Exhibit 10.5
AMENDMENT
To The
Hudson Valley Bank
Supplemental Retirement Plan of 1997
     THIS AMENDMENT (the “Amendment”) TO THE HUDSON VALLEY BANK SUPPLEMENTAL
RETIREMENT PLAN OF 1997 (the “Plan” or the “Agreement”) is executed on this
___day of December, 2008, by Hudson Valley Bank, N.A., formerly known as Hudson
Valley Bank, a national banking association (hereinafter referred to as the
“Plan Sponsor” and/or the “Service Provider,”) and ______ (hereinafter referred
to as the “Participant”), and represents an effort by both parties to comply
with the requirements of Internal Revenue Code Section 409A. The Plan Sponsor
has operated this Plan since 2005 in good faith compliance with the provisions
of Section 409A and all Applicable Guidance.
     WHEREAS the Agreement may be amended at any time by the mutual written
consent of the parties to the Agreement; and
     WHEREAS it is both anticipated and expected that the terms and provisions
of the Plan may need to be amended again in the future to assure continued
compliance. The Plan Sponsor and the Participant acknowledge that fact and agree
to take any and all steps necessary to operate the plan in “good faith” based on
their current understanding of the regulations;
     NOW, THEREFORE, the Plan is hereby amended (without specific numerical
reference) by adding and/or replacing certain definitions and adding or
replacing certain articles of the Plan. Nothing contained herein is considered
by the Plan Sponsor to constitute a material modification of the original Plan:
The following definitions if specifically identified in the original Plan are
hereby replaced in their entirety, and if not found in the original Plan are
hereby added:
     “Aggregated Plans” shall mean this Plan and any other like-type plan or
arrangement (nonaccount balance plan) of the Plan Sponsor in which the
Participant participates and to which the Plan or Applicable Guidance requires
the aggregation of all such nonqualified Deferred Compensation Plans in applying
Code § 409A and associated regulations.
     “Applicable Guidance” shall mean, as the context requires, Code § 409A,
Final Treasury Regulations §1.409A, or other written Treasury or IRS guidance
regarding or affecting Code § 409A.
     “Change in Control” shall mean the occurrence of a Change in Control event,
within the meaning of Treasury Regulations §1.409A-3(i)(5) and described in any
of subparagraph (a), (b), or (c), (collectively referred to as “Change in
Control Events”), or any combination of the Change in Control Events. To
constitute a Change in Control Event with respect to the Participant or
Beneficiary, the Change in Control Event must relate to: (i) the Plan Sponsor
for whom the Participant is performing services at the time of the Change in
Control Event; (ii) the Plan Sponsor that is liable for the payment of the
Accrued Benefit (or all Plan Sponsors liable for the payment if more than one
Plan Sponsor is liable); or (iii) a Plan Sponsor that is a majority shareholder
of a Plan Sponsor identified in clause (i) or (ii), or any Plan Sponsor in a
chain of Plan Sponsors in which each Plan Sponsor is a majority shareholder of
another Plan Sponsor in the chain, ending in a Plan Sponsor identified in clause
(i) or (ii).
     (a) Change in Ownership. A Change in Ownership occurs if a person, or a
group of persons acting together, acquires more than fifty percent (50%) of the
stock of the Plan Sponsor, measured by voting power or value. Incremental
increases in ownership by a person or group that already owns fifty percent
(50%) of the Plan Sponsor do not result in a Change of Ownership, as defined in
Treasury Regulations §1.409A-3(i)(5)(v).

