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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
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
COMMERCIAL NATIONAL FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
COMMERCIAL NATIONAL FINANCIAL CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 23, 1996
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The annual meeting of shareholders of Commercial National Financial
Corporation will be held at the Ithaca Community Center, 120 North Maple
Street, Ithaca, Michigan 48847, on Tuesday, April 23, 1996, at 4:00 p.m. to
consider and vote upon:
1. Election of Directors.
2. One shareholder proposal as set forth in the attached proxy
statement.
3. To transact any other business that may come before the meeting.
Shareholders of record at the close of business on March 8, 1996, are
entitled to notice of and to vote at the meeting or any adjournment of the
meeting.
By Order of the Board of Directors,
Dean E. Milligan
President and Chief Executive Officer
March 22, 1996
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It is important that your shares be represented at the
meeting. Even if you expect to attend the meeting,
PLEASE SIGN AND RETURN YOUR PROXY PROMPTLY.
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
COMMERCIAL NATIONAL FINANCIAL CORPORATION
P.O. Box 280
101 North Pine River Street
Ithaca, Michigan 48847
This proxy statement is being furnished to holders of common stock, $1 par
value ("Common Stock"), of Commercial National Financial Corporation (the
"Corporation") in connection with the solicitation of proxies by the
Corporation's board of directors for use at the annual meeting of shareholders
to be held on April 23, 1996, and at any adjournment of that meeting. The
annual meeting will be held at the Ithaca Community Center, 120 North Maple
Street, Ithaca, Michigan 48847, at 4:00 p.m. for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. This proxy statement
and form of proxy are first being sent to shareholders on or about March 22,
1996.
If a proxy in the form distributed by the Corporation is properly executed
and returned to the Corporation, the shares represented by that proxy will be
voted at the annual meeting of shareholders and at any adjournment of that
meeting. Where a shareholder specified a choice, the proxy will be voted as
specified. If no choice is specified, the shares represented by the proxy will
be voted for the election of all nominees to the board of directors and against
the shareholder proposal. Management does not know of any other matters to be
presented at the annual meeting. If other matters are presented, all proxies
will be voted in accordance with the judgment of the persons named as proxies,
who will consider management's recommendations.
A proxy may be revoked at any time prior to its exercise by written notice
delivered to the President of the Corporation, by a subsequent dated proxy, or
by voting the shares represented by the proxy at the annual meeting.
Solicitation of proxies will be made initially by mail. Officers,
directors and employees of the Corporation and its wholly owned subsidiary,
Commercial Bank (the "Bank"), may also solicit proxies in person or by
telephone without additional compensation. In addition, proxies may be
solicited by nominees and other fiduciaries, who may mail material to or
otherwise communicate with the beneficial owners of shares held by them. All
expenses of solicitation of proxies will be paid by the Bank.
With the exception of the election of directors which requires a plurality
of the votes cast, or as otherwise noted, the affirmative vote of the holders
of a majority of the voting power of the common stock represented at the
meeting is required for approval of the proposal presented in this Proxy
Statement. With respect to abstentions, the shares are considered present at
the meeting for the proposal, but since they are not affirmative votes for the
proposal, they will have the same effect as votes against the proposal. With
respect to broker non-votes, the shares are not considered present at the
meeting for the proposal for which the broker withheld authority.
