SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[X] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
HERITAGE BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
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________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
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________________________________________________________________________________
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[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
HERITAGE BANCORP, INC.
1313 Dolley Madison Boulevard
McLean, Virginia 22101
August 9, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of Heritage Bancorp, Inc. (the "Company"), the holding company for
The Heritage Bank (the "Bank") which will be held on September 9, 1999 at 10:00
a.m. Eastern Daylight Time at the McLean Community Center, 1234 Ingleside
Avenue, McLean, VA 22101 (the "Annual Meeting").
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business that we will transact at the Annual Meeting. In addition to the
formal items of business, management will report on the operations and
activities of the Company and the Bank and you will have an opportunity to ask
questions.
The Board of Directors of the Company has determined that an
affirmative vote on each matter to be considered at the Annual Meeting is in the
best interests of the Company and its stockholders and recommends a vote "FOR"
each of these matters.
Please complete, sign and return the enclosed proxy card promptly,
whether or not you plan to attend the Annual Meeting. YOUR VOTE IS IMPORTANT
REGARDLESS OF THE NUMBER OF SHARES YOU OWN. VOTING BY PROXY WILL NOT PREVENT YOU
FROM VOTING IN PERSON AT THE ANNUAL MEETING BUT WILL ASSURE THAT YOUR VOTE IS
COUNTED IF YOU CANNOT ATTEND.
On behalf of the Board of Directors and the employees of Heritage
Bancorp, Inc. and The Heritage Bank, we thank you for your continued support and
look forward to seeing you at the Annual Meeting.
Sincerely yours,
Harold E. Lieding
Chairman of the Board
<PAGE>
HERITAGE BANCORP, INC.
1313 DOLLEY MADISON BOULEVARD
MCLEAN, VIRGINIA 22101
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: THURSDAY, SEPTEMBER 9, 1999
TIME: 10:00 A.M., LOCAL TIME
PLACE: MCLEAN COMMUNITY CENTER
1234 INGLESIDE AVENUE
MCLEAN, VA 22101
At our 1999 Annual Meeting, we will ask you to:
o Elect eight directors to serve for staggered terms expiring at the
2000, 2001 and 2002 annual meetings;
o Ratify the appointment of Yount, Hyde & Barbour, P.C. as our
independent auditors for the fiscal year ending December 31, 1999;
and
o Transact any other business as may properly come before the Annual
Meeting.
You may vote at the Annual Meeting if you were a stockholder of the
Company at the close of business on July 27, 1999, the record date.
By Order of the Board of Directors,
William B. Sutphin
Secretary
McLean, Virginia
August 6, 1999
================================================================================
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF SHARES YOU OWN. THE BOARD
OF DIRECTORS URGES YOU TO SIGN, DATE AND MARK THE ENCLOSED PROXY CARD PROMPTLY
AND RETURN IT IN THE ENCLOSED ENVELOPE. RETURNING THE PROXY CARD WILL NOT
PREVENT YOU FROM VOTING IN PERSON IF YOU ATTEND THE ANNUAL MEETING.
================================================================================
<PAGE>
GENERAL INFORMATION
GENERAL
We have sent you this Proxy Statement and enclosed proxy card because
the Board of Directors is soliciting your proxy to vote at the Annual Meeting.
This Proxy Statement summarizes the information you will need to know to cast an
informed vote at the Annual Meeting. You do not need to attend the Annual
Meeting to vote your shares. You may simply complete, sign and return the
enclosed proxy card and your votes will be cast for you at the Annual Meeting.
This process is described below in the section entitled "Voting Rights."
We began mailing this Proxy Statement, the Notice of Annual Meeting and
the enclosed proxy card on or about August 9, 1999 to all stockholders entitled
to vote. If you owned the Company's common stock ("Common Stock") at the close
of business on July 27, 1999, the record date, you are entitled to vote at the
Annual Meeting. On the record date, there were 2,294,617 shares of Common Stock
outstanding.
QUORUM
A quorum of stockholders is necessary to hold a valid meeting. If the
holders of at least a majority of the total number of the outstanding shares of
Common Stock of the Company entitled to vote are represented in person or by
proxy at the Annual Meeting, a quorum will exist. We will include proxies marked
as abstentions and broker non-votes to determine the number of shares present at
the Annual Meeting.