 

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     (b) Change in Effective Control. A Change in Effective Control occurs if,
over a twelve (12) month period: (i) a person or group acquires stock
representing thirty percent (30%) of the voting power of the Plan Sponsor; or
(ii) a majority of the members of the Board of the ultimate parent Plan Sponsor
is replaced by directors not endorsed by the persons who were members of the
Board before the new directors’ appointment, as defined in Treasury Regulations
§1.409A-3(i)(5)(vi).
     (c) Change in Ownership of a Substantial Portion of Corporate Assets. A
Change in Control based on the sale of assets occurs if a person or group
acquires forty percent (40%) or more of the gross fair market value of the
assets of a Plan Sponsor over a twelve (12) month period. No change in control
results pursuant to this Article (c) if the assets are transferred to certain
entities controlled directly or indirectly by the shareholders of the
transferring corporation, as defined in Treasury Regulations
§1.409A-3(i)(5)(vii).
     “Disability” shall be defined as a condition of the Participant whereby he
or she either: (i) is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months; or (ii) is, by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Plan Sponsor. The Plan
Administrator will determine whether the Participant has incurred a Disability
based on its own good faith determination and may require the Participant to
submit to reasonable physical and mental examinations for this purpose. The
Participant will also be deemed to have incurred a Disability if determined to
be totally disabled by the Social Security Administration, Railroad Retirement
Board, or in accordance with a disability insurance program, provided that the
definition of disability applied under such disability insurance program
complies with the requirements of Treasury Regulation §1.409A-3(i)(4) and
authoritative guidance.
     “Plan” shall mean this Supplemental Retirement Plan of 1997, the
Participation Agreement (if any), all Election Forms (if any), the Trust (if
any), and any other written documents relevant to the Plan. For purposes of
applying Code § 409A requirements, this Plan is a nonaccount balance plan under
Treasury Regulation §1.409-1(c)(2)(i)(A.
     “Plan Sponsor” shall mean the person or entity: (i) receiving the services
of the Participant; (ii) with respect to whom the Legally Binding Right to
compensation arises; and (iii) all persons with whom such person or entity would
be considered a single employer under Code §414(b) or §414(c).
     “Section 409A” shall mean Section 409A of the Code and the Treasury
Regulations and other Applicable Guidance issued under that Section.
     “Separation from Service” shall mean:
     (a) Employee Participants. The occurrence of a Participant’s death,
retirement, or “other termination of employment” (as defined in Treasury
Regulations §1.409A-1(h)(1)) with the Plan Sponsor (as defined in Treasury
Regulations §1.409A-1(h)(3)).
(i) Effect of Leave. A Participant does not incur a Separation from Service if
the Participant is on military leave, sick leave, or other bona fide leave of
absence if the period of such leave does not exceed six (6) months or, if
longer, the period for which a statute or contract provides the Participant with
the right to reemployment with the Plan Sponsor. If a Participant’s leave
exceeds six (6) months but the Participant is not entitled to reemployment under
a statute or contract, the Participant incurs a Separation from Service on the
next day following the expiration of such six (6) month period.

 

