EXHIBIT 10(g)

                            U.S.B. HOLDING CO., INC.
                          EMPLOYEE STOCK OWNERSHIP PLAN
                            (WITH 401(k) PROVISIONS)

                   AMENDED AND RESTATED AS OF JANUARY 1, 2001

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                                   ARTICLE I

                                  DEFINITIONS

Section 1.1  Account...........................................................1
Section 1.2  Actual Deferral Percentage........................................1
Section 1.3  Affiliated Employer...............................................1
Section 1.4  Adjusted Compensation.............................................1
Section 1.5  Basic Contribution Account........................................3
Section 1.6  Board.............................................................3
Section 1.7  Beneficiary.......................................................3
Section 1.8  Break in Service..................................................3
Section 1.9  Change in Control.................................................3
Section 1.10 Code..............................................................3
Section 1.11 Committee.........................................................3
Section 1.12 Computation Period................................................3
Section 1.13 Contribution Percentage...........................................3
Section 1.14 Designated Beneficiary............................................4
Section 1.15 Disability........................................................4
Section 1.16 Domestic Relations Order..........................................4
Section 1.17 Eligible Employee.................................................4
Section 1.18 Eligible Participant..............................................5
Section 1.19 Employee..........................................................5
Section 1.20 Employer..........................................................5
Section 1.21 Employer Basic Contributions......................................5
Section 1.22 Employer Matching Contributions...................................5
Section 1.23 Employer Optional Contributions...................................5
Section 1.24 Employment Commencement Date......................................5
Section 1.25 Entry Date........................................................5
Section 1.26 ERISA.............................................................5
Section 1.27 Fair Market Value.................................................5
Section 1.28 Family Member.....................................................6
Section 1.29 Financed Share....................................................6
Section 1.30 Five Percent Owner................................................6
Section 1.31 Forfeitures.......................................................6
Section 1.32 Former Participant................................................6
Section 1.33 Highly Compensated Employee.......................................6
Section 1.34 Hour of Service...................................................8
Section 1.35 Investment Fund...................................................8
Section 1.36 Loan Repayment Account............................................8
Section 1.37 Loan Repayment Contribution.......................................8
Section 1.38 Matching Contribution Account.....................................9
Section 1.39 Maternity or Paternity Leave......................................9
Section 1.40 Military Service..................................................9
Section 1.41 Named Fiduciary...................................................9
Section 1.40 Officer...........................................................9
Section 1.43 Optional Contribution Account.....................................9
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Section 1.44  Participant......................................................9
Section 1.45  Plan.............................................................9
Section 1.46  Plan Year........................................................9
Section 1.47  Profit Sharing Account...........................................9
Section 1.48  Qualified Domestic Relations Order..............................10
Section 1.49  Qualified Military Service......................................10
Section 1.50  Qualified Participant...........................................10
Section 1.51  Retirement......................................................10
Section 1.52  Retroactive Basic Contribution..................................10
Section 1.53  Retroactive Matching Contribution...............................10
Section 1.54  Retroactive Optional Contribution...............................10
Section 1.55  Retroactive Salary Reduction Contribution.......................10
Section 1.56  Retroactive Voluntary Contribution..............................10
Section 1.57  Rollover Account................................................10
Section 1.58  Rollover Contribution...........................................11
Section 1.59  Salary Reduction Account........................................11
Section 1.60  Salary Reduction Contribution...................................11
Section 1.61  Share...........................................................11
Section 1.62  Share Acquisition Loan..........................................11
Section 1.63  Tappan Zee ESOP Account.........................................11
Section 1.64  Tender Offer....................................................11
Section 1.65  Total Compensation..............................................11
Section 1.66  Trust...........................................................12
Section 1.67  Trust Agreement.................................................12
Section 1.68  Trust Fund......................................................12
Section 1.69  Trustee.........................................................12
Section 1.70  Valuation Date..................................................12
Section 1.71  Vesting Computation Period......................................12
Section 1.72  Voluntary Contribution Account..................................13
Section 1.73  Voluntary Contributions.........................................13
Section 1.74  Year of Vesting Service.........................................13

                                   ARTICLE II

                                  PARTICIPATION

Section 2.1   Eligibility for Participation...................................13
Section 2.2   Commencement of Participation...................................13
Section 2.3   Termination of Participation....................................14
Section 2.4   Re-employment...................................................14
Section 2.5   Adjustments to Service..........................................14

                                  ARTICLE III

                               SPECIAL PROVISIONS

Section 3.1   Military Service................................................14
Section 3.2   Maternity or Paternity Leave....................................15
Section 3.3   Leave of Absence................................................15
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Section 3.4   Family and Medical Leave........................................16

                                   ARTICLE IV

                          CONTRIBUTIONS BY PARTICIPANT

Section 4.1   Salary Reduction Contributions..................................16
Section 4.2   Changes of Personal Contributions...............................16
Section 4.3   Rollover Contributions..........................................16
Section 4.4   Voluntary Contributions.........................................17
Section 4.5   Retroactive Salary Reduction Contributions......................17
Section 4.6   Retroactive Voluntary Contributions.............................18
Section 4.7   Payments to the Trust Fund......................................19

                                    ARTICLE V

                          CONTRIBUTIONS BY THE EMPLOYER

Section 5.1   Employer Matching Contributions.................................19
Section 5.2   Employer Optional Contributions.................................19
Section 5.3   Employer Basic Contributions....................................20
Section 5.4   Retroactive Contributions.......................................20
Section 5.5   Time and Manner of Payment......................................21

                                   ARTICLE VI

                             SHARE ACQUISITION LOANS

Section 6.1   In General......................................................22
Section 6.2   Collateral: Liability for Repayment.............................22
Section 6.3   Loan Repayment Account..........................................23
Section 6.4   Release of Financed Shares......................................23
Section 6.5   Restrictions on Financed Shares.................................24

                                   ARTICLE VII

                           ALLOCATION OF CONTRIBUTIONS

Section 7.1   Allocation of Employer Matching Contributions...................25
Section 7.2   Allocations of Employer Basic Contributions and Released
                 Shares or Other Property.....................................25
Section 7.3   Allocation of Employer Contributions............................25
Section 7.4   Allocation of Retroactive Contribution..........................25
Section 7.5   No Allocation After Termination of Participation................25
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                                  ARTICLE VIII

                           LIMITATIONS ON ALLOCATIONS

Section 8.1   Optional Limitations on Allocations of Contributions............26
Section 8.2   General Limitations on Contributions............................26
Section 8.3   Limitations on Salary Reduction Contributions by
                 Highly Compensated Employees.................................29
Section 8.4   Limitations on Voluntary Contributions and Employer
                 Matching Contributions by Highly Compensated Employees.......32
Section 8.5   Limitations on Contributions Credited to
                 Participants' Salary Reduction Accounts......................35

                                   ARTICLE IX

                                     VESTING

Section 9.1   Vesting.........................................................36
Section 9.2   Vesting on Death, Disability or Retirement......................36
Section 9.3   Forfeitures on Termination of Employment........................36
Section 9.4   Amounts Credited Upon Re-Employment.............................37
Section 9.5   Accelerated Vesting Upon Change in Control......................37

                                    ARTICLE X

                                 THE TRUST FUND

Section 10.1  The Trust Fund..................................................38
Section 10.2  Investments.....................................................39
Section 10.3  Diversification of Investments..................................39
Section 10.4  Self-Direction of Certain Accounts..............................40
Section 10.5  Information Regarding Investment Funds..........................40
Section 10.6  Use of Commingled Trust Funds...................................
Section 10.7  Management and Control of Assets................................

                                   ARTICLE XI

                    VALUATION OF INTERESTS IN THE TRUST FUND

Section 11.1  Valuation of Investment Funds...................................
Section 11.2  Annual Statements...............................................

                                  ARTICLE XII

                                     SHARES

Section 12.1  Specific Allocation of Shares...................................
Section 12.2  Dividends.......................................................
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Section 12.3  Voting Rights...................................................42
Section 12.4  Tender Offers...................................................42

                                  ARTICLE XIII

                              WITHDRAWALS AND LOANS

Section 13.1  Withdrawals During Employment...................................43
Section 13.2  Loans to Participants...........................................45

                                  ARTICLE XIV

                               PAYMENT OF BENEFITS

Section 14.1  In General......................................................48
Section 14.2  Designation of Beneficiaries....................................48
Section 14.3  Distributions to Participants and Former Participants...........49
Section 14.4  Manner of Payment...............................................51
Section 14.5  Put Options.....................................................51
Section 14.6  Right of First Refusal..........................................52
Section 14.7  Minimum Required Distributions .................................53
Section 14.8  Direct Rollover of Eligible Rollover Distributions..............54
Section 14.9  Valuation of Shares Upon Settlement to a Participant............55

                                   ARTICLE XV

                                 ADMINISTRATION

Section 15.1  Named Fiduciaries...............................................55
Section 15.2  Committee Responsibilities......................................56
Section 15.4  Claims Procedure................................................57
Section 15.5  Claims Review Procedure.........................................58
Section 15.6  Allocation of Fiduciary Responsibilities and
                 Employment of Advisors.......................................58
Section 15.7  Other Administrative Provisions.................................58

                                  ARTICLE XVI

                  AMENDMENT, TERMINATION AND TAX QUALIFICATION

Section 16.1  Amendment and Termination by U.S.B. Holding Co., Inc. ..........59
Section 16.2  Amendment or Termination Other Than by U.S.B. Holding Co., Inc..60
Section 16.3  Conformity to Internal Revenue Code.............................60
Section 16.4  Contingent Nature of Contributions..............................60
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                                  ARTICLE XVII

                     SPECIAL RULES FOR TOP HEAVY PLAN YEARS

Section 17.1  In General......................................................61
Section 17.2  Definition of Top Heavy Plan....................................61
Section 17.3  Determination Date..............................................61
Section 17.4  Cumulative Accrued Benefits.....................................62
Section 17.5  Key Employees...................................................62
Section 17.6  Required Aggregation Group......................................63
Section 17.7  Permissible Aggregation Group...................................63
Section 17.8  Special Requirements During Top Heavy Plan Years................63

                                  ARTICLE XVIII

                            MISCELLANEOUS PROVISIONS

Section 18.1  Governing Law...................................................64
Section 18.2  No Right to Continued Employment................................64
Section 18.3  Construction of Language........................................64
Section 18.4  Headings........................................................64
Section 18.5  Merger with Other Plans.........................................65
Section 18.6  Non-alienation of Benefits......................................65
Section 18.7  Procedures Involving Domestic Relations Orders..................65
Section 18.8  Leased Employees................................................66
Section 18.9  Merger with Employee Stock Ownership Plan of Tappan
                 Zee Financial, Inc. and Certain Affiliates...................66
Section 18.10 Status as an Employee, Stock Ownership Plan.....................68
Section 18.11 Effect of Reinstatement.........................................68
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                            U.S.B. HOLDING CO., INC.
                          EMPLOYEE STOCK OWNERSHIP PLAN
                            (WITH 401(k) PROVISIONS)

                                   ARTICLE I

                                  DEFINITIONS

                 The following definitions shall apply for the purposes of the
Plan, unless a different meaning is clearly indicated by the context:

                 SECTION 1.1 ACCOUNT means for each Participant, Former
Participant and Beneficiary, such of the Matching Contribution Account, Basic
Contribution Account, Optional Contribution Account, Salary Reduction Account,
Voluntary Contribution Account, Rollover Account, Profit Sharing Account, and
Tappan Zee ESOP Account as shall have been established for such person.

                 SECTION 1.2 ACTUAL DEFERRAL PERCENTAGE means, for any group of
Eligible Employees, the average of the ratios, computed separately for each
Eligible Employee in such group, of (a) the amount for each Plan Year of (i)
each Eligible Employee's Salary Reduction Contributions not included in
computing his Contribution Percentage, plus (ii) if necessary to comply with the
limitations of section 8.3(a) (and for Plan Years beginning after December 31,
1996, subject to such conditions as may be imposed by or under the authority of
the Secretary of the Treasury), any Employer Basic Contributions made under
section 5.3 not included in computing his Contribution Percentage; to (b) his
Total Compensation for such Plan Year. For purposes of this section 1.2,
Retroactive Salary Reduction Contributions shall be treated as Salary Reduction
Contributions for the Plan Year included in a period of Qualified Military
Service for which they are deemed made, and not for the Plan Year during which
they are actually made.

                 SECTION 1.3 AFFILIATED EMPLOYER means U.S.B. Holding Co., Inc,
and any corporation which is a member of a controlled group of corporations (as
defined in section 414(b) of the Code) that includes U.S.B. Holding Co., Inc.;
any trade or business (whether or not incorporated) that is under common control
(as defined in section 414(c) of the Code) with U.S.B. Holding Co., Inc.; any
organization (whether or not incorporated) that is a member of an affiliated
service group (as defined in section 414(m) of the Code) that includes U.S.B.
Holding Co, Inc.; any leasing organization (as defined in section 414(n) of the
Code) to the extent that any of its employees are required pursuant to section
414(n) of the Code to be treated as employees of U.S.B. Holding Co., Inc.; and
any other entity that is required to be aggregated with U.S.B. Holding Co., Inc.
pursuant to regulations under section 414(o) of the Code.

                 SECTION 1.4 ADJUSTED COMPENSATION means, for any Participant
for any period, the compensation taken into account in determining the
allocation of Employer Matching Contributions,


                                       1
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Employer Optional Contributions, Forfeitures and Financed Shares among
Participants, and the Salary Deferrals by Participants and consists of the
aggregate compensation received by a Participant from the Employer with respect
to such period as reported to the Internal Revenue Service as wages for such
period pursuant to section 6041 (a) of the Code, with the following
adjustments:

                 (a) In determining Adjusted Compensation, a Participant's
        reported wages shall be increased by the amount by which such Employee's
        compensation with respect to such period has been reduced pursuant to a
        compensation reduction agreement under the terms of any of the following
        plans which may be maintained by the Employer:

                        (i) a qualified cash or deferred arrangement described
                 in section 401 (k) of the Code;

                        (ii) a salary reduction simplified employee pension plan
                 described in section 408(k) of the Code;

                        (iii) a tax deferred annuity plan described in section
                 403(b) of the Code;

                        (iv) a cafeteria plan described in section 125 of the
                 Code; or

                        (v) a salary reduction qualified transportation fringe
                 benefit plan described in section 132(f) of the Code.

                 (b) In determining Adjusted Compensation, a Participant's
        reported wages shall be reduced by the following amounts to the extent
        otherwise included:

                        (i) distributions from any qualified or non-qualified
                 plan of deferred compensation;

                        (ii) compensation income attributable to the exercise of
                 nonqualified stock options;

                        (iii) compensation income attributable to the
                 disqualifying disposition of securities acquired upon exercise
                 of an incentive stock option pursuant to section 422 of the
                 Code;

                        (iv) other items that qualify for special tax benefits,
                 such as premiums for group-term life insurance coverage; and

                        (v) fringe benefits and perquisites provided in-kind and
                 cash allowances in lieu thereof (including, but not limited to,
                 company cars, car allowances and related expense allowances or
                 reimbursements).

In no event, however, shall a Participant's Adjusted Compensation for any Plan
Year include any compensation in excess of $150,000 (or such other amount as may
be permitted under section 401(a)(17) of the Code). If there are less than
twelve (12) months in the Plan Year, the $150,000 limitation (as adjusted) shall
be prorated by multiplying such limitation by a fraction, the numerator

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of which is the number of months in the Plan Year and the denominator of which
is twelve (12). For purposes of applying the foregoing limitations in Plan Years
beginning before January 1, 1997 to any person who is a Five Percent Owner or
who is one of the ten Highly Compensated Employees with the highest Total
Compensation (determined prior to the application of this sentence), any
Adjusted Compensation paid to the spouse of such person or to any lineal
descendant of such person who has not attained age 19 on or before the last day
of such calendar year shall be deemed to have been paid to such person.

                 SECTION 1.5 BASIC CONTRIBUTION ACCOUNT means, for each
Participant for whom the Employer has made Employer Basic Contributions, an
account established for such Participant to which are credited such
Participant's Employer Basic Contributions, together with all earnings and
appreciation thereon, and against which are charged any withdrawals that may be
permitted and any losses, depreciation or expenses allocable to amounts credited
to such account.

                 SECTION 1.6 BOARD means the Board of Directors of U.S.B.
Holding Co., Inc. thereafter.

                 SECTION 1.7 BENEFICIARY means the person or persons designated
by a Participant or Former Participant or other person entitled to a benefit
under the Plan, or otherwise determined to be entitled to a benefit under the
Plan. If more than one person is designated, each shall have an equal share
unless the person making the designation directed otherwise. The word "person"
includes an individual, a trust, an estate or any other person that is permitted
to be named as a Beneficiary.

                 SECTION 1.8 BREAK IN SERVICE means, with respect to any
Employee, a Computation Period during which the Employee does not complete more
than 500 Hours of Service.

                 SECTION 1.9 CHANGE IN CONTROL means an event described in
section 9.5(b).

                 SECTION 1.10 CODE means the Internal Revenue Code of 1986
(including the corresponding provisions of any succeeding law).

                 SECTION 1.11 COMMITTEE means the Administrative Committee
described in section 15.2.

                 SECTION 1.12 COMPUTATION PERIOD means a Vesting Computation
Period.

                 SECTION 1.13 CONTRIBUTION PERCENTAGE means, for any group of
Eligible Employees, the average of the ratios, computed separately for each
Eligible Employee in such group, of: (a) the amount for each Plan Year of (i)
the Employer Matching Contributions under section 5.1, plus (ii) his Voluntary
Contributions, plus (iii) if and to the extent that the Committee so elects
(and, for Plan Years beginning after December 31, 1996, subject to such
conditions as may be imposed by or under the authority of the Secretary of the
Treasury), the Salary Reduction Contributions and Employer Basic Contributions
not included in computing his Actual Deferral Percentage; to (b) his Total
Compensation for such Plan Year. For purposes of this section 1.13, any
Employer Matching Contributions related to Retroactive Salary Reduction
Contributions shall be treated as Employer Matching Contributions for the Plan
Year included in the period of Qualified Military Service for which they are
deemed made and not for the Plan Year in which they are actually made.

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                 SECTION 1.14 DESIGNATED BENEFICIARY means a natural person
designated by a Participant or Former Participant as a Beneficiary and shall not
include any Beneficiary designated by a person other than a Participant or
Former Participant or any Beneficiary other than a natural person. If a natural
person is the beneficiary of a trust which a Participant or Former Participant
has named as his Beneficiary, such natural person shall be treated as a
Designated Beneficiary if: (a) the trust is a valid trust under applicable state
law (or would be a valid trust except for die fact that it does not have a
corpus); (b) the hug is irrevocable or will, by its terms, become irrevocable
upon the death of the Participant or Former Participant; (c) the beneficiaries
of the trust who are beneficiaries with respect to the trust's interest as a
Beneficiary are identifiable from the terms of the trust instrument; and (d) the
following information is furnished to the Committee:

                 (i) by the Participant or Former Participant, if any
         distributions are required to be made pursuant to section 14.7 prior to
         the death of the Participant or Former Participant, either (A) a copy
         of the trust instrument, together with a written undertaking by the
         Participant or Former Participant to furnish to the Committee a copy of
         any subsequent amendment within a reasonable time after such amendment
         is made; or (B)(I) a list of all of the beneficiaries of the trust
         (including contingent and remainderman beneficiaries with a description
         of the conditions on their entitlement); (II) a certification of the
         Participant or Former Participant to the effect that to the best of his
         knowledge, such list is correct and complete and that the conditions of
         section 1.14(a), (b) and (c) are satisfied; (III a written undertaking
         to provide a new certification to the extent that an amendment changes
         any information previously certified, and (IV) a written undertaking to
         furnish a copy of the trust instrument to the Committee on demand; and

                 (ii) by the trustee of the trust within nine months after the
         death of the Participant or Former Participant, if any distributions
         are required to be made pursuant to section 14.7 after the death of the
         Participant or Former Participant, either: (A) a copy of the actual
         trust instrument for the trust; or (B)(I) a final list of all of the
         beneficiaries of the hug (including contingent and remainderman
         beneficiaries with a description of the conditions on their
         entitlement) as of the date of death; (II) a certification of the
         trustee to the effect that, to the best of his knowledge, such list is
         correct and complete and that the conditions of section 1.14(a), (b)
         and (c) are satisfied; and (III) a written undertaking to furnish a
         copy of the trust instrument to the Committee on demand.

                 SECTION 1.15 DISABILITY means a condition of total incapacity,
mental or physical, for further performance of duty with the Employer, which the
Committee shall have determined, on the basis of competent medical evidence, is
likely to be permanent.

                 SECTION 1.16 DOMESTIC RELATIONS ORDER means a judgment, decree
or order (including the approval of a property settlement) that is made pursuant
to a state domestic relations or community property law and relates to the
provision of child support, alimony payments, or marital property rights to a
spouse, child or other dependent of a Participant or Former Participant.

                 SECTION 1.17 ELIGIBLE EMPLOYEE means an Employee who is
eligible for participation in the Plan in accordance with Article II.

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                 SECTION 1.18 ELIGIBLE PARTICIPANT means, for any Plan Year, an
Employee (a) who is a Participant on the last day of such Plan Year and
completes 1,000 or more Hours of Service during the Plan Year, or (b) whose
employment terminated during the Plan Year due to Retirement, Disability or
death and who was a Participant at the time of termination of employment

                 SECTION 1.19 EMPLOYEE means any person, including an officer,
who is employed by the Employer as a common law employee.

                 SECTION 1.20 EMPLOYER means U.S.B. Holding Co., Inc., Union
State Bank, and any successor thereto and any other Affiliated Employer which,
with the prior written approval of the Board of Directors of U.S.B. Holding Co.,
Inc. and subject to such terms and conditions as may be imposed by the Board of
Directors of U.S.B. Holding Co., Inc., shall adopt this Plan.

                 SECTION 1.21 EMPLOYER BASIC CONTRIBUTIONS means contributions
made by the Employer pursuant to section 5.3.

                 SECTION 1.22 EMPLOYER MATCHING CONTRIBUTIONS means
contributions made by the Employer pursuant to section 5.1.

                 SECTION 1.23 EMPLOYER OPTIONAL CONTRIBUTIONS means
contributions made by the Employer pursuant to section 5.2.

                 SECTION 1.24 EMPLOYMENT COMMENCEMENT DATE means the date on
which a person first performs an Hour of Service, except that if an Employee
separates from service with the Employer, incurs a Break in Service and
subsequently returns to service with the Employer, his Employment Commencement
Date shall be the date on which he first performs an Hour of Service following
the Break in Service.

                 SECTION 1.25 ENTRY DATE means each January 1st and July 1st.

                 SECTION 1.26 ERISA means the Employee Retirement Income
Security Act of 1974, as amended from time to time (including the corresponding
provisions of any succeeding law).

                 SECTION 1.27 FAIR MARKET VALUE on any date means:

                 (a) with respect to a Share:

                        (i) the final quoted sale price on the date in question
                 (or, if there is no reported sale on such date, on the last
                 preceding date on which any reported sale occurred) as reported
                 in the principal consolidated reporting system with respect to
                 securities listed or admitted to trading on the principal
                 United States securities exchange on which like Shares are
                 listed or admitted to trading; or

                        (ii) if like Shares are not listed or admitted to
                 trading on any such exchange, the closing bid quotation with
                 respect to a Share on such date on the National Association of
                 Securities Dealers Automated Quotation System, or,

                                      -5-

<PAGE>


                 if no such quotation is provided, on another similar system,
                 selected by the Committee, then in use; or

                        (iii) if sections 1.27(a)(i) and (ii) are not
                 applicable, the fair market value of a Share as determined by
                 an appraiser independent of the Employer and experienced and
                 expert in the field of corporate appraisal.

                 (b) with respect to property other than Shares, the fair market
         value determined in the manner determined by the Trustee.

                 SECTION 1.28 FAMILY MEMBER means, with respect to any person,
such person's spouse and lineal ascendants or descendants and the spouses of
such lineal ascendants or descendants.

                 SECTION 1.29 FINANCED SHARE means: (a) a Share that has been
purchased with the proceeds of a Share Acquisition Loan, that has been allocated
to the Loan Repayment Account in accordance with section 6.3 and that has not
been released in accordance with section 6.4; or (b) a Share that constitutes a
dividend paid with respect to a Share described in section 1.29(a), that has
been allocated to the Loan Repayment Account in accordance with section 6.3 and
that has not been released in accordance with section 6.4.

