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The following is an excerpt from a 10-K/A SEC Filing, filed by HUDSON UNITED BANCORP on 7/20/2000.
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HUDSON UNITED BANCORP - 10-K/A - 20000720 - PART_III

PART III

ITEM 11. EXECUTIVE COMPENSATION

Executive compensation is described below in the tabular format mandated by the Securities and Exchange Commission ("SEC").

SUMMARY COMPENSATION TABLE

The following table summarizes all compensation earned in the past three years for services performed in all capacities for Hudson United Bancorp (the "Corporation" or "Hudson United Bancorp") and its subsidiaries, with respect to the Named Officers.

                           Summary Compensation Table


                                                                              Long Term Compensation
                                                                              ----------------------
                           Annual Compensation Awards
                           --------------------------

                                                                                            Securities
                                                                             Restricted     Underlying     All Other
   Name and Principal                                                          Stock         Options/     Compensation
        Position                Year        Salary ($)      Bonus ($)      Award (s)(1) $    SARs(#)        (2) ($)
        --------                ----        ----------      ---------      --------------    -------        -------
Kenneth T. Neilson,             1999         450,000        450,000           521,250           -0-          18,542
Chairman, President &           1998         390,000        390,000           537,500           -0-          10,171
CEO, the Corporation &          1997         365,000        365,000           236,688        46,000          19,643
HUB

D. Lynn Van                     1999         210,000        105,000           260,625           -0-          14,509
Borkulo-Nuzzo, EVP &            1998         200,000        100,000           268,750           -0-          13,578
Corporate Secretary, the        1997         185,000         92,500            67,625        12,500          15,237
Corporation & HUB

Thomas J. Shara, Jr. EVP        1999         210,000        105,000           260,625           -0-          11,973
& Senior Loan Officer of        1998         190,000         95,000           268,750           -0-           8,371
the Corporation & HUB           1997         170,000         32,500               -0-        10,000          12,678

John McIlwain, EVP              1999         185,000         92,500           260,625           -0-          16,575
& Chief Credit Officer,         1998         155,803         85,000           134,375         5,000          10,799
the Corporation & HUB           1997         169,615        85,000                -0-           -0-           7,924

Susan M. Staudmyer,             1999         210,000        105,000           260,625           -0-          16,130
EVP, Retail Banking ,           1998         142,326        108,100           268,750        16,105           7,931
the Corporation & HUB (3)       1997           5,769            -0-               -0-           -0-             -0-


Notes:

(1) The dollar amounts listed represent the number of shares of restricted stock granted, multiplied by the fair market value of each share of stock on the date of the grant. Cash dividends are paid directly to the officer holding the restricted stock but stock dividends are added to the restricted stock and are subject to the same restrictions. The number of shares reflected has been adjusted for the 3% stock dividend effected December 1, 1997, the 3% stock dividend effected September 1, 1998 and the 3% stock dividend effected December 1, 1999. As of December 31, 1999, Mr. Neilson, Ms. Van Borkulo-Nuzzo, Mr. Shara, Mr. McIlwain, and Ms. Staudmyer held 20,000, 10,000, 10,000, 15,150 and 20,300 shares of restricted stock, respectively, with aggregate values of $521,200, $260,000, $260,000, $398,884, and $529,018, respectively.

(2) All amounts in this column represent employer contributions to 401(k) plans on behalf of the Corporation Named Officers, premiums for life insurance in excess of $50,000 and income attributable to use of a company provided vehicle.

(3) Ms. Staudmyer first worked for the Corporation from December 31, 1996 to February 11, 1997. She rejoined the organization on April 13, 1998. Information with respect to Ms. Staudmyer's compensation in 1997 and 1998 represents (non-annualized) amounts actually paid.

Option Grants in 1999

No stock options were granted to the Named Officers in 1999.

Option Exercises

The following table is intended to show options exercised during the last fiscal year and the value of unexercised options held at year-end 1999 by the Named Officers. Hudson United Bancorp does not utilize stock appreciation rights ("SARs") in its compensation package, although the SEC rules require that SARs be reflected in Table headings.

