REGISTRATION NO. 33-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COMMUNITY BANK SYSTEM, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 16-1213679
- ----------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5790 Widewaters Parkway, DeWitt, New York 13214
- ----------------------------------------- ------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Community Bank System, Inc. 1994 Long-Term Incentive Compensation Program
- --------------------------------------------------------------------------------
(Full title of the plan)
Sanford A. Belden, President and CEO, 5790 Widewaters Parkway,
DeWitt, New York 13214
- --------------------------------------------------------------------------------
(Name and address of agent for service)
(315) 445-2282
- --------------------------------------------------------------------------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered per share* price* fee
- --------------------------------------------------------------------------------
Common Stock, $1.25 298,600 shares $38.625 $11,533,425.00 $3,494.98
par value per share
- --------------------------------------------------------------------------------
* Estimated pursuant to Rule 457 solely for purposes of calculating the
registration fee and based upon the avarage high and low prices reported by the
Nasdaq National Market on November 19, 1996.
Exhibit Index on page 4.
Page 1 of 7
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Community Bank System, Inc. (the
"Company") (Exchange Act File No. 0-11716) with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference and made a
part hereof:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1995,
filed with the Commission on March 27, 1996;
(b) Quarterly Reports on Forms 10-Q, for the quarterly periods ended March
31, 1996, June 30, 1996 and September 30, 1996, filed with the
Commission on May 15, 1996, August 12, 1996, and November 14, 1996,
respectively;
(c) Periodic Report on Form 8-K, filed with the Commission on May 22, 1996;
and
(d) The descriptions of the Company's Common Stock contained in the
Company's registration statements filed under section 12 of the
Securities Exchange Act of 1934, including any amendments or reports
filed for the purpose of updating such descriptions.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
Page 2 of 7
<PAGE>
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Company is a Delaware corporation. Section 145 of the General
Corporation Law of the State of Delaware ("DGCL") provides that a Delaware
corporation has the power to indemnify its officers and directors in certain
circumstances.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding, provided that such director or officer acted in good faith
and in a manner reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, provided that such director or officer had no cause to believe his
or her conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any director of officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
such action or suit, provided that such director or officer acted in good faith
and in a manner reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such director or officer shall
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action was brought shall
determine that despite the adjudication of liability but in view of all the
circumstances, such director or officer is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director of
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith; that indemnification provided for by Section 145 shall not
be deemed exclusive of any other rights to which the indemnified party may be
entitled; and that the corporation shall have power to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or her or incurred by him or her in any such
capacity or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Page 3 of 7
<PAGE>
Article 9 of the Company's Certificate of Incorporation provides that the
Company's directors shall not be liable to the Company or its shareholders for
monetary damages as a result of breach of fiduciary duty, except for liability
for breach of a director's duty of loyalty, for acts not undertaken in good
faith, for a transaction from which a director derives a personal benefit, or
for liability arising under Section 174 of the DGCL.
Article 8 of the Bylaws of the Company provides that the Company shall
indemnify any person made, or threatened to be made, a party to an action, suit
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Corporation.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Certificate of Incorporation of the Company, as amended, previously
filed with the Commission on May 30, 1995 as Exhibit 3.1 to the
Company's Registration Statement on Form S-2 (No. 33-58539), and
incorporated herein by reference.
4.2 Bylaws of the Company, previously filed with the Commission on May 30,
1995 as Exhibit 3.2 to the Company's Registration Statement on Form
S-2 (No. 33-58539), and incorporated herein by reference.
4.3 Community Bank System, Inc. 1994 Long-Term Incentive Compensation
Program, as amended.
5.1 Opinion of Bond, Schoeneck & King, LLP as to the validity of certain
shares being registered.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Bond, Schoeneck & King, LLP (included in Exhibit 5.1).
