November 22, 1999



PERSONAL AND CONFIDENTIAL
-------------------------

The Board of Directors
CNY Financial Corporation
1 North Main Street
Cortland, NY 13045

Attention:    Mr. Harvey Kaufman
              Chairman of the Board of Directors


Gentlemen:

This letter agreement confirms our understanding of the engagement of CIBC World
Markets Corp. ("CIBC World Markets") by CNY Financial Corporation (together with
its  subsidiaries and affiliates,  the "Company") to act as exclusive  financial
advisor to the Company in  connection  with a possible  sale or other  transfer,
directly or indirectly and whether in one or a series of transactions, of all or
a  significant  portion  of the  assets  or  securities  of the  Company  or any
extraordinary  corporate  transaction  involving  a  change  in  control  of the
Company,   regardless  of  the  form  or  structure  of  such  transaction  (the
"Transaction").

SERVICES.  During the term of this  engagement,  CIBC World Markets will provide
you with  financial  advice and assistance in connection  with the  Transaction,
which may  involve,  to the  extent  requested  by you and  appropriate  for the
Transaction,  advice and  assistance in connection  with defining  strategic and
financial objectives,  identifying potential parties to a Transaction, assisting
in the  preparation  of a  confidential  memorandum  describing  the Company and
related  materials  for  distribution  to  such  parties,   reviewing  financial
information  and assisting in  negotiations of the financial terms and structure
of the  Transaction.  At your request,  we also will render an opinion as to the
fairness, from a financial point of view, of the consideration to be received by
the  Company  or the  holders  of its  common  stock,  as the  case  may be,  in
connection  with a Transaction  (or, in the case of a  Transaction  involving an
exchange of  securities,  the exchange  ratio) (the  "Opinion"),  subject to the
approval of CIBC World Markets' M & A Committee.  CIBC World Markets consents to
the inclusion of the Opinion in its entirety and any  references to such Opinion
in any  prospectus,  proxy  statement or  solicitation/recommendation  statement
required to be distributed to the Company's  shareholders  in connection  with a
Transaction  so long as such  inclusion or  reference  is in form and  substance
acceptable  to CIBC World Markets and its counsel.  If you should  request us to
provide additional services not otherwise contemplated by this letter

<PAGE>

agreement,  the Company  and CIBC World  Markets  will enter into an  additional
letter  agreement  which will set forth the  nature  and scope of the  services,
appropriate compensation and other customary matters, as mutually agreed upon by
the Company and CIBC World Markets.

In order to coordinate the efforts in connection with a Transaction, the Company
and CIBC World  Markets  promptly  will inform and consult  with each other with
respect  to  inquiries   received  from  third  parties  in  connection  with  a
Transaction.

COMPENSATION. In connection with this engagement, the Company agrees to pay us a
transaction fee equal to 1.20% of Transaction Value (as defined below),  payable
in cash on the  closing  date  of a  Transaction  if,  during  the  term of this
engagement or within 12 months  thereafter,  a Transaction  is consummated or an
agreement is entered into that subsequently  results in a Transaction.  Upon the
earlier of the oral or written delivery of the Opinion to the Company's Board of
Directors,  CIBC World  Markets  shall be paid a fee of $300,000  (the  "Opinion
Fee").  No portion of the Opinion Fee paid in connection  with the Opinion shall
be contingent on the views expressed  therein.  The Opinion Fee will be credited
against the transaction fee.

