EMPLOYMENT AGREEMENT



         THIS EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
this 13th day of December, 1995, by and between Schenectady Federal Savings Bank
hereinafter  referred  to as the "Bank"  whether in mutual or stock  form),  and
Richard D. Ammian (the "Employee").

         WHEREAS, the Employee is currently serving as the Senior Vice President
and Corporate Secretary; and

         WHEREAS,  the Bank has  adopted a plan of  conversion  whereby the Bank
will convert to capital stock form as the  subsidiary of SFS Bancorp,  Inc. (the
"Holding Company"), subject to the approval of the Bank's members and the Office
of Thrift Supervision (the "Conversion"); and

         WHEREAS,  the board of  directors  of the Bank  ("Board of  Directors")
recognizes that, as is the case with publicly held corporations  generally,  the
possibility  of a change in control of the Holding  Company  and/or the Bank may
exist and that such possibility,  and the uncertainty and questions which it may
raise  among  management,  may result in the  departure  or  distraction  of key
management personnel to the detriment of the Bank, the Holding Company and their
respective stockholders; and

         WHEREAS, the Board of Directors believes it is in the best interests of
the Bank to enter  into  this  Agreement  with the  Employee  in order to assure
continuity  of  management  of the  Bank  and to  reinforce  and  encourage  the
continued  attention  and  dedication  of the  Employee to his  assigned  duties
without distraction in the face of potentially disruptive  circumstances arising
from the  possibility of a change in control of the Holding Company or the Bank,
although no such change is now contemplated; and

         WHEREAS,  the  Board of  Directors  has  approved  and  authorized  the
execution  of this  Agreement  with the  Employee  to take  effect  as stated in
Section 2 hereof;

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:

         1.  Definitions.

                  (a) The  term  "Change  in  Control"  means  (1) an event of a
nature  that (i)  results  in a change  in  control  of the Bank or the  Holding
Company  within the meaning of the Home  Owners'  Loan Act of 1933 and 12 C.F.R.
Part 574 as in  effect  on the date  hereof;  or (ii)  would be  required  to be
reported in  response to Item 1 of the current  report on Form 8-K, as in effect
on the date hereof,  pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934  (the  "Exchange  Act");  (2)  any  person  (as the  term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange  Act),  directly or  indirectly  of
securities of the Bank or the Holding  Company  representing  20% or more of the
Bank's or the Holding Company's outstanding securities;  (3) individuals who are
members of the board of directors of the Bank or the Holding Company on the date
hereof (the  "Incumbent  Board")  cease for any reason to  constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least  three-quarters of
the directors  comprising the Incumbent  Board, or whose nomination for election
by the Holding Company's  stockholders was approved by the nominating  committee
<PAGE>
serving under an Incumbent Board,  shall be considered a member of the Incumbent
Board; or (4) a plan of  reorganization,  merger  consolidation,  sale of all or
substantially  all of the assets of the Bank or the Holding Company or a similar
transaction  in  which  the Bank or the  Holding  Company  is not the  resulting
entity.  The term  "change  in  control"  shall not  include an  acquisition  of
securities by an employee benefit plan of the Bank or the Holding Company or the
acquisition of securities of the Bank by the Holding  Company in connection with
the Conversion. In the application of 12 C.F.R. Part 574 to a determination of a
Change in Control,  determinations  to be made by the OTS or its Director  under
such regulations shall be made by the Board of Directors.

                  (b) The term "Commencement  Date" means the date of completion
of Conversion.

                  (c) The term "Date of  Termination"  means the  earlier of (1)
the date upon which the Bank gives notice to the Employee of the  termination of
his employment  with the Bank or (2) the date upon which the Employee  ceases to
serve as an Employee of the Bank.

                  (d) The term "Involuntarily  Termination" means termination of
the  employment  of  Employee  without his express  written  consent,  and shall
include a material  diminution of or  interference  with the Employee's  duties,
responsibilities  and benefits as Senior Vice  President of the Bank,  including
(without limitation) any of the following actions unless consented to in writing
by the Employee:  (1) a change in the  principal  workplace of the Employee to a
location outside of a 20 mile radius from the Bank's  headquarters  office as of
the date  hereof;  (2) a material  reduction in the number or seniority of other
Bank  personnel  reporting  to  the  Employee  or a  material  reduction  in the
frequency with which, or in the nature of the matters with respect to which such
personnel  are to  report  to the  Employee,  other  than as part of a Bank-  or
Holding  Company-wide  reduction in staff;  (3) a material adverse change in the
Employee's salary, perquisites, benefits, contingent benefits or vacation, other
than as part of an overall program applied  uniformly and with equitable  effect
to all members of the senior management of the Bank or the Holding Company;  and
(4) a material  permanent increase in the required hours of work or the workload
of the Employee. The term "Involuntary Termination" does not include Termination
for Cause or termination of employment due to retirement,  death,  disability or
suspension  or temporary  or permanent  prohibition  from  participation  in the
conduct of the Bank's affairs under Section 8 of the Federal  Deposit  Insurance
Act ("FDIA").