24 Power of Attorney (included at page 6 of this Registration Statement).
Page 4 of 7
<PAGE>
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
1. (a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to
include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
2. That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Page 5 of 7
<PAGE>
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8, and has duly caused the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in DeWitt, New York on the 20th day of November, 1996.
COMMUNITY BANK SYSTEM, INC.
By: /s/ SANFORD A. BELDEN
-------------------------------------
Sanford A. Belden
President and Chief Executive Officer
Each person whose signature appears below hereby authorizes Sanford A.
Belden, as attorney-in-fact, to execute in the name of such person and to file
this registration statement (including any changes that he may deem necessary or
appropriate) and any amendments, including post-effective amendments, hereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ SANFORD A. BELDEN President and CEO, Director November 20, 1996
- ---------------------------
Sanford A. Belden
/s/ DAVID G. WALLACE Treasurer November 20, 1996
- ---------------------------
David G. Wallace
/s/ EARL W. MACARTHUR Chairman of the Board November 20, 1996
- ---------------------------
Earl W. MacArthur
/s/ JOHN M. BURGESS Director November 20, 1996
- ---------------------------
John M. Burgess
Page 6 of 7
<PAGE>
Signature Title Date
--------- ----- ----
/s/ RICHARD C. CUMMINGS Director November 20, 1996
- ---------------------------
Richard C. Cummings
/s/ WILLIAM M. DEMPSEY Director November 20, 1996
- ---------------------------
William M. Dempsey
/s/ NICHOLAS A. DICERBO Director November 20, 1996
- ---------------------------
Nicholas A. DiCerbo
/s/ JAMES A. GABRIEL Director November 20, 1996
- ---------------------------
James A. Gabriel
/s/ LEE T. HIRSCHEY Director November 20, 1996
- ---------------------------
Lee T. Hirschey
/s/ DAVID C. PATTERSON Director November 20, 1996
- ---------------------------
David C. Patterson
/s/ WILLIAM N. SLOAN Director November 20, 1996
- ---------------------------
William N. Sloan
/s/ HUGH G. ZIMMER Director November 20, 1996
- ---------------------------
Hugh G. Zimmer
Page 7 of 7
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
4.1 Certificate of Incorporation of the Company, as amended, previously
filed with the Commission on May 30, 1995 as Exhibit 3.1 to the
Company's Registration Statement on Form S-2 (No. 33-58539), and
incorporated herein by reference.
4.2 Bylaws of the Company, previously filed with the Commission on May 30,
1995 as Exhibit 3.2 to the Company's Registration Statement on Form
S-2 (No. 33-58539), and incorporated herein by reference.
4.3 Community Bank System, Inc. 1994 Long-Term Incentive Compensation
Program, as amended.
5.1 Opinion of Bond, Schoeneck & King, LLP as to the validity of certain
shares being registered.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Bond, Schoeneck & King, LLP (included in Exhibit 5.1).
24 Power of Attorney (included at page 6 of this Registration Statement).
COMMUNITY BANK SYSTEM, INC.
1994 LONG-TERM INCENTIVE COMPENSATION PROGRAM
1. Preamble. Effective as of July 1, 1984, the Board of Directors of
Community Bank System, Inc. adopted the Community Bank System, Inc. Long Term
Incentive Compensation Program ("1984 Program"). The 1984 Program provided for
the granting of incentive stock options, non-statutory stock options,
retroactive stock appreciation rights, and restricted stock awards. The 1984
Program also provided that no option could be granted under that program after
June 30, 1994.
This document sets forth the terms of the Community Bank System, Inc. 1994
Long Term Compensation Program ("1994 Program"), which shall become effective as
of July 1, 1994, contingent upon the approval of the 1994 Program by the
shareholders of Community Bank System, Inc. Options and other rights granted
prior to July 1, 1994 pursuant to the 1984 Program shall remain subject to the
terms of the 1984 Program and any implementing agreements. Options and other
rights described in this 1994 Program document shall be granted after June 30,
1994 in accordance with the terms of this 1994 Program document.
