EXHIBIT 10.1

 

 

UNION STATE BANK

KEY EMPLOYEES’ SUPPLEMENTAL

INVESTMENT PLAN

 

 

 

 

 

Adopted Effective December 1, 1994

Restated and Amended Effective July 1, 1997

Further Restated and Amended Effective January 1, 2005

 

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UNION STATE BANK

 

KEY EMPLOYEES’ SUPPLEMENTAL INVESTMENT PLAN

The Supplemental Employees’ Investment Plan for Salaried Employees of Union
State Bank (the “Plan”) was adopted effective December 1, 1994. The Plan was
established and maintained by Union State Bank solely for the purpose of
providing to a select group of highly compensated or management personnel who
participate in the U.S.B. Holding Co., Inc. Employee Stock Ownership Plan (with
401(k) Provisions) (“Qualified Plan”) benefits attributable to (i) contribution
allocations which would otherwise be made under the Qualified Plan but for the
compensation limitation of Internal Revenue Code of 1986 (“Code”) Section
401(a)(17), and (ii) contributions equal to amounts in excess of the limitations
on annual additions imposed by Code Section 415.

Union State Bank desires to expand the purposes of the Plan to permit certain
key executive employees designated by its Board of Directors to defer portions
of their compensation, in order to continue to attract and retain talented
executives with a competitive compensation package. Accordingly, Union State
Bank has adopted the Plan for its key executive employees, and has restated and
amended the Plan to provide for such deferral of compensation effective as of
July 1, 1997. The Plan is a non-qualified deferred compensation plan subject to
the requirements of section 409A of the Code and has been further amended and
restated effective January 1, 2005 to reflect these requirements.

It is the intention of the parties that the arrangements contemplated by the
Plan be unfunded for tax purposes and for purposes of Title I of ERISA.

Accordingly, Union State Bank hereby adopts, amends and restates the Plan
pursuant to the terms and provisions set forth below:

 

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TABLE OF CONTENTS

ARTICLE I

 

DEFINITIONS

 

Section 1.1 “Board”

Section 1.2 “Change in Control Event”

Section 1.3 “Code”

Section 1.4 “Company”

Section 1.5 “Deferred Compensation Account”

Section 1.6 “Matching Contribution”

Section 1.7 “Optional Contribution”

Section 1.8 “Participant”

Section 1.9 “Plan”

Section 1.10 “Plan Year”

Section 1.11 “Qualified Plan”

Section 1.12 “Salary Reduction Agreement”

Section 1.13 “Salary Reduction Contribution”

Section 1.14 “Service Recipient”

Section 1.15 “Termination of Employment”

Section 1.16 “USB Stock”

ARTICLE II

 

ELIGIBILITY

ARTICLE III

 

CONTRIBUTIONS

Section 3.1 Salary Reduction Contributions

Section 3.2 Salary Reduction Agreement

Section 3.3 Matching Contributions

Section 3.4 Optional Contributions

Section 3.5 Limits on Contributions

Section 3.6 Whole Share Price Limitation on Contributions

ARTICLE IV

 

INVESTMENT OF CONTRIBUTIONS; DIVIDENDS

Section 4.1 Investment of Contributions

Section 4.2 Application of Dividends

 

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ARTICLE V

 

DISTRIBUTIONS

Section 5.1 Payment Elections

Section 5.2 Mandatory Cashout of Small Balances

Section 5.3 Restrictions on Payments to Specified Employees

Section 5.4 Certain One-time Elections

ARTICLE VI

 

ADMINISTRATION OF THE PLANS

Section 6.1 Administration by the Company

Section 6.2 General Powers of Administration

Section 6.3 Financial Accounting

ARTICLE VII

 

AMENDMENT OR TERMINATION

Section 7.1 Amendment or Termination

Section 7.2 Effect of Amendment or Termination

Section 7.3 Suspension of the Plan

ARTICLE VIII

 

GENERAL PROVISIONS

Section 8.1 Participant’s Rights Unsecured

Section 8.2 No Guarantee of Benefits

Section 8.3 No Enlargement of Employee Rights

Section 8.4 Spendthrift Provisions

Section 8.5 Applicable Law

Section 8.6 Incapacity of Recipient

Section 8.7 Corporate Successors

Section 8.8 Unclaimed Benefit

Section 8.9 Limitations on liability

Section 8.10 Compliance with Section 409A of the Code

Section 8.11 Accelerated Vesting Upon a Change in Control

 

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ARTICLE I

 

DEFINITIONS

Wherever used herein the following terms shall have the meanings hereinafter set
forth. Words in the masculine gender shall include the feminine and the singular
shall include the plural, and vice versa, unless qualified by the context. Any
headings used herein are included for ease of reference only, and are not to be
construed so as to alter the terms hereof.