                 SECTION 1.30 FIVE PERCENT OWNER means, for any Plan Year, a
person who, during such Plan Year, owned (or was considered as owning for
purposes of section 318 of the Code): (a) more than 5% of the value of all
classes of outstanding stock of the Employer; or (b) stock possessing more than
5% of the combined voting power of all classes of outstanding stock of the
Employer.

                 SECTION 1.31 FORFEITURES means the amounts forfeited by
Participants and Former Participants on termination of employment prior to full
vesting, pursuant to section 9.3, less amounts credited because of
re-employment, pursuant to section 9.4.

                 SECTION 1.32 FORMER PARTICIPANT means a Participant whose
participation in the Plan has terminated pursuant to section 2.3.

                 SECTION 1.33 HIGHLY COMPENSATED EMPLOYEE means, for any Plan
Year, an Employee who:

                 (a) for Plan Years beginning before January 1, 1997, any
         Employee or person employed by an Affiliated Employer who:

                        (i) at any time during such Plan Year or the immediately
                 preceding Plan Year was a Five Percent Owner; or

                        (ii) is a member of the group consisting of the 100
                 Employees and persons employed by any Affiliated Employer who
                 received the greatest Total Compensation for such Plan Year and
                 during such Plan Year:

                               (A) received Total Compensation for such Plan
                        Year in excess of $75,000 (or such higher amount as may
                        be permitted under section 414(q) of the Code); or

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                               (B) received Total Compensation for such Plan
                        Year that was in excess of both (I) $50,000 (or such
                        higher amount as may be permitted under section 414(q)
                        of the Code) and (II) the Total Compensation for such
                        Plan Year of at least 80% of the Employees and persons
                        employed by any Affiliated Employer for such Plan Year;
                        or

                               (C) was an Officer of the Employer or any
                        Affiliated Employer and received Total Compensation for
                        such Plan Year in excess of 50% of the amount in effect
                        under section 415(b)(1)(A) of the Code for such Plan
                        Year; or

                        (iii) during the immediately preceding Plan Year.

                               (A) received Total Compensation for such Plan
                        Year in excess of $75,000 (or such higher amount as may
                        be permitted under section 414(q) of the Code); or

                               (B) received Total Compensation for such Plan
                        Year that was in excess of both (I) $50,000 (or such
                        higher amount as may be permitted under section 414(q)
                        of the Code) and (II) the Total Compensation for such
                        Plan Year of at least 80% of the Employees and persons
                        employed by an Affiliated Employer for such Plan Year;
                        or

                               (C) was an Officer of the Employer or any
                        Affiliated Employer and received Total Compensation for
                        such Plan Year in excess of 50% of the amount in effect
                        under section 415(b)(1)(A) of the Code for such Plan
                        Year; or

                 (b) for Plan Years beginning after December 31, 1996, any
         Employee or person employed by an Affiliated Employer who:

                        (i) was a Five Percent Owner at any time during such
                 Plan Year or any prior Plan Year; or

                        (ii) received Total Compensation during the immediately
                 preceding Plan Year (A) in excess of $80,000 (or such other
                 amount as may be prescribed by the Secretary of the Treasury
                 pursuant to section 401 (9)(17) of the Code); and (B) if
                 elected by the Committee in such form and manner as the
                 Secretary of the Treasury may prescribe, in excess of the Total
                 Compensation received for such preceding Plan Year by at least
                 80% of the Employees and persons employed by Affiliated
                 Employers.

The determination of who is a Highly Compensated Employee will be made in
accordance with section 414(q) of the Code and the regulations thereunder. In
Plan Years beginning before January 1, 1997 for purposes of applying any
provisions of the Plan applicable to Highly Compensated Employees, any person
who is a Family Member of a Five Percent Owner or one of the ten Highly
Compensated Employees with the highest Total Compensation for a Plan Year shall
not be treated as

                                      -7-
<PAGE>


a separate person for such Plan Year, and any Total Compensation or Adjusted
Compensation paid to such person for such Plan Year, as well as his share of
allocations of contributions or Shares under this Plan, shall be attributed to
the Five Percent Owner or Highly Compensated Employee and, in such case, the
provisions of the Plan shall apply to each person based on the ratio of his
Total Compensation or Adjusted Compensation to the sum of the Total Compensation
or Adjusted Compensation of all persons treated as one person with him.

                 SECTION 1.34 HOUR OF SERVICE means:

                 (a) each hour for which a person is paid, or entitled to
         payment, for the performance of duties for the Employer, or any
         Affiliated Employer,

                 (b) each hour for which such person is paid, or entitled to
         payments by an Affiliated Employer on account of a period during which
         no duties are performed due to vacation, holiday, illness, incapacity
         (including disability), layoff, jury duty, military duty, or leave of
         absence. Hours under this section 1.34(a) shall be calculated and
         credited pursuant to section 2530.200b-2 of the Department of Labor's
         regulations (or any successor regulation), which are incorporated
         herein by reference; plus

                 (c) each hour for which back pay, irrespective of mitigation of
         damages is either awarded or agreed to by any Affiliated Employer,
         provided, however, that such hours have not previously been credited
         under other provisions of this section 1.34; and provided further, that
         not more than 501 Hours of Service shall be credited under section
         1.34(c) to such person on account of a single continuous period during
         which such person performs no duties for an Affiliated Employer whether
         or not such period occurs in a single Plan Year. Hours under this
         section 1.34(c) shall be credited to the person for the Computation
         Period or Computation Periods to which the award or agreement pertains,
         rather than the Computation Period in which the award, agreement or
         payment is made.

Anything in this section 1.34 to the contrary notwithstanding, no Hours of
Service shall be credited for a payment made or due under a plan maintained
solely for the purpose of complying with applicable workmen's compensation or
disability insurance laws, or a payment which solely reimburses any person for
medical or medically-related expenses incurred by such person.

                 SECTION 1.35 INVESTMENT FUND means anyone of the three or more
funds as maybe established from time to time by the Committee which, together
with any and all Shares and other investments held under the Plan, constitute
the Trust Fund.

                 SECTION 1.36 LOAN REPAYMENT ACCOUNT means an account
established and maintained in accordance with section 6.3.

                 SECTION 1.37 LOAN REPAYMENT CONTRIBUTION means amounts of money
contributed to the Plan by the Employer in accordance with section 5.2 and
designated as a Loan Repayment Contribution.

                                      -8-

<PAGE>


                 SECTION 1.38 MATCHING CONTRIBUTION ACCOUNT means for each
Participant for whom the Employer has made Employer Matching Contributions, an
account established for such Participant to which are credited such
Participant's Employer Matching Contributions, together with all earnings and
appreciation thereon, and against which are charged any withdrawals that may be
permitted and any losses, depreciation or expenses allocable to amounts credited
to such account.

                 SECTION 1.39 MATERNITY OR PATERNITY LEAVE means a person's
absence from work for the Employer and all Affiliated Employers: (a) by reason
of the pregnancy of such person; (b) by reason of the birth of a child of such
person; (c) by reason of the placement of a child with the person in connection
with the adoption of such child by such person; or (d) for purposes of caring
for a child of such person immediately following the birth of the child or the
placement of the child with such person.

                 SECTION 1.40 MILITARY SERVICE means service in the armed forces
of the United States, including but not limited to Qualified Military Service.
It may also include, if and to the extent that the Board so provides and if all
Participants and Former Participants in like circumstances are similarly
treated, special service for the government of the United States and other
public service.

                 SECTION 1.41 NAMED FIDUCIARY means any person, committee,
corporation or organization as described in section 14.1.

                 SECTION 1.42 OFFICER means an employee who is an administrative
executive in regular and continued service with the Employer or any Affiliated
Employer; provided, however, that at no time shall more than the lesser of (a)
50 employees or (b) the greater of: (i) 3 employees or (ii) 10% of all employees
be treated as Officers. The determination of whether an employee is to be
considered an Officer shall be made in accordance with section 416(i) of the
Code.

                 SECTION 1.43 OPTIONAL CONTRIBUTION ACCOUNT means for each
Participant for whom the Employer has made Employer Optional Contributions, an
account established for such Participant to which are credited such
Participant's Employer Optional Contributions, together with all earnings and
appreciation thereon, and against which are charged any withdrawals that may be
permitted and any losses, depreciation or expenses allocable to amounts credited
to such account.

                 SECTION 1.44 PARTICIPANT means any person who has satisfied the
eligibility requirements set forth in section 2.1, who has become a Participant
in accordance with section 2.2, and whose participation has not terminated under
section 2.3.

                 SECTION 1.45 PLAN means the U.S.B. Holding Co., Inc. Employee
Stock Ownership Plan (with 401 (k) Provisions) as amended from time to time.
The Plan may be referred to as the "U.S.B. Holding Co., Inc. KSOP."

                 SECTION 1.46 PLAN YEAR means the calendar year.

                 SECTION 1.47 PROFIT SHARING ACCOUNT means, for each person with
an undistributed balance to his credit under the Profit Sharing Plan of U.S.B.
Holding Co., Inc. as of December 31, 1993, an account established for such
person as of January 1, 1994, to which is credited such balance, together with
all earnings and appreciation thereon, and against which are charged any
withdrawals

                                      -9-

<PAGE>


that may be permitted and any losses, depreciation or expenses allocable to
amounts credited to such account.

                 SECTION 1.48 QUALIFIED DOMESTIC RELATIONS ORDER means a
Domestic Relations Order that: (a) clearly specifies (i) the name and last known
mailing address of the Participant or Former Participant and of each person
given rights under such Domestic Relations Order, (ii) the amount or percentages
of the Participant's or Former Participant's benefits under this Plan to be paid
to each person covered by such Domestic Relations Order, (iii) the number of
payments or the period to which such Domestic Relations Order applies, and (iv)
the name of this Plan; and (b) does not require the payment of a benefit in a
form or amount that is (i) not otherwise provided for under the Plan, or (ii)
inconsistent with a previous Qualified Domestic Relations Order.

                 SECTION 1.49 QUALIFIED MILITARY SERVICE means with respect to
any person on any date, any service in the uniformed services of the United
States (as defined in chapter 43 of Title 38 of the United States Code)
completed prior to such date, but only if, on such date, such person is entitled
to re-employment rights with respect to the Employer or any Affiliated Employer
on account of such service.

                 SECTION 1.50 QUALIFIED PARTICIPANT means a Participant who has
attained age 55 and who has been a Participant in the Plan for at least 10
years.

                 SECTION 1.51 RETIREMENT means: (a) any termination of
employment with the Employer (a) at or after attainment of age 65 and the fifth
anniversary of initial Plan participation or (b) at or after attainment of age
55 and completion of seven or more Years of Vesting Service.

                 SECTION 1.52 RETROACTIVE BASIC CONTRIBUTION means an Employer
Basic Contribution made on a retroactive basis in respect of a period of
Qualified Military Service in accordance with section 5.4.

                 SECTION 1.53 RETROACTIVE MATCHING CONTRIBUTION means an
Employer Matching Contribution made on a retroactive basis in respect of a
period of Qualified Military Service in accordance with section 5.4.

                 SECTION 1.54 RETROACTIVE OPTIONAL CONTRIBUTION means an
Employer Optional Contribution made on a retroactive basis in respect of a
period of Qualified Military Service in accordance with section 5.4.

                 SECTION 1.55 RETROACTIVE SALARY REDUCTION CONTRIBUTION means a
Salary Reduction Contribution made on a retroactive basis in respect of a period
of Qualified Military Service in accordance with section 4.5.

                 SECTION 1.56 RETROACTIVE VOLUNTARY CONTRIBUTION means a
Voluntary Contribution made on a retroactive basis in respect of a period of
Qualified Military Service in accordance with section 4.6.

                 SECTION 1.57 ROLLOVER ACCOUNT means an account established for
each Employee making a Rollover Contribution to which are credited all Rollover
Contributions made by such Employee and all earnings or appreciation thereon,
and against which are charged any withdrawals

                                      -10-

<PAGE>


that may be permitted and any losses, depreciation or expenses allocable to
amounts credited to such account.

                 SECTION 1.58 ROLLOVER CONTRIBUTION means a contribution to an
Employee's Rollover Account in the Plan of amounts of money or property received
by an Employee from another qualified plan or individual retirement account or
annuity that may be rolled over into this Plan under the Code without adversely
affecting the qualification of this Plan.

                 SECTION 1.59 SALARY REDUCTION ACCOUNT means an account
established for each Participant for whom Salary Reduction Contributions are
made, to which are credited such Participant's Salary Reduction Contributions,
together with all earnings and appreciation thereon, and against which are
charged withdrawals that may be permitted and any losses, depreciation or
expenses allocable to amounts credited to such account.

                 SECTION 1.60 SALARY REDUCTION CONTRIBUTION means, for each
Participant, amounts contributed to the Plan for such Participant on a pre-tax
salary reduction basis pursuant to section 401 (k) of the Code.

                 SECTION 1.61 SHARE means a share of any class of stock issued
by the Employer or any Affiliated Employer; provided that such share is a
"qualifying employer security" within the meaning section 409(1) of the Code and
section 407(d)(5) of ERISA.

                 SECTION 1.62 SHARE ACQUISITION LOAN means a loan obtained by
the Trustee in accordance with Article VI.

                 SECTION 1.63 TAPPAN ZEE ESOP ACCOUNT means, for each person
with an undistributed balance to his credit under the Employee Stock Ownership
Plan of Tappan Zee Financial, Inc. and Certain Affiliates as of September 30,
1999, an account established for such person as of September 30, 1999 to which
are credited such balance, together with all earnings and appreciation thereon,
and against which are charged any withdrawals that may be permitted and any
losses, depreciation or expenses allocable to amounts credited to such account.

                 SECTION 1.64 TENDER OFFER means a tender offer made to holders
of any one or more classes of Shares generally, or any other offer, made to
holders of any one or more classes of Shares generally, to purchase, exchange,
redeem or otherwise transfer Shares, whether for cash or other consideration.

                 SECTION 1.65 TOTAL COMPENSATION during any period means the
total compensation paid to such person during such period by the Employer and
all Affiliated Employers which is required to be reported to such person on a
written statement under section 6041(d), 6051(a)(3) and 6052 of the Code. In
addition:

                 (a) for purposes of applying the provisions of section 6.1 to
         Limitation Years beginning on or after December 31, 1997 and for
         purposes of identifying those persons who are Highly Compensated
         Employees, each person's Total Compensation shall include; and

                                      -11-
<PAGE>


                 (b) for purposes of computing the Actual Deferral Percentages
         and Contribution Percentages of groups of Employees, each person's
         Total Compensation, in the Committee's discretion, may include:

any Salary Reduction Contributions under this Plan, any elective deferrals
(within the meaning of section 402(g) of the Code) under any qualified cash or
deferred arrangement described in section 401(k) of the Code and maintained by
the Employer or any Affiliated Employer, any tax-deferred annuity described in
section 403(b) of the Code and maintained by the Employer or any Affiliated
Employer, any salary reduction simplified employee pension plan described in
section 408(k) of the Code and maintained by the Employer or any Affiliated
Employer, any salary reduction contributions under any cafeteria plan described
in section 125 of the Code and maintained by the Employer or any Affiliated
Employer, and any salary reduction qualified transportation fringe benefits plan
described in section 132(f) of the Code and maintained by the Employer or any
Affiliated Employer. In no event shall a person's Total Compensation for any
Plan Year include any compensation in excess of $150,000 (or such other amount
as may be permitted under section 401(a)(17) of the Code). If there are less
than twelve (12) months in the Plan Year, the $150,000 limitation (as adjusted)
shall be prorated by multiplying such limitation by a fraction, the numerator of
which is the number of months in the Plan Year and the denominator of which is
twelve (12). For purposes of applying the foregoing limitation in any Plan Year
beginning prior to January 1, 1997 to any person who is a Five Percent Owner or
who is one of the 10 Highly Compensated Employees with the highest Total
Compensation (determined prior to the application of this sentence), any Total
Compensation paid to the spouse of such person or to any lineal descendant of
such person who has not attained age 19 on or before the last day of such
calendar year shall be deemed to have been paid to such person.

                 SECTION 1.66 TRUST means the legal relationship created by the
Trust Agreement pursuant to which the Trustee holds the Trust Fund in trust. The
Trust may be referred to as the "U.S.B. Holding Co., Inc. KSOP Trust."

                 SECTION 1.67 TRUST AGREEMENT means the agreement between U.S.B.
Holding Company, Inc. and the Trustee therein named or its successors pursuant
to which the Trust Fund shall be held in trust.

                 SECTION 1.68 TRUST FUND means the corpus (consisting of
contributions paid over to the Trustee, and investments thereof), and all
earnings, appreciations or additions thereof and thereto, held by the Trustee
under the Trust Agreement in accordance with the Plan, less any depreciation
thereof and any payments made therefrom pursuant to the Plan-

                 SECTION 1.69 TRUSTEE means the Trustee of the Trust Fund from
time to time in office. The Trustee shall serve as Trustee until it is removed
or resigns from office and is replaced by a successor Trustee appointed in
accordance with the terms of the Trust Agreement.

                 SECTION 1.70 VALUATION DATE means the last business day of
March, June, September and December and such additional dates as the Committee
may specify.

                 SECTION 1.71 VESTING COMPUTATION PERIOD means, with respect to
an Employee (a) the 12-month period beginning on the Employee's Employment
Commencement Date and (b) each Plan Year beginning after the Employees'
Employment Commencement Date.

                                      -12-
<PAGE>


                 SECTION 1.72 VOLUNTARY CONTRIBUTION ACCOUNT means, for each
Participant who makes Voluntary Contributions to the Plan, an account
established for such Participant to which are credited such Participant's
Voluntary Contributions, together with all earnings and appreciation thereon,
and against which are charged any withdrawals that may be permitted and any
losses, depreciation or expenses allocable to amounts credited to such account.

                 SECTION 1.73 VOLUNTARY CONTRIBUTIONS means for each Participant
amounts contributed to the Plan on an after-tax basis in accordance with section
4.4.

                 SECTION 1.74 YEAR OF VESTING SERVICE with respect to an
Employee means a Vesting Computation Period during which the Employee is
credited with 1,000 or more Hours of Service.

                                   ARTICLE II

                                 PARTICIPATION

                 SECTION 2.1 ELIGIBILITY FOR PARTICIPATION.

                 (a) Only Eligible Employees may be or become Participants in
the Plan. An Employee shall be an Eligible Employee if (i) he is a common-law
employee of an Employer, and (ii) he has attained age 18; and (iii) he is not
excluded under section 2.1(b).

                 (b) An Employee is not an Eligible Employee if he:

                 (i) is an Employee who has waived any claim to participation in
         the Plan; or

                 (ii) is an Employee or in a unit of Employees covered by a
         collective bargaining agreement with the Employer where retirement
         benefits were the subject of good faith bargaining, unless such
         agreement expressly provides that Employees such as he be covered under
         the Plan; or

                 (iii) is a "leased employee" as defined in section 18.8(a); or

                 (iv) is classified by the Employer as an independent
         contractor, regardless of whether he is required to be treated as a
         common law employee under applicable law.

                 SECTION 2.2 COMMENCEMENT OF PARTICIPATION.

                 Every Employee who is a Participant on the date of adoption of
the amended and restated Plan shall continue as a Participant thereafter until
his participation terminated in accordance with section 2.3. Between such date
of adoption and December 31, 2001, other Employees shall become Participants
upon satisfying the eligibility requirements (for purposes of Employer Optional
Contributions) and on the first Entry Date after satisfying the eligibility
requirements (for all other purposes). After December 31, 2001, other Employees
shall become Participants on the first Entry Date after satisfying the
eligibility requirements.

                                      -13-

<PAGE>


                 SECTION 2.3 TERMINATION OF PARTICIPATION.

                 Participation in the Plan shall cease, and a Participant shall
become a Former Participant, upon: (a) termination of employment with the
Employer for any reason, including resignation, discharge, death, Disability or
Retirement (b) failure to return to work upon the expiration of a leave of
absence granted by the Employer pursuant to section 3.3; or (c) becoming an
Employee who is excluded under section 2.1(b).

                 SECTION 2.4 RE-EMPLOYMENT.

                 A person whose participation in the Plan has terminated due to
termination of employment or becoming an Employer who is excluded from
participation, shall again become a Participant on the earliest subsequent date
on which such person is an Eligible Employee.

                 SECTION 2.5 ADJUSTMENTS TO SERVICE.

                 If a Participant or Former Participant whose employment has
terminated is reemployed after a Break in Service, then:

                 (a) Years of Vesting Service completed prior to termination of
         employment shall not be recognized for purposes of eligibility and
         vesting, respectively, after reemployment until one Year of Vesting
         Service has been completed following re-employment; and

                 (b) Years of Vesting Service after re-employment shall be
         computed using the date of re-employment as the Employment Commencement
         Date; and

                 (c) Years of Vesting Service completed prior to re-employment
         shall not be recognized for purposes of vesting made after
         re-employment unless (A) the Participant was fully or partially vested
         in such contributions prior to termination of employment or (B) the
         number of consecutive Breaks in Service between his termination of
         employment and re-employment is greater than or equal to the greater of
         5 or the number of Years of Vesting Service completed prior to
         termination of employment; and

                 (d) Years of Vesting Service completed after re-employment
         shall be recognized for purposes of additional vesting in employer
         contributions made prior to termination of employment only if
         re-employment occurs prior to the occurrence of five consecutive Breaks
         in Service.

                                  ARTICLE III

                               SPECIAL PROVISIONS

                 SECTION 3.1 MILITARY SERVICE.

                 In the case of a termination of employment of any Employee to
enter directly into Military Service, the entire period of his absence shall be
treated, for purposes of vesting and eligibility for participation (but not,
except as required by law or in the case of Military Leave that

                                      -14-
<PAGE>


is also an approved leave of absence under section 3.2, for purposes of
eligibility to share in allocations of contributions in accordance with Article
VII), as if he had worked for the Employer during the period of his absence. In
the event of the re-employment of such person by the Employer within a period of
not more than six months:

                 (a) after he becomes entitled to release or discharge, if he
         has entered into the uniformed services of the United States;

                 (b) release from hospitalization continuing after discharge
         from the uniformed services of the United States for a period of not
         more than two years; or

                 (c) after such service terminates, if he has entered into other
         service defined as Military Service;

such period, also, shall be deemed to be Military Service.

                 SECTION 3.2 MATERNITY OR PATERNITY LEAVE.

                 In the event of an Employee's absence from work in the service
of the Employer and all Affiliated Employers for a period that commences on or
after January 1, 1985 for which the Employee is not paid or entitled to payment
by the Employer and that constitutes Maternity or Paternity Leave, then solely
for purposes of determining whether a Break in Service has occurred, the
Employee shall be credited for the period of absence with the number of Hours of
Service equal to the lesser of

                 (a) (i) the number of Hours of Service that would have been
         credited to the Employee if he had continued working for the Employer
         during the period of such absence, or (ii) if the number of Hours of
         Service prescribed under section 2.2(a)(i) cannot be determined, 8
         Hours of Service for each working day during the period of absence, or

                 (b) 501 Hours of Service.

Such credit shall be given during the Computation Period in which such absence
began, if necessary to prevent a Break in Service from occurring during such
Computation Period, and in all other cases, such credit shall be given during
the immediately following Computation Period. This section 2.2 shall not apply
unless the Employee furnishes to the Committee such information as the Committee
may reasonably require in order to establish that the Employees absence is one
described herein and the number of working days during such absence.

                 SECTION 3.3 LEAVE OF ABSENCE.

                 In the event of temporary absence from work in the service of
the Employer and all Affiliated Employers for any period of two years or less
for which a Participant shall have been granted a leave of absence by the
Employer, the entire period of his absence shall be treated for purposes of
vesting and eligibility for participation (but not for purposes of eligibility
to share in the allocation of contributions in accordance with Article VII), as
if he had worked for the Employer during the period of his absence. Absence from
work for a period greater than, or failure to return to work upon the expiration
of, the period of leave of absence granted by the Employer shall terminate
participation in the Plan as of the date on which such period ended. In granting
leaves of absence for purposes of the Plan, all Employees in like circumstances
shall be similarly treated.