VOTING RIGHTS
You are entitled to one vote at the Annual Meeting for each share of
the Company's Common Stock that you owned as of record at the close of business
on July 27, 1999. The number of shares you own (and may vote) is listed at the
top of the back of the proxy card.
You may vote your shares at the Annual Meeting in person or by proxy.
To vote in person, you must attend the Annual Meeting and obtain and submit a
ballot, which we will provide to you at the Annual Meeting. To vote by proxy,
you must complete, sign and return the enclosed proxy card. If you properly
complete your proxy card and send it to us in time to vote, your "proxy" (one of
the individuals named on your proxy card) will vote your shares as you have
directed. IF YOU SIGN THE PROXY CARD BUT DO NOT MAKE SPECIFIC CHOICES, YOUR
PROXY WILL VOTE YOUR SHARES FOR EACH OF THE PROPOSALS IDENTIFIED IN THE NOTICE
OF THE ANNUAL MEETING.
If any other matter is presented, your proxy will vote the shares
represented by all properly executed proxies on such matters as a majority of
the Board of Directors determines. As of the date of this Proxy Statement, we
know of no other matters that may be presented at the Annual Meeting, other than
those listed in the Notice of the Annual Meeting.
-1-
<PAGE>
VOTE REQUIRED
PROPOSAL 1: The nominees for director who receive the most votes will
Elect Directors be elected. So, if you do not vote for a nominee, or you
indicate "withhold authority" for any nominee on your
proxy card, your vote will not count "for" or "against"
the nominee.
You may vote your shares cumulatively for the election of
directors if you give notice of your intent to cumulate
votes to the Secretary of Heritage Bancorp, Inc. in
accordance with the Articles of Incorporation, which state
that a shareholder must give the Secretary of the
Corporation sixty days notice before the date established
in the bylaws for the annual meeting. Article II, Section
1 of the bylaws sets the annual meeting date as the second
Wednesday in June. Therefore, the deadline for giving
notice to the Secretary of the Company to cumulate your
votes was April 10, 1999.
PROPOSAL 2: The affirmative vote of a majority of the shares present
Ratify Appointment in person or by proxy at the Annual Meeting and entitled
of Independent to vote on this proposal is required to ratify the
Public Accountants appointment of Yount, Hyde & Barbour, P.C. as the
Company's independent certified public accountants. So, if
you "abstain" from voting, it has the same effect as if
you voted "against" this proposal.
EFFECT OF BROKER NON-VOTES
If your broker holds shares that you own in "street name," the broker
may vote your shares on the two proposals listed above even if the broker does
not receive instructions from you. If your broker does not vote on any of the
proposals, this will constitute a "broker non-vote." Here is the effect of a
"broker non- vote":
o PROPOSAL 1: Elect Directors. A broker non-vote would have no effect on
the outcome of this proposal because only a plurality of votes cast is
required to elect a director.
o PROPOSAL 2: Ratify Appointment of Independent Public Accountants. A
broker non-vote would have no effect on the outcome of this proposal.
REVOKING YOUR PROXY
You may revoke your proxy at any time before it is exercised by:
o filing with the Secretary of the Company a letter revoking the proxy;
o submitting another signed proxy with a later date; and
o attending the Annual Meeting and voting in person, provided you file a
written revocation with the Secretary of the Annual Meeting prior to
the voting of such proxy.
IF YOUR SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
APPROPRIATE DOCUMENTATION FROM YOUR STOCKHOLDER OF RECORD TO VOTE PERSONALLY AT
THE ANNUAL MEETING. Examples of such documentation include a broker's statement,
letter or other document that will confirm your ownership of shares of the
Company.
-2-
<PAGE>
SOLICITATION OF PROXIES
The Company will pay the costs of soliciting proxies from its
stockholders. Directors, officers or employees of the Company and the Bank may
solicit proxies by:
o mail;
o telephone; and
o other forms of communication.
We will also reimburse banks, brokers, nominees and other fiduciaries
for the reasonable expenses they incur in forwarding the proxy materials to you.
OBTAINING AN ANNUAL REPORT ON FORM 10-KSB
If you would like a copy of our Annual Report on Form 10-KSB for the
year ended December 31, 1998, which was filed with the Securities and Exchange
Commission ("SEC"), we will send you one (without exhibits) free of charge.
Please write to:
William B. Sutphin
Heritage Bancorp, Inc.