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(ii) Termination of Employment. A Participant will have incurred a Separation
from Service where the Plan Sponsor and the Participant reasonably anticipated
that no further services would be performed after a certain date.
Notwithstanding the above, a Participant is presumed to have Separated from
Service (whether as an Employee or an Independent Contractor), when the level of
bona fide services performed decreases to a level equal to or less than twenty
percent (20%) of the services performed by the Participant during the
immediately preceding 36-month period (or the full period of services to the
employer if the Participant has been providing services to the Plan Sponsor for
less than 36 months). A Participant will be presumed not to have Separated from
Service where the level of bona fide services performed continues at a level
that is fifty percent (50%) or more of the average level of service performed by
the Participant during the immediately preceding 36-month period (or the full
period of services to the employer if the Participant has been providing
services to the Plan Sponsor for less than 36 months).
(b) Independent Contractor Participants. A Separation from Service will occur
upon the expiration of the contract (or in the case of more than one contract,
all contracts) under which services are performed for the Plan Sponsor (as
defined in Treasury Regulations §1.409A-1(h)(3)), if the expiration constitutes
a good-faith and complete termination of the contractual relationship. The Plan
is considered to satisfy the requirement with respect to an amount payable to an
Independent Contractor upon a Separation from Service if: (i) no amount will be
paid to the Participant before a date at least twelve (12) months after the day
on which the contract expires under which the Participant performs services for
the Plan Sponsor (or, in the case of more than one contract, all such contracts
expire); and (ii) no amount payable to the Participant on that date will be paid
to the Participant if, after the expiration of the contract (or contracts) and
before that date, the Participant performs services for the Service Recipient as
an Independent Contractor or an Employee.
     “Specified Employee” shall mean that the Participant also satisfies the
definition of a “key employee” as such term is defined in Code §416(i) (without
regard to Section 416(i)(5)). However, the Participant is not a Specified
Employee unless any stock of the Plan Sponsor is publicly traded on an
established securities market or otherwise, as defined in Code §1.897-1(m). If
the Participant is a key employee at any time during the twelve (12) months
ending on the identification date, the Participant is a Specified Employee for
the twelve (12) month period commencing on the first day of the fourth (4th)
month following the identification date. For purposes of this Article, the
identification date is December 31 unless a different date is specified in
writing by the Plan Sponsor. The determination of the Participant as a Specified
Employee shall be made by the Administrator in accordance with IRC
Section 416(i), the “specified employee” requirements of Section 409A, and
Treasury Regulations.
     “Treasury Regulations” shall mean regulations promulgated by the Internal
Revenue Service for the United States Department of the Treasury, as they may be
amended from time to time.
The following articles if specifically identified in the original Plan are
hereby replaced in their entirety, and if not found in the original Plan are
hereby added:
     Prohibition on Acceleration of Payments. Notwithstanding anything in this
Plan to the contrary, neither the Plan Sponsor nor a Participant may accelerate
the time or schedule of any payment or amount scheduled to be paid under this
Plan, except as otherwise permitted by Treasury Regulations §1.409A-3(j)(4). The
Plan Sponsor shall deny any change made to an election if the Plan Sponsor
determines that the change violates the requirements of authoritative guidance.
However, the Plan Sponsor shall permit the acceleration of the time or schedule
of payment to pay the Participant at any time the arrangement fails to meet the
requirements of Code Section 409A and the Treasury Regulations and other
guidance promulgated thereunder. Such payment shall not exceed the amount
required to be included in income as the result of the failure to comply with
the requirements of Code Section 409A.

 

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     Delay in Payment by Plan Sponsor.
     (a) A payment may be delayed to a date after the designated payment date
under any of the circumstances described below, and the provision will not fail
to meet the requirements of establishing a permissible payment event. The delay
in the payment will not constitute a subsequent deferral election, so long as
the Plan Sponsor treats all payments to similarly situated Participants on a
reasonably consistent basis.
     (i) Payments subject to Section 162(m). A payment may be delayed to the
extent that the Plan Sponsor reasonably anticipates that if the payment were
made as scheduled, the Plan Sponsor’s deduction with respect to such payment
would not be permitted due to the application of Code §162(m). If a payment is
delayed, such payment must be made either:
     (1) during the Participant’s first taxable year in which the Plan Sponsor
reasonably anticipates, or should reasonably anticipate, that if the payment is
made during such year, the deduction of such payment will not be barred by
application of Code §162(m), or
     (2) during the period beginning with the date of the Participant’s
Separation from Service and ending on the later of the last day of the Taxable
Year of the Plan Sponsor in which the Participant separates from service or the
fifteenth (15th) day of the third (3rd) month following the Participant’s
Separation from Service. Where any scheduled payment to a specific Participant
in the Plan Sponsor’s Taxable Year is delayed in accordance with this Article,
the delay in payment will be treated as a subsequent deferral election unless
all scheduled payments to the Participant that could be delayed in accordance
with this Article are also delayed. Where the payment is delayed to a date on or
after the Participant’s Separation from Service, the payment will be considered
a payment upon a Separation from Service for purposes of the rules under
Treasury Regulations §1.409A-3(i)(2) (payments to specified employees upon a
separation from service), and the six (6) month delay rule will apply for
Specified Employees.
     (ii) Payments that would violate Federal securities laws or other
applicable law. A payment may be delayed where the Plan Sponsor reasonably
anticipates that the making of the payment will violate Federal securities laws
or other applicable law provided that the payment is made at the earliest date
at which the Plan Sponsor reasonably anticipates that the making of the payment
will not cause such violation. The making of a payment that would cause
inclusion in gross income or the application of any penalty provision or other
provision of the Internal Revenue Code is not treated as a violation of
applicable law.
     (iii) Other events and conditions. The Plan Sponsor may delay a payment
upon such other events and conditions as the Commissioner of the Internal RS may
prescribe.
     (iv) Not withstanding the above, a payment may be delayed where the payment
would jeopardize the ability of the Plan Sponsor to continue as a going concern.
     (b) Treatment of Payment as Made on Designated Payment Date. Each payment
under this Plan is deemed made on the required payment date even if the payment
is made after such date, provided the payment is made by the latest of: (i) the
end of the calendar year in which the payment is due; (ii) the 15th day of the
third calendar month following the payment due date; (iii) in case the Plan
Sponsor cannot calculate the payment amount on account of administrative
impracticality which is

