Exhibit 10.1

                              EMPLOYMENT AGREEMENT

     This Employment  Agreement (the "Agreement") is made and entered into as of
the 1st day of July,  1999, by and between  Goshen Savings Bank, a stock savings
bank  organized  and  operating  under the federal laws of the United States and
having its executive office at One South Church Street,  Goshen,  New York 10924
(the "Bank"), and Stephen W. Dederick (the "Executive Officer"), residing at 946
Oregon Trail, Pine Bush, New York 12566.

     Whereas,  the Executive  Officer  currently  serves the Bank as Senior Vice
President and Chief Financial Officer; and

     Whereas, in order to secure the Executive Officer's continued services, the
Board of Directors of the Bank (the "Board") has approved this Agreement; and

     Whereas,  the  Executive  Officer is willing to continue to make his or her
services available to the Bank on the terms and conditions set forth herein; and

     Whereas,  the Bank  recognizes  that a third  party may at some time in the
future pursue a Change in Control (as defined in section 9 of this Agreement) of
the Bank and that this possibility may result in the departure or distraction of
the Bank's executive officers; and

     Whereas,  the Bank has determined that appropriate steps should be taken to
encourage  the  continued  attention  and  dedication  of the  Bank's  executive
officers,  including the Executive Officer, to their duties for the Bank without
the  distraction  that may arise from the  possibility of a Change in Control of
the Bank; and

     Whereas,  the Bank believes that, by assuring certain  officers,  including
the Executive Officer, of reasonable financial security in the event of a Change
in Control of the Bank,  such  officers  will be in a position to perform  their
duties free from  financial  self interest and in the best interests of the Bank
and its shareholders; and

     Whereas,  for purposes of securing the Executive Officer's services for the
Bank,  the Board of Directors of the Bank  ("Board") has  authorized  the proper
officers of the Bank to enter into an  employment  agreement  with the Executive
Officer on the terms and conditions set forth herein; and

     Now,  Therefore,  in consideration of the mutual covenants set forth below,
the parties agree as follows:

     1. Employment.  The Bank continues the employment of the Executive  Officer
as its Senior Vice  President  and Chief  Financial  Officer,  and the Executive
Officer accepts such continued employment.

     2. Assurance Period.

     (a) If,  during the period from the date of this  Agreement  until June 30,
2000,  subject to extension by the Board upon review of the Executive  Officer's
performance,  there occurs a Change in Control,  there shall  automatically come
into  existence an  Assurance  Period which shall be the period from the date of
such Change in Control  through the third  anniversary  of the Change in Control
(the "Assurance Period"). The Assurance Period shall be part of the term of this
Agreement.

     3. Compensation.

     (a) In consideration  for services rendered by the Executive Officer to the
Bank,  the Bank shall pay to the  Executive  Officer a salary  which,  except as
otherwise  provided in this Agreement,  shall be at the discretion of the Board.
Salary shall be paid in accordance with the Bank's customary  payroll  practices
for other employees.

     (b) In no event shall the Executive  Officer's  annual rate of salary under
this  Agreement  in effect  immediately  prior to a Change in Control be reduced
after the  Change in  Control,  nor shall it be  reduced  prior to the Change in
Control in contemplation thereof.


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     4. Employee  Benefits  Plans and Programs;  Other  Compensation.  Except as
otherwise provided in this Agreement, the Executive Officer shall be entitled to
participate in and receive  benefits under the Bank's pension plan,  group life,
health and disability insurance plans, and such other employee benefit plans and
programs, as the Bank may maintain from time to time, on terms no less favorable
than any other employee. Following a Change in Control, all such benefits to the
Executive  Officer  shall be  continued  on terms and  conditions  substantially
identical to, and in no event less favorable than,  those in effect prior to the
Change in Control,  without regard to any reduction in contemplation of a Change
in Control.

