<PAGE>

                                                           Exhibit 10.17

                             PROGRESSIVE BANK, INC.

                           DEFERRED COMPENSATION PLAN

              Effective November 13, 1997, as amended and restated



                                              As adopted by the Board of
                                              Directors on November 13, 1997


<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
<S>                                                                          <C>
ARTICLE 1 INTRODUCTION AND PURPOSE
          1.1  Establishment of the Plan ...................................   1
          1.2  Purpose of the Plan .........................................   1
          1.3  ERISA Not Applicable ........................................   1

ARTICLE 2 DEFINITIONS ......................................................   2

ARTICLE 3 PARTICIPATION
          3.1  Eligibility .................................................   4
          3.2  Enrollment ..................................................   4
          3.3  Duration of Election to Defer Compensation ..................   4
          3.4  Duration of Participation ...................................   4

ARTICLE 4 ADMINISTRATION
          4.1  Responsibility for Administration and Investment ............   5
          4.2  Authority of the Administrator ..............................   5
          4.3  Duties of the Administrator .................................   5
          4.4  Written Deferral Agreement ..................................   5
          4.5  Administrative and Investment Costs .........................   6

ARTICLE 5 PARTICIPANTS ACCOUNTS AND PLAN INVESTMENTS
          5.1  Establishment of Accounts ...................................   7
          5.2  Unsecured General Creditor ..................................   7
          5.3  Investment Options ..........................................   7
          5.4  Investment Elections ........................................   8
          5.5  Changes in Investment Elections .............................   8
          5.6  Transfers Upon Termination of Directorship or Employment ....   8
          5.7  Investment of Funds .........................................   8
          5.8  Investment of Fund Valuations ...............................   9

ARTICLE 6 DISTRIBUTIONS
          6.1  Distribution Upon Retirement Date or Death ..................   10
          6.2  Distribution Upon Termination Because of
               Disability ..................................................   10
          6.3  Distribution Upon Termination of Service Prior to
               Retirement Date for Reasons Other Than Death or Disability ..   10
          6.4  Modes of Distribution .......................................   10
          6.5  Deferred Distribution Dates .................................   11
          6.6  Payment Alternatives ........................................   11
          6.7  Beneficiary Designations ....................................   11
          6.8  Notice of Election Rights ...................................   12
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
<S>                                                                          <C>
ARTICLE 7 NON-ASSIGNABILITY
          7.1  Non-Assignability ...........................................   13
          7.2  Limitation on Payments ......................................   13

ARTICLE 8 AMENDMENT OR TERMINATION
          8.1  Amendment of Plan ...........................................   14
          8.2  Termination of Plan .........................................   14

ARTICLE 9 MISCELLANEOUS PROVISIONS
          9.1  No Right to Continued Directorship or Employment ............   15
          9.2  Construction of Language ....................................   15
          9.3  Headings ....................................................   15
          9.4  Governing Law ...............................................   15
</TABLE>

                                      -ii-
<PAGE>


                                    ARTICLE 1

                            INTRODUCTION AND PURPOSE

     1.1  Establishment of the Plan

          The Plan shall be known as the PROGRESSIVE BANK, INC. DEFERRED
          COMPENSATION PLAN. The Plan is effective as of November 13, 1997,
          established as of such date by the Bank's Board of Directors.

     1.2  Purpose of the Plan

          The purpose of the Plan is to provide for the deferral of (i) all or a
          portion of Director fees or other compensation by members of the
          Employer's Board of Directors and (ii) a portion of annual salary by a
          select group of management or highly compensated Employees of the
          Employer, whereby a designated amount of Director fees or other
          compensation (or Participant's annual salary) is deferred until one of
          the specified events in the Plan occurs, which permits all or part of
          the monies so deferred (together with any earnings, gains or losses,
          as provided for in the Plan), to be distributed to the Participant or
          a designated Beneficiary.

     1.3  ERISA Not Applicable

          This Plan is not intended to be subject to or covered by the
          participation, vesting, funding or fiduciary requirements of ERISA,
          and shall in all cases be construed and interpreted in a manner
          consistent with that intent.



                                      -1-
<PAGE>

                                    ARTICLE 2

                                   DEFINITIONS

The following words and phrases used in the Plan shall have the following
meanings, unless a different meaning is plainly required by the context:

     2.1  "Accounting Date" means each business day of the month.

