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                                                                    EXHIBIT 10.1

                          EMPLOYEE RETENTION AGREEMENT

         This Employee Retention Agreement ("Agreement") is made and entered
into as of July 9, 1997 by and among Goshen Savings Bank, a savings bank
organized and operating under the federal laws of the United States and having
its executive offices at One South Church Street, Goshen, New York 10924 (the
"Bank"); and Stephen W. Dederick, an individual residing at 946 Oregon Trail,
Pine Bush, New York 12566 ("Officer").

                              W I T N E S S E T H :

         Whereas, effective as of the date of this Agreement, the Bank has
converted from a federal mutual savings bank to a federal stock savings bank and
has become a wholly-owned subsidiary of GSB Financial Corporation (the "Holding
Company"); and

         Whereas, the Bank desires to secure for itself the continued
availability of the Officer's services; and

         Whereas, the Bank recognizes that a third party may at some time in the
future pursue a Change of Control of the Bank or the Holding Company and that
this possibility may result in the departure or distraction of the Bank's
officers; and

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

         Whereas, the Bank believes that, by assuring certain officers,
including the Officer, of reasonable financial security in the event of a Change
of Control of the Bank or the Holding Company, 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 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 employee retention agreement with the Officer on
the terms and conditions set forth herein; and

         Whereas, the Officer is willing to make the Officer's services
available to the Bank on the terms and conditions set forth herein;

         Now, Therefore, in consideration of the premises and the mutual
covenants and obligations hereinafter set forth, the Bank, the Holding Company
and the Officer hereby agree as follows:

Section 1. Effective Date.

         (a) This Agreement shall be effective as of the date first above
written and shall remain


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in effect during the term of this Agreement which shall be for a period of three
(3) years commencing on the date of this Agreement, plus such extensions as are
provided pursuant to section 1(b); provided, however, that if the term of this
Agreement has not otherwise terminated, the term of this Agreement will
terminate on the date of the Officer's termination of employment with the Bank;
and provided, further, that the obligations under section 8 of this Agreement
shall survive the term of this Agreement if payments become due here under.

         (b) Prior to each anniversary date of this Agreement, the Board shall
consider the advisability of an extension of the term in light of the
circumstances then prevailing and may, in its discretion, approve an extension
to take effect as of the upcoming anniversary date. If an extension is approved,
the term of this Agreement shall be extended so that it will expire three (3)
years after such anniversary date.

         (c) Notwithstanding anything herein contained to the contrary: (i) the
Officer's employment with the Bank may be terminated at any time, subject to the
terms and conditions of this Agreement; and (ii) nothing in this Agreement shall
mandate or prohibit a continuation of the Officer's employment following the
expiration of the Assurance Period upon such terms and conditions as the Bank
and the Officer may mutually agree upon.

Section 2. Assurance Period.

         (a) The assurance period ("Assurance Period") shall be for a period
commencing on the date of a Change in Control, as defined in section 10 of this
Agreement, and ending on the third anniversary of the date on which the
Assurance Period commences, plus such extensions as are provided pursuant to the
following sentence. The Assurance Period shall be automatically extended for one
(1) additional year on each anniversary of the commencement of the Assurance
Period, unless either the Bank or the Officer elects not to extend the Assurance
Period further by giving written notice to the other party, in which case the
Assurance Period shall become fixed and shall end on the anniversary of the date
on which such written notice is given.

         (b) Upon termination of the Officer's employment with the Bank, further
extensions under subparagraph 2(a) shall cease and the remaining unexpired
Assurance Period under this Agreement shall be a fixed period ending on the
later of the third anniversary of the date of the Change in Control, as defined
in section 10 of this Agreement, or the third anniversary of the date of the
last such extension.

Section 3.  Duties.

         During the period of the Officer's employment that falls within the
Assurance Period, the Officer shall: (a) except to the extent allowed under
section 6 of this Agreement, devote his or her full business time and attention
(other than during weekends, holidays, vacation periods, and periods of illness,
disability or approved leave of absence) to the business and affairs of the Bank
and use his or her best efforts to advance the Bank's interests; (b) serve in
the position to which the Officer is appointed by the Bank, which, during the
Assurance Period, shall be the position that the Officer held on the day before
the Assurance Period commenced or any higher office at the Bank to which he or
she may subsequently be appointed; and (c) subject to the direction of

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the Board and the By-laws of the Bank, have such functions, duties,
responsibilities and authority commonly associated with such position.

Section 4.  Compensation.

