Exhibit 10.1

                              CATSKILL SAVINGS BANK
                           DIRECTOR DEATH BENEFIT PLAN


                                  PLAN PURPOSE

         This plan is the Catskill Savings Bank Director Death Benefit Plan, the
purpose  of  which  is to  provide  a  cash  death  benefit  to  the  Designated
Beneficiary or estate of eligible  directors of Catskill Savings Bank.  Catskill
Savings  Bank's board of directors  believes that it is in the best interests of
the bank to provide the benefits  provided in this plan,  which it believes will
aid the bank in retaining  as directors  the  experienced  and highly  qualified
individuals  who are  essential  to its  continued  success  and  growth.  It is
intended  that the benefits  contemplated  by this plan shall  survive and be an
enforceable  obligation in the event of a change in control of Catskill  Savings
Bank or Catskill Financial Corporation.

                                    ARTICLE I

                              ESTABLISHMENT OF PLAN

         1.1    Establishment of Plan
                ---------------------

         The Plan has  been  established  as of the  Effective  Date as  defined
herein.

         1.2    Applicability of Plan
                ---------------------

         The benefits  provided by the Plan shall be available to all  Directors
who meet the eligibility requirements of Article III.

         1.3    Contractual Right to Benefits
                -----------------------------

         The Plan establishes and vests in each Participant a contractual  right
to the benefits to which each Participant is entitled hereunder,  enforceable by
the Participant against Catskill Savings Bank.

                                   ARTICLE II

                          DEFINITIONS AND CONSTRUCTION

         2.1    Definitions
                -----------

         Whenever used in the Plan, the following  terms shall have the meanings
set forth below.

         (a) "Bank" means Catskill Savings Bank, a federally  chartered  savings
bank, or any successor as provided for in Article VII.

         (b) "Board of  Directors",  or "Board"  means the board of directors of
the Bank, and, in the following  definition of Change of Control means the board
of directors of the Holding Company.
<PAGE>
         (c) "Cause" shall mean removal of a Director for cause,  as provided in
the Bank's by-laws.

         (d) "Change in Control"  means an event in which:  a) 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) the Holding Company; or (ii)
a trustee or other fiduciary  holding  securities under an employee benefit plan
maintained  for the benefit of  employees  of the Bank or the  Holding  Company,
becomes the "beneficial  owner" (as defined in Rule 13d-3  promulgated under the
1934 Act),  directly  or  indirectly,  of  securities  issued by the Bank or the
Holding Company  representing 25% or more of the combined voting power of all of
the Bank's or the  Holding  Company's  then  outstanding  securities;  or b) the
individuals  who on the date this Plan is  adopted  are  members  of the  Board,
together  with  their  successors  as  defined  below,  cease for any  reason to
constitute a majority of the members of the Board; or c) the shareholders of the
Bank or the Holding Company approve either: (I) a merger or consolidation of the
Bank or the Holding Company with any other  corporation,  other than a merger or
consolidation  following  which both of the following  conditions are satisfied:
(I) either  (A) 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 resulting from such merger or consolidation;  or (B) the
shareholders  of  the  Bank  or  the  Holding  Company  own  securities  of  the
institution  resulting  from such merger or  consolidation  representing  eighty
percent  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  or  the  Holding   Company   before  such  merger  or
consolidation;   and  (II)  the  entity  which   results  from  such  merger  or
consolidation  expressly  agrees in writing to assume and  perform the Bank's or
the  Holding  Company's  obligations  under  this  Agreement;  or (ii) a plan of
complete  liquidation of the Bank or the Holding Company or an agreement for the
sale or disposition by the Bank or the Holding  Company of all or  substantially
all of its  assets.  "Change  in  Control"  shall also mean an event of a nature
that:  (I) 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 of the  occurrence  of the event
pursuant to Section 13 or 15(d) of the 1934 Act, as amended;  or (ii) results in
a Change in Control of the Bank or the Holding Company within the meaning of the
Home Owners Loan Act as amended,  the Federal Deposit  Insurance Act as amended,
or regulations promulgated pursuant to such laws.