 

Section 1.1.

“Board” means the Board of Directors of the Company.

Section 1.2.        “Change in Control Event” means, with respect to a
Participant: (a) a change in ownership of the Participant’s Service Recipient;
(b) a change in effective control of the Participant’s Service Recipient; or (c)
a change in the ownership of a substantial portion of the assets of the
Participant’s Service Recipient. The existence of a Change in Control Event
shall be determined by the Plan Administrator in accordance with section 409A of
the Code and the regulations there under.

Section 1.3.         “Code” means the Internal Revenue Code of 1986, as amended
from time to time, and any regulations relating thereto.

Section 1.4.       “Company” means Union State Bank, a New York State banking
association, or, to the extent provided in Section 8.7 below, any successor
corporation or other entity resulting from a merger or consolidation into or
with the Company or a transfer or sale of substantially all of the assets of the
Company.

Section 1.5.         “Deferred Compensation Account” means the account
maintained by the Company under the plan for a Participant that is credited with
amounts contributed under Section 3.1 and 3.3 of the Plan.

Section 1.6.         “Matching Contribution” means the Matching Contribution
made by the Company for the benefit of a Participant under and in accordance
with the terms of Section 3.3 of the Plan in any Plan Year.

Section 1.7.        “Optional Contribution” means the Optional Contribution made
by the Company for the benefit of a Participant under and in accordance with the
terms of Section 3.4 of the Plan in any Plan Year.

Section 1.8.        “Participant” means a salaried employee of the Company to
whom or with respect to whom contributions may be made under the Plan.

 

Section 1.9.

“Plan” means the Key Employees’ Supplemental Investment Plan.

Section 1.10.      “Plan Year” means the calendar year. However, the first Plan
Year was the period commencing December 1, 1994, and ending December 31, 1994.

Section 1.11.      “Qualified Plan” means the U.S.B. Holding Co., Inc. Employee
Stock Ownership Plan (with 401(k) Provisions), and each predecessor, successor,
or replacement plan.

 

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Section 1.12.     “Salary Reduction Agreement” means the written salary
reduction agreement entered into by a Participant with the Company pursuant to
the Plan.

Section 1.13.       “Salary Reduction Contribution” means the salary reduction
contribution made by the Company for the benefit of a Participant under and in
accordance with the terms of Section 3.1 of the Plan in any Plan Year.

Section 1.14.      “Service Recipient” means with respect to a Participant on
any date: (a) the corporation for which the Participant is performing services
on such date; (b) all corporations that are liable to the Participant for the
benefits due to him under the Plan; (c) a corporation that is a majority
shareholder of a corporation described in Section 1.14(a) or (b); or (d) any
corporation in a chain of corporations each of which is a majority shareholder
of another corporation in the chain, ending in a corporation described in
Section 1.14 (a) or (b).

Section 1.15.      “Termination of Employment” means separation from service (as
such term is defined for purposes of section 409A of the Code).

 

Section 1.16.

“USB Stock” means common stock of U.S.B. Holding Co., Inc.

ARTICLE II

 

ELIGIBILITY

An employee who is one of a select group of highly compensated or management
personnel who is designated eligible to participate by the Board, shall be
eligible to participate in the Plan. Notwithstanding the above, any employee
with total compensation in excess of compensation limits for Employee Stock
Ownership, or other qualified plans, may participate on the first day of such
eligibility.

ARTICLE III

 

CONTRIBUTIONS

Section 3.1.         Salary Reduction Contributions. The Salary Reduction
Contribution to be made by the Company for the benefit of a Participant for any
Plan Year shall be in an amount equal to the difference between (a) and (b)
below:

(a)          Any portion of the Participant’s gross compensation (salary, bonus,
other cash compensation for services) for a Plan Year

Less

(b)          The amount of the Qualified Plan Salary Reduction Contribution
actually allocated to the Qualified Plan account of the Participant for the Plan
Year.

