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As filed with the Securities and Exchange Commission on June 19, 1996
Registration No. 33-34198
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
HERITAGE BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 23-2228542
(State of Incorporation) (I.R.S. Employer
Identification Number)
120 South Centre Street, P.O. Box 1100
Pottsville, Pennsylvania 17901
(717) 622-2320
(Address, including Zip Code, and Telephone Number, including Area Code, of
Principal Executive Offices)
------------------------------
HERITAGE BANCORP, INC. EMPLOYEE STOCK OWNERSHIP PLAN
WITH 401(k) PROVISIONS
(Full Title of the Plan)
------------------------------
Allen E. Kiefer
President and Chief Executive Officer
Heritage Bancorp, Inc.
120 South Centre Street, P. O. Box 1100
Pottsville, Pennsylvania 17901
(717) 622-2320
(Name, Address and Telephone Number of Agent for Service)
------------------------------
Copy to:
Charles J. Ferry, Esquire
Rhoads & Sinon
One South Market Square, 12th Floor
P.O. Box 1146
Harrisburg, PA 17108-1146
(717) 233-5731
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
---------------------------------------
The following documents have been filed by Heritage Bancorp, Inc.
("Heritage") with the Securities and Exchange Commission ("SEC") and are
incorporated herein by reference:
(a) Heritage's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 and the Plan's Annual Report on Form 11-K for the fiscal year
ended December 31, 1994.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") since the end of
Heritage's fiscal year ended December 31, 1995.
(c) The description of the Heritage Common Stock contained in a registration
statement filed under the Exchange Act, including any amendment or
report filed for the purpose of updating such description.
All documents subsequently filed by Heritage and the Plan pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein or in any
other subsequently filed incorporated document modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part hereof.
ITEM 4. DESCRIPTION OF SECURITIES
-------------------------
The holders of Heritage common stock, par value $5.00 per share ("Heritage
Common Stock"), are entitled to share ratably in dividends when and if declared
by the Heritage Board of Directors from funds legally available therefor. Each
holder of Heritage Common Stock has one vote for each share held of record on
each matter presented for consideration by Heritage shareholders. Heritage
shareholders are not entitled to cumulate votes in the election of directors.
The Heritage Board of Directors is divided into three classes, each serving
three-year terms, so that approximately one-third of Heritage directors are
elected at each annual meeting of shareholders. The holders of Heritage Common
Stock have no preemptive rights to acquire any additional shares of Heritage.
Heritage's Articles of Incorporation authorize the Heritage Board of Directors
to issue authorized shares of Heritage Common Stock and Heritage preferred stock
without shareholder approval.
In the event of liquidation, dissolution or winding-up of Heritage, whether
voluntary or involuntary, holders of Heritage Common Stock will be entitled to
share ratably in any of its assets or funds that are
<PAGE>
available for distribution to its shareholders after the satisfaction of its
liabilities (or after adequate provision is made therefor) and after payment of
any liquidation preferences of any outstanding Heritage preferred stock.
Heritage's Articles of Incorporation and By-Laws contain certain provisions
which may have the effect of deterring or discouraging, among other things, a
non-negotiated tender or exchange offer for Heritage stock, a proxy contest for
control of Heritage, the assumption of control of Heritage by a holder of a
large block of Heritage stock and the removal of Heritage management. These
provisions: (1) empower the Heritage Board of Directors, without shareholder
approval, to issue preferred stock the terms of which, including voting power,
are set by the Heritage Board; (2) divide the Heritage Board of Directors into
three classes serving staggered three-year terms; (3) require the affirmative
vote of 75% of the votes cast by all shareholders entitled to vote thereon to
approve mergers and other similar transactions if the transaction is not
approved, in advance, by 80% of the members of the Heritage Board of Directors;
(4) require the affirmative vote of 75% of the votes cast by all shareholders
entitled to vote thereon to approve, amend or repeal Heritage's By-Laws by
shareholder action; (5) require the affirmative vote of 75% of the votes cast by
all shareholders entitled to vote thereon to repeal, alter or amend certain
provisions of Heritage's Articles of Incorporation unless such amendment has
received the prior approval of at least 80% of all members of the Heritage Board
of Directors; and (6) eliminate cumulative voting in elections of directors.
The Pennsylvania Business Corporation Law of 1988 contains certain provisions
applicable to Heritage as a "registered corporation" which may have similar
effects.
Heritage's Articles include a provision authorizing the Heritage Board of
Directors, when evaluating a merger or similar transaction, to give
consideration to all relevant factors including without limitation the social
and economic effects of the proposed transaction on depositors, employees,
suppliers, customers and other constituents of Heritage and on the communities
in which Heritage operates, the reputation and business practices of the other
party to the proposed transaction and the Board's evaluation of the future
prospects of Heritage as an independent entity.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
--------------------------------------
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
Subchapter D to Chapter 17 of the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL"), 15 Pa. C.S.A. (S)(S)1741-1750, provides as
follows:
(S)1741. Third-party actions
Unless otherwise restricted in its bylaws, a business corporation shall
have power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation), by reason of the fact
that he is or was a representative of the corporation, or is or was serving
at the request of the corporation as a representative of another domestic or
foreign corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts
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paid in settlement actually and reasonably incurred by him in connection
with the action or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action or
proceeding by judgment, order, settlement or conviction or upon a plea of
nolo contendere or its equivalent shall not of itself create a presumption
that the person did not act in good faith and in a manner that he reasonably
believed to be in, or not opposed to, the best interests of the corporation
and, with respect to any criminal proceeding, had reasonable cause to
believe that his conduct was unlawful.
(S)1742. Derivative actions
Unless otherwise restricted in its bylaws, a business corporation shall
have power to indemnify any person who was or is a party, or is threatened
to be made a party, to any threatened, pending or completed action by or in
the right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a representative of the corporation or is or was
serving at the request of the corporation as a representative of another
domestic or foreign corporation for profit or not-for-profit, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of the action if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation. Indemnification shall not be made under this
section in respect of any claim, issue or matter as to which the person has
been adjudged to be liable to the corporation unless and only to the extent
that the court of common pleas of the judicial district embracing the county
in which the registered office of the corporation is located or the court in
which the action was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for the expenses
that the court of common pleas or other court deems proper.
(S)1743. Mandatory indemnification
To the extent that a representative of a business corporation has been
successful on the merits or otherwise in defense of any action or proceeding
referred to in section 1741 (relating to third party actions) or 1742
(relating to derivative actions) or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
(S)1744. Procedure for effecting indemnification
Unless ordered by a court, any indemnification under section 1741
(relating to third party actions) or 1742 (relating to derivative actions)
shall be made by the business corporation only as authorized in the specific
case upon a determination that indemnification of the representative is
proper in the circumstances because he has met the applicable standard of
conduct set forth in those sections. The determination shall be made:
(1) by the board of directors by a majority vote of a quorum consisting
of directors who were not parties to the action or proceeding;
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(2) if such a quorum is not obtainable or if obtainable and a majority
vote of a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion; or
(3) by the shareholders.
(S)1745. Advancing expenses
Expenses (including attorneys' fees) incurred in defending any action or
proceeding referred to in this subchapter may be paid by a business
corporation in advance of the final disposition of the action or proceeding
upon receipt of an undertaking by or on behalf of the representative to
repay the amount if it is ultimately determined that he is not entitled to
be indemnified by the corporation as authorized in this subchapter or
otherwise.
(S)1746. Supplementary coverage
(a) General rule. - The indemnification and advancement of expenses
provided by, or granted pursuant to, the other sections of this subchapter
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another
capacity while holding that office. Section 1728 (relating to interested
directors or officers; quorum) and, in the case of a registered corporation,
section 2538 (relating to approval of transactions with interested
shareholders) shall be applicable to any bylaw, contract or transaction
authorized by the directors under this section. A corporation may create a
fund of any nature, which may, but need not be, under the control of a
trustee, or otherwise secure or insure in any manner its indemnification
obligations, whether arising under or pursuant to this section or otherwise.
(b) When indemnification is not to be made. - Indemnification pursuant to
subsection (a) shall not be made in any case where the act or failure to act
giving rise to the claim for indemnification is determined by a court to
have constituted willful misconduct or recklessness. The articles may not
provide for indemnification in the case of willful misconduct or
recklessness.
(c) Grounds. - Indemnification pursuant to subsection (1) under any bylaw,
agreement, vote of shareholders or directors or otherwise may be granted for
any action taken or any failure to take any action and may be made whether
or not the corporation would have the power to indemnify the person under
any other provision of law except as provided in this section and whether or
not the indemnified liability arises or arose from any threatened, pending
or completed action by or in the right of the corporation. Such
indemnification is declared to be consistent with the public policy of this
Commonwealth.
(S)1747. Power to purchase insurance
Unless otherwise restricted in its bylaws, a business corporation shall
have power to purchase and maintain insurance on behalf of any person who is
or was a
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representative of the corporation or is or was serving at the request of the
corporation as a representative of another domestic or foreign corporation
for profit or not-for-profit, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against that liability
under the provisions of this subchapter. Such insurance is declared to be
consistent with the public policy of this Commonwealth.
(S)1748. Application to surviving or new corporations
For the purposes of this subchapter, references to "the corporation"
include all constituent corporations absorbed in a consolidation, merger or
division, as well as the surviving or new corporations surviving or
resulting therefrom, so that any person who is or was a representative of
the constituent, surviving or new corporation, or is or was serving at the
request of the constituent, surviving or new corporation as a representative
of another domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise, shall stand in the
same position under the provisions of this subchapter with respect to the
surviving or new corporation as he would if he had served the surviving or
new corporation in the same capacity.
(S)1749. Application to employee benefit plans
For purposes of this subchapter:
(1) References to "other enterprises" shall include employee benefit plans
and references to "serving at the request of the corporation" shall include
any service as a representative of the business corporation that imposes
duties on, or involves services by, the representative with respect to an
employee benefit plan, its participants or beneficiaries.
(2) Excise taxes assessed on a person with respect to an employee benefit
plan pursuant to applicable law shall be deemed "fines".
(3) Action with respect to an employee benefit plan taken or omitted in
good faith by a representative of the corporation in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be action in a manner that is not opposed to the
best interests of the corporation.
(S)1750. Duration and extent of coverage
The indemnification and advancement of expenses provided by, or granted
pursuant to, this subchapter shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
representative of the corporation and shall inure to the benefit of the
heirs and personal representatives of that person.
The By-Laws of Heritage provide for indemnification of directors and
officers to the extent provided in the Pennsylvania Business Corporation Law.
In accordance with Section 1713 of the BCL, the By-Laws of Heritage also include
a provision that the directors of Heritage shall not be personally liable for
monetary damages as such for any action taken, or failure to take any action,
unless: (1) the director has breached
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or failed to perform the duties of his office in good faith, in a manner he
reasonably believes to be in the best interests of Heritage, and with such are,
including reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances; and (2) the breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness. Pursuant
to Section 1713 of the BCL, this limitation of personal liability does not apply
to (i) the responsibility or liability of a director pursuant to any criminal
statute or (ii) the liability of a director for the payment of taxes pursuant to
Federal, state or local law.
Heritage maintains directors and officers liability insurance providing
insurance under certain circumstances for directors and certain officers.
Sections 1712 and 1715 of Subchapter B of Chapter 17 of the BCL provide as
follows:
(S)1712. Standard of care and justifiable reliance
(a) Directors. - A director of a business corporation shall stand in a
fiduciary relation to the corporation and shall perform his duties as a
director, including his duties as a member of any committee of the board
upon which he may serve, in good faith, in a manner he reasonably believes
to be in the best interests of the corporation and with such care, including
reasonable inquiry, skill and diligence, as a person of ordinary prudence
would use under similar circumstances. In performing his duties, a director
shall be entitled to rely in good faith on information, opinions, reports or
statements, including financial statements and other financial data, in each
case prepared or presented by any of the following:
(1) One or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented.
(2) Counsel, public accountants or other persons as to matters which the
director reasonably believes to be within the professional or expert
competence of such person.
(3) A committee of the board upon which he does not serve, duly
designated in accordance with law, as to matters within its designated
authority, which committee the director reasonably believes to merit
confidence.
(b) Effect of actual knowledge. - A director shall not be considered to be
acting in good faith if he has knowledge concerning the matter in question
that would cause his reliance to be unwarranted.
(c) Officers. - Except as otherwise provided in the bylaws, an officer
shall perform his duties as an officer in good faith, in a manner he
reasonably believes to be in the best interests of the corporation and with
such care, including reasonable inquiry, skill and diligence, as a person of
ordinary prudence would use under similar circumstances. A person who so
performs his duties shall not be liable by reason of having been an officer
of the corporation.
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(S)1715. Exercise of powers generally
(a) General rule. - In discharging the duties of their respective
positions, the board of directors, committees of the board and individual
directors of a business corporation may, in considering the best interests
of the corporation, consider to the extent they deem appropriate:
(1) The effects of any action upon any or all groups affected by such
action, including shareholders, employees, suppliers, customers and
creditors of the corporation, and upon communities in which offices or
other establishments of the corporation are located.
(2) The short-term and long-term interests of the corporation, including
benefits that may accrue to the corporation from its long-term plans and
the possibility that these interests may be best served by the continued
independence of the corporation.
(3) The resources, intent and conduct (past, stated and potential) of
any person seeking to acquire control of the corporation.
(4) All other pertinent factors.
(b) Consideration of interests and factors. - The board of directors,
committees of the board and individual directors shall not be required, in
considering the best interests of the corporation or the effects of any
action, to regard any corporate interest or the interests of any particular
group affected by such action as a dominant or controlling interest or
factor. The consideration of interests and factors in the manner described
in this subsection and in subsection (a) shall not constitute a violation of
section 1712 (relating to standard of care and justifiable reliance).
(c) Specific applications. - In exercising the powers vested in the
corporation, including, without limitation, those powers pursuant to section
1502 (relating to general powers), and in no way limiting the discretion of
the board of directors, committees of the board and individual directors
pursuant to subsections (1) and (b), the fiduciary duty of directors shall
not be deemed to require them:
(1) to redeem any rights under, or to modify or render inapplicable, any
shareholder rights plan, including, but not limited to, a plan adopted
pursuant or made subject to section 2513 (relating to disparate treatment
of certain persons);
(2) to render inapplicable, or make determinations under, the provisions
of Subchapter E (relating to control transactions), F (relating to
business combinations), G (relating to control-share acquisitions) or H
(relating to disgorgement by certain controlling shareholders following
attempts to acquire control) of Chapter 25 or under any other provision of
this title relating to or affecting acquisitions or potential or proposed
acquisitions of control; or
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(3) to act as the board of directors, a committee of the board or an
individual director solely because of the effect such action might have on
an acquisition or potential or proposed acquisition of control of the
corporation or the consideration that might be offered or paid to
shareholders in such an acquisition.