         (e) "Designated  Beneficiary" means the person(s) designated in writing
by a  Participant  as the  person(s)  entitled  to receive a Payment,  on a form
prescribed by the Board and delivered to the Secretary of the Bank.

         (f) "Director" means a voting director of the Bank.

         (g) "Effective Date" means May 18,1999.

         (h)  "Expiration  Date" means the date on which  Payment is made to the
Designated  Beneficiary or estate of the last Participant to die, or the date on
which  the Plan is  earlier  terminated  pursuant  to  Section  8.2 or  extended
pursuant to Section 8.1.

         (I) "Holding Company" means Catskill Financial Corporation,  a Delaware
corporation.

         (j)   "Participant"   means  a  Director  who  meets  the   eligibility
requirements of Article III.

         (k)  "Payment"  means the  payment of a death  benefit as  provided  in
Article IV hereof.
<PAGE>
        (l)  "Plan" means the Catskill Savings Bank Director Death Benefit Plan.

         2.2     Applicable Law
                 --------------

         The laws of the State of New York shall be the  controlling  law in all
matters  relating to the Plan to the extent not preempted by applicable  Federal
law.

         2.3      Severability
                  ------------

         If a  provision  of this Plan  shall be held  illegal or  invalid,  the
illegality  or invalidity  shall not affect the remaining  parts of the Plan and
the Plan shall be construed and enforced as if the illegal or invalid  provision
had not been included.

                                   ARTICLE III

                                   ELIGIBILITY

         3.1     Participation
                 -------------

         Directors of the Bank as of the Effective  Date,  who, on the Effective
Date,  have completed,  or thereafter  complete,  five (5) consecutive  years of
service as a Director  (taking into account such service prior and subsequent to
the Effective Date) shall be Participants in the Plan.

         3.2    Duration of Participation
                -------------------------

         Unless such  participation is prohibited by applicable law,  regulatory
action  or  judicial  order,  and,  subject  to  Sections  3.3,  3.4 and 3.5,  a
Participant  shall continue to be a Participant in the Plan following his or her
voluntary  resignation  as a Director  or his or her  failure to be elected as a
Director.  A Participant  shall cease to be a  Participant  in the Plan upon the
Participant's removal as a Director for Cause.

         3.3    Suspension
                ----------
                  If a Participant 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 8(g)(1) of the Federal Deposit  Insurance Act, 12 U.S.C.  ss.
1818(e)(3) or (g)(1),  the Bank's  obligations under the Plan shall be suspended
as of the date of service,  unless  stayed by  appropriate  proceedings.  If the
charges  in the  notice  are  dismissed,  the Bank  shall pay the  Participant's
Designated Beneficiary or estate any Payment which may have come due during such
suspension or temporary prohibition.

         3.4    Removal
                -------

                  If a Participant 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 Federal Deposit  Insurance Act, 12 U.S.C.  ss.
1818(e)(4) or (g)(1), all obligations of the Bank under the Plan shall terminate
as of the effective date of the order.
<PAGE>
         3.5     Default
                 -------

                  If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. ss. 1813(x)(1),  all obligations of the
Bank  under  the  Plan  shall  terminate  as of the  date of  default,  but this
paragraph shall not affect any vested rights of the Participant.

                                   ARTICLE IV

                                    PAYMENTS

         4.1     Right to Payment
                 ----------------

         Following  the death of a  Participant,  the  Participant's  Designated
Beneficiary or estate shall be entitled to receive a Payment from the Bank.

         4.2     Time and Amount of Payment
                 --------------------------

         Not later than  twenty  (20)  business  days after the  delivery to the
Secretary of the Bank of a certified copy of a death certificate, and such other
documentation evidencing the death of a Participant as the Bank may require, the
Bank  shall  pay  to the  Designated  Beneficiary  or  Estate  of  the  deceased
Participant, in cash and in full: I) $200,000, if the Participant was a Director
at the time of death, or ii) $100,000,  if the Participant was not a Director at
the time of death.

