<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) of the
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997
Commission file number 0-12506
Heritage Bancorp, Inc.
Pennsylvania 23-2228542
120 South Centre Street, Pottsville, PA 17901
(717) 622-2320
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, par value $5.00 per share
4,757,289 shares outstanding as of September 30, 1997
<PAGE>
Heritage Bancorp, Inc.
and its wholly owned subsidiary
-------------------------------
<TABLE>
<CAPTION>
Consolidated Balance Sheets (Unaudited)
- ---------------------------------------------------------------------
(Dollars in thousands) September 30, December 31,
1997 1996
--------------- --------------
<S> <C> <C>
ASSETS
- ------
Cash and due from banks $ 7,614 $ 9,463
Securities:
Held to maturity (fair value 1997 - $0;
fair value 1996 - $19,717) 0 19,460
Available for sale 111,267 95,222
--------------- --------------
111,267 114,682
Loans receivable:
Commercial, financial, and agricultural 109,157 95,135
Real estate - mortgage and construction 72,002 68,102
Consumer 49,429 45,830
--------------- --------------
230,588 209,067
Less: Unearned income (192) (354)
Allowance for loan losses (3,145) (3,071)
--------------- --------------
Net loans 227,251 205,642
Premises and equipment, net of accumulated depreciation 5,110 5,331
Accrued income receivable and other 6,521 6,836
--------------- --------------
$ 357,763 $ 341,954
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Noninterest bearing $ 33,275 $ 31,458
Interest bearing 224,333 222,786
--------------- --------------
Total deposits 257,608 254,244
Short term borrowings 10,004 15,952
Term funds borrowed 44,450 29,450
Other liabilities 2,758 2,227
--------------- --------------
Total liabilities 314,820 301,873
Stockholders' Equity:
Preferred stock, $25 par value; 10,000,000 shares
authorized and unissued 0 0
Common stock, $5 par value; authorized 10,000,000 shares
issued 1997 - 5,002,104; 1996 - 2,501,052 shares 25,011 12,505
Surplus 772 668
Retained earnings 18,525 28,474
Treasury stock, at cost (1997 - 244,815 shares;
1996 - 100,791 shares) (2,564) (1,961)
Net unrealized appreciation on securities
available for sale, net of tax 1,199 395
--------------- --------------
Total stockholders' equity 42,943 40,081
--------------- --------------
$ 357,763 $ 341,954
=============== ==============
</TABLE>
2
<PAGE>
Heritage Bancorp, Inc.
and its wholly owned subsidiary
-------------------------------
<TABLE>
<CAPTION>
Consolidated Statements of Income (Unaudited)
- ---------------------------------------------------------------
(Dollars in thousands) Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 5,131 $ 4,287 $ 14,740 $ 12,460
Investment and mortgage-backed securities:
Taxable 1,456 1,559 4,479 4,567
Tax-exempt 293 217 788 581
Other 0 2 1 11
------------- -------------- ------------- -------------
Total interest income 6,880 6,065 20,008 17,619
Interest expense:
Deposits 2,021 1,879 5,769 5,719
Borrowings:
Short-term 96 309 627 530
Long-term 602 63 1,453 188
------------- -------------- ------------- -------------
Total interest expense 2,719 2,251 7,849 6,437
------------- -------------- ------------- -------------
Net interest income 4,161 3,814 12,159 11,182
Provision for loan losses 45 45 135 135
------------- -------------- ------------- -------------
Net interest income after provision for loan losses 4,116 3,769 12,024 11,047
Other income:
Trust department 187 176 664 597
Service charges 173 173 522 491
Other 193 151 452 356
Security gains 10 0 151 0
------------- -------------- ------------- -------------
Total other income 563 500 1,789 1,444
------------- -------------- ------------- -------------
Other expenses:
Salaries and employee benefits 1,284 1,244 3,926 3,695
Occupancy, net 133 213 555 659
Equipment 192 192 595 572
Communications and supplies 148 153 504 474
Professional fees and outside services 250 267 874 723
Marketing and advertising 85 112 262 266
Taxes other than income 96 102 278 291
FDIC insurance premiums 7 1 23 2
Other 189 196 699 623
------------- -------------- ------------- -------------
Total other expenses 2,384 2,480 7,716 7,305
------------- -------------- ------------- -------------
Income before income taxes 2,295 1,789 6,097 5,186
Federal income taxes 658 515 1,777 1,500
------------- -------------- ------------- -------------
Net income $ 1,637 $ 1,274 $ 4,320 $ 3,686
============= ============== ============= =============
Net income per common share $ 0.34 $ 0.27 $ 0.91 $ 0.77
============= ============== ============= =============
</TABLE>
3
<PAGE>
Heritage Bancorp, Inc.
and its wholly owned subsidiary
-------------------------------
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Unaudited)
- ------------------------------------------------------------------------
(Dollars in thousands)
Nine Months Ended September 30,
1997 1996
--------------- --------------
<S> <C> <C>
Operating Activities
- --------------------
Net income $ 4,320 $ 3,686
Adjustments to reconcile net cash provided by
operating activities:
Provision for loan losses 135 135
Depreciation 518 492
Losses on sales of equipment 9 2
Amortization of securities' premiums and
accretion of discounts, net 60 78
Realized gains on sales of securities available for sale (151) 0
Increase in accrued income receivable
and other assets (126) (636)
Increase (decrease) in interest payable and other liabilities 531 (155)
--------------- --------------
Net cash provided by operating activities 5,296 3,602
--------------- --------------
Investing Activities
- --------------------
Securities held to maturity:
Proceeds from called / matured securities 2,055 6,715
Purchases 0 (1,998)
Securities available for sale:
Proceeds from called / matured securities and
principal repayments 8,190 8,222
Proceeds from sales 27,052 401
Purchases (32,546) (20,610)
Net increase in loans receivable (21,744) (19,549)
Proceeds from sales of equipment 30 8
Purchases of equipment (336) (586)
--------------- --------------
Net cash used in investing activities (17,299) (27,397)
--------------- --------------
Financing Activities
- --------------------
Net decrease in demand deposits, N.O.W. (2,261) (2,874)
accounts, and savings accounts
Net increase in time deposits 5,625 512
Net increase (decrease) in short-term borrowings (5,948) 27,178
Term borrowings 40,000 0
Repayment of term borrowings (25,000) 0
Purchase of treasury stock (851) (927)
Issuance of treasury stock 352 220
Cash dividends (1,763) (1,495)
--------------- --------------
Net cash provided by financing activities 10,154 22,614
--------------- --------------
Decrease in cash and cash equivalents (1,849) (1,181)
Cash and cash equivalents at the beginning of the year 9,463 11,356
--------------- --------------
Cash and cash equivalents at September 30 $ 7,614 $ 10,175
=============== ==============
</TABLE>
4
<PAGE>
Heritage Bancorp, Inc.
and its wholly-owned subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1997
Note A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997.
Note B - SIGNIFICANT ACCOUNTING POLICIES
Earnings per share:
Earnings per share is based on the weighted average shares outstanding as
follows:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Third quarter shares * 4,755,956 4,786,782
Year-to-date * 4,769,621 4,800,864
</TABLE>
* Weighted average shares outstanding have been restated to give effect to a
2-for-1 stock split in the form of a 100% stock dividend issued May 23, 1997.
5
<PAGE>
Management's Discussion and Analysis
FINANCIAL CONDITION
The Corporation functions as a financial intermediary, therefore trends in its
sources and uses of funds should be examined when reviewing financial condition.
The primary reason for the increased profitability is the additional income
generated from the significant loan growth that occurred in the second half of
1996 and throughout 1997. It is important to note that credit quality standards
were not compromised to achieve this growth. Further analysis of these items
are detailed within.
LOANS RECEIVABLE
Net loans increased $21,609,000, or 10.5%, during the nine months ended
September 30, 1997 to $227,251,000. The increase in loans was directly
attributable to increased marketing efforts, favorable economic conditions in
our market area, and competitive pricing. The Corporation has purchased loan
participations from other community banks outside our primary market area. As
of September 30, 1997 and 1996, total loan participations were $20,258,000, or
18.6%, and $9,060,000, or 10.7%, of total commercial loans outstanding,
respectively.
ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses for the nine months ended September 30,
1997 and 1996 were as follows (in 000's):
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Balance at beginning of year $ 3,071 $ 3,209
Recoveries of loans 129 216
Provision charged to operations 135 135
Loans charged off (190) (314)
------- -------
Balance at end of period $ 3,145 $ 3,246
======= =======
Net charge-offs to average loans outstanding .04% .07%
======= =======
</TABLE>
The following table summarizes the Corporation's nonaccrual, past due, and
restructured loans at September 30, 1997 and December 31, 1996 (in 000's).
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Loans on nonaccrual $ 1,061 $ 893
Accruing loans past due 90+ days 764 273
Restructured loans 0 0
------- -------
Total $ 1,825 $ 1,166
======= =======
Nonperforming loans to average loans outstanding .85% .63%
======= =======
Allowance for loan losses to nonperforming loans 172.34% 263.40%
======= =======
</TABLE>
As of September 30, 1997 and 1996, management has identified $219,000 and
$367,000, respectively, in loans that are considered potential problem loans.
A potential problem loan is any loan specifically identified in management's
reserve analysis that is not included in the above table.
6
<PAGE>
Information with respect to impaired loans through September 30, 1997 and 1996
(in 000's):
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Impaired loans for which there is a
related allowance for loan losses $ 466 $ 896
Impaired loans for which there is no
related allowance for loan losses 595 73
--------- ---------
Total impaired loans $ 1,061 969
========= =========
Related allowance for loan losses $ 150 $ 335
========= =========
Average recorded balance of these
impaired loans $ 1,194 $ 1,051
========= =========
Interest income recognized on these
impaired loans $ 43 $ 9
========= =========
</TABLE>
The provision for loan losses was $45,000 and $135,000 for the three and nine
months ended September 30, 1997 and 1996. Management monitors the credit
quality of its portfolio on an ongoing basis to determine sufficient levels of
reserve. The process includes an evaluation of the Bank's past loan loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral, composition of the loan portfolio, current economic
conditions, and other relevant factors. As of September 30, 1997, management
believes the current level of the allowance is adequate, and anticipates future
provisions for loan losses will be consistent with 1996 levels.
SECURITIES
The securities portfolio decreased $3,415,000, or 3.0%, compared to the December
31, 1996 ending balance of $114,682,000. The proceeds from maturities and
principal repayments has primarily been used to fund loan growth. Investment
securities with an amortized cost of $17,395,000 were reclassified from held to
maturity to available for sale during the third quarter in order to provide
flexibility for management to implement new investment strategies. The
reclassification resulted in a $193,000 mark-to-market adjustment on the
securities previously classified as held to maturity with a corresponding
adjustment to equity of $127,000 for unrealized gains, net of taxes.
DEPOSITS
The Corporation was able the maintain stable deposit levels during the nine
months ended September 30, 1997. Total deposits increased $3,364,000, or 1.3%,
to $257,608,000 as of September 30, 1997 compared to December 31, 1996. During
the same period in 1996 deposits decreased $2,362,000 or 0.9%.