2. Purpose. The purpose of the 1994 Program is to promote the interests of
the Bank by providing current and future directors, officers and other key
employees with an equity or equity-based interest in the Bank, so that the
interests of such directors and employees will be closely associated with the
interest of shareholders by reinforcing the relationship between shareholder
gains and compensation. Pursuant to this 1994 Program, eligible directors may
receive formula awards and eligible employees may receive (a) Incentive Stock
Options, (b) Non-Statutory Stock Options, (c) Retroactive Stock Appreciation
Rights, and/or (d) Restricted Stock Awards.
3. Eligibility. Officers who are employees of the Bank or its Subsidiaries,
and other key employees of the Bank or its Subsidiaries, shall be eligible to
participate in the 1994 Program. Employee participants shall be selected by the
Committee based upon such factors as the employee's past and potential
contributions to the success, profitability, and growth of the Bank.
Notwithstanding the foregoing, each non-employee member of the Board of
Directors (or of the board of directors of a Subsidiary whom the Board of
Directors has specifically selected, in a written resolution, for participation
in this 1994 Program) shall be eligible for a formula award pursuant to
Paragraph 6, but shall be ineligible for discretionary grants pursuant to
Paragraphs 6, 9, or 10.
4. Definitions. As used in this 1994 Program,
(a) "Bank" shall mean Community Bank System, Inc.
(b) "Board of Directors" shall mean the Board of Directors of the Bank.
(c) "Committee" shall mean the committee appointed by the Board of
Directors to administer the 1994 Program in accordance with Paragraph 15.
(d) "Common Stock" shall mean the Common Stock, par value $5.00 per
share, of the Bank.
-1-
<PAGE>
(e) "Disinterested Director" shall mean a member of the Board of
Directors who has not, at any time within one year prior to the member's
participating in the administration of the 1994 Program, received stock, stock
options (except for formula awards pursuant to the last paragraph of Paragraph 6
hereof), stock appreciation rights or any other equity security of the Bank
pursuant to the 1994 Program or any other plan of the Bank or its affiliates.
(f) "Eligible Employees" shall mean persons described in Paragraph 3.
(g) "Incentive Stock Option" shall mean the right granted to an Eligible
Employee to purchase Common Stock under this 1994 Program, the grant, exercise
and disposition of which are intended to comply with, and to be governed by,
Internal Revenue Code Section 422.
(h) "Market Value per Share" shall mean, at any date, the fair market
value per share of the shares of Common Stock, as described in good faith by the
Committee.
(i) "Non-Statutory Stock Option" shall mean the right granted to an
Eligible Employee or Director to purchase Common Stock under this 1994 Program,
the grant, exercise and disposition of which are not intended to be subject to
the requirements and limitations of Internal Revenue Code Section 422.
(j) "Optionee" shall mean the Eligible Employee or Director to whom an
Option Right is granted pursuant to an agreement evidencing an outstanding
Incentive Stock Option or Non-Statutory Stock Option.
(k) "Option Right" shall mean the right to purchase a share of Common
Stock upon exercise of an outstanding Incentive Stock Option or Non-Statutory
Stock Option.
(l) "Restricted Stock Award" shall mean an award of Common Stock to an
Eligible Employee that is subject to the restrictions described in Paragraph 10
and subject to tax under Internal Revenue Code Section 83.
(m) "Retroactive Stock Appreciation Rights" shall mean an Eligible
Employee's right to receive payments described in Paragraph 9.
(n) "Subsidiary" shall mean any corporation in which (at the time of
determination) the Bank owns or controls, directly or indirectly, 50 percent or
more of the total combined voting power of all classes of stock issued by the
corporation.
5. Shares Available Under the 1994 Program.
(a) The shares of Common Stock which may be made the subject of Option
Rights or Restricted Stock Awards pursuant to this 1994 Program may be either
(i) shares of original issue, (ii) treasury shares, (iii) shares held in a
grantor trust maintained by the Bank, or (iv) a combination of the foregoing.