(d) Presumption. - Absent breach of fiduciary duty, lack of good faith or
self-dealing, any act as the board of directors, a committee of the board or
an individual director shall be presumed to be in the best interests of the
corporation. In assessing whether the standard set forth in section 1712
has been satisfied, there shall not be any greater obligation to justify, or
higher burden of proof with respect to, any act as the board of directors,
any committee of the board or any individual director relating to or
affecting an acquisition or potential or proposed acquisition of control of
the corporation than is applied to any other act as a board of directors,
any committee of the board or any individual director. Notwithstanding the
preceding provisions of this subsection, any act as the board of directors,
a committee of the board or an individual director relating to or affecting
an acquisition or potential or proposed acquisition of control to which a
majority of the disinterested directors shall have assented shall be
presumed to satisfy the standard set forth in section 1712, unless it is
proven by clear and convincing evidence that the disinterested directors did
not assent to such act in good faith after reasonable investigation.
(e) Definition. - The term "disinterested director" as used in subsection
(d) and for no other purpose means:
(1) A director of the corporation other than:
(i) A director who has a direct or indirect financial or other
interest in the person acquiring or seeking to acquire control of the
corporation or who is an affiliate or associate, as defined in section
2552 (relating to definitions), of, or was nominated or designated as a
director by, a person acquiring or seeking to acquire control of the
corporation.
(ii) Depending on the specific facts surrounding the director and the
act under consideration, an officer or employee or former officer or
employee of the corporation.
(2) A person shall not be deemed to be other than a disinterested
director solely by reason of any or all of the following:
(i) The ownership by the director of shares of the corporation.
(ii) The receipt as a holder of any class or series of any
distribution made to all owners of shares of that class or series.
(iii) The receipt by the director of director's fees or other
consideration as a director.
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(iv) Any interest the director may have in retaining the status or
position of director.
(v) The former business or employment relationship of the director
with the corporation.
(vi) Receiving or having the right to receive retirement or
deferred compensation from the corporation due to service as a
director, officer or employee.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
-----------------------------------
Not applicable.
ITEM 8. EXHIBITS
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4.1 Heritage Bancorp, Inc. (formerly Miners National Bancorp, Inc.) Employee
Stock Purchase Plan with 401(k) Provisions, as amended by Amendments
Number 1 through 4
4.2 Articles of Incorporation, as amended, of Heritage Bancorp, Inc. are
incorporated herein by reference to Exhibit 3(a) to the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1994
4.3 By-Laws, as amended, of Heritage Bancorp, Inc. are incorporated herein
by reference to Exhibit 3(b) to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1994
5 Opinion of Rhoads & Sinon as to compliance with ERISA
23.1 Consent of Rhoads & Sinon (included as part of Exhibit 5)
24 Power of Attorney (included as part of signature page)
ITEM 9. UNDERTAKINGS
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A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
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(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraph (A)(1)(i) and (A)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by the
foregoing paragraph is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pottsville, Commonwealth of Pennsylvania, on May
21, 1996.
HERITAGE BANCORP, INC.
(Registrant)
By: /s/ Allen E. Kiefer
---------------------------------------
Allen E. Kiefer
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Allen E. Kiefer, Guy H. Boyer and Charles J.
Ferry, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to the Registration Statement
to which this power of attorney is attached, and to file all those amendments
and all exhibits to them and other documents to be filed in connection with
them, with the Securities and Exchange Commission, granting unto such attorneys-
in-fact and agents full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as fully
and to all intents and purposes as they might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below by the following persons in the
capacities and on the date indicated below.
Signatures Title Date
- ---------- ----- ----
/s/ Allen E. Kiefer President, Chief Executive Officer May 21, 1996
- ---------------------------- and Director
Allen E. Kiefer
/s/ Guy H. Boyer Executive Vice President, May 21, 1996
- ---------------------------- Secretary/Treasurer and Director
Guy H. Boyer (Principal Financial Officer)
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/s/ Richard A. Ketner Executive Vice President and May 21, 1996
- ---------------------------- Director
Richard A. Ketner
/s/ David L. Scott Vice President and Chief May 21, 1996
- ---------------------------- Accounting Officer
David L. Scott
/s/ Ermano O. Agosti Director May 21, 1996
- ----------------------------
Ermano O. Agosti
/s/ Richard D. Biever Director May 21, 1996
- ----------------------------
Richard D. Biever
/s/ Jane C. Deibert Director May 21, 1996
- ----------------------------
Jane C. Deibert
/s/ Albert L. Evans, Jr. Director and Vice Chairman May 21, 1996
- ---------------------------- of the Board
Albert L. Evans, Jr.
/s/ Richard T. Fenstermacher Director May 21, 1996
- ----------------------------
Richard T. Fenstermacher
/s/ Frederick A. Gosch Director May 21, 1996
- ----------------------------
Frederick A. Gosch
/s/ Robert F. Koehler Director May 21, 1996
- ----------------------------
Robert F. Koehler
/s/ Joanne C. McCloskey Director May 21, 1996
- ----------------------------
Joanne C. McCloskey
/s/ Raman V. Patel Director May 21, 1996
- ----------------------------
Raman V. Patel
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/s/ Spencer G. Pope Director and Chairman May 21, 1996
- ---------------------------- of the Board
Spencer G. Pope
/s/ Joseph P. Schlitzer Director May 21, 1996
- ----------------------------
Joseph P. Schlitzer
/s/ William J. Zimmerman Director May 21, 1996
- ----------------------------
William J. Zimmerman
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Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this Amendment to Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Pottsville,
Commonwealth of Pennsylvania on May 21, 1996.
HERITAGE BANCORP, INC.
Employee Stock Ownership Plan
(including 401(k) provisions)
By: /s/ Allen E. Kiefer
---------------------------------------
Allen E. Kiefer
Administrative Committee Member
-14-
<PAGE>
INDEX TO EXHIBITS
-----------------
Sequential
Exhibit No. Exhibit Page Number
- ----------- ------- -----------
4.1 Heritage Bancorp, Inc. (formerly Miners National
Bancorp, Inc.) Employee Stock Purchase Plan
with 401(k) Provisions, as amended by Amendments
Number 1 through 4
4.2 Articles of Incorporation, as amended, of Heritage
Bancorp, Inc. are incorporated herein by reference
to Exhibit 3(a) to the Corporation's Annual Report
on Form 10-K for the year ended December 31, 1994
4.3 By-Laws, as amended, of Heritage Bancorp, Inc.
are incorporated herein by reference to Exhibit
3(b) to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1994
5 Opinion of Rhoads & Sinon as to compliance with ERISA
23.1 Consent of Rhoads & Sinon (included as part
of Exhibit 5)
24 Power of Attorney (included as part of
signature page)
-15-
<PAGE>
EXHIBIT 4.1
HERITAGE BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN WITH 401(k) PROVISIONS
(formerly The Miners National Bancorp, Inc. Employee
Stock Ownership Plan (Containing 401(k) Provisions))
Effective as of January 1, 1989
[This conformed copy reflects the Plan as Amended by:
. The First Amendment dated April 28, 1992
. Amendment Number 2 dated December 13, 1994
. Amendment Number 3 dated November 7, 1995
. Fourth Amendment dated December 22, 1995
(effective January 1, 1996)]
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
1 Nature of Plan 1
2 Definitions [as amended by Amendment Number 2
and Amendment Number 3] 2
3 Eligibility and Participation 7
4 Employer and Employee Contributions [as amended
by Fourth Amendment] 9
5 Investment of Trust Assets [as amended by Fourth
Amendment] 19
6 Allocations to Participant's Account 21
7 Expenses of the Plan and Trust 29
8 Voting Company Stock 30
9 Disclosure to Participants 31
10 Capital Accumulation 32
11 Retirement, Disability or Death 32
12 Termination of Service, Break in Service, Vesting and Forfeitures 33
13 Credited Service [as amended by Amendment Number 3] 35
14 When Capital Accumulation Will Be Distributed 36
15 How Capital Accumulation Will Be Distributed 39
16 Rights, Options and Restrictions On Company Stock 41
17 No Assignment of Benefits, Dividends and Hardship Distribution 43
18 Administration 47
19 Claims Procedure 49
20 Guaranties 50
21 Future of the Plan [as amended by First Amendment] 51
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
22 "Top Heavy" Contingency Provisions 53
23 Diversification 55
24 Governing Law 56
25 Execution 56
</TABLE>
ii
<PAGE>
HERITAGE BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN WITH 401(k) PROVISIONS
(formerly The Miners National Bancorp, Inc.
Employee Stock Ownership Plan (Containing
401(k) Provisions))
[This conformed copy reflects the Plan as amended through
the Fourth Amendment effective January 1, 1996]
Section 1. Nature of Plan.
--------------
The purpose of this Plan is to enable participating Employees to share in
the growth and prosperity of the Company through Employer contributions to the
Plan and to provide Participants with an opportunity to accumulate capital for
their future economic security. The Plan is designed to permit both Employer
and Employee contributions to the Plan. The primary purpose of the Plan is to
enable Participants to acquire stock ownership interests in the Company.
Therefore, the Trust Assets held under the Plan will be invested primarily in
Company Stock.
The Plan is also designed to be available as a technique of corporate
finance to the Company. Accordingly, it may be used to accomplish the following
objectives:
(a) To meet general financing requirements of the Company, including
capital growth and transfers in the ownership of Company Stock;
(b) To provide Participants with beneficial ownership of Company Stock and
other assets through Employer and Employee contributions to the Plan;
and
(c) To receive loans (or other extensions of credit) to finance the
acquisition of Company Stock ("Acquisition Loans"), with such loans to
be repaid by Employer Contributions to the Trust and dividends
received on such Company Stock.
The Plan, hereby adopted effective as of January 1, 1989, is a stock bonus
plan containing Section 401(k) features that is intended to qualify under
Section 401(a) of the Internal Revenue
<PAGE>
Code. The Plan is also designed to be an employee stock ownership plan under
Section 4975(e)(7) of the Code.
All Trust Assets under the Plan will be administered, distributed,
forfeited and otherwise governed by the provisions of this Plan and the related
Trust Agreement. The Plan is administered by a Board of Trustees and an
Administrative Committee for the exclusive benefit of Participants (and their
Beneficiaries).
Section 2. Definitions.
-----------
In this Plan, whenever the context so indicates, the singular or plural
number and the masculine, feminine or neuter gender shall be deemed to include
the other, the terms "he," "his" and "him" shall refer to a Participant, and the
capitalized terms shall have the following meanings:
Account. One of the several accounts maintained to record the
-------
interest of a Participant under the Plan. See Section 6(a) and (b).
Acquisition Loan. A loan (or other extension of credit) used by the
----------------
Trust to finance the Acquisition of Company Stock, which loan may
constitute an extension of credit to the Trust from a party in interest (as
defined in ERISA). See Section 5(b).
Adjusted Compensation. The total remuneration paid to an Employee by
---------------------
the Employer in each Plan Year, as reported on IRS Form W-2, plus the
amount (if any) of his remuneration deferred under a qualified defined
contribution plan containing 401(k) provisions for the Plan Year.
Affiliated Company. Heritage National Bank, Miners Life Insurance
------------------
Company, and any other corporation or business which is a member of a
controlled group of corporations or businesses with the Company pursuant to
Section 414(b), (c) or (m) of the Code.
Anniversary Date. The 31st day of December of each year (the last day
----------------
of each Plan Year).
Annuity Starting Date. The first day of the first period for which an
---------------------
amount is payable as an annuity; or in the case of a benefit not payable in
the form of an
-2-
<PAGE>
annuity, the first day on which all events have occurred which entitle the
participant to such benefit.
Approved Absence. A leave of absence (without pay) granted to an
----------------
Employee by an Employer under its established leave policy.
Beneficiary. The person (or persons) entitled to receive any benefit
-----------
under the Plan in the event of a Participant's death. See Section 15(b).
Board of Directors. The Board of Directors of the Company.
------------------
Break in Service. A Plan Year in which a Participant is not credited
----------------
with more than 500 Hours of Service by reason of his termination of
Service. See Section 12(c).
Capital Accumulation. A Participant's vested, nonforfeitable interest
--------------------
in his Accounts under the Plan. See Section 10.
Code. The Internal Revenue Code of 1986.
----
Committee. The Administrative Committee appointed by the Board of
---------
Directors to administer the Plan. See Section 18.
Company. Heritage Bancorp, Inc., a company organized under the laws
-------
of Pennsylvania and registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended.
Company Stock. Shares of capital stock issued by the Company, which
-------------
are either voting common stock or preferred stock (convertible into voting
common stock) and which shares constitute "employer securities" under
Section 409(1) of the Code.
Company Stock Account. The Account of a Participant which reflects
---------------------
his interest in Company Stock held under the Plan. See Section 6(a).
Compensation. The total remuneration paid to an Employee by the
------------
Employer in each Plan Year for personal services, excluding (a)
contributions to a plan of deferred compensation (to the extent
contributions are not included in gross income of the employee for the
taxable year contributed) and distributions from such a deferred
compensation plan (whether or not includable in gross income), (b) amounts
realized in connection with the exercise of non-qualified stock options (or
the sale exchange or other disposition of qualified stock options) and
amounts which receive special tax benefits.
-3-
<PAGE>
Credited Service. The number of Plan Years during which an Employee
----------------
is credited with at least 1000 Hours of Service.
Defined Contribution Dollar Limitation. The dollar amount of $30,000,
--------------------------------------
or, if greater, one-fourth of the defined benefit dollar limitation set
forth in Section 415(b)(1) of the Code as in effect for the Plan Year.
Employee. Any common-law employee of an Employer.
--------
Employer. The Company, Heritage National Bank, Miners Life Insurance
--------
Company, and any other Affiliated Company which is designated by the Board
of Directors as an Employer and which adopts the Plan for the benefit of
its Employees.
Employer Contributions. Payments made to the Trust by an Employer
----------------------
which include Basic Contributions, Matching Contributions and Optional
Contributions. See Section 4.
Employer Discretionary Basic Contributions. Plan contributions made
------------------------------------------
at the sole discretion of the Employer pursuant to Plan Section 4(1)(a)(3).
Employer Discretionary Matching Contributions. Plan contributions
---------------------------------------------
made at the sole discretion of the Employer pursuant to Plan Section
4(1)(a)(2).