                          Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

                                                                                 Number of
                                                                                 Securities              Value of
                                                                                 Underlying             Unexercised
                                                                                Unexercised            In-the-Money
                                                                                Options/SARs           Options/SARs
                                                                               at FY-End (#)         at FY-End ($)(1)
                                                                               -------------         ----------------
                                   Shares
                            Acquired on Exercise           Value                Exercisable/           Exercisable/
Name                                 (#)                Realized ($)           Unexercisable           Unexercisable
--------------------------- ---------------------- ----------------------- ----------------------- ----------------------
Kenneth T. Neilson                   -0-                    -0-                 174,463/103           $1,777,085/-0-
D. Lynn Van Borkulo-Nuzzo            -0-                    -0-                  67,043/103            $758,448/-0-

Thomas J. Shara                      -0-                    -0-                  69,695/103            $833,245/-0-
John F. McIlwain                   13,111                 256,594                 0/10,712                -0-/-0-
Susan M. Staudmyer                   -0-                    -0-                   0/16,015                -0-/-0-


NOTES:

(1) Options are "in the money" if the fair market value of the underlying security exceeds the exercise price of the option at year-end.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

Under the Corporation's restricted stock plan, each share of stock awarded is subject to a "Restricted Period" of from two to ten years, as determined by the committee administering the plan when it awards the shares. Effective upon the date of grant, the officer or employee is entitled to all the rights of a shareholder with respect to the shares, including dividend and voting rights. However, if a share recipient leaves the employment of the Corporation or its subsidiaries during the Restricted Period for any reason, his or her shares may be forfeited to the Corporation. Upon the occurrence of a change in control of the Corporation, every Restricted Period then in existence with a remaining term of five years or less will automatically expire.

Under the Corporation 1999 Stock Option Plan, options are granted with a term not to exceed ten years from the grant date. Each option is granted with a vesting schedule as determined by the Stock Committee. In the event of a change in control, as defined in the Plan, any option that has not vested, as of the date of the change in control, becomes fully vested.

As of January 1, 1997, the Corporation entered into change in control agreements with Mr. Neilson, Ms. Van Borkulo-Nuzzo, Mr. Shara and Mr. McIlwain. As of August 16, 1999, the Corporation entered into a change in control agreement with Ms. Staudmyer. The Agreements generally provide that in the event of a Change in Control, the Executives would be entitled to be employed for a period of three years and each would be entitled to substantially the same title, same salary and same benefits as existed prior to the change in control or the Executive would be entitled to certain severance payments and benefits. These agreements do not become effective unless there is a change in control and then remain three years after a change in control (two years in the case of Mr. McIlwain and Ms. Staudmyer). Prior to a change in control, unless the Corporation stops their automatic renewal, the agreements are for two year "evergreen" terms (one year in the case of Mr. McIlwain and Ms. Staudmyer).

Each agreement defines "change in control" to mean any of the following: (i) the acquisition of beneficial ownership by any person or group of 25% or more of the Corporation's voting securities or all or substantially all of its assets; (ii) the merger consolidation or combination (a "merger") with an unaffiliated entity unless following the merger the Corporation's directors constitute 50% or more of the directors of the combined entity and the Corporation's CEO is the CEO of the surviving entity; or (iii) during any two consecutive calendar years individuals who were directors of the Corporation at the start of the period cease to constitute two-thirds of the directors unless the election of the directors was approved by the vote of two-thirds of the directors then in office; or (iv) the transfer of all or substantially all of the Corporation's assets.

With respect to Ms. Van Borkulo-Nuzzo's contract and Mr. Shara's contract, if either officer is terminated without cause, resigns for good reason following a change in control, dies or is disabled, the officer (or the officer's estate) is entitled to a lump sum payment equal to three times the sum of their annual salary and highest annual bonus in the last three years, as well as a continuation of family health coverage for a period of three years. In the event that the severance payments and benefits under the agreement, together with any other parachute payments, would constitute an excess parachute payment under Section 280G of the Internal Revenue Code of 1986 (the "Code"), the payments to Ms. Van Borkulo-Nuzzo and Mr. Shara would be increased in an amount sufficient to pay the excise taxes and other income and payroll taxes necessary to allow Ms. Van Borkulo-Nuzzo and Mr. Shara to retain the same net amount, after such taxes as they were otherwise entitled to receive (a "Make Whole Tax Provision").