ITEM NO. 1
ELECTION OF DIRECTORS
The board of directors of the Corporation has nominated the following 11
persons for election to the board of directors at the annual meeting:
Richard F. Abbott Kenneth R. Luneack Russell M. Simmet
Jefferson P. Arnold Dean E. Milligan Joseph B. Simon
Don J. Dewey Kim C. Newson Scott E. Sheldon
David A. Ferguson Howard D. Poindexter
Directors are to be elected at the annual meeting of shareholders to serve
until the next following annual meeting of shareholders. The proposed nominees
are willing to be elected and to serve. In the event that any nominee is
unable to serve or is otherwise unavailable for election, which is not now
contemplated, the incumbent Corporation board of directors may or may not
select a substitute nominee. If a substitute nominee is selected, all proxies
will be voted for the person so selected. If a substitute
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nominee is not so selected, all proxies will be voted for the election of the
remaining nominees. Proxies will not be voted for a greater number of persons
than the number of nominees named.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES AS
DIRECTORS
VOTING SECURITIES
Holders of record of Common Stock, at the close of business on March 8,
1996, will be entitled to vote at the annual meeting of shareholders on April
23, 1996, and any adjournment of that meeting. As of March 8, 1996, there were
818,800 shares of Common Stock issued and outstanding. Each share of Common
Stock entitles its holder to one vote upon each matter to be voted upon at the
meeting.
The following table shows certain information concerning the number of
shares of Common Stock held as of December 31, 1995, by the only shareholder
who is known to management to have been the beneficial owner of more than 5% of
the outstanding shares as of that date:
Amount and Nature of
Beneficial Ownership (1)
-------------------------
Shared Voting Total
Name and Address of or Investment Beneficial Percent
Beneficial Owner Power (2) Ownership of Class
-------------------- ------------- ---------- ---------
Robert M. Sheldon 46,156 46,156 5.64%
1055 Riverview
Alma, Michigan 48801
The following table sets forth information concerning the number of shares
of Common Stock held as of December 31, 1995, by each of the Corporation's
directors and nominees, the named executive officers of the Corporation, and by
all directors and executive officers of the Corporation as a group:
Amount and Nature of
Beneficial Ownership (1)
---------------------------
Sole Voting Shared Voting Total
and Investment or Investment Stock Beneficial Percent
Power Power(2) Options(3) Ownership of Class
-------------- -------------- ---------- ---------- --------
Richard F. Abbott 0 18,177(4) 2,698 20,875 2.55%
Jefferson P. Arnold 8,996 15,931(4) 210 25,137 3.07%
Don J. Dewey 857 1,471 727 3,055 .37%
David A. Ferguson 4,020 802(4) 697 5,519 .67%
Kenneth R. Luneack 32,738 1,532(4) 678 34,948 4.27%
Dean E. Milligan 5,701 0 (4) 3,538 9,239 1.13%
Kim C. Newson 1,812 1,066 688 3,566 .44%
Howard D. Poindexter 13,872 13,551(4) 0 27,423 3.35%
Scott E. Sheldon 5,887 0 (4) 717 6,604 .81%
Russell M. Simmet 0 14,398 0 14,398 1.76%
Joseph B. Simon 0 5,733 671 6,404 .78%
All directors and
executive officers
as a group 73,883 72,661 10,624 157,168 19.19%
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(1) The number of shares stated is based on information furnished by the
officers and directors and includes shares personally owned of record by
each person and shares which under applicable regulations are deemed to be
otherwise beneficially owned by each person. Under these regulations, a
beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship
or otherwise has or shares voting power or investment power with respect
to the security. Voting power includes the power to vote or to direct the
voting of the security. Investment power includes the power to dispose or
to direct the disposition of the security. A person is also considered to
be the beneficial owner of a security if the person has a right to acquire
beneficial ownership of the security within sixty days.
(2) These numbers include shares as to which the indicated person is legally
entitled to share voting or investment power by reason of joint ownership,
trust or other contract or property right, and shares held by a family
member over whom the indicated person may have substantial influence by
reason of relationship.
(3) These numbers include vested stock options, granted under the
Corporation's 1989 and 1991 Stock Option Plans, which entitle the holder
to acquire beneficial ownership of such shares within sixty days.
(4) The Commercial National Bank Employees Retirement and Savings Investment
Plan holds 35,237 shares. The indicated individual is a member of the
Commercial Bank Human Resources Committee, which has the power to vote
those shares. Each member of the Human Resources Committee disclaims
beneficial ownership of those shares that are not allocated to the
member's individual account under the Plan. The shares held by the
Commercial National Bank Employees Retirement and Savings Investment Plan
other than those allocated to an individual committee member's account are
not included in the shares reported as beneficially owned by individual
committee members. However, because of shared voting power, they are
reported as beneficially owned by all directors and officers as a group.