As used in this letter agreement,  "Transaction  Value" means the total value of
all  consideration  (including  cash,  securities  or  other  property)  paid or
received or to be paid or received, directly or indirectly, in connection with a
Transaction  in  respect  of the  assets  of  the  Company  or  the  outstanding
securities  of the Company on a fully diluted  basis  (treating  any  securities
issuable upon the exercise of options,  warrants or other convertible securities
and any securities to be redeemed as  outstanding),  plus the amount of any debt
(including  capitalized  leases)  and  any  other  liabilities  of  the  Company
outstanding  or  assumed,  refinanced  or  extinguished  in  connection  with  a
Transaction,  and amounts payable in connection with a Transaction in respect of
employment  or  consulting  agreements,  agreements  not to  compete  or similar
arrangements. If the Transaction takes the form of a recapitalization or similar
transaction,  "Transaction  Value"  will also  include  the value of all  shares
retained  by the  shareholders  of the  acquired  company.  If  any  portion  of
Transaction  Value is  payable  in the  form of  securities,  the  value of such
securities,  for purposes of calculating our transaction fee, will be determined
based on the average  closing price for such  securities for the 20 trading days
prior to the closing of the  Transaction.  In the case of securities that do not
have an existing public market,  our transaction fee will be determined based on
the fair market value of such  securities as mutually  agreed upon in good faith
by the Company and CIBC World Markets  prior to the closing of the  Transaction.
Fees on amounts paid into escrow will be payable upon the  establishment of such
escrow. Fees relating to contingent payments other than escrowed amounts will be
calculated based on the present value of the reasonably  expected maximum amount
of such contingent  payments as determined in good faith by the Company and CIBC
World Markets prior to the closing of the Transaction, utilizing a discount rate
equal to the  prime  rate  published  in The  Wall  Street  Journal  on the last
business day preceding the closing of the Transaction.

The Company also agrees to  periodically  reimburse CIBC World Markets  promptly
when  invoiced  for  all of its  reasonable  out-of-pocket  expenses  (including
reasonable  fees and  expenses  of its legal  counsel)  in  connection  with the
performance  of its  services  hereunder,  regardless  of whether a  Transaction
occurs. Upon termination or expiration of this letter agreement or completion of
a  Transaction,  the Company  agrees to pay  promptly  in cash any  unreimbursed
expenses that have accrued as of such date; provided,  that, except as otherwise
contemplated  by Annex A hereto,  expenses in excess of $10,000 will require the
consent of the Company (which consent will not be unreasonably withheld).

                                       2
<PAGE>

To the extent officers of CIBC World Markets assist in, or provide  testimony in
trial or deposition for any action, suit or proceeding relating to a Transaction
or our engagement hereunder,  the Company will pay CIBC World Markets a per diem
charge for the services of such officers in an amount to be mutually agreed upon
by the Company and CIBC World Markets prior to such assistance.

TERM.  The term of this  engagement  will extend until  January 6, 2001 and will
automatically  terminate  upon the closing or  termination  of the  Transaction,
provided,  that either party may terminate  this letter  agreement by giving the
other party at least thirty (30) days prior written  notice to that effect.  The
Company   agrees  that  the   provisions   relating  to  the  payment  of  fees,
reimbursement of expenses, indemnification and contribution, confidentiality and
waiver of the right to trial by jury will survive any such termination.

INDEMNIFICATION.  As CIBC  World  Markets  will be  acting on your  behalf,  the
Company  agrees to indemnify CIBC World Markets and certain  related  parties in
the manner set forth in Annex A which is attached and  incorporated by reference
in its entirety to this letter agreement.

USE OF INFORMATION.  The Company will furnish (or will use reasonable efforts to
cause  other  potential  parties to the  Transaction  to  furnish) to CIBC World
Markets such  information  as CIBC World  Markets  believes  appropriate  to its
assignment  (the  "Information").  The Company hereby agrees and represents that
all Information  relating to the Company furnished to CIBC World Markets will be
accurate and complete in all material  respects at the time provided,  and that,
if the  Company  is aware of any  Information  becoming  materially  inaccurate,
incomplete  or  misleading  during  the term of CIBC World  Markets'  engagement
hereunder,  the Company will  promptly  advise CIBC World  Markets.  The Company
recognizes and confirms that CIBC World Markets  assumes no  responsibility  for
the accuracy and  completeness  of the Information and will be using and relying
upon the Information (and information available from generally recognized public
sources)  without  assuming  responsibility  for  independent   verification  or
independent evaluation of any of the assets or liabilities of the Company.