1313 Dolley Madison Boulevard
McLean, Virginia 22101
-3-
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 31, 1999, the beneficial
ownership of Common Stock of the Company by: (i) each director of the Company;
(ii) each executive officer named in the Summary Compensation Table; (iii) each
person who owns or is known by management to own beneficially more than five
percent of the outstanding shares of the Company's Common Stock; and (iv) all
executive officers and directors as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES
OF BENEFICIAL OWNER (1) OWNED BENEFICIALLY (1)(2) PERCENT OF CLASS (3)
---------------------- ------------------------ --------------------
<S> <C> <C>
George K. Degnon 25,100(4) 1.09%
Philip F. Herrick, Jr. 132,008(5) 5.74
Ronald W. Kosh 7,900(6) 0.34
Harold E. Lieding 366,993(7) 15.97
John T. Rohrback 19,162 0.83
Stanley I. Richards 13,602(8) 0.59
Kevin P. Tighe 9,000(9) 0.39
George P. Shafran 48,269(10) 2.10
------ ----
All Directors and
Executive Officers as a
Group (13 persons) 642,335 27.53%
======= =====
</TABLE>
- ---------------------
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from July 31, 1999. Unless otherwise
indicated, the Company believes that all persons named in the table have
sole voting and investment power with respect to all shares of Common Stock
beneficially owned by them. Unless otherwise indicated, the address for the
individuals listed above is c/o Heritage Bancorp, Inc., 1313 Dolley Madison
Blvd., McLean, Virginia 22101.
(2) Based on 2,294,617 shares of Common Stock outstanding as of July 31, 1999.
Each beneficial owner's percentage ownership is determined by assuming that
options that are held by such person (but not those held by any other
person) and which are exercisable within 60 days from the date of this
Proxy Statement have been exercised.
(3) Includes stock options granted to the following outside directors: 4,000
shares to Messrs. Degnon, Herrick, Lieding, Richards and Tighe, 1,500 to
Mr. Kosh, 3,000 to Mr. Shafran.
(4) Includes 100 shares held jointly with his spouse, and 20,000 shares held in
a profit sharing trust, of which Mr. Degnon serves as the trustee.
(5) Includes 110,383 shares held jointly with his spouse.
(6) Includes 3,700 shares held jointly with his spouse.
(7) Includes 146,652 held in an individual retirement account.
(8) Includes 7,000 shares jointly held with his spouse.
(9) Includes 3,000 shares held jointly with his spouse.
(10) Includes 3,634 shares held as custodian for Mr. Shafran's minor
grandchildren.
-4-
<PAGE>
DISCUSSION OF PROPOSALS RECOMMENDED BY BOARD
-------------------------------
PROPOSAL 1
ELECTION OF DIRECTORS
-------------------------------
GENERAL
The Board has nominated eight individuals for election as directors at
the Annual Meeting. If you elect the nominees, they will hold office until the
Annual Meeting listed next to their name, or until their successors have been
elected.
We know of no reason why any nominee may be unable to serve as a
director. If any nominee is unable to serve, your proxy may vote for another
nominee proposed by the Board. If for any reason these nominees prove unable or
unwilling to stand for election, the Board will nominate alternates or reduce
the size of the Board of Directors to eliminate the vacancy. The Board has no
reason to believe that its nominees would prove unable to serve if elected.
NOMINEES
<TABLE>
<CAPTION>
POSITION(S) DIRECTOR
----------- --------
NAME AGE(1) TERM EXPIRES HELD WITH THE COMPANY SINCE(2)
- ---- ------ ------------ --------------------- --------
<S> <C> <C> <C> <C>
Ronald W. Kosh 54 2000 Director 1998
George P. Shafran 72 2000 Vice Chairman 1997
Terrie G. Spiro 43 2000 Consultant to the -
Board of Directors
George K. Degnon 58 2001 Director 1993
Kevin P. Tighe 55 2001 Director 1994
Stanley I. Richards 63 2002 Director 1996
Harold E. Lieding 63 2002 Chairman 1990
Philip F. Herrick, Jr. 59 2002 Director 1987
</TABLE>
- ---------------
(1) As of July 31, 1999.
(2) Includes service as a director of the Bank prior to the formation of the
Company in 1998.
-5-
<PAGE>
The principal occupation and business experience of each nominee for election as
director is set forth below.
NOMINEES
RONALD W. KOSH is Vice President and Division Manager of AAA
MidAtlantic, Inc., Fairfax, Virginia. Mr. Kosh was General Manager of the
American Automobile Association, Inc., Fairfax, Virginia, from 1985 to 1997.