                  (e) The terms  "Termination  for  Cause" and  "Terminated  for
Cause"  mean  termination  of the  employment  of the  Employee  because  of the
Employee's personal dishonesty,  incompetence,  willful misconduct,  breach of a
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  willful  violation of any law, rule, or regulation  (other than traffic
violations or similar  offenses) or final  cease-and-desist  order,  or material
breach of any provision of this  Agreement.  The Employee shall not be deemed to
have been  Terminated for Cause unless and until there shall have been delivered
to the Employee a copy of a resolution,  duly adopted by the affirmative vote of
not less than a majority of the entire  membership  of the Board of Directors of
the Bank at a  meeting  of the Board  called  and held for such  purpose  (after
reasonable notice to the Employee and an opportunity for the Employee,  together
with the Employee's counsel, to be heard before the Board),  stating that in the
good  faith  opinion  of the Board  the  Employee  has  engaged  in the  conduct
described in the preceding  sentence and specifying the  particulars  thereof in
detail.
<PAGE>
         2.  Term.  The term of this  Agreement  shall be a period  of two years
commencing on the Commencement Date, subject to earlier  termination as provided
herein. Beginning on the first anniversary of the Commencement Date, and on each
anniversary  thereafter,  the term of this  Agreement  shall be  extended  for a
period of one year in addition to the then-remaining term, provided that (1) the
Bank has not given  notice to the  Employee in writing at least 90 days prior to
such anniversary that the term of this Agreement shall not be extended  further;
and (2) prior to such anniversary, the Board of Directors explicitly reviews and
approves the extension.  Reference  herein to the term of this  Agreement  shall
refer to both such initial term and such extended terms.

         3.  Employment.  The Employee is employed as the Senior Vice  President
and  Corporate  Secretary of the Bank.  As Senior Vice  President  and Corporate
Secretary,  Employee shall render such  administrative  and management  services
under the supervision of the President as are  customarily  performed by persons
situated in similar executive  capacities,  and shall have such other powers and
duties of an officer of the Bank as the Board of Directors  may  prescribe  from
time to time.

         4.  Compensation.

                  (a)  Salary.  The Bank agrees to pay the  Employee  during the
term of this Agreement the salary  established by the Board of Directors,  which
shall be at least the Employee's  salary in effect as of the Commencement  Date.
The amount of the Employee's salary shall be reviewed by the Board of Directors,
beginning  not  later  than the  first  anniversary  of the  Commencement  Date.
Adjustments in salary or other  compensation shall not limit or reduce any other
obligation of the Bank under this  Agreement.  The  Employee's  salary in effect
from time to time  during the term of this  Agreement  shall not  thereafter  be
reduced.

                  (b) Discretionary  Bonuses.  The Employee shall be entitled to
participate in an equitable manner with all other executive officers of the Bank
in discretionary bonuses as authorized and declared by the Board of Directors to
its executive  employees.  No other compensation  provided for in this Agreement
shall be deemed a substitute  for the  Employee's  right to  participate in such
bonuses when and as declared by the Board of Directors.

                  (c) Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services  under this  Agreement in accordance  with the policies and  procedures
applicable  to the  executive  officers of the Bank,  provided that the Employee
accounts for such expenses as required under such policies and procedures.

         5.       Benefits.

                  (a)  Participation  in Retirement and Employee  Benefit Plans.
The Employee  shall be entitled to participate in all plans relating to pension,
thrift,  profit-sharing,  group life  insurance,  medical  and dental  coverage,
education,   cash  bonuses,   and  other  retirement  or  employee  benefits  or
combinations  thereof,  in which the Bank's executive officers  participate.  In
addition, the Employee shall be entitled to be considered for benefits under all
of the stock and stock  option  related  plans  adopted  for the  benefit of the
Bank's executive or other employees.
<PAGE>
                  (b)  Fringe  Benefits.  The  Employee  shall  be  eligible  to
participate in, and receive benefits under, any other fringe benefit plans which
are or may become applicable to the Bank's executive officers.