                                      -15-
<PAGE>


                 SECTION 3.4 FAMILY AND MEDICAL LEAVE

                 Periods of absence recognized as family or medical leave under
the federal Family and Medical Leave Act of 1993 shall be treated in the manner
required by such law and the regulations promulgated thereunder.

                                   ARTICLE IV

                         CONTRIBUTIONS BY PARTICIPANTS

                 SECTION 4.1 SALARY REDUCTION CONTRIBUTIONS

                 Subject to the limitations of Articles VI and XV, upon
enrollment, a Participant may elect to make Salary Reduction Contributions of 1%
to 15% (integral multiples of 1%) of his Payroll Deduction Compensation.
Salary Reduction Contributions shall be made by payroll deductions authorized by
the Participant in such form and manner as may be prescribed by the Committee,
the first such Salary Reduction Contributions to be withheld for the payroll
period in which participation commences. A Participant's Salary Reduction
Contributions shall be credited to his Salary Reduction Account.

                 SECTION 4.2 CHANGES OF PERSONAL CONTRIBUTIONS.

                 A Participant making Salary Reduction Contributions may elect
to discontinue such Salary Reduction Contributions at any time by written notice
in such form as may be prescribed by the Committee, delivered to the Committee
during such notice period as the Committee may specify. A Participant (including
a Participant who is not currently making Salary Reduction Contributions) may,
subject to the limitations of section 4.1, elect to increase or decrease the
rate of Salary Reduction Contributions by notice given, in such form and manner
as the Committee may prescribe, at least thirty (30) days in advance of any
Entry Date; and such election shall take effect with the first payroll period to
end on or after Such Entry date.

                 SECTION 4.3 ROLLOVER CONTRIBUTIONS.

                 (a) Subject to such terms and conditions as may be established
from time to time by the Committee, an Employee (other than a "leased employee"
as defined in section 15.7(a)), whether or not he is a Participant, may
contribute a Rollover Contribution to the Trust Fund by delivery of such
contribution to the Trustee (or to the Committee for remittance to the Trustee);
provided, however. that such Employee shall submit evidence, in form and
substance satisfactory to the Committee, that the contribution qualifies as a
Rollover Contribution. In the absence of actual facts to the contrary, the
Committee shall be entitled accept as evidence and to rely conclusively upon:

                 (i) in the case of a direct rollover (within the meaning of
         section 401(a)(31) of the Code), a letter signed by the
         administrator of the plan from which the direct rollover is received
         stating that either (A) such plan has received a determination letter
         from the Commissioner of Internal Revenue stating that such plan is
         qualified and that the administrator is not aware of any reason why
         reliance on such determination letter would be unreasonable, or (B) the
         plan satisfies the requirements of section 401 of the Code, or (C) the
         plan is intended to satisfy the requirements of

                                      -16-
<PAGE>


         section 401 of the Code and that such administrator is not aware of any
         plan provision or operation that would result in disqualification of
         the plan; and

                 (ii) in all other cases: (A) a letter signed by the
         administrator of the plan from which the eligible rollover distribution
         was made stating that either (I) such plan has received a determination
         letter from the Commissioner of Internal Revenue stating that such plan
         is qualified and that the administrator is not aware of any reason why
         reliance on such determination letter would be unreasonable, or (II)
         the plan satisfies the requirements of section 401 of the Code, or
         (III) the plan is intended to satisfy the requirements of section 401
         of the Code and that such Committee is not aware of any plan provision
         or operation that would result in disqualification of the plan; and (B)
         a copy of the distribution statement which accompanied the distribution
         from such plan showing that such distribution was made by such plan and
         was made not more than sixty (60) days prior to the date of the
         Rollover Contribution and stating that such distribution (or specified
         portion thereof) is an eligible rollover distribution or reflecting die
         withholding of federal income tax at the rate applicable to eligible
         rollover distributions; provided, however, that the amount of the
         Rollover Contribution shall not exceed the dollar amount shown as
         withheld for federal income tax purposes divided by the rate of federal
         income tax withholding on eligible rollover distributions.

Upon approval by the Committee, an Employee's Rollover Contribution shall be
credited to such Employee's Rollover Account. An Employee shall be entitled to
make investment directions and to direct transfers among Investment Funds as
provided in sections 10.1 and 10.3 with respect to his Rollover Contribution
Account.

                 (b) If the Committee subsequently determines that a
contribution previously accepted as a Rollover Contribution does not satisfy the
conditions for a Rollover Contribution, it shall direct the Trustee to
distribute the amount of such contribution, together with any earnings
attributable thereto to the Employee who made the contribution as soon as
practicable after making such determination.

                 SECTION 4.4 VOLUNTARY CONTRIBUTIONS.

                 If permitted by the Committee on a uniform and
non-discriminatory basis, and subject to the limitations of such terms,
conditions and limitations as the Committee may prescribe, a Participant may
make Voluntary Contributions in an aggregate amount not to exceed ten percent
(10%) of the aggregate Total Compensation paid to him while a Participant.
Unless the Committee permits such contributions by payroll deduction, Voluntary
Contributions shall be made by delivery of such contribution to the Trustee (or
to the Committee for remittance to the Trustee). Voluntary Contributions shall
be credited to the Participant's Voluntary Contribution Account.

                 SECTION 4.5 RETROACTIVE SALARY REDUCTION CONTRIBUTIONS.

                 An individual who is re-employed by the Employer after December
12, 1994, following the completion of a period of Military Service, shall have
the right to elect to make Retroactive Salary Reduction Contributions if the
individual's Military Service constituted Qualifying Military Service. An
election to make Retroactive Salary Reduction Contributions shall be made in
such form and manner as the Committee may prescribe. Such Retroactive Salary
Reduction Contributions shall be made during the period beginning on the date of
the individual's re-employment and extending for a period that is three times as
long as the individual's period of Qualified Military

                                      -17-
<PAGE>


Service (or until the fifth anniversary of the date of re-employment if earlier)
and shall not exceed the excess of:

                 (a) the maximum amount of Salary Reduction Contributions which
         the individual could have made during the period of Qualified Military
         Service if he had remained in the service of the Employer in the same
         capacity and earning Payroll Deduction Compensation and Total
         Compensation at the annual rates in effect immediately prior to the
         commencement of the Qualified Military Leave (or, if such rates are not
         reasonably certain, at an annual rate equal to the actual Payroll
         Deduction Compensation and Total Compensation, respectively, paid to
         him for the 12-month period immediately preceding the Qualified
         Military Service), over

                 (b) the aggregate elective deferrals (within the meaning of
         section 402(g) of the Code) actually made by such individual during the
         period of Qualified Military Service.

Such Salary Reduction Contributions shall be deemed made with respect to the
earliest portion of the period of Qualified Military Service possible consistent
with the limitations on the amount of Salary Reduction Contributions that could
have been made during such period by such individual. No adjustment shall be
made for any earnings that would have accrued between the date such Retroactive
Salary Reduction Contributions are actually delivered to the Trustee for
investment and the date when such Retroactive Salary Reduction Contributions are
deemed made.

                 SECTION 4.6 RETROACTIVE VOLUNTARY CONTRIBUTION.

                 An individual who is re-employed by the Employer after December
12, 1994, following the completion of a period of Military Service, shall have
the right to elect to make Retroactive Voluntary Contributions if such Military
Service constituted Qualifying Military Service. An election to make Retroactive
Voluntary Contributions shall be made in such form and manner as the Committee
may prescribe. Such Retroactive Voluntary Contributions shall be made during the
period beginning on the date of the individual's re-employment and extending for
a period that is three times as long as the individual's period of Qualified
Military Service (or until the fifth anniversary of the date of re-employment if
earlier) and shall not exceed the excess of:

                 (a) the maximum amount of Voluntary Contributions which the
         individual could have made during the period of Qualified Military
         Service if he had remained in the service of the Employer in the same
         capacity and earning Total Compensation at the annual rate in effect
         immediately prior to the commencement of the Qualified Military Leave
         (or, if such rates are not reasonably certain, at an annual rate equal
         to the actual Basic Total Compensation paid to him for the 12-month
         period immediately preceding the Qualified Military Service), over

                 (b) the aggregate employee contributions (within the meaning of
         section 415(c)(2)(B) of the Code) actually made by such individual
         during the period of Qualified Military Service.

Such Voluntary Contributions shall be deemed made with respect to the earliest
portion of the period of Qualified Military Service possible consistent with the
limitations on the amount of Voluntary Contributions that could have been made
during such period by such individual. No adjustment shall be made for any
earnings that would have accrued between the date such Retroactive Voluntary

                                      -18-
<PAGE>


Contributions are actually delivered to the Trustee for investment and the date
when such Retroactive Voluntary Contributions are deemed made.

                 SECTION 4.7 PAYMENTS TO THE TRUST FUND.

                 The aggregate amount of an Employee's Salary Reduction
Contributions and Voluntary Contributions deducted from his paycheck during any
month, Plus the aggregate amount of any Voluntary Contributions and Rollover
Contributions otherwise made by such person during such month, shall be
contributed to the Trust Fund as soon as practicable after they are received (or
otherwise would have been payable as wages), and in any event within 15 business
days after the close of the calendar month in which they are received and,
subject to the payment of any reasonable expenses of the Trust Fund, shall be
invested in any one or more of the Investment Funds for the account of such
person, pursuant to section 10.1, as of the first Valuation Date to occur on
or after the date as of which such funds are contributed to the Trust Fund.

                                   ARTICLE V

                         CONTRIBUTIONS BY THE EMPLOYER

                 SECTION 5.1 EMPLOYER MATCHING CONTRIBUTIONS.

                 For each Plan Year, the Employer shall make an Employer
Matching Contribution for each Eligible Participant in such amount (if any) as
the Board may determine; provided, however, that unless the Board shall
determine otherwise for any Plan Year not later than the last day of such Plan
Year, the Employer Matching Contribution for each Eligible Participant for such
Plan Year shall be an amount equal to the lesser of (a) 50% of the Eligible
Participant's Salary Reduction Contributions for such Plan Year or (b) 2% of the
Eligible Participant's Payroll Deduction Compensation for the Plan Year (or
portion thereof during which he was a Participant).

                 SECTION 5.2 EMPLOYER OPTIONAL CONTRIBUTIONS.

                 For each Plan Year, the Employer shall make an Employer
Optional Contribution in such amount (if any) as the Board shall determine;
provided, however, that for any Plan Year during which a Share Acquisition Loan
is outstanding, the minimum Employer Optional Contribution shall be the amount
necessary (after the application of dividends on Financed Shares and other
amounts available for debt service under the Plan) to make required principal
and interest payment due during such Plan Year with respect to all such Share
Acquisition Loans. For each Plan Year, a portion of the Employer Optional
Contributions, if any, to the Plan for such Plan Year equal to the sum of:

                 (a) the minimum amount required to be added to the Loan
         Repayment Account in order to provide adequate funds for the payment of
         the principal and interest then required to be repaid under the terms
         of any outstanding Share Acquisition Loan obtained by the Trustee; plus

                 (b) the additional amount, if any, designated by the Committee
         to be applied to the prepayment of principal or interest under the
         terms of any outstanding Share Acquisition Loan obtained by the
         Trustee;

                                      -19-
<PAGE>


shall be treated as a Loan Repayment Contribution for such Plan Year. A Loan
Repayment Contribution for a Plan Year shall be allocated to the Loan Repayment
Account and shall be applied by the Trustee, in the manner directed by the
Committee, to the payment of accrued interest and to the reduction of the
principal balance of any Share Acquisition Loan obtained by the Trustee that is
outstanding on the date on which the Loan Repayment Contribution is made. To the
extent that a Loan Repayment Contribution for a Plan Year results in a release
of Financed Shares in accordance with section 6.4, such Shares shall be
allocated among the Accounts of Eligible Participants for such Plan Year in
accordance with section 7.2. The amount by which any Employer Optional
Contributions for a Plan Year exceeds the amount allocated to the Loan Repayment
Account shall be allocated among the account of Eligible Participants in
accordance with section 7.2.

                 SECTION 5.3 EMPLOYER BASIC CONTRIBUTIONS.

                 For each Plan Year, the Employer shall make an Employer Basic
Contribution in such amount (if any) and to be allocated in such manner as the
Board may determine to be necessary to produce compliance with the limitations
imposed under section 8.1, 8.3 and 8.4, or any combination of such limitations.

                 SECTION 5.4 RETROACTIVE CONTRIBUTIONS.

                 The Employer shall make retroactive contributions in respect of
any individual who is re-employed by the Employer after December 12, 1994
following the completion of a period of Qualified Military Service. Such
retroactive contributions shall be made in the following manner for each Plan
Year that includes the period of Qualified Military Service:

                 (a) Retroactive Employer Optional Contributions shall made be
         made as follows:

                        (i) An allocation percentage shall be computed by
                 dividing (A) the sum of the Fair Market Value of all Financed
                 Shares allocated to Eligible Participants for such Plan Year
                 plus the dollar amount of all Employer Optional Contributions
                 not designated as Loan Repayment Contributions and made in cash
                 for such Plan Year plus the Fair Market Value of all ESOP
                 Contributions not designated as Loan Repayment Contributions
                 and made in Shares for such Plan Year, divided by (B) the
                 aggregate amount of Adjusted Compensation used in the
                 allocation for such Plan Year. Fair Market Value for such
                 purposes shall be determined as of the last day of the Plan
                 Year.

                        (ii) A notional allocation shall be determined by
                 multiplying (A) the percentage determined under section
                 5.4(a)(i) by (B) the Adjusted Compensation which the individual
                 would have had for the calendar year ending during such Plan
                 Year if he had remained in the service of the Employer in the
                 same capacity and earning Adjusted Compensation and Total
                 Compensation at the annual rates in effect immediately prior to
                 the commencement of the Qualified Military Leave (or, if such
                 rates are not reasonably certain, at an annual rate equal to
                 the actual Adjusted Compensation and Total Compensation,
                 respectively, paid to him for the 12-month period immediately
                 preceding the Qualified Military Service).

                        (iii) An actual Retroactive Employer Optional
                 Contribution for the Plan Year shall be determined by computing
                 the excess of (A) the notional

                                      -20-
<PAGE>


                 allocation determined under section 5.4(b) over (B) the sum of
                 the dollar amount of any ESOP Contribution in cash, the Fair
                 Market Value of my ESOP Contribution in Shares and the Fair
                 Market Value of any Financed Shares actually allocated to such
                 individual for such Plan Year.

                 (b) For any month during which any Participant makes
         Retroactive Salary Reduction Contributions, the Company shall make a
         Retroactive Employer Matching Contribution if and to the extent
         required by this section 5.4(b). A Retroactive Employer Matching
         Contribution shall be required with respect to a Retroactive Salary
         Reduction Contribution to the extent that Employer Matching
         Contributions were actually made with respect to Salary Reduction
         Contributions made during the period of Qualified Military Service to
         which the Retroactive Salary Reduction Contribution relates. The
         Retroactive Employer Matching Contribution shall be in the same amount
         as the Employer Matching Contribution that would have been made if the
         Retroactive Salary Reduction Contribution had actually been made during
         the period of Qualified Military Service. No adjustments shall be made
         for earnings that would have accrued if Retroactive Salary Reduction
         Contributions and related Employer Matching Contributions had actually
         been made during the period of Qualified Military Service.

                 (c) The Employer shall make a Retroactive Employer Basic
         Contribution for the Account of such individual for any Plan Year
         ending during such period of Qualified Military Service for which the
         individual would received an Employer Basic Contribution if he had
         remained in the active employment of the Company have been a Member.
         The amount of such Retroactive Employer Basic Contribution for any Plan
         Year shall be the amount that would have been contributed for such
         individual as an Employer Basic Contribution for such Plan Year if he
         had been in the active employment of the Employer for such Plan Year.
         For this purpose it shall be assumed that the individual remained
         employed by the Company during his period of Qualified Military Service
         earning Adjusted Compensation, Payroll Deduction and Total Compensation
         at the annual rates in effect immediately prior to the commencement of
         the Qualified Military Leave (or, if such rates are not reasonably
         certain, at an annual rate equal to the actual Adjusted Compensation,
         Payroll Deduction Compensation and Total Compensation, respectively,
         paid to him for the 12-month period immediately preceding the Qualified
         Military Service). No adjustments shall be made for earnings that would
         have accrued if Employer Basic Contributions had actually been made
         during the period of Qualified Military Service.

                 SECTION 5.5 TIME AND MANNER PAYMENT.

                 (a) Payment of contributions made pursuant to this Article V
         shall be made as follows:

                        (i) in cash, in the case of a Loan Repayment
                 Contribution, a Retroactive Loan Repayment Contribution, a
                 Retroactive Employer Matching Contributions or a Retroactive
                 Employer Basic Contribution; and

                        (ii) in cash in the case of Employer Matching
                 Contributions, an Employer Optional Contribution not designated
                 as a Loan Repayment Contribution or an Employer Basic
                 Contribution; provided, however, to the extent provided by the
                 Board when it determines the amount of any Employer Matching
                 Contribution, Employer

                                      -21-
<PAGE>


                 Basic Contribution or Employer Optional Contribution other than
                 a Loan Repayment Contribution, such contribution shall be made
                 in whole or in part on Shares.

                 (b) Contributions (other than Employer Basic Contributions
         under section 5.3) made pursuant to this Article V for a Plan Year
         shall be paid to the Trust Fund on or before the due date (including
         any extensions thereof) of the Employer's federal income tax return for
         its taxable year during which such Plan Year ends. Employer Basic
         Contributions shall be paid to the Trust Fund on or before the last day
         of the Plan Year following the Plan with respect to which they are
         made. All such contributions shall be allocated to the Accounts of the
         Eligible Participants, in the case of a Employer Optional Contribution
         that is not a Loan repayment Contribution or Employer Matching
         Contribution, to the Account of the Participant for whom it is made in
         the case of an Employer Basic Contribution or any retroactive
         contribution under section 5.4, and to the Loan Repayment Account, in
         the case of a Loan Repayment Contribution, as soon as is practicable
         following the payment thereof to the Trust Fund.

                                   ARTICLE VI

                             SHARE ACQUISITION LOANS

                 SECTION 6.1 IN GENERAL.

                 The Committee may, with the prior approval of the Board, direct
the Trustee to obtain a Share Acquisition Loan on behalf of the Plan, the
proceeds of which shall be applied on the earliest practicable date:

                 (a) to purchase Shares; or

                 (b) to make payment of principal or interest, or a combination
         of principal and interest, with respect to such Share Acquisition Loan;
         or

                 (c) to make payments of principal and interest, or a
         combination of principal and interest, with respect to a previously
         obtained Share Acquisition Loan that is then outstanding.

Any such Share Acquisition Loan shall be obtained on such terms and conditions
as the Committee may approve; provided, however, that such terms and conditions
shall provide for the payment of interest at no more than a reasonable rate and
shall permit such Share Acquisition Loan to satisfy the requirements of section
4975(d)(3) of the Code and section 408(b)(3) of ERISA.

                 SECTION 6.2 COLLATERAL, LIABILITY FOR REPAYMENT.

                 (a) The Committee may direct the Trustee to pledge, at the time
         a Share Acquisition Loan is obtained, the following assets of the Plan
         as collateral for such Share Acquisition Loan:

                        (i) any Shares purchased with the proceeds of such Share
                 Acquisition Loan and any earnings attributable thereto;

                                      -22-
<PAGE>


                        (ii) any Financed Shares then pledged as collateral for
                 a prior Share Acquisition Loan which is repaid with the
                 proceeds of such Share Acquisition Loan and any earnings
                 attributable thereto; and

                        (iii) pending the application thereof to purchase Shares
                 or repay a prior Share Acquisition Loan, the proceeds of such
                 Share Acquisition Loan and any earnings attributable thereto.

Except as specifically provided in this section 6.2(a), no assets of the Plan
shall be pledged as collateral for the repayment of any Share Acquisition Loan.

                 (b) No person entitled to payment under a Share Acquisition
         Loan shall have any right to the assets of the Plan except for:

                        (i) Financed Shares that have been pledged as collateral
                 for such Share Acquisition Loan pursuant to section 6.2(a);

                        (ii) Loan Repayment Contributions made pursuant to
                 section 5.2; and

                        (iii) earnings attributable to Financed Shares described
                 in section 6.2(b)(i) and to Loan Repayment Contributions
                 described in section 6.2(b)(ii).

Except in the event of a default or a refinancing pursuant to which an existing
Share Acquisition Loan is repaid, the aggregate amount of all payments of
principal and interest made by the Trustee with respect to all Share Acquisition
Loans obtained on behalf of the Plan shall at no time exceed the aggregate
amount of all Loan Repayment Contributions theretofore made plus the aggregate
amount of all earnings (other than dividends paid in the form of Shares)
attributable to Financed Shares and to such Loan Repayment Contributions.

                 (c) Any Share Acquisition Loan shall be without recourse
         against the Plan and Trust.

                 SECTION 6.3 LOAN REPAYMENT ACCOUNT.

                 In the event that one or more Share Acquisition Loans shall be
obtained, a Loan Repayment Account shall be established under the Plan. The Loan
Repayment Account shall be credited with all Shares acquired with the proceeds
of a Share Acquisition Loan, all Loan Repayment Contributions and all earnings
(including dividends paid in the form of Shares) or appreciation attributable to
such Shares and Loan Repayment Contributions. The Loan Repayment Account shall
be charged with all payments of principal and interest made by the Trustee with
respect to any Share Acquisition Loan, all Shares released in accordance with
section 6.4 and all losses, depreciation or expenses attributable to Shares or
to other property credited thereto. The Financed Shares, as well as any earnings
thereon, shall be allocated to such Loan Repayment Account and shall be
accounted for separately from all other amounts contributed under the Plan.

                 SECTION 6.4 RELEASE OF FINANCED SHARES.

                 As of the last day of each Plan Year during which a Share
Acquisition Loan is outstanding, a portion of the Financed Shares purchased with
the proceeds of such Share Acquisition Loan and allocated to the Loan Repayment
Account shall be released. The number of Financed Shares

                                      -23-
<PAGE>



released in any such Plan Year shall be equal to the amount determined according
to one of the following methods:

                 (a) by computing the product of: (i) the number of Financed
         Shares purchased with the proceeds of such Share Acquisition Loan and
         allocated to the Loan Repayment Account immediately before the release
         is effected; multiplied by (ii) a fraction, the numerator of which is
         the aggregate amount of the principal and interest payments (other than
         payments made upon the refinancing of a Share Acquisition Loan as
         contemplated by section 6. 1(c)) made with respect to such Share
         Acquisition Loan during such Plan Year, and the denominator of which is
         the aggregate amount of all principal and interest remaining to be paid
         with respect to such Share Acquisition Loan as of the first day of such
         Plan Year; or

                 (b) by computing the product of: (i) the number of Financed
         Shares purchased with the proceeds of such Share Acquisition Loan and
         allocated to the Loan Repayment Account immediately before the release
         is effected; multiplied by (ii) a fraction, the numerator of which is
         the aggregate amount of the principal payments (other than payments
         made upon the refinancing of a Share Acquisition Loan as contemplated
         by section 6.1 (c)) made with respect to such Share Acquisition Loan
         during such Plan Year, and the denominator of which is the aggregate
         amount of all of principal remaining to be paid with respect to such
         Share Acquisition Loan as of the first day of such Plan Year; provided,
         however, that the method described in this section 6.4(b) may be used
         only if the Share Acquisition Loan does not extend for a period in
         excess of 10 years after the date of origination and only to the extent
         that principal payments on such Share Acquisition Loan are made at
         least as rapidly as under a loan of like principal amount with a like
         interest rate and term requiring level amortization of principal and
         interest.

The method to be used shall be specified in the documents governing the Share
Acquisition Loan or, if not specified therein, prescribed by the Committee, in
its discretion. In the event that property other than, or in addition to,
Financed Shares shall be held in the Loan Repayment Account and pledged as
collateral for a Share Acquisition Loan, then the property to be released
pursuant to this section 6.4 shall be property having a Fair Market Value
determined by applying the method to be used to the Fair Market Value of all
property pledged as collateral for such Share Acquisition Loan; provided,
however, that no property other than Financed Shares shall be released pursuant
to this section 6.4 unless all Financed Shares have previously been released.

                 SECTION 6.5 RESTRICTIONS ON FINANCED SHARES.