Salary Reduction Contributions for the benefit of the Participant shall be
credited to the Deferred Compensation Account maintained under the Plan in the
name of the Participant on the

 

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date the compensation would otherwise have been payable, but for the Salary
Reduction Agreement.

Section 3.2.         Salary Reduction Agreement. As a condition to the Company’s
obligation to make a Salary Reduction Contribution for the benefit of a
Participant pursuant to Section 3.1, the Participant must execute a Salary
Reduction Agreement The Agreement for any Plan Year shall be made before the
beginning of that Year and shall remain in full force and effect for subsequent
Plan Years unless revoked by a Participant by written instrument delivered to
the Company prior to the beginning of the Plan Year in which such revocation is
to be effective, except that in the first year of participation, a Participant
may enter the Plan by executing a Salary Reduction Agreement within 30 days
after first becoming eligible, which shall apply to compensation payable for
services rendered after the Salary Reduction Agreement is delivered to the
Company. The Participant shall always be vested in Salary Reduction
Contributions.

Section 3.3.       Matching Contributions. The Matching Contribution made by the
Company for the benefit of a Participant for any Plan Year shall be in an amount
equal to the difference between (a) and (b) below:

(a)          The lesser of the matching contribution that would be allocated to
Participant at the matching rate as determined in accordance with the Qualified
Plan provisions with respect to the aggregate amount of Salary Reduction
Contribution actually made by Participant to the Qualified Plan and this Plan,
or the Qualified Plan Company Matching Contribution which would have been
allocated to the Qualified Plan account of the Participant for the Plan Year if
the Participant had contributed to the Qualified Plan the maximum percentage of
his gross compensation provided by the Qualified Plan, without giving effect to
any reduction in the Qualified Plan Salary Reduction Contribution required by
the limitations imposed by Code Sections 402(g) or 415 of the Code on the
Qualified Plan.

Less

(b)          The amount of the Qualified Plan Company Matching Contribution
actually allocated to the Qualified Plan account of the Participant for the Plan
Year.

Company Matching Contributions for each plan year shall become 100% vested on
the last day of each Plan Year, provided that the Participant remains an
employee of the Company on such date; otherwise, all Company Matching
Contributions for such Plan Year shall be forfeited. Company Matching
Contributions for the benefit of a Participant for any Plan Year shall be
credited to the Deferred Compensation Account maintained under the Plan in the
name of the Participant within fifteen (15) days of the last day of such Plan
Year. Company Matching Contributions not made within fifteen (15) days of the
last day of such Plan Year will include interest at the prevailing Federal Funds
rate as published in the Wall Street Journal from the date such contribution
should be made to the date actually paid.

 

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Section 3.4.        Optional Contributions. The Optional Contribution made by
the Company for the benefit of a Participant for any Plan Year shall be an
amount equal to the difference between (a) and (b) below:

(a)          The Qualified Plan Company Optional Contribution which would have
been allocated to the Qualified Plan account of the Participant for the Plan
Year, considering the full amount of the Participant’s compensation, without
giving effect to any reduction in the Qualified Plan Company Optional
Contribution required by the limitations on compensation imposed on the
Qualified Plan by Code Sections 401(a)(17) and/or 415

Less

(b)          The amount of the Qualified Plan Company Optional Contribution
actually allocated to the Qualified Plan account of the Participant for the Plan
Year.

Any Optional Contributions for the benefit of a Participant for any Plan Year
shall be credited to the Deferred Compensation Account maintained under the Plan
in the name of the Participant within fifteen (15) days of the last day of such
Plan Year. Company Matching Contributions not made within fifteen (15) days of
the last day of such Plan Year will include interest at the prevailing Federal
Funds rate as published in the Wall Street Journal from the date such
contribution should be made to the date actually paid.

(c)          A Participant’s account balance in optional contributions will not
be fully vested at all times. Rather, the Participant will be vested in this
account to the same extent that his optional account under the U.S.B. Holding
Co., Inc. Employee Stock Ownership Plan (with 401(k) Provisions) is vested.

Section 3.5.         Limits On Contributions. Notwithstanding the above, the
total employee matching or optional contributions shall not exceed twenty-five
percent of each Participant’s total compensation in any Plan Year.