     5. Board  Memberships and Personal  Activities.  The Executive  Officer may
serve as a member of the board of  directors  of such  business,  community  and
charitable  organizations  as he or she may  disclose  to the Board from time to
time, and he or she may engage in personal  business and  investment  activities
for his or her own account;  provided,  however,  that such service and personal
business and investment  activities shall not (a) materially  interfere with the
performance of his or her duties under this Agreement,  and (b) involve entities
which either  compete with the Bank or may  reasonably be expected to negatively
impact on the Bank's standing and reputation in the community it serves.

     6. Working Facilities and Expenses. The Executive Officer's principal place
of employment  shall be at the Bank's  executive  offices in Orange County,  New
York. The Bank shall provide the Executive  Officer,  at such principal place of
employment, with support services and facilities suitable to his or her position
with the Bank and necessary or appropriate in connection with the performance of
his or her assigned  duties under this  Agreement.  The Bank shall reimburse the
Executive  Officer for his or her  ordinary  and  necessary  business  expenses,
including  reasonable travel and  entertainment  expenses incurred in connection
with  the  performance  of  his  or  her  duties  under  this  Agreement,   upon
presentation  to the Bank of itemized  accounts of such expenses in such form as
the Bank may reasonably require.

     7. Termination.  The Board may terminate the Executive Officer's employment
at any time, with or without cause, and unless such  termination  occurs after a
Change  in  Control,  the Bank  shall  have no  further  obligation  under  this
Agreement,  and the  Executive  Officer is not  entitled  to  receive  continued
benefits and payments after any such termination, other than as follows:

          (i)  His  or  her  earned  but  unpaid  salary  through  the  date  of
     termination, payable when due but not later than thirty (30) days after the
     termination.

          (ii) The benefits,  if any, to which the Executive  Officer and his or
     her  family   and   dependents   are   entitled   as  a  former   Executive
     Officer/employee,   or  family  or   dependents   of  a  former   Executive
     Officer/employee,  under  the  employee  benefit  and  compensation  plans,
     including,  without limitation, stock options, restricted stock awards, and
     participation  in  tax-qualified  stock bonus plans  benefiting  the Bank's
     Executive Officers and employees, as in effect on the date of termination,

          (iii)  Payment  for all unused  vacation  days and  floating  holidays
     accrued  through the date of  termination at his or her highest annual rate
     of salary for such year.

     8. Death. If the Executive Officer dies during the Employment Period,  this
Agreement  shall  terminate  and the  Bank  shall  pay to his or her  designated
beneficiary(ies) the amounts and provide the benefits set forth in sections 7(b)
(i), (ii) and (iii).

     9. Definition of Change in Control.

     For purposes of this Agreement, a Change in Control of the Bank shall mean:

          (a) the  occurrence of any event upon which any "person" (as such term
     is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
     as amended (the "1934  Act")),  other than (i) GSB  Financial  Corporation;
     (ii) a trustee or other  fiduciary  holding  securities  under an  employee
     benefit plan maintained for the benefit of employees


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     of the Bank;  (iii) a corporation  owned,  directly or  indirectly,  by the
     stockholders  of the Bank in  substantially  the same  proportions as their
     ownership of stock of the Bank; or (iv) the Executive Officer, or any group
     otherwise constituting a person in which the Executive Officer is a member,
     becomes the "beneficial  owner" (as defined in Rule 13d-3 promulgated under
     the 1934 Act),  directly or  indirectly,  of securities  issued by the Bank
     representing  twenty-five (25%) or more of the combined voting power of all
     of the Bank's then outstanding securities; or

          (b) the occurrence of any event upon which the  individuals who on the
     date this  Agreement is made are members of the Board,  together with their
     successors  as  described  in  section  11 below,  cease for any  reason to
     constitute a majority of the members of the Board; or

          (c) the shareholders of the Bank approve either:

               (i) a  merger  or  consolidation  of  the  Bank  with  any  other
          corporation,  other than a merger or consolidation  following which of
          the following conditions are satisfied:

               (A)  (x) the  members  of the  Board  immediately  prior  to such
                    merger or  consolidation  constitute  at least a majority of
                    the  members  of  the  governing  body  of  the  institution
                    immediately after such merger or consolidation;  and (y) the
                    shareholders of the Bank immediately prior to such merger or
                    consolidation  own  securities of the resulting  institution
                    immediately after such merger or consolidation  representing
                    fifty percent (50%) or more of the combined  voting power of
                    all such securities then  outstanding in  substantially  the
                    same proportions as their ownership of voting  securities of
                    the Bank before such merger or consolidation; and

               (2)  the entity which  results from such merger or  consolidation
                    expressly agrees in writing to assume and perform the Bank's
                    obligations under this Agreement; or

               (ii) a plan of complete  liquidation  of the Bank or an agreement
          for the sale or disposition by the Bank of all or substantially all of
          its assets; or

          (d) any event which would be described in sections 9(a), (b) or (c) if
     the term "Parent  Corporation  of the Bank" were  substituted  for the term
     "Bank"  therein.  Such an event  shall be deemed to be a Change in  Control
     under the relevant provision of sections 9(a), (b) or (c).

It is  understood  and agreed  that more than one Change in Control may occur at
the same or different times during the Employment Period and that the provisions
of this  Agreement  shall apply with equal force and effect with respect to each
such  Change in  Control.  For the purpose of this  section,  a  successor  of a
director  shall mean any person who is elected or nominated  for election to the
Board by a majority of the  directors of the Bank,  who are either  directors of
the Bank as of the date of this  Agreement or who are  themselves  successors as
defined in this sentence.  For the purposes of section 9(c)(i)(A),  if there are
two or more mergers or consolidations which are substantially contemporaneous in
time,  the   consummation  of  which  are  separated  in  time  principally  for
regulatory,   convenience  or  administrative  reasons,  then  such  mergers  or
consolidations  shall be deemed  one  transaction  for the  purpose of the terms
"immediately prior" and "immediately after."

     10. Change in Control - Termination and Severance Benefits.

     (a) In the event of a Change in Control,  the Executive  Officer shall have
the right to terminate employment with the Bank at any time during the Assurance
Period upon any of the following occurrences:

          (i) if the  Executive  Officer  ceases  to serve  in a senior  officer
     position   with  the  Bank  or  its   successor   or  his  or  her  duties,
     responsibilities or title are not commensurate with senior officer status;


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          (ii) the Executive Officer is not afforded the same  opportunities for
     salary increases,  bonuses,  promotions,  increased work  responsibilities,
     perquisites and similar other types of benefits afforded to other executive
     officers of the successor to the Bank;

          (iii) the principal office at which the Executive  Officer is required
     to work is relocated outside of Orange County; or

          (iv) a reduction in the  compensation  paid to the  Executive  Officer
     below  the  rate of  compensation  paid  prior to the  commencement  of the
     Assurance Period,  or a material  reduction in the benefits provided to the
     Executive Officer under the Bank's program of employee  benefits,  compared
     with the  compensation  and benefits  that were  provided to the  Executive
     Officer on the day before the  Assurance  Period  commenced  excluding  the
     effect of any reductions in  compensation or benefits in  contemplation  of
     any Change in  Control,  unless (i)  mandated by any  regulatory  authority
     having jurisdiction over the Bank or (ii) so reduced with the prior written
     consent of the Executive Officer.

     (b) If the Bank or any  successor  to the  Bank  terminates  the  Executive
Officer's  employment  with the Bank or such successor after a Change in Control
without his or her consent,  or if the  termination is by the Executive  Officer
pursuant to section 10(a),  the following  benefits and amounts shall be paid or
provided to the Executive Officer:

          (i) all  payments and  benefits  set forth in section  7(i),  (ii) and
     (iii);

          (ii) continued group life, health and disability insurance benefits as
     though the  Executive  Officer  had  continued  to be  employed  under this
     Agreement through the end of the Assurance Period;