DIRECTORS AND EXECUTIVE OFFICERS
Biographical information concerning executive officers and directors who
are nominated for election to the board of directors at the annual meeting is
presented below. Except as otherwise indicated, all directors and executive
officers have had the same principal employment for over 5 years and have held
their positions with the Corporation since January, 1991. All eleven nominees
are incumbent directors. All nominees were last elected to the Corporation's
board of directors at the last annual meeting of shareholders that was held on
April 25, 1995.
Richard F. Abbott (age 61) is executive vice president of the
Corporation and the Bank. He has been a director of the
Corporation and the Bank since 1989. He had been interim
president and chief executive officer of the Bank from September
15, 1993, until March 16, 1994, and of the Corporation from
September 15, 1993 until May 18, 1994. From May, 1990 to
September 15, 1993, Mr. Abbott served as executive vice president
of the Bank and of the Corporation. Mr. Abbott has been an
officer of the Bank since 1982.
Jefferson P. Arnold (age 56) has been a director of the Corporation
since May 18, 1994. Mr. Arnold is an attorney at law and has practiced
law with the Arnold Law Offices for 28 years.
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Don J. Dewey (age 58) has been a director of the Corporation since
1988 and a director of the Bank since 1987. He is a funeral
director and the owner and president of Dewey Funeral Homes, Inc.
David A. Ferguson (age 46) has been a director of the Corporation
since 1988 and a director of the Bank since 1985. He is vice
president of Ashcraft's Market, Inc., a retail grocery store.
Kenneth R. Luneack (age 64) has been a director of the Corporation
and of the Bank since May, 1991. He is owner and operator of Ken
Luneack Construction, Inc., a building materials manufacturer.
Dean E. Milligan (age 52) is president and chief executive officer
of the Corporation and the Bank. He has been a director of the
Corporation and the Bank since May 18, 1994. He has been
president and chief executive officer of the Bank since March 16,
1994, and of the Corporation since May 18, 1994. Prior to joining
the Corporation he was CEO and President of Old First National
Bank in Bluffton, Indiana, from January 1986 to March 1994.
Kim C. Newson (age 45) has been director of the Corporation since
1988 and a director of the Bank since 1987. He is president of
Alma Hardware Company and general manager of Alma True Value
Hardware, both of which are in the retail hardware business.
Howard D. Poindexter (age 60) has been chairman of the board of
the Corporation since February of 1993. He has been a director of
the Corporation since 1988 and a director of the Bank since 1973.
He is manager of Poindexter Farms, an independent farming
business. From 1954 until his retirement in 1992, he was a soil
conservationist for the U.S. Department of Agriculture.
Scott E. Sheldon (age 40) has been a director of the Corporation
since 1988 and a director of the Bank since 1985. He is the owner
of Kernen-Sheldon Agency and Shepherd Insurance Agency, both of
which are insurance agencies.
Russell M. Simmet (age 61) has been a director of the Corporation
since 1988 and a director of the Bank since 1976. He is the owner
of Simmet Insurance Agency, an insurance agency.
Joseph B. Simon (age 67) has been a director of the Corporation
since 1988 and a director of the Bank since 1987. He is chairman
of Alma Iron & Metal Company, Inc., a scrap metal processor.
Dean E. Milligan and Richard F. Abbott are the executive officers of the
Corporation. Biographical information for these gentlemen is presented above.
The Corporation's executive officers serve in those capacities without
receiving specific compensation for their services from the Corporation. All
of the Corporation's executive officers continue to serve as executive
officers of the Bank. All officers serve at the pleasure of the boards of
directors of the Corporation and the Bank respectively.
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The Corporation's board has two standing committees, the human resources
committee and the audit committee. The human resources committee includes
Messrs. Ferguson, Arnold, Abbott, Luneack, Milligan, Poindexter and Sheldon.
