Document:

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                                                                    EXHIBIT 10.7

                              AMENDED & RESTATED
                     CHANGE OF CONTROL SEVERANCE AGREEMENT

          This Amended and Restated Change of Control Severance Agreement
("Agreement") dated June 28, 1999, is entered into by and between BSB Bancorp,
Inc., a Delaware corporation ("Corporation"), and its wholly-owned subsidiary
BSB Bank & Trust Company, as successor to Binghamton Savings Bank ("Employer"),
a New York stock savings bank, and Arthur C. Smith ("Executive").  This
Agreement amends and restates the Change of Control Severance Agreement dated as
of January 22, 1996, as amended, by and among the parties and such Agreement, as
amended, shall be of no further force or effect after the date of this
Agreement.

                                  WITNESSETH:

          Whereas, Executive is currently employed by Employer as an Executive
Vice President and Retail Banking Officer; and

          Whereas, Corporation, Employer and Executive entered into a Change of
Control Severance Agreement as of January 22, 1996; and

          Whereas, the parties desire to amend the agreement; and

          Whereas, the parties desire to restate the full agreement;

          Now, therefore, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree to this Amendment and
Restatement as follows:

     1.   Term.  The initial term of this Agreement extends for a period of
          ----
three years from the date of this Agreement, provided that the term of the
Agreement shall be extended automatically for one additional year on each annual
anniversary date of this Agreement, unless either the Board of Directors of
Employer or Executive provide contrary written notice to the other not less than
180 days in advance of any such anniversary date. In the event either Employer
or Executive provide such written notice, then the term hereof shall not be
extended, but the then current term shall continue for the period remaining
thereunder. Notwithstanding the foregoing, this Agreement shall automatically
expire and terminate on Executive's normal retirement date at age 65 or on
Executive's early retirement under the Special Service Retirement provision of
Employer's pension plan if Executive elects to take such early retirement. The
initial term of employment and all such renewed terms of employment under this
Agreement are collectively referred to herein as the "term of this Agreement."

     2.   Benefits Upon Termination of Employment. (a) If, before a Change in
          ---------------------------------------
Control at the request or direction of the acquiring party or at any time during
the 12-month period following a Change in Control, (1)the employment of
Executive with Employer is terminated by Employer for any reason other than Good
Cause, or (2) Executive terminates his employment with Employer for Good Reason,
Employer shall, during the Severance Period, continue to pay Executive an amount
equal to Executive's Base Salary.

     Such amount will be paid during the Severance Period in monthly or other
installments, similar to those being received by Executive at the date of the
Change in Control, and will commence as soon as practicable following the date
of termination of employment.  Executive shall receive any and all vested
benefits accrued under any Incentive Plans and Retirement Plans to the date of
termination of employment, the amount, form and time of payment of such benefits
to be determined by the terms of such Incentive Plans and Retirement Plans and
such benefits shall not be reduced by amounts payable under this Agreement.

     (b)  If upon the date of termination of Executive's employment, Executive
holds any options with respect to stock of Corporation, all such options will
immediately become exercisable upon such date and will be exercisable for not
less than 90 days thereafter.  To the extent such acceleration of vesting or
exercisability of such options is not permissible under the terms of any plan
pursuant to which the options were granted, Employer will pay to Executive, in a
lump sum, within 90 days after termination of employment, an amount equal to the
excess, if any, of the aggregate fair market value of all stock of Corporation
subject to such options, determined on the date of termination of employment,
over the aggregate option price of such stock, and Executive will surrender all
such options unexercised.  For the purposes of this Agreement, in the event that
such stock is listed on an established national or regional stock exchange, is
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System, or is publicly traded in an established securities
market, in determining the fair market value of the stock, Employer shall use
the average of the closing prices of such stock on such exchange or System or in
such market (the highest such closing price if there is more than one such
exchange or market) on the five trading dates immediately before the date of
termination (or, if there is no such closing price, then the Board shall use the
mean between the highest bid and lowest asked prices or between the high and low
prices on such

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date), or, if no sale of the Stock has been made on one or more of such dates,
on the next preceding day on which any such sale shall have been made.

     (c)  During the Severance Period, Executive and his spouse will continue to
be covered by all Welfare Plans, maintained by Employer in which he or his
spouse were participating immediately prior to the date of his termination as if
he continued to be an employee of Employer; provided that, if participation in
any one or more of such Welfare Plans is not possible under the terms thereof,
Employer will provide substantially identical benefits.  If, however, Executive
obtains employment with another employer during the Severance Period, such
coverage shall be provided only to the extent that the coverage exceeds the
coverage of any substantially similar plans provided by his new employer.

     3.   No Setoff.  No payment or benefits payable to or with respect to
          ---------
Executive pursuant to this Agreement shall be reduced by any amount Executive or
his spouse may earn or receive from employment with another employer or from any
other source, except as expressly provided in subsection 2(c) of this Agreement.

     4.   Death.  If Executive dies during the Severance Period:
          -----

     (a)  All amounts payable hereunder to Executive shall, during the remainder
of the Severance Period, be paid to his surviving spouse.

     (b)  The spouse of Executive shall, during the remainder of the Severance
Period, be covered under all Welfare Plans made available by Employer to
Executive or his spouse immediately prior to the date of his death; provided
that, if participation in any one or more of such plans and arrangements is not
possible under the terms thereof, Employer will provide substantially identical
benefits.

     Any benefits payable under this Section 4 are in addition to any other
benefit due to Executive or his spouse or beneficiaries from Employer,
including, but not limited to, payments under any of the Incentive or Retirement
Plans.

     5.   Termination for Good Cause or Without Good Reason. If the employment
          -------------------------------------------------
of Executive with Employer is terminated (a) for any reason prior to a Change in
Control other than at the request or direction of an acquiror in connection with
a Change in Control, or (b) after a Change in Control by Employer for Good
Cause, or by the voluntary action of Executive without Good Reason, Executive's
Base Salary (at the rate in effect on the date of termination) shall be paid
through the date of termination, and Employer shall have no further obligation
to Executive or his spouse under this Agreement, except for benefits accrued
under Incentive Plans pursuant to subsection 2(a) above.