                 Except to the extent required under any applicable law, rule or
regulation, no Shares purchased with the proceeds of a Share Acquisition Loan
shall be subject to a put, call or other option, or to any buy-sell or similar
arrangement, while held by the Trustee or when distributed from the Plan. The
provisions of this section 6.5 shall continue to apply in the event that this
Plan shall cease to be an employee stock ownership plan, within the meaning of
section 4975(e)(7) of the Code.


                                      -24-

<PAGE>

                                  ARTICLE VII

                          ALLOCATION OF CONTRIBUTIONS

                 SECTION 7.1 ALLOCATION OF EMPLOYER MATCHING CONTRIBUTIONS.

                 Employer Matching Contributions made for each Eligible
Participant for a Plan Year shall be allocated to the Employer Matching
Contribution Accounts of the Eligible Participant for whom they are made as soon
as practicable after they are deposited in the Trust Fund.

                 SECTION 7.2 ALLOCATION OF EMPLOYER BASIC CONTRIBUTIONS AND
                             RELEASED SHARES OR OTHER PROPERTY.

                 Subject to the limitations of Article VIII, in the event that
Financed Shares or other property are released from the Loan Repayment Account
for a Plan Year in accordance with section 6.4, such released Shares or other
property shall be allocated among the Accounts of the Eligible Participants for
the Plan Year in the proportion that each such Eligible Participant's Adjusted
Compensation for the portion of the Plan Year during which he was a Participant
bears to the aggregate Adjusted Compensation of all Eligible Participants for
the portion of the Plan Year during which they were Participants. Subject to the
limitation of Article VIII, if Employer Optional Contributions other than Loan
Repayment Contributions are made for a Plan Year, said contribution shall be
allocated among the Eligible Participants for the Plan Year in the proportion
that the Adjusted Compensation of each Eligible Participant for the Plan Year
(or portion thereof during which he was a Participant) to the aggregate of such
Adjusted Compensation for all Eligible Participants.

                 SECTION 7.3 ALLOCATION OF EMPLOYER BASIC CONTRIBUTIONS

                 Employer Basic Contributions made for any Participant for a
Plan Year shall be allocated to the Employer Basic Accounts of the Participants
for whom they are made as soon as practicable after they are deposited in the
Trust Fund.

                 SECTION 7.4 ALLOCATION OF RETROACTIVE CONTRIBUTIONS.

                 Retroactive Contributions made for any person under section 5.4
shall be allocated to the Employer Matching Accounts, Employer Optional
Accounts, and Employer Basic Accounts, as applicable, of the Participants for
whom they are made as soon as practicable after they are deposited in the Trust
Fund.

                 SECTION 7.5 NO ALLOCATION AFTER TERMINATION OF PARTICIPATION

                 Except for retroactive contributions under section 5.4, no
amount of the Employer's contributions for a Plan Year, nor any Financed Shares
or other property released during a Plan Year, shall be allocated to the account
of any person who is not an Eligible Participant for such Plan Year, even if
such person was a Participant during part of such Plan Year.

                                      -25-

<PAGE>


                                  ARTICLE VIII

                           LIMITATIONS ON ALLOCATIONS


                 SECTION 8.1 OPTIONAL LIMITATIONS ON ALLOCATIONS OF
                             CONTRIBUTIONS.

                 If, for any Plan Year, the application of sections 7.2 and 7.3
would result in more than one-third of the number of Shares or of the amount of
money or property to be allocated thereunder being allocated to the Accounts of
Eligible Participants for such Plan Year who are also Highly Compensated
Employees for such Plan Year, then the Committee may, but shall not be required
to, direct that this section 8.1 shall apply in lieu of sections 7.2 and 7.3. If
the Committee gives such a direction, then the Committee shall impose a maximum
dollar limitation on the amount of Adjusted Compensation that may be taken into
account for each Eligible Participant. The dollar limitation which shall be
imposed shall be the limitation which produces the result that the aggregate
Adjusted Compensation taken into account for Eligible Participants who are
Highly Compensated Employees, constitutes exactly one-third of the aggregate
Adjusted Compensation taken into account for all Eligible Participants. In
determining whether more than one-third of the number of Shares or of the amount
of money or property to be allocated under the Plan for a Plan Year beginning
before January 1, 1997 would be allocated to the Highly Compensated Employees,
any allocation to be made to the Account of a Family Member of a Highly
Compensated Employee who is either a Five Percent Owner or one of the ten Highly
Compensated Employees with the highest Total Compensation, shall be treated as
an allocation to such Highly Compensated Employee.

                 SECTION 8.2 GENERAL LIMITATIONS ON CONTRIBUTIONS.

                 (a) No amount shall be allocated to a Participant's Account
         under this Plan for any Limitation Year, to the extent that such an
         allocation would result in an Annual Addition of an amount greater than
         the lesser of (i) $30,000 (or such other amount as is permissible under
         section 415(c)(1)(A) of the Code, or (ii) 25% of the Participant's
         Total Compensation for such Limitation Year.

                 (b) In the case of a Participant who may be entitled to
         benefits under any qualified defined benefit plan (whether or not
         terminated) now in effect or ever maintained by the Employer, such
         Participant's Annual Additions under this Plan shall, in addition to
         the limitations provided under section 8.2(a), be further limited so
         that the sum of the Participant's Defined Contribution Plan Fraction
         plus his Defined Benefit Plan Fraction does not exceed 1.0 for any
         Limitation Year beginning prior to January 1, 2000; provided, however,
         that for any Limitation Year ending prior to January 1, 1983, the sum
         of his Defined Contribution Plan Fraction plus his Defined Benefit Plan
         Fraction shall not exceed 1.4; and provided further, that this
         limitation shall only apply if and to the extent that the benefits
         under the Employer's Retirement Plan are not limited so that such sum
         is not exceeded.

                 (c) For purposes of this section 8.2, the following special
         definitions shall apply:

                        (i) Annual Addition means the sum of the following
                 amounts allocated on behalf of a Participant for a Limitation
                 Year:

                               (A) all contributions by the Employer (including
                        contributions made under a salary reduction agreement
                        pursuant to sections 401(k), 408(k) or 403(b) of the
                        Code) under any qualified defined contribution plan
                        (other than this Plan) or a simplified employee pension
                        plan maintained by the Employer, as well as the
                        Participant's allocable share, if any, of any
                        forfeitures under such plans; plus

                               (B) (1) for Limitation Years that began prior to
                        January 1, 1987, the lesser of (1) 50% of the
                        Participant's voluntary nondeductible contributions

                                      -26-
<PAGE>


                        to all qualified defined contribution plans maintained
                        by the Employer, or (2) the amount by which the
                        Participant's nondeductible voluntary contributions to
                        such plans exceeds 6% of his Total Compensation; and
                        (II) for Limitation Years that begin after December 31,
                        1986, all of the Participant's voluntary nondeductible
                        contributions to such plans; plus

                               (C) all Employer Matching Contributions, Employer
                        Basic Contributions and Employer Optional Contributions
                        other than Loan Repayment Contributions under this Plan;
                        plus

                               (D) except as hereinafter provided in this
                        section 8.2(c)(i), a portion of the Employer's Loan
                        Repayment Contributions to the Plan for such Limitation
                        Year which bears the same proportion to the total amount
                        of the Employer's Loan Repayment Contributions for the
                        Limitation Year that the number of Shares (or the Fair
                        Market Value of property other than Shares) allocated to
                        the Participant's Account pursuant to section 7.2 or
                        8.1, whichever is applicable, bears to the aggregate
                        number of Shares (or Fair Market Value of property other
                        than Shares) so allocated to all Participants for such
                        Limitation Year; plus

                               (E) amounts allocated after March 31, 1984 to an
                        individual medical account (within the meaning of
                        section 415(1) of the Code) which is part of a pension
                        or annuity plan maintained by the Employer and amounts
                        derived from contributions paid or accrued after, and in
                        a taxable year ending after, December 31, 1985 which are
                        attributable to post-retirement medical benefit and
                        allocated to a separate account of a key employee
                        (within the meaning of section 419A(d)(3) of the Code
                        under a welfare benefit fund (within the meaning of
                        section 419(e) of the Code).

Notwithstanding section 8.2(c)(i)(D), if, for any Limitation Year, the aggregate
amount of Employer Matching Contributions, Employer Basic Contributions and
Employer Optional Contributions other than Loan Repayment Contributions
allocated to the Accounts of the individuals who are Highly Compensated
Employees for such Limitation Year, when added to such Highly Compensated
Employees' allocable share of any Loan Repayment Contributions for such
Limitation Year, does not exceed one-third of the total of all Employer
contributions for such Limitation Year, then that portion, if any, of the Loan
Repayment Contributions for such Limitation Year that is applied to the payment
of interest on a Share Acquisition Loan shall not be included as an Annual
Addition. In determining whether more than one-third of the number of Shares or
of the amount of money or property to be allocated under the Plan for a Plan
Year beginning before January 1, 1997 would be allocated to the Highly
Compensated Employees, any allocation to be made to the Account of a Family
Member of a Highly Compensated Employee who is either a Five Percent Owner or
one of the ten Highly Compensated Employees with the highest Total Compensation,
shall be treated as an allocation to such Highly Compensated Employee.

                        (ii) Employer means and U.S.B. Holding Co., Inc. and all
                 members of a controlled group of corporations, as defined in
                 section 414(b) of the Code, as modified by section 415(h) of
                 the Code, all commonly controlled trades or businesses, as
                 defined in section 414(c) of the Code, as modified by section
                 415(h) of the Code, all affiliated service groups, as defined
                 in section 414(m) of the Code, of which

                                      -27-
<PAGE>


                 U.S.B. Holding Co., Inc. is a member, as well as any leasing
                 organization, as defined in section 18.8, that employs any
                 person who is considered an employee under section 18.8 and any
                 other entity that is required to be aggregated with the
                 Employer pursuant to regulations under section 414(o) of the
                 Code.

                        (iii) Defined Benefit Plan Fraction means, for any
                 Participant for any Limitation Year, a fraction, the numerator
                 of which is the Projected Annual Benefit (determined as of the
                 end of such Limitation Year) of the Participant under my
                 qualified defined benefit plans (whether or not terminated)
                 maintained by the Employer for the current and all prior
                 Limitation Years, and the denominator of which is as follows:
                 (A) for Limitation Years ending prior to January 1, 1983, the
                 lesser of (I) the dollar limitation in effect under section
                 415(b)(1)(A) of the Code for such Limitation Year, or (II) the
                 amount which may be taken into account under section
                 415(b)(1)(B) of the Code with respect to such Participant for
                 such Limitation Year, and (B) in all other cases, the lesser of
                 (I) (except as provided in section 16.8(b) for a Top Heavy Plan
                 Year) the product of 1.25 multiplied by the dollar limitation
                 in effect under section 415(b)(1)(A) of the Code for such
                 Limitation Year, or (II) the product of 1.4 multiplied by the
                 amount which may be taken into account under section
                 415(b)(l)(B) of the Code with respect to such Participant for
                 such Limitation Year.

                        (iv) Defined Contribution Plan Fraction means, for any
                 Participant for any Limitation Year, a fraction (A) the
                 numerator of which is the sum of such Participant's Annual
                 Additions (determined as of the end of such Limitation Year)
                 under this Plan and any other qualified defined contribution
                 plans (whether or not terminated) maintained by the Employer
                 for the current and all prior Limitation Years, and (B) the
                 denominator of which is as follows: (I) for Limitation Years
                 ending prior to January 1, 1983, the sum of the lesser of the
                 following amounts for such Limitation Year and for each prior
                 Limitation Year during which such Participant was employed by
                 the Employer: (1) the Maximum Permissible Amount for such
                 Limitation Year (without regard to section 415(c)(6) of the
                 Code), or (2) the amount which may be taken into account under
                 section 415(c)(1)(B) of the Code with respect to such
                 Participant for such Limitation Year, and (II) in all other
                 cases, the sum of the lesser of the following amounts for such
                 Limitation Year and for each prior Limitation during which such
                 Participant was employed by the Employer: (1) (except as
                 provided in section 16.8(b) for a Top Heavy Plan Year) the
                 product of 1.25 multiplied by the Maximum Permissible Amount
                 for such Limitation Year (determined without regard to section
                 415(c)(6) of the Code), or (2) the product of 1.4 multiplied
                 by the amount which may be taken into account under section
                 415(c)(1)(B) of the Code (or section 415(c)(7) of the Code, if
                 applicable) with respect to such Participant for such
                 Limitation Year; provided, however, that the Committee may, at
                 his election, adopt the transition rule set forth in section
                 415(e)(6) of the Code in making the computation set forth in
                 this section 8.2(c)(iv). If the sum of a Participant's Defined
                 Benefit Plan Fraction and Defined Contribution Plan Fraction
                 exceeded 1.0 as of September 30, 1983, then such Participant's
                 Defined Contribution Plan Fraction shall be determined under
                 regulations to be prescribed by the Secretary of the Treasury
                 so that the sum of the fractions does not exceed 1.0.

                        (v) Limitation Year means the Plan Year, provided,
                 however, that if the Employer changes the Limitation Year, the
                 new Limitation Year shall begin on a date within the Limitation
                 Year in which the amendment is made.

                                      -28-
<PAGE>


                        (vi) Maximum Permissible Amount means (A) $25,000 (or
                 such higher amount as may be permitted under section 415(d) of
                 the Code because of cost of living increases) for Limitation
                 Years beginning prior to January 1, 1983, and (B) the greater
                 of (I) $30,000, or (II) 25% of the dollar limitation in effect
                 under section 415(b)(l)(A) of the Code for Limitation Years
                 beginning on or after January 1, 1983 and prior to January 1,
                 1994, and (C) $30,000 (or such higher amount as may be
                 permitted under section 415(d) of the Code because of cost of
                 living increases) for Limitation Years beginning on or after
                 January 1, 1995.

                        (vii) Projected Annual Benefit means a Participant's
                 annual retirement benefit (adjusted to the actuarial equivalent
                 of a straight life annuity if expressed in a form other than a
                 straight life or qualified joint and survivor annuity) under
                 any qualified defined benefit plan maintained by the Employer,
                 whether or not terminated, assuming that the Participant will
                 continue employment until the later of current age or normal
                 retirement age under such plan, and that the Participant's
                 Total Compensation for the Limitation Year and all other
                 relevant factors used to determine benefits under such plan
                 will remain constant for all future Limitation Years.

                 (d) When a Participant's Annual Addition to this Plan must be
         reduced to satisfy the limitations of section 8.2(a) or (b), such
         reduction shall be applied first to Voluntary Contributions; second, to
         Employer Optional Contributions other than Loan Repayment
         Contributions; third, if necessary, to Shares allocated as a result of
         a Loan Repayment Contribution which are included as an Annual Addition;
         fourth, if necessary, to Employer Matching Contributions; fifth, if
         necessary, to Salary Reduction Contributions; and sixth, if necessary,
         to Employer Basic Contributions. The amount by which any Participant's
         Annual Addition to this Plan is reduced shall be returned to the
         Participant (in the case of Voluntary Contributions and Salary
         Reduction Contributions) and allocated in accordance with Articles V
         and VII as a contribution by the Employer in the next succeeding
         Limitation Year (in all other cases).

                 (e) Prior to determining a Participant's actual Total
         Compensation for a Limitation Year, the Employer may determine the
         limitations under this section 8.2 for a Participant on the basis of a
         reasonable estimation of the Participant's Total Compensation for the
         Limitation Year that is uniformly determined for all Participants who
         are similarly situated. As soon as it is administratively feasible
         after the end of the Limitation Year, the limitations of this section
         8.2 shall be determined on the basis of the Participant's actual Total
         Compensation for the Limitation Year.

                 SECTION 8.3 LIMITATIONS ON SALARY REDUCTION CONTRIBUTIONS BY
                             HIGHLY COMPENSATED EMPLOYEES.

                 (a) No Salary Reduction Contributions shall be credited to a
         Participant's Salary Reduction Account if and to the extent that the
         crediting of such a contribution would, for any Plan Year, result in an
         Actual Deferral Percentage for the Employer's Eligible Employees who
         are Highly Compensated Employees which would exceed:

                        (i) for Plan Years that begin before January 1, 1987:

                               (A) if the excess of the Actual Deferral
                        Percentage of such Highly Compensated Employees over
                        that of all other Eligible Employees is three percentage
                        points or less, the Actual Deferral Percentage of such
                        other Eligible Employees multiplied by 2.5, or

                                      -29-
<PAGE>


                               (B) in all other cases, the Actual Deferral
                        Percentage of those Eligible Employees who are not
                        Highly Compensated Employees multiplied by 1.5; and

                 (ii) for Plan Years that begin after December 31, 1986 and
         before January 1, 1997:

                               (A) if the excess of the Actual Deferral
                        Percentage of such Highly Compensated Employees over
                        that of all other Eligible Employees is two percentage
                        points or less, the Actual Deferral Percentage of such
                        other Eligible Employees multiplied by 2, or

                               (B) in all other cases, the Actual Deferral
                        Percentage of those Eligible Employees who are not
                        Highly Compensated Employees multiplied by 1.25; and

                 (iii) for Plan Years that begin after December 31, 1996, except
         to the extent that the Committee elects, in such form, manner and
         subject to such terms and conditions as the Secretary of the Treasury
         may prescribe, to apply section 8.2(a)(ii):

                               (A) if the Actual Deferral Percentage for the
                        Eligible Employees who are not Highly Compensated
                        Employees is less than two percentage points for the
                        immediately preceding Plan Year, the product of such
                        Actual Deferral Percentage multiplied by 2; and

                               (B) if the Actual Deferral Percentage for the
                        Eligible Employees who are not Highly Compensated
                        Employees is eight percentage points or less but two
                        percentage points or more for the immediately preceding
                        Plan Year, the sum of such Actual Deferral Percentage
                        plus two percentage points; and

                               (C) in all other cases, the product of 1.25
                        multiplied by the Actual Deferral Percentage for the
                        Eligible Employees who were not Highly Compensated
                        Employees,

all as determined for the immediately preceding Plan Year. For Plan Years that
begin after December 31, 1996, the Committee has elected to apply section
8.2(a)(ii).

                 (b)(i) For Plan Years that begin prior to January 1, 1987, if
         the making of Salary Reduction Contributions at the rates elected in
         accordance with section 4.1 would cause the limitations of section
         8.2(a)(i) to be exceeded, the rates of contribution elected by
         Participants who are Highly Compensated Employees will be reduced, in
         such manner as the Committee may prescribe, to the extent necessary to
         satisfy the limitations.

                        (ii)(A) For Plan Years that begin after December 31,
                 1986 and before January 1, 1997, if the amount of Salary
                 Reduction Contributions made to the Plan causes the limitations
                 of section 8.2(a) to be exceeded, an amount of Salary Reduction
                 Contributions equal to the amount necessary to produce
                 compliance with such limitations, plus the amount of any income
                 (and minus the amount of any losses) attributable thereto,
                 shall be removed from the Salary Reduction Accounts of the
                 Highly Compensated Employees and disposed of as provided in
                 sections 8.2(b)(ii)(B) and (C).

                               (B) Subject to the limitations of Articles IV,
                        VIII and XV, the Committee may, in its discretion,
                        direct that all or part of the amount of Salary
                        Reduction Contributions determined under section
                        8.2(b)(ii)(A) be recharacterized as Voluntary
                        Contributions and transferred to the Voluntary

                                      -30-
<PAGE>


                        Contribution Accounts of the affected Participants. Such
                        recharacterization shall be effected within 2 1/2 months
                        after the last day of the Plan Year and shall be applied
                        first to the Highly Compensated Employee or Highly
                        Compensated Employees with the highest Actual Deferral
                        Percentage for the Plan Year, until such Actual Deferral
                        Percentage is reduced to be equal to the next highest
                        Actual Deferral Percentage of a Highly Compensated
                        Employee. The procedure described in the preceding
                        sentence shall then be repeated until the entire desired
                        amount has been recharacterized.

                               (C) To the extent that section 8.2(b)(ii)(B) does
                        not apply, the amount determined under section
                        8.2(b)(ii)(A) and the amount of Employer Matching
                        Contributions made under Article V to the Matching
                        Contribution Accounts of such Highly Compensated
                        Employees with respect to such Salary Reduction
                        Contributions, shall be removed from the Accounts of
                        such Highly Compensated Employees not later than the
                        last day of the immediately following Plan Year. The
                        amount removed shall be applied first to the Salary
                        Reduction Account or Salary Reduction Accounts of the
                        Highly Compensated Employee or Highly Compensated
                        Employees with the highest Actual Deferral Percentage
                        for the Plan Year, until such Actual Deferral Percentage
                        is reduced to be equal to the next highest Actual
                        Deferral Percentage of a Highly Compensated Employee.
                        The procedure described in the preceding sentence shall
                        then be repeated until the entire required amount has
                        been removed. 11he entire amount removed from die Salary
                        Reduction Account of any Highly Compensated Employee
                        pursuant to this section 8.2(b)(ii)(C) shall be
                        distributed to the Highly Compensated Employee. Of the
                        amount of Employer Matching Contributions removed from
                        the Matching Contribution Account of such a Highly
                        Compensated Employee, a percentage thereof equal to his
                        vested percentage shall be distributed to the Highly
                        Compensated Employee, and any remaining percentage shall
                        be treated as a Forfeiture and allocated as provided in
                        section 8.1.

                        (iii)(A) For Plan Years that begin after December 31,
                 1996, if the amount of Salary Reduction Contributions made to
                 the Plan causes the limitations of section 8.2(a) to be
                 exceeded, the Employer may make such Employer Basic
                 Contributions pursuant to section 5.3 in an amount sufficient
                 to produce compliance with such limitations. If the Employer
                 does not make Employer Basic Contributions, an amount of Salary
                 Reduction Contributions equal to the amount necessary to
                 produce compliance with such limitations, plus the amount of
                 any income (and minus the amount of any losses) attributable
                 thereto, shall be removed from the Salary Reduction
                 Contribution Accounts of the Highly Compensated Employees and
                 disposed of as provided in section 8.2(b)(iii)(B). The amount
                 necessary to comply with such limitations shall be derived by
                 establishing the highest Actual Deferral Percentage for each
                 Highly Compensated Employee that would produce compliance with
                 such limitations. For this purpose, the Actual Deferral
                 Percentage of Highly Compensated Employees with the highest
                 Actual Deferral Percentage shall be reduced, until such Actual
                 Deferral Percentage is reduced to be equal to the next highest
                 Actual Deferral Percentage of a Highly Compensated Employee.
                 The procedure described in the preceding sentence shall then be
                 repeated until the Actual Deferral Percentages have been
                 reduced to the minimum extent necessary. The aggregate dollar
                 amount of Salary Reduction Contributions that would have to be
                 removed from the Salary Reduction Accounts of Highly
                 Compensated Employees to achieve these reductions shall be the
                 amount which shall be removed and disposed of as provided in
                 section 8.2(b)(iii)(B).

                                      -31-
<PAGE>


         (B) The amount determined under section 8.2(b)(iii)(A) and the amount
of Employer Matching Contributions made under Article V to the Matching
Contribution Accounts of such Highly Compensated Employees with respect to such
Salary Reduction Contributions, shall be removed from the Accounts of such
Highly Compensated Employees not later than the last day of the immediately
following Plan Year. The amount removed shall be applied first to the Salary
Reduction Account or Salary Reduction Accounts of the Highly Compensated
Employee or Highly Compensated Employees with the highest dollar amount of
Salary Reduction Contributions for the Plan Year, until such dollar amount is
reduced to be equal to the next highest dollar amount of a Highly Compensated
Employee. The procedure described in the preceding sentence shall then be
repeated until the entire required amount has been removed. The entire amount
removed from the Salary Reduction Account and the vested amount removed from the
Employer Matching Contribution Account of any Highly Compensated Employee
pursuant to this section 8.2(b)(iii)(B) shall be distributed to the Highly
Compensated Employee. Any amount removed from the Matching Contribution Account
which is not vested shall be treated as a Forfeiture and allocated as provided
in section 8.1.

         (C) For Plan Years that begin before January 1, 1997, the Actual
Deferral Percentage of an Eligible Employee who is a Five Percent Owner or who
is one of the 10 Highly Compensated Employees receiving the highest Total
Compensation shall be the greater of the Actual Deferral Percentage determined
by combining (i) the Salary Reduction Contributions and Total Compensation of
such Eligible Employee and all of his Family Members who are both Eligible
Employees and Highly Compensated Employees, or (ii) the Salary Reduction
Contributions and Total Compensation of such Eligible Employee and all of his,
Family Members who are Eligible Employees. The Family Members of such Eligible
Employees shall be disregarded as separate Employees in determining the Actual
Deferral Percentage both for Eligible Employees who are not Highly Compensated
Employees and for Eligible Employees who are Highly Compensated Employees.

