CATSKILL FINANCIAL CORPORATION
                  SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TRUST


         THIS AGREEMENT (hereinafter referred to as the "Trust Agreement"), made
this 21st day of April , 1998 by and between CATSKILL FINANCIAL  CORPORATION,  a
corporation  organized and existing under the laws of the State of Delaware (the
"Company") and having its principal  offices at 341 Main Street,  Catskill,  New
York  12414,  and the  trustee  identified  on the  signature  page  hereof (the
"Trustee"). Any reference herein to the "Bank" shall mean CATSKILL SAVINGS BANK,
a federally chartered stock savings bank.

                              W I T N E S S E T H:

         WHEREAS, the Company has established the Catskill Financial Corporation
Supplemental Executive Retirement Plan (the "Plan") for the exclusive benefit of
certain management employees of the Company and designated affiliates; and

         WHEREAS,  the  Trustee  is  not a  party  to  the  Plan  and  makes  no
representations  with respect thereto, and all representations and recitals with
respect to the Plan shall be deemed to be those of the Company; and

         WHEREAS,  the Company  wishes to establish a trust (the "Trust") and to
contribute to the Trust assets that shall be held therein, subject to the claims
of the Company's creditors in the event of the Company's  Insolvency,  as herein
defined,  until paid to Plan participants and their beneficiaries in such manner
and at such times as specified in the Plan; and

         WHEREAS,  it is the  intention  of the  parties  that this Trust  shall
constitute an unfunded  arrangement  and shall not affect the status of any Plan
as  an  unfunded  plan   maintained  for  the  purpose  of  providing   deferred
compensation  for a select group of management or highly  compensated  employees
for purposes of Title I of the Employee  Retirement Income Security Act of 1974,
as amended  ("ERISA"),  if the Plan were "an employee  benefit  plan" subject to
ERISA;

         WHEREAS,  it is the intention of the Company to make  contributions  to
the Trust to provide  itself  with a source of funds to assist it in the meeting
of its liabilities  under the Plan,  provided that the assets of the Trust shall
be  subject  to the  claims  of the  Company's  creditors  in the  event  of the
Company's  Insolvency,  as herein defined,  until paid to Plan  participants and
their beneficiaries in the time and manner specified in the Plan;

         NOW,  THEREFORE,  the parties do hereby  establish  the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:


<PAGE>

                                    SECTION 1

                             ESTABLISHMENT OF TRUST


                  (a)      (i)      The Company hereby  deposits with Trustee in
trust  $100,  which  shall  become  the  principal  of  the  Trust  to be  held,
administered and disposed of by Trustee as provided in this Trust Agreement.

                           (ii)     The   Trustee   hereby   accepts   a   trust
consisting of the initial deposit referred to in the preceding sentence and such
cash or other  property  acceptable to the Trustee as shall be paid or delivered
to the Trustee from time to time, together with the earnings,  income, additions
and  appreciation  thereon and thereto (all of which is  hereinafter  called the
"Fund").

                  (b) The Trust hereby  established  shall be  irrevocable.  The
Company may, but shall not be required to, apply to the Internal Revenue Service
(the "IRS") for a Private  Letter Ruling  regarding the status of the Trust as a
"grantor  trust" under sections 671 through 679 of the Internal  Revenue Code of
1986, as amended (the  "Code"),  in  accordance  with Section 15 hereof.  In the
event the Company  makes such a request,  it shall furnish to the Trustee a copy
of such Private Letter Ruling promptly upon the Company's receipt thereof.

                  (c) The Trust is intended to be a grantor trust,  of which the
Company is the grantor,  within the meaning of subpart E, part I,  subchapter J,
chapter 1, subtitle A of the Code, and shall be construed accordingly.

                  (d) The  principal  of the Trust,  and any  earnings  thereon,
shall be held  separate  and apart from other  funds of the Company and shall be
used  exclusively  for the uses and  purposes of Plan  participants  and general
creditors as herein set forth. Plan participants and their  beneficiaries  shall
have no preferred claim on, nor any beneficial ownership interest in, any assets
of the Trust.  Any rights created under the Plan and this Trust  Agreement shall
be  mere  unsecured   contractual   rights  of  Plan   participants   and  their
beneficiaries  against the Company. Any assets held by the Trust will be subject
to the claims of the Company's  general creditors under federal and state law in
the event of Insolvency, as defined in Section 3 herein.

                  (e) The Company,  in its sole discretion,  may at any time, or
from time to time, make  additional  deposits of cash or other property in trust
with Trustee to augment the principal to be held,  administered  and disposed of
by Trustee as provided  in this Trust  Agreement.  Neither  Trustee nor any Plan
participant  or  beneficiary  shall  have any  right to compel  such  additional
deposits, or any other contribution to the Trust.

                                       2
<PAGE>

                  (f)       (i)  Upon a Change of Control, the Company shall, as
soon as  possible,  but in no event later than 30 days  following  the Change of
Control, as defined herein, make an irrevocable  contribution to the Trust in an
amount  that is  sufficient  to pay each Plan  participant  or  beneficiary  the
benefits to which Plan  participants  or their  beneficiaries  would be entitled
pursuant  to the terms of the Plan as of the date on which the Change of Control
occurred.

                           (ii)  Within  30 days  following  the end of the Plan
year(s) ending after the Trust has become irrevocable  pursuant to Section 1(b),
the Company shall be required to irrevocably  deposit  additional  cash or other
property to the Trust in an amount  sufficient to pay each Plan  participant  or
beneficiary  the  benefits  payable  pursuant to the terms of the Plan as of the
close of such Plan year(s).

                           (iii) Any  contribution  required  hereunder shall be
deemed sufficient if the aggregate of such contributions and the
other assets of the Fund, determined as of the date of the contributions,  is at
least  equal  to the  actuarially  determined  value of the  aggregate  benefits
accrued  under  the  Plan,  determined  as  of  the  same  date.  Any  actuarial
determination  required  under  the  preceding  sentence  shall  be  made by the
Company, in its sole discretion.