     6.   Section 280G Gross-Up Payment.
          -----------------------------

     (i)  Anything in this Agreement to the contrary notwithstanding and except
as set forth below in this Section 6(i), in the event it shall be determined
that any payment or distribution by Employer, or any other member of the
affiliated group (as determined for purposes of Sections 280G and 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") of which Employer or
Corporation is a member, to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Section 6) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 6(i), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Executive, after taking into
account the Payments and the Gross-Up Payment, would not receive a net after-tax
benefit of at least $10,000 (taking into account both income taxes and any
Excise Tax) as compared to the net after-tax proceeds to the Executive resulting
from an elimination of the Gross-Up Payment and a reduction of the Payments, in
the aggregate, to an amount (the "Reduced Amount") such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall
be made to the Executive and the Payments, in the aggregate, shall be reduced to
the Reduced Amount.

     (ii) Subject to the provisions of Section 6(iii), all determinations
required to be made under this Section 6, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by
PriceWaterhouseCoopers LLP such other certified public accounting firm
reasonably acceptable to Employer as may be designated in writing by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to Employer and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by Employer. In the event that the Accounting Firm
is serving as accountant or auditor

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for the individual, entity or group effecting the Change of Control, the
Executive shall appoint another nationally recognized accounting firm reasonably
acceptable to Employer to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by Employer. Any
Gross-Up Payment, as determined pursuant to this Section 6, shall be paid by
Employer to the Executive within five business days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon Employer and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that the initial
Gross-Up Payments made by Employer will be inadequate and that additional Gross-
Up Payments by Employer should have been made ("Underpayment"), consistent with
the calculations required to be made hereunder. In the event that Employer
exhaust its remedies pursuant to Section 6(iii) and the Executive thereafter are
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Employer to or for the benefit of the
Executive.

     (iii) The Executive shall notify Employer in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
Employer of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after the Executive receives
written notice of such claim and shall apprise Employer of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of 30 days following the date
on which the Executive gives such notice to Employer (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If Employer notifies the Executive in writing prior to the expiration of such
period that they desire to contest such claim, the Executive shall:

               (a)  give Employer any information reasonably requested by
Employer relating to such claim,

               (b)  take such action in connection with contesting such claim as
Employer shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney selected by Employer and reasonably acceptable to the Executive,

               (c)  cooperate with Employer in good faith in order effectively
to contest such claim, and

               (d)  permit Employer to participate in any proceedings relating
to such claim; provided, however, that Employer shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 6(iii), Employer shall control all
proceedings taken in connection with such contest and, at their sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at their
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as
Employer shall determine; provided, however, that if Employer directs the
Executive to pay such claim and sue for a refund, Employer shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, Employer's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

     (iv)  If, after the receipt by the Executive of an amount advanced by
Employer pursuant to Section 6(iii), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to
Employer's continued compliance with the requirements of this Section 6)
promptly pay to Employer the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the receipt
by the Executive of an amount advanced by Employer pursuant to Section 6(iii), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and Employer does not notify the Executive in writing
of their intent to contest such denial of refund prior to the expiration of 30
days after such determination (or if any such contest shall be finally
determined in a manner adverse to such refund being allowed), then such advance
shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of the Gross-Up Payment
required to be paid.

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     7.   Definitions.  For purposes of this Agreement:
          -----------

               (a)  "Base Salary" shall mean the higher of Executive's annual
base salary at the rate in effect on the date of a Change in Control or the rate
in effect on the date of termination of employment.

               (b)  "Change in Control" shall be deemed to have occurred if
there has been a change of control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), or such
item thereof which may hereafter pertain to the same subject; provided that, and
notwithstanding the foregoing, a Change in Control shall be deemed to have
occurred if (i) any "person" (as that term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of Corporation or Employer representing 25% or more of
the combined voting power of Corporation's then outstanding securities, (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Boards of Directors of Corporation and Employer
cease for any reason to constitute at least a majority thereof unless the
election of each Director, who was not a Director at the beginning of the
period, was approved by a vote of at least two-thirds of the Directors then
still in office who were Directors at the beginning of the period, (iii)
Corporation shall cease to be a publicly owned corporation, or (iv) any merger
or consolidation of Corporation with or into another entity shall occur as a
result of which the stockholders of Corporation do not retain or acquire 75% or
more of the capital stock of the resulting entity.

               (c)  "Good Cause" shall be deemed to exist if, and only if: (1)
Executive engages in acts or omissions constituting dishonesty, intentional
breach of fiduciary obligation or intentional wrongdoing or malfeasance; (2)
Executive is convicted of a criminal violation involving fraud or dishonesty; or
(3) Executive materially breaches the Agreement (other than by engaging in acts
or omissions enumerated in paragraphs (1) and (2) above), or materially fails to
satisfy the conditions and requirements of his employment with Employer, and
such breach or failure by its nature is incapable of being cured, or such breach
or failure remains uncured for more than 30 days following receipt by Executive
of written notice from Employer specifying the nature of the breach of this
paragraph (3), inattention by Executive to his duties shall be deemed a breach
or failure capable of cure.

               Without limiting the generality of the foregoing, the following
shall not constitute Good Cause: any personal or policy disagreement between
Executive and Employer or any member of the Board of Directors of Employer; or
any action taken by Executive in connection with his duties if Executive acted
in good faith and in a manner he reasonably believed to be in, and not opposed
to, the best interest of Employer and had no reasonable cause to believe his
conduct was unlawful.

               Notwithstanding anything herein to the contrary, in the event
Employer shall terminate the employment of Executive for Good Cause hereunder,
Employer shall give at least 30 days prior written notice to Executive
specifying in detail the reason or reasons for Executive's termination.

               (d)  "Good Reason" shall exist if:

                    (1)  there is a significant change in the nature or the
scope of Executive's authority;

                    (2)  there is a reduction in Executive's base salary from
the rate in effect during the fiscal year before the Change in Control;

                    (3)  Employer changes the principal location in which
Executive is required to perform services to one which is more than 50 miles
from his current location;

                    (4)  there is a reasonable determination by Executive that,
as a result of a change in circumstances significantly affecting his position,
he is unable to exercise the authority, powers, function or duties attached to
his position;

                    (e)  "Incentive Plans" shall mean any incentive, bonus
deferred compensation or similar plan or arrangement currently or hereafter made
available by Corporation or Employer in which Executive is eligible to
participate.

                    (f)  "Retirement Plans" shall mean any qualified or
supplemental defined benefit retirement plan or defined contribution retirement
plan, currently or hereinafter made available by Corporation or Employer in
which Executive is eligible to participate.

                    (g)  "Severance Period" shall mean the period beginning on
the date Executive's employment with Employer terminates under circumstances
described in Section 2 above and ending on the first to occur of: (1) the date
24 months thereafter, or (2) the date Executive attains or would have attained
age 65.