         6.  Vacations;  Leave.  The  Employee  shall be entitled to annual paid
vacation in  accordance  with the  policies  established  by the Bank's Board of
Directors for executive  employees  and to voluntary  leave of absence,  with or
without  pay,  from time to time at such times and upon such  conditions  as the
Board of Directors of the Bank may determine in its discretion.

         7.  Termination of Employment.

                  (a)  Involuntary  Termination.  The  Board  of  Directors  may
terminate  the  Employee's  employment at any time,  but,  except in the case of
Termination  for  Cause,  termination  of  employment  shall not  prejudice  the
Employee's right to compensation or other benefits under this Agreement.  In the
event of Involuntary  Termination other than in connection with or within twelve
(12) months  after a Change in Control,  (1) the Bank shall pay to the  Employee
during the remaining  term of this  Agreement,  his salary at the rate in effect
immediately prior to the Date of Termination, payable in such manner and at such
times as such salary would have been payable to the Employee  under Section 2 if
the  Employee had  continued to be employed by the Bank,  and (2) the Bank shall
provide to the  Employee  during the  remaining  term of this  Agreement  health
benefits as  maintained  by the Bank for the benefit of its  executive  officers
from time to time during the remaining term of the Agreement.

                  (b)  Termination  for Cause.  In the event of Termination  for
Cause,  the  Bank  shall  pay  the  Employee  his  salary  through  the  date of
termination, and the Bank shall have no further obligation to the Employee under
this Agreement.

                  (c) Voluntary  Termination.  The Employee's  employment may be
voluntarily  terminated by the Employee at any time upon 90 days written  notice
to the Bank or upon  such  shorter  period  as may be agreed  upon  between  the
Employee and the Board of Directors of the Bank. In the event of such  voluntary
termination,  the Bank shall be  obligated  to continue to pay the  Employee his
salary and  benefits  only  through  the date of  termination,  at the time such
payments are due, and the Bank shall have no further  obligation to the Employee
under this Agreement.

                  (d) Change in Control. In the event of Involuntary Termination
in connection with or within 12 months after a change in control which occurs at
any time while the Employee is employed  under this  Agreement,  the Bank shall,
subject to Section 8 of this Agreement, (1) pay to the Employee in a lump sum in
cash within 25 business  days after the Date of  Termination  an amount equal to
200% of the Employee's  "base amount" as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the  "Code");  and (2) provide to the Employee
during  the  remaining  term of  this  Agreement  such  health  benefits  as are
maintained  for  executive  officers  of the Bank from time to time  during  the
remaining term of this Agreement.

                  (e)  Death;  Disability.  In the  event  of the  death  of the
Employee while  employed  under this  Agreement and prior to any  termination of
employment,  the  Employee's  estate,  or such person as the  Employee  may have
previously designated in writing, shall be entitled to receive from the Bank the
salary of the Employee  through the last day of the calendar  month in which the
Employee  died. If the Employee  becomes  disabled as defined in the Bank's then
current  disability plan or if the Employee is otherwise  unable to serve in his
<PAGE>
present  capacity,  the  Employee  shall be entitled to receive  group and other
disability  income  benefits of the type then provided by the Bank for executive
officers.  In  the  event  of  such  disability,  this  Agreement  shall  not be
suspended. However, the Bank shall be obligated to pay the Employee compensation
pursuant  to  Sections  4(a) and (b) hereof  only to the  extent the  Employee's
salary, in the absence of such disability,  would exceed (on an after tax basis)
the disability income benefits received pursuant to this paragraph. In addition,
the Bank shall have the right,  upon  resolution  of its Board,  to  discontinue
paying cash compensation  pursuant to Sections 4(a) and (b) beginning six months
following a determination that Employee  qualifies for the foregoing  disability
income benefits.

                  (f) Temporary  Suspension or  Prohibition.  If the Employee is
suspended and/or temporarily prohibited from participating in the conduct of the
Bank's  affairs by a notice served under Section  8(e)(3) or (g)(1) of the FDIA,
12 U.S.C. ss. 1818(e)(3) and (g)(1), the Bank's obligations under this Agreement
shall be  suspended  as of the date of  service,  unless  stayed by  appropriate
proceedings.  If the  charges in the notice are  dismissed,  the Bank may in its
discretion (1) pay the Employee all or part of the  compensation  withheld while
its obligations  under this Agreement were suspended and (ii) reinstate in whole
or in part any of its obligations which were suspended.

