CERTIFICATE OF INCORPORATION

OF

COMMUNITY BANK SYSTEM, INC.(1)

 

     The undersigned Incorporator, in order to form a corporation under the

General Corporation Law of the State of Delaware, certifies as follows:

 

     1. Name. The name of the corporation is: Community Bank System,

Inc.(hereinafter called the "Corporation").

 

     2. Address; Registered Agent. The address of the Corporation's registered

office in the State of Delaware is 100 West Tenth Street, City of Wilmington,

County of New Castle, State of Delaware; and the name of its registered agent at

such address is The Corporation Trust Company.

 

     3. Purposes. The nature of the business and the purposes to be conducted or

promoted by the Corporation are to engage in, carry on and conduct any lawful

act or activity for which corporations may be organized under the General

Corporation Law of Delaware.

 

     4. Number and Classes of Shares; Relative Rights, Preferences and

Limitations.

 

          (a) The total number of shares of all classes of stock which the

Corporation shall have authority to issue is Twenty Million Five hundred

Thousand (20,500,000), of which Twenty Million (20,000,000) shares without par

value shall be Common Stock, and Five Hundred Thousand (500,000) shares of the

par value of One Dollar ($1.00) per share, amounting in the aggregate to Five

Hundred Thousand Dollars ($500,000.00), shall be Preferred Stock.

 

          (b) The Preferred Stock may be issued from time to time in one or more

series for any

 

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(1)  This Certificate of Incorporation has been restated in its entirety to

     reflect amendments thereto.

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proper corporate purpose without further action by the stockholders. The

designation, number, preferences and other rights and limitations or

restrictions of the Preferred Stock of each series (other than such as are

stated and expressed herein) shall be such as may be fixed by the Board of

Directors (authority so to do being hereby expressly granted) and stated and

expressed in a resolution or resolutions adopted by the Board of Directors

providing for the initial issue of Preferred Stock of such series. Such

resolution or resolutions shall (i) fix the designation of such series, (ii) fix

the number of shares of stock which shall constitute the initial issue of such

series, (iii) fix the dividend rights of holders of stock of such series,

including the dividend rate or rates thereon, the time or times at which such

dividends shall be paid or payable, whether such dividends shall be cumulative,

and, if so, on what terms, (iv) fix the terms on which stock of such series may

be redeemed, including amounts payable upon redemption if the shares of such

series are to be redeemable, (v) fix the rights of the holders of stock of such

series upon dissolution, liquidation, any distribution of assets or winding up

of the affairs of the Corporation, (vi) fix the terms or amount of the sinking

fund, if any, to be provided for the purchase or redemption of stock of such

series, (vii) fix the terms upon which the stock of such series may be converted

into or exchanged for stock of any other class or classes or of any one or more

series of Preferred Stock, if the shares of such series are to be convertible or

exchangeable, (viii) fix the voting rights, if any, of the stock of such series

and (ix) fix such other powers, preferences, and relative, participating,

optional or other special rights of such series, and the qualifications,

limitations or restrictions of such preferences and/or rights desired to be so

fixed.

 

     Except to the extent otherwise provided in the resolution or resolutions of

the Board of Directors providing for the initial issue of shares of a particular

series or expressly required by law, holders of shares of Preferred Stock of any

series shall not be entitled to vote such shares

 

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with respect to any matter which is put to a vote of the shareholders. The

number of shares of Preferred Stock which the Corporation shall have authority

to issue may be increased or decreased from time to time by the affirmative vote

of the holders of a majority of the stock of the Corporation entitled to vote,

and the holders of the Preferred Stock, if entitled to vote on any such increase

or decrease, shall not be entitled to vote separately as a class or series of a

class thereon.

 

     All shares of any one series of Preferred Stock shall be identical with

each other in all respects except that shares of any one series issued at

different times may differ as to the dates from which dividends thereon shall

accumulate, and all series of Preferred Stock shall rank equally and be

identical in all respects except as specified In the respective resolutions of

the Board of Directors providing for the initial issue thereof. Subject to the

prior and superior rights of the Preferred Stock as set forth in any resolution

or resolutions of the Board of Directors providing for the initial issue of a

particular series of Preferred Stock, such dividends (payable in cash, stock or

otherwise) as may be determined by the Board of Directors may be declared and

paid on the Common Stock from time to time out of any fund legally available

therefor, and the Preferred Stock shall not be entitled to participate in any

such dividend.