Section 3.6.        Whole Share Price Limitation on Contributions.
Notwithstanding the provisions of above sections 3.1, 3.2, 3.3 and 3.4, all
contributions to this Plan shall be limited to amounts that will purchase whole
shares of USB Stock at the market price paid for such shares on the date the
contribution(s) are to be credited to Participants’ Deferred Compensation
Accounts. Any additional amounts that would be contributed to the Plan but for
this Section shall (i) be returned to the Participant or to the Company, and
shall not be credited to Participants’ Plan accounts or applied to purchase
fractional shares of USB Stock, or (ii) if de minimis, held for future purchase
of Company Stock for the benefit of the Participant.

ARTICLE IV

 

INVESTMENT OF CONTRIBUTIONS; DIVIDENDS

Section 4.1.      Investment of Contributions. Amounts credited hereunder to a
Participant’s Deferred Compensation Account shall be treated as if they were
actually invested in USB Stock on the dates amounts are credited to the Deferred
Compensation Account pursuant to

 

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Article III hereof. For purposes of reporting to Participants, each Deferred
Compensation Account shall be credited with appreciation, depreciation, gains,
and/or losses as if actually invested in USB Stock.

If the Company elects to fund any of its liability hereunder through a trust or
other funding mechanism, the company shall do so only with shares of USB Stock,
and shall acquire, issue or release from Treasury such shares of USB Stock on
the dates amounts are credited to Participants’ Deferred compensation Accounts
pursuant to Article III hereof.

SECTION 4.2.        APPLICATION OF DIVIDENDS. IF THE COMPANY ELECTS TO FUND ANY
OF ITS LIABILITY HEREUNDER THROUGH A TRUST OR OTHER FUNDING MECHANISM, DIVIDENDS
PAID ON USB STOCK HELD BY SUCH TRUST OR OTHER FUNDING VEHICLE SHALL BE PAID TO
SUCH TRUST OR OTHER FUNDING VEHICLE AND SHALL BE APPLIED ON THE DATE RECEIVED TO
THE PURCHASE OF ADDITIONAL SHARES OF USB STOCK. THE PLAN ADMINISTRATOR AND/OR
THE TRUSTEE OR OTHER FUNDING VEHICLE SHALL ACCEPT ONLY SUCH AMOUNTS OF DIVIDENDS
AS SHALL EQUAL (ON THE DATE RECEIVED) THE PURCHASE PRICE OF THE MAXIMUM NUMBER
OF WHOLE SHARES OF USB STOCK, AT THE MARKET PRICE (PAID FOR SUCH SHARES) ON THE
DATE DIVIDENDS ARE PAID, THAT CAN BE PURCHASED WITHOUT ANY EXCESS CASH OR OTHER
PROPERTY REMAINING IN THE PLAN, TRUST OR OTHER VEHICLE. THE PLAN ADMINISTRATOR
SHALL APPLY ANY EXCESS AMOUNTS AS IT DEEMS APPROPRIATE, PROVIDED THEY DO NOT
BECOME PART OF THE PLAN’S ASSETS AT ANY TIME UNLESS SUCH AMOUNT IS DIMINIMUS
INASMUCH AS SUCH DIVIDEND MAY BE HELD TO PURCHASE COMPANY STOCK IN THE FUTURE
FOR THE BENEFIT OF THE PARTICIPANT.

ARTICLE V

 

DISTRIBUTIONS

Section 5.1.        Payment Elections. All amounts credited to a Participant’s
Deferred Compensation Account, including gains and losses credited in accordance
with Article IV of the Plan, shall be distributed, to or with respect to a
Participant only upon Termination of Employment for any reason including death
or upon a Change in Control Event. All amounts distributable under the Plan
shall be distributed in the manner selected by Participant.

Distribution shall be made solely in shares of USB Stock.

1.            Distribution of a Participant’s Deferred Compensation Account in a
single distribution on the first day of the calendar month or calendar year
following the occurrence of the distribution event; or

2.            Distribution of a Participant’s Deferred Compensation Account in
substantially equal annual installments beginning on the first day of the
calendar month or calendar year following the occurrence of the distribution
event and continuing over a period not exceeding fifteen (15) years (provided
that such period does not exceed the life expectancy of the Participant); or

 

3.