     2.2  "Administrator" means the Plan administrator.

     2.3  "Bank" means Progressive Bank Inc., 1301 Route 52, P.O. Box 7000,
          Fishkill, New York, or any successor thereto.

     2.4  "Beneficiary" means the person, persons or legal entity provided for
          the Participant to receive any undistributed Deferred Compensation
          which becomes payable in the event of the Participant's death,
          including any designated contingent beneficiary or beneficiaries.

     2.5 "Deferral Election Form" shall mean the form attached as Exhibit "A".

     2.6  "Deferred Compensation" means that portion of the Participant's
          Director fees (or other compensation) or annual salary which the
          Participant and Employer mutually agree to defer, until the conditions
          for distribution of such amounts as set forth in Article 6 are met.

     2.7  "Director" means a member of the Board of Directors of the Employer,
          as constituted from time to time.

     2.8  "Disability" for Directors means total and permanent disability as
          determined by the Plan Administrator. "Disability" for Employee
          Participants means eligibility for disability benefits under the
          provisions of the Pawling Savings Bank long-term disability plan.

     2.9  "Distribution Election Form" shall mean the form attached hereto as
          Exhibit "B".

     2.10 "Effective Date" means November 13, 1997.

     2.11 "Employee" means any person providing personal services to the
          Employer.

     2.12 "Employer" means the Bank, Pawling Savings Bank, and any affiliate
          (within the meaning of Section 407(d)(7) of ERISA) of the Bank.

     2.13 "ERISA" means the Employee Retirement Income Security Act of 1974, as
          amended.



                                      -2-
<PAGE>

     2.14 "Investment Election Form" shall mean the form attached as Exhibit
          "C".

     2.15 "Participant" means any Director or Employee who fulfills the
          eligibility and enrollment requirements for participation in the Plan,
          as set forth in Article 3.

     2.16 "Plan" means the Progressive Bank, Inc. Deferred Compensation Plan,
          effective November 13, 1997, as herein set forth, and as it may be
          amended from time to time.

     2.17 "Plan Year" means the period November 13, 1997 through December 31,
          1997 and each calendar year thereafter.

     2.18 "Retirement Date" for Directors means a severance of the Participant's
          relationship with the Employer's Board of Directors (other than by
          Disability or death), on account of retirement. "Retirement Date" for
          Employees means a severance of the Participant's employment
          relationship with the Employer (other than by Disability or death),
          which renders the Participant eligible to file for and receive
          retirement benefits from the Retirement Plan of Pawling Savings Bank
          in RSI Retirement Trust, as amended from time to time.

     2.19 "Termination of Service" means a severance of either the Director
          Participant's relationship with the Employer's Board of Directors or
          the Employee Participant's employment relationship with the Employer,
          prior to his Retirement Date, Disability or death.



                                      -3-
<PAGE>

                                    ARTICLE 3

                                  PARTICIPATION

     3.1  Eligibility

          Only specific Employees or the class or classes of Employees
          designated by resolution of the Directors, shall be eligible to become
          Participants in accordance with Section 3.2. The specific Employees or
          the class or classes of Employees eligible to become Participants
          shall be limited by the Directors to a select group of management or
          highly compensated Employees. In addition, members of the Employer's
          Board of Directors shall also be eligible to become Participants in
          accordance with Section 3.2.

     3.2  Enrollment

          Any Director or Employee eligible to participate in accordance with
          Section 3.1 shall become a Participant upon agreeing in writing, on a
          Deferral Election Form to be provided by the Administrator, to a
          deferral of (i) all or a portion of Director fees or other
          compensation, or (ii) a portion of annual salary, as follows:

          (a)  For Directors: Commencing with the first day following the later
               of (i) the Plan's Effective Date and (ii) written notification to
               the Administrator of an election to defer all or a portion of the
               Participant's Director fees or other compensation (expressed as
               either a dollar amount or percentage), in accordance with the
               Plan; or

          (b)  For Employees: Commencing with the first full Employer pay period
               following the later of (i) the Plan's Effective Date and (ii)
               written notification to the Administrator of an election to defer
               a portion of the Participant's annual salary (expressed as either
               a dollar amount or percentage), in accordance with the Plan.