Employer Discretionary Optional Contributions. Plan contributions
---------------------------------------------
made at the sole discretion of the Employer pursuant to Plan Section
4(1)(a)(4).
ERISA. The Employee Retirement Income Security Act of 1974, as
-----
amended.
Financed Shares. Shares of Company Stock acquired by the Trust with
---------------
the proceeds of an Acquisition Loan.
Forfeiture. Any portion of a Participant's Accounts which does not
----------
become a part of his Capital Accumulation upon the occurrence of a Break in
Service. See Section 12(b) and (c).
Highly Compensated Participant. Any Employee who, in accordance with
------------------------------
Code section 414(q), during the year or the preceding year: (A) was at any
time a five percent (5%) owner of the Employer, (B) received compensation
from the Employer in excess of $75,000, (C) received compensation from the
Employer in excess of $50,000 and was in the top-paid group of Employees
for such year (defined as the top twenty percent (20%) of Employees when
ranked on the basis of compensation paid during such year), or (D) was at
any time an officer and received compensation greater than fifty percent
(50%) of the amount in effect under Section 415(b)(1)(A) for such year.
See Section 4(2)(c).
-4-
<PAGE>
Hour of Service. Each Hour of Service for which an Employee is
---------------
credited under the Plan, as described in Section 3(d).
Key Employee. Any Employee or former Employee (and the beneficiaries
------------
of such Employee) who at any time during the Plan Year (or any of the four
preceding plan years) was an officer of the Employer if such individual's
annual Compensation exceeds 150 percent (150%) of the dollar limitation
under Section 415(c)(1)(A) of the Code, an owner (or considered an owner
under Section 318 of the Code) of both more than .5% interest, as well as
one of the ten (10) largest interests in the Employer if such individual's
Compensation exceeds 100 percent (100%) of such dollar limitation, a five
percent (5%) owner of the Employer, or a one percent (1%) owner of the
Employer who has an annual Compensation of more than $150,000.
Non-Key Employee. Any Employee or former Employee not defined as a
----------------
Key Employee.
Other Investments Account. The portion of the Optional Contribution
-------------------------
Account of a Participant which reflects his interest under the Plan
attributable to Trust Assets other than Company Stock. See Section
6(d)(3).
Participant. Any Employee who is participating in this Plan. See
-----------
Section 3.
Plan. Heritage Bancorp, Inc. Employee Stock Ownership Plan with
----
401(k) Provisions, which includes the Trust Agreement.
Plan Year. The twelve month period ending on each Anniversary Date
---------
and coinciding with each calendar year.
Quarterly Date. March 31, June 30, September 30 and December 31 of
--------------
each calendar year.
Salary Reduction Contributions. Plan contributions made as a result
------------------------------
of the salary reduction elections of Participants pursuant to Plan Section
4(2).
Service. Employment with the Company (or an Affiliated Company).
-------
Trust. Heritage Bancorp, Inc. Employee Stock Ownership Trust, created
-----
by the Trust Agreement entered into between the Company and the Trustee.
Trust Agreement. The agreement between the Company and the Trustee
---------------
establishing the Trust and specifying the duties of the Trustee.
Trust Assets. The Company Stock and other assets held in the Trust
------------
for the benefit of Participants. See Section 5.
-5-
<PAGE>
Trustee. The Board of Trustees (and any successor Trustee) appointed
-------
by the Board of Directors to hold and invest the Trust Assets. See Section
18.
Vested Account. The present value of a Participant's nonforfeitable
--------------
benefit under the Plan.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation and annual
Adjusted Compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for increases in
the cost of living in accordance with Section 401(a)(17)(B) of the Internal
Revenue Code. The cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which Compensation and
Adjusted Compensation are determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12 months, the
OBRA '93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period, and the
denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Section 401(a)(17) of the Code shall mean the OBRA
'93 annual compensation limit set forth in this provision.
If Compensation or Adjusted Compensation for any prior determination period
is taken into account in determining an Employee's benefits accruing in the
current Plan Year, the Compensation or Adjusted Compensation for that prior
determination period is subject to the OBRA '93 annual compensation limit in
effect for that prior determination period. For this purpose, for determination
periods beginning before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual compensation limit is $150,000.
-6-
<PAGE>
Section 3. Eligibility and Participation.
-----------------------------
(a) Each Employee shall become a Participant on the January 1st or the July
1st, whichever the case may be, following his initial date of Service (the date
he is first credited with an Hour of Service), provided that he has attained age
twenty-one (21) and is employed in a position requiring the completion of at
least 1000 Hours of Service per Plan Year.
An Employee who fails to meet these requirements by the January 1st or July
1st following his initial date of Service shall be eligible to participate in
the Plan on the January 1st or July 1st following the date he has attained age
twenty-one (21) and is credited with at least 1000 Hours of Service during an
eligibility computation period, provided he is an Employee on that January 1st
or July 1st. For this purpose, an eligibility computation period shall first be
the period of twelve (12) consecutive months beginning on the Employee's initial
date of Service and thereafter shall be either of two twelve (12) consecutive
month periods, one period commencing on the January 1st and the other commencing
on the July 1st, of each Plan Year beginning after his initial date of Service.
(b) Participation in the Plan shall continue until it terminates following
retirement, disability, death or other termination of Service, as provided in
Sections 12 and 13. A Participant is generally entitled to share in the
allocations of Employer Contributions and Forfeitures only for a Plan Year in
which he is credited with at least 1000 Hours of Service and in which he was an
Employee (or on Approved Absence) on the Anniversary Date. A Participant shall
also share in the allocations of Employer Contributions for the Plan Year of his
retirement, disability or death (as provided in Section 12).
(c) A former Employee who is reemployed by an Employer and has previously
satisfied the eligibility requirements of Section 3(a) shall become a
Participant as of his date of reemployment. An Employee who is on an Approved
Absence shall not become a Participant until the end of his
-7-
<PAGE>
Approved Absence but a Participant who is on an Approved Absence shall continue
as a Participant during the period of his Approved Absence. Failure to return
to work by the end of the Approved Absence will terminate Service as of the
beginning of the Approved Absence.
(d) Hours of Service. For purposes of determining the Hours of Service to
----------------
be credited to an Employee under the Plan, the following rules shall be applied:
(1) Hours of Service shall include:
(a) each hour of Service for which an Employee is paid, or
entitled to payment, for the performance of duties, with
such hours of Service being credited in the Plan Year in
which the duties are performed; and
(b) each hour of Service for which an Employee is paid, or
entitled to payment, for a period during which no duties are
performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence; provided that no
more than 501 Hours of Service need be credited for one
continuous period during which an Employee does not perform
duties; and
(c) each hour of Service for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to;
provided, however, that Hours of Service credited under
either subparagraph (a) or (b) above shall not be credited
under this subparagraph (c). These Hours of Service will be
credited to Employee for the Plan Year to which the award or
agreement pertains rather than the Plan Year in which the
award, agreement or payment is made.
(2) The crediting of Hours of Service shall be determined by the
Committee in accordance with the rules set forth in Section 2530.200b-2(b)
and (c) of the regulations prescribed by the Department of Labor, which
rules shall be consistently applied with respect to all Employees within
the same job classification.
(3) Hours of Service shall not be credited to an Employee for a period
during which no duties are performed if payment is made or due under a plan
maintained solely for the purpose of complying with applicable worker's
compensation, unemployment compensation or disability insurance laws, and
Hours
-8-
<PAGE>
of Service shall not be credited on account of any payment made or due an
Employee solely in reimbursement of medical or medically-related expenses.
(4) An Employee compensated on an hourly basis shall be credited for
each Hour of Service as described above. Unless an Employer maintains
records of actual Hours of Service, a salaried Employee who completes at
least one Hour of Service during a monthly period shall be credited with
190 Hours for each such period of Service.
(5) Hours of Service will be credited for employment with other
members of an affiliated service group (under Section 414(m) of the Code),
a controlled group of corporations (under Section 414 (b) of the Code), or
a group of trades or businesses under common control (under Section 414(c)
of the Code), of which an Employer is, or may become, a member.
(6) For purposes of determining whether an Employee has incurred a
Break in Service and for vesting and participation purposes, if an Employee
begins a maternity/paternity leave of absence described in Section
411(a)(6)(E)(i) of the Code, his Hours of Service shall include the Hours
of Service that would have been credited to him if he had not been so
absent (or eight (8) Hours of Service for each day of such absence if the
actual Hours of Service cannot be determined). An Employee shall be
credited for such Hours of Service (up to a maximum of 501 Hours of
Service) in the Plan Year in which his absence begins (if such crediting
will prevent him from incurring a Break in Service in such Plan Year) or,
in all other cases, in the following Plan Year. For purposes of this
provision, a maternity/paternity leave of absence described in Section
411(a)(6)(E)(i) of the Code pertains to a Participant who is absent from
work for any period by reason of the pregnancy of the Participant, by
reason of the birth of a child of the Participant, by reason of the
placement of a child with the Participant in connection with the adoption
of such child by such Participant, or for purposes of caring for such child
for a period beginning immediately following such birth or placement.
Section 4. Employer and Employee Contributions.
-----------------------------------
1. Employer Contributions.
----------------------
(a) The Employer shall contribute the following amounts to the Plan
each Plan Year:
1. The amount of each Participant's Salary Reduction Contribution
made pursuant to Section 4(2). As provided in Section 12(a), the
interests
-9-
<PAGE>
of a Participant in the Salary Reduction Contributions allocated
to his account will always be 100% vested.
2. An Employer Discretionary Matching Contribution on behalf of each
Participant up to a maximum of one hundred percent (100%) of the
Participant's Salary Reduction Contributions, provided, however,
that the maximum Employer Matching Contribution shall be based on
a Participant's Salary Reduction Contribution of up to four
percent (4%) of such Participant's Compensation. As provided in
Section 12(a), the interests of a Participant in the Employer
Matching Contributions allocated to his account will always be
100% vested.
3. An Employer Discretionary Basic Contribution, which shall be
determined at the sole discretion of the Board of Directors. As
provided in Section 12(a), the interests of a Participant in the
Employer Basic Contributions allocated to his account will always
be 100% vested.
4. An Employer Discretionary Optional Contribution, which shall be
determined in the sole discretion of the Board of Directors, may
be made in cash or Company Stock as determined by the Board of
Directors. The interests of a Participant in the Employer
Optional Contributions allocated to his account will become
nonforfeitable pursuant to the vesting schedule contained in
Section 12(a).
(b) Salary Reduction Contributions shall be paid to the Trustee
promptly (and in no event later than 30 days after the end of the Plan Year)
following each pay period.
(c) Employer Discretionary Matching, Basic and Optional Contributions
for each Plan Year shall be paid to the Trustee not later than the due date
(including extensions) for filing the Employer's Federal income tax return for
that Plan Year.
(d) In the event Employer Contributions are paid to the Trust by
reason of a mistake of fact, such Employer Contributions may be returned to the
Employer (upon the request of the Employer) by the Trustee within one (1) year
after the payment to the Trust.
-10-
<PAGE>
2. Employee Salary Reduction Contributions.
---------------------------------------
(a) A Participant may authorize his Employer to contribute to the
Trust on his behalf Salary Reduction Contributions. Such Salary Reduction
Contributions shall be stated as a whole percentage, and shall be not less than
1%, nor more than 15%, of the Participant's Compensation. The total amount of
Salary Reduction Contributions for any Plan Year shall not exceed $7,000,
multiplied by any cost of living adjustment factor prescribed by the Secretary
of the Treasury under Section 415(d) of the Code.
(b) Each Participant electing to have his Employer contribute Salary
Reduction Contributions on his behalf during the Plan Year shall file a written
notice with the Plan Administrator at least thirty (30) days prior to the
January 1st, April 1st, July 1st and October 1st that he intends such election
to take effect. This requirement shall be waived on the adoption of the Plan
and each Participant shall be given a reasonable time to elect Salary Reduction
Contributions. Such written notice shall contain an election of the percentage
of his Compensation to be contributed and authorization for his Employer to
reduce his Compensation by such amount. Salary Reduction Contributions may be
suspended at any time by giving prior written notice. After suspension, the
Participant shall not be eligible for further Salary Reduction Contributions
until the beginning of the next Plan Year. A Participant may change the
percentage of his Salary Reduction Contributions only as of the January 1st,
April 1st, July 1st and October 1st of any Plan Year, but upon not less than
thirty (30) days prior written notice. A Participant shall be fully vested at
all times in the portion of his Account from Salary Reduction Contributions.
(c) For any Plan Year, the Committee shall have the right to limit or
reduce the Salary Reduction Contributions of the Highly Compensated Participants
in order to insure that the Maximum Contribution Percentage Limit under Code
Section 401(k) is not exceeded. Furthermore,
-11-
<PAGE>
in accordance with Proposed Regulation 1.401(k)-1(f), the Employer may make
additional 401(k) Basic Contributions, Optional Contributions and/or 401(k)
Matching Contributions or may distribute or recharacterize such contributions
made during the Plan Year in order to provide that the Maximum Contribution
Percentage Limit under Code Section 401(k) is not exceeded. The Maximum
Deferral Percentage Limit under Code Section 401(k) is equal to the greater of
Limit 1 or Limit 2:
Limit 1. The Actual Deferral Percentage of Compensation of the Highly
Compensated Participants may not exceed one hundred twenty-five
percent (125%) of the Actual Deferral Percentage of all other
Participants; or
Limit 2. The Actual Deferral Percentage of the Highly Compensated
Participants may not exceed the lesser of:
(a) The Actual Deferral Percentage of all other Participants,
plus two percent (2%) or
(b) The Actual Deferral Percentage of all other Participants,
multiplied by two hundred percent (200%).
Actual Deferral Percentage with respect to any specific group of
Participants for a Plan Year shall mean the average of the ratios (calculated
separately for each Participant in such group) of (A) the amount of 401(k)
Contributions paid into the Trust Fund on behalf of each Participant for such
Plan Year to (B) the Participant's Compensation for such Plan Year. In the case
of a Highly Compensated Participant who is eligible to have 401(k) Contributions
paid into a trust fund to his account under two or more plans maintained by the
Employer, the Actual Deferral Percentage shall be determined as if all such
401(k) Contributions were made under a single arrangement. Furthermore, for
purposes of determining the Actual Deferral Percentage of a Highly Compensated
Participant, the amount of 401(k) Contributions paid into the Trust Fund on his
behalf shall include 401(k) Contributions made on behalf of certain family
members described in Section 414(q)(6).