With respect to Mr. McIlwain's contract and Ms. Staudmyer's contract, if either officer is terminated without cause, resigns for good reason following a change in control, dies or is disabled, the officer (or the officer's estate) is entitled to a lump sum payment equal to three times of the sum of their annual salary and the highest bonus paid or to be paid to the officer, as well as a continuation of their family's health coverage for the same number of years as the salary entitlement. However, under these contracts, in the event that the severance payments and benefits under the agreements, together with any other parachute payments, would constitute excess parachute payments under Section 280G of the Code, the payments and benefits under the agreements will be reduced (but not below zero) to the extent necessary to avoid excess parachute payments.

With respect to Mr. Neilson's contract, if he is terminated without cause, resigns for good reason (as defined in the contract) within the first 90 days following a change in control, resigns for any reason after that 90 day period following a change in control, dies or is disabled, he (or his estate) is entitled to a lump sum payment equal to three times the sum of his annual salary and his highest bonus in the last three years, as well as a continuation of his family's health coverage for a period of three years. Mr. Neilson's contract contains a Make Whole Tax Provision.

The completion of the Dime-Hudson United Bancorp merger will constitute a change in control under the terms of the Corporation's option and restricted stock plans, and, except for Mr. Neilson's contract, the employment agreements described above.

Concurrently with the execution of the Dime-Hudson United Bancorp merger agreement, the Corporation entered into a new employment agreement with Mr. Neilson, which primarily contains substantive changes to Mr. Neilson's employment arrangement that would take effect after completion of the Dime-Hudson United Bancorp merger. The term of Mr. Neilson's agreement would extend to December 31, 2004. Following the completion of the merger, Dime United will assume the obligations of the Corporation under Mr. Neilson's employment agreement, and Mr. Neilson will serve as President and Chief Operating Officer of each of Dime United and DimeBank. Mr. Neilson's employment agreement also provides that he will succeed Mr. Lawrence Toal on December 31, 2002, or earlier if Mr. Toal leaves office earlier, as Chairman of the Board and Chief Executive Officer of those entities. The terms of Mr. Neilson's employment after the merger are as follows:

o Mr. Neilson's base salary will initially be at least $750,000, or, if greater, 80% of Mr. Toal's salary, and at least $1,000,000 once he becomes Chairman of the Board and Chief Executive Officer of both Dime United and DimeBank.

o Mr. Neilson will be eligible to participate in Dime United's cash incentive plan, with an annual target bonus opportunity of at least 100% of his base salary, and to receive annual stock incentive awards while he is President and Chief Operating Officer equal to 80% of Mr. Toal's base annual stock incentive awards.

o Mr. Neilson will be provided with a car and driver while based in New York City, financial planning benefits and club memberships.

o After Mr. Neilson becomes Chairman of the Board and Chief Executive Officer, he will be eligible to receive annual stock incentive awards on a basis commensurate with those for which Mr. Toal was eligible while holding those offices.

Immediately following completion of the merger, Mr. Neilson will receive:

o options to purchase 120,000 shares of Dime United stock at the closing price on the first trading day after completion of the merger, with one-third of these options to vest on the date Mr. Neilson becomes Chairman of the Board and Chief Executive Officer and, provided that he continues to hold such offices, one-third on the first anniversary of such date and the remaining one-third on December 31, 2004, and

o the right to purchase, at par value of $0.01 per share, 100,000 shares of restricted stock of Dime United, with restrictions to lapse on one-third of the restricted shares on each of the first, second and third anniversaries of the grant date, provided Mr. Neilson is still employed pursuant to his employment agreement on those dates, subject to the exceptions explained below.

Based on a 56% Dime/44% the Corporation weighted average of volatility and an assumed January 31, 2000 grant date, the Black Scholes value of Mr. Neilson's stock option grant would be $1,276,275. Based on the January 31, 2000 closing price of the Corporation stock, his restricted shares would be valued at $2,336,500.

Mr. Neilson also will participate in Dime United's SERP, with a pension goal of not less than 50% of average compensation, offset by benefits received under other defined benefit plans, including plans of the Corporation, such as the Corporation Supplemental Employees' Retirement Plan. Under the terms of Dime United's SERP, Mr. Neilson will receive credit for his years of service at the Corporation. As of the date of this document, Mr. Neilson had completed 16 years of service with the Corporation, which will result in his benefit under the SERP being 100% vested at the completion of the merger.

