EXHIBIT 10(y)



                            U.S.B. HOLDING CO., INC.

                                 SEVERANCE PLAN



SECTION 1. ESTABLISHMENT OF PLAN

U.S.B. Holding Co., Inc. (the "Company"), hereby establishes this Severance Plan
(the "Plan"). The Plan shall become effective as of October 11, 2001 (the
"Effective Date"). For purposes of this Plan, the term Company shall include all
wholly-owned subsidiaries of U.S.B. Holding Co., Inc., including but not limited
to Union State Bank and U.S.B. Financial Services, Inc.

SECTION 2. PURPOSE OF PLAN


The purposes of the Plan are to:

         (a)    attract and retain capable people;

         (b)    address the concerns of the Company's employees (as hereinafter
                defined) regarding job security; and

         (c)    help ensure that the employees receive the benefits which they
                legitimately expect in the normal course of their employment.

SECTION 3. DEFINITION OF EMPLOYEES - ELIGIBILITY

3.1      DEFINITION OF EMPLOYEES/STATUS

For purposes of this Plan, the term "Employees" shall mean all full-time exempt
and nonexempt Employees of the Company, including full time Employees currently
on an approved leave of absence. For Employees employed by more than one company
or subsidiary, Employee status shall be determined by the Company or subsidiary
for which the Employee receives the highest amount of compensation at the time
of an Activation Event (as hereinafter defined).

3.2      ELIGIBILITY

         All employees shall participate in the Plan (the "Participants"),
         provided, however, that (i) no Employee shall participate in this Plan
         while such person is covered by an Employment Agreement, which provides
         for severance payments in connection with a Change in Control (as
         hereinafter defined); (ii) no person who is not an Employee at the time
         of the occurrence of a Change in Control shall become a Participant
         thereafter; and (iii) notwithstanding clause (i), no Employees who are
         Participants at the time of the occurrence of a Change in Control shall
         cease participation without their written consent.


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SECTION 4. DEFINITION OF CHANGE IN CONTROL - ACTIVATION EVENT

4.1      CHANGE IN CONTROL

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

         (a)    approval by the stockholders of the Company of a transaction
                that is ultimately consummated and results in the
                reorganization, merger or consolidation of the Company with one
                or more other persons other than a transaction following which:

                (i)    at least 51% of the equity ownership interests of the
                       entity resulting from such transaction are beneficially
                       owned (within the meaning of Rule l3d-3 promulgated under
                       the Securities Exchange Act of 1934 ("Exchange Act")) in
                       substantially the same relative proportions by persons
                       who, immediately prior to such transaction, beneficially
                       owned (within the meaning of Rule l3d-3 promulgated under
                       the Exchange Act) at least 51% of the outstanding equity
                       ownership interests in the Company; and

                (ii)   at least 51% 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 l3d-3 promulgated under the
                       Exchange Act) in substantially the same relative
                       proportions by persons who, immediately prior to such
                       transaction, beneficially owned (within the meaning of
                       Rule l3d-3 promulgated under the Exchange Act) at least
                       51% of the securities entitled to vote generally in the
                       election of directors of the Company;

         (b)    the acquisition of all or substantially all of the assets of the
                Company or beneficial ownership (within the meaning of Rule
                l3d-3 promulgated under the Exchange act) of 20% or more of the
                outstanding securities of the Company entitled to vote generally
                in the election of directors by any person or by any persons
                acting in concert, or approval by the stockholders of the
                Company of any transaction which ultimately results in such an
                acquisition;

         (c)    a complete liquidation or dissolution of the Company, or
                approval by the stockholders of the Company of a plan which
                ultimately results in such liquidation or dissolution;

         (d)    the occurrence of any event if, immediately following such
                event, at least 50% of the members of the Board of Directors of
                the Company do not belong to any of the following groups:

                (i)   individuals who were members of the Board of Directors of
                      the Company on the date of this Plan; or


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                (ii)  individuals who first became members of the Board of
                      Directors of the Company after the date of this Plan
                      either;

                      (A)    upon election to serve as a member of the Board of
                             Directors of the Company by affirmative vote of
                             three-quarters of the members of such Board in
                             office at the time of such first election; or