BORROWINGS
Federal Home Loan Bank borrowings increased $9,052,000, or 20.0%, compared to
the balance at December 31, 1996 of $45,402,000. The increase in borrowings was
primarily due to fund increased loan demand as deposit growth and security
repayments were not sufficient to cover the increase in loan volume. Borrowings
from the FHLB have provided an alternative source of funds at a lower cost then
paying premium rates to attract deposits that would be deemed volatile in
nature.
LIQUIDITY
The Corporation maintains liquidity through its available for sale securities
portfolio, which management considers extremely liquid. The liquidity of this
portfolio, the Bank's core deposits, credit facilities which have been arranged
through the Federal Home Loan Bank provide the Corporation with funds necessary
to meet loan demand or deposit run-off.
7
<PAGE>
CAPITAL
The Corporation is required to maintain minimum amounts of capital to total
"risk-weighted" assets, as defined by the banking regulators. At September 30,
1997, the Corporation is required to have minimum Tier 1 and total capital
ratios of 4.00% and 8.00%, respectively. The Corporation's actual ratios at
that date were 17.3% and 18.5%, respectively, which significantly exceed the
requirements. The Corporation's leverage ratio at September 30, 1997 was 12.0%.
RESULTS OF OPERATIONS
Net income for the third quarter of 1997 was $1,637,000 ($.34 per share)
compared to $1,274,000 ($.27 per share) in 1996, a 28.5% increase. Earnings for
the nine month period ended September 30, 1997 increased 17.2% to $4,320,000
($.91 per share) compared to $3,686,000 ($.77 per share) in 1996. The primary
reason for the increased profitability is the additional income generated from
the significant loan growth throughout 1996 and 1997. Increases in overhead
expenses were for outside consulting engagements designed to increase the
profitability levels of all income producing departments within the Corporation.
These costs were offset by increases in trust fees, other income and security
gains.
NET INTEREST INCOME
Net interest income was $4,161,000 for the three month and $12,159,000 for the
nine months ended September 30, 1997. This represents an increase of $347,000,
or 9.1%, and $977,000, or 8.7%, over the same period in 1996. The increase in
interest income for the nine month period was primarily due to an increase in
average net loan volume of $34,327,000 resulting in $2,403,000 in additional
interest income compared to the same period in 1996. A slight decrease in loan
yields due to increased competition resulted in a decrease of $123,000 in
interest income. Average investments increased $1,532,000 in addition to a 16
basis point increase in the yield, resulting in $119,000 in additional interest
income. Average borrowings, used to fund loan demand, increased $33,744,000
which resulted in an increase in interest expense of $1,398,000. The
Corporation was able to benefit by a decrease in rates on these borrowed funds
reducing interest expense by $36,000. The increase in interest expense on
deposits of $50,000 was due to slightly higher overall rates and was offset by a
decrease in average interest bearing deposits of $1,808,000.
OTHER INCOME
Other income increased $63,000, or 12.6%, for the three months ended September
30, 1997 and $345,000, or 23.9% for the nine months ended September 30, 1997
compared to the respective periods in 1996. Trust department income increased
$67,000, or 11.2%, for the nine months ended September 30, 1997 despite a
decrease in estate fees collected compared to the same period in 1996. The
majority of the increase is the result of an increase in trust assets under
management this year versus the same period last year.
Other income increased $42,000, or 27.8%, and $96,000, or 27.0%, for the three
and nine months ended September 30, 1997 compared to the same periods in 1996.
The majority of the increase related to an increase in gains from the sale of
loans to Freddie Mac in addition to increased commissions on the sale of
insurance to mortgage and installment loan customers. Also contributing to the
year-to-date increase was $27,000 in additional fee income from the assessment
of late charges on visa and mastercard accounts. Debit cards, a new product
introduced during the first quarter of 1997, generated $26,000 of fee income
year to date.
Security gains increased $10,000 and $151,000 for the three and nine months
ended September 30, 1997. The majority of the gains occurred during the second
quarter of 1997 which was the result of the sale of stock of another financial
Corporation that was purchased by a foreign company.
8
<PAGE>
OTHER EXPENSES
Other expenses were $2,384,000 and $7,716,000 for the three and nine months
ended September 30, 1997. This represents a decrease of $96,000, or 3.9%, and
an increase of $411,000, or 5.6%, over the respective periods in 1996.
Salaries and employee benefits increased $40,000, or 3.2%, and $231,000, or
6.3%, for the three and nine months ended September 30, 1997, compared to the
respective periods in 1996. This is due to normal annual salary increases and
an increase in the accrual for employee performance compensation which is based
on projected increase in earnings this year compared to last year.
Occupancy costs decreased $80,000, or 37.6%, and $104,000, or 15.8%, for the
three and nine month periods ended September 30, 1997 and 1996, respectively.
The majority of the decrease is the result of a reduction in real estate taxes
of approximately $90,000 per year due to a reassessment that was completed in
1996 for Schuylkill County.
Professional fees and other outside services decreased $17,000, or 6.4%, for the
three months and increased $151,000, or 20.9%, for the nine months ended
September 30, 1997 compared to 1996. The decrease for the three month period is
due to a reduction in outside consultant fees this year versus the same period
in 1996. The year-to-date increases relates to the utilization of outside
consultants during the first quarter for the reorganization of various
departments to increase the operating efficiencies and overall profitability in
these areas.
The "other" category decreased $7,000, or 3.6%, and increased $76,000, or 12.2%,
for the three and nine month periods ended September 30, 1997, respectively.
The primary reason for the decrease in the three month period is due to the
collection of ORE related expense resulting from the sale of an ORE property
totalling $23,000. The majority of the year-to-date increases in this category
relates to a forged check that was charged off totalling $18,000 and increased
directors fees of $29,000 due to implementation of a retainer fee during the
first quarter of 1997.
FEDERAL INCOME TAXES
The provision for federal income taxes was $658,000 and $1,777,000 for the three
and nine months ended September 30, 1997 which represents an increase of
$143,000, or 27.8%, and $277,000, or 18.5%, over the respective periods in 1996.
This variance is due to increased earnings in 1997. Effective tax rates were
29.2% and 28.9% for the nine months ended September 30, 1997 and 1996.
9
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings - Not Applicable
Item 2. Changes in Securities - Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable
Item 5. Other Information - Not Applicable
Item 6. Exhibits and Reports on Form 8-K
Exhibit 10 (a) First Amendment to Employment Agreement between the
Corporation and Allen E. Kiefer, President and Chief
Executive Officer
Exhibit 10 (b) First Amendment to Employment Agreement between the
Corporation and Richard A. Ketner, Executive Vice
President and Chief Operating Officer
Amended and Restated
Exhibit 10 (c) Change in Control Agreement between the Corporation
and Allen E. Kiefer, President and Chief Executive
Officer
Amended and Restated
Exhibit 10 (d) Change in Control Agreement between the Corporation
and Richard A. Ketner, Executive Vice President and
Chief Operating Officer
Exhibit 10 (e) Change in Control Agreement between the Corporation
and David L. Snyder, Vice President and Senior
Commercial Loan Officer
Exhibit 10 (f) Change in Control Agreement between the Corporation
and David L. Scott, Vice President and Chief Financial
Officer
There were no reports filed on Form 8-K during the third quarter of
1997.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
HERITAGE BANCORP, INC.
(Registrant)
11/13/97 /s/ Allen E. Kiefer
------------ --------------------------------------
(Date) Allen E. Kiefer,
President & Chief Executive Officer
11/13/97 /s/ David L. Scott
------------ --------------------------------------
(Date) David L. Scott, CPA
Vice President & Chief Financial Officer
11
<PAGE>
105822
Exhibit 10(a)
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS AGREEMENT made as of September 15, 1997, between HERITAGE
BANCORP, INC., a Pennsylvania corporation formerly known as Miners National
Bancorp, Inc. ("Employer"), having an office at 120 South Centre Street,
Pottsville, Pennsylvania 17901, and ALLEN E. KIEFER, with an address at R.D. #3,
Box 155, Schuylkill Haven, Pennsylvania 17972 ("Executive").
W I T N E S S E T H:
WHEREAS, Executive and Employer are parties to that certain
Employment Agreement dated as of September 13, 1994 pursuant to which Executive
has been employed as President and Chief Executive Officer of Employer and
Heritage National Bank (formerly The Miners National Bank), a wholly-owned
subsidiary of Employer (the "Bank"); and
WHEREAS, Employer and Executive desire to extend the terms of
said Employment Agreement and make certain other amendments as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set
fort herein and in said Employment Agreement and intending to be legally bound,
the parties hereto hereby agree as follows:
1. The "Term" of Executive's employment under said Employment
Agreement (said Employment Agreement as amended hereby is hereinafter referred
to as the "Employment Agreement") as provided in Section 2(a) is hereby extended
until September 30, 2000 and all references in the Employment Agreement to the
Term shall include the Term as extended hereby.
<PAGE>
2. The first sentence of Section 2(b) of the Employment
Agreement is hereby amended to read as follows: "Executive's employment right
hereunder shall automatically terminate at the close of business on September
30, 2000.
3. Executive's annual base salary during the remainder of the
Term shall be at least equal to executive's base salary currently in effect,
subject to increase by Employer from time to time with the approval of the Board
of Directors of Employer.
4. Section 6(c) of the Employment Agreement is hereby amended
to read as follows:
(c) Other Benefits. Executive acknowledges that, in the
--------------
event of termination of Executive's employment during the Term of his
employment hereunder pursuant to paragraph (a) of this Section 6, the
payments and benefits to be made or provided to Executive pursuant to
this Section 6 are to be in full satisfaction of Employer's obligations
to Executive under this Employment Agreement and Executive shall not be
entitled to any other severance or termination benefits, whether
pursuant to this Employment Agreement or otherwise; provided, however,
-------- -------
that this paragraph (c) shall not be deemed to affect Executive's
rights to payments or benefits under any existing or future benefit
plan or arrangement (other than a severance or termination plan or
arrangement) of the Corporation, the Bank or any successor in which
Executive is or becomes a participant, or under which Executive has or
obtains rights, including, without limitation, any qualified or
nonqualified deferred compensation or retirement plans or programs or
any outstanding stock options or similar agreements. Any such rights of
Executive shall be determined in accordance with the terms and
conditions of the applicable agreement, arrangements or plan and
applicable law. Notwithstanding the foregoing, if during the Term
Executive becomes entitled to receive benefits under any change in
control agreement then in effect as a result of the termination of
Executive's employment following a change in control event specified in
said agreement, the benefits to be provided under such change in
control agreement shall control and Executive shall not be entitled to
also receive termination benefits under this Employment Agreement.
5. Section 7 of the Employment Agreement is hereby amended by
deleting it in its entirety.
- 2 -
<PAGE>
6. The terms of the Employment Agreement dated September 13,
1994, as amended hereby, shall remain in full force and effect from and after
the date hereof.
IN WITNESS WHEREOF, the following have caused their signatures
and seals to be hereunto affixed to this Amendment as of the date first above
written.
ATTEST: HERITAGE BANCORP, INC.