GEORGE P. SHAFRAN is a business consultant to a number of varied
clients. He is also involved in several partnerships and is the chairman of the
AAA Mid-Atlantic Advisory Board. He is president of Geo. P. Shafran &
Associates, Inc., a consulting firm in McLean, Virginia. Mr. Shafran serves as
Vice Chairman of the Company and has served as Vice Chairman of the Board of
Directors of the Bank since August 1998.
TERRIE G. SPIRO is a consultant to the Board of Directors of the
Company and the Bank. She is the founding President and Chief Executive Officer
of Tysons National Bank and Tysons Financial Corporation, its publicly-traded
holding company. In March 1998, Tysons Financial Corporation was acquired in a
stock for stock transaction by another public company, Mainstreet Financial
Corporation. In April 1998, Ms. Spiro resigned under her "change of control"
provision and has been engaged as a consultant for Riggs National Bank. Prior to
1988, when Ms. Spiro began the organizational efforts for Tysons National Bank,
she was the Senior Vice President and Chief Lending Officer of Century National
Bank in Washington, DC. Ms. Spiro is also an active member in several local
community organizations, including the United Way and the Fairfax County Chamber
of Commerce. As of October 1999, the Board of Directors intends to hire Ms.
Spiro as the next President and Chief Executive Officer of the Company and the
Bank.
GEORGE K. DEGNON is president of Degnon Associates, Inc. (a company
that provides organizational management services to national and international
health and medical associations) in McLean, Virginia.
KEVIN P. TIGHE is senior partner in the law firm of Tighe, Patton,
Tabackman and Babbin in Washington, D.C. Mr. Tighe is also the owner and
Chairman of the Board of Directors of the McLean Racquet and Health Club in
McLean, Virginia.
STANLEY I. RICHARDS is the Chairman and President of the Richards
Corporation (a company engaged in the manufacture and sale of imagery
interpretation equipment and aircraft galley equipment) in Sterling, Virginia.
HAROLD E. LIEDING is a senior partner in the law firm of Lieding and
Anderson, P.C., in McLean, Virginia, and has practiced law in McLean since 1970.
Mr. Lieding is a member of the Fairfax Bar Association and the McLean Bar
Association. Mr. Lieding is the Chairman of the Board of the Company and the
Bank.
PHILIP F. HERRICK, JR. is the owner of Herrick Holdings (investments
and real estate management) in Northern Virginia.
================================================================================
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL
OF THE NOMINEES FOR ELECTION AS DIRECTORS.
================================================================================
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<PAGE>
-------------------------------
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
-------------------------------
The Board of Directors has appointed Yount, Hyde & Barbour, P.C., as
our independent public auditors for the Company for the fiscal year ending
December 31, 1999, and we are asking stockholders to ratify the appointment.
Representatives of Yount, Hyde & Barbour, P.C., are expected to attend the
Annual Meeting, and to be available to answer questions.
================================================================================
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF YOUNT, HYDE & BARBOUR, P.C.,
AS INDEPENDENT AUDITORS FOR THE COMPANY.
================================================================================
INFORMATION ABOUT BOARD OF DIRECTORS AND MANAGEMENT
BOARD OF DIRECTORS
The Company's Board of Directors currently consists of seven members.
The Company's Articles of Incorporation provide that the Board of Directors
shall be divided into three classes, as nearly equal in number as possible. The
terms of the initial directors of the Company expire at the Annual Meeting. Each
of our directors also serves as a director of the Bank.
The Board of Directors oversees our business and monitors the
performance of our management. In accordance with our corporate governance
procedures, the Board of Directors does not involve itself in the day-to-day
operations of the Company. The Company's executive officers and management
oversee the day-to-day operations of the Company. Our directors fulfill their
duties and responsibilities by attending regular meetings of the Board which are
held on a monthly basis. Our directors also discuss business and other matters
with the Chairman and the President, other key executives, and our principal
external advisers (legal counsel, auditors, financial advisors and other
consultants).
The Board of Directors of the Bank held 12 regular meetings and 4
special meetings during the fiscal year ended December 31, 1998. Each incumbent
director, with the exception of Directors Tighe and Degnon, attended at least
75% of the meetings of the Board of Directors plus committee meetings on which
that particular director served during this period.