(b) Subject to adjustments in accordance with Paragraph 12 of this 1994
Program, the maximum number of shares of Common Stock that may be the subject of
Option Rights, Retroactive Stock Appreciation Rights or Restricted Stock Awards
granted pursuant to this 1994 Program shall be 305,000 shares of Common Stock
which are made available by virtue of this 1994 Program.
-2-
<PAGE>
6. Grants of Option Rights Generally. The Committee may, from time to time
and upon such terms and conditions as it may determine, authorize the granting
of Option Rights to Eligible Employees. Each such grant may utilize any or all
of the authorizations, and shall be subject to all of the limitations, contained
in the following provisions:
(a) Each grant shall specify whether it is intended as a grant of
Incentive Stock Options or Non-Statutory Stock Options.
(b) Each grant shall specify the number of shares of Common Stock to
which it pertains.
(c) Each grant shall specify an option price not less than 50%
of the Market Value per Share on the date the Option Right is granted.
(d) Successive grants may be made to the same Eligible Employee whether
or not any Option Rights previously granted to such Eligible Employee remain
unexercised.
(e) Upon exercise of an Option Right, the entire option price shall be
payable (i) in cash, (ii) by the transfer to the Bank by the Optionee of shares
of Common Stock with a value (Market Value per Share times the number of shares)
equal to the total option price, or (iii) by a combination of such methods of
payment. Payment may not be made with Common Stock issued to the Optionee by the
Bank upon his or her prior exercise of an option under this 1994 Program or any
other option plan unless the Common Stock received upon that prior exercise
shall have been held by the Optionee for at least one year.
(f) Each grant of Option Rights shall be evidenced by an agreement
executed on behalf of the Bank by any officer designated by the Committee for
this purpose and delivered to and accepted by the Eligible Employee and shall
contain such terms and provisions, consistent with this 1994 Program, as the
Committee may approve.
As soon as practicable after each January 1 occurring after 1995, each
non-employee member of the Board of Directors (or of the board of directors of a
Subsidiary whom the Board of Directors has specifically selected, in a written
resolution, for participation in this 1994 Program) who has (i) attended at
least 75% of the Board of Directors or Board committee meetings he or she was
scheduled to attend during the immediately preceding calendar year, (ii) served
as a director of the Bank or a Subsidiary on the last day of such calendar year,
and (iii) completed at least six months of service on the Board of Directors (or
on the board of directors of a Subsidiary) shall be granted a Non-Statutory
Stock Option, provided that the first such annual grant of a Non-Statutory Stock
Option shall be to purchase 805 shares of Common Stock, and each subsequent
annual grant of a Non-Statutory Stock Option shall be to purchase 1000 shares of
Common Stock. Notwithstanding the foregoing, to the extent that the Committee
determines that grants may be exempt from Section 16(b) of the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"), each Non-Statutory Stock Option
granted pursuant to the preceding sentence shall relate to a number of shares of
Common Stock which shall be determined based on the financial performance of the
Bank. Such financial performance of the Bank shall be determined based on
factors including but not limited to the Bank's return on equity, measures of
the Bank's asset quality, and the Bank's CAMEL rating. Each Non-Statutory Stock
Option granted pursuant to this paragraph shall be granted at an option price
per share equal to the Market Value per share on the date of grant and be fully
exercisable upon its date of grant, provided that shares of Common Stock
acquired pursuant to the exercise of such a Non-Statutory Stock Option may not
be sold or otherwise transferred by a director within six months of such grant.
-3-
<PAGE>
7. Special Rules for Grants of Incentive Stock Options.
(a) Notwithstanding Paragraph 6(c), if an Incentive Stock Option is
granted to any Eligible Employee who, immediately after such option is granted,
is considered to own stock possessing more than ten percent of the combined
voting power of all classes of stock of the Bank, or any of its subsidiaries,
the option price per share shall be not less than 110 percent of the Market
Value per Share on the date of the grant of the option, and such option may be
exercised only within five years of the date of the grant.