                    (h)  "Welfare Plan" shall mean any health and dental plan,
disability plan, survivor income plan and life insurance plan or arrangement
currently or hereafter made available by Employer in which Executive is eligible
to participate.

     8.   Benefits Unfunded.  All rights of Executive and his spouse or other
          -----------------
beneficiary under this Agreement shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating any assets of
Corporation or Employer for payment of any amounts due hereunder.  Neither
Executive nor his spouse or other

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beneficiary shall have any interest in or rights against any specific assets of
Corporation or Employer, and Executive and his spouse or other beneficiary shall
have only the rights of a general unsecured creditor of Employer.

     9.   Litigation Expense.  Employer shall pay Executive's out of-pocket
          ------------------
expenses, including attorney's fees, in connection with any judicial proceeding
to enforce this Agreement or to construe or determine the validity of this
Agreement or otherwise in connection herewith if Executive is successful in such
litigation.

     10.  Applicable Law.  This Agreement shall be construed and interpreted
          --------------
pursuant to the laws of the State of New York.

     11.  Entire Agreement.  This Agreement contains the entire Agreement
          ----------------
between Employer and Executive and supersedes any and all previous agreements,
written or oral, among the parties relating to his or her employment by
Employer. No amendment or modification of the terms of this Agreement shall be
binding upon the parties hereto unless reduced to writing and signed by Employer
and Executive. This Agreement is the exclusive agreement between Corporation,
Employer and Executive regarding payments to Executive in the event of a change
in control of Corporation or Employer. During the term of this Agreement,
Executive shall not participate in or benefit from any other change of control
severance plan or policy which may be adopted by Corporation or Employer,
provided that thereafter Executive shall participate in such plan or policy if
one has been established by Corporation or Employer.

     12.  No Employment Contract.  Nothing contained in this Agreement shall
          ----------------------
be construed to be an employment contract between Executive and Employer.
Executive is employed at will and Employer may terminate his employment at any
time, with or without cause.

     13.  Counterparts.  This Agreement may be executed in counterparts, each of
          ------------
which shall be deemed an original.

     14.  Severability.  In the event any provision of this Agreement is held
          ------------
illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby.

     15.  Successors.  This Agreement shall be binding upon and inure to the
          ----------
benefit of the parties hereto and their respective heirs, representatives and
successors.

     16.  Notice.  Notices required under this Agreement shall be in writing and
          ------
sent by registered mail, return receipt requested, to the following addresses or
to such other address as the party being notified may have previously furnished
to the others by written notice.

          If to Employer:     Attention: Alex S. DePersis

                              BSB Bank & Trust Company
                              58-68 Exchange Street
                              Binghamton, New York, 13902

          If to Executive:

                              Larry G. Denniston
                              8 Devon Boulevard
                              Binghamton, New York 13903

     17.  Board Approval.  The obligations of Employer under this Agreement are
          --------------
contingent upon the approval or ratification by its Board of Directors of the
execution of this 'Agreement on its behalf.

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In Witness Whereof, Executive has hereunto set his hand, and Corporation and
Employer have caused this agreement to be executed in their name and on their
behalf, all as of the day and year first above written.

                                      BSB BANCORP INC.
                                      BSB BANK & TRUST COMPANY

                                      By: /s/ Alex S. DePersis
                                          --------------------------------------
                                          Alex S. DePersis
                                          President and Chief Executive Officer

                                      By: /s/ Larry G. Denniston
                                          --------------------------------------
                                          Larry G. Denniston
                                          Vice President

                                                                              37<PAGE>

                                                                   EXHIBIT 10.12

                              AMENDED & RESTATED
                              EMPLOYMENT CONTRACT

This Amended and Restated Employment Contract dated June 28, 1999, by and among
BSB Bancorp, Inc. (the "Corporation"), a Delaware-chartered bank holding
company, its wholly owned subsidiary BSB Bank & Trust Company, as successor to
Binghamton Savings Bank (the "Bank"), and Alex S. DePersis (the "Executive")
amends and restates the Employment Contract entered into as of November 2, 1990
and subsequently amended on December 29, 1995, December 30, 1996 and December
29, 1997 and such Employment Contract, as amended, shall be of no further force
or effect after the date of this Agreement.  The Corporation and the Bank are
collectively referred to as the "Employers."

                                  WITNESSETH:

          WHEREAS, the Employers desire to retain the services of Executive on
the terms and conditions set forth herein and, for purpose of effecting the
same, the Boards of Directors of the Employers have approved this Employment
Agreement and authorized its execution and delivery on the Employers' behalf to
the Executive; and

          WHEREAS, the Executive is presently a duly elected President and Chief
Executive Officer of the Employers, and as such, is a key executive officer of
the Employers whose dedication, availability, advice and counsel to the
Employers are deemed important to the Boards of Directors of the Employers and
their stockholders; and

          WHEREAS, the services of the Executive, his experience and knowledge
of the affairs of the Employers, and his reputation and contacts in the industry
are extremely valuable to the Employers; and

          WHEREAS, the Employers wish to attract and retain the executive and it
is in the best interests of the Employers and of the Executive to secure the
continued services of the Executive notwithstanding any change in control of the
Employers; and

          WHEREAS, the Employers consider the establishment and maintenance of a
sound and vital management to be part of their overall corporate strategy and to
be essential to protecting and enhancing the best interests of the Employers and
their stockholders; and

          WHEREAS, the Executive previously entered into an Employment Contract
dated November 2, 1990 and amended December 29, 1995, December 30, 1996 and
December 30, 1997; and

          WHEREAS, the Employers wish to provide security in the event of a
Change in Control and to reinforce and encourage the continued attention and
dedication of Executive to his assigned duties without distraction in
circumstance arising from the possibility of a Change in Control, and

          WHEREAS, the parties desire to amend the Employment Contract to
provide for a change in the termination process of the Employment Contract; and

          WHEREAS, the parties desire to restate the Employment Contract, as
amended;

          NOW, THEREFORE, to assure the Employers of the Executive's dedication,
the availability of his advice and counsel to the Boards of Directors of the
Employers, and the availability of his management skills to the Employers, and
to induce the Executive to remain and continue in the employ of the Employers
and for other good and valuable consideration, the receipt and adequacy whereof
each party hereby acknowledges, the Employers and the Executive hereby agree to
this Amendment and Restatement as follows:

I.   ARTICLE I

     1.   EMPLOYMENT: The Employers agree to, and do hereby, employ Executive
          ----------
and Executive agrees to, and does hereby, accept such employment, for the period
beginning as of the date of this Agreement and ending three years thereafter,
which period of employment shall be extended or terminated only upon the terms
and conditions hereinafter set forth.

