<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
HERITAGE FINANCIAL SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
HERITAGE FINANCIAL SERVICES, INC.
25 JEFFERSON STREET
CLARKSVILLE, TENNESSEE 37040
To the Shareholders of Heritage Financial Services, Inc.
You are invited to attend the Annual Meeting of Shareholders (the "Annual
Meeting") of Heritage Financial Services, Inc. (the "Company") which will be
held at 141 Jefferson Street, Clarksville, Tennessee (the building adjacent to
the main office) on April 15, 1997, at 1:00 p.m.
for the following purposes:
(1) To elect six directors.
(2) To ratify Heathcott and Mullaly as the independent auditors of the Company
for the upcoming year.
(3) To transact such other business as may properly come before the Annual
Meeting.
Only shareholders of record at the close of business on February 28, 1997, are
entitled to notice of the meeting and to vote at the Annual Meeting or any
adjournment thereof.
Your attention is directed to the proxy statement accompanying this notice for a
more complete statement regarding the matters proposed to be acted upon at the
Annual Meeting.
By order of the Board of Directors
JOHN T. HALLIBURTON
Secretary to the Board
Clarksville, Tennessee
March 17, 1997
IMPORTANT
Whether or not you plan to attend the Annual Meeting, it would be appreciated if
you would complete, sign, and promptly return the enclosed proxy in the
self-addressed prepaid envelope prior to the meeting. This will not prevent you
from voting in person, if you so desire.
<PAGE> 3
PROXY STATEMENT
HERITAGE FINANCIAL SERVICES, INC.
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Heritage Financial Services, Inc. to be voted at
the Annual Meeting of Shareholders of the Company to be held at 141 Jefferson
Street, Clarksville, Tennessee (the building adjacent to the main office) on
April 15, 1997, at 1:00 p.m. for the purposes set forth in the accompanying
notice. A proxy may be revoked by the shareholder at any time prior to its use
by filing with the Secretary of the Company a written revocation or a duly
executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person. This proxy statement and the accompanying form of proxy have
been mailed on or about March 17, 1997. The information contained herein is as
of January 31, 1997, unless otherwise indicated. This proxy solicitation is made
by the Company and the expenses thereof will be borne directly or indirectly by
the Company.
The Company's principal executive office is located at 25 Jefferson Street,
Clarksville, Tennessee 37040.
OTHER MEETING AND VOTING INFORMATION
The shares represented by such proxies will be voted in accordance with the
choices specified therein. If no choice has been specified, the shares will be
voted FOR election of the nominees for director named herein, and in the
proxies' discretion on any other matter which may properly come before the
Annual Meeting.
The Board of Directors of the Company (the "Board") does not know of any other
matters which will be presented for action at the Annual Meeting, but the
persons named in the proxy (who are not directors of the Company) intend to vote
or act with respect to any other proposal which may be presented for action
according to their best judgment.
As of the record date, the Company has outstanding 554,010 shares of its $2 par
value common stock. Holders of common stock are entitled to one vote for each
share of common stock held on all matters to come before the Annual Meeting.
Only shareholders of record at the close of business on February 28, 1997, are
entitled to vote at the Annual Meeting or any adjournment thereof.
The affirmative vote of a plurality of the votes cast is required in the
election of the nominees as directors.
<PAGE> 4
ELECTION OF DIRECTORS
The Company's Charter and By-laws provides that the Board of Directors shall
consist of a minimum of three (3) and a maximum of twelve (12) directors. The
Board currently consists of twelve directors. The Charter and By-laws also
provide that the terms of the Board of Directors be staggered so approximately
one-third of the directors are elected each year to three (3) year terms. The
Board of Directors has proposed that the six nominees noted below be elected for
the terms indicated. All nominees currently serve as directors of the Company.
The following table shows the beneficial ownership of the Company's common stock
by all directors, nominees for director, and by all directors and officers of
the Company as a group on January 31, 1997, as well as their respective
percentage of issued and outstanding common stock of the Company. Except where
otherwise stated, sole voting and investment power are held by the beneficial
owners named.
