Exhibit 10.3HUDSON VALLEY BANKSUPPLEMENTAL RETIREMENT PLAN OF 1997EFFECTIVE AS OF JULY 1, 1997ARTICLE ONE 1.PURPOSE OF THE PLAN     The purpose of the Hudson Valley Bank Supplemental Retirement Plan (hereinafter called the“Plan”) is to provide the participating executives with an added incentive in order to retain theirservices until retirement.     The Plan is intended to be a non-qualified, unfunded Plan which is designed to supplement allother benefits received, now or in the future, by the participant. The Plan may, at its option,purchase insurance on the participant’s life with the Bank being the beneficiary of these policiesin order to reimburse itself, in whole or in part, for its cost of such benefits.ARTICLE TWO2. DEFINITIONS     The following words and phrases shall have the respective meaning set forth below:     A. “Plan” shall mean the provisions of the Hudson Valley Bank SupplementalRetirement Plan of 1997.     B. “Bank” shall mean the Hudson Valley Bank, its successors and assigns.     C. “Participants” shall be those present and future Senior Executivesselected by the Compensation Committee to participate in the Plan.
 

 
     D. “Beneficiary” shall mean the person(s) entitled to the benefits as abeneficiary of a deceased participant.     E. “Effective Date” shall mean the 1st day of July, 1997.     F. “Base Annual Compensation” shall mean the regular basic salary of theParticipant (before any deductions for a 401(k) Plan or any other deferredincome) actually paid for the services rendered during any applicable calendaryear. However, it shall exclude any bonuses, overtime, fringe or supplementalcompensation or any payments from prior periods of any amounts that have beendeferred at the request of the employee.     However, if the Participant shall be considered “disabled” under the Plan, the Base AnnualCompensation shall be the regular basic salary at the time of disability, increased by the annualpercentage in the Cost of Living (for the New York Metropolitan Area as determined by the Bureau ofLabor Statistics) limited to a maximum of 5% annually until the Normal Retirement Date.     G. “Normal Retirement Date” shall mean the first day of the monthcoinciding with or next following the date which a Participant has attained Age65 “Normal Retirement” and has completed at least ten (10) years of service.     H. “interest Rate Offset” shall mean the yield on a 15 Year United States Treasury Bond onthe first day of the month, three (3) months prior to the Participant’s retirement.     I. “Lump Sum Equivalent” shall mean the value of the Participant’s Qualified PlanAccount as of the date of retirement.     J. “Bank Pension Plan Benefit” shall mean the annual amount payable over a fifteen (15) yearperiod from the lump sum equivalent of any Qualified Retirement Plan of the Bank at
 

 
the Participant’s retirement assuming the interest rate offset. If the Bank should terminate itsQualified Plan prior to the Participant’s retirement, the definition of lump sum shall be the lumpsum equivalent at termination increased annually by the interest rate offset on January 1st of eachyear.     (An example of this definition is: $100,000 lump sum equivalent at retirement — 7%interest rate offset — annual 15 year payment of $10,261).     K. n401(k) Matching Offset” shall mean the annual amount payable over a 15 yearperiod from the maximum annual amount the Bank would have matched to the executive’s 401(k)contribution (irrespective of whether the executive contributed the maximum amount) increasedannually by the interest rate offset.     (An example of this definition is: $50,000 lump sum equivalent at retirement — 7%interest rate offset — annual 15 year payment of $5,130).ARTICLE THREE3. ADMINISTRATION OF THE PLAN     The Compensation Committee of the Bank (hereinafter called the “Committee”) or other committeeso designated by the Bank’s Board of Directors shall administer the Plan. All questions ofinterpretation and application of the Plan shall be determined by a majority of the committee andthe determination of such majority shall be final and binding on all persons.
 