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     2.   TERM: The initial term of employment under this Agreement shall be
          ----
for a period of three years from the date of this Agreement, provided that the
term of employment under this Agreement shall be extended automatically for one
additional year on each annual anniversary date, unless either the Boards of
Directors of the Employers or the Executive provides contrary written notice to
the other not less than 180 days in advance of any such anniversary date. In the
event either the Employers or the Executive provide such written notice, then
the term hereof shall not be extended, but the then current term shall continue
for the period remaining thereunder. Notwithstanding the foregoing, or the term
provided for in Article II hereof, this Agreement shall automatically expire and
terminate on the Executive's normal retirement date at age 65 or on the
Executive's early retirement under the Special Service Retirement provision of
the Bank's pension plan if the Executive elects to take such early retirement.
The initial term of employment and all such renewed terms of employment under
this Agreement are collectively referred to herein as the "term of this
Agreement."

     3.   EXECUTIVE DUTIES: Executive agrees that, during the term of his
          ----------------
employment under this Agreement and in his capacity as President and Chief
Executive Officer or any other title(s) or position(s) to which the Executive
may be elected during the term of the Employment contract, he will devote his
full business time and energy to the business, affairs and interests of the
Employers and serve them diligently and to the best of his ability. The duties
and responsibilities to be performed by Executive shall be those appropriate to
President and Chief Executive Officer of the Employers as in effect currently,
and from time to time hereafter specified by the Employers' by-laws or as
otherwise specified by the Employers' Boards of Directors.

     4.   COMPENSATION: The Employers agree to pay Executive, and Executive
          ------------
agrees to accept, as compensation for all services rendered by him to the
Employers: (i) salary at the annual rate of $255,000 which shall be payable in
weekly installments in conformity with Employers' policy relating to salaried
employees; (ii) participation in all performance and discretionary bonus plans
of the Employers that are applicable to executive officers of the Employers or
either of the Employers; and (iii) participation in the plans listed in
paragraph 5. Executive's salary shall be increased from time to time in the sole
and absolute discretion of the Employers' Boards of Directors or Committees
thereof duly authorized by the Boards to so act; provided, however, that after
being so increased, Executive's salary shall not be decreased during any year
term of this agreement without the prior written consent of the Executive.

     5.   PARTICIPATION BENEFIT PLANS, REIMBURSEMENT OF BUSINESS EXPENSES:
          ---------------------------------------------------------------

          (i)  During the term of employment under this agreement, Executive
shall be entitled to participate in any pension, group insurance,
hospitalization, travel accident deferred compensation or other benefit,
savings, or incentive plans of the Employers presently in effect or hereafter
adopted by the Employers and generally available to all employees of executive
status, and additionally, Executive shall be entitled to have the use of
Employers' facilities and executive benefits as are customarily made available
by the Employers to their executive officers.

          (ii) During the term of this Agreement, to the extent that such
expenditures meet the requirements of the Internal Revenue Code of 1986, as
amended ("Code"), for deductibility by the Employers for federal income tax
purposes and are substantiated by the Executive as required by the Internal
Revenue Service ("IRS") and policies of the Employers, the Employers shall
reimburse the Executive promptly for all expenditures (including travel,
entertainment and business meetings) made in accordance with rules and policies
established from time to time by the Boards of Directors of the Employers in
pursuance and furtherance of the Employers' business and goodwill.

     6.   ILLNESS: In the event Executive is unable to perform his duties under
          -------
this Agreement on a full-time basis for a period of six consecutive months by
reason of illness or other physical or mental disability, and at or before the
end of such period he does not return to work on a full-time basis, the
Employers may terminate this Agreement without further or additional
compensation payment being due the Executive from the Employers pursuant to this
Agreement, except as such compensation may accrue to the Executive under the
Bank's Disability Pay Policy for work-related or non-work related total
disability, and except for benefits accrued through the date of such termination
under employee benefit plans of the Employers. These benefits shall include
Disability Retirement, Group Life Insurance and other insurance or other
benefits then regularly provided by the Employers to disabled employees, as well
as any other insurance benefits so provided.

     7.   DEATH: In the event of Executive's death during the term of this
          -----
Agreement, his estate, legal representatives or named beneficiaries (as directed
by Executive in writing) shall receive such payments as provided for under the
terms of the Bank's Pension Plan, Group Life Insurance, Travel Accident Plan and
other plans in effect, together with any entitlement under the Bank Vacation
Policy in effect at time of death.

     8.   TERMINATION BY EMPLOYERS: Notwithstanding the provisions of paragraph
          ------------------------
2 of this ARTICLE I, the Board of Directors of the Employers may, in its sole
discretion, terminate the Executive's employment under this Agreement at any
time in any lawful manner by not less than 30 days written notice to the
Executive and in such event, unless the Employers terminate the Executive's
employment for Cause in accordance with paragraph 9 of Article I of this
Agreement, the Executive shall be (i) paid, during the months following such

                                                                              40
<PAGE>

termination at such times as payment was theretofore made, the salary that the
Executive would have been entitled to receive during the remaining term of this
Agreement had such termination not occurred; (ii) paid in cash, at the time
other participants receive a cash payment for that year, an amount equal to that
paid others under the provisions of any stock or other performance incentive
plan, cash bonus plan or such cash award programs as may be in effect at the
time of termination in accordance with the terms of those plans.  Such payments
and benefits described in (i) and (ii) shall automatically cease at the earlier
of the end of the term of this Agreement or in the event that the Executive
shall become employed, directly or indirectly, by a financial institution or
holding company located within a 75 mile radius of the Bank's home office,
whichever shall occur first.  For the purposes of this paragraph 8, the term
"financial institution" shall mean any state or federally chartered bank,
savings and loan association, credit union, trust company or other entity
directly competing with the Employers, or either of them, in the offering of
financial services.  Notwithstanding the provisions of paragraph 2 above or this
paragraph 8, no termination of this Agreement shall be made pursuant to
paragraph 2 above or this paragraph 8 other than upon retirement as specified in
paragraph 2, (a) following a "Change of Control" of the Employers as defined in
paragraph 10 of Article II of this Agreement, or (b) during any period of time
when the Employers have knowledge that any person(s), concern or entity has
taken steps reasonably calculated to effect a Change in Control of the Employers
until, in the reasonable, good faith opinion of their Boards of Directors, the
person(s), concern or entity has abandoned or terminated his or its efforts to
effect a Change in Control.  Any good faith determination by the Employers'
Boards of Directors that the person(s), concern or entity has abandoned or
terminated his or its efforts to effect a Change in Control shall be conclusive
and binding on the Executive.  Such determination shall be promptly communicated
to the Executive in writing by the Employers' Secretary.