 

     No holder of any class, or any series of a class, of stock of the

Corporation shall be entitled as a matter or right, preemptive or otherwise, to

subscribe for or purchase any part of any additional issue of stock of the

Corporation now or hereafter authorized to be issued or any securities of the

Corporation convertible into such stock or any shares of the Corporation held in

the treasury of the Corporation, whether issued for cash or other consideration

or by way of dividend or otherwise.

 

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     5. Name and Address of Incorporator. The name and mailing address of the

Incorporator are: Edwin J. Lyons, 45-19 Court Street, Canton, New York 13617.

 

     6. Directors; Election and Classification.

 

          (a) Members of the Board of Directors may be elected either by written

ballot or by voice vote.

 

          (b) The Board of Directors shall be divided into three (3) classes.

The number of directors of the first class shall equal one-third (1/3) of the

total number of directors as determined in the manner provided in the By-Laws,

with fractional remainders to count as one (1); the number of directors of the

second class shall equal one-third (1/3) of said total number of directors, or

the nearest whole number thereto; and the number of directors of the third class

shall equal said total number of directors minus the aggregate number of

directors of the first and second classes. At the election of the first Board of

Directors, the class of each of the members then elected shall be designated.

The term of office of each member then designated as a director of the first

class shall expire at the annual meeting of the stockholders next ensuing, that

of each member then designated as a director of the second class at the annual

meeting of stockholders one (1) year thereafter, and that of each member then

designated as a director of the third class at the annual meeting of

stockholders two (2) years thereafter. At each annual meeting of stockholders

held after the election and classification of the first Board of Directors,

directors shall be elected for a full term of three (3) years to succeed those

members whose terms then expire.

 

     7. Adoption, Amendment and/or Repeal of Bylaws. The Board of Directors may

 

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from time to time (after adoption by the undersigned of the original By-Laws

of the Corporation) adopt, amend or repeal the By-Laws of the Corporation;

provided, that any By-Laws adopted, amended or repealed by the Board of

Directors may be amended or repealed, and any By-Laws may be adopted, by the

stockholders of the Corporation.

 

     8. Compromise and Arrangements. Whenever a compromise or arrangement is

proposed between this Corporation and its creditors, or any class of them,

and/or between this Corporation and its stockholders, or any class of them, any

court of equitable jurisdiction within the State of Delaware may, on the

application in a summary way of this Corporation or of any creditor or

stockholder thereof, or on the application of any receiver or receivers

appointed for this Corporation under the provisions of Section 291 of Title 8 of

the Delaware Code, or on the application of trustees in dissolution or of any

receiver or receivers appointed for this Corporation under the provisions of

Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or

class of creditors, and/or of the stockholders or class of stockholders of this

Corporation, as the case may be, to be summoned in such manner as the said court

directs. If a majority in number representing three-fourths (3/4) in value of

the creditors or class of creditors, and/or of the stockholders or class of

stockholders of this Corporation, as the case may be, agree to any compromise or

arrangement and to any reorganization of this Corporation as consequence of such

compromise or arrangement, the said compromise or arrangement and the said

reorganization shall, if sanctioned by the court to which the said application

has been made, be binding on all the creditors or class of creditors, and/or on

all the stockholders or class of stockholders, of this Corporation, as the case

may be, and also on this Corporation.

 

     9. Limitation of Directors' Liability. A director of the Corporation shall

not be personally liable to the Corporation or its stockholders for monetary

damages for breach of

 

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fiduciary duty as a director except for liability (i) for any breach of the

director's duty of loyalty to the Corporation or its stockholders, (ii) for acts

or omissions not in good faith or which involve intentional misconduct or a

knowing violation of law, (iii) under Section 174 of the Delaware General

Corporation Law, as the same exists or hereafter may be amended, or (iv) for any

transaction from which the director derived an improper personal benefit. If the

Delaware General Corporation Law hereafter is amended to authorize the further

elimination of limitation of the liability of directors, then the liability of a

director of the Corporation, in addition to the limitation on personal liability

provided herein, shall be limited to the fullest extent permitted by the amended

Delaware General Corporation Law. Any repeal or modification of this paragraph

by the stockholders of the Corporation shall be prospective only, and shall not

adversely affect any limitation on the personal liability of a director of the

Corporation existing at the time of such repeal or modification.