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT & NATURE
NAME OF ADDRESS OF OF BENEFICIAL PERCENTAGE
BENEFICIAL OWNER BENIFICAL OWNER OWNER CLASS
- ---------------- --------------- ----- -----
<S> <C> <C> <C>
William G. Beach (1) 2855 Wimbledon Ct. 1,137 0.20%
Clarksville, Tennessee
Jeffrey V. Bibb (2) 103 Jefferson Street 10,222 1.78%
Clarksville, Tennessee
Earl O. Bradley, III (3) 25 Jefferson Street 47,855 8.34%
Clarksville, Tennessee
David R. Farris (4) 818 River Run 3,197 0.56%
Clarksville, Tennessee
George R. Fleming, Sr. (5) 107 North Third Street 19,589 3.41%
Clarksville, Tennessee
John T. Halliburton (6) 25 Jefferson Street 41,696 7.27%
Clarksville, Tennessee
James G. Holleman (7) 111 South Riverside Drive 15,874 2.77%
Clarksville, Tennessee
Ruth C. Hutton (8) 267 Cherokee Trail 1,100 0.19%
Clarksville, Tennessee
William Lawson Mabry (9) 111 South Riverside Drive 14,895 2.60%
Clarksville, Tennessee
Ted R. McCurdy (10) 2701 E. Ashland City Road 1,140 0.20%
Clarksville, Tennessee
James W. Russell (11) 1778 New Ashland City Road 20,303 3.54%
Clarksville, Tennessee
James E. Thomas (12) 1891 Ft. Campbell Blvd. 18,409 3.21%
Clarksville, Tennessee
& Officers as a group (17 persons) (13) 223,764 39.00%
</TABLE>
(1) Includes 137 shares in the Directors' Unfunded Deferred Compensation Plan
for Mr. Beach.
(2) Includes 209 shares held in custodian accounts for minor children over which
Mr. Bibb has joint voting and investment power, 8,685 shares held in Mr. Bibb's
IRA account, 313 shares jointly owned with his wife, and 1,015 remaining stock
options. Mr. Bibb has exercised 3,985 stock options.
<PAGE> 6
(3) Includes 871 shares held in custodian accounts for minor children over
which Mr. Bradley has sole voting and investment power, 1,000 shares held in
Mr. Bradley's IRA account, 1,921 vested shares in the Company's ESOP, and 2,700
stock options. Mr. Bradley has exercised 32,300 options. The Company's 1996
ESOP contribution has not been allocated.
(4) Includes 1,494 shares held in Mr. Farris' IRA account, 1,494 shares held in
his wife's IRA account to which Mr. Farris disclaims beneficial ownership, and
209 shares in the Directors' Unfunded Deferred Compensation Plan.
(5) Includes 6,269 shares held by Fleming and Fleming Rental, a partnership of
which Mr. Fleming is a partner, and 259 shares in the Directors' Unfunded
Deferred Compensation Plan.
(6) Includes 4,406 shares held in Mr. Halliburton's IRA account, 1,613 vested
shares in the Company's ESOP, 30,677 shares jointly owned with his wife and
5,000 stock options. Mr. Halliburton has exercised 30,000 options. The Company's
1996 ESOP contribution has not been allocated.
(7) Includes 1,054 shares owned by Mr. Holleman's wife, 1,159 shares owned by a
family member living at home as to which Mr. Holleman disclaims beneficial
ownership, and 321 shares in the Directors' Unfunded Deferred Compensation Plan.
(8) Includes 56 shares in the Directors' Unfunded Deferred Compensation Plan
for Mrs. Hutton.
(9) Includes 10,371 shares held in Mr. Mabry's IRA accounts, and 259 shares in
the Directors' Unfunded Deferred Compensation Plan.
(10) Includes 140 shares in the Directors' Unfunded Deferred Compensation Plan
for Dr. McCurdy.
(11) Includes 557 shares held in Mr. Russell's IRA account, 557 shares held in
his wife's IRA account as to which Mr. Russell disclaims beneficial ownership,
18,939 shares held in the James W. and Vista Russell Revocable Living Trust, and
250 shares in the Directors' Unfunded Deferred Compensation Plan.
(12) Includes 5,642 shares owned by Mr. Thomas's wife as to which Mr. Thomas
disclaims beneficial ownership, 12,528 shares held in the James Eldon Thomas
Family Family Partnership, L.P., and 237 shares in the Directors' Unfunded
Deferred Compensation Plan.