                 SECTION 8.4 LIMITATIONS ON VOLUNTARY CONTRIBUTIONS AND EMPLOYER
                             MATCHING CONTRIBUTIONS BY HIGHLY COMPENSATED.

                 (a) For Plan Years that begin after December 31, 1986, the
         Contribution Percentage of the Highly Compensated Employees who are
         Eligible Employees shall not exceed:

                        (i) for Plan Years that begin before January 1, 1997:

                               (A) if the excess of the Contribution Percentage
                        of such Highly Compensated Employees over that of all
                        other Eligible Employees is 2 percentage points or less,
                        the Contribution Percentage of such other Eligible
                        Employees multiplied by 2; or

                               (B) in all other cases, the Contribution
                        Percentage of those Eligible Employees who are not
                        Highly Compensated Employees multiplied by 1.25; and

                        (ii) for Plan Years that begin after December 31, 1996,
                 unless the Committee elects, in such form and manner and
                 subject to such terms and conditions as the Secretary of the
                 Treasury may prescribe, to apply section 8.3(a)(i):

                               (A) if the Contribution Percentage for Eligible
                        Employees who were not Highly Compensated Employees was
                        less than two percentage points

                                      -32-
<PAGE>


                        for the immediately preceding Plan year, the product of
                        such Contribution Percentage multiplied by 2; and

                               (B) if the Contribution Percentage for Eligible
                        Employees who were not Highly Compensated Employees was
                        at least two percent but not more than eight percent for
                        the immediately preceding Plan Year, the sum of such
                        Contribution Percentage plus two percentage points; and

                               (C) in all other cases, the product of 1.25
                        multiplied by the Contribution Percentage for Eligible
                        Employees who were not Highly Compensated Employees for
                        the immediately preceding Plan Year,

all as determined for the immediately preceding Plan Year. For Plan Years that
begin after December 31, 1996, the Committee has elected to apply section
8.3(a)(i).

                 (b)(i) If the amount of Employer Matching Contributions and
         Voluntary Contributions causes the limitations of section 83(a) to be
         exceeded, an amount of Voluntary Contributions (and, if necessary,
         Employer Matching Contributions) equal to the amount necessary to
         produce compliance with such limitations, plus the amount of any income
         (and minus the amount of any losses) attributable thereto, shall be
         removed from the Voluntary Contribution Accounts and the Matching
         Contribution Accounts of such Highly Compensated Employees not later
         than the last day of the immediately following Plan Year in the order
         of priority and in the manner prescribed in section 8.3(b)(ii) or
         (iii), as applicable.

                        (ii) For Plan Years that begin before January 1, 1997,
                 the amount determined under section 8.3(b)(i) shall be applied
                 first to the Account of the Highly Compensated Employee or
                 Highly Compensated Employees with the highest Contribution
                 Percentage for the Plan Year, in the following order of
                 priority:

                               (A) first, to Voluntary Contributions, to the
                        extent necessary to satisfy the limitations of section
                        8.3(a); and

                               (B) second, if necessary, to Employer Matching
                        Contributions, to the extent necessary to satisfy the
                        limitations of section 8.3(a)

until such Contribution Percentage is reduced to be equal to the next highest
Contribution Percentage of a Highly Compensated Employee. The procedure
described in the preceding sentence shall then be repeated until the entire
required amount has been removed. The entire amount removed from the Voluntary
Contribution Account of a Highly Compensated Employee shall be returned to the
Highly Compensated Employee. Of the amount removed from the Matching
Contribution Account of a Highly Compensated Employee, a percentage thereof
equal to such Highly Compensated Employee's vested percentage shall be
distributed to the Highly Compensated Employee, and any remaining percentage
shall be treated as a Forfeiture and allocated as provided in section 9.3.

                        (iii) For Plan Years beginning after December 31, 1996,
                 the amount determined under section 8.3(b)(i) shall be applied
                 first to the Account of the Highly Compensated Employee or
                 Highly Compensated Employees with the highest dollar amount of
                 Voluntary Contributions and Employer Matching Contributions for
                 the Plan Year, in the following order of priority:

                                      -33-
<PAGE>


                               (A) first, to Voluntary Contributions, to the
                        extent necessary to satisfy the limitations of section
                        8.3(a); and

                               (B) second, if necessary, to Employer Matching
                        Contributions, to the extent necessary to satisfy the
                        limitations of section 8.3(a);

until such dollar amount is reduced to be equal to the next highest dollar
amount of a Highly Compensated Employee. The procedure described in the
preceding sentence shall then be repeated until the entire required amount has
been removed. The entire amount removed from the Voluntary Contribution Account
of a Highly Compensated Employee shall be returned to the Highly Compensated
Employee. Of the amount removed from the Matching Contribution Account of Highly
Compensated Employee, a percentage thereof equal to such Highly Compensated
Employee's vested percentage shall be distributed to the Highly Compensated
Employee, and any remaining percentage shall be treated as a Forfeiture and
allocated as provided in section 9.3.

                 (c) In addition to the limitations of sections 8.2(a) and
         8.3(a), for any Plan Year beginning after December 31, 1988 and before
         January 1, 1992 (or, if later, the date which is 60 days after the
         publication by the Internal Revenue Service of final regulations under
         section 401(m)(9)(A) of the Code), the sum of the Actual Deferral
         Percentage of the Highly Compensated Employees who are Eligible
         Employees and the Actual Contribution Percentage of such Highly
         Compensated Employees, determined after any transfers made pursuant to
         section 8.2(c) or any distribution made pursuant to sections 8.2(d) or
         8.3(b) for such Plan Year, shall not exceed the greater of

                        (i)(A) 1.25 multiplied by the greater of (I) the Actual
                 Deferral Percentage of those Eligible Employees who are not
                 Highly Compensated Employees, or (II) the Actual Contribution
                 Percentage of such Eligible Employees; plus

                               (B) 2 percentage points above the lesser of (1)
                        the Actual Deferral Percentage of those Eligible
                        Employees who are not Highly Compensated Employees or
                        (II) the Actual Contribution Percentage of such Eligible
                        Employees; provided, however that the amount determined
                        in this section 8.3(c)(i)(B) shall not exceed the lesser
                        of the amount under section 8-3(c)(i)(A)(I) or (10
                        multiplied by 2; or

                        (ii)(A) 1.25 multiplied by the lesser of (I) of the
                 Actual Deferral Percentage of those Eligible Employees who are
                 not Highly Compensated Employees, or (II) the Actual
                 Contribution Percentage of such Eligible Employees; plus

                               (B) 2 percentage points above the greater of (I)
                        the Actual Deferral Percentage of those Eligible
                        Employees who are not Highly Compensated Employees, or
                        (II) the Actual Contribution Percentage of such Eligible
                        Employees; provided, however, that the amount determined
                        under this section 8.3(c)(ii)(B) shall not exceed the
                        greater of the amount under section 8.3(c)(ii)(B)(I) or
                        (II) multiplied by 2.

For any Plan Year beginning after December 31, 1991 (or, if later, the date
which is 59 days after the publication by the Internal Revenue Service of final
regulations under section 401(m)(9)(A) of the Code), the sum of the Actual
Deferral Percentage of the Highly Compensated Employees who are Eligible
Employees and the Actual Contribution Percentage of such Highly Compensated
Employees, determined after any transfers made pursuant to section 8.2(c) or any
distributions made pursuant to sections 8.2(d) or 8.3(b) for such Plan Year,
shall not exceed the sum of the amounts determined under sections 8.3(c)(1)(A)
and (B).

                                      -34-
<PAGE>


                 (d) If, for any Plan Year to which section 8.3(c) is
         applicable, the limitations of section 8.3(c) are exceeded, an amount
         of the Voluntary Contributions of the Highly Compensated Employees who
         are Eligible Employees (and, if necessary, Employer Matching
         Contributions credited to such Highly Compensated Employees) plus the
         amount of income (and minus the amount of any losses) attributable
         thereto shall be removed from the Voluntary Contribution Accounts (and,
         if necessary, the Matching Contribution Accounts) of such Highly
         Compensated Employees no later than the last day of the immediately
         following Plan Year. The amount to be so removed shall be determined
         and distributed in the manner set forth in section 8.3(b), except that
         references to section 8.3(a) therein shall be read as references to
         section 8.3(c).

                 (e) For Plan Years that begin before January 1, 1997, the
         Contribution Percentage of an Eligible Employee who is a Five Percent
         Owner or who is one of the 10 Highly Compensated Employees receiving
         the highest Total Compensation shall be the greater of the Contribution
         Percentage determined by combining (i) the Voluntary Contributions,
         Employer Matching Contributions and Total Compensation of such Eligible
         Employee and all of his Family Members who are both Eligible Employees
         and Highly Compensated Employees, or (ii) the Voluntary Contributions,
         Employer Matching Contributions and Total Compensation of such Eligible
         Employee and all of his Family Members who are Eligible Employees. The
         Family Members of such Eligible Employees shall be disregarded as
         separate Employees in determining the Contribution Percentage both for
         Eligible Employees who are not Highly Compensated Employees and for
         Eligible Employees who are Highly Compensated Employees.

                 SECTION 8.5 LIMITATIONS ON CONTRIBUTIONS CREDITED TO
                             PARTICIPANTS' SALARY REDUCTION ACCOUNTS.

                 (a) The Salary Reduction Contributions credited to the Salary
         Reduction Account of a Participant for a calendar year that begins
         after December 31, 1986 shall not exceed $7,000 (or such higher amount
         as may be permitted under section 402(g)(5) of the Code). In the event
         that the Salary Reduction Contributions credited to the Salary
         Reduction Account of a Participant for a calendar year exceed $7,000
         (or such higher amount as may be permitted under section 402(g)(5) of
         the Code), the amount of such excess Salary Reduction Contributions,
         plus the amount of any income (and minus the amount of any losses)
         attributable thereto, shall be distributed to such Participant no later
         than April 15th of the calendar year following the calendar year in
         which such Salary Reduction Contributions were made.

                 (b) In addition to the limitations of section 6.4(a), the sum
         of the Salary Reduction Contributions credited to the Salary Reduction
         Account of a Participant for a calendar year, when added to the amount
         of any other elective deferrals by such Participant for such calendar
         year under any other qualified cash or deferred arrangement under
         section 401(k) of the Code, any qualified annuity plan under section
         403 of the Code, or any simplified employee pension plan under section
         408(k) of the Code, shall not exceed $7,000 (or such higher amount as
         may be permitted under section 402(g) of the Code). If, and to the
         extent, necessary to comply with the limitations of this section 6.4(b)
         for a calendar year, an Employee may, by notice to the Committee given
         in such form and manner as the Committee may prescribe, direct that all
         or a portion of his Salary Reduction Contributions credited to his
         Salary Reduction Account for such calendar year, plus the amount of any
         income (and minus the amount of any losses) attributable thereto, be
         distributed to him. Such a notice shall be given not later than March
         1st of the calendar year following the calendar year to which the
         notice relates, and the distribution pursuant to such notice shall be
         made not later than April 15th of such following calendar year.

                                      -35-
<PAGE>



         (c) For purposes of this section 8.5, any Retroactive Salary Reduction
Contributions shall be treated as Salary Reduction Contributions for the
calendar year included in the period of Qualified Military Service for which
they are made and not for the calendar year during which they are made.

                                   ARTICLE IX

                                    VESTING

                 SECTION 9.1 VESTING.

                 The balance inherited to each person's Basic Contribution
Account, Matching Contribution Account, Rollover Account, Profit Sharing
Account, Voluntary Account and Tappan Zee ESOP Account shall be 100% vested and
non-forfeitable at all times. Subject to the provisions of section 9.5(a), the
balance credited to each Employee's Optional Contribution Account shall become
vested in accordance with the following schedule:

PERIOD OF SERVICE                   VESTED
     IN YEARS                     PERCENTAGE
-----------------                 ----------
0 but less than 2                        0%
2 but less than 3                       30%
3 but less than 4                       40%
4 but less than 5                       55%
5 but less than 6                       70%
6 but less than 7                       85%
7 or more                              100%

                 SECTION 9.2 VESTING ON DEATH, DISABILITY OR RETIREMENT.

                 Any previously unvested portion of the remainder of the balance
credited to the Account of a Participant or of a person who is a Former
Participant solely because he is excluded from participation under section
2.1(b) shall become fully vested in him immediately upon attainment of the later
of age 65 or the fifth anniversary of participation in the Plan while still
employed by the Employer or any Affiliated Employer, or, if earlier, upon the
termination of his participation by reason of death, Disability, or Retirement.

                 SECTION 9.3 FORFEITURES ON TERMINATION OF EMPLOYMENT.

                 Upon the termination of employment of a Participant or Former
Participant for any reason other than death, Disability, Retirement, that
portion of the balance credited to his Account which is not vested at the date
of such termination shall be forfeited (a) as of the last Valuation Date for the
Plan Year in which a Break in Service occurs, if the Participant or Former
Participant has received a distribution of any portion of the vested balance in
his Account and (b) as of the last Valuation Date for the Plan Year in which the
fifth of five consecutive Breaks in Service occur, in all other cases. The
proceeds of such forfeitures, less amounts, if any, required to be credited
because of re-employment pursuant to section 9.4, shall be treated as
Forfeitures and shall be allocated among

                                      -36-
<PAGE>


the Eligible Participants for the Plan Year in which the Forfeitures arise in
the same manner as Employer Optional Contributions for such Plan Year. No
Financed Shares allocated to a Participant's Account shall be forfeited until
all other amounts credited to the Participant's account that are not vested have
been forfeited.

                 SECTION 9.4 AMOUNT CREDITED UPON RE-EMPLOYMENT.

                 (a) If an Employee forfeited any amount of the balance credited
to his Account upon his termination of employment with the Employer, and is
re-employed prior to the occurrence of five consecutive Breaks in Service, then:

                        (i) an amount equal to the Fair Market Value of the
                 Shares forfeited, determined as of the date of forfeiture; and

                        (ii) the amount credited to his General Investment
                 Account that was forfeited, determined as of the date of
                 forfeiture;

shall be credited back to his Account from the proceeds of Forfeitures which are
redeemed pursuant to section 9.3 during the Plan Year in which he is
re-employed, unless such proceeds are insufficient, in which case the Employer
shall make an additional contribution in the amount of such deficiency. No such
restoration shall be made unless the Participant repays the amount of any
distribution made to him during the period beginning with the date if his
termination of employment and ending with the end of the second Plan Year to
begin after such termination of employment and such repayment occurs and such
repayment occurs within five years after recommencing participation in the Plan.

                 (b) If a Former Participant receives a distribution from his
Optional Contribution Account after his termination of employment but before he
incurs five (5) consecutive Breaks in Service, then immediately prior to the
first such distribution, the balance credited to his Optional Contribution
Account shall be placed in a separate account, and the vested interest of such
Former -Participant in such separate account at any relevant time shall be an
amount "X" determined by applying the formula:

                           X = P x [AB+(R)xD)]-(R)xD)

where "P" is the vested percentage at the relevant time, "AB" is the separate
account balance at the relevant time, "R" is the ratio of the separate account
balance at the relevant time to the separate account balance immediately after
the distribution, and "D" is the amount of the distribution. If such Former
Participant again performs an Hour of Service before incurring five (5)
consecutive Breaks in Service, his separate account or accounts shall be
maintained; if his Optional Contribution Account and separate account
subsequently become 100% vested, the separate account shall be merged into his
Optional Contribution Account. An Employee's Years of Service subsequent to five
(5) consecutive Breaks in Service shall be disregarded for purposes of
determining his vested interest in his separate account attributable to Employer
Optional Contributions that accrued prior to such five (5) consecutive Breaks in
Service.

                 SECTION 9.5 ACCELERATED VESTING UPON CHANGE IN CONTROL.

                 (a) The balance credited to each Participant's Optional
Contribution Account shall become 100% vested upon the occurrence of a Change in
Control of the Employer while the Participant is an Employee.


                                      -37-
<PAGE>


         (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
                 l3d-3 promulgated under the Exchange Act) by a person who, on
                 January 1, 1994, beneficially owned (within the meaning of Rule
                 l3d-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 (within the
                 meaning of Rule l3d-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.

                                   ARTICLE X

                                 THE TRUST FUND

                 SECTION 10.1 THE TRUST FUND.

                 The Trust Fund shall be held and invested under the Trust
Agreement with the Trustee. The provisions of the Trust Agreement shall vest
such powers in the Trustee as to investment, control and disbursement of the
Trust Fund, and such other provisions not inconsistent with the Plan, including
provision for the appointment of one or more "investment managers" within the
meaning of section 3(38) of ERISA to manage and control (including acquiring and
disposing of) all or any of the assets

                                      -38-
<PAGE>


of the Trust Fund, as the Board may from time to time authorize. Except as
required by ERISA, no bond or other security shall be required of any Trustee at
any time in office.

                 SECTION 10.2 INVESTMENTS.

                 (a) Except to the extent provided to the contrary in sections
10.3 and 10.4, the Trust Fund shall be invested in:

                        (i) Shares;

                        (ii) units of interest in such Investment Funds as may
                 be established from time to time by the Committee; and

                        (iii) such other investments as may be permitted under
                 the Trust Agreement;

in such proportions as shall be determined by the Committee or, if so provided
under the Trust Agreement, as directed by one or more investment managers or by
the Trustee, in its discretion; provided, however, that the investments of the
Trust Fund attributable to the Optional Contribution Accounts and Basic
Contribution Accounts of Participants, Former Participants and Beneficiaries
shall be invested primarily in Shares. Notwithstanding the immediately preceding
sentence, the Trustee may temporarily invest the Trust Fund in short-term
obligations of, or guaranteed by, the United States Government or an agency
thereof, or may retain uninvested, or sell investments to provide, amounts of
cash required for purposes of the Plan.

                 SECTION 10.3 DIVERSIFICATION OF INVESTMENTS.

                 (a) Notwithstanding section 10.2, each Qualified Participant
may:

                        (i) during the first 90 days of each of the first four
                 Plan Years to begin after the Plan Year in which he first
                 becomes a Qualified Participant, elect that such percentage of
                 the balance credited to his Basic Contribution Account and
                 Optional Contribution Account as he may specify, but in no
                 event more than 25% of the balance credited to his Basic
                 Contribution Account and Optional Contribution Account, be
                 invested in one or more of the Investment Funds; and

                        (ii) during the first 90 days of the fifth Plan Year to
                 begin after the Plan Year in which he first becomes a Qualified
                 Participant or of any Plan Year thereafter, elect that such
                 percentage of the balance credited to his Basic Contribution
                 Account and Optional Contribution Account as he may specify,
                 but in no event more than 50% of the balance credited to his
                 Basic Contribution Account and Optional Contribution Account,
                 be invested in one or more of the Investment Funds.

For purposes of an election under this section 10.3, the balance credited to a
Participant's Basic Contribution Account and Optional Contribution Account shall
be the balance credited to his Basic Contribution Account and Optional
Contribution Account determined as of the last Valuation Date to occur in the
Plan Year immediately preceding the Plan Year in which such election is made.

                 (b) An election made under section 10.3(a) shall be made in
         writing, in the form and manner prescribed by the Committee, and shall
         be filed with the Committee during the election period specified in
         section 10.3(a). As soon as is practicable following the end of the
         election period during which such election is made, the Committee shall
         take such actions as are necessary to cause

                                      -39-
<PAGE>


the specified percentage of the balance credited to the Account of the Qualified
Participant making the election to be invested in the specified Investment
Funds. Any investments made pursuant to this section 10.3 shall be specifically
allocated to the General Investment Account of the Qualified Participant for
whom they are made.

                 (c) An election made under section 10.3(a) may be changed or
revoked at any time during the election period described in section 10.3(a)
during which it is initially made, during any subsequent election period
described in section 10.3(a) or, upon at least 15 days' advance written notice
given in the form and manner prescribed by the Committee, as of the first day of
any calendar quarter of any Plan Year that begins after the Participant first
becomes a Qualified Participant. In no event, however, shall any election under
this section 10.3 result in more than 25% of the balance credited to the
Participant's Account being invested at the direction of the Participant, if
such election is made during a Plan Year to which section 10.3(a)(i) applies, or
result in more than 50% of the balance credited to the Participant's Account
being invested at the direction of the Participant, if such election is made
during the Plan Year to which section 10.3(a)(ii) applies or thereafter.

                 SECTION 10.4 SELF-DIRECTION OF CERTAIN ACCOUNTS.

         Each Participant, Former Participant and Beneficiary of a deceased
Former Participant shall have the right to direct the manner in which the
balances credited to his Salary Reduction Account, Matching Contribution Accoun4
Rollover Contribution Account, Voluntary Contribution Account and Profit Sharing
Account are invested among the Plan's Investment Funds in accordance with
procedures established and communicated from time to time by the Committee.

                 SECTION 10.5 INFORMATION REGARDING INVESTMENT FUNDS.

                 (a) With respect to each Investment Fund, the Committee shall
furnish or cause to be furnished to each Participant, Former Participant and
Beneficiary of a deceased Former Participant, upon request, sufficient
information to make informed decisions with regard to the Investment Funds and
the incidents of ownership with respect to the Investment Funds, including,
without limitation:

                        (i) an explanation that the Plan is intended to
                 constitute a participant directed individual account plan
                 described in section 404(c) of ERISA, and that the fiduciaries
                 of the Plan may be relieved of liability for any losses which
                 are the direct and necessary result of investment directions
                 given by a Participant, Former Participant or Beneficiary;

                        (ii) a description of the Investment Funds, a general
                 description of the investment objectives and risk and return
                 characteristics of each and information relating to the type
                 and diversification of assets comprising the portfolio of each;

                        (iii) identification of any designated investment
                 managers;

                        (iv) an explanation of the circumstances under which
                 investment instructions may be given with respect to each
                 Investment Fund and an explanation of any specified limitations
                 on such instructions under the Plan, including any
                 restrictions on transfers to or from an Investment Fund and
                 any restrictions on the exercise of voting, tender and similar
                 rights appurtenant to an investment in each Investment Fund;

                                      -40-
<PAGE>


                        (v) a description of any transaction fees and expenses
                 which affect a Participant's, Former Participant's or
                 Beneficiary's Account in connection with purchases or sales of
                 interests in each Investment Fund;

                        (vi) the name, address and telephone number of the
                 person designated by the Committee to be responsible, upon
                 request made, for providing the information described in
                 section 10.5(b) and a description of such information;

                        (vii) in the case of an Investment Fund that is
                 registered under the Securities Act of 1933, as amended, a copy
                 of the most recent prospectus relating thereto, such prospectus
                 to be provided to a Participant, Former Participant or
                 Beneficiary either immediately before or immediately after such
                 person's first investment in such Investment Fund; and

                        (viii) subsequent to an investment in an Investment
                 Fund, any materials provided to the Plan relating to the
                 exercise of voting, tender or similar rights which are
                 incidental to the holding of an interest in such Investment
                 Fund, to the extent that the exercise of such rights is passed
                 through to Participants, Former Participants and Beneficiaries
                 with an interest in the Investment Fund.

                 (b) In addition to the information furnished in accordance with
         section 10.4(a), the Committee shall furnish, or cause to be furnished,
         either automatically or upon request by a Participant, Former
         Participant or Beneficiary of a deceased Former Participant:

                        (i) a description of the annual operating expenses of
                 each Investment Fund which reduce the rate of return to
                 Participants, Former Participants or Beneficiaries, and the
                 aggregate amount of such expenses for a specified period of
                 time expressed as a percentage of the average net assets of
                 such Investment Period over the same period;

                        (ii) copies of any prospectuses, financial statements
                 and reports, and of any other materials relating to any
                 Investment Fund, provided to the Plan;

                        (iii) a list of the assets comprising the portfolio of
                 each Investment Fund which constitute plan assets within the
                 meaning of 29 C.F.R. ss.2510.3-101, the value of each such
                 assets (or the portion of the Investment Fund which it
                 comprises) and, with respect to each such asset which is a
                 fixed rate investment contract issued by a bank, savings and
                 loan association or insurance company, the name of the issuer
                 of the contract, the term of the contract and the rate of
                 return on the contract;

                        (iv) information concerning the value of the shares or
                 units of each Investment Fund, as well as the past and current
                 investment performance of each Investment Fund, determined on a
                 reasonable and consistent basis; and

                        (v) information concerning the value of shares or Units
                 in each Investment Fund held in the Account of the Participant,
                 Former Participant or Beneficiary;

         all on the basis of the most current information available to the
         Committee or its designee.