If Mr. Neilson's employment is involuntarily terminated other than for cause or if Mr. Neilson terminates his employment following a material change, which is defined to include a failure to elect, re-elect, appoint or reappoint Mr. Neilson to the positions specified above, a material diminution in his responsibilities, other material breaches of the employment agreement, requiring his services to be performed primarily outside the New York metropolitan area, or adoption of a resolution by a simple majority of the board of directors of Dime United or DimeBank providing that he shall not become Chairman of the Board and Chief Executive Officer thereof as specified in his agreement, Mr. Neilson will receive certain specified benefits. These benefits include:

o a lump sum payment equal to his annual salary in effect immediately prior to termination, plus 100% of his annual target bonus;

o the continuation of life, medical and dental coverage for the remainder of the term of his agreement, or 18 months if longer;

o full vesting of all stock options granted during the term of his agreement, continued exercisability of such stock options as if there had been no termination of employment and continued vesting of restricted stock granted at the completion of the merger as if there had been no termination of employment; and

o if Mr. Neilson's SERP benefit does not then equal at least $741,000 starting at or after age 55, an additional payment so that his total retirement benefit, commencing at or after age 55, expressed as a single life annuity, will not be less than that amount.

If Mr. Neilson voluntarily terminates his employment, other than following a material change, generally no additional benefits will be provided to him.

If during the term of his agreement and following a change in control, as defined in his agreement, of Dime United, Mr. Neilson's employment is involuntarily terminated other than for cause, or he terminates his employment after a material change, he will be entitled to receive the benefits described above with respect to an involuntary termination of his employment and additional benefits, including continued medical coverage for him and his spouse for the remainder of their lives and, instead of the lump sum described above, a lump sum equal to three times his rate of annual salary and target bonus, or average actual bonus, if greater. In addition, Mr. Neilson may receive reimbursement of costs or expenses if, following a change in control, he must relocate his principal residence. Neither the execution and delivery of the merger agreement between Dime and the Corporation nor the consummation of the transactions contemplated by the merger agreement will constitute a change in control under Mr. Neilson's agreement.

If any of the compensation and other benefits payable to Mr. Neilson under his agreement results in additional tax under section 4999 of Internal Revenue Code, Dime United will make an additional payment so as to provide Mr. Neilson with the benefits he would have received in the absence of such tax.

Pension Plans

The monthly retirement benefit for executives under the Employees Retirement Plan of Hudson United Bancorp, Inc. (the "Plan") will generally be equal to the product of (a) 1% of the employee's base average annual monthly earnings (based on the highest five years of service) plus 1/2% of the employee's base average monthly earnings (based on the highest 5 years of service) in excess of the average Social Security taxable wage base, multiplied by (b) the years of credited service. Retirement benefits normally commence when an employee reaches age 65, but early retirement without reduction in benefit may be taken when an employee's age plus years of service equals 85.

In the Plan, compensation in the form of a bonus is excluded from benefit calculations. Thus, for each Named Officer, only the amounts that are shown each year under the heading "Salary" in the Summary Compensation Table are covered. The Plan also provides for disability pension benefits.

As of January 1, 1996, Hudson United Bancorp adopted a Supplemental Employee Retirement Plan ("SERP"). The SERP provides a pension benefit which, in large part, makes up the amount of the benefits which cannot be provided under the Plan as a result of the limit on the amount of compensation which can be taken into account under Section 401(a)(17) of the Code ($160,000 in 1998 and indexed for inflation in subsequent years) and the amount of benefits payable under Section 415 of the Code. Unlike the Plan, the SERP covers salary and one-third of incentive compensation. The benefit is payable as a single life annuity and 100% survivor benefits are paid for the life of the designated beneficiary. Kenneth Neilson is the only person who has been designated as a participant under the SERP. Hudson United Bancorp has purchased life insurance to fund the benefit.