The human resources committee makes compensation recommendations. The human
resources committee met four times in 1995. A sub-committee of the human
resources committee consisting of Messrs. Ferguson, Luneack, and Poindexter
administers the 1989 and 1991 Stock Option Plans.
The audit committee recommends to the board the employment of independent
certified public accountants to examine the financial statements of the
Corporation and its subsidiary, makes such additional examinations as the
committee deems advisable, reviews reports of examination of the Corporation
and its subsidiary received from regulatory authorities, reports to the board
at least once each calendar year on the results of examinations made and offers
such conclusions and recommendations as the committee deems appropriate.
Messrs. Dewey, Newson, Simmet, Poindexter, and Simon serve on the audit
committee. The audit committee met seven times during 1995.
The Corporation's entire board of directors performs the functions of
nominating and compensation committees.
The Corporation's board of directors will consider the nomination of
candidates for election as directors of the Corporation at any meeting of
shareholders called for the purpose of electing directors submitted by any
shareholder entitled to vote at that meeting. Any shareholder desiring to
nominate a candidate for director must deliver a notice to the Secretary of the
Corporation, not less than 14 nor more than 50 days prior to the meeting,
setting forth: the name, age, business address and residence address of the
nominee; the principal occupation or employment of the nominee; the number of
shares of Common Stock beneficially owned by the nominee; the total number of
shares of Common Stock that will be voted for each nominee; the name, business
address and residence address of the nominating shareholder; the number of
shares of Common Stock owned by the nominating shareholder; a statement that
the nominee is willing to be nominated; and such other information regarding
the nominee as would be required under the rules of the Securities and Exchange
Commission to be included in proxy statement soliciting proxies for the
election of the nominee.
The board of directors of the Corporation held eleven meetings during
1995. All incumbent directors attended at least 75% of the aggregate number of
meetings of the board of directors and meetings of committees on which they
served while they served in such capacities.
Officers, directors, and persons who own more than ten percent of a
registered class of the Corporation's equity securities are required to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. SEC regulations require such reporting persons to furnish the
Corporation with copies of all such forms they file. Based on its review of
the copies of such forms received by it, or written representations from
certain reporting persons that no such reports were required for those persons,
the Corporation believes that, from January 1, 1995, through December 31, 1995,
its officers and directors complied with all such reporting requirements.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows certain information concerning the compensation
of the named executive officers of the Corporation and the Bank for the three
years ended December 31, 1995. For the same period, the annual salary and
bonus of no other executive officer of the Corporation or Bank exceeded
$100,000.
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SUMMARY COMPENSATION TABLE
Long Term
Compensation
Awards
------------
Securities
Underlying
Annual Compensation(1) Options
----------------------------------- (No. of All Other
Year Salary Bonus Shares) Compensation(2)
---- ------ ----- ------- ---------------
Dean E. Milligan* 1995 $111,878 $30,810 3,381 $10,515
President 1994 $ 86,325 $24,375 3,150 $ 814
and Chief Executive
Officer of the
Corporation and
Bank
Richard F. Abbott 1995 $ 82,250 $18,000 1,848 $9,407
Executive Vice President 1994 $ 80,354 $24,000 277 $9,144
of the Corporation and Bank 1993 $ 77,249 $24,000 1,812 $7,703
*Not a named executive officer prior to 1994.
(1) Includes compensation deferred under the Commercial National Bank
Employees Retirement and Savings Investment Plan and directors' fees.
(2) All other compensation for Mr. Milligan represents $9,028 for the
Corporation matching and base contributions under the Commercial Bank
Employees Retirement and Savings Plan and the amount paid by the
Corporation for his life insurance ($1,487 for 1995 and $814 for 1994).
All other compensation for Mr. Abbott includes Corporation matching and
base contributions under the Commercial Bank Employees Retirement and
Savings Plan ($7,076 for 1995, $6,813 for 1994 and $6,303 for 1993) and
the amount paid by the Corporation for his life insurance ($2,331 for
1995, $2,331 for 1994 and $1,400 for 1993).