 

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beyond the Participant’s control (or the control of the Participant’s estate),
in the first calendar year in which payment is practicable; (iv) in case the
Plan Sponsor does not have sufficient funds to make the payment without
jeopardizing the Plan Sponsor’s solvency, in the first calendar year in which
the Plan Sponsor’s funds are sufficient to make the payment.
     Claims Procedure. This Article is based on final regulations issued by the
Department of Labor and published in the Federal Register on November 21, 2000
and codified in Section 2560.503-1 of the Department of Labor Regulations. If
any provision of this Article conflicts with the requirements of those
regulations, the requirements of those regulations will prevail.
     (a) Claim. A Participant or Beneficiary (hereinafter referred to as a
“Claimant”) who believes he or she is entitled to any Plan benefit under this
Plan may file a claim with the Plan Sponsor. The Plan Sponsor shall review the
claim itself or appoint an individual or entity to review the claim.
     (b) Claim Decision. The Claimant shall be notified within ninety (90) days
after the claim is filed (forty-five (45) days for a Disability Claim), whether
the claim is allowed or denied, unless the claimant receives written notice from
the Plan Sponsor or appointee of the Plan Sponsor prior to the end of the ninety
(90) day period (forty-five (45) days for a Disability Claim) stating that
special circumstances require an extension of the time for decision. For a claim
other than for Disability, such extension is not to extend beyond the day which
is one-hundred eighty (180) days after the day the claim is filed as long as the
Plan Sponsor notifies the claimant of the circumstances requiring the extension,
and the date as of which a decision is expected to be rendered. For a Disability
Claim, a thirty (30) day extension is permitted, with an additional thirty
(30) days permitted, provided that the Plan Sponsor notifies the claimant prior
to expiration of the first 30 day extension, of the circumstances requiring the
extension, and the date as of which a decision is expected to be rendered. If
the Plan Sponsor denies the claim, it must provide to the Claimant, in writing
or by electronic communication:
     (i) The specific reasons for such denial;
     (ii) Specific reference to pertinent provisions of this Plan on which such
denial is based;
     (iii) A description of any additional material or information necessary for
the Claimant to perfect his or her claim, by providing such material to the Plan
Sponsor within forty-five (45) days, and an explanation why such material or
such information is necessary; and
     (iv) A description of the Plan’s appeal procedures and the time limits
applicable to such procedures, including a statement of the Claimant’s right to
bring a civil action under Section 502(a) of ERISA following a denial of the
appeal of the denial of the benefits claim.
     (c) Review Procedures. A request for review of a denied claim must be made
in writing to the Plan Sponsor within sixty (60) days after receiving notice of
denial. The decision upon review will be made within sixty (60) days (forty-five
(45) days for a Disability claim) after the Plan Sponsor’s receipt of a request
for review. If the Plan Sponsor determines that an extension of time for
processing is required, written notice of the extension shall be furnished to
the claimant (which will include the expected date of rendering a decision)
prior to the termination of the initial period, but in no event will the
extension exceed sixty (60) days (forty-five (45) days for a Disability claim).
The reviewer shall afford the Claimant an opportunity to review and receive,
without charge, all relevant documents, information, and records and to submit
issues and comments in writing to the Plan Sponsor. The reviewer shall take into
account all comments, documents, records, and other information submitted by the
Claimant relating to the claim regardless of whether the information was
submitted or considered