     9.   RESIGNATION - OTHER TERMINATION:
          -------------------------------

          (i)  Notwithstanding the provisions of paragraph 2 of this Article I,
the Boards of Directors of the Employers may, in their sole discretion,
terminate the Executive's employment for Cause. For the purposes of this
Agreement, the Employers shall have "Cause" to terminate the Executive's
employment hereunder because of the Executive's personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, willful failure
to perform stated duties, willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) or a final cease-and-desist
order issued by the Federal Deposit Insurance Corporation ("FDIC"), or material
breach of any provision of this Agreement. For purposes of this paragraph, no
act, or failure to act, on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Employers; provided that any act or omission to act on the Executive's behalf in
reliance upon an opinion of counsel reasonably satisfactory to the Employers
shall not be deemed to be "willful". Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to him a copy of a certification by a majority
of the non-officer members of the Boards of Directors of the Employers finding
that, in the good faith opinion of such majority, the Executive was guilty of
conduct which is deemed to be of Cause within the meaning of the first sentence
of this paragraph and specifying the particulars thereof in detail, after
providing reasonable notice to the Executive and after an opportunity for him,
together with his counsel, to be heard before such majority.

          (ii) In the event that Executive resigns from or otherwise voluntarily
terminates his employment by the Employers at any time, or if the Employers
terminate the Executive's employment for Cause in accordance with paragraph 9(i)
of ARTICLE I of this Agreement, this Agreement shall terminate upon the date of
such resignation or other termination of employment, and thereupon the Employers
shall have no obligation to make any further payments under this Agreement,
provided that the Executive shall be entitled to receive any benefits, insured
or otherwise, that he would otherwise be eligible to receive under any benefit
plans of the Employers.

                                  ARTICLE II

     10.  CHANGE OF CONTROL: The provisions of ARTICLE II of this Agreement
          -----------------
shall become operative only when and if there has been a "Change of Control" of
the Employers.  A Change of Control of the Employers shall mean a change of
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended ("Exchange Act"), or such item thereof which may
hereafter pertain to the same subject; provided that, and notwithstanding the
foregoing, a Change of Control shall be deemed to have occurred if (i) any
"person" (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Employer representing 25% or more of the combined voting power of the
Corporation's then outstanding securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Boards of Directors of the Employers cease for any reason to constitute at
least a majority thereof unless the election of each Director, who was not a
Director at the beginning

                                                                              41
<PAGE>

of the period, was approved by a vote of at least two-thirds of the Directors
then still in office who were Directors at the beginning of the period, (iii)
the Corporation shall cease to be a publicly owned corporation, or (iv) any
merger or consolidation of the Corporation with or into another entity shall
occur as a result of which the stockholders of the Corporation do not retain or
acquire 75% or more of the capital stock of the resulting entity.

     11.  TERMINATION: If a Change of Control of the Employers shall have
          -----------
occurred, this Agreement shall continue in full force and effect unless and
until either terminated in accordance with the provisions of this ARTICLE II, or
not extended in accordance with the provisions of paragraph 2 of Article I. If,
after such a Change of Control shall have occurred, the Executive's employment
is terminated, other than upon retirement as specified in paragraph 2 of Article
I, then the Executive shall be entitled to receive the payments specified in
this ARTICLE II in lieu of any payments specified in ARTICLE I of this Agreement
to be paid upon termination, provided that the benefits payable under this
Article II are larger than the benefits payable under Article I, unless such
termination is for Cause in which case the provisions of paragraph ll.(i) apply,
provided further, that if such termination is by reason of the disability or
death of the Executive, the provisions of paragraphs 5 or 6 of ARTICLE I shall
govern such termination, as applicable.

          (i)   The Employers may terminate the Executive's employment for Cause
in accordance with paragraph 9 of ARTICLE I of this Agreement.

          (ii)  The Executive may terminate his employment for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:

                (a) The assignment of duties to the Executive by the Employers
which (i) are materially different from the Executive's duties during the fiscal
year immediately prior to the Change of Control and which are not appropriate
for an officer of the Employers serving in the position(s) held by the Executive
immediately prior to the Change in Control, or (ii) result in the Executive
having significant less authority and/or responsibility than he had as an
officer of the Employers serving in the position(s) held by the Executive during
the fiscal year immediately prior to the Change of Control, or (iii) require
Executive to engage in an excessive amount of travel or to move from Binghamton,
New York, without his express written consent;

                (b) The removal of the Executive from or any failure to re-elect
him to the aforesaid positions(s), except in connection with a termination of
his employment by the Employers for Cause or by reason of the Executive's
disability;

                (c) A reduction by the Employers of the Executive's base salary
as in effect on the date of the Change of Control or as the same may be
increased from time to time thereafter;

                (d) A failure by the Corporation to continue the 1996 Long-Term
Incentive and Capital Accumulation Plan or any successor stock option plan or a
failure by the Employers to continue the Executive as a participant in such Plan
or any successor stock option plan on a basis comparable to the basis on which
he participated in such plan for the last full fiscal year prior to the Change
of Control or a termination or reduction of Executive's ability to participate
in any of the plans referred to in paragraph 5 hereof;

                (e) The failure of the Employers to provide the Executive with
substantially the same fringe benefits (including paid vacations) that were
provided to him immediately prior to the Change of Control, or with a package of
fringe benefits that, though one or more of such benefits may vary from those in
effect immediately prior to such Change of Control, is substantially comparable
in all material respects to such fringe benefits taken as a whole; or

                (f) The failure of the Employers to obtain the assumption of and
agreement to perform this Agreement by any successor as contemplated in
paragraph 14(iii) hereof.

          (iii) Notwithstanding the provisions of paragraphs 11(i) and 11(ii)
above, following a Change of Control the Employers may terminate the Executive's
employment without Cause at any time in any otherwise lawful manner, subject to
the Employers' providing to the Executive the payments and benefits specified in
paragraph 12(ii).