/s/ Beverly A. Riotto By: /s/ Richard A. Ketner
- --------------------------- ------------------------------
(Assistant) Secretary
(SEAL)
WITNESS: EXECUTIVE
/s/ David L. Scott /s/ Allen E. Kiefer
- --------------------------- ------------------------------(SEAL)
Allen E. Kiefer
- 3 -
<PAGE>
Exhibit 10(b)
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS AGREEMENT made as of September 15, 1997, between HERITAGE BANCORP,
INC., a Pennsylvania corporation formerly known as Miners National Bancorp, Inc.
("Employer"), having an office at 120 South Centre Street, Pottsville,
Pennsylvania 17901, and RICHARD A. KETNER, with an address at 118 Avenue E,
Schuylkill Haven, Pennsylvania 17972 ("Executive").
W I T N E S S E T H:
WHEREAS, Executive and Employer are parties to that certain Employment
Agreement dated as of September 13, 1994 pursuant to which Executive has been
employed as Executive Vice President of Employer and Heritage National Bank
(formerly The Miners National Bank), a wholly-owned subsidiary of Employer (the
"Bank"); and
WHEREAS, Employer and Executive desire to extend the terms of said
Employment Agreement and make certain other amendments as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set fort herein
and in said Employment Agreement and intending to be legally bound, the parties
hereto hereby agree as follows:
1. The "Term" of Executive's employment under said Employment Agreement
(said Employment Agreement as amended hereby is hereinafter referred to as the
"Employment Agreement") as provided in Section 2(a) is hereby extended until
September 30, 2000 and all references in the Employment Agreement to the Term
shall include the Term as extended hereby.
<PAGE>
2. The first sentence of Section 2(b) of the Employment Agreement is
hereby amended to read as follows: "Executive's employment right hereunder shall
automatically terminate at the close of business on September 30, 2000."
3. Executive's annual base salary during the remainder of the Term
shall be at least equal to executive's base salary currently in effect, subject
to increase by Employer from time to time with the approval of the Board of
Directors of Employer.
4. Section 6(c) of the Employment Agreement is hereby amended to read
as follows:
(c) Other Benefits. Executive acknowledges that, in the event of
--------------
termination of Executive's employment during the Term of his employment
hereunder pursuant to paragraph (a) of this Section 6, the payments and
benefits to be made or provided to Executive pursuant to this Section 6 are
to be in full satisfaction of Employer's obligations to Executive under this
Employment Agreement and Executive shall not be entitled to any other
severance or termination benefits, whether pursuant to this Employment
Agreement or otherwise; provided, however, that this paragraph (c) shall not
-------- -------
be deemed to affect Executive's rights to payments or benefits under any
existing or future benefit plan or arrangement (other than a severance or
termination plan or arrangement) of the Corporation, the Bank or any
successor in which Executive is or becomes a participant, or under which
Executive has or obtains rights, including, without limitation, any
qualified or nonqualified deferred compensation or retirement plans or
programs or any outstanding stock options or similar agreements. Any such
rights of Executive shall be determined in accordance with the terms and
conditions of the applicable agreement, arrangements or plan and applicable
law. Notwithstanding the foregoing, if during the Term Executive becomes
entitled to receive benefits under any change in control agreement then in
effect as a result of the termination of Executive's employment following a
change in control event specified in said agreement, the benefits to be
provided under such change in control agreement shall control and Executive
shall not be entitled to also receive termination benefits under this
Employment Agreement.
5. Section 7 of the Employment Agreement is hereby amended by deleting
it in its entirety.
- 2 -
<PAGE>
6. The terms of the Employment Agreement dated September 13, 1994, as
amended hereby, shall remain in full force and effect from and after the date
hereof.
IN WITNESS WHEREOF, the following have caused their signatures and
seals to be hereunto affixed to this Amendment as of the date first above
written.
ATTEST: HERITAGE BANCORP, INC.
/s/ Beverly A. Riotto By: /s/ Allen E. Kiefer
- ----------------------------- ---------------------------------
(Assistant) Secretary
(SEAL)
WITNESS: EXECUTIVE
/s/ David L. Scott /s/ Richard A. Ketner (SEAL)
- --------------------------- ----------------------------------
Richard A. Ketner
- 3 -
<PAGE>
Exhibit 10(c)
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
---------------------------
AGREEMENT made as of September 15, 1997, by and among HERITAGE
BANCORP, INC., a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania and having its principal place of business in
Pottsville, Pennsylvania (hereinafter referred to as the "Corporation"), and
ALLEN E. KIEFER, an individual residing at R.D. #3, Box 155, Schuylkill Haven,
Pennsylvania 17972 (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, Executive is now serving as President and Chief
Executive Officer of the Corporation and Heritage National Bank, a wholly-owned
subsidiary of the Corporation (the "Bank"); and
WHEREAS, the Corporation and Executive desire to amend and
restate that certain Change in Control Agreement dated as of September 13, 1994
whereby the Corporation agreed to make certain payments to Executive upon
termination under specific conditions, in order to induce Executive to continue
in employment.
NOW, THEREFORE, in consideration of the employment of
Executive and intending to be legally bound hereby, Executive and the
Corporation agree as follows:
<PAGE>
ARTICLE I
TERMINATION PURSUANT TO A CHANGE IN CONTROL
-------------------------------------------
1.1 Definition: Termination Pursuant to a Change in Control.
-------------------------------------------------------
Any of the following events occurring during the period commencing with the date
of any "Change in Control" (as defined in ARTICLE II hereof) and ending on the
third anniversary of the date of the consummation of the Change in Control
transaction, shall constitute a "Termination Pursuant to a Change in Control":
(A) Executive's employment is terminated by the Corporation,
the Bank or an acquiror or successor of either without "Good Cause" (as
defined below); or
(B) Any of the following events occurs and Executive
thereafter terminates Executive's employment:
(i) the nature and scope of Executive's duties or
responsibilities with the Corporation, the Bank or an
acquiror or successor are materially reduced from that which
Executive enjoyed immediately prior to the Change in Control
including, without limitation, if Executive ceases to have
the title and duties of President and Chief Executive Officer
of the principal holding company and principal bank in the
corporate structure; or
(ii) Executive's base salary immediately prior to the
Change in Control is reduced or material benefits then being
provided to Executive are reduced or eliminated (excluding
reduction or curtailment of benefits affecting all
employees); or
(iii) Executive is assigned, without Executive's consent,
to a principal place of employment which is more than thirty
(30) miles from Executive's principal place of employment
immediately prior to the Change in Control.
- 2 -
<PAGE>
For purposes of this Section 1.1, "Good Cause" shall mean (i)
the commission of gross malfeasance in office constituting dishonesty or the
commission of a crime involving fraud, misappropriation, embezzlement,
dishonesty or other violation of law of a similar nature and severity or (ii)
the willful breach of a fiduciary duty owed to the Corporation or the Bank. No
act, or failure to act, on Executive's part shall be considered "willful" unless
done, or omitted to be done, by Executive, not in good faith and without
reasonable belief that Executive's action or omission was in the best interest
of the Corporation or the Bank. The burden of establishing the validity of any
termination for Good Cause shall rest upon the Corporation or the Bank.
1.2 Compensation Upon Termination Pursuant to a Change in
-----------------------------------------------------
Control. If Executive's employment is terminated and such termination is a
- -------
Termination Pursuant to a Change in Control (as defined in Section 1.1), the
Corporation (or any acquiror or successor thereto) shall provide the following
to Executive:
(A) Executive's compensation shall be continued for a period
of three (3) years, commencing as of the Termination Pursuant to the
Change in Control, but not beyond the date on which Executive attains
age 65 or dies. For purposes of this Section 1.2, compensation shall
mean the greater of Executive's base salary in effect immediately prior
to the Termination Pursuant to a Change in Control and the base salary
in effect prior to the Change in Control, plus any cash bonuses or
annual incentive cash compensation earned by Executive with respect to
the calendar year immediately preceding the date of the Termination
Pursuant to a Change in Control; and
(B) Executive shall be provided, for a period of three (3)
years, commencing as of the Termination Pursuant to the Change in
Control, but not beyond the date on which Executive attains age 65 or
dies, with life, disability and accident and health insurance coverages
comparable to employer sponsored plan coverages in effect for Executive
immediately preceding the Termination Pursuant to a Change in Control.
Comparable life, disability and accident and
- 3 -
<PAGE>
health insurance coverages may be provided to Executive under: (1)
existing plans or programs in which the Executive participates, or (2)
through conversion of group coverage pursuant to any group policy in
effect, or (3) through other available commercial insurance
arrangements, if obtainable, for Executive; provided, however, that to
-------- -------
the extent a specific coverage cannot be continued or obtained under
either (1), (2) or (3) above, Executive shall not be entitled to
continuation of that specific coverage. Executive shall continue to be
responsible for the cost of comparable insurance coverages following
his Termination Pursuant to a Change in Control to the same extent as
other similarly situated active employees of the Corporation or the
Bank as of the Termination Pursuant to a Change in Control or, if there
are no similarly situated employees, then to the same extent, on a
percentage of total cost basis, that Executive was responsible for the
cost of available insurance coverages prior to the Termination Pursuant
to a Change in Control. With respect to health insurance coverage,
Executive's spouse and/or eligible dependents, if covered under any
employer sponsored accident and health insurance plan in effect for
Executive as of Executive's Termination Pursuant to a Change in
Control, shall also be provided with health insurance coverage for the
three (3) year term set forth above (regardless of Executive's death or
attainment of age 65 prior to the end of the three (3) year term), and
under the same cost sharing method as described above.
(C) If (i) any payment or benefit received or receivable
hereunder by Executive would not be deductible in whole or in part by
the payor as a result of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and (ii) a reduction in such payment or
benefit of no greater than 5% would result in full deductibility of all
payments and benefits, then such payment or benefit shall be reduced up
to the maximum amount, not exceeding 5%, necessary to achieve full
deductibility. If a 5% reduction is not sufficient to achieve full
deductibility, then no reduction shall be made. If at any time it is
determined that any reduction imposed pursuant to this paragraph was
not sufficient to achieve full deductibility, then the Executive shall
be entitled to immediately receive payment in an amount equal to the
reduction.
(D) Should the total of all payments made hereunder to
Executive upon a Termination Pursuant to a Change in Control, together
with any other payments which Executive has a right to receive from the
Corporation, the Bank, any of the other subsidiaries of the
Corporation, or any successors of any of the foregoing, result in the
imposition of an excise tax under Internal Revenue Code Section 4999
(or any successor thereto), Executive shall be entitled to an
additional "excise tax" adjustment payment in an amount such that,
after the payment of all federal and state income and excise taxes,
Executive will be in the same after-tax position as if no excise tax
had been imposed. Any payment or benefit which is
- 4 -
<PAGE>
required to be included under Internal Revenue Code Sections 280G or
4999 (or any successor provisions thereto) for purposes of determining
whether an excise tax is payable shall be deemed a payment "made to
Executive" or a payment "which Executive has a right to receive" for
purposes of this provision. The Corporation (or its successor) shall be
responsible for the costs of calculation of the deductibility of
payments and benefits and the excise tax by the Corporation's
independent certified accountant and tax counsel and shall notify
Executive of the amount of excise tax due prior to the time such excise
tax is due. If at any time it is determined that the additional "excise
tax" adjustment payment previously made to Executive was insufficient
to cover the effect of the excise tax, the gross-up payment pursuant
to this provision shall be increased to make Executive whole, including
an amount to cover the payment of any penalties resulting from any
incorrect or late payment of the excise tax resulting from the prior
calculation.