 

     10. Business Combinations.

 

          (A) A Business Combination (as defined) shall, in addition to any

Board or Shareholder approval required by the Delaware General Corporation Law,

require the affirmative vote of (1) a majority vote of the Board of Directors

and at least three-fourths (3/4) of the votes entitled to be cast by the holders

of all then-outstanding shares of common stock of the Corporation ("Common

Stock"), or (2) at least two-thirds (2/3) of the votes entitled to be cast by

said common stockholders if the Business Combination shall have been approved by

two-thirds (2/3) or more of the Continuing Directors (as defined), whether such

Directors' approval is given prior to or subsequent to the acquisition of

beneficial ownership of the Common Stock that caused the Interested Shareholder

(as defined) to become an Interested Shareholder.

 

          (B) For the purposes of this Article:

 

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               (1) The term "Business Combination" shall mean:

 

                    (a) any merger or consolidation of the Corporation or any

Subsidiary (as defined) with (i) any Interested Shareholder or (ii) any other

corporation (whether or not itself an Interested Shareholder) which is or after

such merger or consolidation would be an Affiliate or Associate of an Interested

Shareholder; or

 

                    (b) any sale, lease, exchange, mortgage, pledge, transfer,

or other disposition (in one transaction or a series of transactions) to or with

any Interested Shareholder or any Affiliate or Associate of any Interested

Shareholder involving any assets or securities of the Corporation or any

Subsidiary having an aggregate Fair Market Value of $3,000,000.00 or more; or

 

                    (c) the adoption of any plan or proposal for the liquidation

or dissolution of the Corporation proposed by or on behalf of an Interested

Shareholder or any Affiliate or Associate of any Interested Shareholder; or

 

                    (d) any reclassification of securities (including any

reverse stock split), or recapitalization of the Corporation, or any merger or

consolidation of the Corporation with any of its Subsidiaries, or any other

transaction (whether or not with or otherwise involving an Interested

Shareholder) that has the effect, directly or indirectly, of increasing the

proportionate share of the outstanding shares of any class of equity or

convertible securities of the Corporation or any Subsidiary which is

beneficially owned by any Interested Shareholder or any Affiliate or Associate

of any Interested Shareholder; or

 

                    (e) any agreement, contract, or other arrangement providing

for

 

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any one or more of the actions specified in the foregoing clauses (a) to (d).

 

               (2) The term "person" shall mean any individual, firm,

corporation or other entity and shall include any group comprised of any person

and any other person with whom such person or any Affiliate or Associate of such

person has any agreement, arrangement, or understanding, directly or indirectly,

for the purpose of acquiring, holding, voting, or disposing of Common Stock.

 

               (3) The term "Interested Shareholder" shall mean any person

(other than the Corporation or any Subsidiary and other than any profit-sharing,

employee stock ownership or other employee benefit plan of the Corporation or

any Subsidiary or any trustee of or fiduciary with respect to any such plan when

acting in such capacity) who:

 

                    (a) is the Beneficial Owner of Common Stock representing

three percent or more of the votes entitled to be cast by the holders of all the

outstanding shares of Common Stock; or

 

                    (b) is an Affiliate or Associate of the Corporation and at

any time within the two-year period immediately prior to the date in question

was the Beneficial Owner of Common Stock representing three percent or more of

the votes entitled to be cast by the holders of all then outstanding shares of

Common Stock; or

 

                    (c) is an assignee of or has otherwise succeeded to any

shares of Common Stock which were at any time within the two-year period

immediately prior to the date in question beneficially owned by any Interested

Shareholder, if such assignment or succession shall have occurred in the course

of transactions not involving a public offering within the meaning of the

Securities Act of 1933.