-12-
<PAGE>
(d) In the event the Maximum Deferral Percentage Limit under Code
Section 401(k) is exceeded, the amount of excess contributions for a Highly
Compensated Participant will be determined in the following manner, pursuant to
Regulation 1.401(k)-1(f)(2). First, the Actual Deferral Percentage (ADP) of the
Highly Compensated Participant with the highest ADP will be reduced to the
extent necessary to satisfy the Maximum Deferral Percentage Limit under Code
Section 401(k) or to cause such Participant's ADP to equal the ADP of the Highly
Compensated Participant with the next highest ADP. Second, this process is
repeated until the Maximum Deferral Percentage Limit under Code Section 401(k)
is satisfied. For each such Highly Compensated Participant whose ADP is
reduced, the amount of such Participant's excess contributions is equal to the
Participant's total Basic, Matching and Salary Reduction Contributions
(determined prior to the application of this paragraph) minus the amount
determined by multiplying the Participant's ADP (determined after application of
this paragraph) by such Participant's Compensation. In the case of a Highly
Compensated Participant whose ADP is determined pursuant to the Code Section
414(q)(6) family aggregation rules, the determination of the amount of excess
assets shall be made pursuant to Proposed Regulation 1.401(k)-1(f)(5)(iii).
The amount of a Participant's excess contributions distributed or
recharacterized pursuant to Proposed Regulation 1.401(k)-1(f) shall be reduced
by any excess deferrals previously distributed or recharacterized during such
Plan Year. The distribution or recharacterization of excess contributions will
include any income attributable thereto (computed pursuant to Proposed
Regulation 1.401(k)-1(f)(4)) from the date such excess contributions were made
until such date of recharacterization or distribution. The distribution or
recharacterization of any excess contribution is to be made prior to the two and
one-half month period following the end of the Plan Year in which such excess
-13-
<PAGE>
contributions were made. Any recharacterized excess contributions will remain
subject to Plan provisions applicable to Salary Reduction Contributions.
(e) In the event a Participant's Salary Reduction Contribution or
Employer Contribution:
(1) is made under a mistake of fact;
(2) is conditioned upon initial qualification of the Plan under
Code Section 401(a) and the Plan does not so qualify,
the contribution may be returned to the Employer within one (1) year after the
payment of the contribution, the disallowance of the deduction to the extent
disallowed, or the date of denial of the qualification of the Plan, whichever is
applicable. Except as provided under this paragraph, the assets of the Plan
will be used for the exclusive purpose of providing benefits to Participants
under the Plan and their Beneficiaries and for defraying reasonable
administrative expenses of the Plan.
3. Employee Voluntary Contributions.
--------------------------------
(a) A Participant may (subject to the limitation provision of Section
6) make Voluntary Participant Contributions. These contributions may be made
during any period in which he is a Participant. Voluntary Participant
Contributions shall be made in accordance with procedures set up by the
Administrative Committee.
A Participant's Voluntary Participant Contributions, including any
voluntary contributions he has made under any other qualified plan of the
Employer may not, in the aggregate, exceed 10% of his aggregate earnings from
the Employer for the period of time that he has actively participated under this
and such other plan or plans.
-14-
<PAGE>
(b) Before the date he ceases to be an Employee, a Participant may
withdraw any part of his Capital Accumulation resulting from his Voluntary
Participant Contributions in a single sum.
(c) Voluntary Participant Contributions shall be credited to the
Participant's Account as they are made and shall be forwarded to the Trustee at
least quarterly. Voluntary Participant Contributions are fully vested and
nonforfeitable.
(d) For any Plan Year, the Committee shall have the right to limit or
reduce the Voluntary Contributions of or the Matching Contributions attributable
to the Highly Compensated Participants in order to insure that the Maximum
Contribution Percentage Limit under Code Section 401(m) is not exceeded. The
Maximum Contribution Percentage Limit under Code Section 401(m) is equal to the
greater of Limit 1 or Limit 2:
Limit 1. The Actual Contribution Percentage of the Highly Compensated
Participants may not exceed one hundred twenty-five percent
(125%) of the Actual Contribution Percentage of all other
Participants; or
Limit 2. The Actual Contribution Percentage of the Highly Compensated
Participants may not exceed the lesser of:
(a) The Actual Contribution Percentage of all other
Participants, plus two percent (2%) or
(b) The Actual Contribution Percentage of all other
Participants, multiplied by two hundred percent (200%).
Actual Contribution Percentage with respect to any specific group of
Participants for a Plan Year shall mean the average of the ratios (calculated
separately for each Participant in such group) of (A) the amount of 401(m)
Contributions paid into the Trust Fund on behalf of each Participant for such
Plan Year to (B) the Participant's Compensation for such Plan Year. A
Participant's 401(m) Contribution is to be taken into account if it is paid to
the Trust during the Plan Year or is paid to
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<PAGE>
an agent of the Plan and is transmitted to the Trust within a reasonable period
after the end of the Plan Year. Any 401(k) Basic Contributions, Optional
Contributions and/or 401(k) Matching Contributions that are recharacterized as
Voluntary Contributions pursuant to Section 5(c) of the Plan are to be taken
into account in the Plan Year in which such amounts are includible in the
Participant's gross income. In the case of a Participant who has no 401(m)
Contribution, the Actual Contribution Percentage is considered to be zero. In
the case of a Highly Compensated Participant who is eligible to have 401(m)
Contributions paid into a trust fund to his account under two or more plans
maintained by the Employer, the Actual Contribution Percentage shall be
determined as if all such 401(m) Contributions were made under a single
arrangement. Furthermore, for purposes of determining the Actual Contribution
Percentage of a Highly Compensated Participant, the amount of 401(m)
Contributions paid into the Trust Fund on his behalf shall include 401(m)
Contributions made on behalf of certain family members described in Code Section
414(q)(6) and the Regulations thereunder.
(e) In the event the Maximum Contribution Percentage Limit under Code
Section 401(m) is exceeded, the amount of excess contributions for a Highly
Compensated Participant will be determined in the following manner, pursuant to
Regulation 1.401(m)-1(e)(2). First, the Actual Contribution Percentage (ACP) of
the Highly Compensated Participant with the highest ACP will be reduced to the
extent necessary to satisfy the Maximum Contribution Percentage Limit under Code
Section 401(m) or to cause such Participant's ACP to equal the ACP of the Highly
Compensated Participant with the next highest ACP. Second, this process is
repeated until the Maximum Contribution Percentage Limit under Code Section
401(m) is satisfied. For each such Highly Compensated Participant whose ACP is
reduced, the amount of such Participant's excess contributions is equal to the
Participant's total Voluntary and Matching Contributions (determined
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prior to the application of this paragraph) minus the amount determined by
multiplying the Participant's ACP (determined after application of this
paragraph) by such Participant's Compensation. In the case of a Highly
Compensated Participant whose ACP is determined pursuant to the Code Section
414(q)(6) family aggregation rules, the determination of the amount of excess
assets shall be made pursuant to Proposed Regulation 1.401(m)-1(e)(4)(iii).
The amount of a Participant's excess contributions distributed pursuant to
Proposed Regulation 1.401(m)-1(e) shall be reduced by any excess deferrals
previously distributed during such Plan Year. The distribution of excess
contributions will include any income attributable thereto (computed pursuant to
Proposed Regulation 1.401(m)-1(e)(3)) from the date such excess contributions
were made until such date of recharacterization or distribution. The
distribution of any excess contribution is to be made prior to the two and one-
half month period following the end of the Plan Year in which such excess
contributions were made. Any recharacterized excess contributions will remain
subject to Plan provisions applicable to Voluntary and Matching Contributions.
(f) For any Plan Year, the application of the Maximum Contribution
Percentage Limitations pursuant to Sections 5(c) and 6(d) of the Plan shall be
made in accordance with the multiple use limitations under Proposed Regulation
1.401(m)-2.
(g) To the extent Matching Contributions are used, pursuant to Plan
Section 5(c), to compute the Maximum Contribution Percentage Limit under Code
Section 401(k), they will not be used to compute the Maximum Contribution
Percentage Limit under Code Section 401(m). Furthermore, at the election of the
Employer, Optional Contributions and 401(k) Basic Contributions (to the extent
not utilized to compute the Maximum Contribution Percentage Limit under Code
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<PAGE>
Section 401(k)) may be used in the computation of the Maximum Contribution
Percentage Limit under Code Section 401(m).
4. Employee Rollover Contribution.
------------------------------
(a) With the Employer's consent, a Rollover Contribution may be made
by or for an Employee if either of the following conditions are met:
(1) The Contribution is a rollover contribution which the Code
permits to be transferred to a plan that meets the
requirements of Section 401(a) of the Code; and
(2) The Contribution is made within 60 days after the Employee
receives or would be entitled to receive the distribution;
and
(3) The rollover contribution is not from a defined benefit plan
or a defined contribution plan which is subject to the
funding standards of Code Section 412; and
(4) The Employee furnishes evidence satisfactory to the
Committee that proposed transfer is in fact a rollover
contribution which meets conditions (1), (2) and (3) above.
-OR-
(5) The contribution is made pursuant to Plan Section 23
diversification requirements.
The Rollover Contribution may be made by the Employee or may be made with
his consent by the named fiduciary of another plan. The Contribution will be
made according to procedures set up by the Committee.
(b) If the Employee is not an Active Participant at the time the
Rollover Contribution is made, he will be deemed to be a Participant only for
the purposes of investment and distribution of the Rollover Contribution. No
Employer Contribution will be made for him and he may not make Participant
Contributions, until the time he meets all of the requirements to become a
Participant.
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(c) Any Rollover Contribution made by or for an Employee is credited
to his Account when made and is at all times fully vested and nonforfeitable.
Section 5. Investment of Trust Assets.
--------------------------
1. General Investment Guidelines.
-----------------------------
(a) Trust Assets under the Plan will be invested by the Trustee
primarily in Company Stock, in accordance with the Trust Agreement. Employer
Contributions (and other Trust Assets) may be used to acquire shares of Company
Stock from Company shareholders or from the Company. The Trustee may also
invest Trust Assets in such other prudent investments as the Trustee deems to be
desirable for the Trust, or Trust Assets may be held temporarily in cash. All
purchases of Company Stock by the Trustee shall be made at prices which do not
exceed the fair market value of Company Stock, as determined in good faith by
the Trustee in accordance with the provisions of Section 18. The Trustee may
invest and hold up to one hundred percent (100%) of the Trust Assets under such
Accounts in Company Stock.
(b) The Trustee may incur Acquisition Loans from time to time to
finance the acquisition of Company Stock (Financed Shares) for the Plan or to
repay a prior Acquisition Loan. An installment obligation incurred in
connection with the purchase of Company Stock shall constitute an Acquisition
Loan. An Acquisition Loan shall be for a specific term, shall bear a reasonable
rate of interest and shall not be payable on demand except in the event of
default. An Acquisition Loan may be secured by a pledge of the Financed Shares
so acquired (or acquired with the proceeds of a prior Acquisition Loan which is
being refinanced). No other Trust Assets may be pledged as collateral for an
Acquisition Loan, and no lender shall have recourse against Trust Assets other
than any Financed Shares remaining subject to pledge. If the lender is a party
in interest (as defined in
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<PAGE>
ERISA), Financed Shares may be transferred to the lender only upon and to the
extent of the failure of the Plan to meet the payment schedule of the loan. Any
pledge of Financed Shares must provide for the release of the shares so pledged
as payments on the Acquisition Loan are made by the Trustee and such Financed
Shares are allocated to Participants' Company Stock Accounts under Section 6(e).
Payments of principal and interest on any Acquisition Loan shall be made by the
Trustee only from Employer Contributions to enable the Trust to repay such
Acquisition Loan, from Salary Reduction Contributions of Participants, from
earnings attributable to such Employer Contributions and Salary Reduction
Contributions, and from any dividends received by the Trust on such Financed
Shares.
2. Direction of Investments.
------------------------
(a) Various investment funds shall be established by the Trustee in
which Participants may direct the investment of their Salary Reduction Account,
Voluntary Participant Contribution Account, Employer Discretionary Matching,
Rollover Account and Prior Plan Account. Investment funds which are established
by the Trustee, for Participant investment direction purposes, may also include
a fund which permits Participants to acquire and hold Company Stock.
A Participant's right to direct the investment of any contribution shall
apply only to the investment funds established for this purpose. The following
rules shall apply to the administration of such funds.
(1) At the time an Employee becomes eligible for the Plan, he or
she shall complete an investment designation form stating
the permissible percentage of his or her contributions to be
invested in the available funds.
(2) A Participant may change his or her election with respect to
future contributions by filing a new investment designation
form with the Employer in accordance with the procedures
established by the Plan Administrator.
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<PAGE>
(3) A Participant may elect to transfer all or part of his or
her account balances from one investment fund to another by
filing an investment designation form with the Employer in
accordance with the procedures established by the Plan
Administrator.
(4) Except as otherwise provided in the Plan, neither the
Trustee, nor the Employer, nor any fiduciary of the Plan
shall be liable to the Participant or any of his or her
beneficiaries for any loss resulting from action taken at
the direction of the Participant.
(b) The Participant's account balances shall be adjusted as of each
valuation date based on the performance of the Investment Fund or Funds selected
by the Participant. Each Account will be valued separately. The reasonable and
equitable decision of the Trustee as to the value of each Investment Fund and of
any Account as of each valuation date shall be conclusive and binding upon all
Participants having any interest, direct or indirect, in the Investment Funds or
in any Accounts.
Section 6. Allocations to Participant's Account.
------------------------------------
Separate Accounts shall be established to reflect each Participant's
interest under the Plan.
(a) Employer Matching Contribution Account. The Employer Matching
--------------------------------------
Contribution Account maintained for each Participant will be credited annually
with the amount of the Employer Matching Contribution allocable to such
Participant, as determined pursuant to Section (4)(1)(a)(2), and with his share
of the net income (or loss) of the Trust.
(b) Employer Basic Contribution Account. The Employer Basic Contribution
-----------------------------------
Account maintained for each Participant will be credited annually with his
allocable share of Employer Basic Contributions and with his share of the net
income (or loss) of the Trust. Employer Basic Contributions under Section 4
shall be allocated as of the Anniversary Date among the Accounts of
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Participants so entitled under Section 3(b) in the ratio which the Adjusted
Compensation of each such Participant bears to the total Adjusted Compensation
of all such Participants for that Plan Year.
