|   |  **RETIREMENT                    PLAN** **FOR** **NON-EMPLOYEE                    DIRECTORS** **OF** **U.S.B.                    HOLDING CO., INC.** **AND                    CERTAIN AFFILIATES**     Effective                      as of May 19, 1999Amended                      as of March 20, 2002Further                      Amended as of January 1, 2005 |   |
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**Retirement      Plan for Non-Employee Directors **

**of      U.S.B. Holding Co., Inc. **

| 1. | All                Directors of the Company who are not employees of the Company or                any                affiliate shall be eligible to receive a benefit under the                Plan. |
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| 2. | Every                eligible Director who shall have served at least fifteen (15) aggregate                years on the Company’s Board of Directors shall be eligible to receive a                retirement benefit under this Plan. In the event a “Change of Control” (as                defined below) occurs, every eligible Director currently serving                on the                Company’s Board of Directors shall be fully vested and entitled to the                full retirement benefit under this Plan. |
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| 3. | If                the Director is married at the time of his retirement and at the                time of                his/her death while receiving benefits under this Plan, a benefit                equal to                $1,000 per month if the Director has qualified, by serving fifteen                or more                years on the Board of Director’s, for a benefit under this Plan, and                one-half (1/2) of the pro-rated benefit payable due to a “Change of                Control” (if the Director is eligible for a benefit only as a result of a                "Change in Control") shall be paid to the Director’s spouse for the                remainder of the 120 month period or until the death of the spouse,                whichever occurs first. If the spouse does not survive the Director,                no                benefit shall be paid under the Plan following the Director’s death. |
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| 4. | Upon                joining the Board, or within 90 days following the effective date                of the                Plan (for those serving on the Board on May 19, 1999), each Director                shall                complete a Distribution Election Form provided by the Company. Each                Director may elect to be paid his/her benefit in the form of a single                lump                sum on the first day of the calendar month following Separation from                Service, or the first day of the calendar year following Separation                from                Service; provided, however, that if the Director is a Specified Employee                immediately prior to Separation from Service, the payment of his/her                benefit shall be paid or commence on the first day of the seventh                calendar                month following Separation from Service.                The Director may elect a different permitted form of payment for                payments                due after the occurrence of a Change in Control Event. The lump sum                shall                equal the present value of $200,000, discounted based on the average                ten-year advance rate of the Federal Home Loan Bank of New York over                the                thirty day period preceding the payment date, assuming interest would                have                compounded and payments would have been made in equal monthly installments                over the ten year discount period. The present value calculation                must be                consistent with financial accounting requirements with respect to                the                determination of the expense to be recorded on the Company’s Income                Statement with respect to such payment. If the Director does not                elect a                lump sum payment, payments shall be made monthly, as stated                above. |
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| 5.  | (a) At                any time not less than twelve (12) months prior to retirement, a                Director                may file a written election with the Company changing the form of                payment                under the Plan from monthly payments to a lump sum, or from a lump                sum to                monthly payments. Such election shall not be effective until twelve                months                following its receipt by the Company. This election is only available                prior to January 1, 2005. |
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|   | (b) At                any time after December 31, 2004 and prior to January 1, 2006, a                Director                may file a written election with the Company changing the form of                payment                under the Plan from monthly payments to a lump sum, or from a lump                sum to                monthly payments. During this period, a Director may also elect a                different permitted form of payment for payments due after a Change                in                Control Event. |
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| 6. | This                  Plan shall be administered by the Board of Directors of the Company.                  Any                  determination relating to the Plan regarding one or more individual                  Directors shall be made by a bare majority of the total number                  of                  Directors, excluding the individual(s) whose benefits or rights                  are being                  determined. Any decisions or interpretations made by the Board                  of                  Directors regarding the Plan shall be final and binding on all                  parties. |
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| 7. | The                right to receive any benefit under the Plan shall not be subject                in any                manner to anticipation, alienation or assignment, nor shall such                rights be                liable for or subject to debts, contracts, torts, or any other liabilities                of any party. Any attempt to encumber benefit rights under this Plan                shall                result in forfeiture of all such rights. |
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| 8. | This                Plan is intended to be an unfunded deferred compensation arrangement                for                the specified participants. The Company may, but shall not be obligated                to, establish a trust, account, or reserve for purposes of funding                its                obligations and liabilities hereunder, but no participant shall have                any                rights with respect to such trust, account or reserve, except the                rights                of any other general unsecured creditor of the Company. |