                  (g) Permanent  Suspension or  Prohibition.  If the Employee 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 (g)(1) of the FDIA,
12 U.S.C.  ss.  1818(e)(4)  and (g)(1),  all  obligations of the Bank under this
Agreement  shall  terminate as of the  effective  date of the order,  but vested
rights of the contracting parties shall not be affected.

                  (h) Default of the Bank. If the Bank is in default (as defined
in Section  3(x)(1) of the FDIA),  all  obligations  under this Agreement  shall
terminate  as of the date of default,  but this  provision  shall not affect any
vested rights of the contracting parties.

                  (i)  Termination by  Regulators.  All  obligations  under this
Agreement shall be terminated, except to the extent determined that continuation
of this  Agreement is necessary for the continued  operation of the Bank: (1) by
the Director of the Office of Thrift  Supervision (the "Director") or his or her
designee,  at  the  time  the  Federal  Deposit  Insurance  Corporation  or  the
Resolution Trust Corporation  enters into an agreement to provide  assistance to
or on behalf of the Bank under the  authority  contained in Section 13(c) of the
FDIA; or (2) by the Director or his or her designee, at the time the Director or
his or her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director to be in an
unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by any such action.

         8. Certain Reduction of Payments by the Bank.

                  (a) Notwithstanding any other provision of this Agreement,  if
payments under this Agreement,  together with any other payments  received or to
be received by the Employee in  connection  with a Change in Control would cause
any amount to be  nondeductible  by the Bank or the Holding  Company for federal
income tax purposes  pursuant to Section 280G of the Code,  then benefits  under
this Agreement shall be reduced (not less than zero) to the extent  necessary so
as to maximize  payments to the  Employee  without  causing any amount to become
nondeductible by the Bank or the Holding  Company.  The Employee shall determine
the allocation of such reduction among payments to the Employee.
<PAGE>
                  (b)  Any  payments  made  to the  Employee  pursuant  to  this
Agreement,  or otherwise,  are subject to and conditioned  upon their compliance
with 12 U.S.C. 1828(k) and any regulations promulgated thereunder.

         9. No  Mitigation.  The Employee  shall not be required to mitigate the
amount of any salary or other payment or benefit  provided for in this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation  earned by
the Employee as the result of  employment  by another  employer,  by  retirement
benefits after the date of termination or otherwise.

         10.  Attorneys  Fees.  In the  event  the Bank  exercises  its right of
Termination for Cause, but it is determined by a court of competent jurisdiction
or by an  arbitrator  pursuant  to  Section 18 that cause did not exist for such
termination, or if in any event it is determined by any such court or arbitrator
that the Bank has  failed to make  timely  payment  of any  amounts  owed to the
Employee under this Agreement,  the Employee shall be entitled to  reimbursement
for all reasonable  costs,  including  attorneys' fees,  incurred in challenging
such  termination or collecting  such amounts.  Such  reimbursement  shall be in
addition to all rights to which the  Employee is otherwise  entitled  under this
Agreement.

         11.      Confidential Information; Loyalty; Noncompetition.

                  (a) During the term of the Employee's employment hereunder and
thereafter,  the  Employee  shall not,  except as may be required to perform his
duties  hereunder  or as  required by law,  disclose  to others or use,  whether
directly or indirectly, any Confidential Information. "Confidential Information"
means  information  about the Bank and the Bank's clients and customers which is
not available to the general  public and was or shall be learned by the Employee
in the course of his employment by the Bank,  including  without  limitation any
data,  formulae,  information,  proprietary  knowledge,  trade  secrets,  credit
reports and analyses owned,  developed and used in the course of the business of
the Bank,  including client and customer lists and information  related thereto;
and all papers,  records and other documents (and all copies thereof)  contained
such Confidential Information.  The Employee acknowledges that such Confidential
Information is specialized, unique in nature and of great value to the Bank. The
Employee  agrees that upon the expiration of the  Employee's  term of employment
hereunder or in the event the  Employee's  employment  hereunder  is  terminated
prior thereto for any reason  whatsoever,  the Employee will promptly deliver to
the Bank all documents  (and all copies  thereof)  containing  any  Confidential
Information.

                  (b) The Employee shall devote his full time to the performance
of his employment under this Agreement; provided, however, that the Employee may
serve, without compensation, as a director of charitable, community and industry
organizations  and continue to serve,  with  compensation,  as a director of the
business  corporations  of which he is  currently  a director to the extent such
directorships  do not  inhibit  the  performance  of his  duties  thereunder  or
conflict  with the  business  of the  Bank.  During  the term of the  Employee's
employment hereunder,  the Employee shall not engage in any business or activity
contrary to the business affairs or interests of the Bank.