Any combination of the foregoing.

If no such election is made, the distribution will be made in a single
distribution on the first day of the calendar month following the occurrence of
the distribution event.

 

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If a Participant should die before distribution of the full amount of the
Deferred Compensation Account had been made to him, any remaining amounts shall
be distributed to his beneficiary in the same manner and to the same extent as
the Participant would have received distributions in accordance with the
foregoing.

A Participant may, but is not required to make a separate distribution election
that will apply to payments due following a Change in Control Event.

Section 5.2.         Mandatory Cashout of Small Balances. Notwithstanding
anything in the Plan to the contrary, if, as of December 31 of any calendar year
following a Participant’s Termination of Employment, the balance credited to his
Deferred Compensation Account is $10,000 or less, the entire balance credited to
his Deferred Compensation Account shall be distributed in shares of Company
stock (fractional shares paid in cash) in a single lump sum payment as soon as
practicable during the immediately following calendar year.

Section 5.3.        Restrictions on Payments to Specified Employees.
Notwithstanding anything in the Plan to the contrary, to the extent required
under section 409A of the Code, no payment to be made to a specified employee
(within the meaning of section 409A of the Code) on or after the date of his
Termination of Employment shall be made sooner than six (6) months after such
Termination of Employment.

 

Section 5.4.

Certain One-time Elections.

(a)         Notwithstanding anything in the Plan to the contrary, each active or
terminated Participant in this Plan may elect, by written notice given at any
time prior to January 1, 2006, to receive all, but not less than all, of his
vested and unpaid benefits under this Plan in a single lump sum payment as of
December 31, 2005 in full settlement of all of his rights under this Plan.

(b)         Notwithstanding anything in this Plan to the contrary, each
Participant may elect, by written notice given at any time prior to January 1,
2006 to receive all, but not less than all, of his vested and unpaid benefits
under this Plan beginning at any time and payable in any form permitted under
this Plan (including but not limited to an election that any accrued but unpaid
vested benefits be paid in a lump sum as soon as practicable following a Change
in Control Event).

ARTICLE VI

 

ADMINISTRATION OF THE PLAN

Section 6.1.         Administration by the Company. The Company shall be
responsible for the general operation and administration of the Plan and for
carrying out the provisions thereof.

Section 6.2.         General Powers of Administration. The Company shall be
entitled to rely conclusively upon all tables, valuations, certificates, opinion
and reports furnished by any actuary, accountant, controller, counsel or other
person employed or engaged by the Company with respect to the Plan.

 

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SECTION 6.3.         FINANCIAL ACCOUNTING. THE COMPANY INTENDS THIS PLAN TO
QUALIFY, UNDER EITF CONSENSUS DATED JULY 23, 1998 RELATING TO ISSUE 97-14 (“EITF
97-14”), FOR FINANCIAL ACCOUNTING, IN THE COMPANY’S FINANCIAL STATEMENTS, AS A
“PLAN A” TYPE PROGRAM, UNDER WHICH USB STOCK HELD BY ANY TRUST OR OTHER FUNDING
MECHANISM UTILIZED BY THE COMPANY AND THE RELATED DEFERRED COMPENSATION
OBLIGATION OF THE COMPANY EACH SHALL BE RECORDED IN STOCKHOLDERS, EQUITY, IN AN
AMOUNT EQUAL TO THE ORIGINAL AMOUNTS OF DEFERRED COMPENSATION CREDITED UNDER THE
PLAN WITHOUT THE NEED TO ADJUST THE USB STOCK OR THE OBLIGATION TO A MARKET
VALUE LEVEL. TO THE EXTENT THIS PLAN MUST BE INTERPRETED AT ANY TIME, IT SHALL
BE INTERPRETED TO HAVE THE MEANING THAT CONFORMS TO THE REQUIREMENTS TO EITF
97-14.

ARTICLE VII

 

AMENDMENT OR TERMINATION

Section 7.1.        Amendment or Termination. The Company intends the Plan to be
permanent but reserves the right to amend or terminate the Plan when, in the
sole opinion of the Company, such amendment or termination is advisable. Any
such amendment or termination shall be made pursuant to a resolution of the
Board and shall be effective as of the date of such resolution.