1.3 Other Benefits. The payments provided by this ARTICLE I
--------------
shall not affect Executive's rights to receive any payments or benefits to which
Executive may be or become entitled under any other existing or future agreement
or arrangement of the Corporation, the Bank or any successor with the Executive,
or under any existing or future benefit plan or arrangement of the Corporation,
the Bank or any successor in which Executive is or becomes a participant, or
under which Executive has or obtains rights, including without limitation, any
qualified or nonqualified deferred compensation or retirement plans or programs
or any outstanding stock options or similar agreements. Any such rights of
Executive shall be determined in accordance with the terms and conditions of the
applicable agreement, arrangement or plan and applicable law, provided, however,
-------- -------
that Executive shall not be entitled to any severance payments in addition to
those provided hereunder. Notwithstanding the foregoing, if a Termination
Pursuant to a Change in Control occurs at a time when an employment agreement
between Executive and the Corporation is in effect and Executive would
- 5 -
<PAGE>
otherwise be entitled to benefits under such employment agreement as a result of
termination of employment, the benefits to be provided under this Agreement as a
result of the Termination Pursuant to a Change in Control shall control and
Executive shall not be entitled to also receive termination benefits under such
employment agreement.
1.4 Withholding for Taxes. All payments required to be made
---------------------
under this Agreement will be made in accordance with the Corporation's or
payor's normal payroll schedule and will be subject to withholding of such
amounts relating to tax and/or other payroll deductions as may be required by
law.
ARTICLE II
----------
DEFINITION OF CHANGE IN CONTROL
-------------------------------
2.1 For purposes of this Agreement, the term "Change in
Control" shall mean any of the following:
(A) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")),
other than the Corporation, a subsidiary of the Corporation, an
employee benefit plan (or related trust) of the Corporation or a direct
or indirect subsidiary of the Corporation becomes the beneficial owner
(as determined pursuant to Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing more than
10% of the combined voting power of the Corporation's then outstanding
securities or announces a tender offer or exchange offer for securities
of the Corporation representing more than 10% of the combined voting
power of the Corporation's then outstanding securities; or
(B) the occurrence of, or execution of an agreement providing
for, a sale of all or substantially all of the assets of the
Corporation or the Bank to an entity which is not a direct or indirect
subsidiary of the Corporation; or
- 6 -
<PAGE>
(C) the occurrence of, or execution of an agreement providing
for, a reorganization, merger, consolidation, or similar transaction
involving the Corporation or the Bank excluding, however, the merger or
--------- -------
consolidation of the Bank with the Corporation or the merger or
consolidation of the Bank with and into any other wholly-owned
subsidiary of the Corporation; or
(D) any other event which is at any time designated as a
"Change in Control" for purposes of this Agreement by a resolution
adopted by the Board of Directors of the Corporation with the
affirmative vote of a majority of the non-employee directors in office
at the time the resolution is adopted; in the event any such resolution
is adopted, the Change in Control event specified thereby shall be
deemed incorporated herein by reference and thereafter may not be
amended, modified or revoked without the written agreement of
Executive.
2.2 Notwithstanding anything else to the contrary set forth
in this Agreement, if (i) an agreement is executed by the Corporation or the
Bank providing for any of the transactions or events constituting a Change in
Control pursuant to this ARTICLE II or an announcement concerning a tender offer
or exchange offer is made constituting a Change in Control pursuant to this
Article II, and the agreement, tender offer or exchange offer subsequently
expires or is terminated without the transaction or event being consummated, and
(ii) a "Termination Pursuant to a Change in Control" (as defined in ARTICLE I
hereof) has not occurred prior to such expiration or termination, then for
purposes of this Agreement (including, without limitation, ARTICLE I hereof) it
shall be as though such agreement was never executed or such tender offer or
exchange offer was never announced and no Change in Control event shall be
deemed to have occurred as a result.
2.3 The expiration of the three-year period after any Change
in Control event without the occurrence of a Termination Pursuant to a Change in
Control shall not have any effect on this Agreement, which shall remain in full
force and effect until its termination by
- 7 -
<PAGE>
written agreement of the parties or the earlier termination of Executive's
employment under circumstances not constituting a Termination Pursuant to a
Change in Control.
ARTICLE III
EXPENSES
--------
3.1 Legal Action. If Executive determines in good faith that
------------
the Corporation or any successor has failed to comply with its obligations under
this Agreement, or if the Corporation or any successor or any other person takes
any action to declare this Agreement void or unenforceable, or institutes any
legal action or arbitration proceeding with respect to this Agreement, the
Corporation hereby irrevocably authorizes Executive from time to time to retain
counsel of Executive's choice, at the expense of the Corporation or such
successor, to represent Executive in connection with any and all actions and
proceedings, whether by or against the Corporation, any acquiror or successor,
or any director, officer, stockholder or other person affiliated with any of the
foregoing, which may adversely affect Executive's rights hereunder.
3.2 Excise Tax Matters. It is the intention of the
------------------
Corporation that Executive not be required to incur any expenses associated with
determination of the amount of any "excess parachute payment" under Internal
Revenue Code Section 280G or the amount of any excise tax imposed on Executive
pursuant to Internal Revenue Code Section 4999 (or any successor provisions
thereto). Therefore, the Corporation agrees to pay all expenses, including the
expenses of the Corporation's independent certified accountant and tax counsel,
related to the determination of any excess parachute payment and excise tax, and
to pay the legal costs and
- 8 -
<PAGE>
expenses of any tax audit of Executive to the extent such expenses relate to the
amount of the excise tax determined by the Corporation.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Termination of Employment. This Agreement shall not in
-------------------------
any way obligate either the Corporation or the Bank to continue the employment
of Executive, nor shall this Agreement limit the right of the Corporation or the
Bank to terminate Executive's employment for any reason.
4.2 Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon and inure to the benefit of the parties hereto, their respective
heirs, executors, administrators, successors and, to the extent permitted
hereunder, assigns. All of the obligations of the Corporation hereunder shall be
legally binding on any successor to the Corporation, including without
limitation, any successor as a result of the consummation of a Change in
Control. The right of Executive to receive payments hereunder may not be
assigned, alienated, pledged or otherwise encumbered by Executive and any
attempt to do so shall be void and of no force or effect.
4.3 Entire Agreement; Amendment. This Agreement represents
---------------------------
the entire understanding between the parties hereto with respect to the subject
matter hereof and may be amended only by an instrument in writing signed by the
parties hereto. This Agreement amends
- 9 -
<PAGE>
and restates and supersedes that certain Change in Control Agreement dated as of
September 13, 1994.
4.4 Jurisdiction. The parties hereto consent to the exclusive
------------
jurisdiction of the courts of the Commonwealth of Pennsylvania in any and all
actions arising hereunder.
4.5 Governing Laws. This Agreement shall be governed and
--------------
construed under the laws of the Commonwealth of Pennsylvania, without regard to
the conflict of laws principles thereof.
4.6 Unfunded Obligations. The obligations to make payments
--------------------
hereunder shall be unfunded and Executive's rights to receive any payments
hereunder shall be the same as those of any other unsecured general creditor.
4.7 Individual Agreement. This Agreement constitutes an
--------------------
agreement solely between the Corporation and Executive named herein. This
Agreement is intended to constitute a non-qualified arrangement for the benefit
of a key management employee and shall be construed and interpreted in a manner
consistent with such intention.
4.8 Headings. All headings preceding the text of the several
--------
paragraphs hereof are inserted solely for reference and shall not constitute a
part of this Agreement, nor affect its meaning, construction or effect.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement
to be executed and attested to on its behalf by its duly authorized officer, and
Executive hereunto has set his hand and seal as of the day and year first above
written.
ATTEST: HERITAGE BANCORP, INC.
/s/ Beverly A. Riotto By: /s/ Richard A. Ketner
- ----------------------------- -------------------------------
(Assistant) Secretary
(SEAL)
WITNESS: EXECUTIVE
/s/ David L. Scott /s/ Allen E. Kiefer (SEAL)
- ------------------------------ ----------------------------
Allen E. Kiefer
- 11 -
<PAGE>
Exhibit 10(d)
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
---------------------------
AGREEMENT made as of September 15, 1997, by and among HERITAGE
BANCORP, INC., a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania and having its principal place of business in
Pottsville, Pennsylvania (hereinafter referred to as the "Corporation"), and
RICHARD A. KETNER, an individual residing at 118 Avenue E, Schuylkill Haven,
Pennsylvania 17972 (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, Executive is now serving as Executive Vice President of the
Corporation and Heritage National Bank, a wholly-owned subsidiary of the
Corporation (the "Bank"); and
WHEREAS, the Corporation and Executive desire to amend and restate
that certain Change in Control Agreement dated as of September 13, 1994 whereby
the Corporation agreed to make certain payments to Executive upon termination
under specific conditions, in order to induce Executive to continue in
employment.
NOW, THEREFORE, in consideration of the employment of Executive and
intending to be legally bound hereby, Executive and the Corporation agree as
follows:
<PAGE>
ARTICLE I
TERMINATION PURSUANT TO A CHANGE IN CONTROL
-------------------------------------------
1.1 Definition: Termination Pursuant to a Change in Control.
-------------------------------------------------------
Any of the following events occurring during the period commencing with the date
of any "Change in Control" (as defined in ARTICLE II hereof) and ending on the
third anniversary of the date of the consummation of the Change in Control
transaction, shall constitute a "Termination Pursuant to a Change in Control":
(A) Executive's employment is terminated by the Corporation, the
Bank or an acquiror or successor of either without "Good Cause" (as defined
below); or
(B) Any of the following events occurs and Executive thereafter
terminates Executive's employment:
(i) the nature and scope of Executive's duties or
responsibilities with the Corporation, the Bank or an acquiror or
successor are materially reduced from that which Executive enjoyed
immediately prior to the Change in Control including, without
limitation, if Executive ceases to have the title and duties of an
Executive Vice President of the principal holding company and
principal bank in the corporate structure; or
(ii) Executive's base salary immediately prior to the Change
in Control is reduced or material benefits then being provided to
Executive are reduced or eliminated (excluding reduction or
curtailment of benefits affecting all employees); or
(iii) Executive is assigned, without Executive's consent, to a
principal place of employment which is more than thirty (30) miles
from Executive's principal place of employment immediately prior to
the Change in Control.
- 2 -
<PAGE>
For purposes of this Section 1.1, "Good Cause" shall mean (i) the
commission of gross malfeasance in office constituting dishonesty or the
commission of a crime involving fraud, misappropriation, embezzlement,
dishonesty or other violation of law of a similar nature and severity or (ii)
the willful breach of a fiduciary duty owed to the Corporation or the Bank. No
act, or failure to act, on Executive's part shall be considered "willful" unless
done, or omitted to be done, by Executive, not in good faith and without
reasonable belief that Executive's action or omission was in the best interest
of the Corporation or the Bank. The burden of establishing the validity of any
termination for Good Cause shall rest upon the Corporation or the Bank.