     3.3  Duration of Election to Defer Compensation

          Once an election to defer has been made by the Participant, the
          election with respect to such Deferred Compensation shall continue in
          effect until (i) revoked, modified, or suspended by the Participant in
          a writing sent to the Administrator, or (ii) the Participant's
          Retirement Date, Disability, death, or Termination of Service,
          pursuant to Article 6.

     3.4  Duration of Participation

          A Participant shall continue participation in the Plan until such time
          as the Participant is no longer deferring any portion of Director fees
          (or other compensation) or his annual salary and all amounts credited
          to the Participant's Plan account have been distributed.



                                      -4-
<PAGE>

                                    ARTICLE 4

                                 ADMINISTRATION

     4.1  Responsibility for Administrator and Investment

          The Plan shall be administered by a Plan Administrator, who shall be
          an officer or Employee of the Employer, to be chosen by the Employer.
          The Administrator shall be responsible for all functions related to
          the management of Plan accounts and their distribution, in accordance
          with the provisions of the Plan.

     4.2  Authority of the Administrator

          The Administrator shall have the full power and authority to
          promulgate, adopt, amend, or revoke such rules and regulations as are
          necessary to implement and maintain the Plan, consistent with the
          provisions of the Plan.

          The Administrator shall have the authority to require such supportive
          information, documents, or evidence, as is deemed necessary, in order
          to carry out the Administrator's responsibilities under the Plan.

          The Employer reserves the power to rule on any matter involving
          construction of the Plan and interpretation of the terms and
          provisions thereof, and may exercise said authority or delegate such
          authority to the Administrator. Any decision hereunder on any such
          matter shall be final and binding upon all parties.

     4.3  Duties of the Administrator

          Whenever a Director or Employee becomes eligible for a deferral of
          Director fees (or other compensation) or annual salary, the Director
          or Employee shall receive from the Administrator a Deferral Election
          Form for the purpose of stating the amount or percentage of Director
          fees (or other compensation) or annual salary to be deferred, as well
          as a notification that (i) such deferred amounts shall not, to the
          extent provided by the applicable law, be included as a part of the
          Director's earned income or the Employee's annual salary with respect
          to federal, state or local income taxes, and (ii) with respect to
          Federal "FICA" and "FUTA" taxes, the deferred amounts shall not be
          included as earned income for Directors, but will be included as
          annual salary for Employee Participants.

     4.4  Written Deferral Agreement

          The Employer shall enter into a written Deferral Election Form,
          Distribution Election Form, and Investment Election Form with each
          Participant, which shall address: (i) the obligations contained in the
          Plan; (ii) the method of payout upon events specified in the Plan;
          (iii) the amounts of Director fees (or other compensation) or annual
          salary to be deferred; (iv) the name of any Beneficiary or



                                      -5-
<PAGE>

          Beneficiaries; and (v) such other information as the Employer or the
          Administrator deems necessary to administer the Plan.

     4.5  Administrative and Investment Costs

          It is the intent of the Employer that the Plan shall not be
          implemented or administered so as to be an expense to the Employer,
          other than for the Employer's obligation to pay the Deferred
          Compensation as provided in the Plan. Any expenses associated with the
          Plan, including but not limited to, administrative and investment
          costs, may be charged against the Participants' accounts on a pro rata
          basis, as determined by the Employer and/or the Administrator. The
          Employer and/or Administrator shall report to the Board of Directors
          of the Bank, from time to time, the Plan costs (if any), so that the
          Board of Directors of the Bank can properly analyze these costs.
          Included among such costs, but not limited thereto, shall be the costs
          (if any), of making investments, accounting for Deferred Compensation,
          and providing information to eligible Employees and Participants.



                                      -6-
<PAGE>

                                    ARTICLE 5

                   PARTICIPANTS ACCOUNTS AND PLAN INVESTMENTS

     5.1   Establishment of Accounts

          The Administrator shall establish a bookkeeping account for each
          Participant, which account shall be credited as of each date of the
          Participant's Director fees (or other compensation) or annual salary
          is deferred. Subject to Section 4.5, each account shall also be
          credited with any increase, or charged with any decrease, incurred by
          the Employer and attributable to any investment and/or crediting of
          Deferred Compensation under Section 5.3. Notwithstanding the
          foregoing, all accrued benefits under the Bank's and Pawling Savings
          Bank's former deferred compensation plans shall be converted (on
          November 13, 1997) into initial credits to the accounts of
          Participants, with such credits to be made as of the Plan's Effective
          Date.