(13) Includes 19,715 vested stock options, and 6,409 vested shares in the
Company's ESOP. The Company's 1996 ESOP contribution has not been allocated.
<PAGE> 7
PRINCIPAL HOLDERS OF VOTING SECURITIES
To the knowledge of the Company, the individuals listed below are the only
shareholders who beneficially own more than five percent (5%) of the outstanding
common stock of the Company.
<TABLE>
<CAPTION>
Name & Address Amount & Nature of Percent of
of Beneficial Owner Beneficial Owner Class
------------------- ---------------- -----
<S> <C> <C>
Earl O. Bradley, III (1)
25 Jefferson Street
Clarksville, Tennessee 47,855 8.34%
John T. Halliburton (2)
25 Jefferson Street
Clarksville, Tennessee 41,696 7.27%
</TABLE>
(1) Includes 871 shares held in custodian accounts for minor children over which
Mr. Bradley has sole voting and investment power, 1,000 shares held in Mr.
Bradley's IRA account, 1,921 vested shares in the Company's ESOP, and 2,700
stock options. Mr. Bradley has exercised 32,300 options.
(2) Includes 4,406 shares held in Mr. Halliburton's IRA account, 1,613 vested
shares in the Company's ESOP, 30,677 shares jointly owned with his wife and
5,000 stock options. Mr. Halliburton has exercised 30,000 options. The Company's
1996 ESOP contribution has not been allocated.
NOMINEES FOR ELECTION AS DIRECTORS
The following individuals have been nominated for directors by the Board of
Directors. Mr. Farris, Mr. Fleming, Mr. Halliburton and Mrs. Hutton are
nominated to serve three (3) year terms; Dr. McCurdy is nominated to serve a two
(2) year term; and Mr. Beach is nominated to serve a one (1) year term. The
Board of Directors has no reason to believe that any nominees for director will
be unavailable for election. However, if any of the nominees should become
unavailable for election and unless authority is withheld, the holders of the
proxies solicited hereby will vote for such other individual(s) as the Board of
Directors may recommend.
<PAGE> 8
WILLIAM G. BEACH
Director since: 1996
Term to expire: 1997
Age: 40
Residence: Clarksville, Tennessee
Mr. Beach is the President of Beach Oil Company, an Amoco Oil distributor and
owner/operator of convenience markets. He graduated from Austin Peay State
University in 1978.
DAVID R. FARRIS
Director since: 1994
Term to expire: 1997
Age: 59
Residence: Clarksville, Tennessee
Mr. Farris is a marketing consultant. He retired with over 28 years from
American Standard, Inc., where he served as an Executive Vice President and
Corporate Officer. Mr. Farris graduated from the University of Wisconsin in 1960
with a B.S. degree in Engineering and did his post graduate work at the
University of Missouri.
GEORGE R. FLEMING, SR.
Director since: 1989
Term to expire: 1997
Age: 73
Residence: Clarksville, Tennessee
Mr. Fleming is of counsel with the law firm of Daniel, Harvil, Batson & Nolan.
He received his J.D. degree from the University of Tennessee College of Law in
1950 and has practiced law in Clarksville since 1952.
JOHN T. HALLIBURTON
Executive Vice President and Corporate Secretary
Director since: 1989
Term to expire: 1997
Age: 49
Residence: Clarksville, Tennessee
Mr. Halliburton has served as Executive Vice President and Secretary of the
Board since its formation in 1989. He graduated from Austin Peay State
University in 1969 with a B.S. degree in Business Administration, and is a
graduate of the Tennessee Commercial Lending School held at Vanderbilt
University.
<PAGE> 9
RUTH C. HUTTON
Director since: 1989
Term to expire: 1997
Age: 73
Residence: Clarksville, Tennessee
Prior to retirement, Mrs. Hutton was the manager of the Clarksville Credit
Bureau. She is a graduate of the Garrett School of Business and the University
of North Carolina Management Institute.