1.2 Compensation Upon Termination Pursuant to a Change in Control.
-------------------------------------------------------------
If Executive's employment is terminated and such termination is a Termination
Pursuant to a Change in Control (as defined in Section 1.1), the Corporation (or
any acquiror or successor thereto) shall provide the following to Executive:
(A) Executive's compensation shall be continued for a period of
three (3) years, commencing as of the Termination Pursuant to the Change in
Control, but not beyond the date on which Executive attains age 65 or dies.
For purposes of this Section 1.2, compensation shall mean the greater of
Executive's base salary in effect immediately prior to the Termination
Pursuant to a Change in Control and the base salary in effect prior to the
Change in Control, plus any cash bonuses or annual incentive cash
compensation earned by Executive with respect to the calendar year
immediately preceding the date of the Termination Pursuant to a Change in
Control; and
(B) Executive shall be provided, for a period of three (3) years,
commencing as of the Termination Pursuant to the Change in Control, but not
beyond the date on which Executive attains age 65 or dies, with life,
disability and accident and health insurance coverages comparable to
employer sponsored plan coverages in effect for Executive immediately
preceding the Termination Pursuant to a Change in Control. Comparable life,
disability and accident and
- 3 -
<PAGE>
health insurance coverages may be provided to Executive under: (1) existing
plans or programs in which the Executive participates, or (2) through
conversion of group coverage pursuant to any group policy in effect, or (3)
through other available commercial insurance arrangements, if obtainable,
for Executive; provided, however, that to the extent a specific coverage
-------- -------
cannot be continued or obtained under either (1), (2) or (3) above,
Executive shall not be entitled to continuation of that specific coverage.
Executive shall continue to be responsible for the cost of comparable
insurance coverages following his Termination Pursuant to a Change in
Control to the same extent as other similarly situated active employees of
the Corporation or the Bank as of the Termination Pursuant to a Change in
Control or, if there are no similarly situated employees, then to the same
extent, on a percentage of total cost basis, that Executive was responsible
for the cost of available insurance coverages prior to the Termination
Pursuant to a Change in Control. With respect to health insurance coverage,
Executive's spouse and/or eligible dependents, if covered under any
employer sponsored accident and health insurance plan in effect for
Executive as of Executive's Termination Pursuant to a Change in Control,
shall also be provided with health insurance coverage for the three (3)
year term set forth above (regardless of Executive's death or attainment of
age 65 prior to the end of the three (3) year term), and under the same
cost sharing method as described above.
(C) If (i) any payment or benefit received or receivable hereunder
by Executive would not be deductible in whole or in part by the payor as a
result of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") and (ii) a reduction in such payment or benefit of no greater
than 5% would result in full deductibility of all payments and benefits,
then such payment or benefit shall be reduced up to the maximum amount, not
exceeding 5%, necessary to achieve full deductibility. If a 5% reduction is
not sufficient to achieve full deductibility, then no reduction shall be
made. If at any time it is determined that any reduction imposed pursuant
to this paragraph was not sufficient to achieve full deductibility, then
the Executive shall be entitled to immediately receive payment in an amount
equal to the reduction.
(D) Should the total of all payments made hereunder to Executive
upon a Termination Pursuant to a Change in Control, together with any other
payments which Executive has a right to receive from the Corporation, the
Bank, any of the other subsidiaries of the Corporation, or any successors
of any of the foregoing, result in the imposition of an excise tax under
Internal Revenue Code Section 4999 (or any successor thereto), Executive
shall be entitled to an additional "excise tax" adjustment payment in an
amount such that, after the payment of all federal and state income and
excise taxes, Executive will be in the same after-tax position as if no
excise tax had been imposed. Any payment or benefit which is
- 4 -
<PAGE>
required to be included under Internal Revenue Code Sections 280G or 4999
(or any successor provisions thereto) for purposes of determining whether
an excise tax is payable shall be deemed a payment "made to Executive" or a
payment "which Executive has a right to receive" for purposes of this
provision. The Corporation (or its successor) shall be responsible for the
costs of calculation of the deductibility of payments and benefits and the
excise tax by the Corporation's independent certified accountant and tax
counsel and shall notify Executive of the amount of excise tax due prior to
the time such excise tax is due. If at any time it is determined that the
additional "excise tax" adjustment payment previously made to Executive was
insufficient to cover the effect of the excise tax, the gross- up payment
pursuant to this provision shall be increased to make Executive whole,
including an amount to cover the payment of any penalties resulting from
any incorrect or late payment of the excise tax resulting from the prior
calculation.
1.3 Other Benefits. The payments provided by this ARTICLE I
--------------
shall not affect Executive's rights to receive any payments or benefits to which
Executive may be or become entitled under any other existing or future agreement
or arrangement of the Corporation, the Bank or any successor with the Executive,
or under any existing or future benefit plan or arrangement of the Corporation,
the Bank or any successor in which Executive is or becomes a participant, or
under which Executive has or obtains rights, including without limitation, any
qualified or nonqualified deferred compensation or retirement plans or programs
or any outstanding stock options or similar agreements. Any such rights of
Executive shall be determined in accordance with the terms and conditions of the
applicable agreement, arrangement or plan and applicable law, provided, however,
-------- -------
that Executive shall not be entitled to any severance payments in addition to
those provided hereunder. Notwithstanding the foregoing, if a Termination
Pursuant to a Change in Control occurs at a time when an employment agreement
between Executive and the Corporation is in effect and Executive would
- 5 -
<PAGE>
otherwise be entitled to benefits under such employment agreement as a result of
termination of employment, the benefits to be provided under this Agreement as a
result of the Termination Pursuant to a Change in Control shall control and
Executive shall not be entitled to also receive termination benefits under such
employment agreement.
1.4 Withholding for Taxes. All payments required to be made
---------------------
under this Agreement will be made in accordance with the Corporation's or
payor's normal payroll schedule and will be subject to withholding of such
amounts relating to tax and/or other payroll deductions as may be required by
law.
ARTICLE II
----------
DEFINITION OF CHANGE IN CONTROL
-------------------------------
2.1 For purposes of this Agreement, the term "Change in
Control" shall mean any of the following:
(A) any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934 (the "Exchange Act")), other than
the Corporation, a subsidiary of the Corporation, an employee benefit plan
(or related trust) of the Corporation or a direct or indirect subsidiary of
the Corporation becomes the beneficial owner (as determined pursuant to
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Corporation representing more than 10% of the combined voting power
of the Corporation's then outstanding securities or announces a tender
offer or exchange offer for securities of the Corporation representing more
than 10% of the combined voting power of the Corporation's then outstanding
securities; or
(B) the occurrence of, or execution of an agreement providing for, a
sale of all or substantially all of the assets of the Corporation or the
Bank to an entity which is not a direct or indirect subsidiary of the
Corporation; or
- 6 -
<PAGE>
(C) the occurrence of, or execution of an agreement providing for,
a reorganization, merger, consolidation, or similar transaction involving
the Corporation or the Bank excluding, however, the merger or consolidation
--------- -------
of the Bank with the Corporation or the merger or consolidation of the Bank
with and into any other wholly-owned subsidiary of the Corporation; or
(D) any other event which is at any time designated as a "Change in
Control" for purposes of this Agreement by a resolution adopted by the
Board of Directors of the Corporation with the affirmative vote of a
majority of the non-employee directors in office at the time the resolution
is adopted; in the event any such resolution is adopted, the Change in
Control event specified thereby shall be deemed incorporated herein by
reference and thereafter may not be amended, modified or revoked without
the written agreement of Executive.
2.2 Notwithstanding anything else to the contrary set forth in this
Agreement, if (i) an agreement is executed by the Corporation or the Bank
providing for any of the transactions or events constituting a Change in
Control pursuant to this ARTICLE II or an announcement concerning a tender
offer or exchange offer is made constituting a Change in Control pursuant
to this Article II, and the agreement, tender offer or exchange offer
subsequently expires or is terminated without the transaction or event
being consummated, and (ii) a "Termination Pursuant to a Change in Control"
(as defined in ARTICLE I hereof) has not occurred prior to such expiration
or termination, then for purposes of this Agreement (including, without
limitation, ARTICLE I hereof) it shall be as though such agreement was
never executed or such tender offer or exchange offer was never announced
and no Change in Control event shall be deemed to have occurred as a
result.
2.3 The expiration of the three-year period after any Change in
Control event without the occurrence of a Termination Pursuant to a Change
in Control shall not have any effect on this Agreement, which shall remain
in full force and effect until its termination by
- 7 -
<PAGE>
written agreement of the parties or the earlier termination of Executive's
employment under circumstances not constituting a Termination Pursuant to a
Change in Control.
ARTICLE III
EXPENSES
--------
3.1 Legal Action. If Executive determines in good faith that
------------
the Corporation or any successor has failed to comply with its obligations under
this Agreement, or if the Corporation or any successor or any other person takes
any action to declare this Agreement void or unenforceable, or institutes any
legal action or arbitration proceeding with respect to this Agreement, the
Corporation hereby irrevocably authorizes Executive from time to time to retain
counsel of Executive's choice, at the expense of the Corporation or such
successor, to represent Executive in connection with any and all actions and
proceedings, whether by or against the Corporation, any acquiror or successor,
or any director, officer, stockholder or other person affiliated with any of the
foregoing, which may adversely affect Executive's rights hereunder.
3.2 Excise Tax Matters. It is the intention of the Corporation
------------------
that Executive not be required to incur any expenses associated with
determination of the amount of any "excess parachute payment" under Internal
Revenue Code Section 280G or the amount of any excise tax imposed on Executive
pursuant to Internal Revenue Code Section 4999 (or any successor provisions
thereto). Therefore, the Corporation agrees to pay all expenses, including the
expenses of the Corporation's independent certified accountant and tax counsel,
related to the determination of any excess parachute payment and excise tax, and
to pay the legal costs and
- 8 -
<PAGE>
expenses of any tax audit of Executive to the extent such expenses relate to the
amount of the excise tax determined by the Corporation.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Termination of Employment. This Agreement shall not in any
-------------------------
way obligate either the Corporation or the Bank to continue the employment of
Executive, nor shall this Agreement limit the right of the Corporation or the
Bank to terminate Executive's employment for any reason.
4.2 Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon and inure to the benefit of the parties hereto, their respective
heirs, executors, administrators, successors and, to the extent permitted
hereunder, assigns. All of the obligations of the Corporation hereunder shall be
legally binding on any successor to the Corporation, including without
limitation, any successor as a result of the consummation of a Change in
Control. The right of Executive to receive payments hereunder may not be
assigned, alienated, pledged or otherwise encumbered by Executive and any
attempt to do so shall be void and of no force or effect.
4.3 Entire Agreement; Amendment. This Agreement represents the
---------------------------
entire understanding between the parties hereto with respect to the subject
matter hereof and may be amended only by an instrument in writing signed by the
parties hereto. This Agreement amends
- 9 -
<PAGE>
and restates and supersedes that certain Change in Control Agreement dated as of
September 13, 1994.
4.4 Jurisdiction. The parties hereto consent to the exclusive
------------
jurisdiction of the courts of the Commonwealth of Pennsylvania in any and all
actions arising hereunder.