                 (c) The Committee shall also furnish or cause to be furnished,
         upon request or otherwise to any Participant, Former Participant or
         Beneficiary such other information and take or

                                      -41-
<PAGE>




                 (b) Dividends paid with respect to Shares allocated to a
         person's Account shall be credited to such person's Account. Cash
         dividends credited to a person's Account shall be, at the direction of
         the Committee, either: (i) held in such Account and invested in
         accordance with sections 10.2 and 11.2; (ii) distributed immediately to
         such person; (iii) distributed to such person within 90 days of the
         close of the Plan Year in which such dividends were paid; or (iv) used
         to make payments of principal or interest on a Share Acquisition Loan;
         provided, however, that the Fair Market Value of Financed Shares
         released from the Loan Repayment Account equals or exceeds the amount
         of the dividend.

                 SECTION 12.3 VOTING RIGHTS.

                 (a) Each person shall direct the manner in which all voting
         rights appurtenant to Shares allocated to his Account will be
         exercised, provided that such Shares were allocated to his Account as
         of the applicable record date. Such person shall, for such purpose, be
         deemed a "named fiduciary" within the meaning of section 402(a)(2) of
         ERISA. Such a direction shall be given by completing and filing with
         the inspector of elections, the Trustee or such other person who the
         Employer as the Committee shall designate, at least 10 days prior to
         the date of the meeting of holders of Shares at which such voting
         rights will be exercised, a written direction in the form and manner
         prescribed by the Committee. The inspector of elections, the Trustee or
         such other person designated by the Committee shall tabulate the
         directions given on a strictly confidential basis, and shall provide
         the Committee with only the final results of the tabulation. The final
         results of the tabulation shall be followed by the Committee in
         directing the Trustee as to the manner in which such voting rights
         shall be exercised. The Committee shall make a reasonable effort to
         furnish, or cause to be furnished, to each person for whom an Account
         is maintained all annual reports, proxy materials and other information
         known by the Committee to have been furnished by the issuer of the
         Shares, or by my solicitor of proxies, to the holders of Shares.

                 (b) To the extent that any person shall fail to give
         instructions with respect to the exercise of voting rights appurtenant
         to Shares allocated to his Account, the Trustee shall cause such Shares
         to be voted in its discretion.

                 (c) The voting rights appurtenant to Financed Shares shall be
         exercised by the Trustee in its discretion.

                 SECTION 12.4 TENDER OFFERS.

                 (a) Each person shall direct whether Shares allocated to his
         Account will be delivered in response to any Tender Offer. Such person
         shall for such purpose, be deemed a "named fiduciary" within the
         meaning of section 402(a)(2) of ERISA. Such a direction shall be given
         by completing and filing with the Trustee or such other person who
         shall be independent of the Employer as the Committee shall designate,
         at least 10 days prior to the latest date for exercising a right to
         deliver Shares pursuant to such Tender Offer, a written direction in
         the form and manner prescribed by the Committee. The Trustee or other
         person designated by the Committee shall tabulate the directions given
         on a strictly confidential basis, and shall provide the Committee with
         only the final results of the tabulation. The final results of the
         tabulation shall be followed by the Committee in directing the number
         of Shares to be delivered. The Committee shall make a reasonable effort
         to furnish, or cause to be furnished, to each person for whom a Account
         is maintained, all information known by the Committee to have been
         furnished by the issuer or by or on behalf of any person making such
         Tender Offer, to the holders of Shares in connection with such Tender
         Offer.

                                      -42-

<PAGE>




                 (b) To the extent that any person shall fail to give
         instructions with respect to Shares allocated to his Account the
         Trustee shall determine whether to tender or otherwise offer for
         purchase, exchange or redemption such Shares in its discretion.

                 (c) In the case of any Tender Offer, any Financed Shares held
         in the Loan Repayment Account shall be dealt with by the Trustee in its
         discretion.

                                  ARTICLE XIII

                              WITHDRAWALS AND LOANS

                 SECTION 13.1 WITHDRAWALS DURING EMPLOYMENT.

                 (a) Each Participant or Former Participant in the active
         employment of the Employer shall be entitled, subject to the
         restrictions of section 13.2 (applicable in the case of a loan to a
         Participant or Former Participant), to withdraw once during each
         calendar quarter.

                        (i) if he has attained age 59 1/2, all or any portion
                 of the balance credited to his Salary Reduction Account; and

                        (ii) (A) if, as of the date of the withdrawal, a
                 Hardship (as determined under section 13.1(a)(ii)(B) has
                 occurred, an amount necessary to alleviate the Hardship (as
                 determined under section 13.1(a)(ii)(B) but in no event more
                 than (I) the entire balance credited to the Participant's
                 Salary Reduction Account,or (II) if less and the withdrawal is
                 made after December 31, 1988 the sum of the balance credited to
                 the Participant's Salary Reduction Account as of December 31,
                 1988 and not previously distributed plus the amount of Salary
                 Reduction Contributions made by the Participant after December
                 31, 1988 and not previously distributed, provided, however,
                 that no Participant or Former Participant may obtain more than
                 one withdrawal during any period of two years.

                        (B)(I) A Hardship shall have occurred with respect to a
                 Participant or Former Participant if:

                        (I) Prior to January 1, 1989, the Participant or Former
                 Participant has an immediate and heavy need for funds:

                               (a) to pay medical expenses of the Participant
                        or Former Participant or his spouse or dependents; and

                               (b) to pay expenses for the education of the
                        Participant or Former Participant or his spouse or
                        dependents; and

                               (c) to purchase a primary residence for the
                        Participant or Former Participant; and

                        (2) After December 31, 1988, the Participant or Former
                  Participant has a need for funds:

                                      -43-
<PAGE>



                               (a) to pay medical expenses (within the meaning
                        of section 213(d) of the Code) of the Participant or
                        Former Participant or his spouse or dependents (within
                        the meaning of section 152 of the Code; or

                               (b) to pay tuition costs for the next semester
                        or quarter of post-secondary education for the
                        Participant or Former Participant or his spouse or
                        dependents (within the meaning of section 152 of the
                        Code); or

                               (c) to pay the expenses (excluding mortgage
                        payments) of purchasing the Participant's or Former
                        Participant's principal residence; or

                               (d) to prevent the eviction of the Participant
                        or Former Participant from his principal residence or
                        to prevent foreclosure on the mortgage of the
                        Participant's or Former Participant's principal
                        residence; or

                               (e) to be used in such other circumstances as
                        the Commissioner of Internal Revenue shall determine
                        to qualify as a presumptive immediate and heavy
                        financial need.

                        (II) A withdrawal from a Participant's or Former
                 Participant's Salary Reduction Account shall be deemed
                 necessary to alleviate a Hardship if:

                               (I) In the case of a withdrawal made prior
                        to January 1, 1989:

                               (a) the amount withdrawn does not exceed the
                        expense which constitutes the Hardship; and

                               (b) payment of the expense which constitutes the
                        Hardship may not be deferred; and

                               (c) the expense which constitutes the Hardship
                        is substantial in amount; and

                               (d) any medical expenses which constitute a
                        Hardship are ineligible for reimbursement through
                        insurance or otherwise.

                                (2) In the case of a withdrawal made after
                        December 31, 1989, either:

                                (a) the Participant or Former Participant
                        certifies, in a written certification on which the
                        Committee may reasonably rely, that the Hardship cannot
                        be relieved:

                                       (i) through reimbursement or compensation
                                 by insurance or otherwise; or

                                       (ii) by reasonable liquidation of the
                                 assets of the Participant or Former
                                 Participant, or assets of the Participant's or
                                 Former Participant's spouse or dependents
                                 (within the meaning of section 152 of the Code)
                                 that are reasonably available to the
                                 Participant

                                      -44-
<PAGE>



                                 or Former Participant, except to the extent
                                 that such liquidation would itself give rise
                                 to a Hardship; or

                                        (iii) by ceasing to make Voluntary
                                 Contributions and Salary Reduction
                                 Contributions to the Plan or employee
                                 contributions under any other qualified or
                                 non-qualified plan maintained by the Employer
                                 or any other employer; or

                                        (iv) by (a) taking payments which are
                                 then available under any other qualified or
                                 non-qualified plan maintained by the Employer
                                 or any other employer, or (b) obtaining loans
                                 under any qualified or non-qualified plan
                                 maintained by the Employer or any other
                                 employer that are not, at the time of
                                 origination, treated as taxable distributions
                                 under section 72(p) of the Code, or (c)
                                 borrowing from commercial sources on
                                 reasonable commercial terms; or

                                 (B) The Participant or Former Participant
                        satisfies such other conditions as the Commissioner of
                        Internal Revenue shall determine to be justification
                        for a presumption that a withdrawal is necessary to
                        alleviate a Hardship.

                        (e) Withdrawals made pursuant to this section 13.2 shall
                 be made pursuant to a written request (which request shall be
                 irrevocable), in the form and manner prescribed by the
                 Committee, and for an amount not less than $500 and shall be
                 effected as soon as practicable after receipt of the request
                 by liquidating all or a portion of the interests of such
                 Participant or Former Participant in such Investment Funds as
                 may be specified in his withdrawal request; provided, however,
                 if proportions are not specified, the withdrawal shall be made
                 proportionately from all Investment Funds other than Shares
                 represented in the Account from which the withdrawal is made
                 and no Shares shall be sold unless necessary to fund the
                 withdrawal; and

                 SECTION 13.2 LOANS TO PARTICIPANTS.

                 (a) To the extent permitted under and subject to the terms and
         conditions of a loan policy established by the Committee, an individual
         may borrow from his Accounts. Any such loan policy shall conform to the
         following requirements:

                        (i) Unless the policy expressly provides otherwise, only
                 Participants and Former Participants who are Employees may
                 obtain loans under the Plan;

                        (ii) The maximum loan permitted shall be the lesser of
                 (A) 50% of the vested portion of the borrower's Accounts, or
                 (ii) $50,000, reduced by the highest aggregate outstanding
                 principal balance on all other loans outstanding to the
                 individual under the Plan on any day during the one-year period
                 ending on the day before the date of the loan. The minimum loan
                 permitted shall not be in excess of $1,000.

                        (ii) The period of repayment for any loan shall be
                 arrived at by mutual agreement between the Committee and the
                 borrower, but such period in no event shall exceed 5 years
                 (except if the loan is used to acquire any dwelling unit that
                 within a reasonable time is to be used as the principal
                 residence of the borrower, in which case a loan may have a
                 maximum term established by the Committee of up to 30 years).

                                      -45-
<PAGE>




                        (iii) The borrower shall execute a promissory note for
                 the amount of the loan (including interest), payable to the
                 order of the Trustee and, as collateral security therefor,
                 shall pledge to the Trustee and grant the Trustee a security
                 interest in his vested Account balance.

                        (iv) Each loan shall bear interest at the prevailing
                 commercial rate, which shall be determined by the Committee
                 based upon market conditions for loans of similar duration and
                 quality.

                        (v) To the extent permitted by applicable law, the
                 Committee may require, as a condition of approving a loan, that
                 the borrower make payments thereon by payroll deduction.

                        (vi) Payments of interest and principal on a loan shall
                 be made in substantially level installments, at least
                 quarterly, in such amounts that the loan will be repaid over
                 the term of the loan; provided, however, that the Committee
                 may, at the request of the borrower, suspend all payments of
                 principal and interest otherwise due during a period of
                 service in the uniformed services of the United States
                 (within the meaning of chapter 43 of Title 38 of the United
                 States Code). In such event, no interest shall accrue during
                 the period of suspension, the maturity date of the loan shall
                 be extended by a period equal in length to the period of
                 suspension, and loan payments shall be resumed promptly at the
                 conclusion of the suspension period.

                        (vii) A borrower may prepay his loan on any Valuation
                 Date, provided he pays the full amount of the loan plus all
                 interest accrued and unpaid thereon. Subject to such other
                 terms and conditions as may be established from time to time by
                 the Committee, a borrower may prepay a portion of his loan on
                 any Valuation Daft.

                        (viii) Unless the policy expressly provides otherwise,
                 termination of the borrower's employment with all Participating
                 Employers and Affiliated Employers shall constitute a default
                 by the borrower resulting in the entire outstanding principal
                 balance of his loan becoming immediately due and payable.

                 (b) Funds to extend a loan shall be obtained by liquidating all
         or a portion of the borrower's interest in the Plan, in the following
         order of priority (i) uninvested cash; (ii) interests in Investment
         Funds other than Shares, in such proportions as the borrower may
         specify; and (iii) Shares. In exchange therefor, the borrower's
         promissory note shall be held as a special investment of his Accounts.
         All payments of principal and interest shall be reinvested in the
         Investment Funds for the borrower's Accounts.

                 (c) Upon default by a borrower in any of the terms of a loan
         under this section 13.2, or if the employment of a Participant
         terminates when a loan is outstanding to him under this section 13.2,
         the loan will, at the option of the Committee, become immediately due
         and payable. In such case, if the Participant's employment has been
         terminated or if the Committee has tried unsuccessfully to collect the
         debt through judicial proceedings, then the Committee may charge the
         unpaid balance thereon against the borrower's vested interest in his
         Accounts; provided, however, that the Committee shall not charge such
         unpaid loan against a borrower's Accounts until, and then only to the
         extent that, a borrower is entitled to elect a distribution under this
         Article XIII. Notwithstanding the foregoing, in the event that a
         borrower fails to make a payment of principal or interest when due,
         unless the terms of the documents governing the loan provide otherwise,
         the entire principal amount of the loan plus accrued interest shall,
         for federal income tax purposes, be deemed distributed to the borrower
         on the

                                      -46-
<PAGE>




         last business day of the calendar quarter that includes the earlier of
         (i) the last day of any grace period established under the documents
         governing the loan or (ii) the last day of the calendar quarter
         following the calendar quarter in which the required payment was due.
         Such deemed distribution shall not relieve the borrower of his
         repayment obligation unless the amount thereof is charged against the
         borrower's vested interest in his Accounts.

                 (d) (i) In the event that a borrower fails to make a payment of
         principal or interest when due, unless the terms of the documents
         governing the loan provide otherwise, the entire principal amount of
         the loan plus accrued interest shall, for federal income tax purposes,
         be deemed distributed to the borrower on the last business day of the
         calendar quarter that includes the earlier of (i) the last day of any
         grace period established under the documents governing the loan of (ii)
         the last day of the calendar quarter following the calendar quarter in
         which the required payment was due. Such deemed distribution shall not
         relieve the borrower of his repayment obligation, and interest shall
         continue to accrue in accordance with the terms of the loan, unless and
         until the amount thereof is charged against the borrower's vested
         interest in his Account or is repaid in full; provided, however, that
         no interest accruing after the date of the deemed distribution shall
         give rise to a further deemed distribution. In no event shall any
         deemed distribution be treated as a non-taxable distribution of
         employee contributions.

                 (ii) In the event, and on and as of the date, that the
         outstanding amount of any loan is deemed distributed to the borrower,
         the Committee shall charge the entire unpaid balance of such loan,
         together with any interest accrued and unpaid thereon, against the
         borrower's vested interest in his Account. Whenever the unpaid balance
         of a loan (plus any interest accrued and unpaid thereon) is charged
         against a borrower's vested interest in his Account, it shall be
         charged in the following order, to the extent then available for
         payment or withdrawals against: (i) the amount credited to his Rollover
         Account; (ii) the amount credited to his Voluntary Contribution
         Account; (iii) the vested portion of his Salary Reduction Account;
         (iv) the vested portion of his Basic Contribution Account; (v) the
         vested portion of his Matching Contribution Account; (vi) the vested
         portion of his Optional Contribution Account; (vii) the vested portion
         of the balance credited to his Profit Sharing Account; and (viii) the
         vested portion of the balance credited to his Tappan Zee ESOP Account.
         To the extent that the unpaid balance of the loan (plus any interest
         accrued and unpaid thereon) shall exceed the portion of the borrower's
         Account against which a charge may be made, such excess shall continue
         to be held as a receivable and, if such excess includes any unpaid
         principal, interest shall continue to accrue thereon until charged off
         or paid in full.

                 (iii) A borrower may, at any time, repay all or any
         portion of the outstanding balance of a loan (and any interest that
         has accrued and is unpaid) that has been deemed distributed in
         accordance with section 13.2(c)(i) but has not been charged against
         his Account in accordance with section 13.2(c)(ii). The amount of any
         such payment (principal and interest) shall be credited to the
         borrower's Account and shall, solely for the purpose of determining
         the income tax treatment of any subsequent distribution from his
         Account, be treated as an employee contribution.

                 (d) No borrower who has an outstanding loan shall be permitted
         to obtain a withdrawal or distribution from his Accounts if, after such
         withdrawal or distribution, the vested balance credited to his Accounts
         (including the value of the promissory note to be held as a special
         investment of his Account under section 13.2(b)) would be less than the
         outstanding principal amount of his loan.

                                      -47-
<PAGE>



                                  ARTICLE XIV

                              PAYMENT OF BENEFITS

                 SECTION 14.1 IN GENERAL.

                 The balance credited to a Participant's or Former Participant's
Account under the Plan shall be paid only at the times, to the extent, in the
manner and to the persons provided in this Article XIV.

                 SECTION 14.2 DESIGNATION OF BENEFICIARIES.

          (a) Subject to section 14.2(b), any person entitled to a benefit
under the Plan may designate a Beneficiary to receive any amount to which he
is entitled that remains undistributed on the date of his death. Such person
shall designate his Beneficiary (and may change or revoke any such
designation) in writing in the form and manner prescribed by the Committee.
Such designation, and any change or revocation thereof, shall be effective only
if received by the Committee prior to such person's death and shall become
irrevocable upon such person's death.

          (b) A Participant or Former Participant who is married shall
automatically be deemed to have designated his spouse as his Beneficiary,
unless, prior to the time such designation would, under section 14.2(a), become
irrevocable:

                     (i) the Participant or Former Participant designates an
              additional or a different Beneficiary in accordance with this
              section 14.2; and

                     (ii) (A) the spouse of such Participant or Former
              Participant consents to such designation in a writing that
              acknowledges the effect of such consent and is witnessed by a
              Plan representative or a notary public; or (B) the spouse of
              such Participant or Former Participant has previously consented
              to such designation by signing a written waiver of any right to
              consent to any designation made by the Participant or Former
              Participant, and such waiver acknowledged the effect of the
              waiver and was witnessed by a Plan representative or a notary
              public; or (C) it is established to the satisfaction of a Plan
              representative that the consent required under section
              14.2(b)(ii)(A) may not be obtained because such spouse cannot
              be located or is not required because of other circumstances
              permitted under regulations issued by the Secretary of the
              Treasury.

          (c) In the event that a Beneficiary entitled to payments hereunder
shall die after the death of the person who designated him but prior to
receiving payment of his entire interest in the Account of the person who
designated him, then such Beneficiary's interest in the Account of such person,
or any unpaid balance thereof, shall be paid as provided in section 14.3 to the
Beneficiary who has been designated by the deceased Beneficiary, or if there is
none, to the executor or administrator of the estate of such deceased
Beneficiary, or if no such executor or administrator is appointed within such
time as the Committee, in his sole discretion, shall deem reasonable, to such
one or more of the spouse and descendants and blood relatives of such deceased
Beneficiary as the Committee may select. If a person entitled to a benefit
under the Plan and any of the Beneficiaries designated by him shall die in such
circumstances that there shall be substantial doubt as to which of them shall
have been the first to die, for all purposes of the Plan, the person who made
the Beneficiary designation shall be deemed to have survived such Beneficiary.

                                      -48-
<PAGE>




                 (d) If no Beneficiary survives the person entitled to the
benefit under the Plan or if no Beneficiary has been designated by such person,
such benefit shall be paid to the executor or administrator of the estate of
such person, or if no such executor or administrator is appointed within such
time as the Committee, in his sole discretion, shall deem reasonable, to such
one or more of the spouse and descendants and blood relatives of such deceased
person as the Committee may select.

                 SECTION 14.3 DISTRIBUTIONS TO PARTICIPANTS AND FORMER
                              PARTICIPANTS.

                 (a)(i) The vested portion of the balance credited to a
         Participant's or a Former Participant's Account shall be distributed to
         him commencing as of the last Valuation Date to occur in the Plan Year
         in which the Participant or Former Participant terminates employment
         with the Employer or attains age 65, whichever is later, unless the
         Participant or Former Participant elects otherwise pursuant to section
         14.3(a)(ii), and the payment, or first in a series of payments, shall
         be actually made within sixty (60) days following such Valuation Date;
         provided, however, that required minimum distributions shall be made
         earlier in accordance with section 14.7; and provided, further, that if
         termination of employment occurs prior to January 1, 1998 and the total
         vested balance credited to his Account at termination of employment is
         $3,500 or less, or if termination of employment occurs after December
         31, 1998 and the total vested balance credited to his Account at
         termination of employment is $5,000 (or such higher amount as may be
         prescribed by law) or less, his entire vested interest in his Account
         shall be paid to him in a single lump sum as soon as practicable after
         termination of employment.

                        (ii) A Participant or Former Participant may, upon
         request on a form provided by the Committee and filed with the
         Committee not later than 15 days prior to the date on which his
         employment with the Employer terminates, elect that his vested interest
         in his Account be paid commencing as of any earlier or later Valuation
         Date after his termination of employment, but in no event later than
         the last Valuation Date to occur in the calendar year in which the
         Participant or Former Participant attains age 70 1/2, in which case the
         payment, or first in a series of payments, shall be made within three
         months following such Valuation Date.

                 (b)(i) Subject to section 14.3(b)(ii), the vested portion of
         the balance credited to the Account of a Participant or Former
         Participant will be paid to him, commencing as of the Valuation Date
         determined under section 14.3(a), in substantially equal annual
         installments over a fixed period equal to the greater of:

                               (A) five years; or

                               (B) if the vested portion of the balance credited
                        to the Account of the Participant or Former Participant,
                        determined as of the Valuation Date determined under
                        section 13.3(a), is greater than $500,000 (or such
                        larger amount as may be prescribed by the Secretary of
                        the Treasury pursuant to section 409(o) of the Code),
                        the sum of five years plus the lesser of (I) five
                        additional years, or (II) one additional year for each
                        $100,000 (or fraction thereof) by which the vested
                        portion of the balance credited to the Participant's or
                        Former Participant's Account exceeds $500,000 (or such
                        larger amount as may be prescribed by the Secretary of
                        the Treasury pursuant to section 409(o) of the Code).

                        (ii) A Participant or Former Participant may, upon
         request on a form provided by the Committee and filed with the
         Committee not later than 15 days prior to the date on which his
         employment terminates, elect that the vested portion of the balance
         credited to his Account be paid, commencing as of the Valuation Date
         determined under section 13.3(a):

                                      -49-
<PAGE>



                               (A) in substantially equal annual installments
         over a fixed period not to exceed the life expectancy of the
         Participant or Former Participant; or

                               (B) subject to section 14.4, in a lump sum
         payment

                               (c) If any person entitled to a benefit under the
         Plan dies before his entire benefit has been distributed to him, then
         the remainder of such benefit shall be paid to the Beneficiary
         designated by him under section 14.2 either:

                        (i) subject to section 14.4 in a lump sum distribution
                 as of the Valuation Date next following the date of his death,
                 and the amount thereof shall be based upon the vested portion
                 of the balance credited to his Account as of such Valuation
                 Date; or

                        (ii) subject to section 14.4 if, prior to the death of
                 the Participant or Former Participant whose vested Account is
                 being distributed, an election pursuant to section
                 14.3(b)(ii)(B) is in effect for him, in a lump sum distribution
                 as of the Valuation Date specified in such election, or, if
                 earlier, as of the latest Valuation Date that would permit
                 payment to be made within five years after the Participant's or
                 Former Participant's death, and the amount thereof shall be
                 based upon the vested portion of the balance credited to his
                 Account as of such Valuation Date; or

                        (iii) if, prior to the death of the Participant or
                 Former Participant whose vested Account is being distributed,
                 an election pursuant to section 14.3(b)(ii)(A) is in effect for
                 him:

                               (A) over the period and at the times set forth in
                        such election, if distribution has begun prior to the
                        Participant's or Former Participant's death; or

                               (B) commencing at the time set forth in such
                        election and over the period set forth in such election
                        (or, if less, over a period equal to the life expectancy
                        of the Beneficiary of the deceased Participant or Former
                        Participant), if the deceased Participant's or Former
                        Participant's spouse is his Beneficiary and distribution
                        has not begun prior to the deceased Participant's or
                        Former Participant's death; or

                               (C) commencing on the date specified in such
                        election (or, if earlier, the last Valuation Date that
                        will permit payment to begin within one year after the
                        deceased Participant's or Former Participant's death)
                        and over the period set forth in such election (or, if
                        less, over a period equal to the life expectancy of the
                        Beneficiary of the deceased Participant or Former
                        Participant), if the deceased Participant's or Former
                        Participant's Beneficiary is a natural person other than
                        his spouse and distribution has not begun prior to the
                        deceased Participant's or Former Participant's death;

         and the amount thereof shall be based upon the vested portion of the
         balance credited to his Account as of the Valuation Dates as of which
         payments are determined; or

                        (iv) upon written application of the Beneficiary made in
         such form and manner as the Committee may prescribe, at another time or
         in another manner permitted under section 14.3(a) or (b), subject to
         the following limitations:

                                      -50-
<PAGE>




                               (A)(I) If such Beneficiary is a Designated
                 Beneficiary other than the spouse of the deceased Participant
                 or Former Participant whose vested Account is being
                 distributed, a distribution that commences within one year
                 after such deceased Participant's or Former Participant's death
                 shall be made over a fixed period that does not exceed the life
                 expectancy of such Designated Beneficiary when distribution
                 commences.