                                    ARTICLE V

                     OTHER RIGHTS AND BENEFITS NOT AFFECTED

         5.1 Neither the  provisions  of this Plan nor the Payment  provided for
hereunder shall reduce any amounts otherwise payable, or in any way diminish the
Participant's  rights  as a  Director  of  the  Bank,  whether  existing  now or
hereafter, under any benefit, incentive,  retirement, stock option, stock bonus,
stock ownership, deferred compensation, or other plan or arrangement.

                                   ARTICLE VI

                           PARTICIPATING ORGANIZATIONS

         6.1 Upon approval by the Board of  Directors,  this Plan may be adopted
by any Subsidiary or Parent of the Bank.  Upon such adoption,  the provisions of
the Plan  shall be fully  applicable  to the  Directors  of that  Subsidiary  or
Parent. The term "Subsidiary" means any corporation in which the Bank,  directly
or indirectly, holds a majority of the voting power of the outstanding shares of
capital stock. The term "Parent" means any corporation which holds a majority of
the voting power of the Bank's outstanding shares of capital stock.
<PAGE>
                                   ARTICLE VII

                              SUCCESSOR TO THE BANK

         7.1 The Bank shall require any successor or assignee, whether direct or
indirect,  by  purchase,   merger,   consolidation  or  otherwise,   to  all  or
substantially   all  the  business  or  assets  of  the  Bank,   expressly   and
unconditionally  to assume and agree to perform the Bank's obligations under the
Plan,  in the same manner and to the same extent that the Bank would be required
to perform if no such succession or assignment had taken place.

                                    ARTICLE VIII

                       DURATION AMENDMENT AND TERMINATION

         8.1    Duration
                --------

         If a Change in Control has not  occurred,  the Plan shall  expire as of
the  Expiration  Date,  unless sooner  terminated as provided in Section 8.2, or
unless extended for an additional period or periods by resolution adopted by the
Board of  Directors.  Notwithstanding  the  foregoing,  if a Change  in  Control
occurs,  this  Plan  shall  continue  in full  force and  effect,  and shall not
terminate or expire until the Expiration Date.

         8.2    Amendment and Termination
                -------------------------

         The Plan may be  terminated  or  amended in any  respect by  resolution
adopted by a majority of the Board of  Directors  unless a Change in Control has
previously occurred.  If a Change in Control occurs, the Plan no longer shall be
subject to amendment, change, substitution,  deletion, revocation or termination
in any respect whatsoever.

         8.3    Form of Amendment
                -----------------

         The Plan may be amended or terminated by a written instrument signed by
a duly  authorized  officer  of the  Bank,  certifying  that  the  amendment  or
termination has been approved by the Board of Directors.

         8.4    No Attachment
                -------------

         Except as required by law, no right to receive Payments under this Plan
shall be subject to anticipation,  commutation,  alienation,  sale,  assignment,
encumbrance,  charge,  pledge,  or hypothecation,  or to execution,  attachment,
levy,  or similar  process or  assignment  by operation of law, and any attempt,
voluntary or involuntary,  to affect such action shall be null,  void, and of no
effect.
<PAGE>
                                   ARTICLE IX

                             LEGAL FEES AND EXPENSES

         9.1 If a court of competent  jurisdiction  or an arbitrator  determines
that the Bank or any  successor  to the Bank as  described  in  Section  7.1 has
failed  to  meet  any of its  obligations  under  this  Plan,  the  Bank or such
successor shall reimburse a Participant,  a Designated Beneficiary or estate, as
applicable,  for all reasonable costs,  including  attorneys' fees,  incurred in
enforcing such obligation.

         Having been adopted by its Board of  Directors  on May 18,  1999,  this
Plan is executed by its duly authorized officers this 18 day of May, 1999.


Attest                                               CATSKILL SAVINGS BANK



/s/ David L. Guldenstern                             BY: /s/ David J. DeLuca
------------------------                             -----------------------
David Guldenstern                                    David J. DeLuca
Secretary                                            Vice President &
                                                     Chief Financial Officer