         In consideration for the services rendered by the Officer during the
Assurance Period, the Bank shall pay to the Officer during the Assurance Period
a salary at an annual rate equal to the greater of:

         (a) the  annual  rate of salary in effect  for the  Officer  on the day
before the Assurance Period commenced; or

         (b) such higher annual rate as may be prescribed by or under the
authority of the Board;

provided, however, that in no event shall the Officer's annual rate of salary
under this Agreement in effect at a particular time during the Assurance Period
be reduced without the Officer's prior written consent. The annual salary
payable under this section 4 shall be subject to review at least once annually
and shall be paid in approximately equal installments in accordance with the
Bank's customary payroll practices. Nothing in this section 4 shall be deemed to
prevent the Officer from receiving additional compensation other than salary for
his or her services to the Bank, or additional compensation for his or her
services to the Holding Company, upon such terms and conditions as may be
prescribed by or under the authority of the Board.

Section 5.  Employee Benefit Plans and Programs.

         Except as otherwise provided in this Agreement, the Officer shall,
during the Assurance Period, be treated as an employee of the Bank and be
eligible to participate in and receive benefits under any qualified or
non-qualified defined benefit or defined contribution retirement plan, group
life, health (including hospitalization, medical and major medical), dental,
accident and long term disability insurance plans, and such other employee
benefit plans and programs, including, but not limited to, any incentive
compensation plans or programs (whether or not employee benefit plans or
programs), any stock option and appreciation rights plan, employee stock
ownership plan and restricted stock plan, as may from time to time be maintained
by, or cover employees of, the Bank, in accordance with the terms and conditions
of such employee benefit plans and programs and compensation plans and programs
and with the Bank's customary practices.

Section 6.  Board Memberships.

         The Officer may serve as a member of the boards of directors of such
business, community and charitable organizations as he or she may disclose to
and as may be approved by the Board (which approval shall not be unreasonably
withheld), 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 materially interfere with
the performance of his or her duties under this Agreement.


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Section 7.  Working Facilities and Expenses.

         During the Assurance Period, the Officer's principal place of
employment shall be at the Bank's executive offices at the address first above
written, or at such other location within the County of Orange at which the Bank
shall maintain its principal executive offices, or at such other location as the
Bank and the Officer may mutually agree upon. The Bank shall provide the
Officer, at his or her 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 Officer for his or her
ordinary and necessary business expenses, including, without limitation, the
Officer's travel and entertainment expenses, incurred in connection with the
performance of the Officer's duties under this Agreement, upon presentation to
the Bank of an itemized account of such expenses in such form as the Bank may
reasonably require.

Section 8.  Termination of Employment with Severance Benefits.

         (a) In the event that the Officer's employment with the Bank shall
terminate during the Assurance Period, or prior to the commencement of the
Assurance Period but within three (3) months of and in connection with a Change
of Control as defined in section 10 of this Agreement on account of:

         (i) The Officer's voluntary resignation from employment with the Bank
within ninety (90) days following:

         (A) the failure of the Bank's Board to appoint or re-appoint or elect
or re-elect the Officer to serve in the same position in which the Officer was
serving, on the day before the Assurance Period commenced or a more senior
office;

         (B) the failure of the stockholders of the Holding Company to elect or
re-elect the Officer as a member of the Board, if he or she was a member of the
Board on the day before the Assurance Period commenced;

         (C) the expiration of a thirty (30) day period following the date on
which the Officer gives written notice to the Bank of its material failure,
whether by amendment of the Bank's Charter or By-laws, action of the Board or
the Holding Company's stockholders or otherwise, to vest in the Officer the
functions, duties, or responsibilities vested in the Officer on the day before
the Assurance Period commenced (or the functions, duties and responsibilities of
a more senior office to which the Officer may be appointed), unless during such
thirty (30) day period, the Bank fully cures such failure;

         (D) the failure of the Bank to cure a material breach of this Agreement
by the Bank, within thirty (30) days following written notice from the Officer
of such material breach;

         (E) a reduction in the compensation provided to the Officer, or a
material reduction in the benefits provided to the Officer under the Bank's
program of employee benefits, compared with the compensation and benefits that
were provided to the Officer on the day before the Assurance

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Period commenced;

         (F) a change in the Officer's principal place of employment that would
result in a one-way commuting time in excess of the greater of (I) 30 minutes or
(II) the Officer's commuting time immediately prior to such change; or

         (ii) the discharge of the Officer by the Bank for any reason other than
for "cause" as provided in section 9(a);

Then, subject to section 21, the Bank shall provide the benefits and pay to the
Officer the amounts provided for under section 8(b) of this Agreement; provided,
however, that if benefits or payments become due hereunder as a result of the
Officer's termination of employment prior to the commencement of the Assurance
Period, the benefits and payments provided for under section 8(b) of this
Agreement shall be determined as though the Officer had remained in the service
of the Bank (upon the terms and conditions in effect at the time of his or her
actual termination of service) and had not terminated employment with the Bank
until the date on which the Officer's Assurance Period would have commenced.