 

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in the benefit determination. Upon completion of its review of an adverse
initial claim determination, the Plan Sponsor will give the Claimant, in writing
or by electronic notification, a notice containing:
     (i) its decision;
     (ii) the specific reasons for the decision;
     (iii) the relevant Plan provisions on which its decision is based;
     (iv) a statement that the Claimant is entitled to receive, upon request and
without charge, reasonable access to, and copies of, all documents, records and
other information in the Plan’s files which is relevant to the Claimant’s claim
for benefit;
     (v) a statement describing the Claimant’s right to bring an action for
judicial review under ERISA Section 502(a); and
     (vi) If an internal rule, guideline, protocol, or other similar criterion
was relied upon in making the adverse determination on review, a statement that
a copy of the rule, guideline, protocol, or other similar criterion will be
provided without charge to the Claimant upon request.
     (d) Calculation of Time Periods. For purposes of the time periods specified
in this Article, the period of time during which a benefit determination is
required to be made begins at the time a claim is filed in accordance with this
Plan’s procedures without regard to whether all the information necessary to
make a decision accompanies the claim. If a period of time is extended due to a
Claimant’s failure to submit all information necessary, the period for making
the determination shall be tolled from the date the notification is sent to the
Claimant until the date the Claimant responds.
     (e) Failure of Plan to Follow Procedures. If the Plan Sponsor fails to
follow the claims procedure required by this Article, a Claimant shall be deemed
to have exhausted the administrative remedies available under this Plan and
shall be entitled to pursue any available remedy under Section 502(a) of ERISA
on the basis that this Plan has failed to provide a reasonable claims procedure
that would yield a decision on the merits of the claim.
     (f) Failure of Claimant to Follow Procedures. A Claimant’s compliance with
the foregoing provisions of this Article is a mandatory prerequisite to the
Claimant’s right to commence any legal action with respect to any claim for
benefits under the Plan.
     Amendment. The Plan Sponsor reserves the right to amend this Plan at any
time to comply with Section 409A and other Applicable Guidance or for any other
purpose, provided that such amendment will not cause the Plan to violate the
provisions of Section 409A. Except to the extent necessary to bring this Plan
into compliance with Section 409A, no amendment or modification shall be
effective to decrease the value or vested percentage of a Participant’s Accrued
Benefit in existence at the time an amendment or modification is made to the
Plan.
     Plan Termination. The Plan Sponsor reserves the right to terminate this
Plan in accordance with one of the following, subject to the restrictions
imposed by Section 409A and authoritative guidance:
     (a) Corporate Dissolution or Bankruptcy. This Plan may be terminated within
twelve (12) months of a corporate dissolution taxed under Code § 331, or with
the approval of a Plan Sponsor bankruptcy court pursuant to 11 U.S.C.
Section 503(b)(1)(A), and distributions may then be made to the Participant
provided that the

 

