Exhibit 10.1


                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
this 1st day of April,  1998, by and between Catskill Financial  Corporation,  a
corporation  organized and operating under the laws of the State of Delaware and
having an office at 341 Main Street,  Catskill,  New York 12414 (the "Company"),
and Wilbur J.Cross, residing at 45 Prospect Avenue, Catskill, New York 12414.


         WHEREAS,  Mr. Cross currently serves the Company as President and Chief
Executive Officer; and


         WHEREAS, in order to secure Mr. Cross' continued services, the Board of
Directors of the Company (the "Board") has approved and authorized the execution
of this Agreement; and


         WHEREAS,  Mr.  Cross  is  willing  to  continue  to make  his  services
available to the Company on the terms and conditions set forth herein; and

         WHEREAS,  on or about even date,  Mr. Cross and  Catskill  Savings Bank
(the  "Bank")  entered  into  an  Employment  Agreement  (the  "Bank  Employment
Agreement"); and

         WHEREAS, the Company is a savings and loan holding company of which the
Bank is a wholly owned subsidiary.

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
obligations hereinafter set forth, the parties hereto hereby agree as follows:

         1. EMPLOYMENT. The Company hereby continues the employment of Mr. Cross
as its President and Chief Executive Officer,  and Mr. Cross hereby accepts such
continued  employment,  during the period and upon the terms and  conditions set
forth in this Agreement.

<PAGE>

         2.  EMPLOYMENT  PERIOD,  TERMS AND CONDITIONS.  The employment  period,
terms and conditions of this  Agreement  shall be identical to those in the Bank
Employment  Agreement  unless  explicitly  superseded  or expanded  upon by this
Agreement.

         3. COMPENSATION AND BENEFITS.  The compensation and benefits payable to
Mr. Cross under this Agreement and under the Bank Employment Agreement shall not
be: (a) duplicative but, rather, the Bank shall be primarily responsible for the
payments  called for in the Bank's  Employment  Agreement and the Company hereby
guarantees  performance  of such  obligations  by the Bank;  or (b)  limited  by
paragraph 8 of the Bank Employment Agreement.

         4. EXCISE TAX  INDEMNIFICATION.
         (a) This Section 4 shall apply if Mr.  Cross'  employment is terminated
in circumstances giving rise to liability for excise taxes under Section 4999 of
the Internal Revenue Code of 1986 (the "Code"). If this Section 4 applies, then,
if for any taxable year,  Mr. Cross shall be liable for the payment of an excise
tax under  Section 4999 of the Code with respect to any payment in the nature of
compensation  made by the  Company  or the Bank to (or for the  benefit  of) Mr.
Cross,  the Company shall pay to Mr. Cross an amount equal to X determined under
the following formula:

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

where
                  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 4;

                  FI = the highest marginal rate of income
                       tax applicable to Mr. Cross under the
                       Code for the taxable year in question;


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<PAGE>

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

                    M = the highest marginal rate of Medicare
                        tax applicable to Mr. Cross under
                        the Code for the taxable year in
                        question.

With  respect to any payment in the nature of  compensation  that is made to (or
for the benefit of) Mr. Cross under the terms of this  Agreement,  or otherwise,
and on which an excise tax under Section 4999 of the Code will be assessed,  the
payment  determined  under this  Section  4(a) shall be made to Mr. Cross on the
earlier of (i) the date the Company or the Bank is  required  to  withhold  such
tax, or (ii) the date the tax is required to be paid by Mr. Cross.

         (b) Notwithstanding  anything in this Section 4 to the contrary, in the
event that Mr.  Cross'  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  4(a),  Mr. Cross 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  Section  4(a),  when  increased  by the amount of the payment made to Mr.
Cross under this Section  4(b) by the Company,  or when reduced by the amount of
the payment made to the Company under this Section 4(b) by Mr. Cross, equals the
amount that should have properly been paid to Mr. Cross under Section 4(a).  The
interest  paid under this Section 4(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 Mr. Cross under this Section 4, Mr. Cross 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.

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<PAGE>

         (c) The  provisions  of this  Section 4 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 4 shall be modified in such manner as Mr. Cross and the
Company may  mutually  agree upon if and to the extent  necessary to assure that
Mr. Cross 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.

           IN WITNESS  WHEREOF,  the  Company has caused  this  Agreement  to be
executed and Mr. Cross has hereto set his hand, all as of the day and year first
above written.

                                 /s/ Wilbur J. Cross
                                 -------------------------------------
                                     WILBUR J. CROSS
                                     Chairman/President/CEO

WITNESS:



                                 /s/ David L. Guldenstern
                                 -------------------------------------
                                     DAVID L. GULDENSTERN
                                     VP/Secretary


                                 CATSKILL FINANCIAL CORPORATION



                              By /s/ Allan Oren
                                 -------------------------------------
                                     Director

ATTEST:



/s/ David L. Guldenstern
----------------------------------
VP/Secretary

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