It is the Corporation's practice to award stock options annually to key
policy making members of management. Stock options have been an important
component of the Corporation's executive compensation program for several
years. Stock options are believed to help align the interests of senior
management with the interests of shareholders by promoting stock ownership by
senior executive officers and by rewarding them for appreciation in the price
of the Corporation's Common Stock. Stock options which were granted,
exercised, or outstanding during 1995 were granted under either the 1989 Stock
Option Plan or the 1991 Stock Option Plan. Both Stock Option Plans have been
approved by the Corporation's shareholders.
The Corporation's 1989 and 1991 Stock Option Plans provide that stock
options, stock appreciation rights, and tax benefit rights may be issued to
directors, officers, and key employees. Stock options entitle a participant to
buy shares of Common Stock of the Corporation during a specified time period at
a specified price. Subject to restrictions imposed by the Plans, the stock
option committee in its discretion determines who will be granted options, how
many shares will be subject to options, and the form of consideration that may
be paid upon exercise of an option. As of December 31, 1995, a
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maximum of 27,034 authorized shares are subject to the exercise of options
under the plans. As of December 31, 1995, no stock appreciation rights had
been granted under either plan. By its terms, the 1989 Stock Option Plan will
terminate on April 26, 1999. The 1991 Stock Option Plan will terminate by its
terms on April 22, 2001.
The following tables set forth information concerning stock options
granted to and exercised or retained by the named executive officers of the
Corporation and Bank during 1995. In 1995, the Corporation granted options
only under the 1991 Stock Option Plan. As indicated in the following table,
some options awarded in 1995 are exercisable for two years while the remaining
options are exercisable for five years.
OPTION GRANTS IN LAST FISCAL YEAR(1)
Percent of Potential Realizable Value
No. of Total at Assumed Annual Rates
Securities Options of Stock Price
Underlying Granted To Appreciation for
Options Employees Exercise Option Term
Granted In Fiscal Price Expiration --------------------------
(#) Year ($/Shr) Date 0% 5% 10%
----------- ---------- -------- --------------- ----- ------- --------
Dean E. Milligan 3,381 30.6% $23.80 3,150 @ 9/30/00 0 $19,560 $43,029
231 @ 6/01/97 $ 418 $ 852
Richard F. Abbott 1,848 16.7% $23.80 273 @ 6/01/97 0 $ 494 $ 3,967
1,575 @ 9/30/00 $21,515 $22,885
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
Value of
Number Unexercised
Unexercised In-the-Money
Options at Options at
Year End Year End
Number of ------------- --------------
Shares Acquired Value Exercisable/ Exercisable/
on Exercise Realized Unexercisable Unexercisable
--------------- -------- ------------- --------------
Dean E. Milligan 0 0 3,538 / 3,150 $78,707 / $ 74,970
Richard F. Abbott 1,082 $11,632 2,698 / 5,228 $48,615 / $104,077
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(1) The per share exercise price of each option is equal to the market value
of the Common Stock on the date each option was granted. The option
information has been adjusted to reflect the 5% stock dividend in
November, 1995. All outstanding options were granted for a term of ten or
fewer years. Options terminate, subject to certain limited exercise
provisions, in the event of death, retirement, or other termination of
employment. In the event of a change in control of the Corporation, a
participant may exercise tax benefit rights granted in tandem with the
options.
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Such tax benefit rights would entitle an optionee to cash payments at the
time of exercise to partially reimburse the optionee for tax liability.
COMPENSATION OF DIRECTORS
The board of directors of the Bank holds regular monthly meetings. The
Bank compensates its directors at the rate of $550 per month. The Chairman of
the board is paid $1,100 per month. Directors of the Bank who are not
executive officers are paid $100 for each committee meeting attended. The
Corporation's board of directors meetings customarily coincide with Bank board
of directors meetings. No separate cash compensation is paid to directors for
Corporation board of directors meetings.