 
ARTICLE FOUR4. POSTPONED RETIREMENT     Each Participant shall be required to retire at such time as he or she attains the NormalRetirement Age, provided said Normal Retirement is in conformity with the State and/or FederalLaws applicable at that time.     A. Participant may remain in the employ of the Bank after he or she attains the NormalRetirement Age for such periods or “at will” as may be agreed to by the Board of Directors.     No additional benefits shall accrue for any employment subsequent to Age 65, but uponretirement or separation from employment, the Participant shall receive the Normal SupplementalRetirement Benefits he or she would have received had the Participant retired at Age 65.ARTICLE FIVE5. BENEFITS FORMULA A. Supplemental Pension Benefit — Term — A Participant who retires fromthe Bank under Normal Retirement, or under Postponed Retirement, shallreceive supplemental retirement benefits for a period of fifteen (15)years, payable on a monthly basis (180 months) beginning on the firstday of the month following his Normal or Postponed Retirement Date .  B. Supplemental Pension Benefit — Amount — The Normal Supplemental PensionBenefit shall be equal to 60% of the average of the highest five yearsBase Annual Compensation during the last ten years of the Participant’semployment reduced by the following :     1. The Lump Sum Equivalent of Qualified Plan Benefit;
 

 
     2. The Lump Sum Equivalent of the 401(k) Matching benefit;     3. 50% of the Executive’s Primary Social Security Benefit; and     4. The Lump Sum Equivalent of any other retirement type benefits whichhave been provided and paid for by the Bank during the course of theParticipant’s employment.     An example of this provision is as follows:     Age Salary63 $150,000 64 $135,000 62 $125,000 61 $110,000 60 $100,000 Average $124,000 60% of Average Salary $74,400 Minus Pension Plan Lump Sum Equivalent $24,4000 Minus 401(k) Match Lump Sum Equivalent $5,100 Minus 50% Primary Social Security $7,500 Equals 15 Yr. Supplemental Pension $37,400      C. Transfer of Duties/Authorized Leave — Notwithstanding any provision to the contrary, solong as the Participant shall continue to be in tie employ of the Bank or the Hudson Valley HoldingCorp. or one or more of its subsidiaries, his or her eligibility and vesting shall not be affectedby any change of duties or position. In addition, an authorized leave of absence shall not affectthe Participant’s rights. However, nothing in this Plan or in any other agreement
 

 
shall confer upon any Participant any right to continue’ in the employment of the Bank, HoldingCorp., or any such subsidiary.ARTICLE SIX6. VOLUNTARY RESIGNATION, TERMINATION WITH AND WITHOUT CAUSE, PRIOR TO RETIREMENT.     A. Voluntary Resignation. In the event the Participant voluntarilyresigns, before the Participant reaches Age 65, the Bank’s obligations to make any payments underthis Agreement shall immediately terminate.     B. Termination with Cause. In the event that a Participant is terminatedfor cause including but not limited to wrongful application of funds, commission of a crime ordisregard of Board or Management policy or directives at any time either before the Participantreaches Age 65 or after the Participant reaches Age 65 if the Participant has postponed retirementin accordance with Article 4 herein, the Bank’s obligations to make any payments under thisAgreement shall immediately terminate. Additionally, if after receiving payments under this plan,it comes to the attention of the Bank that while employed, the Participant engaged in an act thatwould have caused Termination, for Cause, the participant will no longer be entitled to benefitsunder this Plan.     The Compensations Committee’s determination as to what constitutes “for cause” shall bebinding and final on all parties.     C. Termination without Cause. In the event the Participant’s employmentis terminated without cause before the Participant shall have reached the Age of 65, the Bank’sobligation to make any payments under this Agreement shall immediately terminate, except the
 

 
Participant shall be entitled to receive a percentage of the annual benefitsbased upon the following formula:           # of Years Non-ForfeitureAge at Termination Of Service Benefit60 but less than 61 10 or more  50%61 but less than 62 11 or more  60%62 but less than 63 12 or more  70%63 but less than 65 13 or more  80%64 but less than 65 14 or more  90%ARTICLE SEVEN7. TOTAL DISABILITY     A. If, prior to the Participant’s 65th birthday, Participant should becomedisabled by “Total Disability” as defined herein, while employed by the Bank,the Participant’s rights and Bank’s payment obligations as described in ArticleFive hereof, shall remain unaffected due to such disability. If such TotalDisability shall continue through the Participant’s “Normal Retirement Date”,then the annual benefits shall be payable as if the Participant had fulfilledall of the conditions in Paragraph 5 of this Agreement.     B. “Total Disability”, for the purposes of this Agreement, shall be if theParticipant is deemed totally disabled under the Bank’s Long Term DisabilityPolicy in effect at the time of the Participant’s disability.
 