DR. TED R. MCCURDY
Director since: 1996
Term to expire: 1997
Age: 51
Residence: Clarksville, Tennessee
Dr. McCurdy is an oral and maxillofacial surgeon in private practice at the
Clarksville Oral Surgery Center. He graduated with a B.S. degree from Mercer
University in Macon, Georgia, attended the University of Tennessee Medical
School in Memphis, and completed his intern/residency at the University of
Tennessee Memorial Research Hospital in Knoxville.
CONTINUING DIRECTORS UNTIL 1998 ANNUAL MEETING
JEFFREY V. BIBB
Director since: 1989
Term to expire: 1998
Age 42
Residence: Clarksville, Tennessee
Mr. Bibb is a partner in the firm of Bibb, Lott and Fryer Marketing/Advertising.
He is also owner/organizer of the Clarksville Coyotes professional baseball
team. Mr. Bibb is a 1976 graduate of Austin Peay State University with a B.A.
degree in Urban Affairs and Regional Development.
<PAGE> 10
JAMES G. HOLLEMAN
Chairman of the Board
Director since: 1989
Term to expire: 1998
Age 65
Residence: Clarksville, Tennessee
Mr. Holleman has served as Chairman of the Board of Directors of the Bank since
its formation in 1989. He is engaged in the real estate business, and is
President of Conroy, Marable & Holleman Real Estate, Inc. and Chairman of the
Board of CM&H Commercial Properties, Inc. He graduated from Vanderbilt
University in 1953 with a B.A. in Business Administration.
JAMES E. THOMAS, SR.
Director since: 1989
Term to expire: 1998
Age 63
Residence: Clarksville, Tennessee
Mr. Thomas is the owner of various investment properties. He graduated from
Vanderbilt University in 1956 with a B.A. degree in Business Administration.
CONTINUING DIRECTORS UNTIL 1999 ANNUAL MEETING
EARL O. BRADLEY, III
President and CEO
Director since: 1989
Term to expire: 1999
Age: 41
Residence: Clarksville, Tennessee
Mr. Bradley has served as President and Chief Executive Officer of the Bank
since its formation in 1989. Mr. Bradley graduated from Austin Peay State
University in 1977 with a B.S. degree in Accounting. He is a licensed Certified
Public Accountant, and is a graduate of the University of Wisconsin School for
Bank Administration and the Tennessee Commercial Lending School held at
Vanderbilt University.
<PAGE> 11
W. LAWSON MABRY
Director since: 1989
Term to expire: 1999
Age: 41
Residence: Clarksville, Tennessee
Mr. Mabry is a real estate broker with Conroy, Marable and Holleman Real Estate,
Inc., and is actively involved in the ownership and development of real estate.
He graduated from Austin Peay State University in 1977 with a B.S. degree in
English.
JAMES W. RUSSELL, SR.
Director since: 1989
Term to expire: 1999
Age: 72
Residence: Clarksville, Tennessee
Mr. Russell serves as President of Russell, Russell and Waddle, Inc. a firm
engaged in real estate development and contracting.
There are no family relationships between any director or executive officer of
the Company. There are no arrangements or understandings regarding the election
of any of the foregoing nominees as directors. All nominations for membership on
the Board of Directors originated with the Board of Directors.
DESCRIPTION OF THE BOARD AND COMMITTEES
During 1996, the Board met monthly and on a called basis for a total of 16
meetings. The Board has six standing committees: the Executive Committee, the
Audit Committee, the Incorporators Stock Option Plan Committee, the Employees
Stock Option Plan Committee, the Facilities Committee and the Human Resources
Committee. All except the Executive Committee meet on a called basis. The Board
has no separate Nominating Committee.
The Executive Committee consists of three permanent members - the Chairman of
the Board, the President/CEO, and the Executive Vice President. The remaining
directors serve on the Executive Committee on a rotational basis. The Executive
Committee oversees the Bank between Board meetings and met on a weekly basis in
1996 for a total of 47 meetings.
The Audit Committee consists of three non-employee directors - George Fleming,
Sr., Ruth Hutton and Lawson Mabry. The Committee acts on behalf of the Board to
ensure that the affairs and operations of the Company are subject to proper
audits and control procedures. The Committee communicates to the Board the
findings and reports of the independent auditors of
<PAGE> 12
the Company and assures that the auditors are free to exercise their function
independently of management. The Audit Committee met three times during 1996.