          (iv)  The Executive may terminate his employment at any time after a
Change of Control, but if such termination is not for Good Reason, or Good
Reason is alleged but ultimately determined pursuant to paragraph 11(vi) not to
be justifiable, then upon and after such termination date Executive shall be
entitled to the payments and benefits from the Employers specified in paragraph
12(iii).

          (v)   Termination either by the Employers pursuant to paragraph 11(i)
or 11(iii) above, or by the Executive pursuant to paragraph 11(ii) or 11(iv)
above, shall be communicated by written Notice of Termination to the other party
hereto. For purposes of ARTICLE II of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provisions in
this Agreement relied upon and, except for a termination pursuant to paragraph
11(iii) or 11(iv) above, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under the
provision so indicated.

          (vi)  "Date of Termination" shall mean the date specified in the
Notice of Termination, which shall be not less than 30 nor more than 90 days
after such Notice of Termination is given; provided, that if within 30 days

                                                                              42
<PAGE>

after any Notice of Termination is given pursuant to paragraph 11(i) or 11(ii)
above, the party receiving such Notice of Termination notified the other party
that a dispute exists concerning the termination, then pending the resolution of
any such dispute the Employers shall continue to pay the Executive the same base
salary as and when due and payable, and provide him the same or substantially
comparable fringe benefits that he was paid and provided immediately prior to
the delivery of the Notice of Termination. If a termination by the Employers
pursuant to paragraph 11(i) above is challenged by the Executive and the
termination is ultimately determined to be justified, or a termination by the
Executive pursuant to paragraph 11(ii) above is challenged by the Employers and
the termination is ultimately determined not to be justified, then all sums paid
by the Employers to the Executive pursuant to this paragraph 11(vi), plus the
cost to the Employers of providing the Executive such fringe benefits from the
date of such termination to the date of the resolution of such dispute, shall be
promptly repaid by the Executive to the Employers with interest at the prime
rate charged by the Savings Bank to its most substantial customers for unsecured
lines of credit; provided, however, that nothing herein shall be deemed to
relieve the Employers of their obligation to make payments to the Executive
pursuant to paragraph 12(iii) in the event that a termination by the Executive
pursuant to paragraph 11(ii) above is challenged by the Employers and the
termination is ultimately determined not to be justified. Should it ultimately
be determined that a termination by the Employers pursuant to paragraph 11(i)
above was not justified, or that a termination by the Executive pursuant to
paragraph 11(ii) above was justified, then the Executive shall be entitled to
retain all sums paid to him pending the resolution of such dispute and he shall
be entitled to receive in addition the payments and other benefits provided for
in paragraph 12(ii), and the Date of Termination shall be the date on which the
dispute is finally settled, either by mutual written agreement of the parties,
or by a final judgment, order or decree of a court of competent jurisdiction
(the time for appeal therefrom having expired and no appeal having been
perfected).

     12.  TERMINATION PROVISIONS: (i) If the Executive's employment shall be
          ----------------------
terminated for Cause pursuant to paragraph 9 of ARTICLE I of this Agreement, and
if such termination is challenged by the Executive and the challenge is resolved
in favor of the Employers, the Employers shall be obligated to the Executive
according to ARTICLE I only, and the Employers shall have no further obligation
to Executive under this ARTICLE II.

          (ii) If within two years after a Change of Control of the Employers,
(1)the Employers shall terminate the Executive's employment other than in
accordance with the provisions of paragraph 9 of Article I or paragraph 11(i)
hereof, or (2) the Executive shall terminate his employment pursuant to
paragraph 11(ii) hereof at any time during the period beginning with a Change of
Control and ending two years after the Change of Control, then:

               (a) On or before the Executive's last day of employment with the
Employers, the Employers shall pay to the Executive as compensation for services
rendered to the Employers a lump sum cash amount (subject to any applicable
payroll or other taxes required to be withheld) equal to 2.99 times the highest
annual cash compensation paid to the Executive by the Employers for any of the
three calendar years ending with the year of the Executive's termination,
provided that, at the option of the Executive, the cash amount required to be
paid hereby shall be paid by the Employers in equal monthly installments over
the 30 months succeeding the Date of Termination, payable on the first day of
each such month.  For purposes of this paragraph 12(ii) (a), highest annual cash
compensation shall consist of only Executive's base salary and any performance
incentive plan award or other cash bonus paid or accrued, provided that, if no
performance incentive plan award or other cash bonus has been granted since the
Change of Control, then, for the purposes of calculating the payments required
by this paragraph 12(ii), it shall be assumed that the Executive earned a
performance incentive plan award or other cash bonus in each of the three
calendar years ending with the year of the Executive's termination equal to the
average of the performance incentive plan awards or other cash bonus earned for
each of the three fiscal years preceding the Change of Control.

               (b) Any awards previously granted to the Executive under any
performance incentive or other cash bonus plan, actual payment of which was
deferred, shall immediately vest and be paid to the Executive within five days
of the Date of Termination, and the amount of such deferred payment will not be
calculated as a setoff to, or as an amount to be included in, the cash payment
due the Executive pursuant to paragraph 12(ii)(a). Concurrently therewith, the
Employers also shall distribute to the Executive all uninvested cash in
Executive's account which is attributable to prior performance incentive plan or
other cash bonus awards. There also shall be paid to the Executive in cash, at
the time other participants received a cash payment for that year, an amount
equal to a performance incentive plan award for the year during which such
termination occurred prorated from the first of the year through the Date of
Termination.

               (c) In addition to the benefits to which the Executive is
entitled under the retirement plans or programs of the Employers in effect as of
the date first above written or any successor plans or programs in effect on the
Date of Termination of the Executive's employment, the Employers shall pay the
Executive at the Executive's normal retirement age, or early retirement age
should the Executive so elect, as defined in the aforementioned retirement plans
or programs or any successor plans or programs in effect on the Date of
Termination, a cash amount equal to the actuarial equivalent of the retirement
pension to which the Executive would have been entitled under the terms of such
retirement plans or programs, without regard to "vesting" thereunder, had the
Executive accumulated the

                                                                              43
<PAGE>

lesser of two additional years of continuous service or the remaining number of
additional years of service Executive would have accumulated if he retired at
the age of 65 (after any termination pursuant to this Agreement) at the
Executive's base salary rate in effect on the Date of Termination under such
retirement plans or programs reduced by the single sum actuarial equivalent of
any amounts to which the Executive is entitled pursuant to the provisions of
said retirement plans and programs. For purposes of this paragraph 12(ii)(c),
"actuarial equivalent" shall be determined using the same methods and
assumptions utilized under the Employers' retirement plans and programs
immediately prior to the Change of Control. At the election of the Executive,
the Employers' obligations under this paragraph 12(ii)(c) shall be satisfied by
a lump sum payment of cash or by the purchase of an annuity contract from a life
insurance company designated by the Executive and reasonably acceptable to the
Employers, which contract shall be owned by and payable to the Executive and
shall provide for payments comparable to payments which the Executive would
receive pursuant to the aforementioned retirement plans or programs. If
applicable, the annuity contract shall be purchased and delivered to the
Executive within 30 days following termination.

