Gross-up Agreement




	



GROSS-UP AGREEMENT 

FOR KENNETH T. NEILSON 




THIS GROSS-UP AGREEMENT (the
“Agreement”), is made this 1 day of December, 2004, among Hudson United
Bancorp and Hudson United Bank (collectively, the “Company”), New Jersey
corporations that maintain principal offices at 1000 MacArthur Boulevard, Mahwah, New
Jersey, and Kenneth T. Neilson (the “Executive”). 



        WHEREAS,
the Executive is presently an executive officer of the Company; and 



        WHEREAS, the
Executive and the Company wish to enter into the Agreement as provided herein; 



        NOW,
THEREFORE, for the good and valuable consideration set forth herein, and to induce the
Executive to remain in the employ of the Company, the Company and the Executive, each
intending to be legally bound hereby, agree as follows: 



        
1.         Gross-up.  If, for any taxable year, Executive shall be                liable for the payment of an
excise tax under Section 4999 or other substitute                or similar tax
assessment (the “Excise Tax”) of the Internal Revenue                Code of
1986, as amended (the “Code”), including the corresponding
               provisions of any succeeding law, with respect to any payments made by the
               Company to the Executive as severance, or otherwise, or under any benefit
plan                of the Company applicable to the Executive individually or generally
to                executives or employees of the Company, then, the Company shall pay to
the                Executive an additional amount (the “Gross-Up Payment”) such
that the                net amount retained by the Executive, after deduction of any
Excise Tax on such                payments and benefits and any federal, state and local
income tax and Excise Tax                upon the Gross-Up Payment, shall be equal to the
payments made to the Executive                as severance, or otherwise, and the
payments and/or benefits due to the                Executive under any benefit plan of
the Company.  



        
2.         Payment.  Each Gross-Up Payment shall be made by domestic                cashier’s or treasurer’s
check, certified check or wire transfer, upon                the later of (i) five (5)
days after the date the Executive notifies the Company                of its need to make
such Gross-Up Payment, or (ii) the date of any payment                causing the
liability for such Excise Tax. The amount of any Gross-Up Payment                under
this section shall be computed by a nationally recognized certified public
               accounting firm designated jointly by the Company and the Executive. The
cost of                such services by the accounting firm shall be paid by the Company.
If the                Company and the Executive are unable to designate jointly the
accounting firm,                then the firm shall be the accounting firm used by the
Company at the time of                the Executive’s termination of employment. The
Executive shall have the                right to require the Company to make a
determination of whether any payments are                due hereunder in the event of a
change in the ownership or effective control of                the Company, or change in
the ownership of a substantial portion of the assets                of the Company that
may trigger an Excise Tax payment. The Company may make                Excise Tax
payments directly to the Internal Revenue Service (or local tax                authority,
if applicable) on behalf of the Executive.  



        
3.         Notification.  The Executive shall notify the company in                writing of any claim by the
Internal Revenue Service (“IRS”) that, if                successful, would
require the payment by the Company of a Gross-Up Payment in                addition to
that payment previously paid by the Company pursuant to this                Agreement.
Such notification shall be given an soon as practicable but no later                than
fifteen (15) business days after the Executive is informed in writing of
               such claim and shall apprise the Company of the nature of such claim, the
date                on which such claim is requested to be paid, and attach a copy of the
IRS                notice. The Executive shall not pay such claim prior to the expiration
of the                thirty (30) day period following the date on which the Executive
gives such                notice to the Company (or such shorter period ending on the
date that any                payment of taxes with respect to such claim is due). If the
Company notifies the                Executive in writing prior to the expiration of such
period that it desires to                contest such claim, the Executive shall:  













          	(i)	 	
               Give the Company any information reasonably requested by the Company relating to
               such claim; 


               



          	(ii)	 	
               Take such action in connection with contesting such claim as the Company shall
               reasonably request in writing from time to time, including, without limitation,
               accepting legal representation with respect to such claim by an attorney
               reasonably selected by the Company; 


               



          	(iii)	 	
               Cooperate with the Company in good faith in order effectively to contest such
               claim; and 


               



          	(iv)	 	
               Permit the Company to participate in any proceedings relating to such claim;
               provided, however that the Company shall pay directly all costs and expenses
               (including legal and accounting fees, as well as other expenses and any
               additional interest and penalties) incurred by the Executive and the Company in
               connection with an IRS levy, contest or claim and provided further that the
               Company shall not take any action or fail to make any Gross-Up Payment so as to
               cause the assessment of any IRS levy and the Company shall cause any levy so
               assessed to be immediately released by payment of the Gross-Up Amount, together
               with all costs, interest and penalties. 


               




	



        
4.         Miscellaneous.  
This Agreement is the joint and several                obligation of Hudson United
Bancorp and Hudson United Bank. The terms of this                Agreement shall be
governed by, and interpreted and construed in accordance                with, the laws of
New Jersey. This Agreement supersedes all prior agreements and
               understandings with respect to the matters covered hereby. The amendment
or                termination of this Agreement may be made only in a writing executed by
the                Company and the Executive, and no amendment or termination of this
Agreement                shall be effective unless and until made in such a writing. This
Agreement shall                be binding upon any successor (whether direct or indirect,
by purchase, merger,                consolidation, liquidation or otherwise) to all or
substantially all of the                assets of the Company. This Agreement is personal
to the Executive and the                Executive may not assign any of his rights or
duties hereunder but this                Agreement shall be enforceable by the Executive’s
legal representatives,                executors or administrators. The Company shall pay
all legal fees incurred by                the Executive in connection with the Executive’s
good faith enforcement of                the Executive’s legal rights under this
Agreement. This Agreement may be                executed in two or more counterparts,
each of which shall be deemed an original,                and it shall not be necessary
in making proof of this Agreement to produce or                account for more than one
such counterpart.  



        IN
WITNESS WHEREOF, the Company has caused this Gross-up Agreement to be signed by its duly
authorized representatives pursuant to the authority of its Board of Directors’
Compensation Committee, and the Executive has personally executed this Gross-up Agreement,
all as of the day and year first above written. 














	ATTEST:




  /s/  Ann LaCarrubba
——————————————

    Ann LaCarrubba
    Assistant Corporate Secretary    
             		HUDSON UNITED BANCORP AND 
HUDSON UNITED BANK



By:  /s/ John H. Tatigian, Jr.
——————————————

        John H. Tatigian, Jr.,     
        Chairperson,
Compensation Committee






	WITNESS:



  /s/  Victoria S. Freund
——————————————

    Victoria S. Freund    
              		EXECUTIVE



  /s/  Kenneth T. Neilson
——————————————

    Kenneth T. Neilson