 
     C. Under no circumstances shall this Article be construed to give the Participant anyadditional disability benefits other than those which may be provided by the Bank underseparate disability plans or policies.ARTICLE EIGHT8. DEATH BENEFITS     A. Death Prior to Age 60 — In the event of a Participant’s death whileemployed by the Bank prior to Age 60 and prior to his or her Retirement Date, the Bank agrees topay to such beneficiary as Participant may have designated pursuant to Article Nine or in theabsence of any such designation, to the Participant’s surviving spouse, or if no surviving spouse,then to Participant’s estate, 60% of the Participant’s Base Annual Compensation (see definitions)for a period of fifteen (15) years (the benefit years) commencing upon the first day of the monthimmediately following the Participant’s death, with death benefits in equal monthly installmentssubject to the provisions of Paragraph B below.     B. Death After Age 60 but Prior to Retirement — In the event of aParticipant’s death after Age 60, but before receiving retirement benefits, the amount paid to thedesignated beneficiary shall be the amount as if the Participant had retired on the normalretirement date.     C. Eligibility for Death Benefits Prior to Retirement — In order to beeligible for the pre-retirement death benefit under the Planl prior to retirement, the Participantmust qualify for life insurance at standard rates from the insurer designated by the Bank. If theParticipant does not qualify for standard insurance, he or she can qualify for the Pre-RetirementDeath Benefit if the Participant agrees to reduce their compensation from the Bank for that portionof the life insurance premium greater than the standard premium.
 

 
         An example of this paragraph is:        If Standard Premium could be issued  =  $10,000 Premium Offered by Insurer  =   12,500 Executive’s Annual Salary Reduction  =   2,500      If the Participant was previously insured at standard rates and receives an increase in BaseAnnual Compensation which necessitates additional insurance for which Participant is uninsurable orcannot qualify for standard rates and the Participant does not elect salary reduction as statedabove, the Participant will still be entitled to death benefits based upon the Participant’s BaseAnnual Compensation in effect at the time immediately prior to the increase in Base AnnualCompensation that triggered the need for increased insurance.     D. Death Benefit While Receiving Retirement Benefits — In the event of theParticipant’s death while receiving retirement payments under Articles Five and Six, Death Benefitsshall be payable to such beneficiary as Participant nay have designated pursuant to Article Nine orin the absence of any such designation, to the Participant’s surviving spouse, or if no survivingspouse, then to Participant’s estate, in the same manner as if payable to the Participant. Anyamounts not fully paid by reason of any such payee’s death while receiving payments, if any, shallalso be payable in the same manner and under the same conditions as if payable to the Participantunder Paragraph 8A above.ARTICLE NINE9. DESIGNATION OF BENEFICIARY     To designate a beneficiary or beneficiaries to receive death benefits or unpaid retirementbenefits under this Agreement, the Bank shall provide each Participant with beneficiary forms to
 