          The Employer is only under a contractual obligation to make payments
          under the Plan in accordance with this Article 5, as payments become
          due hereunder, and the Employer is not a guarantor of the Plan. The
          Board of Directors of the Bank shall not be liable for any claims
          raised by any Employee, Participant, or Beneficiary, by reason of
          participation in, or receipt of benefits from, the Plan. All
          Participants shall accept any policy established, or determinations
          made, by the Administrator or Board of Directors of the Bank
          concerning the resolution of any Plan accounting or recordkeeping
          errors or omissions.

     5.2  Unsecured General Creditor

          Title to, and beneficial ownership of, any assets, whether in cash or
          investments (including any common stocks, life insurance policies,
          annuity contracts or mutual fund accounts), which the Employer may
          earmark to pay or measure any Deferred Compensation under the Plan,
          shall, at all times, remain as part of the general assets of the
          Employer. A Participant and any Beneficiary or Beneficiaries shall not
          have any property interest whatsoever in any specific asset of the
          Employer on account of the election to defer any Director fees (or
          other compensation) or annual salary under the Plan. To the extent
          that any person acquires a right to receive payments from the Employer
          under the terms of the Plan, such right shall be no greater than the
          right of any unsecured general creditor of the Employer.

     5.3  Investment Options

          Upon enrollment in the Plan under Section 3.2, each Participant shall
          request, either within the Agreement for Deferral of Compensation or
          on another form to be provided for such purpose by the Administrator,
          the portion of Deferred Compensation to be invested in one or more
          investment funds as may be made available by the Employer in its sole
          discretion. The Employer is under no obligation to offer such
          investment fund or funds, or to honor such Participant



                                      -7-
<PAGE>

          request hereunder. Any such investment fund or funds hereunder shall
          be authorized by the Board of Directors of the Bank.

     5.4  Investment Elections

          Each Participant may request that the Participant's Deferred
          Compensation account be invested 100% in any of the then available
          investment funds, if any, or alternatively, in any combination of then
          available investment funds (so long as the total equals 100%). A
          Participant's investment request shall specify the multiples of said
          Deferred Compensation account which may be invested in each of the
          said investment funds. Such requests shall be acted upon by the
          Employer in its sole discretion.

     5.5  Changes in Investment Elections

          A Participant's investment request for the Participant's Deferred
          Compensation account may be changed for a following calendar year,
          provided the revised investment request is filed with the
          Administrator prior to the beginning of the calendar year, on a form
          to be provided by the Administrator. A Participant, while still an
          Employee or Director, may request by written notification to the
          Administrator, no more often than four (4) time during each Plan Year,
          to transfer, in multiples of 25%, the value of the Participant's
          account balance, if any, in any then available investment fund, to any
          other available investment fund, effective with respect to such
          account balance value held on the Accounting Date coincident with or
          next following implementation of such request by the Administrator.

     5.6  Transfers Upon Termination of Directorship or Employment

          Prior to the commencement of installment payments, a Participant who
          has terminated his directorship or employment on account of Disability
          or otherwise, or retired on a Retirement Date, may request a one time
          irrevocable transfer, in multiples of 25%, of the value of the
          Participant's account balance in any investment fund to any other
          investment fund. Upon advance written notice to the Administrator,
          this transfer may, at the Administrator's discretion, be effective
          with respect to the account balance value held on the Accounting Date
          coincident with or next following implementation of such request by
          the Administrator.

     5.7  Investment of Funds

          The Administrator, upon the approval of the Board of Directors of the
          Bank, may invest any or all Plan funds, and, at the direction of the
          Board of Directors of the Bank, may contract with an agent or agents
          to assist in such investment. Plan investments may be made in the name
          of the Employer or through a trust arrangement established by the
          Employer. The Board of Directors of the Bank reserves the authority,
          without advance notice to the affected Participants, to



                                      -8-
<PAGE>

          eliminate any or all of the investment funds created by the Plan, if
          any, and may direct the Administrator to reinvest, or withhold from
          investment, funds affected by such action, in any manner consistent
          with the provisions of the Plan.