4.5 Governing Laws. This Agreement shall be governed and
--------------
construed under the laws of the Commonwealth of Pennsylvania, without regard to
the conflict of laws principles thereof.
4.6 Unfunded Obligations. The obligations to make payments
--------------------
hereunder shall be unfunded and Executive's rights to receive any payments
hereunder shall be the same as those of any other unsecured general creditor.
4.7 Individual Agreement. This Agreement constitutes an
--------------------
agreement solely between the Corporation and Executive named herein. This
Agreement is intended to constitute a non-qualified arrangement for the benefit
of a key management employee and shall be construed and interpreted in a manner
consistent with such intention.
4.8 Headings. All headings preceding the text of the several
--------
paragraphs hereof are inserted solely for reference and shall not constitute a
part of this Agreement, nor affect its meaning, construction or effect.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement
to be executed and attested to on its behalf by its duly authorized officer, and
Executive hereunto has set his hand and seal as of the day and year first above
written.
ATTEST: HERITAGE BANCORP, INC.
/s/ Beverly A. Riotto By: /s/ Allen E. Kiefer
- ------------------------------ ---------------------------
(Assistant) Secretary
(SEAL)
WITNESS: EXECUTIVE
/s/ David L. Scott /s/ Richard A. Ketner (SEAL)
- ------------------------------ ------------------------------
Richard A. Ketner
- 11 -
<PAGE>
Exhibit 10(e)
CHANGE IN CONTROL AGREEMENT
AGREEMENT made as of September 15, 1997, by and among HERITAGE BANCORP,
INC., a corporation organized and existing under the laws of the Commonwealth of
Pennsylvania and having its principal place of business in Pottsville,
Pennsylvania (hereinafter referred to as the "Corporation"), and DAVID L.
SNYDER, an individual residing at 3905 Brookside Court, Orwigsburg, Pennsylvania
17961 (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, Executive is now serving as Vice President and Assistant
Secretary of the Corporation and Vice President and Senior Commercial Loan
Officer of Heritage National Bank, a wholly-owned subsidiary of the Corporation
(the "Bank"); and
WHEREAS, the Corporation and Executive desire to enter into this
Agreement whereby the Corporation will agree to make certain payments to
Executive upon termination under specific conditions, in order to induce
Executive to continue in employment with the Corporation.
NOW, THEREFORE, in consideration of the employment of Executive and
intending to be legally bound hereby, Executive and the Corporation agree as
follows:
<PAGE>
ARTICLE I
TERMINATION PURSUANT TO A CHANGE IN CONTROL
-------------------------------------------
1.1 Definition: Termination Pursuant to a Change in Control. Any of
-------------------------------------------------------
the following events occurring during the period commencing with the date of any
"Change in Control" (as defined in ARTICLE II hereof) and ending on the third
anniversary of the date of the consummation of the Change in Control
transaction, shall constitute a "Termination Pursuant to a Change in Control":
(A) Executive's employment is terminated by the Corporation, the
Bank or an acquiror or successor of either without "Good Cause" (as
defined below); or
(B) Any of the following events occurs and Executive thereafter
terminates Executive's employment:
(i) the nature and scope of Executive's duties or
responsibilities with the Corporation, the Bank or an acquiror or
successor are materially reduced from that which Executive enjoyed
immediately prior to the Change in Control including, without
limitation, if Executive ceases to have the title and duties of
Vice President and Assistant Secretary of the Corporation and Vice
President and Senior Commercial Loan Officer of the Bank or an
acquiror or successor thereto; or
(ii) Executive's base salary immediately prior to the Change
in Control is reduced or material benefits then being provided to
Executive are reduced or eliminated (excluding reduction or
curtailment of benefits affecting all employees); or
(iii) Executive is assigned, without Executive's consent, to
a principal place of employment which is more than thirty (30)
miles from Executive's principal place of employment immediately
prior to the Change in Control.
- 2 -
<PAGE>
For purposes of this Section 1.1, "Good Cause" shall mean (i) the
commission of gross malfeasance in office constituting dishonesty or the
commission of a crime involving fraud, misappropriation, embezzlement,
dishonesty or other violation of law of a similar nature and severity or (ii)
the willful breach of a fiduciary duty owed to the Corporation or the Bank. No
act, or failure to act, on Executive's part shall be considered "willful" unless
done, or omitted to be done, by Executive, not in good faith and without
reasonable belief that Executive's action or omission was in the best interest
of the Corporation or the Bank. The burden of establishing the validity of any
termination for Good Cause shall rest upon the Corporation or the Bank.
1.2 Compensation Upon Termination Pursuant to a Change in Control. If
-------------------------------------------------------------
Executive's employment is terminated and such termination is a Termination
Pursuant to a Change in Control (as defined in Section 1.1), the Corporation (or
any acquiror or successor thereto) shall provide the following to Executive:
(A) Executive's compensation shall be continued for a period of
three (3) years, commencing as of the Termination Pursuant to the
Change in Control, but not beyond the date on which Executive attains
age 65 or dies. For purposes of this Section 1.2, compensation shall
mean the greater of Executive's base salary in effect immediately prior
to the Termination Pursuant to a Change in Control and the base salary
in effect prior to the Change in Control, plus any cash bonuses or
annual incentive cash compensation earned by Executive with respect to
the calendar year immediately preceding the date of the Termination
Pursuant to a Change in Control; and
(B) Executive shall be provided, for a period of three (3) years,
commencing as of the Termination Pursuant to the Change in Control, but
not beyond the date on which Executive attains age 65 or dies, with
life, disability and accident and health insurance coverages comparable
to employer sponsored plan coverages in effect for Executive
immediately preceding the Termination Pursuant to a Change in Control.
Comparable life, disability and accident and
- 3 -
<PAGE>
health insurance coverages may be provided to Executive under: (1)
existing plans or programs in which the Executive participates, or (2)
through conversion of group coverage pursuant to any group policy in
effect, or (3) through other available commercial insurance
arrangements, if obtainable, for Executive; provided, however, that to
-------- -------
the extent a specific coverage cannot be continued or obtained under
either (1), (2) or (3) above, Executive shall not be entitled to
continuation of that specific coverage. Executive shall continue to be
responsible for the cost of comparable insurance coverages following
his Termination Pursuant to a Change in Control to the same extent as
other similarly situated active employees of the Corporation or the
Bank as of the Termination Pursuant to a Change in Control or, if there
are no similarly situated employees, then to the same extent, on a
percentage of total cost basis, that Executive was responsible for the
cost of available insurance coverages prior to the Termination Pursuant
to a Change in Control. With respect to health insurance coverage,
Executive's spouse and/or eligible dependents, if covered under any
employer sponsored accident and health insurance plan in effect for
Executive as of Executive's Termination Pursuant to a Change in
Control, shall also be provided with health insurance coverage for the
three (3) year term set forth above (regardless of Executive's death or
attainment of age 65 prior to the end of the three (3) year term), and
under the same cost sharing method as described above.
(C) If (i) any payment or benefit received or receivable hereunder
by Executive would not be deductible in whole or in part by the payor
as a result of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code") and (ii) a reduction in such payment or benefit of
no greater than 5% would result in full deductibility of all payments
and benefits, then such payment or benefit shall be reduced up to the
maximum amount, not exceeding 5%, necessary to achieve full
deductibility. If a 5% reduction is not sufficient to achieve full
deductibility, then no reduction shall be made. If at any time it is
determined that any reduction imposed pursuant to this paragraph was
not sufficient to achieve full deductibility, then the Executive shall
be entitled to immediately receive payment in an amount equal to the
reduction.
(D) Should the total of all payments made hereunder to Executive
upon a Termination Pursuant to a Change in Control, together with any
other payments which Executive has a right to receive from the
Corporation, the Bank, any of the other subsidiaries of the
Corporation, or any successors of any of the foregoing, result in the
imposition of an excise tax under Internal Revenue Code Section 4999
(or any successor thereto), Executive shall be entitled to an
additional "excise tax" adjustment payment in an amount such that,
after the payment of all federal and state income and excise taxes,
Executive will be in the same after-tax position as if no excise tax
had been imposed. Any payment or benefit which is
- 4 -
<PAGE>
required to be included under Internal Revenue Code Sections 280G or
4999 (or any successor provisions thereto) for purposes of determining
whether an excise tax is payable shall be deemed a payment "made to
Executive" or a payment "which Executive has a right to receive" for
purposes of this provision. The Corporation (or its successor) shall be
responsible for the costs of calculation of the deductibility of
payments and benefits and the excise tax by the Corporation's
independent certified accountant and tax counsel and shall notify
Executive of the amount of excise tax due prior to the time such excise
tax is due. If at any time it is determined that the additional "excise
tax" adjustment payment previously made to Executive was insufficient
to cover the effect of the excise tax, the gross- up payment pursuant
to this provision shall be increased to make Executive whole, including
an amount to cover the payment of any penalties resulting from any
incorrect or late payment of the excise tax resulting from the prior
calculation.
1.3 Other Benefits. The payments provided by this ARTICLE I shall not
--------------
affect Executive's rights to receive any payments or benefits to which Executive
may be or become entitled under any other existing or future agreement or
arrangement of the Corporation, the Bank or any successor with the Executive, or
under any existing or future benefit plan or arrangement of the Corporation, the
Bank or any successor in which Executive is or becomes a participant, or under
which Executive has or obtains rights, including without limitation, any
qualified or nonqualified deferred compensation or retirement plans or programs
or any outstanding stock options or similar agreements. Any such rights of
Executive shall be determined in accordance with the terms and conditions of the
applicable agreement, arrangement or plan and applicable law, provided, however,
-------- -------
that Executive shall not be entitled to any severance payments in addition to
those provided hereunder. Notwithstanding the foregoing, if a Termination
Pursuant to a Change in Control occurs at a time when an employment agreement
between Executive and the Corporation is in effect and Executive would
- 5 -
<PAGE>
otherwise be entitled to benefits under such employment agreement as a result of
termination of employment, the benefits to be provided under this Agreement as a
result of the Termination Pursuant to a Change in Control shall control and
Executive shall not be entitled to also receive termination benefits under such
employment agreement.
1.4 Withholding for Taxes. All payments required to be made under this
---------------------
Agreement will be made in accordance with the Corporation's or payor's normal
payroll schedule and will be subject to withholding of such amounts relating to
tax and/or other payroll deductions as may be required by law.
ARTICLE II
DEFINITION OF CHANGE IN CONTROL
-------------------------------
2.1 For purposes of this Agreement, the term "Change in Control" shall
mean any of the following:
(A) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")),
other than the Corporation, a subsidiary of the Corporation, an
employee benefit plan (or related trust) of the Corporation or a direct
or indirect subsidiary of the Corporation becomes the beneficial owner
(as determined pursuant to Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing more than
10% of the combined voting power of the Corporation's then outstanding
securities or announces a tender offer or exchange offer for securities
of the Corporation representing more than 10% of the combined voting
power of the Corporation's then outstanding securities; or
(B) the occurrence of, or execution of an agreement providing for,
a sale of all or substantially all of the assets of the Corporation or
the Bank to an entity which is not a direct or indirect subsidiary of
the Corporation; or
- 6 -
<PAGE>
(C) the occurrence of, or execution of an agreement providing for,
a reorganization, merger, consolidation, or similar transaction
involving the Corporation or the Bank excluding, however, the merger or
--------- -------
consolidation of the Bank with the Corporation or the merger or
consolidation of the Bank with and into any other wholly-owned
subsidiary of the Corporation; or
(D) any other event which is at any time designated as a "Change
in Control" for purposes of this Agreement by a resolution adopted by
the Board of Directors of the Corporation with the affirmative vote of
a majority of the non-employee directors in office at the time the
resolution is adopted; in the event any such resolution is adopted, the
Change in Control event specified thereby shall be deemed incorporated
herein by reference and thereafter may not be amended, modified or
revoked without the written agreement of Executive.