 

               (4) A person shall be a "Beneficial Owner" of any Common Stock

 

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                    (a) which such person or any of its Affiliates or Associates

beneficially owns, directly or indirectly;

 

                    (b) which such person or any of its Affiliates or Associates

has, directly or indirectly, (i) the right to acquire (whether such right is

exercisable immediately or subject only to the passage of time), pursuant to any

agreement, arrangement or understanding or upon the exercise of conversion

rights, exchange rights, warrants or options, or otherwise, or (ii) the right to

vote pursuant to any agreement, arrangement or understanding; or

 

                    (c) which are beneficially owned, directly or indirectly, by

any other person with which such person or any of its Affiliates or Associates

has any agreement, arrangement or understanding for the purpose of acquiring,

holding, voting or disposing of any shares of Common Stock.

 

                    For the purposes of determining whether a person is an

Interested Shareholder pursuant to this paragraph (B) (4), the number of shares

of Common Stock deemed to be outstanding shall include shares deemed

beneficially owned by such person through application of paragraphs (B)(5) and

(B)(6), but shall not include any other shares of Common Stock that may be

issuable pursuant to any agreement, arrangement or understanding, or upon

exercise of conversion rights, warrants or options, or otherwise.

 

               (5) An "Affiliate" is a person that directly or indirectly,

through one or more intermediaries, controls, or is controlled by, or is under

common control with, the person specified.

 

               (6) The term "Associate" used to indicate a relationship with any

person means;

 

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                    (a) any corporation or organization (other than the

Corporation or a majority-owned subsidiary of the Corporation) of which such

person is an officer or partner or is, directly or indirectly, the beneficial

owner of ten percent or more of any class of equity securities;

 

                    (b) any trust or other estate in which such person has a

substantial beneficial interest or as to which such person serves as trustee or

in a similar fiduciary capacity; and

 

                    (c) any relative or spouse of such person, or any relative

of such spouse, who has the same home as such person or who is a director or

officer of the Corporation or any of its parents or subsidiaries.

 

               (7) The term "Subsidiary" means any corporation of which a

majority of any class of equity security is beneficially owned by the

Corporation; provided, however, that for the purposes of the definition of

Interested Shareholder set forth in paragraph (B) (4), the term "Subsidiary"

shall mean only a corporation of which a majority of each class of equity

security is beneficially owned by the Corporation.

 

               (8) The term "Continuing Director" means any member of the Board

of Directors of the Corporation (the "Board"), while such person is a member of

the Board, who is not an Affiliate or Associate or representative of an

Interested Shareholder and who was a member of the Board prior to the time that

the Interested Shareholder became an Interested Shareholder, and any successor

of a Continuing Director, while such successor is a member of the Board, who is

not an Affiliate or Associate or representative of the Interested Shareholder

and who is recommended or elected to succeed the Continuing Director by a

majority of Continuing Directors.

 

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               (9) The term "Fair Market Value" means:

 

                    (a) in the case of cash, the amount of such cash;

 

                    (b) in the case of stock, the highest closing sale price

during the 30-day period immediately preceding the date in question of a share

of such stock on the Composite Tape for New York Stock Exchange Listed Stocks,

or, if such stock is not listed on such Exchange, on the principal United States

securities exchange registered under the Act on which such stock is listed, or,

if such stock is not listed on any such exchange, the highest closing bid

quotation with respect to a share of such stock during the 30-day period

preceding the date in question on the National Association of Securities

Dealers, Inc. Automated Quotations System or any similar system then in use, or

if no such quotations are available, the fair market value on the date in

question of a share of such stock as determined by a majority of the Continuing

Directors in good faith; and

 

                    (c) in the case of property other than cash or stock, the

fair market value of such property on the date in question as determined in good

faith by a majority of the Continuing Directors.

 

          (C) The Board shall have the power and duty to determine for the

purposes of this Article, on the basis of information known to them after

reasonable inquiry,

 

                         (1) whether a person is an Interested Shareholder;

 

                         (2) the number of shares of Common Stock or other

securities beneficially owned by any person;

 

                         (3) whether a person is an Affiliate or Associate of

another; and

 

                         (4) whether the assets that are the subject of any

Business Combination have or the consideration to be received for the issuance

or transfer of

 

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securities by the Corporation or any Subsidiary in any Business Combination has,

an aggregate Fair Market Value of $3,000,000.00 or more.

 

                         Any such determination made in good faith shall be

binding and conclusive on all parties.

 

          (D) Nothing contained in this Article shall be construed to relieve

any Interested Shareholder from any fiduciary obligation imposed by law.