     5.8  Investment Fund Valuations

          Investment funds under the Plan, if any, are to be valued as of each
          Accounting Date, so that the value of each Participant's account can
          be determined as of any Accounting Date pursuant to a uniform system
          of accounting. The Administrator may, in his sole discretion, provide
          each Participant with a statement of account following the end of each
          calendar year, and may provide more frequent statements as deemed
          appropriate.

          All withdrawals and distributions made under the Plan shall be made in
          accordance with Article 6, subject to any applicable federal, state or
          local tax withholding law.

          A Participant's account shall be valued for a single-sum or
          installment payment as of the Accounting Date coincident with or
          immediately following receipt by the Administrator of written
          notification of the Participant's Retirement Date, Disability, death
          or Termination of Service; unless the Participant has elected to
          commence payment at a later date, in which event, in the case of
          either a single lump-sum or installment payment, the Participant's
          account shall be valued as of the Accounting Date coincident with or
          immediately next following implementation of said payment date by the
          Administrator. The Administrator, to the extent reasonable and
          practicable, after initially determining an installment payment date,
          shall use that date as the uniform payment date every applicable
          month.



                                      -9-
<PAGE>

                                    ARTICLE 6

                                  DISTRIBUTIONS

     6.1  Distribution Upon Retirement Date or Death

          Subject to the provisions of Section 5.2, upon the Retirement Date or
          death of a Participant, Plan payments shall be distributed to the
          Participant, or to a Beneficiary or Beneficiaries in the case of
          death, in the manner set forth in Section 6.4; provided, however, that
          in the case of a Retirement Date, the Participant has advised the
          Administrator in writing at least seven (7) days prior to the intended
          Retirement Date. If a Participant does not provide such advance
          written notice, the Administrator may delay, in his sole discretion,
          the initial installment or single lump-sum payment for such additional
          period of time as he shall require.

     6.2  Distribution Upon Termination Because of Disability

          Subject to the provisions of Section 5.2, upon the termination of
          service of a Participant because of Disability, Plan payments shall be
          distributed to the Participant in the manner set forth in Section 6.4.

     6.3  Distribution Upon Termination of Service Prior to Retirement Date for
          Reasons Other Than Death or Disability

          Subject to the provisions of Section 5.2, upon the Participant's
          Termination of Service prior to Retirement Date for any reason other
          than death or Disability, Plan payments shall be distributed to the
          Participant in the manner set forth in Section 6.4.

     6.4  Modes of Distribution

          In the event of a Participant's Retirement Date, death, Disability or
          Termination of Service, the entire value of the Participant's account
          balance shall be distributed in a single lump-sum payment, provided
          that said Participant has not made a written request to the
          Administrator for the selection of one of the Section 6.6 payment
          alternatives, Option (A) or Option (B), which request has been
          approved by the Administrator. Such request shall be made at least
          seven (7) days prior to the effective date of Retirement Date,
          Disability or Termination of Service. The Administrator's decision
          concerning a Participant's request for one of the available payment
          alternatives shall be made in the sole discretion of the
          Administrator, consistent with the best interests of the Employer.

          Such request hereunder may be subsequently modified upon the written
          request of the Participant to the Administrator, in the sole
          discretion of the Administrator, consistent with the best interests of
          the Employer.



                                      -10-
<PAGE>

     6.5  Deferred Distribution Dates

          In lieu of a distribution under Section 6.4, a Participant may request
          to defer a distribution payable as a result of Disability, Retirement
          Date or Termination of Service, by written request to the
          Administrator at least seven (7) days prior to the effective date of
          Disability, Retirement Date or Termination of Service. Approval of
          such request shall be made in the sole discretion of the
          Administrator, consistent with the best interests of the Employer.

          Such request hereunder, may be subsequently modified upon the written
          request of the Participant to the Administrator, in the sole
          discretion of the Administrator, consistent with the best interests of
          the Employer.