          (iii) within thirty days after  termination,  a lump sum payment equal
     to the present  value of the total  salary and bonuses  that the  Executive
     Officer  would  have  earned if he or she had worked for the Bank until the
     end of the  Assurance  Period at the highest  annual rate of salary and the
     highest  annual bonus paid to the  Executive  Officer  during the two years
     prior to the Change in Control; and

          (iv) within thirty days after termination, a lump sum payment equal to
     the  present  value of the  difference  between  (a) the  amount  which the
     Executive Officer would have been entitled to receive (for all plans in the
     nature of defined  benefit  plans) or contributed on his or her behalf (for
     all plans in the nature of defined contribution, profit sharing, incentive,
     bonus or award plans) if employment had not terminated  prior to the end of
     the  Assurance  Period  and (b)  the  amount  which  will  be  received  or
     contributed based on the actual termination. This provision shall encompass
     pension  plans,  profit sharing plans,  401(k) plans,  ESOPs,  bonus plans,
     supplemental  executive retirement plans, and all other plans providing for
     post-termination or salary  augmentation  payments to the Executive Officer
     whether or not tax qualified,  which were in effect on the day prior to the
     Change in Control,  but excluding the effect of any  reductions in benefits
     in contemplation of the Change in Control.

     (c) In calculating payments under section 10(b), the discount rate used for
determining  present  value  shall be 3%,  compounded  monthly,  based  upon the
scheduled due dates of the future  payments in accordance  with the terms of the
plans and  customary  practice  of the  Bank.  Benefits  to which the  Executive
Officer  would have been  entitled had the  termination  not  occurred  shall be
determined  by  including  full  credit for years of service  and  attained  age
through  the end of the  Assurance  Period as  though  the  termination  had not
occurred.  If  applicable,  benefits  shall be assumed to be payable in a single
life annuity and actuarial  benefits shall be based upon mortality  tables under
Section 72 of the  Internal  Revenue  Code of 1986.  If any benefits or payments
would have required any payment or  contribution  by the Executive  Officer,  it
shall be assumed that the Executive Officer made the highest permissible payment
or contribution.

     (d) The  Executive  Officer shall not be required to mitigate the amount of
any payment  provided  for in this  section 10 by seeking  other  employment  or
otherwise,  nor shall the amount of any payment or benefit  provided for in this
section 10 be reduced by any compensation earned by the Executive Officer as the
result of employment by another  employer,  by  retirement  benefits,  by offset
against any amount  claimed to be owed by the  Executive  Officer


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to the Bank or the  parent  corporation  of the  Bank,  or  otherwise  except as
specifically  provided in this Agreement.  The damages incurred by the Executive
Officer due to a termination  triggering the benefits described in section 10(b)
are not capable of accurate  measurement  on the date of this  Agreement and the
benefits and payments  provided  for in this  Agreement  constitute a reasonable
estimate  of all  damages  that  would  be  sustained  consequence  due to  such
termination,  other  than  damages  arising  under or out of any  stock  option,
restricted stock or other  non-qualified stock acquisition or investment plan or
program,  it being  understood and agreed that this Agreement does not determine
the  measurement  of  damages  under any such plan or  program in respect of any
termination of employment.

     11. Successors and Assigns.

     (a) The Bank shall 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 Bank to expressly assume and agree to perform this
Agreement  in the same  manner  and to the same  extent  that the Bank  would be
required to perform it if no such succession had taken place.

     (b) This  Agreement  will inure to the  benefit of and be binding  upon the
Executive  Officer,  his or her legal  representatives  and testate or intestate
distributes,  and the Bank, their respective  successors and assigns,  including
any successor by merger or  consolidation  or a statutory  receiver or any other
person  or  firm  or  corporation  to  which  all  or  substantially  all of the
respective assets and business of the Bank may be sold or otherwise transferred.