                           (iv) The Trustee shall have the right and power, but
shall be under no duty, to determine  whether the amount of any  contribution is
in  accordance   with  any  Plan  or  to  collect  or  enforce  payment  of  any
contribution.  The Trustee shall not be responsible  for computing or collecting
any contribution or other amounts due under the Plan or the Trust.


                                    SECTION 2

              PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES


                  (a)      (i)   The Company shall deliver to Trustee a schedule
(the "Payment  Schedule")  that indicates the amounts payable in respect of each
Plan  participant  (and his or her  beneficiaries),  that  provides a formula or
other instructions acceptable to Trustee for determining the amounts so payable,
the form in which such amount is to be paid (as provided for or available  under
the Plan) and the time of  commencement  for payment of such amounts.  Except as
otherwise provided herein,  Trustee shall make payments to the Plan participants
and their beneficiaries in accordance with such Payment Schedule.

                           (ii)  The Payment  Schedule shall be delivered to the
Trustee  following the execution of this Trust  Agreement and an updated Payment
Schedule  shall be furnished  at least  annually  thereafter.  Each such Payment
Schedule shall include, without limitation,  (A) the names, addresses,  dates of

                                       3
<PAGE>

birth,  social  security  numbers and the amount and form of accrued  benefit of
each Plan  participant  and  beneficiary in the Plan; (B) the amount and form of
projected benefits under the Plan of each participant and beneficiary,  assuming
such  participant  would retire or die as of the last day of such calendar year;
(C) a schedule of the estimated yearly cash payments under the Plan; and (D) any
other information regarding the Plan which the Trustee may reasonably request.

                  (b)      (i)   To the extent that  amounts are paid under this
Section 2 by the Trustee directly to any Plan  participant or beneficiary,  such
amounts  shall be  reduced by the  Trustee in an amount  equal to the income and
employment tax withholding  required by law with respect to such  participant or
beneficiary,  as  determined  by the Company and  promptly  communicated  to the
Trustee.  The Trustee shall inform each Plan participant and beneficiary to whom
payment  is made  of the  amount  withheld  from  payment  and  the  purpose  of
withholding  such amount.  Such withheld amounts shall be paid by the Trustee to
the  Company,  which  shall remit such  withheld  amounts to, and shall file the
appropriate withholding reports with, the appropriate  governmental agencies. In
making any determination  whether the Company has properly determined,  reported
and/or  withheld  the  appropriate  taxes,  the  Trustee  may rely on a  written
certification, under penalties of perjury, signed by the Chief Executive Officer
of the  Company or by another  officer of the  Company  authorized  by the Chief
Executive Officer to sign such certification in his behalf.

                           (ii)  To the extent that  amounts are paid under this
Section 2 by the Trustee directly to any Plan participant or beneficiary and the
Company fails to direct the Trustee with respect to the appropriate amount to be
withheld by the Trustee with respect to the applicable withholding requirements,
the Trustee shall use its best efforts to determine, in its sole discretion, the
appropriate amount of income and employment tax withholding required by law with
respect to the payment to such participant or beneficiary,  and shall reduce any
payments by the amount of tax withholding required. The Trustee shall inform the
Company and each Plan participant and beneficiary to whom payment is made of the
amount  withheld from payment and the purpose of  withholding  such amount.  The
amount  withheld by the Trustee  shall be paid by the Trustee to the Company and
the Company shall remit such withheld amounts to, and shall file the appropriate
withholding reports with, the appropriate  governmental agencies.  Provided that
the Trustee has withheld the amounts  directed by the Company or, in the absence
of such  direction  from  the  Company,  used  its  best  efforts  to  determine
applicable  withholding  under  this  Section,  it shall have no  liability  for
failure to withhold  amounts  sufficient to meet  applicable  requirements,  and
shall be held harmless by the Company against such liability.

                           (iii) Unless otherwise agreed to by the Trustee,  the
Company shall be responsible for all tax  information  reporting with respect to
payments made to Plan participants and beneficiaries hereunder.

                                       4
<PAGE>

                  (c)      (i)   The entitlement of a Plan participant or his or
her  beneficiaries to benefits under the Plan shall be determined by the Company
or such  party as it shall  designate  under  the  Plan,  and any claim for such
benefits  shall be considered  and reviewed  under the procedures set out in the
Plan.

                           (ii)  The Trustee shall have no authority over and no
responsibility for the disposition of claims for benefits under the Plan and, in
the absence of an order to the  contrary of a court of  competent  jurisdiction,
may rely conclusively on the most recent Payment Schedule furnished to it by the
Company  in  making  or  refraining  from  making  payments  from  the  Trust to
individuals who are or purport to be Plan  participants or their  beneficiaries.
The Trustee  shall not make  payments  hereunder to any person until it receives
instructions from the Company in a form reasonably satisfactory to the Trustee.

                  (d)      (i)   The  Company  may  make   payment  of  benefits
directly to Plan  participants or their  beneficiaries  as they become due under
the terms of the Plan.  The Company shall notify Trustee of its decision to make
payment  of  benefits  directly  prior  to  the  time  amounts  are  payable  to
participants or their beneficiaries. In addition, if the principal of the Trust,
and any earnings  thereon,  are not  sufficient  to make payments of benefits in
accordance  with the terms of the Plan,  the  Company  shall make the balance of
each such  payment as it falls due. The Trustee  shall notify the Company  where
principal and earnings are not sufficient.

                           (ii)  The  Trustee   shall  have  no   liability   or
responsibility for duplicate payments made prior to its receipt from the Company
of notice of the Company's intention to make direct payment.