                      (B)    upon election by the stockholders to serve as a
                             member of the Board of Directors of the Company,
                             but only if nominated for election by affirmative
                             vote of three-quarters of the members of the Board
                             of Directors of the Company, or of a nominating
                             committee hereof, in office at the time of such
                             first nomination;

                provided, however, that such individual's election or nomination
                did not result from an actual or threatened election contest
                (within the meaning of Rule 14a-11 of Regulation 14A promulgated
                under the Exchange Act) or other actual or threatened
                solicitation of proxies or consents (within the meaning of Rule
                14a-11 of Regulation 14A promulgated under the Exchange Act)
                other than by or on behalf of the Board of the Company.

         In no event, however, shall a Change of Control be deemed to have
         occurred as a result of any acquisition of securities or assets of the
         Company, by the Company or by any employee benefit plan maintained by
         the Company. For purposes of this Section 4.1, the term "person" shall
         have the meaning assigned to it under Sections 13(d)(3) or 14(d)(2) of
         the Exchange Act. The date of a Change in Control shall be the date
         upon which the transaction or event resulting in such Change in Control
         is actually consummated.

4.2      ACTIVATION EVENT

         For purposes of this Plan, the term "Activation Event" shall mean, with
         respect to a Participant, an involuntary termination of such
         Participant's employment with the Company, either actual termination or
         Constructive Termination (as hereinafter defined), within one (1) year
         after a Change in Control for any reason other than death or
         Termination for Just Cause (as hereinafter defined). The term
         "Activation Event" shall also include a termination of employment with
         the Company (whether voluntary or involuntary) within one (1) year
         after a Change in Control for any reason other than death or
         Termination for Just Cause (x) if the Change in Control occurs
         otherwise than through a transaction approved and authorized or
         consented to by the Board of Directors of the Company, as constituted
         prior to such transaction, or (y) in such other circumstance as the
         Board of Directors shall deem appropriate.

SECTION 5. SEVERANCE BENEFITS

Upon the occurrence of an Activation Event with respect to a Participant, the
following shall apply to such Participant, depending on their years of service
with the Company, or a subsidiary as defined in Section 3.1, as follows:


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-------------------------------------------------------------------------------
  YEARS OF SERVICE                    SEVERANCE BENEFIT
-------------------------------------------------------------------------------
 More than 20 years     Forty weeks of compensation as defined below
-------------------------------------------------------------------------------
 16 to 20 years         Thirty-two weeks of compensation as defined below
-------------------------------------------------------------------------------
 11 to 15 years         Twenty-four weeks of compensation as defined below
-------------------------------------------------------------------------------
 6 to 10 years          Sixteen weeks of compensation as defined below
-------------------------------------------------------------------------------
 1 to 5 years           Eight weeks of compensation as defined below
-------------------------------------------------------------------------------
 less than 1 year       Two weeks of compensation as defined below
-------------------------------------------------------------------------------


For purpose of severance payments, compensation is defined as the Participant's
annual base compensation at the time such severance payment is determined, plus,
for those in the Executive Bonus Plan, the executive bonus that would have been
paid for the year of the occurrence of a Change in Control based on actual net
income of the Company, if known, or the latest Company projection or budget.

Severance payments will be paid over the Severance Period in equal bi-weekly or
monthly installments as determined by the Company and shall be subject to all
applicable tax withholding requirements. "Severance Period" means the period
beginning on the Activation Date and continuing for the number of weeks for
which the participant is to receive compensation determined from the table
above.

The Board of Directors of the Company shall have discretion to increase benefits
of individual Participants; however, the Board of Directors may never decrease
benefits of any individual Participant.

SECTION 6.     U.S.B. HOLDING CO., INC. EMPLOYEE STOCK OWNERSHIP PLAN
               (WITH 401(k) PROVISION) ("RETIREMENT PLAN")

Upon the occurrence of an Activation Event, the vesting requirement applicable
to the Employee Stock Ownership portion of the Retirement Plan shall become one
(1) year of service (as defined in the Retirement Plan) to become fully (100%)
vested in the Employee Stock Ownership portion of the Retirement Plan.