The following table shows an employee's estimated annual retirement benefit from the Plan and the SERP combined, assuming retirement at age 65 for an individual reaching such age before January 1, 2000 and assuming a straight life annuity benefit, for the specified compensation levels and years of service. Except for Mr. Neilson, the amounts in the table below are limited under Section 401(a)(17) of the Code, as described in the preceding paragraph. The benefits listed in the table are not subject to any deduction for social security or other offset amounts. Mr. Neilson has approximately 16 years of credited service under the pension plan as of January 1, 2000 and, at age 65, would have 31 years of credited service. Ms. Van Borkulo-Nuzzo has approximately 33 years of credited service under the pension plan as of January 1, 2000, and, at age 65, would have approximately 49 years of credited service. Mr. Shara has approximately 19 years of credited service as of January 1, 2000 and, at age 65, would have 42 years of credited service. Mr. McIwain has 8 years of credited service as of January 1, 2000 and, at age 65, would have approximately 11 years of credited service. Ms. Staudmyer has approximately 2 years of credited service as of January 1, 2000 and at age 65, would have approximately 24 years of credited service.

           Pension Plan Table

Salary                                    Years of Service
------                                    ----------------
                         15                  20               25             30                 35
                         --                  --               --             --                 --
$125,000              $25,645            $34,193          $42,742          $51,290           $59,838
$150,000              $31,270            $41,693          $52,117          $62,540           $72,963
$200,000              $42,520            $56,693          $70,867          $85,040           $99,213
$250,000              $53,770            $71,693          $89,617         $107,540          $125,463
$300,000              $65,020            $86,693         $108,367         $130,040          $151,713
$350,000              $76,270           $101,693         $127,117         $152,540          $177,963
$400,000              $87,520           $116,693         $145,867         $175,040          $204,213
$450,000              $98,770           $131,693         $164,617         $197,540          $230,463
$500,000             $110,020           $146,693         $183,367         $220,040          $256,713
$550,000             $121,270           $161,693         $202,117         $242,540          $282,963
$600,000             $132,520           $176,693         $220,867         $265,040          $309,213

Compensation Committee Interlocks and Insider Participation

Various aspects of the compensation of the Hudson United Bancorp executive officers are determined by the Compensation Committee.

The Compensation Committee members are: Charles F.X. Poggi, Chairman, Robert J. Burke, Joan David, W. Peter McBride and John H. Tatigian, Jr.

Mr. Neilson serves on the Board of Directors of Hudson United Bancorp and is an officer of Hudson United Bancorp. Mr. Neilson absented himself from all discussions and abstained from all voting with respects to his own compensation.

Charles F.X. Poggi, who is the Chairman of the Compensation Committee and is involved in setting executive compensation, is President of Poggi Press, a general printing company. During 1999 Poggi Press was paid $677,321 for printing work for Hudson United Bancorp and its subsidiaries. Management believes the terms and a condition of the transactions with Poggi Press to be equivalent to terms available from an independent third party.

W. Peter McBride, who is on the Compensation Committee, and is involved in setting executive compensation, is affiliated with McBride Corporate Real Estate. McBride Corporate Real Estate was retained to assist in the sale and/or leasing of various Hudson United Bancorp properties and in doing so earned commissions of approximately $584,273 in 1999. Management believes the terms and a condition of the transactions with McBride Corporate Real Estate to be equivalents to terms available from an independent third party.


ITEM 13 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Compensation Committee Interlocks and Insider Participation

Various aspects of the compensation of the Hudson United Bancorp executive officers are determined by the Compensation Committee.

The Compensation Committee members are: Charles F.X. Poggi, Chairman, Robert J. Burke, Joan David, W. Peter McBride and John H. Tatigian, Jr.

Mr. Neilson serves on the Board of Directors of Hudson United Bancorp and is an officer of Hudson United Bancorp. Mr. Neilson absented himself from all discussions and abstained from all voting with respects to his own compensation.

Charles F.X. Poggi, who is the Chairman of the Compensation Committee and is involved in setting executive compensation, is President of Poggi Press, a general printing company. During 1999 Poggi Press was paid $677,321 for printing work for Hudson United Bancorp and its subsidiaries. Management believes the terms and a condition of the transactions with Poggi Press to be equivalent to terms available from an independent third party.

W. Peter McBride, who is on the Compensation Committee, and is involved in setting executive compensation, is affiliated with McBride Corporate Real Estate. McBride Corporate Real Estate was retained to assist in the sale and/or leasing of various Hudson United Bancorp properties and in doing so earned commissions of approximately $584,273 in 1999. Management believes the terms and a condition of the transactions with McBride Corporate Real Estate to be equivalents to terms available from an independent third party.