The Human Resources Committee consists of four non-employee directors - James
Thomas, Sr., Ruth Hutton, Jeff Bibb and David Farris. This Committee oversees
the personnel practices and procedures of the Company, employee benefit
programs, and acts with regard to salary administration. The Committee sets the
salaries of certain officers of the Company, and recommends to the Board the
salaries of officers of the Company who are also directors. The Human Resources
Committee met three times in 1996.
The Employee Stock Option Plan Committee consists of three non-employee
directors - Lawson Mabry, James Russell and George Fleming, Sr. The Employee
Stock Option Plan Committee met once during 1996. The Committee granted 10,050
options and 12,300 options were exercised during 1996.
The Incorporator Stock Option Plan Committee consists of directors Ruth Hutton,
Earl Bradley and John Halliburton who are not subject to receiving options under
this plan. The Incorporator Stock Option Plan Committee did not meet during
1996. There were 547 options exercised in accordance with the plan during the
year.
The Facilities Committee consists of directors Jeff Bibb, David Farris, Lawson
Mabry, James Russell and James Thomas, Sr. The Facilities Committee met six
times in 1996. The committee is responsible for planning future needs related to
facilities including the selection of locations, building requirements, and
space needs.
All board members were in attendance at 75% or more of the meetings.
COMPENSATION OF DIRECTORS
During 1996, the Chairman of the Board and Committee Chairmans received annual
retainers of $3,000 and $2,000, respectively. All other non-employee directors
receive an annual retainer of $1,800. All non-employee directors also received
$200 for attendance at each Board Meeting and $100 for attendance at each
Committee Meeting. Also, all non-employee directors received an incentive fee of
$1,800 based upon the Company achieving certain net income and asset growth
goals.
<PAGE> 13
CASH COMPENSATION
The following table sets forth information concerning cash compensation paid
during the year ended December 31, 1996, to officers of the Company whose salary
and bonus exceeded $100,000. See the Summary Compensation Table following the
Employee Stock Option Plan section for additional information.
<TABLE>
<CAPTION>
PRINCIPAL CAPACITIES CASH
NAME SERVED COMPENSATION
---- ------ ------------
<S> <C> <C>
Earl O. Bradley, III President, CEO & Director $140,901
John T. Halliburton Executive Vice President & Director $109,313
7 Executive Officers as a group, including those named above $605,163
</TABLE>
Non-cash compensation does not exceed 10% of cash compensation of any of the
persons referred to in the above table.
CERTAIN RELATIONSHIPS AND
RELATED PARTY TRANSACTIONS
Certain of the Bank's officers and directors are at present, as in the past,
customers of the Bank, and are directors or officers of corporations, or members
of partnerships, which are customers of the Bank. As such customers, they had
transactions in the ordinary course of business with the Bank, including
borrowings, all of which are on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than normal risk of
collectability or present any other unfavorable features.
James W. Russell, Sr. is President of Russell, Russell and Waddle, Inc. (RR&W).
During 1996, RR&W received $15,326 for remodeling certain offices of the Bank.
In addition, RR&W purchased foreclosed real estate in the amount of $5,000 from
the Bank during 1996.
Jeffrey V. Bibb is a partner in the firm of Bibb, Lott and Fryer
Marketing/Advertising. During 1996, the Bank paid $75,744 to the firm for
services rendered.
James G. Holleman is President of Conroy, Marable & Holleman Real Estate, Inc.
(CM&H). During 1996, the Bank leased office space from CM&H in the amount of
$15,000.
Earl Bradley, Lawson Mabry, John Halliburton, James Russell, James Holleman,
David Farris and George Fleming, Sr. are partners in Riverside Partners. During
1996, the Bank leased office space from Riverside Partners in the amount of
$18,813.
<PAGE> 14
DIRECTORS' UNFUNDED DEFERRED
COMPENSATION PLAN
In 1996, the Company adopted the Directors' Unfunded Deferred Compensation Plan
to provide incentive to the directors who have contributed to the success of the
Company, and which are expected to continue to contribute to such success in the
future. The plan is administrated by the Board, and acts through a majority of
its members. Non-employee directors are eligible to participate in the plan and
may elect to defer all or part of their director's compensation to the plan. The
plan purchases common stock of the company for the benefit of those directors
electing to participate in the plan. During 1996, directors elected to defer
$59,500 of compensation into the plan, and 1,871 shares of common stock was
purchased for the benefit of the participating directors in January of 1997.
