SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to _____________
Commission file number 0-10699
Hudson United Bancorp
----------------------------------------------------------------------
New Jersey 22-2405746
---------------------------------------------------- --------------------
(State or other jurisdiction of Incorporation or (I.R.S. Employer
organization) Identification No.)
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
---------------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 236-2600
--------------------------------------------------------------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
-------------------------------------------------------------------------------
None
-------------------------------------------------------------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
-------------------------------------------------------------------------------
Common Stock, no par value Series B Preferred Stock
----------------------------- -----------------------------------------
(Title of Class) (Title of Class)
-----------------------------
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K/A or any amendment to this Form 10-K/A.
The aggregate market value of the voting stock held by non-affiliates
of the Registrant, as of March 27, 2000 was $1,029,830,711.
The number of shares of Registrant's Common Stock, no par value,
outstanding as of March 27, 2000 was 51,652,951.
<PAGE>
Hudson United Bancorp
Form 10-K/A Annual Report
For The Fiscal Year Ended December 31, 1999
This amendment on Form 10-K/A amends Items 11 and 13 of Part III and Exhibit 21
and is being filed to correct certain information relating executive
compensation, disclose additional related party transactions and include
additional subsidiaries of Hudson United Bank ("HUB"), acquired in the
JeffBanks, Inc. and Southern Jersey Bancorp of Delaware, Inc. transactions.
PART III
ITEM 11. EXECUTIVE COMPENSATION
Executive compensation is described below in the tabular format
mandated by the Securities and Exchange Commission ("SEC").
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation earned in the past
three years for services performed in all capacities for Hudson United Bancorp
(the "Corporation" or "Hudson United Bancorp") and its subsidiaries, with
respect to the Named Officers.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards
--------------------------
Securities
Restricted Underlying All Other
Name and Principal Stock Options/ Compensation
Position Year Salary ($) Bonus ($) Award (s)(1) $ SARs(#) (2) ($)
-------- ---- ---------- --------- -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
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-
</TABLE>
-----------------------
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 $50,000 and income attributable to use of a
company provided vehicle.
(3) Ms. Staudmyer first worked for the Corporation from December 31, 1996
to February 11, 1997. She rejoined the organization on April 13, 1998.
Information with respect to Ms. Staudmyer's compensation in 1997 and
1998 represents (non-annualized) amounts actually paid.
Option Grants in 1999
No stock options were granted to the Named Officers in 1999.
Option Exercises
The following table is intended to show options exercised during the
last fiscal year and the value of unexercised options held at year-end 1999 by
the Named Officers. Hudson United Bancorp does not utilize stock appreciation
rights ("SARs") in its compensation package, although the SEC rules require that
SARs be reflected in Table headings.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)(1)
------------- ----------------
Shares
Acquired on Exercise Value Exercisable/ Exercisable/
Name (#) Realized ($) Unexercisable Unexercisable
--------------------------- ---------------------- ----------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
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-
</TABLE>
-----------------------
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.
<TABLE>
<CAPTION>
Pension Plan Table
Salary Years of Service
------ ----------------
15 20 25 30 35
-- -- -- -- --
<S> <C> <C> <C> <C> <C>
$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
</TABLE>
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.
<PAGE>
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.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) (1) & (2) List of Financial Statements and Financial
Statement Schedules
Schedules to the Consolidated Financial Statements required by Article 9 of
Regulation S-X are not required under the related instructions or are
inapplicable, and therefore have been omitted.
(a) (3) Exhibits
List of Exhibits
(3a) The Certificate of Incorporation of the Company in effect
on May 11, 1999. (Incorporated by reference from the
Company's Amended Quarterly Report on Form 10 Q/A for the
quarter ended June 30, 1999 filed September 10, 1999,
Exhibit (3a)).
(3b) The By-Laws of HUBCO, Inc. (Incorporated by reference from
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, Exhibit (3)).
(4a) Indenture dated as of January 14, 1994, between HUBCO,
Inc. and Summit Bank as Trustee for $25,000,000 7.75%
Subordinated Debentures due 2004. (Incorporated by
reference from the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993, Exhibit (4)).
(4b) Indenture dated as of September 13, 1996, between HUBCO,
Inc. and Summit Bank as Trustee for $75,000,000 8.20%
Subordinated Debentures due 2006. (Incorporated by
reference from the Company's Current Report on Form 8-K
dated September 18, 1996.)
(4c) Indenture dated as of January 31, 1997, between HUBCO,
Inc. and The Bank of New York as Trustee for $50,000,000
8.98% Junior Subordinated Debentures due 2027.
(Incorporated by reference from the Company's Current
Report on Form 8-K dated February 11, 1997.)
(4d) Indenture dated as of June 19, 1998, between HUBCO, Inc.
and The Bank of New York as Trustee for $50,000,000 7.65%
Junior Debentures due 2028. (Incorporated by reference
from the Company's Current Report on Form 8-K dated June
26, 1998.)
(10a) The Agreement and Plan of Merger between Hudson United
Bancorp and Dime Bancorp, Inc. as amended and restated on
December 27, 1999.
(10b) The Stock Option Agreement between Dime Bancorp, Inc. and
Hudson United Bancorp dated September 16, 1999.