The Company acknowledges that in performing its services,  CIBC World Markets is
acting as an independent contractor with duties owing solely to the Company. The
Company further acknowledges that any service,  information or advice, including
the Opinion,  provided by CIBC World Markets to the Company in  connection  with
this engagement is for the confidential use of the Board of Directors and senior
management of the Company and may not be disclosed or referred to publicly or to
any third party,  without our prior written  consent,  which consent will not be
unreasonably withheld. CIBC World Markets will treat confidentially any material
non-public  information  relating to the Company provided by the Company to CIBC
World  Markets  during the term of this  engagement,  except as (a)  required in
order to perform our services under this engagement,  including  disclosing such
information  to its officers,  employees,  agents and other  representatives  as
necessary,  (b)  such  information  becomes  publicly  available  other  than by
disclosure  by CIBC  World  Markets  in  violation  of the  terms  hereof or (c)
otherwise required by law or judicial or regulatory process.

MISCELLANEOUS.  This  letter  agreement  will be governed  by and  construed  in
accordance  with the laws of the State of New York without  regard to principles
of conflicts of law. The Company  irrevocably submits to the jurisdiction of any
court of the  State of New York for the  purpose  of any  suit,  action or other
proceeding arising out of this letter agreement or our engagement hereunder.

                                       3
<PAGE>

Each of the Company and CIBC World  Markets  hereby waives any right it may have
to a trial by jury in  respect  of any claim  brought  by or on behalf of either
party based upon,  arising out of or in connection  with this letter  agreement,
our engagement hereunder or the transactions contemplated hereby.

The Company  represents  and  warrants to CIBC World  Markets  that there are no
brokers, representatives or other persons which have an interest in compensation
due to CIBC World  Markets from any  Transaction  or our  services  contemplated
herein.

CIBC  World   Markets  may,  at  our  own  expense,   place   announcements   or
advertisements  in financial  newspapers  and journals  describing  our services
hereunder.

This letter agreement may not be amended or modified except in writing signed by
the  Company  and  CIBC  World  Markets  and  may be  executed  in  two or  more
counterparts,  each of will be deemed to be an  original,  but all of which will
constitute one and the same agreement.  All rights,  liabilities and obligations
hereunder  will be binding  upon and inure to the benefit of the  Company,  CIBC
World  Markets,  each  Indemnified  Party  (as  defined  in Annex  A) and  their
respective successors and assigns.

Please  confirm  our mutual  understanding  of this  engagement  by signing  and
returning to us the enclosed  duplicate  copy of this letter  agreement.  We are
pleased  that you  have  engaged  us to act as your  financial  advisor  and are
looking forward to working with you on this assignment.

                                                     Very truly yours,

                                                     CIBC WORLD MARKETS CORP.


                                                     By:_______________________
                                                          Mary Anne Callahan
                                                          Managing Director


Agreed to and accepted as of the above date.

CNY Financial Corporation


By:
      ----------------------------------
      Harvey Kaufman
      Chairman of the Board of Directors