         (b) In the event that Officer's employment with the Bank shall
terminate under circumstances described in section 8(a) of this Agreement, the
following benefits and amounts shall be paid or provided to the Officer:

         (i) his or her earned but unpaid salary as of the date of the
termination of his or her employment with the Bank, payable when due but in no
event later than thirty (30) days following his or her termination of employment
with the Bank;

         (ii) the benefits, if any, to which Officer and his or her family and
dependents are entitled as a former officer/employee, or family or dependents of
a former officer/employee, under the employee benefit plans and programs and
compensation plans and programs maintained for the benefit of the Bank's
officers and employees, in accordance with the terms of such plans and programs
in effect on the date of his or her termination of employment, or if his or her
termination of employment occurs after a Change in Control, on the date of his
or her termination of employment or on the date of such Change in Control,
whichever results in more favorable benefits as determined by Officer, with
credit being given for additional years of service and age to the expiration of
the Assurance Period for purposes of determining eligibility and benefits for
any plan and program where age and service are relevant factors;

         (iii) payment for all unused vacation days and floating holidays in the
year in which his or her employment is terminated, at his or her highest annual
rate of salary for such year;

         (iv) continued group life, health (including hospitalization, medical,
major medical and dental) and disability insurance benefits in addition to that
provided pursuant to section 8(b)(ii) of this Agreement, to the extent necessary
after taking into account coverage provided by any subsequent employer, to
provide Officer and his or her family and dependents, until the expiration of
the Assurance Period, with coverage identical to and in any event no less
favorable than the coverage to which they would have been entitled under such
plans (as in effect on the

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date of his or her termination of employment, or, if his or her termination of
employment occurs after a Change in Control, on the date of his or her
termination of employment or during the one-year period ending on the date of
such Change in Control, whichever results in more favorable benefits as
determined by Officer) if he or she had continued working for the Bank until the
expiration of the Assurance Period at the highest annual rate of compensation
paid to the Officer during the three preceding years;

         (v) within thirty days following his or her termination of employment
with the Bank, a lump sum payment in an amount equal to the present value of the
total salary and bonuses that the Officer would have earned if he or she had
worked for the Bank until the expiration of the Assurance Period at the highest
annual rate of salary paid to the Officer during the three preceding years and
the highest bonus calculated by applying the highest ratio of bonus to salary
received during the previous five years to the annual rate of salary used in the
calculation under this subparagraph), with such present value to be determined
by using a discount rate of six percent per annum, compounded, in the case of
salary, with the frequency corresponding to the Bank's regular payroll periods
with respect to its officers, and, in the case of bonus, annually;

         (vi) within thirty days following his or her termination of employment
with the Bank, a lump sum payment in an amount equal to the excess, if any, of
(A) the present value of the benefits to which he or she would be entitled under
any defined benefit plans maintained by, or covering employees of, the Bank
(including any "excess benefit plan" within the meaning of section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or other
special or supplemental plan) as in effect on the date of his or her
termination, if he or she had worked for the Bank until the expiration of the
Assurance Period at the highest annual rate of compensation paid to the Officer
during the three preceding years and been fully vested in such plan or plans,
such benefits to be determined as of the date of termination of employment by
adding to the service actually recognized under such plans an additional period
equal to the time remaining until the expiration of the Assurance Period and by
adding to the compensation recognized under such plans for the year in which
termination of employment occurs all amounts payable under sections 8(b)(i), (v)
and (viii), over (B) the present value of the benefits to which he or she is
actually entitled under any such plans maintained by, or covering employees of,
the Bank as of the date of his or her termination with such present values to be
determined by using a discount rate of six percent per annum, compounded
monthly, and the mortality tables prescribed under section 72 of the Internal
Revenue Code of 1986 ("Code");

         (vii) within thirty days following his or her termination of employment
with the Bank, a lump sum payment in an amount equal to the excess, if any, of
(A) the present value of the benefits attributable to the Bank's contribution to
which he or she would be entitled under any defined contribution plans
maintained by, or covering employees of, the Bank (including any "excess benefit
plan" within the meaning of section 3(36) of ERISA, or other special or
supplemental plan) as in effect on the date of his or her termination, if he or
she had worked for the Bank until the expiration of the Assurance Period at the
highest annual rate of compensation paid to the Officer during the three
preceding years and made the maximum amount of employee contributions, if any,
required or permitted under such plan or plans, and been eligible for the
highest rate in matching contributions under such plan or plans during the time
remaining until the expiration of the Assurance Period which is prior to the
Officer's termination of employment