                  (e) The Company  may direct that  payments be made before they
would otherwise be due if, based on a change in the federal tax or revenue laws,
a  published  ruling or similar  announcement  issued by the IRS,  a  regulation
issued by the  Secretary  of the  Treasury,  a decision by a court of  competent
jurisdiction  involving a participant or a beneficiary,  or a closing  agreement
made under  Section  7121 of the Code that is approved by the IRS and involves a
participant  or a beneficiary,  it determines  that a participant or beneficiary
has or will  recognize  income for federal  income tax purposes  with respect to
amounts that are or will be payable under the Plan before they are to be paid.


                                    SECTION 3

         TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
                          WHEN THE COMPANY IS INSOLVENT


                  (a)      (i)   The Trustee  shall cease payment of benefits to
Plan  participants  and their  beneficiaries  if the Company is  Insolvent.  The
Company shall be considered  "Insolvent" for purposes of this Trust Agreement if

                                       5

<PAGE>

(A) the Company is unable to pay its debts as they  become due,  (B) the Company
is  subject  to a  pending  proceeding  as a  debtor  under  the  United  States
Bankruptcy  Code or the  equivalent  thereof or (C) the Company is subject to an
order or  regulation  issued  pursuant to section  18(k) of the Federal  Deposit
Insurance Act, as amended, prohibiting payments from the Plan.

                           (ii)  For  purposes  of  this  Trust   Agreement,   a
condition which results in the Company's being Insolvent shall be
referred to as the Company's "Insolvency."

                           (iii)  While the  Company is  Insolvent,  the Trustee
shall make payments from the Trust only to or for the benefit of the
Company's  general creditors and only upon the direction of a court of competent
jurisdiction  or, in the event that a trustee,  receiver,  conservator  or other
similar  official  shall be appointed to oversee the Company's  affairs during a
period of Insolvency, upon the direction of such trustee, receiver,  conservator
or other similar official.

                  (b) At all times  during the  continuance  of this  Trust,  as
provided in Section 1(d) hereof,  the principal and income of the Trust shall be
subject to claims of general  creditors of the Company  under  federal and state
law as set forth below.

                           (i)   The Board of Directors and the Chief  Executive
Officer of the Company  shall have the duty to inform  Trustee in writing of the
Company's  Insolvency.  If a person  claiming  to be a creditor  of the  Company
alleges in writing to Trustee  that the  Company has become  Insolvent,  Trustee
shall   determine   whether  the  Company  is   Insolvent   and,   pending  such
determination,   Trustee   shall   discontinue   payment  of  benefits  to  Plan
participants or their beneficiaries.

                           (ii)  (A)     Unless Trustee has actual  knowledge of
the Company's  Insolvency,  or has received  notice from the Company or a person
claiming to be a creditor alleging that the Company is Insolvent,  Trustee shall
have no duty to inquire  whether  the Company is  Insolvent.  Trustee may in all
events  rely  on such  evidence  concerning  the  Company's  solvency  as may be
furnished  to Trustee and that  provides  Trustee  with a  reasonable  basis for
making a determination concerning the Company's solvency.

                                 (B)   The  Trustee   shall be  deemed to have a
reasonable  basis  for  determining  that the  Company  is  Insolvent  if it has
received  (1) a certified  copy of a  bankruptcy  or  insolvency  petition  with
respect to the Company or a general assignment by the Company for the benefit of
its creditors,  (2) a Certificate of Commencement of Case (or similar  document)
acknowledging either (aa) that a petition for the commencement of a voluntary or
involuntary  case  pursuant  to Titles 7 or 11 of the United  States  Bankruptcy
Code,  as  amended,  was duly filed by or against  the  Company  with the United
States  Bankruptcy Court, or (bb) the taking of possession of the Company of all
or substantially all of its assets by a receiver,  custodian, trustee or similar

                                       6
<PAGE>

official,  (3) a certified  copy of an order  pursuant  to section  18(k) of the
Federal Deposit Insurance Act, as amended,  prohibiting payments pursuant to the
Plan ("Regulatory  Order"), or (4) a written  certification,  under penalties of
perjury,  signed by the Chief Executive  Officer of the Company or a majority of
the members of the Board, that the Company is Insolvent.

                           (iii) If at any time the Trustee has determined  that
the Company is Insolvent, Trustee shall discontinue payments to
Plan participants or their  beneficiaries and shall hold the assets of the Trust
for the  benefit  of the  Company's  general  creditors.  Nothing  in this Trust
Agreement  shall in any way  diminish any rights of Plan  participants  or their
beneficiaries  to pursue their  rights as general  creditors of the Company with
respect to benefits due under the Plan or otherwise.

                           (iv)     (A) The Trustee  shall resume the payment of
benefits to Plan participants or their  beneficiaries in accordance with Section
2 hereof only after Trustee has determined that the Company is not Insolvent (or
is no longer Insolvent).

                                    (B) The  Trustee  shall be  deemed to have a
reasonable  basis for determining  that the Company is no longer Insolvent if it
has  received:  (1) a  judgement,  decree  or  order  of a  court  of  competent
jurisdiction  dismissing a case filed with respect to the Company  under Title 7
or 11 of the United States Bankruptcy Code; or (2) a judgement,  decree or order
of a court of competent  jurisdiction  overturning a Regulatory Order; or (3) if
the Trustee  determined the Company to be Insolvent based on a certification  of
the Chief Executive  Officer or the Board, a subsequent  written  certification,
under penalties of perjury, signed by the Chief Executive Officer of the Company
or a  majority  of the  members  of the  Board  that the  Company  is no  longer
insolvent.