                               (II) If such Designated Beneficiary is the spouse
                 of the deceased Participant or Former Participant whose vested
                 Account is being distributed, a distribution that commences no
                 later than the later of: (1) the date on which the deceased
                 Participant or Former Participant would have attained age
                 70 1/2 had he lived; or (2) the first anniversary of the death
                 of such deceased Participant or Former Participant; shall be
                 made over a fixed period that does not exceed the life
                 expectancy of such Designated Beneficiary when distribution
                 commences.

                               (III) In all other cases where the spouse of the
                 deceased Participant or Former Participant whose vested Account
                 is being distributed is not the Beneficiary, payment must be
                 completed within five years after the death of such deceased
                 Participant or Former Participant.

                               (B) In cases where distribution has commenced
                 prior to the death of the deceased Participant or Former
                 Participant whose vested Account is being distributed,
                 distribution must be completed as least as rapidly as under the
                 method in effect prior to such deceased Participant's or former
                 Participant's death.

                 SECTION 14.4 MANNER OF PAYMENT.

                 Payments of distributions shall be paid, in accordance with the
written direction of the person requesting the payment, in whole Shares plus
cash in lieu of fractional Shares or, in the case of balances credited to
Accounts other than the Employer Optional Account, in cash, or in a combination
of cash and whole Shares. Such written direction shall be given in such form and
manner as the Committee may prescribe. If no such direction is given, then
payment shall be made in the maximum number of whole Shares that may be acquired
with the amount of the payment, plus, if necessary, an amount of money equal to
any remaining amount of the payment that is less than the Fair Market Value of a
whole Share. The Committee may impose reasonable and uniformly applied
restrictions on the timing and amount of cash distributions to the extent
necessary to provide for the orderly sale of Shares by the Plan.

                 SECTION 14.5 PUT OPTIONS.

                 (a) Except as provided otherwise in section 14.5(b), each
Participant or Former Participant to whom Shares are distributed under the Plan,
each Beneficiary of a deceased Participant or Former Participant, including the
estate of a deceased Participant or Former Participant, to whom Shares are
distributed under the Plan, and each person to whom such a Participant, Former
Participant or Beneficiary gives Shares that have been distributed under the
Plan shall have the right to require the Employer to purchase from him all or
any portion of such Shares. A person shall exercise such right by delivering to
the Employer a written notice, in such form and manner as the Employer may by
written notice to such person prescribe, setting forth the number of Shares to
be purchased by the Employer, the number of the stock certificate evidencing
such person's ownership of such Shares, and

                                      -51-
<PAGE>




         the effective date of purchase. Such notice shall be given, and the
         effective date of the purchase specified therein shall be, no later
         than the last day of the fifteenth calendar month to begin after the
         date on which the Shares to be purchased by the Employer were
         distributed from The Plan. As soon as practicable following its receipt
         of such notice, the Employer shall take such actions as are necessary
         to purchase the Shares specified in such notice at a price per Share
         equal to the Fair Market Value of a Share determined as of the
         effective date of the purchase.

                 (b) The Employer shall have no obligation to purchase any Share
         (i) pursuant to a notice given, or on an effective date of purchase,
         after the last day of the fifteenth calendar month to begin after the
         date on which such Share was distributed from the Plan; (ii) following
         the earliest date on which Shares are publicly traded on an established
         market; or (iii) if the Employer is a "Employer, within the meaning of
         section 581 of the Code and is prohibited by law from redeeming or
         purchasing its own securities.

                 SECTION 14.6 RIGHT OF FIRST REFUSAL.

                 (a) For any period during which Shares are not publicly traded
         on any established market, no person who owns Shares that were
         distributed from the Plan, other than a person to whom such Shares were
         sold in compliance with this section 14.6, shall sell such Shares to
         any person other than the Employer without first offering to sell such
         Shares to the Employer (or person designated by the Employer) in
         accordance with this section 14.6.

                 (b) In the event that a person to whom this section 14.6
         applies shall receive and desire to accept from a person other than the
         Employer a bona fide offer to purchase Shares to which this section
         14.6 applies, he shall furnish to the Employer a written notice which
         shall:

                        (i) include a copy of such offer to purchase;

                        (ii) offer to sell to the Employer the Shares subject to
                 such offer to purchase at a price per Share that is equal to
                 the greater of:

                               (A) the price per Share specified in such offer
                        to purchase; or

                               (B) the Fair Market Value of a Share as of the
                        date of purchase;

                        and otherwise upon the same terms and conditions as
                 those specified in such offer to purchase; and

                        (iii) include an indication of his intention to accept
                 such offer to purchase if the Employer does not accept his
                 offer to sell.

                 (c) The Employer shall have the right to purchase the Shares
         covered by the offer to sell contained in a notice given pursuant to
         section 14.6(b), on the terms and conditions specified in such notice,
         by written notice given to the party making the offer to sell not later
         than the fourteenth day after the notice described in section 14.6(b)
         is given. If the Employer does not give such a notice during the
         prescribed fourteen day period, then the person owning such Shares may
         accept the offer to purchase described in the notice.

                                      -52-
<PAGE>



                 SECTION 14.7 MINIMUM REQUIRED DISTRIBUTIONS.

                 (a) Required minimum distributions of a Participant's or Former
         Participant's Account shall commence no later than:

                        (i) if the Participant or Former Participant attained
                 age 70 1/2 prior to January 1, 1988 and was not a Five Percent
                 Owner at any time during the Plan Year ending in the calendar
                 year in which he attained age 70 1/2, during any of the four
                 preceding Plan Years or during any subsequent years, the later
                 of (A) the calendar year in which he attains or attained age 70
                 1/2 or (B) the calendar year in which he terminates employment
                 with the Employer; or

                        (ii) if the Participant or Former Participant attained
                 age 70 1/2 prior to January 1, 1988 and is or was a Five
                 Percent Owner at any time during the Plan Year ending in the
                 calendar year in which he attained age 70 1/2, or during any of
                 the four preceding Plan Years or during any subsequent years,
                 the later of (A) the calendar year in which he attains age 70
                 1/2 or (B) the calendar year in which he first becomes a Five
                 Percent Owner; or

                        (iii) if the Participant or Former Participant attains
                 age 70 1/2 after December 31, 1987 and before January 1, 1997,
                 in all other cases, the calendar year in which the Participant
                 or Former Participant attains age 70 1/2; or

                        (iv) if the Participant or Former Participant attains
                 age 70 1/2 after December 31, 1998 and was not a Five Percent
                 Owner at any time during the Plan Year ending in the calendar
                 year in which he attained age 70 1/2, during any of the four
                 preceding Plan Years or during any subsequent years, the later
                 of (A) the calendar year in which he attains or attained age 70
                 1/2 or (B) the calendar year in which he terminates employment
                 with the Employer and all Affiliated Employers; or

                        (v) if the Participant or Former Participant attains age
                 70 1/2 after December 31, 1998 and is or was a Five Percent
                 Owner at any time during the Plan Year ending in the calendar
                 year in which he attained age 70 1/2, during any of the four
                 preceding Plan Years or during any subsequent years, the later
                 of (A) the calendar year in which he attains age 70 1/2 or (B)
                 the calendar year in which he first becomes a Five Percent
                 Owner;

         provided, however, that any Participant who is employed by an Employer
         after December 31, 1996 may elect not to receive, or to discontinue
         receiving, such required minimum distributions until April 1 of the
         year following the year in which such Participant terminates employment
         or is or becomes a Five Percent Owner, whichever is earlier.

                 (b) The required minimum distributions contemplated by section
         14.7(a) shall be made as follows:

                        (i) The minimum required distribution to be made for the
                 calendar year for which the first minimum distribution is
                 required shall be no later than April 1st of the immediately
                 following calendar year and shall be equal to the quotient
                 obtained by dividing (A) the vested balance credited to the
                 Participant's or Former Participant's Account as of the last
                 Valuation Date to occur in the calendar year immediately
                 preceding the calendar year in which the first minimum
                 distribution is required

                                      -53-
<PAGE>



                 (adjusted to account for any additions thereto or subtractions
                 therefrom after such Valuation Date but on or before December
                 31st of such calendar year); by (B) the Participant's or Former
                 Participant's life expectancy (or, if his Beneficiary is a
                 natural person, the joint life and last survivor expectancy of
                 him and his Beneficiary; and

                        (ii) the minimum required distribution to be made for
                 each calendar year following the calendar year for which the
                 first minimum distribution is required shall be made no later
                 than December 31st of the calendar year for which the
                 distribution is required and shall be equal to the quotient
                 obtained by dividing (A) the vested balance credited to the
                 Participant's or Former Participant's Account as of the last
                 Valuation Date to occur in the calendar year prior to the
                 calendar year for which the distribution is required (adjusted
                 to account for any additions thereto or subtractions therefrom
                 after such Valuation Date but on or before December 31st of
                 such calendar year and, in the case of the distribution for the
                 calendar year immediately following the calendar year for which
                 the first minimum distribution is required, reduced by any
                 distribution for the prior calendar year that is made in the
                 current calendar year); by (B) the Participant's or Former
                 Participant's life expectancy (or, if his Beneficiary is a
                 Designated Beneficiary, the joint life and last survivor
                 expectancy of him and his Beneficiary).

For purposes of this section 14.7, the life expectancy of a Participant or
Former Participant (or the joint life and last survivor expectancy of a
Participant or Former Participant and his Designated Beneficiary) for the
calendar year in which the Participant or Former Participant attains age 70 1/2
shall be determined on the basis of Tables V and VI, as applicable, of section
1.72-9 of the Income Tax Regulations as of the Participant's or Former
Participant's and Beneficiary's birthday in such year. Such life expectancy or
joint life and last survivor expectancy for any subsequent year shall be equal
to the excess of (1) the life expectancy or joint life and last survivor
expectancy for the year in which the Participant or Former Participant attains
age 70 1/2, over (2) the number of whole years that have elapsed since the
Participant or Former Participant attained age 70 1/2.

                 (c) Payment of the distributions required to be made to a
Participant or Former Participant under this section 14.7 shall be made in
accordance with section 14.4.

                 SECTION 14.8 DIRECT ROLLOVER OF ELIGIBLE ROLLOVER
                              DISTRIBUTIONS.

                 (a) A Distributee may elect, at the time and in the manner
prescribed by the Plan Administer, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.

                 (b) The following rules shall apply with respect to Direct
Rollovers made pursuant to this section 14.8:

                        (i) A Participant may only elect to make a Direct
                 Rollover of an Eligible Rollover Distribution if such Eligible
                 Rollover Distribution (when combined with other Eligible
                 Rollover Distributions made or to be made in the same calendar
                 year) is reasonably expected to be at least $200;

                        (ii) If a Participant elects a Direct Rollover of a
                 portion of an Eligible Rollover Distribution, that portion must
                 be equal to at least $500; and

                                      -54-
<PAGE>




                        (iii) A Participant may not divide his or her Eligible
                 Rollover Distribution into separate distributions to be
                 transferred to two or more Eligible Retirement Plans.

                 (c) For purposes of this section 14.8 and any other applicable
section of the Plan, the following definitions shall have the following
meanings:

                        (i) "Direct Rollover" means a payment by the Plan to the
                 Eligible Retirement Plan specified by the Distributee.

                        (ii) "Distributee" means an Employee or former Employee.
                 In addition, the Employee's or former Employee's surviving
                 spouse and the Employee's spouse or former spouse who is the
                 alternate payee under a Qualified Domestic Relations Order are
                 considered Distributees with regard to the interest of the
                 spouse or former spouse.

                        (iii) "Eligible Retirement Plan" means an individual
                 retirement account described in section 408(a) of the Code, an
                 individual retirement annuity described in section 408(b) or
                 the Code, an annuity plan described in section 403(a) of the
                 Code, or a qualified trust described in section 401(a) of the
                 Code that accepts the Distributee's Eligible Rollover
                 Distribution. However, in the case of an Eligible Rollover
                 Distribution to the current or former spouse who is the
                 alternative payee under a Qualified Domestic Relations Order or
                 to a surviving spouse, an Eligible Retirement Plan is an
                 individual retirement account or individual retirement annuity.

                        (iv) "Eligible Rollover Distribution" means any
                 distribution of all or any portion of the balance to the credit
                 of the Distributee, except that an Eligible Rollover
                 Distribution does not include: any distribution that is one of
                 a series of substantially equal periodic payments (not less
                 frequently than annually) made for the life (or life
                 expectancy) of the Distributee or the joint lives (or joint
                 life expectancies) of the Distributee's designated Beneficiary,
                 or for a specified period of ten (10) years or more; any
                 distribution to the extent such distribution is required under
                 section 401(a)(9) of the Code; withdrawals during service after
                 December 31, 1999 on account of Hardship; and the portion of
                 any distribution that is not includible in gross income
                 (determined without regard to the exclusion for net unrealized
                 appreciation with respect to employer securities).

                 SECTION 14.9 VALUATION OF SHARES UPON SETTLEMENT TO THE
                              PARTICIPANT.

                 Notwithstanding any contrary provision in this Article XIV, in
the event that all or a portion of a payment of a distribution to a Participant
is to be made in cash and such distribution requires a sale of Shares, such
Participant shall only be entitled to receive the proceeds of the Shares
allocated to his Account that are sold in connection with such distribution.

                                   ARTICLE XV

                                 ADMINISTRATION

                 SECTION 15.1 NAMED FIDUCIARIES.

                                      -55-
<PAGE>




                 The term "Named Fiduciary" shall mean (but only to the extent
of the responsibilities of each of them) the Committee, the Board and the
Trustee. This Article XIV is intended to allocate to each Named Fiduciary the
responsibility for the prudent execution of the functions assigned to him or it,
and none of such responsibilities or any other responsibility shall be shared by
two or more of such Named Fiduciaries. Whenever one Named Fiduciary is required
by the Plan or Trust Agreement to follow the directions of another Named
Fiduciary, the two Named Fiduciaries shall not be deemed to have been assigned a
shared responsibility, but the responsibility of the Named Fiduciary giving the
directions shall be deemed his sole responsibility, and the responsibility of
the Named Fiduciary receiving those directions shall be to follow them insofar
as such instructions we are on their face proper under applicable law.

                 SECTION 15.2 COMMITTEE RESPNSIBILITIES.

                 The Committee shall, subject to the responsibilities of the
Board, have the following responsibilities:

                 (a) To maintain records necessary or appropriate for the
         administration of the Plan;

                 (b) To give and receive such instructions, notices,
         information, materials, reports and certifications to the Trustee as
         may be necessary or appropriate in the administration of the Plan;

                 (c) To prescribe forms and make rules and regulations
         consistent with the terms of the Plan;

                 (d) To require such proof of age or evidence of good health of
         an Employee, Participant or Former Participant or the spouse of either,
         or of a Beneficiary as may be necessary or appropriate in the
         administration of the Plan;

                 (e) To prepare and file, distribute or furnish all reports,
         plan descriptions, and other information concerning the Plan,
         including, without limitation, filings with the Secretary of Labor and
         communications with Participants, Former Participants and other
         persons, as shall be required of the plan administrator under ERISA;

                 (f) To determine any question arising in connection with the
         Plan, and the Committee's decision or action in respect thereof shall
         be final and conclusive and binding upon the Employer, the Trustee,
         Participants, Former Participants, Beneficiaries and any other person
         having an interest under the Plan;

                 (g) Subject to the provisions of section 15.4, to review and
         dispose of claims under the Plan filed pursuant to section 15.3;

                 (h) If the Committee shall determine that by reason of illness,
         senility, insanity, or for any other reason, it is undesirable to make
         any payment to a Participant Former Participant, Beneficiary or any
         other person entitled thereto, to direct the application of any amount
         so payable to the use or benefit of such person in any

                                      -56-
<PAGE>



manner that he may deem advisable or to direct in his discretion the
withholding of any payment under the Plan due to any person under legal
disability until a representative competent to receive such payment in his
behalf shall be appointed pursuant to law;

                 (i) To hear and decide appeals, pursuant to the claims
         procedure contained in section 15.5 of the Plan;

                 (j) To review the performance of the Trustee and such
         investment managers as may be appointed in or pursuant to the Trust
         Agreement in investing, managing and controlling the assets of the
         Plan;

                 (k) To the extent required by ERISA, to establish a funding
         policy and method consistent with the objectives of the Plan and the
         requirements of ERISA, and to review such policy and method at least
         annually;

                 (1) To report and make recommendations to the Board regarding
         changes in the Plan, including changes in the operation and management
         of the Plan and removal and replacement of the Trustee and such
         investment managers as may be appointed in or pursuant to the Trust
         Agreement;

                 (m) To the extent provided under and subject to the provisions
         of the Trust Agreement, to appoint "investment managers" as defined
         in section 3(38) of ERISA to manage and control (including acquiring
         and disposing of) all or any of the assets of the Plan;

                 (n) With the prior approval of the Board, to direct the Trustee
         to obtain one or more Share Acquisition Loans;

                 (o) To develop and provide procedures and forms necessary to
         enable Participants to give voting and tendering directions on a
         confidential basis;

                 (p) To perform any duty or take any action which is allocated
         to the Committee under the Plan.

The Committee shall have the power and authority necessary or appropriate to
carry out its responsibilities.

                 SECTION 15.4 CLAIMS PROCEDURE.

                 Any claim relating to benefits under the Plan shall be filed
with the Committee on a form prescribed by him. If a claim is denied in whole or
in part, the Committee shall give the claimant written notice of such denial,
which notice shall specifically set forth:

                 (a) The reasons for the denial;

                 (b) The pertinent Plan provisions on which the denial was
         based;

                 (c) Any additional material or information necessary for the
         claimant to perfect his claim and an explanation of why such material
         or information is needed; and

                                      -57-
<PAGE>



                 (d) An explanation of the Plan's procedure for review of the
         denial of the claim.

In the event that the claim is not granted and notice of denial of a claim is
not furnished by the 30th day after such claim was filed, the claim shall be
deemed to have been denied on that day for the purpose of permitting the
claimant to request review of the claim.

                 SECTION 15.5 CLAIMS REVIEW PROCEDURE.

                 Any person whose claim filed pursuant to section 15.3 has been
denied in whole or in part by the Committee may request review of the claim by
the Committee, upon a form prescribed by the Committee. The claimant shall file
such form (including a statement of his position) with the Committee no later
than 60 days after the mailing or delivery of the written notice of denial
provided for in section 15.3, or, if such notice is not provided, within 60 days
after such claim is deemed denied pursuant to section 15.3. The claimant shall
be permitted to review pertinent documents. A decision shall be rendered by the
Committee and communicated to the claimant not later than 30 days after receipt
of the claimant's written request for review. However, if the Committee finds it
necessary, due to special circumstances (for example, the need to hold a
hearing), to extend this period and so notifies the claimant in writing, the
decision shall be rendered as soon as practicable, but in no event later than
120 days after the claimant's request for review. The Committee's decision shall
be in writing and shall specifically set forth:

                 (a) The reasons for the decision; and

                 (b) The pertinent Plan provisions on which the decision is
         based.

Any such decision of the Committee shall be binding upon the claimant and the
Employer, and the Committee shall take appropriate action to carry out such
decision.

                 SECTION 15.6 ALLOCATION OF FIDUCIARY RESPONSIBILITIES  AND
                              EMPLOYMENT OF ADVISORS.

                 Any Named Fiduciary may:

                 (a) Allocate any of his or its responsibilities (Other than
         trustee responsibilities) under the Plan to such other person or
         persons as he or it may designate, provided that such allocation and
         designation shall be in writing and filed with the Committee;

                 (b) Employ one or more persons to render advice to him or it
         with regard to any of his or its responsibilities under the Plan; and

                 (c) Consult with counsel, who may be counsel to the Employer.

                 SECTION 15.7 OTHER ADMINISTRATIVE PROVISIONS.

                 (a) Any person whose claim has been denied in whole or in part
must exhaust the administrative review procedures provided in section 15.4 prior
to initiating any claim for judicial review.

                                      -58-
<PAGE>




                 (b) No bond or other security shall be required of a member of
         the Committee, or any officer or Employee of the Employer to whom
         fiduciary responsibilities are allocated by a Named Fiduciary, except
         as may be required by ERISA.

                 (c) Subject to any limitation on the application of this
         section 15.6(c) pursuant to ERISA, neither the Committee, nor a member
         of the Committee, nor any officer or Employee of the Employer to whom
         fiduciary responsibilities are allocated by a Named Fiduciary, shall be
         liable for any act of omission or commission by himself or by another
         person, except for his own individual willful and intentional
         malfeasance.

                 (d) The Committee or the Committee may, except with respect to
         actions under section 15.4, shorten, extend or waive the time (but not
         beyond 60 days) required by the Plan for filing any notice or other
         form with the Committee or the Committee, or taking any other action
         under the Plan.

                 (e) The Committee or the Committee may direct that the costs of
         services provided pursuant to section 15.5, and such other reasonable
         expenses as may be incurred in the administration of the Plan, shall be
         paid out of the funds of the Plan unless the Employer shall pay them.

                 (f) Any person, group of persons, committee, corporation or
         organization may serve in more than one fiduciary capacity with respect
         to the Plan.

                 (g) Any action taken or omitted by any fiduciary with respect
         to the Plan, including any decision, interpretation, claim denial or
         review on appeal, shall be conclusive and binding on all interested
         parties and shall be subject to judicial modification or reversal only
         to the extent it is determined by a court of competent jurisdiction
         that such action or omission was arbitrary and capricious and contrary
         to the terms of the Plan.

                                  ARTICLE XVI

                  AMENDMENT, TERMINATION AND TAX QUALIFICATION

                 SECTION 16.1 AMENDMENT AND TERMINATION BY U.S.B. HOLDING
                              CO., INC.

                 The Employer expects to continue the Plan indefinitely, but
specifically reserves the right, in its sole discretion, at any time, by
appropriate action of the Board, to amend, in whole or in part, any or all of
the provisions of the Plan and to terminate the Plan at any time. Subject to the
provisions of section 16.2, no such amendment or termination shall permit any
part of the Trust Fund to be used for or diverted to purposes other than for the
exclusive benefit of Participants, Former Participants, Beneficiaries or other
persons entitled to benefits, and no such amendment or termination shall reduce
the accrued benefit of any Participant, Former Participant, Beneficiary or other
person who may be entitled to benefits, without his consent. In the event of a
termination or partial termination of the Plan, or in the event of a complete
discontinuance of the Employer's contributions to the Plan, the Accounts of each
affected person shall forthwith become nonforfeitable and shall be payable in
accordance with the provisions of Article XIV.

                                      -59-
<PAGE>



                 SECTION 16.2 AMENDMENT OR TERMINATION OTHER THAN BY
                              U.S.B. HOLDING Co. Inc.