2.2 Notwithstanding anything else to the contrary set forth in this
Agreement, if (i) an agreement is executed by the Corporation or the Bank
providing for any of the transactions or events constituting a Change in Control
pursuant to this ARTICLE II or an announcement concerning a tender offer or
exchange offer is made constituting a Change in Control pursuant to this Article
II, and the agreement, tender offer or exchange offer subsequently expires or is
terminated without the transaction or event being consummated, and (ii) a
"Termination Pursuant to a Change in Control" (as defined in ARTICLE I hereof)
has not occurred prior to such expiration or termination, then for purposes of
this Agreement (including, without limitation, ARTICLE I hereof) it shall be as
though such agreement was never executed or such tender offer or exchange offer
was never announced and no Change in Control event shall be deemed to have
occurred as a result.
2.3 The expiration of the three-year period after any Change in
Control event without the occurrence of a Termination Pursuant to a Change in
Control shall not have any effect on this Agreement, which shall remain in full
force and effect until its termination by
- 7 -
<PAGE>
written agreement of the parties or the earlier termination of Executive's
employment under circumstances not constituting a Termination Pursuant to a
Change in Control.
ARTICLE III
EXPENSES
--------
3.1 Legal Action. If Executive determines in good faith that the
------------
Corporation or any successor has failed to comply with its obligations under
this Agreement, or if the Corporation or any successor or any other person takes
any action to declare this Agreement void or unenforceable, or institutes any
legal action or arbitration proceeding with respect to this Agreement, the
Corporation hereby irrevocably authorizes Executive from time to time to retain
counsel of Executive's choice, at the expense of the Corporation or such
successor, to represent Executive in connection with any and all actions and
proceedings, whether by or against the Corporation, any acquiror or successor,
or any director, officer, stockholder or other person affiliated with any of the
foregoing, which may adversely affect Executive's rights hereunder.
3.2 Excise Tax Matters. It is the intention of the Corporation that
------------------
Executive not be required to incur any expenses associated with determination of
the amount of any "excess parachute payment" under Internal Revenue Code Section
280G or the amount of any excise tax imposed on Executive pursuant to Internal
Revenue Code Section 4999 (or any successor provisions thereto). Therefore, the
Corporation agrees to pay all expenses, including the expenses of the
Corporation's independent certified accountant and tax counsel, related to the
determination of any excess parachute payment and excise tax, and to pay the
legal costs and
- 8 -
<PAGE>
expenses of any tax audit of Executive to the extent such expenses relate to the
amount of the excise tax determined by the Corporation.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Termination of Employment. This Agreement shall not in any way
-------------------------
obligate either the Corporation or the Bank to continue the employment of
Executive, nor shall this Agreement limit the right of the Corporation or the
Bank to terminate Executive's employment for any reason.
4.2 Binding Effect; Assignment. This Agreement shall be binding upon
--------------------------
and inure to the benefit of the parties hereto, their respective heirs,
executors, administrators, successors and, to the extent permitted hereunder,
assigns. All of the obligations of the Corporation hereunder shall be legally
binding on any successor to the Corporation, including without limitation, any
successor as a result of the consummation of a Change in Control. The right of
Executive to receive payments hereunder may not be assigned, alienated, pledged
or otherwise encumbered by Executive and any attempt to do so shall be void and
of no force or effect.
4.3 Entire Agreement; Amendment. This Agreement represents the entire
---------------------------
understanding between the parties hereto with respect to the subject matter
hereof and may be amended only by an instrument in writing signed by the parties
hereto.
- 9 -
<PAGE>
4.4 Jurisdiction. The parties hereto consent to the exclusive
------------
jurisdiction of the courts of the Commonwealth of Pennsylvania in any and all
actions arising hereunder.
4.5 Governing Laws. This Agreement shall be governed and construed
--------------
under the laws of the Commonwealth of Pennsylvania, without regard to the
conflict of laws principles thereof.
4.6 Unfunded Obligations. The obligations to make payments hereunder
--------------------
shall be unfunded and Executive's rights to receive any payments hereunder shall
be the same as those of any other unsecured general creditor.
4.7 Individual Agreement. This Agreement constitutes an agreement
--------------------
solely between the Corporation and Executive named herein. This Agreement is
intended to constitute a non-qualified arrangement for the benefit of a key
management employee and shall be construed and interpreted in a manner
consistent with such intention.
4.8 Headings. All headings preceding the text of the several
--------
paragraphs hereof are inserted solely for reference and shall not constitute a
part of this Agreement, nor affect its meaning, construction or effect.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and attested to on its behalf by its duly authorized officer, and
Executive hereunto has set his hand and seal as of the day and year first above
written.
ATTEST: HERITAGE BANCORP, INC.
/s/ Richard A. Ketner By: /s/ Allen E. Kiefer
- ----------------------------- ------------------------------
(Assistant) Secretary
(SEAL)
WITNESS: EXECUTIVE
/s/ Beverly A. Riotto /s/ David L. Snyder (SEAL)
- ----------------------------- ------------------------------
David L. Snyder
- 11 -
<PAGE>
106131
Exhibit 10(f)
CHANGE IN CONTROL AGREEMENT
---------------------------
AGREEMENT made as of September 15, 1997, by and among HERITAGE
BANCORP, INC., a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania and having its principal place of business in
Pottsville, Pennsylvania (hereinafter referred to as the "Corporation"), and
DAVID L. SCOTT, an individual residing at 1812 Crazyhorse Drive, Auburn,
Pennsylvania 17922 (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, Executive is now serving as Vice President and
Treasurer of the Corporation and Vice President and Chief Financial Officer of
Heritage National Bank, a wholly-owned subsidiary of the Corporation (the
"Bank"); and
WHEREAS, the Corporation and Executive desire to enter into
this Agreement whereby the Corporation will agree to make certain payments to
Executive upon termination under specific conditions, in order to induce
Executive to continue in employment with the Corporation.
NOW, THEREFORE, in consideration of the employment of
Executive and intending to be legally bound hereby, Executive and the
Corporation agree as follows:
<PAGE>
ARTICLE I
TERMINATION PURSUANT TO A CHANGE IN CONTROL
-------------------------------------------
1.1 Definition: Termination Pursuant to a Change in Control.
-------------------------------------------------------
Any of the following events occurring during the period commencing with the date
of any "Change in Control" (as defined in ARTICLE II hereof) and ending on the
third anniversary of the date of the consummation of the Change in Control
transaction, shall constitute a "Termination Pursuant to a Change in Control":
(A) Executive's employment is terminated by the Corporation,
the Bank or an acquiror or successor of either without "Good Cause" (as
defined below); or
(B) Any of the following events occurs and Executive
thereafter terminates Executive's employment:
(i) the nature and scope of Executive's duties or
responsibilities with the Corporation, the Bank or an acquiror
or successor are materially reduced from that which Executive
enjoyed immediately prior to the Change in Control including,
without limitation, if Executive ceases to have the title and
duties of Vice President and Treasurer of the Corporation and
Vice President and Chief Financial Officer of the Bank or an
acquiror or successor thereto; or
(ii) Executive's base salary immediately prior to the
Change in Control is reduced or material benefits then being
provided to Executive are reduced or eliminated (excluding
reduction or curtailment of benefits affecting all employees);
or
(iii) Executive is assigned, without Executive's consent,
to a principal place of employment which is more than thirty
(30) miles from Executive's principal place of employment
immediately prior to the Change in Control.
- 2 -
<PAGE>
For purposes of this Section 1.1, "Good Cause" shall mean (i)
the commission of gross malfeasance in office constituting dishonesty or the
commission of a crime involving fraud, misappropriation, embezzlement,
dishonesty or other violation of law of a similar nature and severity or (ii)
the willful breach of a fiduciary duty owed to the Corporation or the Bank. No
act, or failure to act, on Executive's part shall be considered "willful" unless
done, or omitted to be done, by Executive, not in good faith and without
reasonable belief that Executive's action or omission was in the best interest
of the Corporation or the Bank. The burden of establishing the validity of any
termination for Good Cause shall rest upon the Corporation or the Bank.
1.2 Compensation Upon Termination Pursuant to a Change in
-----------------------------------------------------
Control. If Executive's employment is terminated and such termination is a
- -------
Termination Pursuant to a Change in Control (as defined in Section 1.1), the
Corporation (or any acquiror or successor thereto) shall provide the following
to Executive:
(A) Executive's compensation shall be continued for a period
of three (3) years, commencing as of the Termination Pursuant to the
Change in Control, but not beyond the date on which Executive attains
age 65 or dies. For purposes of this Section 1.2, compensation shall
mean the greater of Executive's base salary in effect immediately prior
to the Termination Pursuant to a Change in Control and the base salary
in effect prior to the Change in Control, plus any cash bonuses or
annual incentive cash compensation earned by Executive with respect to
the calendar year immediately preceding the date of the Termination
Pursuant to a Change in Control; and
(B) Executive shall be provided, for a period of three (3)
years, commencing as of the Termination Pursuant to the Change in
Control, but not beyond the date on which Executive attains age 65 or
dies, with life, disability and accident and health insurance coverages
comparable to employer sponsored plan coverages in effect for Executive
immediately preceding the Termination Pursuant to a Change in Control.
Comparable life, disability and accident and
- 3 -
<PAGE>
health insurance coverages may be provided to Executive under: (1)
existing plans or programs in which the Executive participates, or (2)
through conversion of group coverage pursuant to any group policy in
effect, or (3) through other available commercial insurance
arrangements, if obtainable, for Executive; provided, however, that to
-------- -------
the extent a specific coverage cannot be continued or obtained under
either (1), (2) or (3) above, Executive shall not be entitled to
continuation of that specific coverage. Executive shall continue to be
responsible for the cost of comparable insurance coverages following
his Termination Pursuant to a Change in Control to the same extent as
other similarly situated active employees of the Corporation or the
Bank as of the Termination Pursuant to a Change in Control or, if there
are no similarly situated employees, then to the same extent, on a
percentage of total cost basis, that Executive was responsible for the
cost of available insurance coverages prior to the Termination Pursuant
to a Change in Control. With respect to health insurance coverage,
Executive's spouse and/or eligible dependents, if covered under any
employer sponsored accident and health insurance plan in effect for
Executive as of Executive's Termination Pursuant to a Change in
Control, shall also be provided with health insurance coverage for the
three (3) year term set forth above (regardless of Executive's death or
attainment of age 65 prior to the end of the three (3) year term), and
under the same cost sharing method as described above.