                           (v)      The Board and Chief Executive Officer of the
Company shall  certify to the Trustee,  at the  Trustee's  request,  whether the
Company is  Insolvent.  Any such  certification  may be requested by the Trustee
from time to time and at any time,  and shall be made  promptly  by the Board or
Chief  Executive  Officer  under the  penalties  of perjury.  Any  certification
received  by the  Trustee  under  this  subparagraph  shall  also  be  deemed  a
reasonable  basis from the  Trustee's  determination  of  Insolvency  under this
Section 3.

                  (c)  Provided  that there are  sufficient  assets,  if Trustee
discontinues  the payment of benefits from the Trust  pursuant to this Section 3
and  subsequently  resumes  such  payments,  the first  payment  following  such
discontinuance  shall include the  aggregate  amount of all payments due to Plan
participants or their  beneficiaries  under the terms of the Plan for the period
of such  discontinuance,  less the aggregate amount of any payments made to Plan
participants  or their  beneficiaries  by the  Company  in lieu of the  payments
provided for  hereunder  during any such period of  discontinuance.  The Trustee
shall have an obligation to offset payments hereunder by direct payments made to
Plan  participants  and their  beneficiaries by the Company during the period of
discontinuance  described  in the  preceding  sentence  only to the  extent  the
Company directs the Trustee to make such offset.

                                       7
<PAGE>

                                   SECTION 4

                            PAYMENTS TO THE COMPANY

         Except as  provided  in  Section 3 hereof,  after the Trust has  become
irrevocable,  the  Company  shall  have no right or power to direct  Trustee  to
return to the Company or to divert to others any of the Trust assets  before all
payments of benefits have been made to Plan participants and their beneficiaries
pursuant to the terms of the Plan.


                                    SECTION 5

                              INVESTMENT AUTHORITY

                  (a) Subject to subsections  (b) and (c) of this Section 5, the
Trustee shall have exclusive  authority and discretion to manage and control the
assets  of the  Fund as  specified  in this  Section  5,  and  pursuant  to such
authority  and  discretion  may  exercise  from time to time and at any time the
power:

                           (i)      To invest  and  reinvest  the Fund,  without
distinction  between  principal  and  income,  in the group,  family or class of
mutual funds or other securities specified in writing by the Company which shall
constitute the exclusive permitted investments of the Fund;

                           (ii)     To  exercise,  personally  or by  general or
limited  proxy,  the  right  to vote any  securities  held in the  Fund;  and to
exercise,  personally or by power of attorney,  any other right  appurtenant  to
securities held by the Fund;

                           (iii)    To  exercise  or  sell  any   conversion  or
subscription or other rights appurtenant to any securities held in the Fund;

                           (iv)     To invest and reinvest any property, real or
personal,  in the Fund in any other form or type of investment not  specifically
mentioned in this  subsection (a), so long as such form or type of investment is
a form or type of investment  approved by the Chief  Financial  Officer or Chief
Executive  Officer of the  Company  and a  direction  is made by the  Company to
invest in such property.

                  (b)      (i)     The   Trustee   may  invest  in   securities
(including  stock or  rights to  acquire  stock)  or  obligations  issued by the
Company or the Bank.  All rights  associated  with  assets of the Trust shall be
exercised by the Trustee or the person  designated by the Trustee,  and shall in
no event be  exercisable by or rest with Plan  participants  except that voting,
tender,  appraisal,  dissenter  and other  similar  rights with respect to Trust
assets shall be exercised  by the Company.  In the absence of timely  directions

                                       8
<PAGE>

from the Company,  the Trustee shall have no duty to exercise  such rights,  and
shall have no liability for refraining from exercising such rights.

                           (ii)     Any  investment by the Trustee in securities
or  obligations  of the  Company or the Bank  shall be subject to prior  written
approval of the Company.

                           (iii)    The Company shall have the right at anytime,
and from time to time in its sole discretion, to substitute assets of equal fair
market value for any asset held by the Trust.  This right is  exercisable by the
Company in a nonfiduciary capacity without the approval or consent of any person
in a fiduciary capacity.

                  (c) The Trustee shall exercise its powers under this Section 5
in a manner  consistent  with such  direction  by the  Company and shall have no
liability  whatsoever for any loss, cost or expense occasioned by any investment
in accordance with this section.

                  (d) To the extent  permitted by law, the Trustee  shall not be
liable for any act or omission of the Company hereunder and, except as set forth
hereunder, the Trustee shall not be under any obligations to invest or otherwise
manage the assets of the Plan. Without limiting the generality of the foregoing,
the  Trustee  shall not be liable by  reason of its  taking or  refraining  from
taking any action  hereunder at the direction of the Company;  the Trustee shall
be under no duty to question or to make  inquiries as to any  direction or order
or failure to give  direction  or order by the Company and the Trustee  shall be
under no duty to make any  review of  investments  acquired  for the Fund at the
direction or order of the Company and shall be under no duty at any time to make
any recommendation with respect to disposing of or continuing to retain any such
investment.

                  (e) Without  limiting  the  generality  of the  provisions  of
Section 8 hereof,  the  Company  agrees,  to the  extent  permitted  by law,  to
indemnify  the  Trustee  and  hold it  harmless  from an  against  any  claim or
liability  that may be  asserted  against it,  otherwise  than on account of the
Trustee's  own gross  negligence  or  willful  misconduct  or  violation  of any
provision of law, by reason of the Trustee's  taking or  refraining  from taking
any action in accordance with this Section 5.

                  (f) Subject to the other  provisions of this Trust  Agreement,
the  Trustee  shall have the power and  authority  to be  exercised  in its sole
discretion  at any time and from time to time to issue and place  orders for the
purchase or sale of securities directly with qualified brokers or dealers.  Such
orders may be placed with such qualified brokers and/or dealers who also provide
investment  information or other research or statistical services to the Trustee
in its capacity as a fiduciary or investment manager for other clients.

                                       9
<PAGE>

                                    SECTION 6

                              DISPOSITION OF INCOME

         During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.