(Incorporated by reference from the Company's filing on
Form 8-K dated September 24, 1999, Exhibit (99.2)).
(10c) The Stock Option Agreement between Hudson United Bancorp
and Dime Bancorp, Inc. dated September 16, 1999.
(Incorporated by reference from the Company's filing on
Form 8-K dated September 24, 1999, Exhibit (99.3)).
(10d) Change in Control, Severance and Employment Agreement with
Susan Staudmyer dated August 16, 1999.
(10e) The Agreement and Plan of Merger dated June 28, 1999,
among Hudson United Bancorp, Hudson United Bank,
JeffBanks, Inc., Jefferson Bank, and Jefferson Bank of New
Jersey. (Incorporated by reference from the Company's
filing on Form 8-K/A dated June 30, 1999, Exhibit (99.1)).
(10f) The Stock Option Agreement dated June 28, 1999, between
Hudson United Bancorp and JeffBanks, Inc. (Incorporated by
reference from the Company's filing on Form 8-KA dated
June 30, 1999, Exhibit (99.2)).
(10g) The Agreement and Plan of Merger dated June 28, 1999,
among Hudson United Bancorp, Hudson United Bank, Southern
Jersey Bancorp of Delaware, Inc., and Farmers and
Merchants National Bank. (Incorporated by reference from
the Company's filing on Form 8-KA dated June 30, 1999,
Exhibit (99.4)).
(10h) The Stock Option Agreement dated June 28, 1999, between
Hudson United Bancorp and Southern Jersey Bancorp of
Delaware, Inc. (Incorporated by reference from the
Company's filing on Form 8-KA dated June 30, 1999, Exhibit
(99.5)).
(10i) Agreement and Plan Merger dated as of January 26, 1999,
among HUBCO, Inc., Hudson United Bank, Little Falls
Bancorp, Inc. and Little Falls Bank. (Incorporated by
reference from the Company's Current Report Form 8-K dated
January 28, 1999, Exhibit (99.2)).
(10j) Stock Option Agreement dated as of January 26, 1999,
between HUBCO, Inc., and Little Falls Bancorp, Inc.
(Incorporated by reference from the Company's Current
Report on Form 8-K dated January 28, 1999, Exhibit
(99.3)).
(10k) Agreement and Plan of Merger dated as of March 31, 1998,
among HUBCO, Inc., Hudson United Bank, IBS Financial
Corporation, and Inter-Boro Savings and Loan Association.
(Incorporated by reference from the Company's Current
Report on Form 8-K dated March 31, 1998, Exhibit (99.2)).
(10l) Stock Option Agreement dated as of March 31, 1998, between
HUBCO, Inc., IBS Financial Corporation. (Incorporated by
reference from the Company's Current Report on Form 8-K
dated March 31, 1998, Exhibit (99.3)).
(10m) Agreement and Plan of Merger dated as of March 31, 1998,
among HUBCO, Inc., Lafayette American Bank, Dime Financial
Corp., and Dime Savings Bank of Wallingford. (Incorporated
by reference from the Company's Current Report on Form 8-K
dated March 31, 1998, Exhibit (99.4)).
(10n) Stock Option Agreement dated as of March 31, 1998, between
HUBCO, Inc. and Dime Financial Corp. (Incorporated by
reference from the Company's Current Report on Form 8-K
dated March 31, 1998, Exhibit (99.5)).
(10o) Change in Control, Severance and Employment Agreement with
Thomas R. Nelson dated March 30, 1998.
(10p) Change in Control, Severance and Employment Agreement with
Kenneth T. Neilson dated January 1, 1997. (Incorporated by
reference from the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.)
(10q) Change in Control, Severance and Employment Agreement with
D. Lynn Van Borkulo-Nuzzo dated January 1, 1997.
(Incorporated by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1996.)
(10r) Change in Control, Severance and Employment Agreement with
John F. McIlwain dated January 1, 1997. (Incorporated by
reference from the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.)
(10s) Change in Control, Severance and Employment Agreement with
Thomas Shara dated January 1, 1997
(10t) HUBCO Supplemental Employees' Retirement Plan dated
January 1, 1996. (Incorporated by reference from the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.)
(10u) HUBCO, Inc. Directors Deferred Compensation Plan.
(Incorporated by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1994.)
(21) List of Subsidiaries.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
On December 15, 1999, Hudson United Bancorp filed a Form 8-K Item 5
(date of earliest event - November 30, 1999), containing the
consolidated financial statements of Hudson United Bancorp restating
Hudson United Bancorp's historical consolidated financial statements as
of and for the three years ended December 31, 1998 to reflect the
mergers and the acquisition of JeffBanks, Inc. and Southern Jersey
Bancorp of Delaware.
On November 24, 1999, Hudson United Bancorp filed a Form 8-K Item 5
(date of earliest event - November 16, 1999), to announce the
declaration of a cash dividend of $0.25 per common share and a 3% stock
dividend.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HUDSON UNITED BANCORP
D. LYNN VAN BORKULO-NUZZO
By: _________________________
D. Lynn Van Borkulo-Nuzzo
Executive Vice President
Dated: July 19, 2000