                  (c)  Upon  the  expiration  of  the  term  of  the  Employee's
employment  hereunder  or in  the  event  the  Employee's  employment  hereunder
terminates prior thereto for any reason whatsoever,  the Employee shall not, for
a period of one year after the occurrence of such event, for himself,  or as the
<PAGE>
agent of, on behalf of, or in conjunction with, any person or entity, solicit or
attempt to solicit, whether directly or indirectly: (i) any employee of the Bank
to terminate such employee's employment  relationship with the Bank; or (ii) any
savings and loan,  banking or similar business from any person or entity that is
or was a  client,  employee,  or  customer  of the Bank and had  dealt  with the
Employee  or any  other  employee  of the  Bank  under  the  supervision  of the
Employee.

                  (d) In the event  Employee  voluntarily  resigns  pursuant  to
Section 7(c) of this  Agreement,  the Employee  shall not, for a period equal to
the lesser of one year from the date of  termination  or the period during which
the Bank is obligated  to continue to pay the  Employee his salary,  directly or
indirectly,  own, manage,  operate or control,  or participate in the ownership,
management,  operation  or control  of, or be employed  by or  connected  in any
manner with, any financial institution having an office located within ten miles
of any office of the Bank as of the date of termination.

                  (e) The  provisions  of this  Section 11 shall not prevent the
Employee from purchasing,  solely for investment, not more than 5 percent of any
financial  institution's  stock or other  securities  which  are  traded  on any
national or regional securities.

                  (f)  The   provisions   of  this  Section  shall  survive  the
termination of the Employee's  employment hereunder whether by expiration of the
term thereof or otherwise.

         12.  No Assignments.

                  (a) This Agreement is personal to each of the parties  hereto,
and  neither  party may  assign or  delegate  any of its  rights or  obligations
hereunder  without  first  obtaining  the  written  consent of the other  party;
provided,  however, that the Bank shall require any successor or assign (whether
direct or indirect, by purchase,  merger,  consolidation or otherwise) to all or
substantially  all of the business  and/or  assets of the Bank, by an assumption
agreement  in form and  substance  satisfactory  to the  Employee,  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  or
assignment  had taken  place.  Failure of the Bank to obtain such an  assumption
agreement prior to the  effectiveness of any such succession or assignment shall
be a breach of this  Agreement  and shall  entitle the Employee to  compensation
from the  Bank in the same  amount  and on the  same  terms as the  compensation
pursuant to Section 7(d) hereof.  For purposes of implementing the provisions of
this Section  12(a),  the date on which any such  succession  becomes  effective
shall be deemed the Date of Termination.

                  (b) This  Agreement  and all rights of the Employee  hereunder
shall inure to the benefit of and be enforceable by the Employee's  personal and
legal   representatives,    executors,   administrators,    successors,   heirs,
distributees,  devisees  and  legatees.  If the  Employee  should  die while any
amounts  would still be payable to the  Employee  hereunder  if the Employee had
continued to live, all such amounts,  unless otherwise provided herein, shall be
paid in accordance  with the terms of this Agreement to the Employee's  devisee,
legatee or other  designee or if there is no such  designee,  to the  Employee's
estate.
<PAGE>
         13. Notice.  For the 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  personally  delivered  or sent by certified
mail, return receipt requested,  postage prepaid, to the Bank at its home office
the  attention  of the Board of  Directors  with a copy to the  Secretary of the
Bank,  or, if the  Employee,  to such home or other  address as the Employee has
most recently provided in writing to the Bank.

         14.  Amendments.  No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.

         15. Paragraph  Headings.  The paragraph headings used in this Agreement
are  included  solely  for  convenience  and  shall  not  affect,  or be used in
connection with, the interpretation of this Agreement.

         16.  Severability.  The  provisions of this  Agreement  shall be deemed
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

         17.  Governing Law. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
New York.


         18.  Arbitration.  Any  dispute  or  controversy  arising  under  or in
connection  with this Agreement  shall be settled  exclusively by arbitration in
accordance  with  the  rules of the  American  Arbitration  Association  then in
effect.  Judgment may be entered on the  arbitrator's  award in any court having
jurisdiction.
<PAGE>

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
day and year first above written.

         THIS AGREEMENT  CONTAINS A BINDING  ARBITRATION  PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.

Attest:                                        Schenectady Federal Savings Bank

---------------------                          ---------------------------
Secretary
                                               By:
                                               Its:


                                               EMPLOYEE

                                               ----------------------------
                                               Richard D. Ammian