                                    SECTION 7

                                    ACCOUNTS


                  (a)      (i)      The Trustee shall keep accurate and detailed
records of all receipts,  investments  and  disbursements  under this Agreement.
Such  person or  persons  as the  Company  shall  designate  shall be allowed to
inspect the books of account relating to the Fund upon request at any reasonable
time during the business hours of the Trustee

                           (ii)     Within  120  days  after  the  close of each
calendar year,  Trustee shall transmit to the Company,  and certify the accuracy
of, a written  statement of the assets and  liabilities of the Fund at the close
of that calendar year, showing the current value of each asset at that date, and
a written account of all the Trustee's  transactions relating to the Fund during
the period from the last previous accounting to the close of that calendar year.
(For purposes of this section, the date of the Trustee's  resignation or removal
as provided in Section 10 hereof or the date of the  termination  of the Plan as
provided in Section 11 hereof shall be deemed to be the close of a calendar year
with respect to the Trustee's  resignation or the  terminated  Plan, as the case
may be).

                           (iii)    Unless the Company shall have filed with the
Trustee written exceptions or objections to any such statement or account within
180 days after  receipt  thereof,  the Company  shall be deemed to have approved
such  statement and account;  and in such case, or upon the written  approval by
the Company of any such  statement  and  account,  the Trustee  shall be forever
released and  discharged  with respect to all matters and things  expressly  set
forth in such statement and account as though it had been settled by decree of a
court of competent  jurisdiction in an action or proceeding to which the Company
and all persons having any beneficial interest in the Fund were parties.

                  (b) Nothing  contained in this  Agreement or in the Plan shall
deprive the Trustee of the right to have judicial settlement of its accounts. In
any  proceeding  for a judicial  settlement  of the Trustee's  accounts,  or for
instructions in connection with the Fund, the only other necessary party thereto
in addition to the Trustee  shall be the Company.  If the Trustee so elects,  it
may bring in as a party or parties  defendant  any other  person or persons.  No
person  interested in the Fund, other than the Company,  shall have the right to
compel an  accounting,  judicial or  otherwise,  by the  Trustee,  and each such
person  shall be bound by all  accountings  by the  Trustee to the  Company,  as

                                       10
<PAGE>

herein  provided,  as if the  account  had been  settled by decree of a court of
competent  jurisdiction  in an action or  proceeding  to which such person was a
party.


                                    SECTION 8

                            RESPONSIBILITY OF TRUSTEE

                  (a)  The  Trustee  shall   discharge  its  duties  under  this
Agreement with the care,  skill,  prudence and diligence under the circumstances
then  prevailing that a prudent person acting in like capacity and familiar with
such matters would use in the conduct of an  enterprise of a like  character and
with like aims; provided,  however, that the Trustee shall incur no liability to
any person for any action  taken  pursuant to a  direction,  request or approval
given by the Company which is contemplated by, and in conformity with, the terms
of the Plan or this Agreement and is given in writing by the Company. The duties
and obligations of the Trustee shall be limited to those expressly  imposed upon
it by this Agreement, notwithstanding any reference herein to the Plan.

                  (b) The  Trustee  shall have no duty to commence or defend any
legal  action  arising in  connection  with the Trust unless it shall first have
been indemnified, in manner and substance satisfactory to it, against its costs,
expenses and liabilities  (including,  without  limitation,  attorneys' fees and
expenses) relating thereto.

                  (c) The Trustee may consult with  counsel,  who may be counsel
for the Company or for the Trustee in its individual capacity,  and shall not be
liable  for any  actions  taken or  omitted in  accordance  with the  opinion of
counsel.  The Company agrees,  to the extent  permitted by law, to indemnify and
hold the Trustee  harmless from and against any  liability  that it may incur in
connection  with the  Fund,  unless  arising  from  the  Trustee's  own  grossly
negligent or willful breach of the provisions of Section 8(a). The Trustee shall
not be required to give any bond or other security for the faithful  performance
of its duties under this Agreement,  except as required by law. The Trustee,  in
its  corporate  capacity,  shall not be liable for claims of any  persons in any
manner regarding the Plan; such claims shall be limited to the Trust Fund.

                  (d)      (i)      The Trustee shall have,  without  exclusion,
all powers  conferred on trustees by applicable law, unless  expressly  provided
otherwise herein;  provided,  however, that if an insurance policy is held as an
asset of the Trust,  Trustee  shall have no power to name a  beneficiary  of the
policy other than the Trust,  to assign the policy (as distinct from  conversion
of the policy to a different form) other than to a successor  Trustee or to loan
to any person the proceeds of any borrowing against such policy.

                                       11
<PAGE>

                           (ii)     The Trustee shall have,  and in its sole and
absolute  discretion  may  exercise  from  time to  time  and at any  time,  the
following   administrative  powers  and  authority  with  respect  to  the  Fund
consistent with the provisions of Section 5:

                                    (A) To continue to hold any  property of the
Fund whether or not  productive of income;  to reserve from  investment and keep
unproductive  of  income,  without  liability  for  interest,  cash  temporarily
awaiting  investment and such cash as it deems  advisable or as the Company from
time to time may  specify in order to meet the  administrative  expenses  of the
Fund or anticipated distributions therefrom;

                                    (B) To hold  property of the Fund in its own
name or in the name of a nominee or nominees,  without  disclosure of the Trust,
or in bearer form so that it will pass by delivery,  but no such  holding  shall
relieve the Trustee of its  responsibility  for the safe  custody of the Fund in
accordance with the provisions of the Agreement; the Trustee's books and records
shall at all times show that such property is part of the Fund; and,  subject to
Section 8(c), the Trustee shall be absolutely  liable for any loss occasioned by
the acts of its nominee or nominees with respect to the securities registered in
the name of the nominee or nominees;

                                    (C) To employ in the  management of the Fund
suitable  agents,  without  liability for any loss occasioned by any such agents
selected by the Trustee with the care,  skill,  prudence and diligence under the
circumstances  then  prevailing that a prudent man acting in a like capacity and
familiar  with such matters  would use in the conduct of an enterprise of a like
character and with like aims.