 
designate the name, address, relationship, and percentage benefit payable to the beneficiary. Ifthe Bank does not have an executed beneficiary designation of Participant, the benefits shall bepayable to the Participant’s surviving spouse or if the Participant has no surviving spouse, theestate of the Participant. If the beneficiary of any benefits is the Surviving spouse of theParticipant, said surviving spouse shall have the right to designate a beneficiary to receive anyunpaid benefits due to the surviving spouse at their death. If the beneficiary is not the survivingspouse, the Participant shall have the right to name successor beneficiaries.ARTICLE TEN10. RESTRICTIVE COVENANTS     A.Employment and Solicitation. The Participant agrees that during employment or while receiving benefits hereunder, the Participant shall not accept employment orconsultancy with any bank, mortgage or brokerage company, or financial institution, nor solicit asa customer, either directly ox indirectly, on behalf of any other bank, mortgage or brokeragecompany, or financial institution, any person or entity that is domiciled or operating within theBank’s primary market area as defined in its public C.R.A. statement or anyone who is a current orprospective customer of the Bank, wherever located.     B. Confidential Information. During the term of employment or whilereceiving benefits hereunder, the Participant agrees to keep confidential all information providedby the Bank except only such information as is already known to the public, and including suchinformation and material relating to any customer, vendor, licensee, or other party transactingbusiness with the Bank and not to release, use, or disclose the same except with the prior writtenpermission of the Bank.
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     Participant further agrees to consider all plans, strategies and techniques ith which theParticipant has become familiar to be confidential and the exclusive property of the Bank whichwill not be disclosed to anyone for any reason whatsoever. All records, files, reports, lists,customer lists, plans documents, equipment, and the like relating to the business of the Bank,which the Participant has used or come into contact with, shall remain the sole property of theBank.     Participant agrees that on request of the Bank, and in any event upon termination, Participantshall turn over to the Bank all documents, papers, or other material in Participant’s possessionand under Participant’s control which may contain or be derived from confidential information,together with all documents, notes, or other work product which is connected with or derived fromParticipant’s services to the Bank whether or not such material is at the date hereof inParticipant’s possession. Participant agrees that he or she shall have no proprietary interest inany work product developed or used by him or her arising out of employment with the Bank.     C. Injunctive Relief. Participant acknowledges that the Bank will sufferirreparable injury, not readily susceptible of valuation in monetary damages, if the Participantbreaches any of the obligations under paragraphs 10 A or 10 B above. Accordingly, the Participantagrees that the bank will be entitled to injunctive relief against any breach or prospective breachby the Participant of the Participant’s obligation’s under paragraphs 10 A or 10 B in any federalor state court of competent jurisdiction sitting in the State of New York. The Participant herebysubmits to the jurisdiction of such courts for the purposes of any actions or proceeding institutedby the Bank to obtain such injunctive relief, and agrees that process may be served on theParticipant by
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registered mail, addressed to the last address of the Participant known to the Bank, or in anyother manner authorized by law.ARTICLE ELEVEN11. INSURANCE     It is the intention of the Bank to purchase a life insurance contract or contracts on theParticipant’s life payable to the Bank as a means of reimbursing itself, in whole or in part, forthe cost of the benefits provided in this Agreement. The Participant agrees to cooperate with theBank in obtaining such insurance by giving necessary consents or be submitted to any necessaryphysical examinations. Nothing in this Agreement, however shall create an obligation on the Bank’spart to obtain life insurance or to set aside any assets or funds to meet the obligations underthis Agreement and the Bank hereby reserves the absolute right in its sole discretion to terminateany insurance contract it may obtain on the Participant’s life, or to terminate in whole or inpart, any other funding program it may elect to undertake in connection with this Agreement.ARTICLE TWELVE12. REORGANIZATION     If the Bank is merged, consolidated into or with any other Corporation or substantially allthe assets are transferred to another Corporation, the provisions of this Agreement are bindingupon and inure to the benefit of the corporation resulting from such merger, consolidation, ortransfer.     Notwithstanding any other provisions of this Agreement, in the event of a merger,consolidation or sale of the Bank’s assets where the Bank remains the controlling party, such an