     6.6  Payment Alternatives

          Option (A)

          Monthly, quarterly or annual installments over a period not to exceed
          fifteen (15) years; provided, however, that total monthly payments
          during any calendar year shall not be less than the annual amount to
          be paid under the following annual payment formula:

               (i)  On a calendar year basis, the value of the Participant's
                    account on the Accounting Date immediately preceding the day
                    on which the installment is payable, multiplied by a
                    fraction of one divided by the number of years remaining,
                    and

               (ii) The amount of each subsequent installment on a calendar year
                    basis, based on the remaining value, including any
                    investment earnings in the Participant's account on the
                    Accounting Date immediately preceding the day on which an
                    installment is payable during said year, multiplied by a
                    fraction of one, divided by the number of installments
                    chosen, less the number of years elapsed since the
                    commencement of installment payments.

          Option (B)

          A combination of both (i) a single lump-sum payment, and (ii) monthly,
          quarterly or annual installment payments, pursuant to Option (A),
          above.

     6.7  Beneficiary Designations

          At the time a Participant makes a request for a form of distribution
          under Section 6.6, the Participant shall specify the payment
          alternative applicable to a Beneficiary or Beneficiaries in the event
          the Participant should die prior to receiving the full amount of the
          Participant's account balance, and said alternative may be the same or
          different from the alternative elected for the Participant.



                                      -11-
<PAGE>

          If a Participant entitled to receive, or receiving, a distribution
          under the Plan should die prior to the time the Participant has
          received the full amount to which entitled at the date of death, all
          remaining amounts shall be paid to the deceased Participant's
          Beneficiary or Beneficiaries, according to the Participant's form of
          election as specified in the above paragraph, or, if the Beneficiary
          or Beneficiaries are deceased, or if no Beneficiary was selected by
          the Participant, to the Participant's estate in a single lump-sum.

     6.8  Notice of Election Rights

          The Administrator shall develop, to the extent practicable, reasonable
          procedures providing that, upon receipt of notification of a
          Participant's Retirement Date, Disability or Termination of Service,
          the Administrator shall notify each Participant who has not requested
          a payment alternative pursuant to this Article, in order that said
          Participant may make such a payment alternative request. Any request
          for a payment alternative or other distribution under this Article
          shall be subject to the approval of the Administrator in his sole and
          absolute discretion.



                                      -12-
<PAGE>

                                    ARTICLE 7

                                NON-ASSIGNABILITY

     7.1  Non-Assignability

          The Plan and any Agreement for Deferral of Compensation entered into
          between the Employer and a Participant, and the benefits, procedures
          or payments thereunder are non-assignable and non-transferable, and
          shall not be sold, assigned, pledged, commuted, transferred or
          otherwise conveyed by any Participant or Beneficiary.

          The Employer shall be the owner of all Deferred Compensation hereunder
          and shall be the grantor of any trust and sole beneficiary of any
          investment fund contract or contracts entered into pursuant to the
          Plan. The Administrator, or his agents, shall be the custodian of any
          such investment fund contracts and the Administrator, or his agents,
          shall take the steps necessary to provide a place of safekeeping for
          any such contracts.

          Except as otherwise required by applicable law, any Deferred
          Compensation payments made pursuant to the Plan shall not be subject
          to attachment, garnishment, or execution, or to transfer by operation
          of law in the event of a Participant's or a Beneficiary's bankruptcy
          or insolvency.

     7.2  Limitation on Payments

          The Plan shall not provide for the payment of amounts other than
          amounts of Deferred Compensation under the Plan and amounts, if any,
          earned thereon. The Employer and Board of Directors of the Bank shall
          have no responsibility, contractual or otherwise, for Participant
          investment requests made in accordance with the Plan, nor for any loss
          of Participant account values resulting from such requests, to the
          extent honored by the Employer.



                                      -13-
<PAGE>

                                    ARTICLE 8

                            AMENDMENT OR TERMINATION

     8.1  Amendment of Plan

          The Board of Directors of the Bank shall have the authority, by
          majority vote, to amend the Plan from time to time. No amendment or
          modification shall affect the rights of Participants or their
          Beneficiaries to the receipt of Director fees (or other compensation)
          or annual salary deferred prior to any such amendment or modification.