                                    (D) To do all other  acts  that the  Trustee
may deem necessary or proper to carry out any of the powers set forth in Section
5 hereof or otherwise in the best interests of the Fund.

                  (e) Notwithstanding any powers granted to the Trustee pursuant
to this Trust  Agreement or to  applicable  law, the Trustee  shall not have any
power that could give this Trust the  objective  of carrying  on a business  and
dividing the gains  therefrom,  within the meaning of section  301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Code.

                  (f) Unless the Trustee participates knowingly in, or knowingly
undertakes to conceal, an act or omission of the Company or any other fiduciary,
knowing  such act or omission to be a breach of  fiduciary  responsibility,  the
Trustee shall be under no liability for any loss of any kind which may result by
reason of such act or omission.

                  (g) If a  dispute  arises  as to the  payment  of any funds or
delivery of any assets by the Trustee,  the Trustee may withhold such payment or
delivery until the dispute is determined by a court of competent jurisdiction or
finally settled in writing by the parties concerned.

                                       12
<PAGE>

                                    SECTION 9

                   TAXES, COMPENSATION AND EXPENSES OF TRUSTEE


                  (a)      (i)      The Company  shall  pay any Federal,  state,
local or other taxes  imposed or levied with respect to the corpus and/or income
of the Fund or any part thereof under existing or future laws

                           (ii)     All taxes  that may be  levied  or  assessed
upon, or in respect of, the Fund shall be paid from the Fund.  The Trustee shall
notify the Company of any proposed or final  assessments of taxes and may assume
that any such taxes are lawfully levied or assessed,  unless the Company advises
it in writing to the contrary  within 15 days after  receiving  the above notice
from the  Trustee.  In such case,  the  Trustee,  if requested by the Company in
writing,  shall  contest  the  validity  of  such  taxes  in any  manner  deemed
appropriate  by the Company;  the Company may itself contest the validity of any
such  taxes,  in which  case the  Company  shall so notify the  Trustee  and the
Trustee shall have no  responsibility or liability  respecting such contest.  If
either party to this Agreement  contests any such proposed levy or  assessments,
the other party shall  provide such  information  and  cooperation  as the party
conducting the contest shall reasonably request.

                  (b) The Trustee, without direction from the Company, shall pay
from the Fund from time to time such reasonable compensation for its services as
trustee as shall be agreed upon with the Company,  the  reasonable and necessary
expenses and compensation of counsel and other agents employed or engaged by the
Trustee  pursuant to Section  8(d)(ii)(C) and all other reasonable and necessary
expenses of managing  and  administering  the Fund  (which the  Trustee,  in its
discretion,  determines to be necessary or appropriate) that are not paid by the
Company.


                                   SECTION 10

                       RESIGNATION AND REMOVAL OF TRUSTEE


                  (a) The  Trustee  may resign at any time by written  notice to
the  Company,  which  shall be  effective  60 days after  receipt of such notice
unless the Company and the Trustee agree otherwise.

                  (b) The  Company,  by  action of its  Board,  may  remove  the
Trustee  at any time upon 60 days  written  notice,  or upon  shorter  notice if
acceptable  to the Trustee.  In the event it resigns or is removed,  the Trustee
shall have a right to have its accounts settled as provided in Section 7 hereof.

                                       13
<PAGE>

                  (c) (i) Upon resignation or removal of Trustee and appointment
of a successor  Trustee,  all assets shall  subsequently  be  transferred to the
successor Trustee.  The transfer shall be completed within 60 days after receipt
of notice of  resignation,  removal or transfer,  unless the Company extends the
time limit.

                           (ii)      The Trustee  may  reserve  such sums as the
Trustee shall deem necessary to defray its expenses in settling its accounts, to
pay any of its  compensation  due and unpaid and to discharge any  obligation of
the Fund for which the  Trustee may be liable.  If the sums so reserved  are not
sufficient  for these  purposes,  the  Trustee  shall be entitled to recover the
amount of any deficiency  from either the Company or the successor  Trustee,  or
both.  When the Fund shall have been  transferred and delivered to the successor
Trustee and the accounts of the Trustee have been settled as provided in Section
7  hereof,  the  Trustee  shall be  released  and  discharged  from all  further
accountability or liability for the Fund and shall not be responsible in any way
for the further disposition of the Fund or any part thereof.

                  (d)     (i)        If  Trustee   resigns  or  is  removed,   a
successor  shall be  appointed,  in  accordance  with Section 11 hereof,  by the
effective date of resignation or removal under  subsection (b) above. If no such
appointment  has  been  made,   Trustee  may  apply  to  a  court  of  competent
jurisdiction for appointment of a successor or for instructions. All expenses of
Trustee  incurred  in  connection  with  the  proceeding  shall  be  allowed  as
administrative expenses of the Trust.

                           (ii)      Each  successor  trustee shall have all the
powers and  duties  conferred  upon the  Trustee  in this  Trust  Agreement  and
"Trustee",  as used in this Agreement,  shall be deemed to include any successor
Trustee.


                                   SECTION 11

                            APPOINTMENT OF SUCCESSOR


                  In the event of the  resignation or removal of the Trustee,  a
successor Trustee shall be appointed by the Company. Such appointment shall take
effect upon delivery to the Trustee of an instrument so appointing the successor
and an  instrument  of  acceptance  executed  by such  successor,  both of which
instruments shall be duly acknowledged by a notary public.  The delivery of such
instruments  shall take place within sixty (60) days after notice of resignation
or removal, as applicable, of the Trustee shall have been given.