(c) Employee Salary Reduction and Voluntary Contribution Account. The
------------------------------------------------------------
Employee Salary Reduction and Voluntary Contribution Accounts maintained for
each Participant will be credited (or debited) annually with his share of the
net income (or loss) of the Trust and with his Salary Reduction and Voluntary
Contributions, if any, made during the Plan Year. This Account shall keep
separate the portion attributable to Salary Reduction Contributions and the
portion attributable to Voluntary Participant Contributions.
(d) Employee Rollover Contribution Account. The Rollover Contribution
--------------------------------------
Account maintained for each Participant will be credited (or debited) annually
with his share of net income (or loss) of the Trust and with his Rollover
Contributions, if any, made during the Plan Year.
(e) Employer Optional Contribution Accounts. A separate Company Stock
---------------------------------------
Account and Other Investments Account shall be established to reflect each
Participant's interest under the Employer Optional Contribution portion of the
Plan. The Company Stock Account maintained for each Participant will be
credited annually with his allocable share of Company Stock (including
fractional shares) purchased and paid for by the Trust or contributed in kind to
the Trust, with any Forfeitures of Company Stock and with any stock dividends on
Company Stock allocated to his Company Stock Account. Financed Shares shall
initially be credited to a "Loan Suspense Account" and shall be allocated to the
Company Stock Accounts of Participants only as payments on the Acquisition Loan
are made by the Trustee. The number of Financed Shares to be released from the
Loan Suspense Account for allocation to Participants' Company Stock Accounts for
each Plan Year shall be determined by the Committee as described under (e)(1)
and (e)(2) below.
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<PAGE>
(1) General Rule. The number of Financed Shares held in the Loan
------------
Suspense Account immediately before the release for the current Plan Year shall
be multiplied by a fraction. The numerator of the fraction shall be the amount
of principal or principal and interest paid on the Acquisition Loan for that
Plan Year. The denominator of the fraction shall be the sum of the numerator
plus the total payments of principal or principal and interest on the
Acquisition Loan projected to be paid for all future Plan Years. For this
purpose, the interest to be paid in future years is to be computed by using the
interest rate in effect as of the Anniversary Date of the Plan Year.
(2) Special Rule. The Committee may elect (at the time an Acquisition
------------
Loan is incurred) or the provisions of the Acquisition Loan may provide for the
release of shares from the Loan Suspense Account based solely upon the ratio
that the payments of principal for each Plan Year bear to the total principal
amount of the Acquisition Loan. This method may be used only if: (A) the
Acquisition Loan provides for annual payments of principal and interest at a
cumulative rate that is not less rapid at any time than level annual payments of
such amounts for ten (10) years; (B) interest included in any payment on the
Acquisition Loan is disregarded only to the extent that it would be determined
to be interest under standard loan amortization tables; and (C) the entire
duration of the Acquisition Loan repayment period does not exceed ten (10)
years, even in the event of a renewal, extension or refinancing of the
Acquisition Loan.
(3) Other Investments Accounts. The Other Investment Account
--------------------------
maintained for each Participant will be credited (or debited) annually with his
share of the net income (or loss) of the Trust, with any cash dividends on
Company Stock allocated to his Company Stock Account (other than currently
distributed dividends) and with his allocable share of Employer Contributions in
cash and any Forfeitures from Other Investment Accounts. Such Account will be
debited for the
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<PAGE>
Participant's share of any cash payments made for the acquisition of Company
Stock or for the repayment of any principal and interest on an Acquisition Loan.
The allocations to Participants' Accounts for each Plan Year will be made
as follows under the remaining subsections of this Section.
(f) Employer Contributions and Forfeitures. Employer Contributions under
--------------------------------------
Section 4 and Forfeitures under Section 12(b) and (c) for each Plan Year will be
allocated as of the Anniversary Date among the Accounts of Participants so
entitled under Section 3(b) in the ratio which the Adjusted Compensation of each
such Participant bears to the total Adjusted Compensation of all such
Participants for that Plan Year.
(g) Allocation Limitations. For each Plan Year, the Annual Additions with
----------------------
respect to any Participant may not exceed the lesser of:
(1) Twenty-five percent (25%) of his compensation (within the meaning
of Code Section 415(c)(3)); or
(2) The Defined Contribution Dollar Limitation.
For this purpose, "Annual Additions" shall be the total amount of any Employer
Contributions, Salary Reduction Contributions, Voluntary Participant
Contributions and Forfeitures (including any income attributable to Forfeitures
and amounts described in Code Sections 415(L)(1) and 419A(d)(2) allocated to the
Participant in this Plan and any other Employer defined contribution plan. For
purposes of applying these limitations only, the Plan uses the safe harbor
definition of Compensation pursuant to Section 1.415-2(d)(8) of the regulations,
as defined in Section 2 of the Plan. In computing Annual Additions, Forfeitures
of Company Stock and Employer Contributions of Company Stock shall be based on
the fair market value of Company Stock as of the Anniversary Date.
-24-
<PAGE>
Prior to the allocation of the Employer Contributions for any Plan Year,
the Committee shall determine whether the amount to be allocated would cause the
limitation described herein to be exceeded as to any Participant. In the event
that the limitation is exceeded for any Participant due to the allocation of a
forfeiture or a reasonable error in the estimation of a Participant's
Compensation, the following action shall be taken until the limitation for the
Plan Year will not any longer be exceeded:
(i) First, Salary Reduction Contributions allocated in accordance
with Section 6 shall be subtracted from the Participant's
Account.
(ii) Next, Employer Matching Contributions allocated in accordance
with Plan Section 6 shall be subtracted from the Participants'
Account.
(iii) Next, Employer Basic Contributions allocated in accordance with
Plan Section 6 shall be subtracted from the Participant's
Account.
(iv) Next, Employer Optional Contributions allocated in accordance
with Plan Section 6 shall be subtracted from the Participant's
Account.
The amount of Salary Reduction Contributions (including any income and gains
thereon) and Employer Contributions (including any income and gains thereon)
subtracted from a Participant's Account in accordance with the foregoing shall
be maintained in a separate suspense account and shall be allocated in the next
subsequent Plan Year as if such amounts were an additional contribution to the
appropriate Account. No contributions which would be included in the next
limitation year's Annual Addition may be made before the total suspense account
has been reallocated.
In addition, for any Participant who was covered under a defined benefit
plan, Annual Additions may not be allocated to his Accounts (under this Plan) in
amounts which cause the sum of the defined benefit plan fraction and the defined
contribution plan fraction to exceed 1.0 for any Plan Year. For this purpose,
the "defined benefit plan fraction" shall have as its numerator the
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<PAGE>
projected annual benefit of the Participant under the defined benefit plan as of
the Anniversary Date and shall have as its denominator the lesser of (i) the
product of 1.25 multiplied by the dollar limitation in effect under Section
415(b)(1)(A) of the Code for such Plan Year; or (ii) the product of 1.4
multiplied by the amount which may be taken into account under Section
415(b)(1)(B) of the Code with respect to the Participant for such Plan Year.
The "defined contribution plan fraction" shall have as its numerator the total
of the Annual Additions of the Participant (under this Plan and any other
Employer defined contribution plan) for all Plan Years and shall have as its
denominator the sum of the lesser of the following amounts determined for such
Plan Years and for each prior year of Service with an Employer: (i) the product
of 1.25 multiplied by the dollar limitation taken into account under Section
415(c)(1)(A) of the Code for the year; or (ii) the product of 1.4 multiplied by
the amount which may be taken into account under Section 415(c)(1)(B) of the
Code with respect to such Participant for such year.
Any excess amount shall be reallocated among the Accounts of the other
Participants according to the ratio which the Adjusted Compensation of each such
Participant bears to the total Adjusted Compensation of all such Participants
for that Plan Year, to the extent possible without exceeding the limitations
with respect to any other Participant for that Plan Year.
If as a result of the allocation of Forfeitures, a reasonable error in
estimating a Participants' annual Compensation, or under other limited facts and
circumstances, the Annual Additions for a particular Participant would cause the
limitations of Code Section 415 to be exceeded, the excess amounts shall be held
unallocated in a "Suspense Account" and shall be allocated during the next
succeeding Plan Year (prior to the allocation of Employer and Employee
Contributions for such succeeding Plan Year).
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<PAGE>
(h) Special Limitation Provision. Any Employer Contributions which are
----------------------------
applied by the Trust (not later than the due date, including extensions, for
filing the Company's Federal income tax return for that Plan Year) to pay
interest on an Acquisition Loan, and any Financed Shares which are allocated as
Forfeitures, shall not be included as Annual Additions under Section 6(g);
provided, however, that the provisions of this Section 6(h) shall be applicable
only for Plan Years for which not more than one-third (1/3) of the Employer
Contributions applied to pay principal or interest, or both, on an Acquisition
Loan are allocated to Participants who are highly compensated employees within
the meaning of Code Section 414(q).
(i) Net Income (or Loss) of the Trust. The net income (or loss) of the
---------------------------------
Trust for each Plan Year will be determined as of the Anniversary Date. Each
Participant's share of the net income (or loss) will be allocated to his
Accounts in the ratio which the balance of such Accounts on the preceding
Anniversary Date (reduced by the amount of any distribution of Capital
Accumulation from such Account during the Plan Year) bears to the sum of the
Account balances for all Participants as of that date. Net income earned on
each Participant's Salary Reduction Contributions made during the Plan Year
shall be allocated on a method which takes into account the timing of such
Contributions into the Account. The net income (or loss) of the Trust includes
the increase (or decrease) in the fair market value of the Trust Assets (other
than Company Stock), interest income, dividends and other income and gains (or
loss) attributable to Trust Assets (other than any dividends on Company Stock
allocated to Company Stock Accounts) since the preceding Anniversary Date,
reduced by any expenses charged to the Trust Assets for that Plan Year. The
computation of the net income (or loss) of the Trust shall not take into account
any interest paid by the Trust under an Acquisition Loan.
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<PAGE>
(j) Dividends on Company Stock. Cash dividends received on shares of
--------------------------
Company Stock allocated to Participants' Accounts will be allocated to the
respective Other Investments Account portion of the Employer Optional
Contribution Accounts of those Participants. Cash dividends received on
unallocated shares of Company Stock shall be included in the computation of net
income (or loss) of the Trust. Stock dividends received on Company Stock shall
be credited to the Accounts to which such Company Stock was allocated. Any cash
dividends which are currently distributed to Participants or used to repay a
loan to the ESOP under Section 17(b) or (c) shall not be credited to their Other
Investments Account portion of the Employer Optional Contribution Account.
Furthermore, any cash dividends used to pay administrative expenses of the Plan
shall not be credited to Participants' Other Investments Account portion of the
Employer Optional Contribution Account.
(k) Accounting for Allocations. The Committee shall establish accounting
--------------------------
procedures for the purpose of making the allocations to Participants' Accounts
provided for in this Section. The Committee shall maintain adequate records of
the aggregate cost basis of Company Stock allocated to each Participant's
Company Stock Account. The Committee shall also keep separate records of
Financed Shares and of Employer Contributions (and any earnings thereon) made
for the purpose of enabling the Trust to repay any Acquisition Loans. From time
to time, the Committee may modify the accounting procedures for the purposes of
achieving equitable and nondiscriminatory allocations among the Accounts of
Participants in accordance with the general concepts of the Plan, the provisions
of this Section and the requirements of the Code and ERISA.
(l) Limitation on Allocation to Certain Shareholders. To the extent that a
------------------------------------------------
Company shareholder sells qualifying Company securities to the Plan Trust and
elects (with the consent of the Company) nonrecognition of gain under Section
1042 of the Code or elects (with the consent of the Company) to qualify a sale
under Section 2057 of the Code, no portion of the Company securities
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<PAGE>
purchased in the nonrecognition transaction (or any dividends or other income
attributable thereto) may accrue or be allocated:
(1) during the nonallocation period (the ten year period beginning on
the later of (i) the date of the sale of the qualified Company
securities, or (ii) the date of the Plan allocation attributable
to the final payment of acquisition indebtedness incurred in
connection with such sale) for the benefit of:
(A) the selling shareholder;
(B) any decedent if the executor of the estate of such decedent
makes a qualified sale to which Code Section 2057 applies;
(C) the spouse, brothers or sisters (whether by the whole or
half blood), ancestors or lineal descendants of the selling
shareholder or decedent referred to above;
OR
(2) for the benefit of any other person who owns (after application
of Code Section 318(a)) more than 25% of:
(A) any class of outstanding stock of the Company or of any
corporation which is a member of the same controlled group
of corporations (within the meaning of subsection (1)(4)) as
the Company, or
(B) the total value of any class of outstanding stock of the
Company or any such corporation described in (2)(A) above.
For the purposes of this subparagraph (i)(2), Code Section 318(a) shall be
applied without regard to the employee trust exception in Section
318(a)(2)(B)(i).
Section 7. Expenses of the Plan and Trust.
------------------------------
All expenses of administering the Plan and Trust shall be charged to and
paid out of the Trust Assets. The Company may pay all or any portion of such
expenses, and payment of expenses by the Company shall not be deemed to be
Employer Contributions.
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<PAGE>
Section 8. Voting Company Stock.
--------------------
If the Company Stock is a registration-type class of securities as
described in Section 409(e)(4) of the Code, each Participant will be entitled to
direct the Trustee as to the exercise of any voting rights attributable to
shares of Company Stock then allocated to his Accounts but only to the extent
required by Sections 4975(e)(7) and 409(e)(2) of the Code and the regulations
thereunder. In that event, any allocated Company Stock with respect to which
voting instructions are not received from Participants shall not be voted, and
all Company Stock which is not then allocated to Participants' Accounts shall be
voted by the Trustee only in such manner as it shall determine in its sole
discretion.
If the Company Stock is not a registration-type class of securities as
described in Section 409(e)(4) of the Code, then all Company Stock in the Trust
shall normally be voted by the Trustee in such manner as it shall determine in
its sole discretion. However, with respect to any corporate matter which
involves the voting of Bank Stock as to the approval or disapproval of any
corporate merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of a trade or
business, or such similar transactions as may be prescribed in Code regulations,
each Participant will be entitled to direct the Trustee as to the exercise of
any voting rights attributable to shares of Company Stock then allocated to his
Accounts but only to the extent required by Sections 401(a)(22) and 409(e)(3) of
the Code and the regulations thereunder. In that event, any allocated Company
Stock with respect to which voting instructions are not received from
Participants shall not be voted, and all Company Stock which is not then
allocated to Participants' Accounts shall be voted in the manner determined by
the Trustee.
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<PAGE>
Section 9. Disclosure to Participants.
--------------------------
(a) Summary Plan Description. Each Participant shall be furnished with the
------------------------
summary plan description required by Sections 102(a)(1) and 104(b)(1) of ERISA.