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with the Bank, and been fully vested in such plan or plans, over (B) the present
value of the benefits attributable to the Bank's contributions to which he or
she is actually entitled under such plans as of the date of his or her
termination of employment with the Bank, with such present values to be
determined by using a discount rate of six percent per annum, compounded with
the frequency corresponding to the Bank's regular payroll periods with respect
to its officers;

         (viii) the payments that would have been made to the Officer under any
incentive compensation plan maintained by, or covering employees of, the Bank
(other than bonus payments to which section 8(b)(v) of this Agreement is
applicable) if he or she had continued working for the Bank until the expiration
of the Assurance Period and had earned an incentive award in each calendar year
that ends during the time remaining until the expiration of the Assurance Period
in an amount equal to the product of (A) the maximum percentage rate of
compensation at which an award was ever available to Officer under such
incentive compensation plan, multiplied by (B) the compensation that would have
been paid to Officer during each calendar year at the highest annual rate of
compensation paid to the Officer during the three preceding years, such payments
to be made at the same time and in the same manner as payments are made to other
officers of the Bank pursuant to the terms of such incentive compensation plan;
provided, however, that payments under this section 8(b)(viii) shall not be made
to the Officer for any year on account of which no payments are made to any of
the Bank's officers under any such incentive compensation plan; and

         (ix) the benefits to which the Officer is entitled under any excess
benefits plan within the meaning of section 3(36) of ERISA or other special or
supplemental plan shall be paid to him in a lump sum, with such lump sum to be
computed using the mortality tables under the Bank's tax-qualified pension plan
and a discount rate of six percent per annum. The payments specified in this
section 8(b)(ix) shall be made within thirty days after the date of Officer's
election, and if the amount may be increased by a subsequent Change in Control,
any additional payment shall be made within thirty days of such Change in
Control.

Section 9.  Termination without Severance Benefits.

         In the event that the Officer's employment with the Bank shall
terminate during the Assurance Period on account of:

         (a) the discharge of the Officer for "cause," which, for purposes of
this Agreement shall mean personal dishonesty, incompetence, willful misconduct,
breach of 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, in each case as measured
against standards generally prevailing at the relevant time in the savings and
community banking industry; provided, however, that the Officer shall not be
deemed to have been discharged for cause unless and until he or she shall have
received a written notice of termination from the Board, accompanied by a
resolution duly adopted by affirmative vote of a majority of the entire Board at
a meeting called and held for such purpose (after reasonable notice to the
Officer and a reasonable opportunity for the Officer to make oral and written
presentations to the members of the Board, on his or her own behalf, or through
a representative, who may be his or her legal

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counsel, to refute the grounds for the proposed determination) finding that in
the good faith opinion of the Board grounds exist for discharging the Officer
for cause; or

         (b) the Officer's voluntary resignation from employment with the Bank
for reasons other than those specified in section 8(a)(i); or

         (c) the Officer's death; or

         (d) a determination that the Officer is eligible for long-term
disability benefits under the Bank's long- term disability insurance program or,
if there is no such program, under the federal Social Security Act;

then the Bank shall have no further obligations under this Agreement, other than
the payment to the Officer (or, in the event of his or her death, to his or her
estate) of his or her earned but unpaid salary as of the date of the termination
of his or her employment, and the provision of such other benefits, if any, to
which the Officer is entitled as a former employee under the employee benefit
plans and programs and compensation plans and programs maintained by, or
covering employees of, the Bank.

Section 10. Change of 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 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) any person or
group consisting, in whole or in part, of one or more executive officers of the
Bank, 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 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 individuals
(other than any individual designated by a person who has entered into an
agreement with the Bank to effect a transaction described in section 10(a) or
10(c) of this Agreement) whose election by the Board or nomination for election
by the Bank's stockholders was approved by the affirmative vote of at least
two-thirds of the members of Board then in office who were either members of the
Board on the date this Agreement is made or whose nomination or election was
previously so approved cease for any reason to constitute a majority of the
members of the Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of directors of the Bank (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act);
or


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         (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 both of the
following conditions are satisfied:

                            (A) either (x) the members of the Board of the Bank
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 (y) the shareholders of the Bank 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 before such merger or consolidation; and

                            (B) 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; and

         (d) any event which would be described in sections 10(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 10(a), (b) or (c).

It is understood and agreed that more than one Change in Control may occur at
the same or different times and that the provisions of this Agreement shall
apply with equal force and effect with respect to each such Change in Control.