     12. Notices. Any communication required or permitted to be given under this
Agreement, including any notice, direction,  designation,  consent, instruction,
objection or waiver,  shall be in writing and shall be deemed to have been given
at such time as it is delivered  personally,  or five (5) days after  mailing if
mailed,  postage  prepaid,  by  registered  or certified  mail,  return  receipt
requested,  or next  day mail via  Federal  Express  or  United  Parcel  Service
addressed to such party at the address  listed below or at such other address as
one such party may by written notice specify to the other party:

     If to the Executive Officer:

     Stephen W. Dederick
     946 Oregon Trail
     Pine Bush, New York 12566

     If to the Bank:

     Goshen Savings Bank
     One South Church Street
     Goshen, New York  10924
     Attention: Chairman of the Board of Directors


     With a copy to:

     Serchuk & Zelermyer, LLP
     81 Main Street
     White Plains, NY 10601
     Attention:  Jay L. Hack, Esq.

     13.  Enforcement  Costs and  Attorneys'  Fees.  The Bank shall pay to or on
behalf of the Executive Officer all reasonable costs, including reasonable legal
fees,  incurred  by him or her in  connection  with or arising out of his or her
consultation  with legal  counsel or in  connection  with or arising  out of any
action,  suit or proceeding  in which he or she may be involved,  as a result of
his or her  efforts,  in good  faith,  to  defend or  enforce  the terms of this
Agreement,   provided  that  the  Executive  Officer  shall  have  substantially
prevailed  on the merits  pursuant to a


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judgment,  decree  or  order  of a  court  of  competent  jurisdiction  or of an
arbitrator in an  arbitration  proceeding,  or in a settlement.  Any  settlement
agreement  which provides for payment of any amounts in settlement of the Bank's
obligations  hereunder shall be conclusive  evidence of the Executive  Officer's
entitlement  to payments  under this section,  and any such payments shall be in
addition to amounts payable pursuant to such settlement  agreement,  unless such
settlement agreement expressly provides otherwise.

     14.  Severability.  A determination that any provision of this Agreement is
invalid or unenforceable  shall not affect the validity or enforceability of any
other provision hereof.

     15. Waiver. Failure to insist upon strict compliance with any of the terms,
covenants  or  conditions  hereof  shall not be  deemed a waiver  of such  term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in  writing,  designated  as a waiver,  and signed by the party  against who its
enforcement is sought.  Any waiver or  relinquishment  of such right or power at
any one or more  times  shall not be deemed a waiver or  relinquishment  of such
right or power at any other time or times.

     16.   Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts,  each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.

     17.  Governing Law. This  Agreement  shall be governed by and construed and
enforced  in  accordance  with the laws of the  State  of New  York,  and in the
absence of  controlling  New York law,  the federal  laws of the United  States,
without reference to conflicts of law principles.

     18. Headings and  Construction.  The headings of sections in this Agreement
are for  convenience  of  reference  only and are not  intended  to qualify  the
meaning of any  section.  Any  reference  to a section  number  shall refer to a
section of this Agreement, unless otherwise stated.

     19. Entire Agreement;  Modifications.  This instrument  contains the entire
agreement of the parties  relating to the subject matter hereof,  and supersedes
in its entirety any and all prior agreements,  understandings or representations
relating  to the  subject  matter  hereof  between  the Bank  and the  Executive
Officer.  No  modifications  of this  Agreement  shall be valid  unless  made in
writing and signed by the parties hereto.

     20. Required Regulatory  Provisions.  The following provisions are included
for  the  purposes  of  complying  with  various  laws,  rules  and  regulations
applicable to the Bank:

          (a) Notwithstanding  anything herein contained to the contrary,  in no
     event shall the aggregate  amount of compensation  payable to the Executive
     Officer  under  section  10(b) hereof  (exclusive  of amounts  described in
     section 10(b)(i)) exceed three times the Executive Officer's average annual
     total  compensation  for the last five  consecutive  calendar  years to end
     prior to his or her  termination of employment with the Bank (or for his or
     her entire  period of  employment  with the Bank if less than five calendar
     years).