Such summary plan description shall be updated from time to time as required
under ERISA and Department of Labor regulations thereunder.
(b) Summary Annual Report. Within nine (9) months after each Anniversary
---------------------
Date, each Participant shall be furnished with the summary annual report of the
Plan required by Section 104(b)(3) of ERISA, in the form required by regulations
of the Department of Labor.
(c) Annual Statement. Following each Anniversary Date, each Participant
----------------
shall be furnished with a statement reflecting the following information:
(1) The balance (if any) in his Accounts as of the beginning of the
Plan Year.
(2) The amounts of Employer Contributions allocated to his Accounts
for that Plan Year.
(3) The amounts of Salary Reduction Contributions allocated to his
Accounts for that Plan Year.
(4) The amounts of Rollover Contributions (and that portion
representing diversification by Participants under Section 23 of
the Plan) allocated to his Accounts for that Plan Year.
(5) The adjustments to his Accounts to reflect his share of
Forfeitures, dividends (if any) on Company Stock and the net
income (or loss) of the Trust for that Plan Year.
(6) The new balance in his Accounts, including the number of shares
of Company Stock allocated to his Employer Optional Contribution
Stock Account and the fair market value of Company Stock as of
that Anniversary Date.
(7) His number of years of Credited Service and his vested percentage
in his Account balances (under Sections 12 and 13) as of that
Anniversary Date.
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(d) Additional Disclosure. The Committee shall make available for
---------------------
examination by any Participant copies of the Plan, the Trust Agreement and the
latest annual report of the Plan filed (on Form 5500) with the Internal Revenue
Service. Upon written request of any Participant, the Committee shall furnish
copies of such documents and may make a reasonable charge to cover the cost of
furnishing such copies, as provided in regulations of the Department of Labor.
Section 10. Capital Accumulation.
--------------------
A Participant's vested (nonforfeitable) interest under the Plan is called
his Capital Accumulation. His Capital Accumulation shall be determined in
accordance with the provisions of Sections 11 and 12. Each Participant's
Capital Accumulation will be distributed as provided in Sections 14 and 15.
Section 11. Retirement, Disability or Death.
-------------------------------
Upon a Participant's retirement, disability or death, his Capital
Accumulation will be the total of his Account balances (100% vested). The
Participant will share in the allocation of Employer Contributions and
Forfeitures for the Plan Year in which his retirement, disability or death
occurs.
A Participant will be treated as having retired under the Plan if his
Service ends by any of the following:
(a) Normal Retirement. A Participant's Normal Retirement Age is his
-----------------
sixty-fifth (65th) birthday. Upon attaining his Normal
Retirement Age while employed by the Company (or an Affiliated
Company), a Participant's Account balances will become
nonforfeitable.
(b) Early Retirement. A Participant may elect early retirement under
----------------
the Plan at any time after he has attained age fifty-five (55)
and has completed at least ten (10) years of Service.
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(c) Deferred Retirement. In the event a Participant's Service
-------------------
continues beyond his Normal Retirement Age, he shall continue to
participate in the Plan.
(d) Disability Retirement. If the Committee determines that a
---------------------
Participant has suffered a disability (while employed by the
Company or an Affiliated Company) of a type that entitles him to
receive total disability benefits under Social Security, he will
be granted disability retirement under the Plan without regard to
his age or period of Service.
Section 12. Other Termination of Service, Break in Service, Vesting and
-----------------------------------------------------------
Forfeitures.
- -----------
(a) If Participant's Service terminates for any reason other than his
retirement, disability or death, his Employer Optional Contribution Account
Capital Accumulation will be determined on the basis of his nonforfeitable
interest, in accordance with the following vesting schedule:
Credited Service Nonforfeitable
Under Section 13 Percentage
---------------- ----------
Less than Three Years 0%
Three Years 20%
Four Years 40%
Five Years 60%
Six Years 80%
Seven Years or More 100%
A Participant is 100% vested at all times in his Account due to Employer 401(k)
Basic and Matching Contributions, and in Employee Salary Reduction, Voluntary
and Rollover Contributions. A Participant will not share in the allocation of
Employer Contributions and Forfeitures for the Plan year if his Service
terminates prior to the Anniversary Date (except for reasons of retirement,
disability or death).
(b) Any portion of the final balances in a Participant's Accounts which is
not vested (and does not become part of his Capital Accumulation) will become a
Forfeiture upon the occurrence
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<PAGE>
of a Break in Service, provided the Participant has first received a
distribution of his nonforfeitable interest in his Account balances. If the
Participant has not received a distribution of his Account balances prior to or
contemporaneous with the occurrence of a Break in Service, then the portion of
his Account balance which is not vested shall be forfeited only upon the
occurrence of a five-consecutive-year Break in Service. Forfeitures shall first
be charged against a Participant's Other Investments Account, with any balance
charged against his Company Stock Account at the then fair market value of
Company Stock. Financed Shares shall be forfeited only after other shares of
Company Stock have been forfeited. All Forfeitures will reallocated among the
Participants, as provided in Section 6(e), as of the Anniversary Date of the
Plan Year in which a Break in Service will occur only in a Plan Year for which a
Participant is not credited with more than 500 hours of Service and in which he
is not an Employee on the Anniversary Date by reason of his termination of
Service.
(c) Restoration of Forfeited Accounts. If a Participant is reemployed
---------------------------------
after a one-year Break in Service but prior to the occurrence of a five-
consecutive-year Break in Service, the portion of his Accounts (attributable to
the prior period of Service) that was forfeited upon the occurrence of a one-
year Break in Service shall be restored as if there had been no Forfeiture,
provided the Participant repays any amounts previously distributed. Such
restoration shall be made out of Forfeitures in the Plan Year of reemployment
(prior to allocations under Section 6(e)). To the extent such Forfeitures are
not sufficient, the Company shall make a special contribution to the
Participant's restored Accounts. Any amount so restored to a Participant shall
not constitute an Annual Addition under Section 6(f).
(d) Subsequent Vesting. If the Participant received a distribution of his
------------------
Capital Accumulation prior to the occurrence of a five-consecutive-year Break in
Service and he is
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<PAGE>
reemployed prior to the occurrence of such a Break in Service, the portion of
his Accounts which was not vested (including any restored Accounts) shall be
maintained separately until he becomes one hundred percent (100%) vested. His
Capital Accumulation ("X") attributable to such separate Accounts shall be
determined (prior to one hundred percent (100%) vesting) at the time his
participation in the Plan subsequently terminates, in accordance with the
following formula:
X = P(AB + D) - D
For purposes of applying this formula, P is the vested percentage at the time of
the subsequent termination; AB is the total of such Account balances at that
time; and D is the amount of his Capital Accumulation previously distributed.
Notwithstanding the above formula, should a Participant whose nonvested Accounts
were previously forfeited resume employment covered under the Plan before five
(5) consecutive Breaks-in-Service, such Participant may repay the full amount of
the earlier distribution at any time prior to the date upon which five
consecutive Breaks-in-Service have been incurred. Upon repayment, the Plan
which shall not be less than the amount in the Account balance of the
Participant at the date of distribution (including amounts distributed and
amounts forfeited), unadjusted by any subsequent gains or losses.
Section 13. Credited Service.
----------------
(a) General Rule. For purposes of vesting, an Employee's Credited Service
------------
includes the number of Plan Years after January 1, 1989 in which he is credited
with at least 1000 Hours of Service. Credited Service shall include such
Service with the Company, any other Employer and any Affiliated Company.
Employees of the Schuylkill Haven Trust Company shall receive Credited Service,
for vesting purposes, for all calendar years in which they are credited with at
least 1000 Hours of Service.
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<PAGE>
(b) Reemployment. If a former Participant is reemployed after the
------------
occurrence of a Break in Service, the following special rules shall apply in
determining his Credited Service:
(1) New Accounts will be established to reflect his interest in the
Plan attributable to his Service after the Break in Service.
(2) If he is reemployed after the occurrence of a five-consecutive-
year Break in Service, Credited Service after the Break in
Service will not increase his vested interest in his Accounts
attributable to Service prior to the Break in Service.
(3) After he completes one (1) Plan Year of Credited Service
following his reemployment, his Credited Service with respect to
his new Accounts will include his Credited Service accumulated
prior to the Break in Service.
(4) In the case of a Participant who is reemployed who has not
attained a vested interest under this Plan, Service prior to the
Break in Service shall not be included in determining his
Credited Service provided the number of consecutive one-year
Breaks in Service equals or exceeds the greater of five (5), or
the aggregate number of years of Credited Service before such
consecutive Breaks in Service.
Section 14. When Capital Accumulation Will Be Distributed.
---------------------------------------------
(a) A Participant's Capital Accumulation will be computed following the
termination of his Service. The Committee will, upon implementation of the
Plan, determine whether distribution of a Participant's Capital Accumulation for
any reason other than retirement, disability or death be made: (i) as soon as
reasonably possible after termination of Service, (ii) at some set date or dates
during the Plan Year, or (iii) as soon as reasonably possible after a Break in
Service has occurred. Once such determination has been made by the Committee,
it must be applied equally and in a nondiscretionary manner to all terminating
Participants. In the event of a Participant's retirement, disability or death,
his Capital Accumulation will be distributed in a single distribution as soon as
reasonably possible after the close of the Plan Year in which the Participant
retires, is disabled or
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<PAGE>
dies. In no event, however, shall distribution in such case be delayed later
than one year after the close of the Plan Year in which the Participant retires,
is disabled or dies. Under certain circumstances described in Section 16(d),
the Committee may delay the timing of a distribution to the Participant because
the Plan lacks sufficient cash liquidity to convert a Participant's Stock
Account to cash.
In no event, however (with the exception of Financed Shares described in
the succeeding sentence), shall distribution be deferred more than one year
after the close of the fifth Plan Year following the Participant's termination
of Service (unless the Participant has been reemployed by the Company at the end
of the fifth Plan Year following the termination of Service or the Participant
has chosen to delay the distribution of his Capital Accumulation beyond this
date). In the event any portion of the Participant's Account consists of
Company Stock attributable to a loan made to the Plan (pursuant to Section 5 of
the Plan) which has not been fully repaid, if the Plan lacks sufficient cash
liquidity as described in Section 16(d), the above timing as to distributions
may be delayed until the earlier of the Plan Year in which sufficient cash
liquidity is available or the Plan Year following the year in which the loan is
fully repaid. Once entitled to distribution, the Participant may choose the
following alternative modes of distribution (other than an immediate lump sum
distribution):
(1) Distribution of a Participant's Capital Accumulation in a single
distribution at some earlier or later date; or
(2) Distribution of a Participant's Capital Accumulation in
substantially equal, annual installments over a period not
exceeding five (5) years (provided that such period does not
exceed the life expectancy of the Participant); or
(3) Any combination of the foregoing.
Notwithstanding Section 14(a)(2) above, if the fair market value of a
Participant's Account attributable to Company Stock is in excess of $500,000 as
of the date distribution is to begin, the five-
-37-
<PAGE>
year maximum distribution period shall be extended by one additional year (up to
an additional five years) for each $100,000 increment, or fraction of such
increment, by which the value of the Participants' Account exceeds $500,000.
The $500,000 and $100,000 dollar amounts shall be subject to adjustment in
accordance with Section 409(o)(2) of the Code.
(b) Distribution of a Participant's Capital Accumulation shall commence not
later than sixty (60) days after the Anniversary Date coinciding with or next
following his Normal Retirement Age (or his termination of Service, if later).
A Participant who terminates Service prior to attaining age fifty-five (55) but
after completing at least ten (10) years of Service shall be entitled, upon his
request, to have the distribution of his Capital Accumulation commence upon his
attaining age fifty-five (55). The distribution of the Capital Accumulation of
any Participant with respect to the Plan Year in which he attains age 70-1/2
must commence not later than April 1st of the next Plan Year (even if he has not
terminated Service and regardless of any consent requirements pursuant to
Section 15(c) of the Plan). If the amount of a Participant's Capital
Accumulation cannot be ascertained by the Committee by the date on which a
distribution is to commence, or if the Participant cannot be located,
distribution of his Capital Accumulation shall commence within sixty (60) days
after the date on which his Capital Accumulation is able to be determined or
after the date on which the Committee locates the Participant.
(c) If any part of a Participant's Capital Accumulation is retained in the
Trust after his Service or participation ends, his Accounts will continue to be
treated as provided in Section 6. However, such Accounts will not be credited
with any additional Employer Contributions or Forfeitures.
(d) In accordance with Section 15 of the Plan, if Company Stock is not
readily tradeable on an established market, the Participant must be given the
right to demand distribution of his
-38-
<PAGE>
Capital Accumulation entirely in cash, Company Stock or some combination of the
two. In such case, the Trustees will strive to create sufficient cash reserves
in the Plan to permit a terminating Participant to convert the portion of his
Capital Accumulation consisting of Company Stock to cash. However, should Plan
cash reserves not permit conversion of Company Stock to cash, the Committee may
delay distribution of a Participant's Capital Accumulation, within the limits
described in Section 16(a), until the date such Plan cash reserves can be
reasonably generated through either additional Employer contributions to the
Plan or a restructuring of existing Plan assets.
Section 15. How Capital Accumulation Will Be Distributed.
--------------------------------------------
(a) Distribution of a Participant's Capital Accumulation will be made in
whole shares of Company Stock, cash or a combination of both, as determined by
the Committee; provided, however, that the Committee shall notify the
Participant of his right to demand distribution of his Capital Accumulation
entirely in cash or entirely in whole shares of Company Stock (with the value of
any fractional shares paid in cash). If Company Stock is readily tradeable on
an established market, a Participant need not be given the right to demand
distribution in cash. In the event a distribution is to be made in shares of
Company Stock, any balance in a Participant's Other Investments Account may be
applied to provide whole shares of Company Stock for distribution, at the then
fair market value. If securities acquired with the proceeds of an exempt loan
are available for distribution and consist of more than one class of Company
Stock, a Participant receiving distribution must receive substantially the same
proportion of each such class of Company Stock.