The directors of the Corporation and Bank may receive stock options under
the Corporation's 1991 Stock Option Plan. The number of shares of Common Stock
covered by each option equals the number of shares the director could purchase
if he had purchased shares with the directors fees that the director earned
during the year. The options awarded to the directors are exercisable after
six months from the date of grant and expire two years from the date of grant.
EMPLOYMENT, TERMINATION OF EMPLOYMENT, AND CHANGE IN CONTROL AGREEMENT
The Corporation and the Bank entered into an agreement with Mr. Abbott,
which provides for severance benefits if his employment is terminated for any
reason by any party within two years after a change in control of the
Corporation or Bank. Severance benefits are also payable if Mr. Abbott
terminates employment after receiving notice that the Corporation or Bank
wishes to end the agreement or if the Corporation or Bank terminates his
employment other than for cause. Severance benefits will not be payable if Mr.
Abbott terminates employment on a discretionary basis before he receives notice
of termination of the agreement or if his employment ends due to his death.
The agreement essentially provides for a severance benefit of twelve months
continuation of salary, pro rata bonus, coordinated health, dental, life and
disability insurance coverage.
CERTAIN RELATIONSHIPS
Directors and officers of the Corporation and members of their immediate
families and businesses controlled by them were customers of and had certain
transactions with the Bank in the ordinary course of business since January 1,
1995. It is anticipated that such transactions will take place in the future
in the ordinary course of business. All loans and commitments included in such
transactions were made on substantially the same terms, including interest
rates, fees, and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than normal risk of
collectibility or present any unfavorable features.
David A. Ferguson, a director of the Corporation, is Vice President of
Ashcraft's Market, Inc. Mr. Ferguson is also related by marriage to the owners
of Ashcraft's Market, Inc. During 1995, Ashcraft's entered into two lease
agreements with the Corporation with respect to the Corporation's Alma
Ashcraft's Supermarket Branch and the Midland Ashcraft's Supermarket Branch.
The lease payments payable under these leases are comparable to payments that
would have been paid to non-affiliated persons for similar facilities.
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ITEM NO. 2
SHAREHOLDER PROPOSAL
Tracy J. Tucker and Marsha S. Tucker, 2704 Ramblewood, Kalamazoo, Michigan
49009, owners of 18,383 shares of the Corporation's common stock, have given
notice that they intend to present for action at the annual meeting the
following resolution:
RESOLVED, that the shareholders request that the Board of Directors
conduct or cause to be conducted a written survey of shareholders of Commercial
National Financial Corporation ("Commercial National") to determine if the
shareholders would favor or oppose a sale or merger of Commercial National in a
transaction where all Commercial National shareholders are offered stock issued
by the acquiring corporation or other consideration valued at not less than
$35.00 for each share of Commercial National stock, and for the Board of
Directors to make the results of the survey available to Commercial National
shareholders upon request. It is recommended that the Board of Directors
survey all record owners of Commercial National stock and survey all beneficial
owners of Commercial National stock whose names are known or readily available
to Commercial National and that the survey be completed as soon as reasonably
practicable.
The following statement was submitted in support of such resolution:
The commercial banking industry continues to reflect increased
consolidation through acquisitions, mergers and other combinations of banks and
bank holding companies. Banks and bank holding companies of similar size to
Commercial National must consider whether to try to remain independent or to
pursue possible transactions that could benefit the company and its
shareholders. Determinations by the Board of Directors with respect to any
merger, sale or other disposition of Commercial National should be made with
due consideration for the view of all shareholders. We believe that the
proposed survey of Commercial National shareholders will provide an effective
means of communicating the views of shareholders independent of management as
to whether such shareholders would favor selling or exchanging their shares of
Commercial National stock in a transaction where all Commercial National
shareholders are offered stock or other consideration valued not less than
$35.00 for each share of Commercial National stock. We believe the proposed
survey will benefit Commercial National by providing the directors with
important information that will enhance the board's ability to assess any
merger or acquisition opportunities or offers and to better represent the
interests of all Commercial National shareholders.