COMMITTEES OF THE BOARD
The Board of Directors of the Bank has established the following
committees:
EXECUTIVE The Executive Committee, under certain circumstances
COMMITTEE and to the extent permitted by law, can exercise all
powers of the Board of Directors when the Board is not
in session.
Present members are Messrs. Lieding (Chairman),
Shafran and Herrick.
The Executive Committee did not meet in 1998.
-7-
<PAGE>
AUDIT The Audit Committee is responsible for reviewing a
COMMITTEE number of periodic management reports. It also reviews
the annual audit and audit report prepared by the
independent accountants and recommends appointment of
the accountants.
Present members are Messrs. Tighe (Chairman), Degnon
and Richards.
There were three meetings in 1998.
COMPENSATION The Compensation Committee provides advice and
COMMITTEE recommendations to the Board in areas of employee
salaries and directors' compensation.
Present members are Messrs. Degnon (Chairman), Kosh,
Richards and Shafran.
There were two meetings in 1998.
The nominating committee met in July 1999 to select the nominees for
election as directors at the Annual Meeting and the Board of Directors approved
the nominations.
DIRECTOR'S COMPENSATION
Directors' Fees. Currently, each outside director of the Company
receives the following fees:
o $250 per month; and
o $100 per committee meeting attended, with an annual payment cap of
$600.
Outside Directors of the Company are also eligible to receive options under the
Company' stock option plans. See "--Stock Ownership of Certain Beneficial Owners
and Management" for the number of stock options granted to each director.
-8-
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions of the
Non-Director Executive Officers of the Company and/or the Bank:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John P. Carroll 47 Executive Vice President and Chief
Operating Officer
N. George Assaf 38 Senior Vice President/Chief Business
Development Officer
William B. Sutphin 65 Secretary
Acting President - The
Heritage Bank
Louis A. Scerbo 46 Vice President - Loan Administration
B. Todd Dempsey 41 Vice President -
Acting Chief Lender
</TABLE>
The principal occupation and business of the Non-Director Executive
Officers is set forth below:
JOHN P. CARROLL joined the Bank in July, 1999 as the Executive Vice
President and Chief Operating Officer. Mr. Carroll was previously Vice
President/Marketing Officer of Fremont Financial Corporation. He was employed at
Tysons National Bank from 1993 to 1998 as the Senior Vice President and Chief
Credit Officer. Mr. Carroll's banking career began over 20 years ago at Maryland
National Bank and has included various positions and responsibilities.
N. GEORGE ASSAF joined the Bank in July, 1999 as the Senior Vice
President and Chief Business Development Officer. Prior to joining the Bank, Mr.
Assaf was the Vice President - Commercial Lending at Industrial Bank in
Washington, DC. From 1993 to 1998, Mr. Assaf was employed by Tysons National as
the Vice President and Chief Lending Officer.
WILLIAM B. SUTPHIN has been the Senior Vice President of the Bank since
1987. Mr. Sutphin also serves as the principal accounting officer. Mr. Sutphin
was Vice President in charge of operations and accounting of the McLean Bank
from 1981 to 1987 and has 44 years banking experience. Mr. Sutphin has also been
serving as the Acting President and is the Secretary of the Company.
LOUIS A. SCERBO joined the Bank in July, 1999 as the Vice President -
Loan Administration. Mr. Scerbo was previously a management consultant to Riggs
Bank. He was also employed by Tysons National Bank as an Assistant Vice
President in the Commercial Lending Department. In addition, Mr. Scerbo
previously held positions at GrandBank and Patriot National Bank in the
commercial lending departments and as a Consumer Compliance and Asset Sales
Advisor for the Resolution Trust Corporation, and as Conservator for Standard
Federal Savings Association.
-9-
<PAGE>
B. TODD DEMPSEY has been a Vice President since the Bank's founding in
1987. He has most recently served as the Acting Senior Lender and Business
Development Officer. A graduate of George Mason University, Mr. Dempsey has over
20 years' banking experience including Meritor Savings Bank, Dominion Bank, and
McLean Bank. He has been involved in many community organizations and currently
serves as a McLean Rotarian.