(b) The Trustee will make distributions from the Trust only upon the
direction of the Committee. Distribution will be made to the Participant if
living, and if not, to his Beneficiary. Upon the death of a Participant, the
Participant's Beneficiary shall be his surviving spouse, or if
-39-
<PAGE>
none, his estate. A Participant (with the consent of his spouse, if any) may
designate a different Beneficiary (and contingent Beneficiaries) and alternate
form of distribution of his Capital Accumulation from time to time (and may
change such designation of Beneficiary or form of distribution at any time) with
the consent of his spouse (unless the original consent permits subsequent choice
of Beneficiary or form of distribution without further spousal consent) by
filing a written designation with the Committee. The consent for a designation
of a Beneficiary (or change in designation of Beneficiary and form of
distribution) must be in writing, must acknowledge the effect of such election,
and must be witnessed by a Plan representative or a notary public. A deceased
Participant's entire Capital Accumulation shall be distributed to his
Beneficiary within five (5) years after his death, except to the extent that
distribution has previously commenced in accordance with Section 14(a)(2).
(c) The Company shall furnish the recipient of a distribution with the tax
consequences explanation required by Section 402(f) of the Code and shall comply
with the applicable withholding requirements of Section 3405 of the Code with
respect to distributions from the Trust (other than any dividend distributions
under Section 17(b)). If a Participant's Capital Accumulation exceeds $3,500,
no portion of his Capital Accumulation shall be distributed to him without his
consent, or where the Participant has died, the consent of the surviving
Participant's Beneficiary. Regardless of the value of a Participant's Capital
Accumulation, no distribution may be made under the preceding sentence after the
Annuity Starting Date unless the Participant and the spouse of the Participant
(or where the Participant has died, the surviving spouse) consents in writing to
such distribution in accordance with Section 417 of the Code and the Regulations
thereafter.
-40-
<PAGE>
Section 16. Rights, Options and Restrictions On Company Stock.
-------------------------------------------------
(a) Shares of Company Stock distributed by the Trust shall be subject to a
"right of first refusal" if the Company Stock is not publicly traded at the time
the right may be exercised. The right of first refusal shall not be applicable
if Company Stock is publicly traded at the time the right may otherwise be
exercised. For this purpose, "publicly traded" refers to shares of Company
Stock which are listed on a national securities exchange or which are quoted on
a system sponsored by a national securities association. If the Company Stock
is subject to a right of first refusal, the right shall provide that, prior to
any subsequent transfer of such shares, the shares must first be offered for
purchase in writing to the Company, and then to the Trust, at their then fair
market value. A bona fide written offer from an independent prospective buyer
shall be deemed to be the fair market value of such Company Stock for this
purpose. The Company and the Trustee shall have a total of fourteen (14) days
to exercise the right of first refusal on the same terms offered by a
prospective buyer. The Company or the Trustee may require that a Participant
entitled to a distribution of Company Stock execute an appropriate stock
transfer agreement (evidencing the right of first refusal) prior to receiving a
distribution of Company Stock.
(b) In accordance with Section 409(h) of the Code and the regulations
thereunder, the Company shall not be required to issue a "put option" to any
Participant who receives a distribution of Company Stock if the Company Stock is
readily tradeable on any established market or if the Company is not allowed by
law to purchase its own stock. If the Company stock, however, is not readily
tradeable on an established market, the Company shall issue a "put option" to
any Participant who receives a distribution of Company Stock. The put option
shall permit the Participant to sell such Company Stock to the Company at any
time during two option periods, at the fair market value of such shares. The
first put option period shall be for at least sixty (60) days beginning on the
date
-41-
<PAGE>
of distribution. The second put option period shall be for at least sixty (60)
days beginning after the new determination of the fair market value of Company
Stock by the Trustee (and notice to the Participant) in the following Plan Year.
The Company may allow the Trustee to purchase shares of Company Stock tendered
to the Company under a put option. In the event neither the Trustee nor the
Company wishes to purchase such shares, then the Participant has the right to
demand distribution in cash. If the distribution to the Participant constituted
a total distribution within the meaning of Code Section 409(h)(5), payment of
the fair market value of a Participants' Account consisting of Company Stock
shall be made in five substantially equal annual payments. The first
installment shall be paid not later than 30 days after the Participant exercises
the put option. The Plan will pay a reasonable rate of interest (as determined
by the Company or the Trustees) and will provide adequate security on amounts
not paid after 30 days. If the distribution to the Participant did not
constitute a total distribution within the meaning of Code Section 409(h)(5),
the Participant shall be paid an amount equal to the fair market value of the
Company Stock repurchased no later than 30 days after the Participant exercises
the put option.
(c) The Company or the Trustee may at any time offer to purchase any shares
of Company Stock (including, if a put option is issued, those shares not sold
under the put option described in Section 16(b)) which are held by former
Participants (or Beneficiaries), at the then fair market value. The terms of
payment for any such purchase of Company Stock may be either in a lump sum or in
installments over a period not exceeding ten (10) years, with interest payable
at a reasonable rate on any unpaid installment balance (as determined by the
Trustee).
(d) Shares of Company Stock held or distributed by the Trustee may include
such legend restrictions on transferability as the Company may reasonably
require in order to assure compliance with applicable federal and state
securities and banking laws. Except as otherwise provided in this
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<PAGE>
Section 16, no shares of Company Stock held or distributed by the Trustee may be
subject to a put, call or other option, or buy-sell or similar arrangement. The
provisions of this Section 16 shall continue to be applicable to Company Stock
even if the Plan ceases to be an employee stock ownership plan under Section
4975(e)(7) of the Code.
Section 17. No Assignment of Benefits, Dividends and Hardship Distribution.
--------------------------------------------------------------
(a) Prior to a Participant receiving distribution of his Capital
Accumulation, such Participant's Capital Accumulation may not be anticipated,
assigned (either at law or in equity), alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process, except in
accordance with a "qualified domestic relations order" (as defined in Section
414(p) of the Code).
(b) Dividends on Allocated Stock. Any cash dividends on Company Stock
----------------------------
allocated to the Accounts of Participants may be paid currently (or within
ninety (90) days after the end of the Plan Year in which the dividends are paid
to the Trust) in cash to such Participants on a nondiscriminatory basis, as
determined by the Committee. Such distribution (if any) of cash dividends to
Participants may be limited to dividends on shares of Company Stock which are
then vested or may be applicable to dividends on all shares allocated to Company
Stock Accounts.
(c) Dividends Used to Repay Loan to Plan. Any cash dividends on allocated
------------------------------------
and unallocated Company Stock may also be used to repay a loan to the Plan which
meets the requirements of Code Section 4975 and the Regulations thereunder.
(d) Trustee Discretion as to Dividends. The decision as to whether cash
----------------------------------
dividends on Company Stock will be distributed to Participants, used to repay a
loan to the ESOP, or held in the
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<PAGE>
Trust shall be made in the sole discretion of the Committee, and the Committee
may request the Company to pay such dividends directly to Participants.
(e) Withdrawal of Salary Reduction Contributions. After being in the Plan
--------------------------------------------
for five (5) years and upon prior written notice effective as of the first
Anniversary Date after receipt of such notice but not more than once in any
five-year period, a Participant under age 59-1/2 years may be permitted to make
a withdrawal from his Salary Reduction Contributions account in accordance with
the following rules:
(1) An application for approval shall be made in writing on a form
provided for such purposes by the Committee, and
(2) Withdrawals shall be subject to the following conditions:
(i) Withdrawals shall be approved only on account of an
immediate and heavy financial need and shall be approved
only up to the amount that is necessary to satisfy such
financial need. The determination of the existence of an
immediate and heavy financial need and of the amount
necessary to meet such need is to be made in a
nondiscriminatory and objective manner on the basis of all
relevant facts and circumstances. The determination of the
Committee as to justification of the withdrawal and the
amount thereof shall be final.
(ii) A distribution will generally be treated as necessary to
satisfy a financial need if the Committee reasonably relies
upon the Participants' representation that the need cannot
be relieved:
(A) through reimbursement or compensation by insurance or
otherwise, or
(B) by reasonable liquidation of the Participants' assets
(or those of his spouse), to the extent such
liquidation would not itself cause an immediate and
heavy financial need, or
(C) by cessation of Salary Reduction or Voluntary
Participant Contributions under the Plan, or
-44-
<PAGE>
(D) by other distributions or nontaxable (at the time of
the loan) loans from any tax-qualified employee benefit
plans maintained by the Employer or any other employer
of the Participant, or by borrowing from commercial
sources on reasonable commercial terms.
(iii) For the purpose of this Section, the term "financial
hardship" shall mean the financial inability to the
Participant to provide the necessary funds:
(A) to meet the extraordinary medical expenses (described
in Code Section 213(d)) incurred by the Participant,
the Participant's spouse, or any dependents of the
Participant (as defined in Code Section 152), or
(B) to provide payment of tuition for the next semester or
quarter of post-secondary education for the
Participant, his or her spouse, children or dependents,
or
(C) to provide funds for the purchase (excluding mortgage
payments) of a principal residence for the Participant
or to provide funds to prevent the eviction of the
Participant from his principal residence or foreclosure
on the mortgage of the Participant's principal
residence.
(iv) Withdrawals shall be in an amount of not less than five
hundred dollars ($500) and shall not exceed one hundred
percent (100%) of the Participant's Salary Reduction
Contributions account (including earnings and appreciation
thereon).
(v) Withdrawals shall be made in cash.
(f) Loans to Participants. The Committee is hereby designated with sole
---------------------
authority and responsibility to approve or deny loans and, except as provided in
this Section, collect unpaid loans. Loans may be made on any Quarterly Date
upon the written application of a Participant submitted to the Committee during
the period 30 days prior to and ending 15 days before the date the loan is to be
made.
-45-
<PAGE>
Written application shall be in a form acceptable to the Trustee and shall
set forth the reason the loan is being requested. Loans shall be approved only
for financial emergencies of a Participant which could result in the financial
hardship of the Participant. Financial hardship is defined as above in Section
17(e). Loans shall be made available to all Participants in a uniform and
nondiscriminatory manner. All loans will be adequately secured and will bear a
reasonable rate of interest as determined by the Committee. The term of the
loan shall be determined by the Committee, but shall not exceed five (5) years,
except that the Committee, in its discretion, may permit a repayment period in
excess of five years for loans used to acquire, construct or substantially
rehabilitate any dwelling unit which is to be used as a principal residence of
the Participant.
The Committee shall bear sole responsibility for ensuring compliance with
all applicable federal or state laws and regulations. Each loan shall be
secured by a written assignment of that portion of the Participant's vested
Account which the Committee determines to be necessary to adequately secure
repayment of the loan. However, no portion of the Participant's Capital
Accumulation may be used as security for such loan unless the spouse (if any)
consents in writing to such use during the 90-day period ending on the date on
which the loan is secured. No loan shall be approved by the Committee to any
Participant in any amount which exceeds (1) minus (2) where:
(1) is the lesser of:
(i) $50,000; or
(ii) the greater of fifty percent (50%) of the Participant's
vested Account, or $10,000.
(2) is the aggregate unpaid amount of all loans made to the
Participant under this or any other qualified plan maintained by
the Employer.
Each loan shall be made from the borrowing Participant's Account.
Repayments of the loan and interest shall be credited to his Account. No loan
shall be considered a general investment of
-46-
<PAGE>
the Trust Fund. In the event a Participant does not repay the principal of such
loan within the time prescribed by the Committee or interest thereon at such
times as are required by the terms of the loan or if the Participant ceases to
be an Employee while such Participant has a loan which is outstanding, the
Committee may direct the Trustee to take such action as the Committee may
reasonably determine, including:
(1) demand repayment of the loan and institute legal action to
enforce collection, or
(2) demand repayment of the loan and charge the total amount against
the balance credited to the Participant's vested Account which
was assigned as security, and reduce any payment or distribution
from the Trust Fund to which the Participant or his Beneficiary
may become entitled to the extent necessary to discharge the
obligation on the loan.
Section 18. Administration.
--------------
The Plan will be administered by a Board of Trustees (the "Trustees") and
an Administrative Committee (the "Committee"), each composed of individuals or a
corporation appointed by the Board of Directors to serve at its pleasure and
without compensation. The Trustees shall be the named fiduciary with authority
and responsibility for the management and investment of the Trust Assets. The
Committee members shall be the named fiduciaries with authority to control and
manage all other aspects of the administration of the Plan. Any Committee
member may also serve as a Trustee of the Plan, if so designated by the Board of
Directors.
Committee action will be by vote of a majority of the members at a meeting
or in writing without a meeting. Minutes of each meeting of the Committee shall
be kept. The Committee shall make such rules, regulations, computations,
interpretations and decisions, and shall maintain such records and accounts as
may be necessary to administer the Plan in a nondiscriminatory manner for
-47-
<PAGE>
the exclusive benefit of the Participants and their Beneficiaries, as required
under the Code and ERISA. The Committee shall establish procedures to determine
the qualified status of domestic relations orders and to administer
distributions under such qualified orders (in accordance with Section 414(p) of
the Code).
The Committee will give instructions to the Trustee with respect to matters
which require instructions, as provided in this Plan and the Trust Agreement.
The Committee members may allocate their fiduciary responsibilities among
themselves and may designate other persons (including the Trustee) to carry out
its fiduciary responsibilities under the Plan. In the event that the Committee
specifically designates the Trustee to perform any of the Committee's fiduciary
responsibilities, or if the Trustee is composed of the same individuals as the
Committee, then any specific instructions otherwise required by the Plan or
Trust Agreement from the Committee to the Trustee with respect to such
designated fiduciary responsibilities shall not be required.
The Trustee shall be responsible for investing the Trust Assets under the
Plan. The Board of Directors shall establish a funding policy and method for
acquiring Company Stock for the Trust in a manner that is consistent with the
objectives of the Plan and the requirements of ERISA. If Company Stock is
readily tradeable on an established securities market, the fair market value of
Company Stock shall be based upon the offering price established by current bid
and asked prices quoted by persons independent of the Company, pursuant to
Section 3(18)(A)(ii) of ERISA. In the absence of Company Stock trading on an
established securities market, all valuations of Company Stock pursuant to
activities carried on by the Plan shall be made by an independent appraiser
meeting requirements similar to those contained in Treasury Regulations under
Section 170(a)(1) of the Code.
The Trustee and the Committee are empowered, on behalf of the Plan, to
employ investment advisers, accountants, legal counsel and other agents to
assist them in the performance of their duties
-48-
<PAGE>
under the Plan. The Company shall secure fidelity bonding for the fiduciaries
of the Plan, as required by Section 412 of ERISA. All reasonable expenses of
the Trustee and the Committee shall be paid as provided in Section 7. The
Company shall indemnify each member of the Board of Trustees (or a corporation
serving as Trustee) and the Committee against any personal liability or expense,
except such liability or expense as may result from his own willful misconduct.
The Company shall be the Plan Administrator under Section 414(g) of the
Code and under Section 3(16)(A) of ERISA. The Committee shall be the designated
agent of the Plan for the service of legal process.
