Exhibit 10.2

                        SUPPLEMENTAL EMPLOYMENT AGREEMENT

     This  SUPPLEMENTAL  EMPLOYMENT  AGREEMENT  (the  "Agreement")  is made  and
entered  into as of the 1st day of July,  1999,  by and  between  GSB  Financial
Corporation,  a corporation  organized and operating under the laws of the State
of Delaware  and having an office at 1 South  Church  Street,  Goshen,  New York
10924 (the  "Company"),  and  Stephen W.  Dederick,  (the  "Executive  Officer")
residing at 946 Oregon Trail, Pine Bush, New York 12566.

     WHEREAS,  pursuant to an Employment Agreement dated as of July 1, 1999 (the
"Employment Agreement") by and between Goshen Savings Bank, a stock savings bank
organized  under  the  federal  laws of the  United  States  and a wholly  owned
subsidiary  of the Company  (the  "Bank") and the  Executive  Officer,  the Bank
agreed,  among other  things,  to provide the  Executive  Officer  with  certain
assurances regarding his or her continued employment in the event of a Change in
Control of the Bank or the Company; and

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that it would be in the best  interests  of the Company and the Bank to guaranty
the assurances given by the Bank to Executive Officer in order to secure for the
Bank and itself the continued availability of the Executive Officer's services.

     NOW,  THEREFORE,  in consideration of the mutual covenants set forth below,
the parties agree as follows:

Section 1. The Guaranty.

     The Company  hereby  guarantees  each and every  obligation  of the Bank to
Executive Officer pursuant to the Employment  Agreement.  Such guaranty shall be
effective as, when and if the Bank fails to make any payment due, or perform any
obligation, under the Employment Agreement.

Section 2. Payment in Full.

     If the provisions of Section 20(a) of the Employment  Agreement  reduce any
amount otherwise payable to the Executive Officer, then the Company shall pay to
the Executive  Officer the amount of such reduction so that the aggregate amount
payable to the  Executive  Officer  shall be equal to the amount  which would be
payable under the Employment Agreement as though Section 20(a) were not included
therein.

Section 3. Excise Tax Indemnification.

     (a) This section 3 shall apply if the Executive  Officer's  employment with
the Bank or the Company is terminated in circumstances  giving rise to liability
for excise taxes under  section  4999 of the Internal  Revenue Code of 1986 (the
"Code").  If for any  taxable  year,  the  Executive  Officer  is liable for the
payment  of an excise  tax under  section  4999 of the Code with  respect to any
payment made by the Company or the Bank to the  Executive  Officer,  the Company
shall pay to the  Executive  Officer  the  amount  necessary  so that  after the
payment of all excise taxes, and after the payment of all other taxes due on the
amount  payable to the  Executive  Officer  under this  section,  the net amount
remaining  in the  hands  of the  Executive  Officer  shall  be the  amount  the
Executive  Officer would have  received if no excise tax had been payable.  Such
amount shall be equal to X determined under the following formula:

     X =              E x P
         ------------------
         1-[(FI x (1 - SLI) + SLI + M]

where


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     E = the rate at which the excise tax is assessed  under section 4999 of the
Code;

     P = the  amount  with  respect  to  which  such  excise  tax  is  assessed,
determined without regard to this section 3;

     FI = the highest  marginal  rate of income tax  applicable to the Executive
Officer under the Code for the taxable year in question;

     SLI = the sum of the highest marginal rates of income tax applicable to the
Executive Officer under all applicable state and local laws for the taxable year
in question;

and

     M = the highest  marginal rate of Medicare tax  applicable to the Executive
Officer under the Code or the taxable year in question.

Any amount  payable  under this section  shall be paid on the earlier of (i) the
date the Company or the Bank is required to withhold  tax on any payment due, or
(ii) the date the tax is required to be paid by the Executive Officer.

     (b)  Notwithstanding  anything in this  section 3 to the  contrary,  in the
event that the  Executive  Officer's  liability for the excise tax under section
4999 of the Code for a taxable year is  subsequently  determined to be different
than the amount determined by the formula (X + P) x E, where X, P and E have the
meanings provided in section 3(a), the Executive Officer or the Company,  as the
case may be,  shall pay to the other  party at the time that the  amount of such
excise tax is finally determined,  an appropriate  amount,  plus interest,  such
that the payment made under subsection 3(a), when increased by the amount of the
payment made to the Executive  Officer under this subsection by the Company,  or
when  reduced  by the  amount of the  payment  made to the  Company  under  this
subsection by the Executive Officer, equals the amount that should have properly
been paid to the Executive  Officer  under  subsection  3(a).  The interest paid
under this section 3(b) shall be determined  at the rate provided  under section
1274(b)(2)(B)  of the Code. To confirm that the proper amount,  if any, was paid
to the  Executive  Officer  under this section 3, the  Executive  Officer  shall
furnish to the Company a copy of each tax return which  reflects a liability for
an excise tax payment made by the  Company,  at least 20 days before the date on
which such return is required to be filed with the Internal Revenue Service.

     (c) The provisions of this section 3 are designed to reflect the provisions
of  applicable  federal,  state and local tax laws in effect on the date of this
Agreement.  If,  after the date  hereof,  there  shall be any change in any such
laws,  this  section  3 shall be deemed  automatically  modified  to the  extent
necessary to assure that the Executive Officer is fully indemnified  against the
economic  effects  of the tax  imposed  under  section  4999 of the  Code or any
similar federal, state or local tax.

Section 4. Successors and Assigns.

     This  Agreement  will inure to the benefit of and be binding upon Executive
Officer, his or her legal representatives and testate or intestate distributees,
and the Company its 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 assets and business of the Company may
be sold or otherwise transferred.

Section 5. 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:


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     If to Executive Officer:

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

     If to the Company:

     GSB Financial Corporation
     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, New York 10601
     Attention: Jay L. Hack, Esq.

Section 6. Enforcement Costs and Attorneys' Fees.

     The  Company  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 the  Executive  Officer's  consultation  with
legal  counsel or in  connection  with or  arising  out of any  action,  suit or
proceeding  in which the Executive  Officer may be involved,  as a result of the
Executive  Officer's  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 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  Company'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.

Section 7. Severability.

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

Section 8. 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 whom its enforcement is
sought.  Any waiver or relinquishment of any right or power hereunder 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.

Section 9. Counterparts.


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     This  Agreement  may be executed in two (2) or more  counterparts,  each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.

Section 10. 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.

Section 11. 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.

Section 12. 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.

Section 13. No Effect on Employment at Will Relationship.

     The Company and  Executive  Officer  acknowledge  and confirm  that nothing
contained in this agreement or in the  Employment  Agreement  between  Executive
Officer and the Bank shall change the employment  relationship  between the Bank
and Executive  Officer to anything other than employment at will, except for the
express assurances, protections and other provisions contained in the Employment
Agreement and this Agreement,  which provisions shall be deemed to supersede the
employment at will relationship.

     IN WITNESS  WHEREOF,  the Company 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


                                        GSB FINANCIAL CORPORATION


                                        By
                                             ----------------------------------
                                             Thomas V. Guarino, Chairman


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