                                       14
<PAGE>

                                   SECTION 12

                            AMENDMENT OR TERMINATION


                  (a)  This  Trust   Agreement  may  be  amended  by  a  written
instrument  duly  executed  and  acknowledged  by the Trustee  and the  Company.
Notwithstanding  the foregoing,  no such amendment shall conflict with the terms
of the Plan or shall make the Trust revocable after it has become irrevocable in
accordance with Section 1(b) hereof.

                  (b)      (i)       The  Trust  shall not  terminate  until the
date on which Plan  participants and their  beneficiaries are no longer entitled
to benefits  pursuant to the terms of the Plan.  Upon  termination of the Trust,
any assets remaining in the Trust shall be returned to the Company.

                           (ii)      Notwithstanding   the  foregoing,   if  not
sooner terminated,  the Trust shall terminate  automatically on the twenty-first
(21st)  anniversary  of the  death  of  the  last  to  die of all of the  lineal
descendants of Rose Fitzgerald Kennedy,  daughter of John Francis Fitzgerald and
Josephine Mary Hannon  Fitzgerald,  who are living and in being on the effective
date of this Trust Agreement.

                           (iii)     Notwithstanding  the  foregoing,  until the
Trust has become  irrevocable as provided in Section 1(b) hereof,  the Trust may
be terminated at any time by the Company.

                           (iv)      In case the Plan is terminated, in whole or
in part, the Trustee (subject to the provisions of Sections 10 and 11 hereof and
reserving such sums as the Trustee shall deem necessary in settling its accounts
and to discharge any obligation of the Fund for which the Trustee may be liable)
shall apply and distribute any subfund  attributable to such terminating Plan in
accordance with the written directions of the Company.  Upon such termination of
the  Plan in  whole  or in  part,  the  Trustee  shall  have a right to have its
accounts settled as provided in Section 7 hereof. When a subfund shall have been
so applied or  distributed  and the  accounts of the Trustee  shall have been so
settled,  the  Trustee  shall  be  released  and  discharged  from  all  further
accountability  or  liability   respecting  such  subfund,   and  shall  not  be
responsible in any way for the further disposition of such subfund.

                                       15
<PAGE>

                                   SECTION 13

                                  MISCELLANEOUS


                  (a) Any  provision of this Trust  Agreement  prohibited by law
shall be ineffective to the extent of any such prohibition, without invalidating
the remaining provisions hereof.

                  (b)   Benefits   payable  to  Plan   participants   and  their
beneficiaries  under  this  Trust  Agreement  may not be  anticipated,  assigned
(either at law or in equity),  alienated,  pledged,  encumbered  or subjected to
attachment, garnishment, levy, execution or other legal or equitable process.

                  (c)      (i)  This Trust  Agreement  shall be  governed by and
construed in  accordance  with the laws of the State of New York  applicable  to
contracts to be performed wholly within the State of New York.

                           (ii) Nothing in this Agreement  shall be construed to
subject either the Trust created hereunder or the Plan to ERISA.

                          (iii) Any reference  herein to ERISA or the Code shall
include such law as in effect on the effective date hereof, subsequent amendment
thereto and any succeeding law.

                  (d) The titles to Sections of this Agreement are placed herein
for  convenience of reference  only, and the Agreement is not to be construed by
reference thereto.

                  (e) This Agreement  shall bind and inure to the benefit of the
successors and assigns of the Company and the Trustee, respectively.

                  (f)  This   Agreement   may  be  executed  in  any  number  of
counterparts, each of which shall be an original but all of which together shall
constitute  but one  instrument,  which  may be  sufficiently  evidenced  by any
counterpart executed by all parties hereto.

                  (g) Any  corporation  into which the Trustee is merged with or
with  which it is  consolidated,  or any  corporation  resulting  from a merger,
reorganization  or  consolidation,  to which  the  Trustee  is a  party,  or any
corporation to which all or substantially  all the trust business of the Trustee
is transferred  shall become the successor  trustee under the Agreement  without
the  execution or filing of any further  instrument  or the  performance  of any
further act.

                                       16
<PAGE>

                  (h) The Company or anyone acting on its behalf may at any time
employ the Trustee in its corporate (and not its fiduciary) capacity as agent to
perform any act, keep any records or accounts, or make any computations required
by the Company.  Any such agency relationship shall be established by a separate
agreement  between  the  Company  and the  Trustee,  and the  existence  of such
agreement and any actions  performed by the Trustee under such  agreement  shall
not affect its responsibilities as Trustee under this Agreement.


                                   SECTION 14

                   ADMINISTRATION OF THE PLAN; COMMUNICATIONS

                  (a) The Company shall administer the Plan as provided therein,
and the Trustee shall not be responsible in any respect for  administering  such
Plan nor shall the Trustee be  responsible  for the adequacy of the Fund to meet
and discharge all payments and liabilities under such Plan. The Trustee shall be
fully  protected in relying upon any written notice,  instruction,  direction or
other communication  signed by an officer of the Company duly authorized to give
communications  to the Trustee.  The Company from time to time shall furnish the
Trustee with the names and specimen  signatures of such duly authorized officers
of the  Company and shall  promptly  notify the  Trustee of the  termination  of
office of any officer of the Company and the appointment of a successor thereto.
Until notified to the contrary,  the Trustee shall be fully protected in relying
upon the most recent list of duly authorized  officers of the Company  furnished
to it by the Company.