                                       4
<PAGE>

CNY FINANCIAL
DATE:  NOVEMBER 22, 1999
                            ANNEX A: INDEMNIFICATION
The Company agrees to indemnify CIBC World  Markets,  its employees,  directors,
officers,  agents,  affiliates,  and each person, if any, who controls it within
the  meaning of either  Section  20 of the  Securities  Exchange  Act of 1934 or
Section 15 of the Securities Act of 1933 (each such person, including CIBC World
Markets,  is referred to as  "Indemnified  Party")  from and against any losses,
claims, damages and liabilities,  joint or several (including all legal or other
expenses  reasonably  incurred by an  Indemnified  Party in connection  with the
preparation  for or  defense  of any  threatened  or  pending  claim,  action or
proceeding,  whether or not resulting in any  liability)  ("Damages"),  to which
such  Indemnified  Party,  in connection with its services or arising out of its
engagement  hereunder,  may become subject under any applicable Federal or state
law or  otherwise,  including  but not  limited  to  liability  (i) caused by or
arising out of an untrue  statement or an alleged untrue statement of a material
fact or the omission or alleged  omission to state a material fact  necessary in
order to make a statement  not  misleading in light of the  circumstances  under
which it was made, (ii) caused by or arising out of any act or failure to act or
(iii)  arising out of CIBC World  Markets'  engagement  or the  rendering by any
Indemnified Party of its services under this Agreement;  provided, however, that
the Company will not be liable to the Indemnified  Party hereunder to the extent
that any  Damages  are found in a final  non-appealable  judgment  by a court of
competent jurisdiction to have resulted from the gross negligence,  bad faith or
willful misconduct of the Indemnified Party seeking indemnification hereunder.

These indemnification provisions shall be in addition to any liability which the
Company may otherwise have to any Indemnified Party.

If for  any  reason,  other  than a final  non-appealable  judgment  finding  an
Indemnified  Party  liable for  Damages for its gross  negligence,  bad faith or
willful  misconduct  the foregoing  indemnity is  unavailable  to an Indemnified
Party or  insufficient to hold an Indemnified  Party harmless,  then the Company
shall  contribute  to the amount  paid or payable by an  Indemnified  Party as a
result of such Damages in such  proportion as is appropriate to reflect not only
the relative  benefits  received by the Company and its  shareholders on the one
hand and CIBC World  Markets on the other,  but also the  relative  fault of the
Company  and  the   Indemnified   Party  as  well  as  any  relevant   equitable
considerations,  subject  to the  limitation  that in no event  shall  the total
contribution of all Indemnified Parties to all such Damages exceed the amount of
fees actually received and retained by CIBC World Markets hereunder.

Promptly after receipt by the Indemnified Party of notice of any claim or of the
commencement  of any  action in respect of which  indemnity  may be sought,  the
Indemnified  Party  will  notify  the  Company  in  writing  of the  receipt  or
commencement  thereof and the Company shall have the right to assume the defense
of such  claim  or  action  (including  the  employment  of  counsel  reasonably
satisfactory  to the  Indemnified  Party and the payment of fees and expenses of
such  counsel),  provided  that the  Indemnified  Party  shall have the right to
control its defense if, in the opinion of its counsel,  the Indemnified  Party's
defense is unique or  separate to it as the case may be, as opposed to a defense
pertaining to the Company.  In any event,  the Indemnified  Party shall have the
right to retain counsel reasonably satisfactory to the Company, at the Company's
expense,  to represent  it in any claim or action in respect of which  indemnity
may be sought and agrees to cooperate with the Company and the Company's counsel
in the defense of such claim or action, it being understood,  however,  that the
Company shall not, in connection  with any one such claim or action or separate,
but substantially  similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances,  be liable for the
reasonable  fees and expenses of more than one separate firm of  attorneys,  for
all the  Indemnified  Parties  unless the  defense of one  Indemnified  Party is
unique or separate  from that of another  Indemnified  Party subject to the same
claim or action.  In the event that the  Company  does not  promptly  assume the
defense  of a claim or action,  the  Indemnified  Party  shall have the right to
employ counsel reasonably satisfactory to the Company, at the Company's expense,
to defend such claim or action. The omission by an Indemnified Party to promptly
notify the  Company of the  receipt  or  commencement  of any claim or action in
respect of which  indemnity  may be sought will  relieve  the  Company  from any
liability the Company may have to such Indemnified Party only to the extent that
such a delay in notification materially prejudices the Company's defense of such
claim or action.  The Company shall not be liable for any settlement of any such
claim or  action  effected  without  its  written  consent,  which  shall not be
unreasonably  withheld or delayed.  Any obligation  pursuant to this Annex shall
survive the termination or expiration of this Agreement.