Section 19. Claims Procedure.
----------------
Unless otherwise specified in the Plan, distributions of Capital
Accumulations under the Plan will normally be paid without a Participant (or
Beneficiary) having to file a claim for benefits. However, a Participant (or
Beneficiary) who does not receive a distribution to which he believes he is
entitled may present a claim to the Committee for any unpaid benefits. All
questions and claims regarding benefits under the Plan shall be acted upon by
the Committee.
Each Participant (or Beneficiary) who wishes to file a claim for benefits
with the Committee shall do so in writing, addressed to the Committee or to the
Company. If the claim for benefits is wholly or partially denied, the Committee
shall notify the Participant (or Beneficiary) in writing of such denial of
benefits within ninety (90) days after the Committee initially received the
benefit claim.
Any notice of a denial of benefits shall advise the Participant (or
Beneficiary) of:
(a) the specific reason or reasons for the denial;
(b) the specific provisions of the Plan on which the denial is based;
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<PAGE>
(c) any additional material or information necessary for the
Participant (or Beneficiary) to perfect his claim and an
explanation of why such material or information is necessary; and
(d) the steps which the Participant (or Beneficiary) must take to
have his claim for benefits reviewed.
Each Participant (or Beneficiary) whose claim for benefits is denied shall
have the opportunity to file a written request for a full and fair review of his
claim by the Committee, to review all documents pertinent to his claim and to
submit a written statement regarding issues relative to his claim. Such written
request for review of his claim must be filed by the Participant (or
Beneficiary) within sixty (60) days after receipt of written notification of the
denial of his claim.
The decision of the Committee will be made within sixty (60) days after
receipt of a request and shall be communicated in writing to the claimant. Such
written notice shall set forth the specific reasons and specific Plan provisions
on which the Committee based its decision. If there are special circumstances
(such as the need to hold a hearing) which require an extension of time for
completing the review, the Committee's decision shall be rendered not more than
one hundred twenty (120) days after receipt of a request for review.
All notices by the Committee denying a claim for benefits, and all
decisions on request for a review of the denial of a claim for benefits, shall
be written in a manner calculated to be understood by the Participant (or
Beneficiary) filing the claim or requesting the review.
Section 20. Guaranties.
----------
All Capital Accumulations will be paid only from the Trust Assets. An
Employer, the Trustee or the Committee shall not have any duty or liability to
furnish the Trust with any funds, securities or other assets, except as
expressly provided in the Plan.
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<PAGE>
The adoption and maintenance of the Plan shall not be deemed to constitute
a contract of employment or otherwise between an Employer and any Employee, or
to be a consideration for, or an inducement or condition of, any employment.
Nothing contained in this Plan shall be deemed to give an Employee the right to
be retained in the Service of an Employer or to interfere with the right of an
Employer to discharge, with or without cause, any Employee at any time.
Section 21. Future of the Plan.
------------------
As future conditions cannot be foreseen, the Company reserves the right to
amend or terminate the Plan (in whole or in part) and the Trust Agreement at any
time, by action of its Board of Directors. Neither amendment nor termination
shall retroactively reduce the vested rights of Participants or permit any part
of the Trust Assets to be diverted to or used for any purpose other than for the
exclusive benefit of the Participants (and their Beneficiaries). Any
Participant who has completed three (3) years of Service may, upon amendment to
the Plan's vesting schedule, choose to have his nonforfeitable vesting
percentage determined under the previous vesting schedule. No amendment to the
Plan shall eliminate an optional form of distribution or reduce the accrued
benefit of a Participant (other than an amendment described in Code Section
412(c)(8) or Section 4281 of the Employee Retirement Security Act of 1974).
The Company specifically reserves the right to amend the Plan and the Trust
Agreement retroactively in order to satisfy any applicable requirements of the
Code and ERISA.
The Company further reserves the right to terminate the Plan in the event
of a determination by the Internal Revenue Service (after a timely Application
for Determination is filed by the Company) that the Plan initially fails to
satisfy the requirements of Section 401(a) and 4975(e)(7) of
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<PAGE>
the Code. In that event, all Trust Assets shall (upon written direction of the
Company) be returned to the Company, and the Plan and the Trust shall terminate.
If the Plan is terminated (or partially terminated) by the Company,
participation of all Participants affected by the termination will end. The
Accounts of all Participants affected by the termination will become
nonforfeitable as of the date of termination. A complete discontinuance of
Employer Contributions shall be deemed to be a termination of the Plan for this
purpose. The Plan will not be considered "terminated" within the meaning of
Section 1.401-6(b) of the Regulations under the Code if Employer Contributions
are replaced by contributions to a comparable plan that meets the requirements
of Section 401(a) of the Code. After termination of the Plan, the Trust will be
maintained until the Capital Accumulation of all Participants have been
distributed. Capital Accumulations will be distributed following termination of
the Plan in accordance with Section 14 of the Plan.
In the event of the merger or consolidation of this Plan with another Plan,
or the transfer of Trust Assets (or liabilities) to another Plan, the Account
balances of each Participant immediately after such merger, consolidation or
transfer must be at least as great as immediately before such merger,
consolidation or transfer (as if the Plan had then terminated).
In accordance with Rule 16b-3(c)(2)(ii) promulgated by the Securities and
Exchange Commission pursuant to Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), Plan provisions which set forth the
formula that determines the amount, price and timing of any grants or awards
(within the meaning of Rule 16b-3 of the Exchange Act) of the Company's Common
Stock to Participants subject to Section 16 of the Exchange Act shall not be
amended more than once every six months, other than to comport with changes in
the Code, ERISA or the rules promulgated thereunder.
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<PAGE>
Section 22. "Top Heavy" Contingency Provisions.
----------------------------------
(a) The provisions of this Section 22 are included in the Plan pursuant to
Section 401(a)(10)(B)(ii) of the Code and shall become applicable only if the
Plan becomes a "top heavy plan" under Section 416(g) of the Code for any Plan
Year.
(b) The determination as to whether the Plan becomes "top heavy" for any
Plan Year shall be made as of the Anniversary Date of the immediately preceding
Plan Year (or as of December 31, 1988, for the Plan Year ending on that date),
by considering the Account balances of Participants in (1) the Plan, (2) any
other plan (such as a defined contribution or defined benefit plan) of the
Employer in which a Key Employee participates (in the Plan Year containing the
determination date or any of the preceding four Plan Years, even if the plan was
terminated), and (3) each other plan which enables any plan in which a Key
Employee participates during the period tested to meet the requirements of Code
Section 401(a)(4) or 410(b). All employers aggregated under Code Section
414(b), (c) or (m) are considered a single employer. The Plan (the Retirement
Plan and any other Employer defined contribution plan) shall be "top heavy" only
if the total of the Account balances under the Plan and any other defined
contribution plan and the value of accrued benefits under any defined benefit
plan for Key Employees as of the determination date for that Plan Year exceeds
sixty percent (60%) of the total of the Account balances for all Participants.
For such purpose, Account balances (including Participants' Account balances
under any other defined contribution plan) and accrued benefit values shall be
computed and adjusted pursuant to Section 416(g) of the Code. In determining
Key Employees under this Section 22(b), the term "annual compensation" in
Section 416(i)(1)(A) of the Code shall mean Compensation (as defined in Section
2).
(c) For any Plan Year in which the Plan is "top heavy," each Participant
who is an Employee on the Anniversary Date and is not a participant in the
Retirement Plan and who is a Non-
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<PAGE>
Key Employee shall receive, regardless of his Hours of Service for that Plan
Year, a minimum allocation of Employer Contributions and Forfeitures which is
equal to the lesser of:
(1) Three percent (3%) of his Compensation; or
(2) The same percentage of his Compensation as the allocation to the
Key Employee for whom the Percentage is the highest for that Plan
Year. For purposes of this calculation, any salary reduction or
other similar arrangement of a Key Employee shall be included in
determining the percentage allocation to a Key Employee.
If such Employee is also a Participant in any other defined contribution plan,
he shall receive only the minimum allocation in this Plan and shall not receive
the minimum allocation provided in the defined contribution plan.
(d) For any Plan Year in which the Plan is "top heavy," each Participant
who is an Employee on the Anniversary Date and is also a participant in the
Retirement Plan and who is a Non-Key Employee shall receive only the defined
benefit minimum provided in the Retirement Plan and shall not receive the
minimum allocation provided in Section 22(c) of this Plan (or the minimum
allocation in any other defined contribution plan).
(e) For any Plan Year in which the Plan is "top heavy" (and for any Plan
Year without regard to "top-heaviness" after December 31, 1988), Compensation of
each Employee for purposes of the Plan shall not take into account any amount in
excess of $200,000, as adjusted for increases in the cost of living pursuant to
Section 416(d)(2) of the Code.
(f) For any Plan Year in which the Plan is "top heavy," with respect to any
Participant who is covered under a defined benefit plan, the "defined benefit
plan fraction" and the "defined contribution plan fraction" referred to in
Section 6(f) shall be computed by substituting $1.0" in lieu of "1.25" in both
denominators.
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<PAGE>
(g) The Capital Accumulation of an Employee who has not performed any
Service for the Employer at any time during the five-year period ending on the
determination date is excluded from the calculation to determine top-heaviness.
Section 23. Diversification.
---------------
(a) Within 90 days after the last day of each Plan Year during the
Participants' Qualified Election Period, any Plan Participant who has attained
age fifty-five (55) and has completed ten (10) years of Credited Service
beginning on or after January 1, 1989 (i.e., a "Qualified Participant") shall
have the right to make an election to direct the Plan as to the investment of
twenty-five percent (25%) of the value of the Participants' Account attributable
to Company Stock which was acquired by the Plan and which is allocated to the
Participant's Employer Optional Contribution Account. Within 90 days after the
close of the last Plan Year in the Participants' Qualified Election Period, a
Qualified Participant may direct the Plan as to the investment of fifty percent
(50%) of the value of such Account. The term Qualified Election Period shall
mean the six (6) Plan Year period beginning with the Plan Year in which a Plan
Participant first becomes a Qualified Participant.
(b) Method of Directing Investment. The Participant's election to
------------------------------
diversify his Account shall be provided to the Plan Administrator in writing and
shall be effective no later than 180 days after the close of the Plan Year to
which the election applies.
(c) Distribution of Account. Upon a Qualified Participant's election to
-----------------------
direct the investment of a portion of the Participant's Account, the Trustee, in
its sole discretion, may transfer the portion of the Account that is covered by
the election to the Participant within 90 days after the last day of the period
during which the election can be made.
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<PAGE>
Section 24. Governing Law.
-------------
The provisions of the Plan and the Trust Agreement shall be construed,
administered and enforced in accordance with the laws of the Commonwealth of
Pennsylvania, to the extent such laws are not superseded by ERISA.
Section 25. Execution. *
---------
To record the adoption of this Plan, the Company has caused this document
to be executed this 19th day of December , 1989.
------ ----------
MINERS NATIONAL BANCORP, INC.
[now Heritage Bancorp, Inc.]
By: /s/ Allen E. Kiefer
----------------------------------------
Allen E. Kiefer
President
By: /s/ Guy H. Boyer
----------------------------------------
Guy H. Boyer
Secretary
* First Amendment dated April 28, 1992; Amendment Number 2 dated December 13,
1994; Amendment Number 3 dated November 7, 1995; and Fourth Amendment dated
December 22, 1995.
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<PAGE>
EXHIBIT 5
May 21, 1996
Re: Heritage Bancorp, Inc. Employee Stock
Ownership Plan with 401(k) Provisions
-------------------------------------
Board of Directors
Heritage Bancorp, Inc.
120 South Centre Street
P.O. Box 1100
Pottsville, PA 17901
Ladies and Gentlemen:
We are counsel to Heritage Bancorp Inc. ("Heritage"), formerly Miners
National Bancorp, Inc., in connection with the amendment of Registration
Statement 33-34198 with respect to securities to be issued pursuant to the
Heritage Bancorp, Inc. Employee Stock Ownership Plan with 401(k) Provisions (the
"KSOP").
On December 19, 1989, Heritage amended and restated the KSOP in order
to comply with certain changes enacted by the Tax Reform Act of 1986. On April
28, 1992, Heritage amended the KSOP by the First Amendment ("Amendment No. 1").
On April 22, 1993 the KSOP received a favorable determination letter from the
Internal Revenue Service on the qualified status of the KSOP. This
determination letter also covered Amendment Number 1.
Subsequent to the receipt of the favorable determination letter the
KSOP was amended by an Amendment Number 2, Amendment Number and a Fourth
Amendment ("Amendment No. 4"). An opinion of counsel which confirms compliance
of Amendments 2, 3 and 4 of the KSOP with the requirements of ERISA pertaining
to such amendments is required to be filed as an Exhibit to Post-Effective
Amendment No. 1 to Registration Statement 33-34198.
In rendering this opinion, we have examined the following documents:
<PAGE>
RHOADS & SINON
May 21, 1996
Page 2
(i) Amendment Number 2 to the Heritage KSOP effective January
1, 1994.
(ii) Amendment Number 3 to the Heritage KSOP effective March
1, 1995.
(iii) Amendment Number 4 to the Heritage KSOP effective January
1, 1996.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such copies.
Based solely upon the foregoing, but subject to the assumptions and
qualifications hereinafter set forth, we are of the opinion that Amendment
Numbers 2, 3 and 4 to the KSOP comply in all respects with the requirements of
ERISA which pertain to such amendments.
In addition to the assumptions and qualifications set forth above, the
opinions set forth herein are also subject to the following qualifications:
(i) We express no opinion as to the laws of any jurisdiction other
than the laws of the Commonwealth of Pennsylvania and the laws of the
United States of America.
(ii) This opinion is issued as of the date hereof, is necessarily
limited to laws now in effect in the Commonwealth of Pennsylvania and the
United States and to facts and circumstances within our knowledge.
The opinions herein are solely for the use of Heritage and may not be
relied on by any other persons without our prior written approval. The opinions
expressed in this letter are limited to the matters set forth herein, and no
other opinions should be inferred beyond the matters expressly stated.
We hereby consent to the filing of this opinion as an Exhibit to said
Registration Statement and to all references to us therein. In giving such
consent, we do not
<PAGE>
[LETTERHEAD OF RHOADS & SINON APPEARS HERE]
May 21, 1996
Page 3
thereby admit that we are experts within the meaning of Section 7 of the
Securities Act of 1933.
Very truly yours,
RHOADS & SINON
By: [SIGNATURE APPEARS HERE]
Drake D. Nicholas
DDN/bma/70522