(b) The period of each Incentive Stock Option by its terms shall be not
more than ten years from the date the option is granted as specified by the
Committee.
(c) The Committee shall establish the time or times within the option
period when the Incentive Stock Option may be exercised in whole or in such
parts as may be specified from time to time by the Committee, except that
Incentive Stock Options shall not be exercisable earlier than one year, nor
later than 10 years, following the date the option is granted. The date of grant
of each Option Right shall be the date of its authorization by the Committee.
(d) Except as provided in Paragraph 13, or as may be provided by the
Committee at the time of grant, (i) in the event of the Optionee's termination
of employment due to any cause, including death or retirement, rights to
exercise Incentive Stock Options shall cease, except for those which are
exercisable as of the date of termination, and (ii) rights that are exercisable
as of the date of termination shall remain exercisable for a period of three
months following a termination of employment for any cause other than death or
disability, and for a period of one year following a termination due to death or
disability. However, no Incentive Stock Option shall, in any event, be exercised
after the expiration of ten years from the date such option is granted, or such
earlier date as may be specified in the option.
(e) No Incentive Stock Options shall be granted hereunder to any
Optionee that would allow the aggregate fair market value (determined at the
time the option is granted) of the stock subject of all post-1986 incentive
stock options, including the Incentive Stock Option in question, which such
Optionee may exercise for the first time during any calendar year, to exceed
$100,000. The term "post-1986 incentive stock options" shall mean all rights,
which are intended to be "incentive stock options" under the Internal Revenue
Code, granted on or after January 1, 1987 under any stock option plan of the
Bank or its Subsidiaries. If the Bank shall ever be deemed to have a "parent",
as such term is used for purposes of Section 422 of the Internal Revenue Code,
then rights intended to be "incentive stock options" under the Internal Revenue
Code, granted after January 1, 1987 under such parent's stock option plans,
shall be included with the terms of the definition of "post-1986 incentive stock
options".
8. Special Rules for Grants of Non-Statutory Stock Options.
(a) Except as provided in Paragraph 13, or as may be provided by the
Committee at the time of grant, (i) in the event of the Optionee's termination
of employment due to death or disability, rights to exercise Non-Statutory Stock
Options that are exercisable as of the date of termination shall remain
exercisable for two years following termination, (ii) in the event of the
Optionee's termination of employment due to any other reason, the rights to
exercise Non-Statutory Stock Options that are exercisable as of the date of
termination shall remain exercisable for three months following termination, and
(iii) the right to exercise Non-Statutory Stock Options that are not exercisable
as of the date of termination shall be forfeited.
-4-
<PAGE>
(b) The Bank shall not issue stock certificates to an Optionee who
exercises a Non-Statutory Stock Option, unless payment of the required lawful
withholding taxes has been made to the Bank by check, payroll deduction or other
arrangements satisfactory to the Committee.
(c) Notwithstanding any other provision of this 1994 Program to the
contrary and except as provided in Paragraph 13 hereof, Non-Statutory Stock
Options issued pursuant to the last paragraph of Paragraph 6 shall be
exercisable until the earlier of (i) ten years from the date of grant of such
Non-Statutory Stock Option, or (ii) termination of the Optionee's service on the
Board of Directors for Just Cause. For the purposes of this Paragraph 8(c),
"Just Cause" shall mean, in the good faith determination of the Committee, the
Optionee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease and desist order. Additionally,
in the event that the Committee, in its sole discretion, determines that an
Optionee who has left service with the Bank or Subsidiary engaged in misconduct
which would have constituted Just Cause for dismissal if the Optionee were then
serving with the Bank or a Subsidiary, then the Committee may rescind, without
the consent of the Optionee, any or all unexercised Option Rights held by the
Optionee.