SECTION 7.     MEDICAL BENEFITS AND LIFE INSURANCE

Upon the occurrence of an Activation Event with respect to a Participant, such
Participant's coverage under the Company's Medical, Dental and Life Insurance
Plans shall continue for the duration of the Severance Period at no cost to the
Participant at a benefit level equal to or greater than the current coverage. In
addition, a Participant shall be eligible for the subsidized medical/dental plan
for retirees if the participant has at least seven years of service and the
Participant's age (in full and partial years) plus service (in full and partial
years) equals at least sixty-two (62), with age and service being determined as
of the end of the Severance Period. Further, upon the occurrence of a Change in
Control, the Company's medical/dental plan applicable to retirees may not be
terminated or amended in a manner that is not also applicable to


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active employees.

SECTION 8. AMENDMENT/TERMINATION OF THE PLAN

This Plan may be terminated or amended in any manner by the Board of Directors
of the Company at their sole option. Notwithstanding the foregoing, upon the
occurrence of a Change in Control, this Plan may not be amended in any respect
without the written consent of each Participant affected by such proposed
amendment.

SECTION 9. TERMINATION FOR JUST CAUSE

For purposes of this Plan, the term "Termination of for Just Cause" shall mean
termination for the commission of a wrongful action such as, but not limited to,
theft of Company property or alcohol or drug abuse.

SECTION 10. CONTRACT RIGHT OF PARTICIPANTS

The Board of Directors of the Company intends this Plan to constitute an
enforceable contract between the Company and each Participant and intends this
Plan to vest rights in such Participants as third party beneficiaries.

SECTION 11. CONSTRUCTION

Wherever any words are used herein in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.

SECTION 12. GOVERNING LAW

This Plan shall be governed by the law of the State of New York (regardless of
the law that might otherwise govern under applicable principles of conflict of
laws), to the extent not superseded by Federal Law.

SECTION 13. SUCCESSORS AND ASSIGNS

The Plan shall be binding upon the Company and upon any assignee or successor in
interest to the Company.

SECTION 14. CONSTRUCTIVE TERMINATION

14.1     DEFINITION

         For purposes of this Plan, the term "Constructive Termination" shall
         include, but shall not be limited to, any of the following: (i) a
         reduction in rate of base earnings, (ii) a reduction in participation
         in the Executive Incentive Bonus Plan or equivalent compensation, (iii)
         a change in job situs of more than 25 miles from the current Employee's
         work location or an increase of more than 25 miles in the distance from
         the Employee's work location to


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         the Employee's primary residence, (iv) a reduction in job duties and
         responsibilities, (v) a job assignment which would require absence from
         the Participant's then principal place of employment for more than four
         (4) consecutive weeks, (vi) a reduction in benefits, (vii) a change in
         reporting relationship of an Employee with officer status that results
         in an Employee reporting to a less senior officer, or (viii) any other
         action which shall be determined by a competent authority to constitute
         a Constructive Termination.

14.2     DECLARATION PERIOD

         After the occurrence of an event described in any of clauses (i)
         through (viii) of Section 14.1 hereof, a Participant shall have a
         period of one (1) month thereafter to declare such occurrence to be a
         Constructive Termination and thereby become entitled to the payment of
         such Participant's severance and other benefits in accordance with the
         provisions of this Plan.

SECTION 15. NOTICE OF TERMINATION

During the one (1) year period after the occurrence of a Change in Control, the
employment of a Participant may not be terminated, except in the event of
Termination for Just Cause, unless the Participant has received one (1) month
advance notice of the termination in a letter written to such Participant, which
letter shall specify (i) the effective date of termination (which date shall not
be sooner than one (1) month after receipt of such letter by the Participant),
(ii) the reason for the termination, and (iii) a commitment to honor this Plan,
and to pay to the Participant all amounts to which the Participant is entitled
thereunder.

Approved by the Board of Directors of the Company on January 30, 2002.

ATTEST:                                  U.S.B. HOLDING CO., INC.


/s/ Michael H. Fury                      /s/ Thomas E. Hales
--------------------------------         ------------------------------------
Michael H. Fury                          Thomas E. Hales
Secretary of the Board                   Chairman of the Board, President and
                                         Chief Executive Officer










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