Section 7.2.         Effect of Amendment or Termination. No amendment or
termination of the Plan shall directly or indirectly reduce the balance of the
Deferred Compensation Account held hereunder as of the effective date of such
amendment or termination. Upon termination of the Plan, all amounts credited to
each participant shall fully vest, and distribution of amounts in the Deferred
Compensation Account shall be made to the Participant or his beneficiary in the
manner and at the time described in Article V of the Plan. No additional credits
of Salary Reduction or Matching Contributions shall be made to the Deferred
Compensation Account of a Participant after termination of the Plan, but the
Company shall continue to credit gains to the Deferred Compensation Account
pursuant to Article IV until the balance of the Deferred Compensation Account
has been fully distributed to the Participant or his beneficiary.

Section 7.3.         Suspension of the Plan. The Company reserves the right, in
its sole and absolute discretion, by action of the Board, to suspend the
operation of the Plan, but only in the following circumstances:

(a)          With respect to Salary Reduction Contributions, Mandatory
Contributions to be earned and paid in calendar years beginning after the date
of adoption of the resolution suspending the operation of the Plan; and

(b)          At such other time and in such other circumstances as may be
permitted under section 409A of the Code.

In such event, no further compensation shall be deferred following the effective
date of the suspension and Deferred Compensation Accounts in existence prior to
such date shall continue to be maintained, and payments shall continue to be
made, in accordance with the provisions of the Plan.

 

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ARTICLE VIII

 

GENERAL PROVISIONS

Section 8.1.         Participant’s Rights Unsecured. The Plan at all times shall
be entirely unfunded and no provision shall at any time be made with respect to
segregating any assets of the Company for payment of any distributions
hereunder; provided, however, that the Company in its sole discretion may
establish a reserve, segregate specific assets, or create a trust or other
vehicle, to hold assets for purposes of administering the Plan or for its own
financial purposes. The right of a Participant or his designated beneficiary to
receive a distribution hereunder shall be an unsecured claim against the general
assets of the Company, and neither the Participant nor a designated beneficiary
shall have any rights in or against any specific assets of the Company,
including any reserve, segregated assets, or trust assets that may be maintained
by the Company.

Section 8.2.         No Guarantee of Benefits. Nothing contained in the Plan
shall constitute a guaranty by the Company or any other person or entity that
the assets of the Company will be sufficient to pay any benefit hereunder.

Section 8.3.         No Enlargement of Employee Rights. No Participant shall
have any right to receive a distribution of contributions made under the Plan
except in accordance with the terms of the Plan. Establishment of the Plan shall
not be construed to give any Participant the right to be retained in the service
of the Company.

Section 8.4.         Spendthrift Provisions. No interest of any person or entity
in, or right to receive a distribution under, the Plan shall be subject in any
manner to sale, transfer, assignment, pledge, attachment, garnishment,
anticipation, or other alienation or encumbrance of any kind; nor may such
interest or right to receive a distribution be taken, either voluntarily or
involuntarily for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims for alimony, support,
separate maintenance, and claims in bankruptcy proceedings.

Section 8.5.         Applicable Law. The Plan shall be construed and
administered under the laws of the State of New York.

Section 8.6.         Incapacity of Recipient. If any person entitled to a
distribution under the Plan is deemed by the Company to be incapable of
personally receiving and giving a valid receipt for such payment, then, unless
and until claim therefore shall have been made by a duly appointed guardian or
other legal representative of such person, the Company may provide for such
payment or any part thereof to be made to any other person or institution then
contributing toward or providing for the care and maintenance of such person.
Any such payment shall be a payment for the account of such person and a
complete discharge of any liability of the Company and the Plan therefor.

Section 8.7.         Corporate Successors. The Plan shall not be automatically
terminated by a transfer or sale of assets of the Company or by the merger or
consolidation of the Company into or with any other corporation or other entity,
but the Plan shall be continued after such sale, merger, or consolidation only
if and to the extent that the transferee, purchaser, or successor

 

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entity agrees to continue the Plan. In the event that the Plan is not continued
by the transferee, purchaser, or successor entity, then the Plan shall terminate
subject to the provisions of Section 7.2.