SUMMARY COMPENSATION TABLE
The following table sets forth cash and noncash compensation for the
fiscal years ended December 31, 1998, 1997 and 1996 awarded to or earned by the
Company's Chief Executive Officer ("Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
-------------------------------------------------- ------------ ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL AWARDS COMPENSATION
POSITIONS YEAR SALARY($) BONUS($) COMPENSATION ($) OPTIONS(#) ($)(2)
- ------------------ ---- --------- -------- ---------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John T. Rohrback, 1998 100,000 - - 2,581 10,228
Former President and 1997 100,000 10,000 - - 3,829
Chief Executive Officer 1996 47,916 - - - 3,751
</TABLE>
- ---------------
(1) Under Annual Compensation, the column titled "Salary" includes base salary,
amounts deferred under the Bank's 401(k) plan (but not matching
contributions from the Bank) and payroll deductions for health insurance
under the Bank's health insurance plan. Mr. Rohrback was elected as
President and Chief Executive Officer (CEO) of the Bank by the Board of
Directors effective July, 1996. Mr. Rohrback's employment with the Bank
terminated on January 25, 1999.
(2) Includes (a) the use of a vehicle provided by the Bank valued at $8,126,
$3,325 and $3,535 for the years ended December 31, 1998, 1997 and 1996,
respectively; (b) the amount of insurance premiums paid by the Bank on
behalf of Mr. Rohrback, in the amounts of $600, $504 and $216 for the years
ended December 31, 1998, 1997 and 1996, respectively; and (c) contributions
made by the Bank to Mr. Rohrback's 401(k) Plan account in the amount of
$1,502 in 1998 for the fiscal year ended December 31, 1997.
STOCK OPTION PLANS
The Company's 1998 Outside Directors Stock Option Plan (the "Directors
Option Plan") and the Company's 1998 Employee Incentive Stock Option Plan (the
"Employee Option Plan," together with the Directors Option Plan, the "Stock
Option Plans") were adopted by the Board of Directors of the Bank and approved
by its shareholders at the 1998 Annual Meeting. The purpose of the Stock Option
Plans is to promote the growth of the Company, the Bank and other affiliates by
linking the incentive compensation of officers, key executives and directors
with the profitability of the Company. The Stock Option Plans are not subject to
ERISA and are not tax-qualified plans. The Company has reserved an aggregate of
75,000 shares of Common Stock under each Plan for issuance upon the exercise of
stock options granted under each stock option plan. The Company also has made
stock option grants that remain outstanding under the 1992 Employee Stock Option
Plan.
The members of a stock option committee (the "Option Committee")
administer the Stock Option Plans. The option committee administering the
Employee Option Plan consists of not less than three members of the Board of
Directors. In contrast, the option committee administering the Outside Directors
Option Committee consists of three members, including an outside director, an
employee who is not an outside director, and a stockholder who is neither an
employee or an outside director. Options may be granted
-10-
<PAGE>
to eligible employees and to members of the Board who are Outside Directors. The
Option Committee has discretion under the Stock Option Plans to establish
certain material terms of the Options granted to employees or to Outside
Directors provided such grants are made in accordance with the Stock Option
Plans' requirements. As of December 31, 1998, each Outside Director of the
Company had been granted a non- qualified stock option to purchase an aggregate
of either 1,500 or 2,000 shares of Common Stock at an exercise price of $3.875
per share. Under the Employee Incentive Stock Option Plan, as of December 31,
1998, options for 8,925 shares of Common Stock have been granted to eligible
employees.
All stock options currently granted under the Plan are immediately
exercisable. The Option Committee has the discretion to determine the vesting
schedule of a stock option award; provided, however, that each option granted
shall automatically become 100% vested and fully exercisable in the event of an
option holder's death, disability or retirement or upon a change in control of
the Company. No option is exercisable after the tenth anniversary from the date
it was granted. The Company pays all costs and expenses of the Stock Option
Plans. The Company has reserved the right to amend or terminate the Stock Option
Plans, in whole or in part, subject to the requirements of all applicable laws.
The following table summarizes the option grants that were made to John
T. Rohrback under the Employee Stock Option Plan during the fiscal year 1998.
OPTION/SAR GRANTS IN FISCAL YEAR 1998
INDIVIDUAL GRANTS
-----------------
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR
GRANTED FISCAL YEAR BASE PRICE EXPIRATION
NAME (#)(1) (%) ($ PER SHARE) DATE
- ---- ------ --- ------------- ----------
<S> <C> <C> <C> <C> <C>
John T. Rohrback
Former President and Chief
Executive Officer............. 2,581 28.92 3.875 9/22/08
</TABLE>
- ---------------
(1) All options are immediately exercisable upon grant.