                  (b) Any action  required by any provision of this Agreement to
be taken by the Board shall be evidenced by a resolution of the Board, certified
to the Trustee by the  Secretary or an Assistant  Secretary of the Company under
its corporate  seal.  The Trustee  shall be fully  protected in relying upon any
resolution  so certified to it. Unless other  evidence with respect  thereto has
been specifically prescribed in this Agreement,  any other action of the Company
under any provision of this  Agreement,  including any approval of or exceptions
to the  Trustee's  accounts,  shall be evidenced by a  certificate  signed by an
officer of the Company,  duly authorized to give  communications to the Trustee,
and the Trustee shall be fully protected in relying upon such  certificate.  The
Trustee  may  accept a  certificate  signed by an officer  of the  Company  duly
authorized to give  communications to the Trustee as proof of any fact or matter
that it deems necessary or desirable to have  established in the  administration
of the  Trust  (unless  other  evidence  of such  fact or  matter  is  expressly
prescribed herein), and the Trustee shall be fully protected in relying upon the
statements in the certificate.

                  (c) Notwithstanding anything herein contained to the contrary,
the Trustee  shall be  entitled  conclusively  to rely upon any written  notice,
instruction,  direction,  certificate or other communication reasonably believed
by it to be genuine and to be signed by the proper  person or  persons,  and the

                                       17
<PAGE>

Trustee shall be under no duty to make  investigation or inquiry as to the truth
or accuracy of any statement contained therein.

                  (d) Until notice be given to the contrary,  communications  to
the     Trustee     shall    be    sent    to    it    at    its    office    at
___________________________________        Attention:       ___________________;
communications  to the  Company  shall be sent to it at its  office  at 341 Main
Street, Catskill, New York 12414 Attention: Wilbur J. Cross, CEO.


                                   SECTION 15

                                   IRS RULING


         The  Company  may apply for a Private  Letter  Ruling from the IRS with
respect  to the  federal  income  tax  consequences  of the  Trust.  If the IRS,
following a request by the Company,  declines to issue a favorable ruling to the
effect that the Company  will be treated for Federal  income tax purposes as the
owner of the Fund  pursuant  to Sections  671 through 679 of the Code,  that the
income  of the Fund will be  treated  as  income  of the  Company,  and that the
funding of, and  realization of income by, the Fund will not result in income to
the participants or beneficiaries prior to the date that such funds are actually
distributed or made available to participants or beneficiaries hereunder, all of
the assets then held in the Fund shall  forthwith  be returned to the Company in
kind and this Agreement shall be null and void and have no force and effect.

                                       18

<PAGE>

                                   SECTION 16

                         DEFINITION OF CHANGE OF CONTROL


                  (a) "Change of Control" shall have the same meaning under this
Trust as defined in the Company's employee stock ownership plan.

                  (b) The  Trustee  shall  not be  responsible  for  determining
whether a Change of Control occurs.  Such determination  shall be made solely by
the Company,  and the Company  shall  promptly  notify the Trustee in writing in
such an event.  The Company  shall,  under the  penalties  of perjury,  promptly
certify to the  Trustee  at any time,  and from time to time,  at the  Trustee's
request,  whether a Change of  Control  has been  deemed to have  occurred.  The
Trustee  shall be fully  protected in relying upon such  certification,  and the
Company shall  indemnify  Trustee for any act or omission taken pursuant to such
certification.

                                   SECTION 17

                                 EFFECTIVE DATE


         The effective date of this Trust Agreement shall be April 1, 1998.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective names by their duly authorized officers under their
corporate seals as of the day and year first above written.

                                         CATSKILL FINANCIAL CORP.

                                         By: /s/ David L. Guldenstern
                                            ------------------------------------
                                             As its: VP/Secretary


                                            /s/ Allan D. Oren
                                            ------------------------------------
                                                Allan D. Oren, Trustee

                                            /s/ Edward P. Stiefel
                                            ------------------------------------
                                                Edward P. Stiefel, Trustee

                                           /s/ Richard A. Marshall
                                            ------------------------------------
                                               Richard A. Marshall, Trustee

                                       19

<PAGE>

STATE OF NEW YORK          )
                           : ss.:
COUNTY OF  GREENE          )


         On this 21st day of May , 1998,  before  me  personally  came  David L.
Guldenstern , to me known,  who, being by me duly sworn, did depose and say that
he resides at Wildwing  Pk.  Catskill,  NY, that he is the  VP/Secretary  of the
CATSKILL FINANCIAL CORPORATION,  the company described in and which executed the
foregoing  instrument;  that he knows  the seal of said  company;  that the seal
affixed to said  instrument is such  company's  seal;  that it was so affixed by
order of the Board of  Directors  of said  company;  and that he signed his name
thereto by like order.


                                             /s/ Gloria Leone
                                             -----------------------------------
                                                 Notary Public


STATE OF NEW YORK          )
                           : ss.:
COUNTY OF  GREENE          )


         On this 19th day of May , 1998,  before  me  personally  came  ALLAN D.
OREN,  to me known,  who,  being by me duly  sworn,  did  depose and say that he
resides  at  Abeel  Dr.  Catskill,  NY , and  that  he  executed  the  foregoing
instrument as a Trustee.


                                             /s/ David L. Guldenstern
                                             -----------------------------------
                                                 Notary Public

STATE OF NEW YORK          )
                           : ss.:
COUNTY OF ALBANY           )

         On this 21st day of May , 1998,  before me  personally  came  EDWARD P.
STIEFEL,  to me known,  who, being by me duly sworn,  did depose and say that he
resides at Catskill,  NY , and that he executed the  foregoing  instrument  as a
Trustee.

                                             /s/ Dale B. Pinckney
                                             -----------------------------------
                                                 Notary Public


                                       20
<PAGE>

STATE OF NEW YORK          )
                           : ss.:
COUNTY OF ALBANY           )


         On this 21st day of May , 1998,  before me  personally  came RICHARD A.
MARSHALL,  to me known,  who, being by me duly sworn, did depose and say that he
resides at Delmar,  NY , and that he  executed  the  foregoing  instrument  as a
Trustee.


                                             /s/ Dale B. Pinckney
                                             -----------------------------------
                                                 Notary Public


                                       21