Section 11. No Effect on Employee Benefit Plans or  Programs.

         The termination of the Officer's employment during the Assurance Period
or thereafter, whether by the Bank or by the Officer, shall have no effect on
the rights and obligations of the parties hereto under the Bank's qualified and
non-qualified defined benefit or defined contribution retirement plans, group
life, health (including hospitalization, medical and major medical), dental,
accident and long term disability insurance plans or such other employee benefit
plans or programs, or compensation plans or programs (whether or not employee
benefit plans or programs) and any defined contribution plan, employee stock
ownership plan, stock option and appreciation rights plan, and restricted stock
plan, as may be maintained by, or cover employees of, the Bank from time to
time; provided, however, that nothing in this Agreement shall be deemed to
duplicate any compensation or benefits provided under any agreement, plan or
program covering the Officer to which the Bank or the Holding Company is a party
and any duplicative amount payable under any such agreement, plan or program
shall be applied as an offset to reduce the amounts otherwise payable hereunder.

Section 12. Successors and Assigns.

         This Agreement will inure to the benefit of and be binding upon the
Officer, his or her

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legal representatives and testate or intestate distributees, and the Bank and
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 Bank may be sold or
otherwise transferred.

Section 13. 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, 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 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: President

Section 14. Enforcement Costs and Attorneys' Fees.

         The Bank shall pay to or on behalf of the Officer all reasonable costs,
including legal fees, incurred by him in connection with or arising out of the
Officer's consultation with legal counsel or in connection with or arising out
of any action, suit or proceeding in which the Officer be involved, as a result
of the Officer's efforts, in good faith, to defend or enforce the terms of this
Agreement, provided however that the 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; provided, further, that this section 14 shall not obligate the Bank
to pay costs and legal fees on behalf of the Officer under this Agreement in
excess of reasonable attorneys fees. For purposes of this Agreement, any
settlement agreement which provides for payment of any amounts in settlement of
the Bank's obligations hereunder shall be conclusive evidence of the 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 15. Severability.

         A determination that any provision of this Agreement is invalid or
unenforceable shall not

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affect the validity or enforce ability of any other provision hereof.

Section 16. 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 17. Counterparts.

         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 18. Governing Law.

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

Section 19. 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 20. 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 21. 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 Officer under
section 8(b) hereof (exclusive of amounts described in section 8(b)(i)) exceed
three times the 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).

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         (b) Notwithstanding anything herein contained to the contrary, the
Officer shall have no right to receive compensation or other benefits for any
period after termination for cause.

         (c) Notwithstanding anything herein contained to the contrary, any
payments to the 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 ("FDI Act"), 12 U.S.C. Section
1828(k), and any regulations promulgated thereunder.

         (d) Notwithstanding anything herein contained to the contrary, if the
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 obligation 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 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
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 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 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 or
her 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 any of
the foregoing provisions shall cease to be required by applicable law, rule or
regulation, the same shall become inoperative as though eliminated by formal
amendment of this Agreement.

Section 22.  Maximum Limitations on Severance Benefits.

         Notwithstanding anything in this Agreement to the contrary, in the
event that the payments provided to the Officer (or in the event of his or her
death, to his or her estate) under this Agreement constitute an "excess
parachute payment" under section 280G of the Code, such

12

<PAGE>


payments shall be limited to the lesser of

         (a) 2.99 times his or her average compensation (including salary,
bonuses, amounts contributed on behalf of the Officer to any employee benefit
plans and programs and compensation plans and programs maintained for the
benefit of the Bank's officers and employees and any other cash or non-cash
compensation paid to the Officer) for the period of five taxable years ending
immediately prior to his or her termination of employment; or

         (b) whichever of the following amounts, as determined by the Officer in
his or her sole discretion, yields the larger net payment to the Officer, after
provision for the tax (if any) imposed under section 4999 of the Code:

         (i) the amount determined under section 23(a); or

         (ii) the maximum amount (if any) which may be paid to the Officer
hereunder without giving rise to any tax under section 4999 of the Code;

In Witness Whereof, the Bank has caused this Agreement to be executed and the
Officer has hereunto set his or her hand, all as of the day and year first above
written.

                                                /s/ Stephen W. Dederick
                                                -------------------------------
                                                Stephen W. Dederick, Officer

ATTEST:                                           Goshen Savings Bank


By  /s/ Jenny Ford                         By /s/ Clifford E. Kelsey, Jr.
    -------------------------------           -------------------------------
     Jenny Ford, Secretary                    Clifford E. Kelsey, Jr., President