The following table provides information with respect to Mr. Rohrback
concerning the exercise of options during the last fiscal year and the value for
"in-the-money" options held by him at year end, which represents the positive
spread between the exercise price of any such existing stock options and the
year-end price of the Common Stock. Mr. Rohrback did not hold any "in-the-money"
options at year end.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1998 FISCAL YEAR AND 1998 FISCAL YEAR END OPTION/VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FISCAL OPTIONS/SARS AT FISCAL
SHARES ACQUIRED VALUE YEAR-END YEAR-END
ON EXERCISE REALIZED (#) ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- --------------- -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
John T. Rohrback - - 2,581 / 0 N/A
</TABLE>
- ------------------
(1) Based upon a market price of $3.75 per share at December 31, 1998 minus
the exercise price.
-11-
<PAGE>
CONSULTING AGREEMENT AND PROPOSED EMPLOYMENT AGREEMENT
Terrie G. Spiro, a nominee for director, entered into a consulting
agreement with the Company and the Bank on May 3, 1999 under which Ms. Spiro
provides services in an advisory capacity to the Bank and the Company as
requested and directed from time to time by the Board of Directors. The
consulting agreement provides for a monthly fee of $10,000 and will expire on
September 30, 1999 unless terminated earlier upon the mutual agreement of the
parties.
The Board of Directors intends to hire Ms. Spiro as the new President
and Chief Executive Officer of the Company and the Bank as soon as she is no
longer prohibited from providing services to the Company and the Bank in that
capacity under a non-competition agreement with her prior employer. Ms. Spiro,
the Company and the Bank have agreed to the terms and conditions of a proposed
employment agreement and have agreed to execute that agreement once Ms. Spiro is
free to assume the duties of President and Chief Executive Officer. It is
anticipated that Ms. Spiro will be able to assume these duties and enter into
the proposed employment agreement in October, 1999.
The proposed employment agreement provides that Ms. Spiro will serve as
President and Chief Executive Officer of the Company and the Bank. The initial
term of the agreement will be three years. Beginning with the end of the initial
term, and every two years thereafter, the agreement will be automatically
extended an additional two years unless either party gives the other six months
prior written notice of non-renewal. The proposed agreement provides for an
initial annual base salary of $120,000, which will be reviewed annually by the
Compensation Committee, commencing with salary for the calendar year 2002, and
increased as the Compensation Committee determines, but at least by the Consumer
Price Index. Upon the execution of the proposed agreement, Ms. Spiro will be
granted an option to purchase 5,000 shares of Company stock, which will be fully
and immediately exercisable, and an option to purchase 3,000 shares of Company
stock, which will become fully exercisable one year from the date of grant. The
exercise price under these options will be equal to the fair market value of the
Company stock as of the date the options are granted. The proposed agreement
also provides for the payment of a signing bonus upon the agreement's execution
equal to the increase in the per share fair market value of the Company's stock
from May 3, 1999 through the execution date multiplied by a factor of eight
thousand, e.g., $800 for every increase in per share fair market value of $.10.
Under the agreement, Ms. Spiro also will be entitled to an annual performance
bonus in an amount based on the performance of the Bank in relation to
pre-established targets for annual net profit and asset growth and for an annual
grant of stock options in an amount based on the performance of the Bank in
relation to pre-established targets for earnings and asset growth. The proposed
agreement also provides for certain executive perquisites, such as the use of a
car and club dues.
In the event that Ms. Spiro's employment is terminated by the Bank and
the Company during the term of the agreement for reasons other than just cause,
Ms. Spiro will continue to receive the payment of her salary and coverage under
various fringe benefit plans for the remaining term of the agreement, but in no
event for a period of less than nine months. Ms. Spiro also would be entitled to
the continuation of her regular salary for a period of not less than nine months
if she resigns during the agreement's term after any of the following occur
without cure within 30 days: the requirement that she move her personal
residence or perform her executive duties more than thirty-five (35) miles from
her primary office; the assignment of duties and responsibilities not normal for
the President and Chief Executive Officer; loss of Board membership; and a
material diminution or reduction in her responsibilities or authority. Within
six months following a change in control of the Bank or the Company, Ms. Spiro
may resign and be entitled to receive a severance benefit equal to 2.99
multiplied by her annual base salary plus bonus.