Certain Transactions with Management

HUB has made in the past and, assuming continued satisfaction of generally applicable credit standards, expects to continue to make, loans to directors, executive officers and their associates (i.e., corporations or organizations for which they serve as officers or directors or in which they have beneficial ownership interests of 10% or more). These loans have all been made in the ordinary course of the banking business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and do not involve more than the normal risk of collectibility or other unfavorable features. Directors, executive officers and their associates did not during 1999 or through March 31, 2000, borrow from HUB an amount in excess of 10% of the bank's equity capital for any one director or executive officer (together with their associates) or an amount in excess of 20% of the bank's equity capital for all directors and executive officers and their associates as a group.

Prior to the Corporation's acquisition of JeffBanks, Inc. and its subsidiary banks, Jefferson Bank PA and Jefferson Bank New Jersey (collectively "JeffBanks"), JeffBanks entered into leases with related parties. The Corporation has not formed an opinion as to whether or not the rental paid for these leases is comparable to the rental that would have been required by unrelated parties in similar commercial transactions for similar locations.

In January 1998, JeffBanks entered into a 10-year lease (with three five-year renewal options) for 12,943 square feet (increasing to 17,328 square feet in May 1999) of office space at 1845 Walnut Street. 1845 Walnut Street is owned by a partnership, one of whose partners is a limited partnership of which subsidiaries of Resource America, Inc. ("RAI") are the general and limited partners. Edward E. Cohen, husband of Director Betsy Z. Cohen, is an executive, officer, and principal shareholder and director of RAI. JeffBanks also leased 2,164 square feet on the first floor of 1845 Walnut Street pursuant to a September 1996 lease with a ten-year term and two five-year renewal options. In 1999, annual rent under the two leases aggregated $378,183. Resource Asset Investment Trust ("RAIT") (of which Director Cohen is Chairman and Director of RAIT and RAI is a 13.4% shareholder) has occupied approximately 1,334 square feet of the Bank-leased 1845 Walnut property and has utilized the phone system, utilities and cleaning services provided by the Bank since the inception of the lease pursuant to a sublease. The Bancorp.com, Inc. also has occupied approximately 1,534 square feet of the Bank-leased 1845 Walnut property and has utilized the phone system, utilities and cleaning services since sometime in 1999. The Bancorp.com, Inc. is a corporation that was organized to act as the bank holding company for a bank being formed to operate as an Internet only bank. Edward E. Cohen, the husband of Director Cohen, is the Chairman of Bancorp.com, and Daniel G. Cohen, Director Cohen's son, is the President and Chief Executive Officer. Edward Cohen and two sons, Daniel and Jonathan, own an aggregate of 6.7% of Bancorp.com, RAI owns 9.8% and Director William H. Lamb owns 3.2%. RAIT and Bancorp.com are expected to vacate the premises by September 30, 2000. At the outset of the sublease, RAIT was required to pay JeffBanks $96,167 for tenant improvements. At the termination of the sublease, Hudson United Bancorp will be obligated to return the unamortized portion of the tenant improvements payment.

JeffBanks leased facilities consisting of 10,045 square feet, plus basement space, at 1607-1609 Walnut Street from Jefferson Associates II. Jefferson Associates II is a Pennsylvania limited partnership, the partners of which are comprised principally of persons who were related to JeffBanks as officers, directors or legal counsel. Director Cohen's husband and Patricia K. Lamb, the wife of Director Lamb, are limited partners of Jefferson Associates
II. A lease was executed in December 1985 and amended effective April 1988 to include the 1609 Walnut Street space. As amended, the lease provides for a twenty-year term, with a five-year renewal option. The amended lease provides for a minimum rent and yearly escalations based upon increases in the cost of living, with a minimum increase of 3% and a maximum increase of 7% in any year. In addition, under the terms of the lease, the tenant is responsible for payment of taxes, utilities and insurance on the building. In 1999, the rent was $152,216 per annum. The new minimum rent for 2000 is $212,843. Pursuant to a sublease agreement dated July 2, 1998, the second floor of the building (consisting of 4,145 square feet) was sublet by JeffBanks to Brandywine Construction & Management, Inc., an affiliate of Director Cohen's husband. The sublease term runs from April 10, 1998 to April 9, 2001 with three three-year options to renew at 95% of market rent for the space. Initial base rent on the sublease was $49,776 per year, plus taxes, electricity allowance of $1,025 per month and 2% CPI increases. By letter dated August 12, 1998, JeffBanks and Brandywine added the 2,000 square foot mezzanine and 500 square foot of storage space to the sublease. The sublease consists of 61% of the space and 24% of the total rent payable to the landlord. Base rent under the sublease is presently $51,828 annually and the utility reimbursement is $1,025 per month.