9. Retroactive Stock Appreciation Rights. Upon such conditions and
limitations it deems advisable, the Committee may authorize (a) the surrender of
the right to exercise all or a portion of an Option Right granted under the 1994
Program that is exercisable at the time of surrender, and (b) the payment in
exchange for the surrender of an amount of up to the excess of the Market Value
per Share at the time of surrender of the shares covered by the option, or
portion thereof, surrendered over the option price of such shares. Such payment
may be made in shares of Common Stock valued at fair market value or in cash or
partly in cash and partly in shares of Common Stock, at the Committee's sole
discretion. The shares of Common Stock covered by any Option Right, or portion
thereof, as to which the right to purchase has been so surrendered shall not
again be available for purposes of Option Rights under the 1994 Program.
10. Restricted Stock Awards.
(a) Shares of Common Stock granted pursuant to a Restricted Stock Award
issued under the 1994 Program (except as otherwise provided in the 1994 Program)
shall not be sold, exchanged, transferred, assigned, pledged, hypothecated, or
otherwise disposed of, for the period of time determined by the Committee in its
absolute discretion (the "Forfeiture Period"). Except as provided in Paragraph
13, or as may be provided by the Committee at the time of grant, if the
recipient's employment with the Bank or any of its Subsidiaries terminates prior
to the expiration of the Forfeiture Period for any reason other than death or
disability, the recipient shall, on the date employment terminates, forfeit and
surrender to the Bank the number of shares of Common Stock with respect to which
the Forfeiture Period has not expired as of the date employment terminates. If
Common Stock is forfeited, dividends paid on those shares during the Forfeiture
Period may be retained by the recipient.
(b) Upon each grant of a Restricted Stock Award, the Committee shall fix
the Forfeiture Period. Each certificate of Common Stock issued pursuant to the
Restricted Stock Award shall bear a legend to reflect the Forfeiture Period
until the Forfeiture Period expires. As a condition to issuance of Common Stock
to an Eligible Employee, the Committee may require the Eligible Employee to
enter into an agreement providing for the Forfeiture Period and such other terms
and conditions that it prescribes, including, but not limited to, a provision
that Common Stock issued to the to the Eligible Employee shall be held by an
escrow
-5-
<PAGE>
agent until the Forfeiture Period lapses. The Committee also may require a
written representation by the Eligible Employee that he or she is acquiring the
shares for investment.
(c) When the Forfeiture Period with respect to shares to Common Stock
lapses, a certificate for such shares shall be issued, free of any escrow; such
certificate shall not bear a legend relating to the Forfeiture Period.
(d) Each Eligible Employee shall agree, at the time he or she receives a
Restricted Stock Award and as a condition thereof, to pay or make arrangements
satisfactory to the Committee regarding the payment to the Bank of any federal,
state or local taxes of any kind required by law to be withheld with respect to
any award or with respect to the lapse of any restrictions on shares of
restricted Common Stock awarded under this 1994 Program, or the waiver of any
forfeiture hereunder, and also shall agree that the Bank may, to the extent
permitted by law, deduct such taxes from any payments of any kind due or to
become due to such recipient from the Bank, sell by public or private sale, with
ten days notice or such longer notice as may be required by applicable law, a
sufficient number of shares of Common Stock so awarded in order to cover all or
part of the amount required to be withheld, or pursue any other remedy or law or
in equity. In the event that the recipient of shares of Common Stock under this
1994 Program shall fail to pay to the Bank all such federal, state and local
taxes, or to make arrangements satisfactory to the Committee regarding the
payment of such taxes, the shares to which such taxes relate shall be forfeited
and returned to the Bank.
(e) The Committee shall have the authority at any time to accelerate the
time at which any or all or the restrictions set forth in this 1994 Program with
respect to any or all shares of restricted Common Stock awarded hereunder shall
lapse.