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event shall have no effect on this Agreement and this Agreement shall remain in full force andeffect.     Notwithstanding any other provisions of this Agreement, in the event of a merger,consolidation or sale of substantially all of the Bank’s assets where the Bank is not thecontrolling party and the Participant would at the time of said merger, consolidation or sale haveten (10) or more years of service and be under Age 60, the Participant for purposes of thisAgreement shall be deemed to be Age 60. Even though the Participant may be entitled to receivepayments prior to Age 65 if terminated under this paragraph, the provisions in regard to postponedretirement under Article Four above shall only be effective after the Participant’s chronologicalage of 65.     An example of this paragraph is:     Executive Age 55-12 Year of Service — Bank is sold — Executive is terminated withoutcause 2 years after sale — average 5-Year compensation at that time is $100,000.     Executive would be entitled to $35,000 less any Qualified Plan Offset 3 years hence,payable for 15 years: i.e.,             $100,000  x 50% x 70% = $35,000      (Pension) (Age 62) (Pension Before Offsets)ARTICLE THIRTEEN13. INCAPACITY OF RECIPIENT     In the event a Participant or Beneficiary is declared incompetent or the provisions of theParticipant or Beneficiary’s Durable Power of Attorney has been satisfied, then any benefitspayable under the Plan to which such Participant or Beneficiary shall be entitled may be paid to
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such Guardian or Attorney-in-Fact or any other person legally charged with the care of this personor estate. Except as provided above in this paragraph, if the Compensation Committee in its solediscretion determines that a Participant or Beneficiary is unable to manage his or her ownfinancial affairs, the Compensation Committee may direct the payments to any persons for thebenefit of the Participant or Beneficiary.ARTICLE FOURTEEN14. CLAIMS BY OTHERS     At no time shall the Participant’s estate, Participant’s spouse, or any other beneficiary theParticipant may have designated under this Agreement, be deemed to have any claims, rights, title,or any other interest in or to any life insurance contract(s) the Bank may have obtained or anyspecific fund or asset belonging to the Bank. Regarding any claim for unpaid benefits under thisAgreement, the Participant, Participant’s spouse, or any other designated beneficiary shall be anunsecured creditor of the Bank with no greater rights than any other creditor having a generalclaim for unpaid compensation.ARTICLE FIFTEEN15. ENCUMBRANCES     It is expressly agreed all payments under this Agreement and any rights thereto arenonassignable and nontransferable. Neither the Participant, the Participant’s spouse, nor anyother beneficiary shall have the right to commute, sell, pledge, assign, transfer or otherwiseconvey the right to receive any payments under this Agreement. Such payments shall not be subjectto legal process or levy of any kind.
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ARTICLE SIXTEEN16. RELATION TO OTHER BENEFITS     The benefits under this Agreement shall be independent of, and in addition to, benefitspayable under any other employment agreement that may exist from time to time between the partieshereto, or any other compensation payable by the Bank to the Participant whether as salary, orotherwise. This Agreement shall not be deemed to constitute a contract of employment between theparties, nor shall any provision hereof restrict the absolute right of the Bank to discharge theParticipant at will or restrict the absolute right of the Participant to terminate his/heremployment at will. However, it is intended that this Agreement shall remain in effect until allbenefits have been paid, except in the event of earlier termination of the Agreement as providedunder any other termination provision of this Agreement.ARTICLE SEVENTEEN17. LUMP SUM PAYMENT OF BENEFITS     The Corporation shall have the right to commute any benefits after they become payable underthe program but shall be limited to utilizing the Interest Rate Offset.             An example of this article is:    l. __ Annual Payment $37,500 2.   Years Remaining  5 3.   Interest Rate Offset  7%4.   Commuted Amount $164,520 
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ARTICLE EIGHTEEN18. AMENDMENTS     During the Participant’s lifetime this Agreement may be terminated or amended in anyparticular by the mutual written agreement of the Participant and the Bank.ARTICLE NINETEEN19. BINDING EFFECT     This Agreement shall be binding upon the parties hereto, their heirs, executors andadministrators, conservators, attorney-in-fact and successors in interest.ARTICLE TWENTY20. GOVERNING LAW     This Plan shall be construed in accordance with the laws of the State of New York, except tothe extent (if any) preempted by federal law.ARTICLE TWENTY-ONE21. ARBITRATION     Unless otherwise provided in this Agreement, any controversy or claim arising out of orrelating to this contract, or the breach thereof, shall be settled by the American ArbitrationAssociation and the judgment upon the award rendered by the arbitrators may be entered in any courthaving jurisdiction thereof.
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ARTICLE TWENTY-TWO22. SEVERABILITY     It is agreed that the invalidity or unenforceability of any article, section, provision ofthis Agreement shall not affect the validity or enforceability of any one or more of the otherarticles, sections, paragraphs or provisions.         HUDSON VALLEY BANK           BY:             Chairman of the Board    November 16, 1998     ATTEST:       Secretary     A:\RETIRE.WPD  
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