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amounts payable under this Plan are included in the Participants’ gross income
in the latest of:
     (i) The calendar year in which the Plan termination occurs;
     (ii) The calendar year in which the amount is no longer subject to a
substantial risk of forfeiture; or
     (iii) The first calendar year in which the payment is administratively
practicable.
     (b) Change in Control. This Plan may be terminated within the thirty
(30) days preceding or the twelve (12) months following a Change in Control.
This Plan will then be treated as terminated only if all substantially similar
arrangements sponsored by the Plan Sponsor are terminated so that all
participants in all similar arrangements are required to receive all amounts of
compensation deferred under the terminated arrangements within twelve
(12) months of the date of termination of the arrangements.
     (c) Discretionary Termination. The Plan Sponsor may also terminate this
Plan and make distributions provided that:
     (i) All plans sponsored by the Plan Sponsor that would be aggregated with
any terminated arrangements under Treasury Regulations §1.409A-1(c) are
terminated;
     (ii) No payments, other than payments that would be payable under the terms
of this plan if the termination had not occurred, are made within twelve
(12) months of this plan termination;
     (iii) All payments are made within twenty-four (24) months of this plan
termination; and
     (iv) Neither the Plan Sponsor nor any of its affiliates adopts a new plan
that would be aggregated with any terminated plan if the same Participant
participated in both arrangements at any time within three (3) years following
the date of termination of this Plan.
     (v) The termination does not occur proximate to a downturn in the financial
health of the Plan Sponsor.
     Compliance with Section 409A and Authoritative Guidance. Notwithstanding
anything in this Plan to the contrary, all provisions of this Plan, including
but not limited to the definitions of terms, elections to defer, and
distributions, shall be made in accordance with and shall comply with
Section 409A and any authoritative guidance. The Plan Sponsor will amend the
terms of this Plan retroactively, if necessary, to the extent required to comply
with Section 409A and any authoritative guidance. No provision of this Plan
shall be followed to the extent that following such provision would result in a
violation of Section 409A or the authoritative guidance, and no election made by
a Participant hereunder, and no change made by a Participant to a previous
election, shall be accepted by the Plan Sponsor if the Plan Sponsor determines
that acceptance of such election or change could violate any of the requirements
of Section 409A or the authoritative guidance. This Plan and any accompanying
forms shall be interpreted in accordance with, and incorporate the terms and
conditions required by, Section 409A and the authoritative guidance, including,
without limitation, any such Treasury Regulations or other guidance that may be
issued after the date hereof.
     Status of Plan. The Plan is intended to be a plan that: (i) is not
qualified within the meaning of Code Section 401(a); and (ii) “is unfunded and
is maintained by the Plan Sponsor primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees” within the meaning of ERISA Sections 201(2), 301(a)(3), and
401(a)(1). Furthermore, the provisions of this Plan, both in form and in
operation, are intended

 

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to comply with the requirements of Section 409A(a)(2), (3), and (4) of the Code.
This Plan shall be administered and interpreted to the extent possible in a
manner consistent with these intentions. If the Plan Sponsor or Plan
Administrator determines in good faith that a Participant who has not
experienced a Separation from Service no longer qualifies as a member of a
select group of management or highly compensated employees, as membership in
such group is determined in accordance with Sections 201(2), 301(a)(3), and
401(a)(1) of ERISA, or that such a Participant’s participation in the Plan could
jeopardize the status of this Plan as a plan intended to be “unfunded” and
“maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees” within the meaning
of ERISA Sections 201(2), 301(a)(3), and 401(a)(1), or causes the Plan to fail
to comply with any requirements of Sections 409A(a)(2), (3), or (4) of the Code,
the Plan Sponsor may take reasonable steps necessary to maintain the status of
the Plan as such or to prevent or cure any failure, as the case may be.
The following Article is hereby deleted:
17. LUMP SUM PAYMENT OF BENEFITS
     IN WITNESS OF THE ABOVE, the Plan Sponsor and Participant have executed
this Amendment to the Agreement.

         
WITNESS:
      FOR THE PLAN SPONSOR:
 
       
 
       
(name)
      (name of Plan Sponsor)
 
       
 
       
(signature of witness)
      (signature of authorized officer of Plan Sponsor)
 
       
 
       
(title if any)
      (title of signing officer)
 
       
 
      THE PARTICIPANT:
 
       
 
       
 
      (signature)
 
       
 
       
 
      (print name)