(f) If an Eligible Employee dies, or terminates employment with the Bank
because of disability before the expiration of a Forfeiture Period, the
Forfeiture Period on any Common Stock owned by the Eligible Employee shall lapse
on the date of death or on the date that employment terminates because of
disability, provided such date is not less than four years subsequent to the
date of the award. If the date of death or disability is within four years of
the date of the awards, the Committee, in its sole discretion, can waive the
Forfeiture Period as to any or all of the stock.
11. Limited Transferability. Option Rights, Restricted Stock Awards, and
Retroactive Stock Appreciation Rights (collectively, "Rights") may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of decent and distribution. Notwithstanding the
foregoing, or any other provision of this 1994 Program, a holder of Rights may
transfer such Rights (but not Incentive Stock Options) to his or her spouse,
lineal ascendants, lineal descendants, or to a duly established trust for the
benefit of one or more of these individuals. Rights so transferred may
thereafter be transferred only to the holder who originally received the grant
or to an individual or trust to whom the holder could have initially transferred
the Rights pursuant to this Paragraph. Rights which are transferred pursuant to
this Paragraph shall be exercisable by the transferee according to the same
terms and conditions as applied to the holder.
12. Adjustments. The Committee may make or provide for such adjustments in
the maximum number of shares of Common Stock specified in Paragraph 5 of this
1994 Program, in the numbers of shares of Common Stock covered by other rights
granted hereunder, and in the prices per share applicable under all such rights,
as the Committee in its sole discretion, exercised in good faith, may determine
is equitably required to prevent dilution or enlargement of the rights of
Optionees that otherwise would result from any
-6-
<PAGE>
stock dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Bank, merger, consolidation, spin-off,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase securities, or any other transaction or event having an effect
similar to any of the foregoing.
13. Change in Control.
(a) Notwithstanding any other term or provision of this 1994 Program, in
the event the employment of an Eligible Employee is terminated, for any reason
other than death or disability, within one year following a "Change in Control"
(as defined in (b) below):
(i) all Option Rights granted to the Eligible Employee
under this 1994 Program prior to the date of termination, but
not exercisable as of such date, shall become exercisable
automatically as of the later of the date of termination or
one year after the date the Option Right was granted;
(ii) any Option Right that is exercisable as of the date
of termination, or that becomes exercisable pursuant to (i)
above, shall remain exercisable until the end of the exercise
period provided in the original grant of the Option Right
(determined without regard to the Eligible Employee's
termination of employment); and
(iii) any Forfeiture Period (with respect to a Restricted
Stock Award) that shall be unexpired as of the date of
termination shall expire automatically as of such date.
(b) For purpose of this 1994 Program, a "Change of Control" shall be
deemed to have occurred if:
(i) any "person" including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange
Act of 1934 ("Exchange Act"), is or becomes the beneficial
owner, directly or indirectly, of securities of the Bank
representing 30 percent or more of the combined voting power
of the Bank's then outstanding securities;
(ii) as a result of, or in connection with, any tender
offer or exchange offer, merger or other business combination
(a "Transaction"), the persons who were directors of the Bank
before the Transaction shall cease to constitute a majority of
the Board of Directors of the Bank or any successor to the
Bank;
(iii) the Bank is merged or consolidated with another
corporation and as a result of the merger or consolidation
less than 70 percent of the outstanding voting securities of
the surviving or resulting corporation shall then be owned in
the aggregate by former stockholders of the Bank, other than
(A) affiliates within the meaning of the Exchange Act, or (B)
any party to the merger or consolidation;
(iv) a tender offer or exchange offer is made and
consummated for the ownership of securities of the Bank
representing 30 percent or more of the combined voting power
of the Bank's then outstanding voting securities; or
-7-
<PAGE>
(v) the Bank transfers substantially all of its assets
to another corporation which is not controlled by the Bank.