JeffBanks leased premises for the Manayunk branch office consisting of 2,426 square feet from Canal House Historic Associates, a Pennsylvania limited partnership which is an affiliate of Director Cohen. The initial term of the lease expired on May 31, 1995, whereupon JeffBanks exercised the first of three five-year renewal options. The second renewal term commenced effective June 1, 2000 and will expire May 31, 2005. During the second and third renewal terms, base rent is defined as the prevailing market rent, provided that the minimum annual rent payable during the second renewal term is $48,520 and during the third renewal term is $53,372. The maximum annual rent in any renewal period cannot exceed 120% of the rent paid at the expiration of the prior period. In 1999, base rent of $46,094 was paid. On June 12, 2000 notice was received that rent for the current period will be 120% of the prior rent paid, or $55,313.

JeffBanks leased its Haddon Heights branch office consisting of 4,844 square feet leased from Jefferson Associates NJ, L.P., a New Jersey limited partnership in which Director Cohen and her husband are limited partners. The lease provides for a term expiring March 1, 2001. In 1999, $133,860 was paid under the Lease.

Hudson United Bancorp entered into certain transactions with The Bancorp.com, Inc. during 1999 and 2000. For $922,820, Hudson United Bancorp purchased 92,280 shares (4.9% of the outstanding shares) of Bancorp.com common stock, and a warrant entitling it to purchase an additional 92,280 shares at $10.00 per share. Bancorp.com sold common stock, without matching warrants, to other investors in its initial stock offering at $10.00 per share. For $955,638, HUB sold to Bancorp.com a number of items of used equipment and assigned certain related software licenses. The purchase price was set at the book value (and in some cases, the original purchase price) of the items of equipment, and Bancorp.com assumed HUB's obligations under the licenses. The equipment was acquired by Hudson United Bancorp in the JeffBanks merger. HUB management expected to dispose of the equipment for substantially less consideration if it had not sold it to Bancorp.com. In addition, Bancorp.com, with HUB's permission, offered employment to a number of former JeffBanks employees and obtained, for HUB's benefit, releases by those employees of claims for severance compensation.

HUB has agreed in principle to sell its motor vehicle financing and direct leasing business located in Crofton, Maryland, to Bancorp.com. The purchase price for the portfolio is to be its net book value as of the closing date. Had the transaction closed on March 31, 2000, the purchase price would have been approximately $22 million. Bancorp.com has not received FDIC approval for its bank subsidiary, and the parties do not anticipate entering into a binding agreement relating to the sale until such time as the bank's FDIC charter is issued.

HUB is reviewing whether all lease payments and reimbursements due to HUB from RAIT, Bancorp.com and Brandywine have been paid in full.

Effective March 31, 2000, Director Cohen terminated her employment as an officer of Hudson United Bancorp and its subsidiaries. The employment agreement between her and the Corporation (as successor to JeffBanks) was terminated, except that the Corporation retained certain of its obligations to Director Cohen, including the obligation to make "gross-up payments" if Section 280G of the Code applies to certain payments or benefits received by Director Cohen (although neither party expects this to be the case). The Corporation paid Director Cohen $1,200,000 in satisfaction of her severance benefits under the employment agreement.

In March, 2000, the Corporation entered into a two year Consulting Agreement with Interfinancial Consulting, Inc., a corporation affiliated with Director Cohen. Pursuant to that agreement, Interfinancial may be required to perform up to 600 person hours of consulting during the term. Under the agreement, Interfinancial was paid $425,000 at the contract commencement and is to be paid an additional $425,000 early in 2001.

BROKERAGE PARTNERS