 

     11. Amendments to Articles. Notwithstanding any other provisions of this

Certificate of Incorporation or the Bylaws of the Corporation, the affirmative

vote required to amend or repeal, or adopt any provisions inconsistent with,

Articles 6, 9, 10, or this Article 11 shall consist of (1) a majority vote of

the Board of Directors and of the holders of at least three-fourths (3/4) of the

votes entitled to be cast by the holders of all then-outstanding shares of

Common Stock, or (2) at least two-thirds (2/3) of the votes entitled to be cast

by said common stockholders if the amendment, repeal, or adoption shall have

been approved by at least two-thirds (2/3) of the Continuing Directors within

the meaning of paragraph (B)(8) of Article 10.

 

     12. Prohibition on Action by Consent in Lieu of Meeting. All action which

is required by law or which may be taken at any annual or special meeting of the

stockholders of the Corporation shall be taken at a meeting and may not be taken

by consent or consents in lieu of a meeting.

 

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     IN WITNESS WHEREOF, this Certificate has been signed on this 11th day of

April, 1983, and the signature of the undersigned shall constitute the

affirmation and acknowledgment of the undersigned, under penalties of perjury,

that the Certificate is the act and deed of the undersigned and that the facts

stated in the Certificate are true.(2)

 

                                             /s/ Edwin J. Lyons

                                             Edwin J. Lyons, Incorporator

 

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(2)  This Certificate of Incorporation has been restated in its entirety to

     reflect amendments thereto. This paragraph and the signature below are

     those set forth on the original Certificate of Incorporation.

 

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PROPOSED AMENDMENT TO ARTICLES 6 AND 11 OF THE

CERTIFICATE OF INCORPORATION OF

COMMUNITY BANK SYSTEM, INC.

 

The text below is the portion of Community Bank System, Inc.ís Certificate of Incorporation proposed to be amended by Item Three.  Proposed additions are indicated by underlining and proposed deletions are indicated by strike−outs.

 

6.           Directors; Election and Classification.

 

(a)           Members of the Board of Directors may be elected either by written ballot or by voice vote.

 

(b)           Commencing with the 2010 annual meeting of the stockholders, directors shall be elected annually for terms of one year and shall hold office until the next succeeding annual meeting.  Directors elected at the 2007 annual meeting of stockholders shall hold office until the 2010 annual meeting of stockholders; directors elected at the 2008 annual meeting of stockholders shall hold office until the 2011 annual meeting of stockholders; and directors elected at the 2009 annual meeting of stockholders shall hold office until the 2012 annual meeting of stockholders.  In all cases, directors shall hold office until their respective successors are duly elected and qualified.  The Board of Directors shall be divided into three (3) classes.  The number of directors of the first class shall equal one-third (1/3) of the total number of directors as determined in the manner provided in the By-Laws, with fractional remainders to count as one (1); the number of directors of the second class shall equal one-third (1/3) of said total number of directors, or the nearest whole number thereto; and the number of directors of the third class shall equal said total number of directors minus the aggregate number of directors of the first and second classes.  At the election of the first Board of Directors, the class of each of the members then elected shall be designated.   The term of office of each member then designated as a director of the first class shall expire at the annual meeting of the stockholders next ensuing, that of each member then designate as a director of the second class at the annual meeting of stockholder one (1) year thereafter, and that each member then designated as a director of the third class at the annual meeting stockholders two (2) years thereafter.  At each annual meeting of stockholders held after the election and classification of the first Board of Directions, directors shall be elected for a full term of three (3) years to succeed those members whose terms then expire.

 

 

11.           Amendments to Articles.  Notwithstanding any other provisions of this Certificate of Incorporation or the Bylaws of the Corporation, the affirmative vote required to amend or repeal, or adopt any provisions inconsistent with, Articles 6, 9 or 10, or this Article 11 shall consist of (1) a majority vote of the Board of Directors and of the holders of at least three-fourths (3/4) of the votes entitled to be cast by the holders of all then-outstanding shares of Common Stock, or (2) at least two-thirds (2/3) of the votes entitled to be cast by said common stockholders if the amendment, repeal, or adoption shall have been approved by at least two-thirds (2/3) of the Continuing Directors within the meaning of paragraph (B)(8) of Article 10.

[As filed 4/16/2010]