14. Fractional Shares. The Bank shall not be required to issue any
fractional shares of Common Stock pursuant to this 1994 Program. The Committee
may provide for the elimination of fractions or for the settlement of fractions
in cash.
15. Administration of the 1994 Program.
(a) This 1994 Program shall be administered by the Committee, which
shall consist of not less than three Disinterested Directors. No right (other
than a formula award pursuant to the last paragraph of Paragraph 6 hereof) shall
be granted under this 1994 Program unless the transaction is approved by the
Board of Directors.
(b) The Committee shall have the power to interpret and construe any
provision of this 1994 Program. The interpretation and construction by the
Committee of any provision of this 1994 Program or of any agreement evidencing
the grant of rights hereunder, and any determination by the Committee pursuant
to any provision of this 1994 Program or of any such agreement, shall be final
and binding. No member of the Committee shall be liable for any such action or
determination made in good faith.
16. Amendments, Termination, Miscellaneous
(a) This 1994 Program may be amended from time to time by resolutions of
the Board of Directors, provided that no such amendment shall (i) increase the
maximum numbers of shares of Common Stock specified in Paragraph 5 of this 1994
Program (except that adjustments authorized by Paragraph 12 of this 1994 Program
shall not be limited by this provision), or (ii) change the definition of
"Eligible Employees", without further approval by the stockholders of the Bank.
(b) The Committee may, with the concurrence of the affected Optionee,
cancel any agreement evidencing Option Rights granted under this 1994 Program.
In the event of such cancellation, the Committee may authorize the granting of
new Option Rights (which may or may not cover the same number of shares which
had been the subject of the prior agreement) in such manner, at such option
price and subject to the same terms and conditions as, under this 1994 Program,
would have been applicable had the canceled Option Rights not been granted.
(c) In the case of any Option Right not immediately exercisable in full,
the Committee in its discretion may accelerate the time at which the Option
Right may be exercised, subject to the limitation described in Paragraph 7(c).
(d) Notwithstanding any other provision of the 1994 Program to the
contrary, (i) the 1994 Program may be terminated at any time by resolutions of
the Board of Directors, and (ii) no rights shall be granted pursuant to this
1994 Program after June 30, 2004.
-9-
Exhibit 5.1
November 21, 1996
Community Bank System, Inc.
5790 Widewaters Parkway
DeWitt, New York 13214
Gentlemen:
We have acted as counsel to Community Bank System, Inc., a Delaware
Corporation (the "Company") in connection with the Registration Statement on
Form S-8 (the "Registration Statement") filed with the United States Securities
and Exchange Commission with respect to the Community Bank System, Inc. 1994
Long Term Incentive Compensation Program, as amended (the "Plan").
In rendering this opinion, we have examined and relied upon originals or
copies, authenticated or certified to our satisfaction, of such corporate
records of the Company, communications or certifications of public officials,
communications with or certificates of officers, directors and representatives
of the Company, and such other documents as we have deemed necessary to the
issuance of the opinion set forth herein. In making this examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
tendered to us as originals, and the conformity to original documents of all
documents submitted to us as copies.
Based upon the foregoing, it is our opinion that the shares of the
Company's Common Stock, par value $1.25 per share registered pursuant to the
Registration Statement and offered by the Company pursuant to the Plan will be,
assuming that such shares are validly authorized at the time of issuance and
assuming that no change occurs in the applicable law or pertinent facts, when
paid for in full by the participant and issued in accordance with the Plan,
legally issued, fully paid and non-assessable.
We hereby consent to the use of this letter as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Bond, Schoeneck & King, LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
------------------
We consent to the incorporation by reference in the Registration Statement of
Community Bank System, Inc. on Form S-8 of our report dated January 26, 1996 on
our audits of the consolidated financial statements of Community Bank System,
Inc. as of December 31, 1995 and 1994, and for the years ended December 31,
1995, 1994 and 1993, which report is included in the Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Syracuse, New York
November 20, 1996