EMPLOYEE STOCK OWNERSHIP PLAN
The Bank maintains an employee stock ownership plan (ESOP) for salaried
employees who have attained the age of 21 and have completed one year of
service. Contributions to the ESOP are at the discretion of the Board of
Directors and are predetermined annually based upon the Company achieving
certain operating results. The ESOP purchases common stock of the Company for
the benefit of eligible employees. The shares are held in trust for each
employee until retirement, death, or termination. Contributions are allocated to
each participant based upon their compensation in relation to the total
compensation of all eligible participants. Participants have no vesting to their
account until the completion of five years of service, upon which they become
100% vested. During 1996, $131,250 was allocated to the ESOP.
INCORPORATOR STOCK OPTION PLAN
An Incoporator Stock Option Plan (ISOP) was adopted at the 1989 organizational
shareholder meeting. The purpose of the ISOP was to advance the interests of the
Bank and its shareholders by rewarding the non-employee incorporators of the
Bank for their efforts during the organizational phase of the Bank's operations,
by providing such incorporators with the incentive for outstanding performance
inherent in stock options, and by increasing their proprietary interest in the
Bank through increased stock ownership.
Each eligible incorporator was granted options to purchase 5,000 shares of the
Company's common stock at $10.00 per share which represented the fair market
value of the stock at the grant date. The plan provided for a total of 35,000
options, all of which were granted, 33,985 options have been exercised, and
1,015 shares are currently exercisable.
<PAGE> 15
EMPLOYEE STOCK OPTION PLAN
The Company maintains an employee stock option plan to advance the interests of
the Bank and its shareholders by attracting and retaining in the employment of
the Company key professional and management employees, by providing such
employees with the incentive for outstanding performance inherent in stock
options, and by increasing their proprietary interest in the Company through
stock ownership.
The plan is administered, interpreted and applied by a committee consisting of
three (3) Board members, none of which are eligible to receive options. The
Committee is authorized to select key employees (including executive officers
and directors who are salaried employees) of the Company to whom options are to
be granted under the plan; to determine the number of shares subject to each
option; to fix the period or periods during which the option may be exercised
(not to exceed ten years); and to fix the prices at which shares subject to
options may be purchased. The plan provides for a total of 150,000 options,
which may be granted through May 24, 1999, (termination date of the plan). As of
December 31, 1996, 113,119 shares have been granted, 68,800 shares have been
exercised, and 18,200 shares are currently exercisable.
The right to exercise an option generally expires three (3) months after
employment is terminated. In the event of any change in the outstanding shares
of stock by reason of stock dividend, split or combination, recapitalization or
reclassification, or a reorganization, merger, etc., the number and class of
shares then subject to options shall be appropriately adjusted by the committee
to reflect such change.
The following table sets forth the compensation paid or accrued during the three
years ended December 31, 1996, 1995 and 1994 to the President/CEO, and any other
officer of the Company whose total annual salary and bonus exceeds $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION (1)
- ----------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
1996 125,000 28,748 15,901
Earl O. Bradley, III 1995 100,000 35,000 11,276
President, CEO & Director 1994 87,400 30,590 5,590
1996 106,250 24,437 3,063
John T. Halliburton 1995 85,000 30,000 2,726
Executive Vice President 1994 75,700 20,000 3,483
</TABLE>
(1) The aggregate amount of perquisites and other personal benefits not reported
above does not exceed 10% of the total annual salary and bonuses reported above
for such named executive
<PAGE> 16
officers. The value of the participant's vested interest in shares held in the
Company's Employee Stock Ownership Plan (ESOP) is based on an independent
valuation of shares held by the ESOP.
It is anticipated that Earl O. Bradley, III and John T. Halliburton will
continue to serve as President/CEO and Executive Vice President, respectively,
until the next Annual Meeting.