          (d)  The Employers shall maintain in full force and effect, for the
continued benefit of the Executive for a two year period after the Date of
Termination, all employee welfare plans and programs or arrangements in which
the Executive was entitled to participate immediately prior to the Date of
Termination, provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Employers shall arrange to provide the Executive with benefits substantially
similar to those which the Executive was entitled to receive under such plans
and programs.

               (iii) In the event that the Executive terminates his employment
at any time after a Change of Control for other than Good Reason, or Good Reason
is alleged but ultimately determined pursuant to paragraph 11(vi) hereof to not
be justifiable, then

          (a)  On or before the Executive's last day of employment with the
Employers, the Employers shall pay to the Executive as compensation for services
rendered to the Employers a cash amount (subject to any applicable payroll or
other taxes required to be withheld) equal to the highest annual cash
compensation paid to the Executive by the Employers for any of the three
calendar years ending with the year of the Executive's termination, provided
that, at the option of the Executive, the cash amount required to be paid hereby
shall be paid in equal monthly installments over the 12 months succeeding the
Date of Termination, payable on the first day of each such month.  For purposes
of this paragraph 12(iii), highest annual cash compensation shall include only
base salary and performance incentive plan awards or other cash bonus paid or
accrued, provided that, if no performance incentive plan award or other cash
bonus has been granted since the Change of Control, then, for purposes of
calculating the payments required by this paragraph 12(iii), it shall be assumed
that the Executive earned a performance incentive plan award or other cash bonus
in each of the three calendar years ending with the year of the Executive's
termination equal to the average of the performance incentive plan awards or
other cash bonus earned for each of the two fiscal years preceding the Change of
Control.

          (b)  Any awards previously granted to the Executive under any
performance incentive or other cash bonus plan, actual payment of which was
deferred, shall immediately vest in and be paid to the Executive within five
days of the Date of Termination, and the amount of such deferred payment will
not be calculated as a setoff to, or as an amount to be included in, the cash
payment due the Executive pursuant to paragraph 12(iii)(a).  Concurrently
therewith, the Employers also shall distribute to the Executive all uninvested
cash in Executive's account which is attributable to prior performance incentive
plan or other cash bonus awards.  There also shall be paid to the Executive in
cash, at the time other participants receive a cash payment for that year, an
amount equal to a performance incentive plan award or other cash bonus for the
year during which such termination occurred prorated from the first of the year
through the Date of Termination.

          (c)  In addition to the benefits to which the Executive is entitled
under the retirement plans or programs of the Employers in effect as of the date
first above written or any successor plans or programs in effect on the Date of
Termination of the Executive's employment, the Employers shall pay the Executive
at the Executive's normal retirement age, or early retirement age should the
Executive so elect, as defined in the aforementioned retirement plans or
programs or any successor plans or programs in effect on the Date of
Termination, a cash amount equal to the actuarial equivalent of the retirement
pension to which the Executive would have been entitled under the terms of such
retirement plans or programs, without regard to "vesting" thereunder, had the
Executive accumulated one (1) additional year of continuous service (after any
termination pursuant to this Agreement) at the Executive's base salary rate in
effect on the Date of Termination under such retirement plans or programs
reduced by the single sum actuarial equivalent of any amounts to which the
Executive is entitled pursuant to the provisions of said retirement plans and
programs. For purposes of this paragraph 12(iii)(c), "actuarial equivalent"
shall be determined using the same methods and assumptions utilized under the
Employers' retirement plans and programs
<PAGE>

immediately prior to the Change of Control. At the Executive's option, the
Employers' obligations under this paragraph 12(iii)(b) shall be satisfied by a
lump sum payment of cash or by the purchase of an annuity contract from a life
insurance company designated by the Executive and reasonably acceptable to the
Employers, which contract shall be owned by and payable to the Executive and
shall provide for payments comparable to payments which the Executive would
receive pursuant to the aforementioned retirement plans or programs. If
applicable, the annuity contract shall be purchased and delivered to the
Executive within 30 days following termination.

          (d)  The Employers shall maintain in full force and effect for the
continued benefit of the Executive, for a two year period after the Date of
Termination, all employee welfare plans and programs or arrangements in which
the Executive was entitled to immediately prior to the Date of Termination
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs.  In the event that the
Executive's participation in any such plan or program is barred, the Employers
shall arrange to provide the Executive with benefits substantially similar to
those which the Executive was entitled to receive under such plans and programs.

     13.  STOCK OPTIONS AND STOCK GRANTS: Upon a Change of Control, all stock
          ------------------------------
options granted to the Executive under the Employers' Long-Term Incentive and
Capital Accumulation Plan, or any successor thereto, shall become immediately
exercisable with respect to all or any portion of the shares covered thereby,
regardless whether such options are otherwise exercisable, and all service
period restrictions on stock grants awarded to the Executive under the same
program or any successor thereto shall lapse so as to permit the transfer of all
stock subject to such grants.

     14.  Section 280G Gross-Up Payment.
          -----------------------------

               (i)  Anything in this Agreement to the contrary notwithstanding
and except as set forth below in this Section 14(i), in the event it shall be
determined that any payment or distribution by the Employers, or any other
member of the affiliated group (as determined for purposes of Sections 280G and
4999 of the Internal Revenue Code of 1986, as amended (the "Code") of which any
Employer is a member, to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Section 14) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 14(i), if it shall be determined that the Executive
is entitled to a Gross-Up Payment, but that the Executive, after taking into
account the Payments and the Gross-Up Payment, would not receive a net after-tax
benefit of at least $10,000 (taking into account both income taxes and any
Excise Tax) as compared to the net after-tax proceeds to the Executive resulting
from an elimination of the Gross-Up Payment and a reduction of the Payments, in
the aggregate, to an amount (the "Reduced Amount") such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall
be made to the Executive and the Payments, in the aggregate, shall be reduced to
the Reduced Amount.