                 In the event that a corporation or trade or business other than
U.S.B. Holding Co., Inc. shall adopt this Plan, such corporation or trade or
business shall, by adopting the Plan empower U.S.B. Holding Co., Inc. to amend
or terminate the Plan, insofar as it shall cover employees of such corporation
or trade or business, upon the terms and conditions set forth in section 16.1;
provided, however, that any such corporation or trade or business may, by action
of its board of directors or other governing body, amend or terminate the Plan,
insofar as it shall cover employees of such corporation or trade or business, at
different times and in a different manner. In the event of any such amendment or
termination by action of the board of directors or other governing body of such
a corporation or trade or business, a separate plan shall be deemed to have been
established for the employees of such corporation or trade or business, and the
assets of such plan shall be segregated from the assets of this Plan at the
earliest practicable date and shall be dealt with in accordance with the
documents governing such separate plan.

                 SECTION 16.3 CONFORMITY TO INTERNAL REVENUE CODE

                 The Employer has established the Plan with the intent that the
Plan and Trust will at all times be qualified under section 401(a) and exempt
under section 501(a) of the Code an with the intent that contributions under
the Plan will be allowed as deductions in computing the net income of the
Employer for federal income tax purposes, and the provisions of the Plan and
Trust Agreement shall be construed to effectuate such intentions. Accordingly,
notwithstanding anything to the contrary hereinbefore provided, the Plan and the
Trust Agreement may be amended at any time without prior notice to Participants,
Former Participants, Beneficiaries or any other persons entitled to benefits, if
such amendment is deemed by the Board to be necessary or appropriate to
effectuate such intent.

                 SECTION 16.4 CONTINGENT NATURE OF CONTRIBUTIONS.

                 (a) All contributions to the Plan are conditioned upon the
         issuance by the Internal Revenue Service of a determination that the
         Plan and Trust are qualified under section 401(a) of the Code and
         exempt under section 501(a) of the Code. If the Employer applies to
         the Internal Revenue Service for such a determination within 90 days
         after the date on which it files its federal income tax return for its
         taxable year that includes the last day of the Plan Year in which the
         Plan is adopted, and if the Internal Revenue Service issues a
         determination that the Plan and Trust are not so qualified or exempt,
         all contributions made by the Employer prior to the date of receipt of
         such a determination may, at the election of the Employer, be returned
         to the Employer within one year after the date of such determination.

                 (b) All contributions to the Plan are made upon the condition
         that such contributions will be allowed as a deduction in computing the
         net income of the Employer for federal income tax purposes. To the
         extent that any such deduction is disallowed, the amount disallowed
         may, at the election of the Employer, be returned to the Employer
         within one year after the deduction is disallowed.

                 (c) Any contribution to the Plan made by the Employer as a
         result of a mistake of fact may, at the election of the Employer, be
         returned to the Employer within one year after such contribution is
         made.

                                      -60-
<PAGE>




                                  ARTICLE XVII

                     SPECIAL RULES FOR TOP HEAVY PLAN YEARS

                 SECTION 17.1 IN GENERAL.

                 As of the Determination Date for each Plan Year, the Committee
shall determine whether the Plan is a Top Heavy Plan in accordance with the
provisions of this Article XVII. If, as of such Determination Date, the Plan is
a Top Heavy Plan, then the Plan Year immediately following such Determination
Date shall be a Top Heavy Plan Year and the special provisions of this Article
XVII shall be in effect; provided, however, that if, as of the Determination
Date for the Plan Year in which the Effective Date occurs, the Plan is a Top
Heavy Plan, such Plan Year shall be a Top Heavy Plan Year, and the provisions of
this Article XVII shall be given retroactive effect for such Plan Year.

                 SECTION 17.2 DEFINITION OF TOP HEAVY PLAN.

                 (a) Subject to section 17.2(c), the Plan is a Top Heavy Plan
         if, as of a Determination Date: (i) it is not a member of a Required
         Aggregation Group, and (ii)(A) the sum of the Cumulative Accrued
         Benefits of all Key Employees exceeds 60% of (B) the sum of the
         Cumulative Accrued Benefits of all Employees (excluding former Key
         Employees), former Employees (excluding former Key Employees and other
         former Employees who have not performed any services for the Employer
         or any Affiliated Employer during the immediately preceding five Plan
         Years), and their Beneficiaries.

                 (b) Subject to section 17.2(c), the Plan is a Top Heavy Plan
         if, as of a Determination Date: (i) the Plan is a member of a Required
         Aggregation Group, and (ii)(A) the sum of the Cumulative Accrued
         Benefits of all Key Employees under all plans that are members of the
         Required Aggregation Group exceeds 60% of (B) the sum of the Cumulative
         Accrued Benefits of all Employees (excluding former Key Employees),
         former Employees (excluding former Key Employees and other former
         Employees who have not performed any services for the Employer or any
         Affiliated Employer during the immediately preceding five Plan Years),
         and their Beneficiaries under all plans that are members of the
         Required Aggregation Group.

                 (c) Notwithstanding sections 17.2(a) and 17.2(b), the Plan is
         not a Top Heavy Plan if, as of a Determination Date: (i) the Plan is a
         member of a Permissible Aggregation Group, and (ii)(A) the sum of the
         Cumulative Accrued Benefits of all Key Employees under all plans that
         are members of the Permissible Aggregation Group does not exceed 60%
         of (B) the sum of the Cumulative Accrued Benefits of all Employees
         (excluding former Key Employees), former Employees (excluding former
         Key Employees and other former Employees who have not performed any
         services for the Employer or any Affiliated Employer during the
         immediately preceding five Plan Years), and their Beneficiaries under
         all plans that are members of the Permissible Aggregation Group.

                 SECTION 17.3 DETERMINATION DATE.

                 The Determination Date for the Plan Year in which the Effective
Date occurs shall be the last day of such Plan Year, and the Determination Date
for each Plan Year beginning after the Plan Year in which the Effective Date
occurs shall be the last day of the preceding Plan Year. The Determination Date
for any other qualified plan maintained by the Employer for a plan year shall be
the last day of the preceding plan year of each such plan, except that in the
case of the first plan year of such plan, it shall be the last day of such first
plan year.

                                      -61-
<PAGE>



                 SECTION 17.4 CUMULATIVE ACCRUED BENEFITS.

                 (a) An individual's Cumulative Accrued Benefits under this Plan
         as of a Determination Date are equal to the sum of:

                        (i) the balance credited to such individual's Account
                 under this Plan as of the most recent Valuation Date preceding
                 the Determination Date;

                        (ii) the amount of any ESOP Contributions or Loan
                 Repayment Contributions made after such Valuation Date but on
                 or before the Determination Date; and

                        (iii) the amount of any distributions of such
                 individual's Cumulative Accrued Benefits under the Plan during
                 the five year period ending on the Determination Date.

For purposes of this section 17.4(a), the computation of an individual's
Cumulative Accrued Benefits, and the extent to which distributions, rollovers
and transfers are taken into account, will be made in accordance with section
416 of the Code and the regulations thereunder.

                 (b) For purposes of this Plan, the term "Cumulative Accrued
         Benefits" with respect to any other qualified plan shall mean the
         cumulative accrued benefits determined for purposes of section 416 of
         the Code under the provisions of such plans.

                 (c) For purposes of determining the top heavy status of a
         Required Aggregation Group or a Permissible Aggregation Group, the
         Cumulative Accrued Benefits under this Plan and the Cumulative Accrued
         Benefits under any other plan shall be determined as of the
         Determination Date that falls within the same calendar year as the
         Determination Dates for all other members of such Required Aggregation
         Group or Permissible Aggregation Group.

                 SECTION 17.5 KEY EMPLOYEES.

                 (a) For purposes of the Plan, the term Key Employee means any
         employee or former employee of the Employer or any Affiliated Employer
         who is at any time during the current Plan Year or was at any time
         during the immediately preceding four Plan Years:

                        (i) a Five Percent Owner;

                        (ii) a person who would be described in section 1.31 if
                 the number 1% were substituted for the number "5%" in section
                 1.31 and who has an annual Total Compensation from the Employer
                 and any Affiliated Employer of more than $150,000;

                        (iii) an Officer of the Employer or any Affiliated
                 Employer who has an annual Total Compensation greater than 50%
                 of the amount in effect under section 415(b)(1)(A) of the Code
                 for any such Plan Year; or

                        (iv) one of the ten persons owning the largest interests
                 in the Employer and having an annual Total Compensation from
                 the Employer or any Affiliated Employer in excess of the dollar
                 limitation in effect under section 415(c)(1)(A) of the Code for
                 such Plan Year.

                                      -62-
<PAGE>



                 (b) For purposes of section 17.5(a):

                        (i) for purposes of section 17.5(a)(iii), in the event
                 the Employer or any Affiliated Employer has more officers than
                 are considered Officers, the term Key Employee shall mean those
                 officers, up to the maximum number, with the highest annual
                 compensation in any one of the five consecutive Plan Years
                 ending on the Determination Date; and

                        (ii) for purposes of section 17.5(a)(iv), if two or more
                 persons have equal ownership interests in the Employer, each
                 such person shall be considered as having a larger ownership
                 interest than any such person with a lower annual compensation
                 from the Employer or any Affiliated Employer.

                 (c) For purposes of section 17.5(a): (i) a person's
         compensation from Affiliated Employers shall be aggregated, but his
         ownership interests in Affiliated Employers shall not be aggregated;
         (ii) an employee shall only be deemed to be an officer if he has the
         power and responsibility of a person who is an officer within the
         meaning of section 416 of the Code; and (iii) the term Key Employee
         shall also include the Beneficiary of a deceased Key Employee.

                 SECTION 17.6 REQUIRED AGGREGATION GROUP.

                 For purposes of this Article XVII a Required Aggregation Group
shall consist of (a) this Plan; (b) any other qualified plans maintained by the
Employer and any Affiliated Employers that cover Key Employees (including any
such qualified plans that were terminated during the five-year period ending on
the Determination Date); and (c) any other qualified plans that are required to
be aggregated for purposes of satisfying the requirements of sections 401(a)(4)
or 410(b) of the Code (including any such qualified plans that were terminated
during the five-year period ending on the Determination Date).

                 SECTION 17.7 PERMISSIBLE AGGREGATION GROUP.

                 For purposes of this Article XVII, a Permissible Aggregation
Group shall consist of (a) the Required Aggregation Group and (b) any other
qualified plans maintained by the Employer and any Affiliated Employers;
provided, however, that the Permissible Aggregation Group must satisfy the
requirements of sections 401(a)(4) and 410(b) of the Code.

                 SECTION 17.8 SPECIAL REQUIREMENTS DURING TOP HEAVY PLAN YEARS.

                 (a) Notwithstanding any other provision of the Plan to the
         contrary, for each Top Heavy Plan Year, in the case of a Participant
         (other than a Key Employee) on the last day of such Top Heavy Plan Year
         who is not also a participant in another qualified plan which satisfies
         the minimum contribution and benefit requirements of section 416 of the
         Code with respect to such Participant, the sum of the employer
         contributions made with respect to such Participant, when expressed as
         a percentage of his Total Compensation for such Top Heavy Plan Year,
         shall not be less than 3% of such Participant's Total Compensation for
         such Top Heavy Plan Year or, if less, the highest combined rate,
         expressed as a percentage of Total Compensation at which employer
         contributions were made on behalf of a Key Employee for such Top Heavy
         Plan Year. The Employer shall make an additional contribution to the
         Account of each Participant to the extent necessary to satisfy the
         foregoing requirement.

                                      -63-
<PAGE>




                 (b) For any Top Heavy Plan Year beginning before January 1,
         2000, the number "1.0" shall be substituted for the number "1.25" in
         sections 8.2(c)(iii) and 8.2(c)(iv), except that:

                        (i) this section 17.8(b) shall not apply to any
                 individual for a Top Heavy Plan Year that is not a Super Top
                 Heavy Plan Year if the requirements of section 16.8(a) would be
                 satisfied for such Super Top Heavy Plan Year if the number
                 "4%" were substituted for the number 3% in section 16.8(a);
                 and

                        (ii) this section 17.8(b) shall not apply to an
                 individual for a Top Heavy Plan Year if, during such Top Heavy
                 Plan Year, there are no ESOP Contributions or Loan Repayment
                 Contributions allocated to such individual under this Plan,
                 there are no contributions under any other qualified defined
                 contribution plan maintained by the Employer, and there are no
                 accruals for such individual under any qualified defined
                 benefit plan maintained by the Employer.

For purposes of this section 17.8(b), the term Super Top Heavy Plan Year means a
Top Heavy Plan Year in which the Plan would meet the definitional requirements
of sections 17.2(a) or 17.2(b) if the term "90%" were substituted for the term
"60%" in sections 17.2(a), 17.2(b) and 17.2(c).

                                 ARTICLE XVIII

                            MISCELLANEOUS PROVISION

                 SECTION 18.1 GOVERNING LAW.

                 The Plan shall be construed, administered and enforced
according to the laws of the State of New York without giving effect to the
conflict of laws principles thereof, except to the extent that such laws are
preempted by federal law.

                 SECTION 18.2 NO RIGHT TO CONTINUED EMPLOYMENT.

                 Neither the establishment of the Plan, nor any provisions of
the Plan or of the Trust Agreement establishing the Trust Fund nor any action of
the Committee, the Committee or the Trustee, shall be held or construed to
confer upon any Employee any right to a continuation of employment by the
Employer. The Employer reserves the right to dismiss any Employee or otherwise
deal with any Employee to the same extent as though the Plan had not been
adopted.

                 SECTION 18.3 CONSTRUCTION OF LANGUAGE.

                 Wherever appropriate in the Plan, words used in the singular
may be read in the plural, words used in the plural may be read in the singular,
and words importing the masculine gender may be read as referring equally to the
feminine and the neuter. Any reference to an Article or section number shall
refer to an Article or section of the Plan, unless otherwise indicated.

                 SECTION 18.4 HEADINGS.

                 The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and the
text of the Plan, the text shall control.

                                      -64-
<PAGE>



                 SECTION 18.5 MERGER WITH OTHER PLANS.

                 The Plan shall not be merged or consolidated with, nor transfer
its asset or liabilities to, any other plan unless each Participant, Former
Participant, Beneficiary and other person entitled to benefits, would (if that
plan then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit he would
have been entitled to receive if the Plan had terminated immediately before the
merger, consolidation or transfer.

                 SECTION 18.6 NON-ALIENATION OF BENEFITS.

                 (a) Except as provided in section 18.6(b) and (c), the right to
         receive a benefit under the Plan shall not be subject in any manner to
         anticipation, alienation or assignment, nor shall such right be liable
         for or subject to debts, contracts, liabilities or torts. Should any
         Participant, Former Participant or other person attempt to anticipate,
         alienate or assign his interest in or right to a benefit, or should any
         person claiming against him seek to subject such interest or right to
         legal or equitable process, all the interest or right of such
         Participant or Former Participant or other person entitled to benefits
         in the Plan shall cease, and in that event such interest or right shall
         be held or applied, at the direction of the Committee, for or to the
         benefit of such Participant or Former Participant, or other person or
         his spouse, children or other dependents in such manner and in such
         proportions as the Committee may deem proper.

                 (b) This section 18.6 shall not prohibit the Committee from
         recognizing a Domestic Relations Order that is determined to be a
         Qualified Domestic Relations Order in accordance with section 18.7.

                 (c) Notwithstanding anything in the Plan to the contrary, a
         Participant's, Former Participant's or Beneficiary's Accounts under the
         Plan may be offset by any amount such Participant, Former Participant
         or Beneficiary is required or ordered to pay to the Plan if:

                        (i) the order or requirement to pay arises: (A) under a
                 judgment issued on or after August 5, 1997 of conviction for a
                 crime involving the Plan, (B) under a civil judgment (including
                 a consent order or decree) entered by a court on or after
                 August 5, 1997 in an action brought in connection with a
                 violation (or alleged violation) of part 4 of subtitle B of
                 title I of ERISA; or (C) pursuant to a settlement agreement
                 entered into on or after August 5, 1997 between the
                 Participant, Former Participant or Beneficiary and one or both
                 of the United States Department of Labor and the Pension
                 Benefit Guaranty Corporation in connection with a violation (or
                 alleged violation) of part 4 of subtitle B of title I of ERISA
                 by a fiduciary or any other person; and

                        (ii) the judgment, order, decree or settlement agreement
                 expressly provides for the offset of all or part of the amount
                 ordered or required to be paid to the Plan against the
                 Participant's, Former Participant's or Beneficiary's benefits
                 under the Plan.

                 SECTION 18.7 PROCEDURES INVOLVING DOMESTIC RELATIONS ORDERS.

                 Upon receiving a Domestic Relations Order, the Committee shall
segregate in a separate account or in an escrow account or separately account
for the amounts payable to any person pursuant to such Domestic Relations Order,
pending a determination whether such Domestic Relations Order constitutes a
Qualified Domestic Relations Order, and shall give notice of the receipt of the
Domestic Relations Order to the Participant or Former Participant and each other
person affected

                                      -65-
<PAGE>



thereby. If, within 18 months after receipt of such Domestic Relations Order,
the Committee, a court of competent jurisdiction or another appropriate
authority determines that such Domestic Relations Order constitutes a Qualified
Domestic Relations Order, the Committee shall direct the Trustee to pay the
segregated amounts (plus any interest thereon) to the person or persons entitled
thereto under the Qualified Domestic Relations Order. If it is determined that
the Domestic Relations Order is not a Qualified Domestic Relations Order or if
no determination is made within the prescribed 18-month period, the segregated
amounts shall be distributed as though the Domestic Relations Order had not been
received, and any later determination that such Domestic Relations Order
constitutes a Qualified Domestic Relations Order shall be applied only with
respect to benefits that remain undistributed on the date of such determination.
The Committee shall be authorized to establish such reasonable administrative
procedures as he deems necessary or appropriate to administer this section 18.7.
This section 18.7 shall be construed and administered so as to comply with the
requirements of section 401(a)(13) of the Code.

                 SECTION 18.8 LEASED EMPLOYEES.

                 (a) Subject to section 18.8(b), a leased employee shall be
         treated as an Employee for purposes of the Plan. For purposes of this
         section 18.8, the term "leased employee" means any person (i) who would
         not, but for the application of this section 18.8, be an Employee and
         (ii) who pursuant to an agreement between the Employer and any other
         person ("leasing organization") has performed for the Employer (or for
         the Employer and related persons determined in accordance with section
         414(n)(6) of the Code), on a substantially full-time basis for a period
         of at least one year; (i) prior to January 1, 1997, services of a type
         historically performed by employees in the business field of the
         Employer; and (ii) after December 31, 1996, services under the primary
         direction or control of the Employer.

                 (b) For purposes of the Plan:

                        (i) contributions or benefits provided to the leased
                 employee by the leasing organization which are attributable to
                 services performed for the Employer shall be treated as
                 provided by the Employer; and

                        (ii) section 18.8(a) shall not apply to a leased
                 employee if:

                               (A) the number of leased employees performing
                        services for the Employer does not exceed 20% of the
                        number of the Employer's Employees who are not Highly
                        Compensated Employees; and

                               (B) such leased employee is covered by a money
                        purchase pension plan providing (I) a nonintegrated
                        contribution rate of at least 10% of the leased
                        employee's compensation; (II) immediate participation;
                        (III full and immediate vesting; and IV coverage for all
                        of the employees of the leasing organization (other than
                        employees who perform substantially all of their
                        services for the leasing organization).

                 SECTION 18.9 MERGER WITH EMPLOYEE STOCK OWNERSHIP PLAN OF
                              TAPPAN ZEE FINANCIAL, INC. AND CERTAIN AFFILIATES.

                 (A) MERGER OF PLANS. Effective at midnight on September 30,
         1999 ("Merger Effective Time"), the Employee Stock Ownership Plan of
         Tappan Zee Financial, Inc. and Certain Affiliates ("Tappan Zee ESOP")
         is hereby merged with and into the Plan, all of the assets of the

                                      -66-
<PAGE>



         Tappan Zee ESOP shall become assets of this Plan immediately after the
         Merger Effective Time, and the Trustees of this Plan shall succeed to
         all rights, powers, privileges, duties and discretions with respect to
         such assets.

                 (B) PARTICIPANT ACCOUNTS. Effective at the Merger Effective
         Time, a Tappan Zee ESOP Account shall be established for each person
         with an undistributed account balance under the Tappan Zee ESOP at such
         time. At the Merger Effective Time, each person's Tappan Zee ESOP
         Account shall be credited with the assets credited to his or her
         account under the Tappan Zee ESOP immediately prior to the Merger
         Effective Time. Each person's rights with respect to his or her Tappan
         Zee ESOP Account shall be governed by the provisions of this Plan
         applicable to balances credited to Employer Optional Contribution
         Accounts. Except for earnings and other appreciation attributable to
         balances credited to such Tappan Zee ESOP Accounts (including but not
         limited to earnings or appreciation attributable to the use of
         dividends on Company Stock held in a Tappan Zee ESOP Account to make
         payments on Acquisition Loans), no additions shall be made to any
         Tappan Zee ESOP Account after its establishment.

                 (C) ELIGIBILITY AND PARTICIPATION. A person who is a
         participant in the Tappan Zee ESOP immediately prior to the Merger
         Effective Time shall continue without interruption as a Participant in
         this Plan until such time as he or she ceases to satisfy the conditions
         of eligibility to participate in this Plan. For purposes of eligibility
         to participate in this Plan, a person's Credited Service under Section
         13 shall be determined as if all of such person's hours of service with
         Tappan Zee Financial, Inc. and Tarrytowns Bank, FSB were Hours of
         Service under this Plan.

                 (D) VESTING. Each Participant's Tappan Zee ESOP Account shall
         be 100% vested. Each Participant's other Accounts under this Plan
         shall become vested according to the generally applicable vesting
         schedules set forth elsewhere in this Plan. For purposes of applying
         such vesting schedules, a Participant's years of Credited Service shall
         be equal to the sum of (i) the Participant's Period of Service under
         the Tappan Zee ESOP as of December 31, 1998, plus (ii) the greater of
         the additional Period of Service that the Participant would have earned
         under the Tappan Zee ESOP if it had remained in effect through December
         31, 1999 or the Credited Service that would be earned under the
         provisions of this Plan for the period beginning January 1, 1999 and
         ending December 31, 1999, plus (iii) the additional Credited Service
         earned under the provisions of this Plan after December 31, 1999.

                 (E) INVESTMENT OF PARTICIPANTS' ZEE ESOP ACCOUNTS. Balances
         credited to Participants' Tappan Zee ESOP Accounts shall be invested in
         the same manner as balances credited to Employer Optional Contribution
         Accounts under the Plan. Participants shall have all of the same rights
         relating to voting, tender offers and dividends as apply to Employer
         Optional Contribution Accounts under the Plan.

                 (F) DISTRIBUTIONS. Balances credited to Participants' Tappan
         Zee ESOP Accounts shall be available at the same times, in the same
         manner and subject to the same terms and conditions applicable to
         distribution of balances credited to Employer Optional Contribution
         Accounts. In addition, a Participant may elect to have the balance
         credited to his or her Tappan Zee ESOP Account distributed in annual
         installments over period not to exceed the lesser of ten years or the
         Participant's life expectancy when distributions begin.

                 (G) OUTSTANDING SECURITIES ACQUISITION LOANS. Any Share
         Acquisition Loans obtained and outstanding under the terms of the
         Tappan Zee ESOP, shall be treated as Acquisition Loans for purposes of
         the Plan, and any shares of Company Stock pledged as collateral for any
         such loans shall be treated as Financed Shares.

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<PAGE>



                 SECTION 18.10 STATUS AS AN EMPLOYEE STOCK OWNERSHIP PLAN.

                 It is intended that (a) the portion of the Plan consisting of
Employer Optional Accounts and Tappan Zee ESOP Accounts constitute an "employee
stock ownership plan," as defined in section 4975(e)(7) of the Code and section
407(d)(6) of ERISA and (b) all remaining portions of the Plan constitute a
profit sharing plan. The Plan shall be construed and administered to give effect
to such intent.

                 SECTION 18.11 EFFECT OF REINSTATEMENT.

                 Except as otherwise provided herein, the Plan described herein
shall, effective as of January 1, 2001 amend and supersede all provisions of the
Plan as in effect on December 31, 2000, except that the rights of persons who
terminated employment or retired prior to January 1, 2001, shall be governed by
the terms of the Plan in effect at the time of such termination or retirement.








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