(C) If (i) any payment or benefit received or receivable
hereunder by Executive would not be deductible in whole or in part by
the payor as a result of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and (ii) a reduction in such payment or
benefit of no greater than 5% would result in full deductibility of all
payments and benefits, then such payment or benefit shall be reduced up
to the maximum amount, not exceeding 5%, necessary to achieve full
deductibility. If a 5% reduction is not sufficient to achieve full
deductibility, then no reduction shall be made. If at any time it is
determined that any reduction imposed pursuant to this paragraph was
not sufficient to achieve full deductibility, then the Executive shall
be entitled to immediately receive payment in an amount equal to the
reduction.
(D) Should the total of all payments made hereunder to
Executive upon a Termination Pursuant to a Change in Control, together
with any other payments which Executive has a right to receive from the
Corporation, the Bank, any of the other subsidiaries of the
Corporation, or any successors of any of the foregoing, result in the
imposition of an excise tax under Internal Revenue Code Section 4999
(or any successor thereto), Executive shall be entitled to an
additional "excise tax" adjustment payment in an amount such that,
after the payment of all federal and state income and excise taxes,
Executive will be in the same after-tax position as if no excise tax
had been imposed. Any payment or benefit which is
- 4 -
<PAGE>
required to be included under Internal Revenue Code Sections 280G or
4999 (or any successor provisions thereto) for purposes of determining
whether an excise tax is payable shall be deemed a payment "made to
Executive" or a payment "which Executive has a right to receive" for
purposes of this provision. The Corporation (or its successor) shall be
responsible for the costs of calculation of the deductibility of
payments and benefits and the excise tax by the Corporation's
independent certified accountant and tax counsel and shall notify
Executive of the amount of excise tax due prior to the time such excise
tax is due. If at any time it is determined that the additional "excise
tax" adjustment payment previously made to Executive was insufficient
to cover the effect of the excise tax, the gross- up payment pursuant
to this provision shall be increased to make Executive whole, including
an amount to cover the payment of any penalties resulting from any
incorrect or late payment of the excise tax resulting from the prior
calculation.
1.3 Other Benefits. The payments provided by this ARTICLE I
--------------
shall not affect Executive's rights to receive any payments or benefits to which
Executive may be or become entitled under any other existing or future agreement
or arrangement of the Corporation, the Bank or any successor with the Executive,
or under any existing or future benefit plan or arrangement of the Corporation,
the Bank or any successor in which Executive is or becomes a participant, or
under which Executive has or obtains rights, including without limitation, any
qualified or nonqualified deferred compensation or retirement plans or programs
or any outstanding stock options or similar agreements. Any such rights of
Executive shall be determined in accordance with the terms and conditions of the
applicable agreement, arrangement or plan and applicable law, provided, however,
-------- -------
that Executive shall not be entitled to any severance payments in addition to
those provided hereunder. Notwithstanding the foregoing, if a Termination
Pursuant to a Change in Control occurs at a time when an employment agreement
between Executive and the Corporation is in effect and Executive would
- 5 -
<PAGE>
otherwise be entitled to benefits under such employment agreement as a result of
termination of employment, the benefits to be provided under this Agreement as a
result of the Termination Pursuant to a Change in Control shall control and
Executive shall not be entitled to also receive termination benefits under such
employment agreement.
1.4 Withholding for Taxes. All payments required to be made
---------------------
under this Agreement will be made in accordance with the Corporation's or
payor's normal payroll schedule and will be subject to withholding of such
amounts relating to tax and/or other payroll deductions as may be required by
law.
ARTICLE II
DEFINITION OF CHANGE IN CONTROL
-------------------------------
2.1 For purposes of this Agreement, the term "Change in
Control" shall mean any of the following:
(A) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")),
other than the Corporation, a subsidiary of the Corporation, an
employee benefit plan (or related trust) of the Corporation or a direct
or indirect subsidiary of the Corporation becomes the beneficial owner
(as determined pursuant to Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing more than
10% of the combined voting power of the Corporation's then outstanding
securities or announces a tender offer or exchange offer for securities
of the Corporation representing more than 10% of the combined voting
power of the Corporation's then outstanding securities; or
(B) the occurrence of, or execution of an agreement providing
for, a sale of all or substantially all of the assets of the
Corporation or the Bank to an entity which is not a direct or indirect
subsidiary of the Corporation; or
- 6 -
<PAGE>
(C) the occurrence of, or execution of an agreement providing
for, a reorganization, merger, consolidation, or similar transaction
involving the Corporation or the Bank excluding, however, the merger or
--------- -------
consolidation of the Bank with the Corporation or the merger or
consolidation of the Bank with and into any other wholly-owned
subsidiary of the Corporation; or
(D) any other event which is at any time designated as a
"Change in Control" for purposes of this Agreement by a resolution
adopted by the Board of Directors of the Corporation with the
affirmative vote of a majority of the non-employee directors in office
at the time the resolution is adopted; in the event any such resolution
is adopted, the Change in Control event specified thereby shall be
deemed incorporated herein by reference and thereafter may not be
amended, modified or revoked without the written agreement of
Executive.
2.2 Notwithstanding anything else to the contrary set forth in
this Agreement, if (i) an agreement is executed by the Corporation or the Bank
providing for any of the transactions or events constituting a Change in Control
pursuant to this ARTICLE II or an announcement concerning a tender offer or
exchange offer is made constituting a Change in Control pursuant to this Article
II, and the agreement, tender offer or exchange offer subsequently expires or is
terminated without the transaction or event being consummated, and (ii) a
"Termination Pursuant to a Change in Control" (as defined in ARTICLE I hereof)
has not occurred prior to such expiration or termination, then for purposes of
this Agreement (including, without limitation, ARTICLE I hereof) it shall be as
though such agreement was never executed or such tender offer or exchange offer
was never announced and no Change in Control event shall be deemed to have
occurred as a result.
2.3 The expiration of the three-year period after any Change
in Control event without the occurrence of a Termination Pursuant to a Change in
Control shall not have any effect on this Agreement, which shall remain in full
force and effect until its termination by
- 7 -
<PAGE>
written agreement of the parties or the earlier termination of Executive's
employment under circumstances not constituting a Termination Pursuant to a
Change in Control.
ARTICLE III
EXPENSES
--------
3.1 Legal Action. If Executive determines in good faith that
------------
the Corporation or any successor has failed to comply with its obligations under
this Agreement, or if the Corporation or any successor or any other person takes
any action to declare this Agreement void or unenforceable, or institutes any
legal action or arbitration proceeding with respect to this Agreement, the
Corporation hereby irrevocably authorizes Executive from time to time to retain
counsel of Executive's choice, at the expense of the Corporation or such
successor, to represent Executive in connection with any and all actions and
proceedings, whether by or against the Corporation, any acquiror or successor,
or any director, officer, stockholder or other person affiliated with any of the
foregoing, which may adversely affect Executive's rights hereunder.
3.2 Excise Tax Matters. It is the intention of the Corporation
------------------
that Executive not be required to incur any expenses associated with
determination of the amount of any "excess parachute payment" under Internal
Revenue Code Section 280G or the amount of any excise tax imposed on Executive
pursuant to Internal Revenue Code Section 4999 (or any successor provisions
thereto). Therefore, the Corporation agrees to pay all expenses, including the
expenses of the Corporation's independent certified accountant and tax counsel,
related to the determination of any excess parachute payment and excise tax, and
to pay the legal costs and
- 8 -
<PAGE>
expenses of any tax audit of Executive to the extent such expenses relate to the
amount of the excise tax determined by the Corporation.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Termination of Employment. This Agreement shall not in any
-------------------------
way obligate either the Corporation or the Bank to continue the employment of
Executive, nor shall this Agreement limit the right of the Corporation or the
Bank to terminate Executive's employment for any reason.
4.2 Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon and inure to the benefit of the parties hereto, their respective
heirs, executors, administrators, successors and, to the extent permitted
hereunder, assigns. All of the obligations of the Corporation hereunder shall be
legally binding on any successor to the Corporation, including without
limitation, any successor as a result of the consummation of a Change in
Control. The right of Executive to receive payments hereunder may not be
assigned, alienated, pledged or otherwise encumbered by Executive and any
attempt to do so shall be void and of no force or effect.
4.3 Entire Agreement; Amendment. This Agreement represents the
---------------------------
entire understanding between the parties hereto with respect to the subject
matter hereof and may be amended only by an instrument in writing signed by the
parties hereto.
- 9 -
<PAGE>
4.4 Jurisdiction. The parties hereto consent to the exclusive
------------
jurisdiction of the courts of the Commonwealth of Pennsylvania in any and all
actions arising hereunder.
4.5 Governing Laws. This Agreement shall be governed and
--------------
construed under the laws of the Commonwealth of Pennsylvania, without regard to
the conflict of laws principles thereof.
4.6 Unfunded Obligations. The obligations to make payments
--------------------
hereunder shall be unfunded and Executive's rights to receive any payments
hereunder shall be the same as those of any other unsecured general creditor.
4.7 Individual Agreement. This Agreement constitutes an
--------------------
agreement solely between the Corporation and Executive named herein. This
Agreement is intended to constitute a non-qualified arrangement for the benefit
of a key management employee and shall be construed and interpreted in a manner
consistent with such intention.
4.8 Headings. All headings preceding the text of the several
--------
paragraphs hereof are inserted solely for reference and shall not constitute a
part of this Agreement, nor affect its meaning, construction or effect.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement
to be executed and attested to on its behalf by its duly authorized officer, and
Executive hereunto has set his hand and seal as of the day and year first above
written.
ATTEST: HERITAGE BANCORP, INC.
/s/ Richard A. Ketner By: /s/ Allen E. Kiefer
- ------------------------------ ------------------------------------
(Assistant) Secretary
(SEAL)
WITNESS: EXECUTIVE
/s/ Beverly A. Riotto /s/ David L. Scott
- ------------------------------ ---------------------------------(SEAL)
David L. Scott
- 11 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,614
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 111,267
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 230,396
<ALLOWANCE> 3,145
<TOTAL-ASSETS> 357,763
<DEPOSITS> 257,608
<SHORT-TERM> 10,004
<LIABILITIES-OTHER> 2,758
<LONG-TERM> 44,450
0
0
<COMMON> 25,011
<OTHER-SE> 17,932
<TOTAL-LIABILITIES-AND-EQUITY> 357,763
<INTEREST-LOAN> 14,740
<INTEREST-INVEST> 5,267
<INTEREST-OTHER> 1
<INTEREST-TOTAL> 20,008
<INTEREST-DEPOSIT> 5,769
<INTEREST-EXPENSE> 2,080
<INTEREST-INCOME-NET> 12,159
<LOAN-LOSSES> 135
<SECURITIES-GAINS> 151
<EXPENSE-OTHER> 6,078
<INCOME-PRETAX> 6,097
<INCOME-PRE-EXTRAORDINARY> 6,097
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,320
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
<YIELD-ACTUAL> 4.93
<LOANS-NON> 1,061
<LOANS-PAST> 764
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 219
<ALLOWANCE-OPEN> 3,071
<CHARGE-OFFS> 190
<RECOVERIES> 129
<ALLOWANCE-CLOSE> 3,145
<ALLOWANCE-DOMESTIC> 1,483
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,562
</TABLE>