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| 9. | Participation                in, or eligibility under, this Plan does not in any way assure that                an                individual shall be entitled to remain a member of the Company’s Board of                Directors. Nomination and/or election to additional terms on the                Board are                solely the prerogative of the shareholders of the Company, and the                existence of, or participation in, this Plan shall not in any way                affect                or impinge such rights of the shareholders. |
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| 10. | The                Board of Directors reserves the right to amend or terminate the Plan                at                any time. Any termination or amendment shall not deprive any Director,                who                has already become entitled to a benefit by reason of having completed                fifteen years of Board service, of his/her benefit. In no event shall                any                amendment cause the Plan to fail to comply with the requirements                of                section 409A of the Internal Revenue Code and the regulations thereunder.                In the event the Plan is terminated, benefits payable to Directors                who                have already become entitled to a benefit by reason of having completed                fifteen years of Board service shall continue to be payable at the                time                and in the manner provided under the Plan; provided, however, that:                (a) to                the extent permitted under section 409A of the Internal Revenue Code                and                the regulations thereunder, the Board may direct that all benefits                payable                following the Plan's termination shall be paid in a single lump sum                in                lieu of all other benefits, and (b) in such event, the lump sum payment                made to each recipient shall be in an amount no less than the present                value of the remaining payment due to him or her, calculated on the                basis                of the interest rate assumption specified in paragraph 4 above, such                interest rate assumption shall be adjusted to reflect the remaining                term                of benefit payments, if currently in pay status over a ten year                period. |
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| 11. | Notwithstanding                any provisions of this Plan, any benefits payable hereunder are subject                to                and conditioned upon their compliance with Section 18(k) of the Federal                Deposit Insurance Act, 12 U.S.C. Section 1828(k), and any regulations                issued thereunder. |
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| 12. | This                Plan shall be construed, administered and enforced in accordance                with the                laws of the State of New York. It is intended that this Plan not                be                subject to ERISA, and to the extent necessary for such purpose, the                Plan                shall be so interpreted. |
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| 13. | For                purposes of this Plan, “Change of Control” shall mean the occurrence of                any of the following events: |
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|   | a. | Any                consolidation, merger, stock-for-stock exchange or similar transaction                (“Transaction”) which results in the shareholders prior to the Transaction                owning less than 50% of the entity surviving after the Transaction; |
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|   | b. | Any                person, entity, or group of persons or entities becoming the beneficial                owner (as defined in Rule 13d-3 promulgated by the Securities Exchange                Commission under the Exchange Act) of securities of the Company possessing                one-third (1/3) of the voting power for the election of Directors                of the                Company, which were not beneficially owned by such person, entity,                or                group of persons or entities prior to the transactions resulting                in such                new beneficial ownership; |
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|   | c. | During                any period of twenty-four (24) consecutive months, individuals who                at the                beginning of such period constituted a majority of the Board of Directors                cease for any reason, other than death or a voluntary retirement                entitling                such Director to receive benefits under this Plan, to constitute                at least                a majority of the Board of Directors of the Company; or |
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|   | d. | Any                sale, lease, exchange or other transfer, in one or more transactions,                of                all, or substantially all, of the assets of the Company to one or                more                parties which are not controlled by or under common control with                the                Company. |
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| 14. | 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                Directors 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. |
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|                                                           |                                                                                                                       |  /s/                 Thomas E. Hales |   |
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|                                                           |  Thomas                  E. Hales Chairman                  of the Board and Chief                  Executive Officer |                                           |
| ATTEST:                                                   |                                                                                                                  |                                      |   |
|  /s/                 Raymond J. Crotty               |                                                                                                                       |                                           |   |
| Raymond                  J. Crotty,                  Secretary |                                                                                                                            |                                           |
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