AGGREGATED OPTIONS EXERCISES
IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTIONS VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED (1)
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE AT FISCAL YEAR -END AT FISCAL YEAR-END
NAME EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C>
Earl O. Bradley, III 2,300 $50,600 2,700 /1,540 $ 59,400 /$10,780
John T. Halliburton 5,000 $110,000 5,000 /1,300 $110,000 /$ 9,100
</TABLE>
(1) Dollar values were calculated by determining the difference between the
price of the common stock on December 31, 1996 ($32.00 per share) and the
exercise price of such options.
During 1996, the Company granted 1,540 and 1,300 stock options to Mr. Bradley
and Mr. Halliburton, respectively. The Company did not grant any additional
restricted stock awards, stock appreciations rights or make any long-term
incentive pay-outs during 1994, 1995 or 1996 to either Mr. Bradley or Mr.
Halliburton.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Heathcott and Mullaly, Certified Public Accountants, has been the Company's
independent auditors since 1991 and reported on the Company's consolidated
financial statements for the year end December 31, 1996. Heathcott and Mullaly
is a member of the SEC Practice Section of the American Institute of Certified
Public Accountants division for CPA firms. A representative of Heathcott and
Mullaly is not expected to attend the Annual Meeting.
SHAREHOLDER PROPOSALS
In order for appropriate proposals by shareholders to be included in the 1998
proxy materials and to be considered for the 1997 Annual Meeting, all such
proposals intended for presentation at the 1997 Annual Meeting must be mailed
to Earl O. Bradley, III, President and CEO, Heritage Financial Services, Inc.,
25 Jefferson Street, Clarksville, Tennessee 37040, and must be received no
later than November 18, 1997.
ANNUAL REPORT ON FORM 10-KSB
TO OBTAIN A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-KSB AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (AVAILABLE WITHOUT CHARGE TO
SHAREHOLDERS), PLEASE WRITE EARL O. BRADLEY, III, PRESIDENT AND CEO, HERITAGE
FINANCIAL SERVICES, INC., 25 JEFFERSON STREET, CLARKSVILLE, TENNESSEE 37040.
<PAGE> 17
APPENDIX A
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
APRIL 15, 1997 AT 1:00 P.M.
HERITAGE FINANCIAL SERVICES, INC.
25 JEFFERSON STREET
CLARKSVILLE, TN 37040
The undersigned, having received the notice of the Annual meeting of
Shareholders dated April 15, 1997, hereby appoints David Smithfield and Judge
Sam Boaz, either of whom may act as proxies, with full power of substitution,
proxy and attorneys-in-fact of the undersigned to vote all the shares of common
stock of Heritage Financial Services, Inc. which the undersigned would be
entitled to vote at the Annual Meeting of Shareholders to be held at 141
Jefferson Street, Clarksville, Tennessee (the Annex) on April 15, 1997, at 1:00
p.m. and any adjournments thereof, and the undersigned instructs said proxies
to vote upon the following matters:
1. To elect to the Board of Directors of the Company, six (6) directors listed
in the Proxy Statement.
FOR ALL NOMINEES LISTED BELOW
- ---- (Except as marked to the contrary below)
WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW
- ----
INSTRUCTION: To withhold authority for any individual nominee, strike a line
through the nominee's name in the list below.
William Beach David Farris George R. Fleming, Sr.
John T. Halliburton Ruth Hutton Ted McCurdy
2. The ratification of Heathcott and Mullaly as the independent accountants
and auditors for the Company.
FOR AGAINST ABSTAIN
---- ----- -----
3. All such matters as may properly come before the meeting or any adjournment
thereof.
Any proxy heretofore given for said meeting is hereby revoked.
IF NO INSTRUCTIONS ARE GIVEN ABOVE, THE UNDERSIGNED SHAREHOLDER HEREBY
AUTHORIZE THE PROXIES NAMED HEREIN TO VOTE "FOR" PROPOSALS 1,2&3.
- --------------------- ------------- --------------------- -------------
Signature Date Signature Date
(See special instructions below)
Please date and sign the above exactly as your name
or names appear on the Stock Certificates. If shares
are held by two or more persons, all must sign. When
signing as attorney-in-fact, executor, administrator,
trustee, guardian or other person acting in a representative
or fiduciary capacity, please give full title as such. If the
signor is signing for a corporation, please sign in full the
corporate name by a duly authorized officer with full title.