-12-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The officers, directors, their immediate families and affiliated
companies in which they are stockholders maintain normal relationships with the
Bank. Loans made by the Bank are made in the ordinary course of business on the
same terms, including interest rates and collateral, as those prevailing at the
time of comparable transactions with others and do not involve more than normal
risks of collectability or present other unfavorable features. The amount of
such loans was approximately $279,384 and $348,483 as of December 31, 1998 and
1997, respectively. No loan to a director or any director's related interest
exceeded ten percent of capital or exceeded $300,000 at December 31, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's
directors, executive officers, and any person holding more than ten percent of
the Company's Common Stock file with the SEC reports of ownership changes, and
that such individuals furnish the Company with copies of the reports.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons, the Company believes
that all of our executive officers and directors complied with all Section 16(a)
filing requirements applicable to them.
ADDITIONAL INFORMATION
INFORMATION ABOUT STOCKHOLDER PROPOSALS
If you wish to submit proposals to be included in our 1999 proxy
statement for the 2000 Annual Meeting of Stockholders, you must follow the proxy
soliciting regulations of the SEC. SEC rules contain standards as to what
stockholder proposals are required to be in the proxy statement. Any such
proposal will be subject to 17 C.F.R. ss.240.14a-8 of the rules and regulations
promulgated by the SEC.
In addition, under the Company's Bylaws, if you wish to nominate a
director or bring other business before an annual meeting:
o You must be a stockholder of record and have given timely notice in
writing to the Secretary of the Company.
o Your notice must contain specific information required in our Bylaws.
By Order of the Board of Directors,
William B. Sutphin
Secretary
McLean, Virginia
August 9, 1999
================================================================================
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
================================================================================
-13-
<PAGE>
REVOCABLE PROXY
HERITAGE BANCORP, INC.
1313 DOLLEY MADISON BOULEVARD
MCLEAN, VIRGINIA 22101
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HERITAGE BANCORP,
INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 9, 1999.
The undersigned shareholder of Heritage Bancorp, Inc. hereby appoints
Stanley I. Richards and George K. Degnon, or either of them, with full powers of
substitution, to represent and to vote as proxy, as designated, all shares of
common stock of Heritage Bancorp, Inc. held of record by the undersigned on July
27, 1999, at the Annual Meeting of Shareholders (the "Annual Meeting") to be
held at 10:00 a.m. Eastern Daylight time, on September 9, 1999, or at any
adjournment or postponement thereof, upon the matters described in the
accompanying Notice of Annual Meeting and Proxy Statement- Prospectus and upon
such other matters as may properly come before the Annual Meeting. The
undersigned hereby revokes all prior proxies.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES LISTED IN PROPOSAL 1 AND
"FOR" PROPOSAL 2.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
I WILL ATTEND THE ANNUAL MEETING [] PLEASE MARK YOUR CHOICE LIKE THIS [X] IN
BLUE OR BLACK INK.
- --------------------------------------------------------------------------------
1. Election of Directors for the terms expiring at the 2000, 2001 and 2002
Annual Meeting. The nominees and the annual meeting at which their term
expires is set forth below:
<TABLE>
<CAPTION>
2000 Annual Meeting 2001 Annual Meeting 2002 Annual Meeting
- ------------------- ------------------- -------------------
<S> <C> <C>
Ronald W. Kosh George K. Degnon Stanley I. Richards
George P. Shafran Kevin P. Tighe Philip F. Herrick, Jr.
Terrie G. Spiro Harold E. Lieding
INSTRUCTION: TO WITHHOLD AUTHORITY to
vote for any individual nominee, write
that nominee's name in the space
provided:
FOR All Nominees
(except as otherwise indicated) WITHHOLD for all Nominees -----------------------------------------
[] []
- -----------------------------------------------------------------------------------------------------------
</TABLE>
2. Ratification of the appointment of Yount, Hyde & Barbour, P.C. as
independent auditors for Heritage Bancorp, Inc. for the fiscal year ending
December 31, 1999.
For Against Abstain
[] [] []
- --------------------------------------------------------------------------------
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and the Proxy Statement for the Annual Meeting.
-----------------------------------------------
Signature(s):
----------------------------------
Date: , 1999
------------------------------------
Please sign exactly as your name appears on
this proxy. Joint owners may each sign
personally, but only one signature is required.
If signing as attorney, executor,
administrator, trustee or guardian, please
include your full title. Corporate or
partnership proxies should be signed by an
authorized officer.