     8.2  Termination of Plan

          The Board of Directors of the Bank shall have the authority, by
          majority vote, to terminate the Plan at any time, or to substitute a
          new plan of deferred compensation. Upon termination of the Plan: (i)
          each Participant's full Director fees (or other compensation) or
          annual salary, to the extent not already deferred, will be thereupon
          restored; and (ii) the Administrator shall treat all Participants as
          if they had a Termination of Service date on the date of Plan
          termination, and pay to each Participant Deferred Compensation in
          accordance with Section 6.4. Any substitution of a new plan for the
          Plan shall provide for the retention by the Employer of all amounts
          already deferred under the Plan, and may, in the sole discretion of
          the Employer, provide for distribution of said amounts in accordance
          with Participant requests pursuant to Section 6.4.



                                      -14-
<PAGE>

                                    ARTICLE 9

                            MISCELLANEOUS PROVISIONS

     9.1  No Right to Continued Directorship or Employment

          Neither the establishment of the Plan, nor any provisions of the Plan,
          nor any action of the Administrator or the Employer, shall be held or
          construed to confer upon any Director or Employee any right to a
          continuation of (i) a position on the Board of Directors or (ii)
          employment by the Employer. The Employer reserves the right to (i)
          deal with any Director, or (ii) dismiss or otherwise deal with any
          Employee to the same extent and in the same manner that it would if
          the Plan had not been adopted.

     9.2  Construction of Language

          Wherever appropriate in the Plan, words used in the singular may be
          read in the plural, words used in the plural may be read in the
          singular, and words importing the masculine gender shall be deemed to
          refer equally to the female gender. Any reference to a section number
          shall refer to a section of the Plan, unless otherwise indicated.

     9.3  Headings

          The headings of articles and sections are included solely for
          convenience of reference, and if there be any conflict between the
          text of such headings and the text of the Plan, the text within the
          Plan sections shall control.

     9.4  Governing Law

          The Plan shall be construed, administered and governed in all respects
          under applicable federal law and the laws of the State of New York,
          without regard to the choice of law or conflict of law rules
          recognized by such state. The Board of Directors of the Bank shall
          have authority to make any changes in the Plan necessary to conform
          its terms with the requirements of applicable federal and state law.


                                      -15-
<PAGE>

                                                           Exhibit "A"

                         PROGRESSIVE BANK, INC.
                       DEFERRED COMPENSATION PLAN

                       --------------------------

                         Deferral Election Form

                       --------------------------

     AGREEMENT, made this ____ day of ________, 199__, by and between
_____________ (the "Participant"), and Progressive Bank, Inc. (the "Company").

     WHEREAS, the Company has restated its Deferred Compensation Plan (the
"Plan"), consolidated it with companion plans that Pawling Savings Bank was
maintaining, and the participant is eligible to participate in said Plan;

NOW THEREFORE, it is mutually agreed as follows:

     1.   The Participant, by the execution hereof, agrees to participate in
the Plan upon the terms and conditions set forth therein, and, in accordance
therewith, elects to defer the receipt of --

     /  /  ___% or $________ of the Participant's salary over the remaining
           calendar year and each calendar year hereafter until this election
           is revoked, modified, or superseded.

     /  /  ___% or $________ of any cash bonuses awarded to the Participant.

     /  /  ___% or $________ of the Participant's annual retainer for
           services as a director ___ of the Company, and/or ____ of the Bank.

     /  /  ___% or $________ of any other fees that the Participant receives
           for services as a director _____ of the Company, and/or of ____ the
           Bank.

     /  /  ___% or $________ of any other compensation that the Participant
           receives for services as a director ____ of the Company, and/or
           of ____ the Bank.

     2.  This election will take effect for the payroll period beginning
after after the date of this Agreement (or, for directors, the fist day
following the date of this Agreement), and shall apply only compensation
earned after the execution of this Agreement.

     3.  This election will continue in force until December 31st of the
calendar year in which it becomes effective, and thereafter until either
revoked, modified, or superseded by the Participant in a writing sent to the
Company or until the Participant ceases to be a Plan Participant or until the
Plan is terminated by appropriate corporate action, whichever shall first
occur.

<PAGE>

Deferral Election Form
Page 2 of 2

     IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the
day and year first above-written.

Witnessed by:                          PARTICIPANT

----------------------------           -------------------------------------

Witnessed by:                          PROGRESSIVE BANK, INC.

                                     By
----------------------------           --------------------------------------
                                       A duly authorized Administrator of the
                                       Plan




                                    A-2