Section 8.8.         Unclaimed Benefit. Each Participant shall keep the Company
informed of his current address and the current address of his designated
beneficiary. The Company shall not be obligated to search for the whereabouts of
any person. If the location of a Participant is not made known to the Company
within three (3) years after the date on which payment of the Participant’s
Deferred Compensation Accounts may first be made, payment may be made as though
the Participant had died at the end of the three-year period. If, within one
additional year after such three-year period has elapsed, or, within three year
after the actual death of a Participant, the Company is unable to locate any
designated beneficiary of the Participant, then the Company shall have no
further obligation to pay any benefit hereunder to such Participant or
designated beneficiary and such benefit shall be irrevocably forfeited.

Section 8.9.         Limitations on liability. Notwithstanding any of the
preceding provisions of the Plan, neither the Company nor any individual acting
as employee or agent of the Company shall be liable to any Participant, former
Participant or other person for any claim, loss, liability, or expense incurred
in connection with the Plan. However, the preceding sentence shall not apply to
liability for criminal acts or willful misconduct.

Section 8.10.       Compliance with Section 409A of the Code. The Plan is
intended to be a non-qualified deferred compensation plan described in section
409A of the Code. The Plan shall be operated, administered and construed to give
effect to such intent. In addition, the Plan shall be subject to amendment, with
or without advance notice to Participants and other interested parties, and on a
prospective or retroactive basis, including but not limited to amendment in a
manner that adversely affects the rights of participants and other interested
parties, to the extent necessary to effect such compliance.

 

Section 8.11.

Accelerated Vesting Upon a Change in Control.

(a)         Each Participant’s benefit under the Plan shall become 100% vested
upon the occurrence of a Change in Control of the Employer while the Participant
is an Employee.

(b)          A Change in Control of the Employer shall be deemed to have
occurred upon the happening of any of the following events:

(i)           consummation of a reorganization, merger, or consolidation of
U.S.B. Holding Co., Inc. with one or more other persons, other than a
transaction following which more than 20% of the securities entitled to vote
generally in the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) by a person who, on January 1, 1994, beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) more than
20% of the securities entitled to vote generally in the election of directors of
U.S.B. Holding Co., Inc.

(ii)          a transaction or series of transactions resulting in the
acquisition of all or substantially all of the assets of U.S.B. Holding Co.,
Inc. or beneficial ownership

 

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(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than 20% of the outstanding securities of U.S.B. Holding Co., Inc. entitled to
vote generally in the election of directors by any person or by any persons
acting in concert, who do not, prior to such transaction or series of
transactions already beneficially own more than 20% of such outstanding
securities;

(iii)         a complete liquidation or dissolution of U.S.B. Holding Co., Inc.,
or approval by its stockholders of a plan for such liquidation or dissolution.

In no event, however, shall a Change in Control be deemed to have occurred as a
result of any acquisition of securities or assets of U.S.B. Holding Co., Inc.,
an affiliated employer, or a subsidiary of either of them, by U.S.B. Holding
Co., Inc., an affiliated employer, or a subsidiary of either of them, or by any
employee benefit plan maintained by any of them. For purposes of this section
9.5(b), the term “person” shall have the meaning assigned to it under sections
13(d)(3) or 14(d)(2) of the Exchange Act.

 

IN WITNESS WHEREOF, the Company has formally adopted this amended and restated
Plan effective as of January 1, 2005.

UNION STATE BANK

 

By: /s/ Thomas E. Hales                        

Thomas E. Hales – Chairman and CEO

 

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UNION STATE BANK

100 Dutch Hill Road

Orangeburg, New York 10962

KEY EMPLOYEES’ SUPPLEMENTAL INVESTMENT PLAN

SALARY REDUCTION AGREEMENT

As a condition to receiving a Salary Reduction and Matching Contribution under
the Key Employees’ Supplemental Investment Plan (the “Plan”) of Union State Bank
(the “Bank”), I hereby agree that the salary, inclusive of bonuses, otherwise
payable to me by Union State Bank for any Plan Year commencing with the Plan
Year which begins January 1, 2006, shall be reduced by _________ percent per pay
period after I have met all 401(k) qualified plan provisions under the Bank’s
Employee Stock Ownership Plan (With 401(k) Provisions) (“KSOP”). Such amount
shall be paid by the Bank as a salary reduction contribution for my benefit
pursuant to the terms of the Plan.

 

 

 

 

                                                               

                                                                

Date

Participant