               (ii) Subject to the provisions of Section 14(ii), all
determinations required to be made under this Section 14, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by PriceWaterhouseCoopers LLP such other certified public accounting firm
reasonably acceptable to the Employers as may be designated in writing by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Employers and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Employers. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm reasonably acceptable to the Employers to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Employers. Any Gross-Up Payment, as determined
pursuant to this Section 14, shall be paid by the Employers to the Executive
within five business days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding upon the Employers and
the Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that the initial Gross-Up Payments made by the
Employers will be inadequate and that additional Gross-Up Payments by the
Employers should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Employers
exhaust their remedies pursuant to Section 14(iii) and the Executive thereafter
are required

                                                                              45
<PAGE>

to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Employers to or for the benefit of the Executive.

               (iii) The Executive shall notify the Employers in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Employers of a Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than 10 business days after the Executive
receives written notice of such claim and shall apprise the Employers of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of 30 days
following the date on which the Executive gives such notice to the Employers (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Employers notify the Executive in writing prior to
the expiration of such period that they desire to contest such claim, the
Executive shall:

          (a)  give the Employers any information reasonably requested by the
Employers relating to such claim,

          (b)  take such action in connection with contesting such claim as the
Employers shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney selected by the Employers and reasonably acceptable to the
Executive,

          (c)  cooperate with the Employers in good faith in order effectively
to contest such claim, and

          (d)  permit the Employers to participate in any proceedings relating
to such claim; provided, however, that the Employers shall bear and pay directly
all costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 14(iii), the Employers shall control all
proceedings taken in connection with such contest and, at their sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at their
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Employers shall determine; provided, however, that if the Employers direct the
Executive to pay such claim and sue for a refund, the Employers shall advance
the amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Employers' control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

               (iv)  If, after the receipt by the Executive of an amount
advanced by the Employers pursuant to Section 14(iii), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Employers' continued compliance with the requirements of this
Section 14) promptly pay to the Employers the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the Employers
pursuant to Section 14(iii), a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the Employers do
not notify the Executive in writing of their intent to contest such denial of
refund prior to the expiration of 30 days after such determination (or if any
such contest shall be finally determined in a manner adverse to such refund
being allowed), then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of the Gross-Up Payment required to be paid.

     15.  LITIGATION - OBLIGATIONS - SUCCESSORS:  (i) Notwithstanding the
          -------------------------------------
requirements of paragraph 21 of Article III hereof, if litigation shall be
brought to challenge, enforce or interpret any provision contained in this
ARTICLE II, the Employers hereby agree to indemnify the Executive for his
reasonable attorney's fees and disbursements incurred in such litigation, and
hereby agree to pay post-judgment interest on any money judgment obtained by the
Executive calculated at the rate charged from time to time by the Bank to its
most substantial customers for unsecured lines of credit from the date that
payment(s) to him should have been made under the judgment to date of payment.

               (ii)  The Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise.

                                                                              46
<PAGE>

               (iii) The Employers will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Employers, by agreement
in form and substance satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in its entirety.  Failure of the Employers to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement and shall entitle the Executive to compensation from
the Employers in the same amount and on the same terms as he would be entitled
under this ARTICLE II if he had terminated his employment for Good Reason
pursuant to subparagraph 11(ii) above, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.  As used in this ARTICLE II, "Employers" shall
mean the Employers as hereinbefore defined and any successors to their
respective businesses and/or assets as aforesaid which execute and deliver the
Agreement provided for in this paragraph 15(iii) or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of law.

                                  ARTICLE III

     16.  NOTICES: For purposes of this Agreement, notices and all other
          -------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

          If to the Executive:

                 Mr. Alex S. DePersis
                 1713 Campus Drive
                 Vestal, New York 13850

          If to the Employers:

                 BSB Bancorp, Inc.
                 58-68 Exchange Street
                 Binghamton, New York 13902

or at such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

                                                                              47
<PAGE>

     17.  ENTIRE AGREEMENT-MODIFICATION-WAIVERS-APPLICABLE LAW:
          -----------------------------------------------------

          (i)   This Agreement contains the entire agreement of the parties
hereto relating to the subject matter hereof and supersedes in its entirety any
and all prior agreements, contracts, understandings or representations relating
to the employment relationship created hereunder.

          (ii)  Executive hereby waives the provisions of any prior employment
agreement, contract or understanding relating to Executive's employment by the
Bank and/or the Corporation, and specifically that Agreement dated February 18,
1986, between the Savings Bank and Executive.

          (iv)  No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing, signed by the Executive and on behalf of the Employers by such officers
as may be specifically designated by the Boards of Directors of the Employers.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.

          (v)   No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York.

     18.  INVALIDITY-ENFORCEABILITY: The invalidity or unenforceability of any
          -------------------------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating or affecting
the remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

     19.  SUCCESSOR RIGHTS: This Agreement shall inure to the benefit of and be
          ----------------
enforceable-by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. if
Executive should die while any amounts would still be payable to him under
either ARTICLE I or ARTICLE II of this Agreement, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to his devisee, legatee or other designee or, if there is no such
designee, to his estate.

     20.  HEADINGS: Descriptive headings contained in this Agreement are for
          --------
convenience only and shall not control or affect the meaning or construction of
any provision hereof.

     21.  ARBITRATION: Any dispute, controversy or claim arising under or in
          -----------
connection with this Agreement shall be settled exclusively by arbitration,
conducted in Binghamton, New York before a panel of three arbitrators in
accordance with the rules then in effect of the American Arbitration
Association. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. Unless otherwise provided in the rules of the American
Arbitration Association, the arbitrators shall, in their award, allocate between
the parties the costs of arbitration, which shall include reasonable attorneys'
fees and expenses of the parties, as well as the arbitrators' fees and expenses,
in such proportions as the arbitrators deem just.

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.

                                        /s/ Alex S. DePersis
                                        --------------------
                                        Alex S. DePersis

                                        BSB BANCORP INC.

                                        By: /s/ Larry G. Denniston
                                            ----------------------
                                        Title:  Senior Vice President &
                                                Corporate Secretary

                                        BSB BANK & TRUST COMPANY

                                        By: /s/ Larry G. Denniston
                                            ----------------------
                                        Title:  Senior Vice President &
                                                Corporate Secretary

                                                                              48

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