          (b)  Notwithstanding  anything  contained herein to the contrary,  the
     Executive  Officer  shall  have no right to receive  compensation  or other
     benefits  for any period  after  termination  for cause.  "Termination  for
     Cause" shall include termination of the Executive Officer due to any of the
     following:  (i)  personal  dishonesty,  (ii)  incompetence  or  intentional
     failure to perform  regular  duties,  (iii)  willful  misconduct or willful
     violation of any law, rule or regulation (other than traffic  violations or
     similar offenses) or final cease and desist order, (iv) breach of fiduciary
     duty involving  personal  profit or (v) material breach of any provision of
     this Agreement.

          (c)  Notwithstanding  anything herein  contained to the contrary,  any
     payments to the  Executive  Officer by the Bank,  whether  pursuant to this
     Agreement  or  otherwise,   are  subject  to  and  conditioned  upon  their
     compliance  with section  18(k) of the Federal  Deposit  Insurance Act (the
     "FDI Act"), 12 U.S.C.  Section  1828(k),  and any  regulations  promulgated
     thereunder.


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          (d) Notwithstanding  anything herein contained to the contrary, if the
     Executive  Officer is suspended from office and/or  temporarily  prohibited
     from  participating in the conduct of the affairs of the Bank pursuant to a
     notice  served under  section  8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C.
     Section  1818(e)(3)  or  1818(g)(1),  the  Bank's  obligations  under  this
     Agreement  shall be  suspended  as of the date of service  of such  notice,
     unless stayed by appropriate proceedings. If the charges in such notice are
     dismissed,  the  Bank,  in its  discretion,  may (i)  pay to the  Executive
     Officer  all  or  part  of  the  compensation  withheld  while  the  Bank's
     obligations  hereunder  were suspended and (ii)  reinstate,  in whole or in
     part, any of the obligations which were suspended.

          (e) Notwithstanding  anything herein contained to the contrary, if the
     Executive   Officer  is  removed   and/or   permanently   prohibited   from
     participating in the conduct of the Bank's affairs by an order issued under
     section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C.  Section 1818(e)(4) or
     (g)(1), all obligations of the Bank under this Agreement shall terminate as
     of the effective  date of the order,  but vested rights and  obligations of
     the Bank and the Executive Officer shall not be affected.

          (f) Notwithstanding  anything herein contained to the contrary, if the
     Bank is in default  (within the meaning of section  3(x)(1) of the FDI Act,
     12 U.S.C.  Section  1813(x)(1)),  all  obligations  of the Bank  under this
     Agreement shall terminate as of the date of default,  but vested rights and
     obligations of the Bank and the Executive Officer shall not be affected.

          (g)  Notwithstanding  anything herein  contained to the contrary,  all
     obligations of the Bank hereunder shall be terminated, except to the extent
     that a  continuation  of this  Agreement  is  necessary  for the  continued
     operation  of the  Bank:  (i) by the  Director  of  the  Office  of  Thrift
     Supervision  ("OTS")  or his  designee  or the  Federal  Deposit  Insurance
     Corporation  ("FDIC"),  at the time the FDIC  enters into an  agreement  to
     provide  assistance  to or on  behalf  of  the  Bank  under  the  authority
     contained in section 13(c) of the FDI Act, 12 U.S.C. Section 1823(c);  (ii)
     by the Director of the OTS or his or her designee at the time such Director
     or designee  approves a supervisory  merger to resolve  problems related to
     the  operation of the Bank or when the Bank is  determined by such Director
     to be in an unsafe or unsound condition.  The vested rights and obligations
     of the parties shall not be affected.

     If and to the extent that any of the  provisions of this section 20 are not
required  by  applicable  law,  rule  or  regulation,   the  same  shall  become
inoperative as though eliminated by formal amendment of this Agreement.

     IN WITNESS  WHEREOF,  the Bank has caused this Agreement to be executed and
the Executive Officer has hereto set his or her hand, all as of the day and year
first above written.


                                        ---------------------------------------
                                        Stephen W. Dederick, Executive Officer


                                        GOSHEN SAVINGS BANK

                                        By
                                             ----------------------------------
                                             Thomas V. Guarino, President


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