The survey would have no binding effect with respect to the actions or
determinations of either the Board of Directors or management of Commercial
National and the survey does not, to our knowledge, reflect any actual
transaction or offer under consideration. Rather, the survey is intended to
serve as a productive forum for shareholders, as owners of Commercial National,
to communicate with the Board of Directors concerning potential merger or
acquisition opportunities or offers and a per share price at which shareholders
may favor such a transaction.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS
SHAREHOLDER PROPOSAL (THE "TUCKER PROPOSAL") FOR THE FOLLOWING REASONS:
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The Board of Directors places a high value on direct shareholder input and
believes the survey proposal has some merit. Even so, the Board opposes the
Tucker Proposal because of its narrow scope of inquiry, and because its
reference to a particular per share value may have the undesired effect of
limiting business options available to the Board and shareholders.
The Board also believes that the proposed survey may confuse certain
shareholders, and fails to provide sufficient information to allow shareholders
to properly respond. Thus, in its proposed single issue format, the survey is
unlikely to provide the Board with meaningful and usable results.
A well designed and comprehensive survey will be more beneficial and
cost-effective to the Corporation. The Board intends to review different
possibilities of conducting a more detailed shareholder survey covering a wide
range of issues relating to the Corporation, the Bank and its operations in
1996.
THEREFORE, THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE TUCKER
PROPOSAL, ITEM NO. 2. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS SHAREHOLDERS SPECIFY A DIFFERENT CHOICE.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed BDO Seidman, LLP as auditors for the
Corporation for the year ending December 31, 1995. At a meeting held on
December 13, 1995, the Board of Directors of the Corporation approved the
engagement of Crowe Chizek as its independent auditors for the fiscal year
ending December 31, 1996 to replace the firm of BDO Seidman, LLP. The audit
committee of the Board of Directors approved the change in auditors on December
13, 1995.
In connection with the audits of the Corporation's financial statements
for the past two fiscal years ended December 31, 1993 and 1994, and up to
December 13, 1995 there were no disagreements with BDO Seidman, LLP on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope and procedures which, if not resolved to the satisfaction of
BDO Seidman, LLP, would have caused BDO Seidman, LLP to make reference to the
matter in their report.
A representative of BDO Seidman, LLP is expected to be present at the
annual meeting of shareholders to respond to appropriate questions from
shareholders and to make any comments they believe appropriate.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the annual meeting
scheduled to be held April 22, 1997, must be received by the Corporation for
inclusion in its proxy statement and form of proxy relating to that meeting by
November 22, 1996. Proposals of shareholders should be made in accordance with
Securities and Exchange Commission Rule 14a-8.
OTHER MATTERS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and certain officers and persons who own more than ten
percent of the Corporation's common stock, to file with the SEC initial reports
of ownership and reports of changes in ownership of the Corporation's
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common stock. These officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Corporation with
copies of these reports.
To the Corporation's knowledge, based solely on review of the copies of
such reports furnished to the Corporation, during the fiscal year ended
December 31, 1995 all Section 16(a) filing requirements were satisfied, with
respect to the applicable officers, directors and greater than ten percent
beneficial owners.
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PROXY COMMERCIAL NATIONAL FINANCIAL CORPORATION PROXY
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1996
The undersigned acknowledges receipt of notice of and a proxy statement
for the annual meeting of shareholders of Commercial National Financial
Corporation to be held on April 23, 1996, and hereby appoints Edward Hooper and
Richard S. Prestage, and each of them, proxies of the undersigned, each with
full power of substitution, to vote all shares of the undersigned in Commercial
National Financial Corporation at the annual meeting of its shareholders to be
held on April 23, 1996, and at any adjournment thereof, with all powers which
the undersigned would have if personally present. The undersigned hereby
instructs Commercial National Financial Corporation to vote any and all shares
held for the account of the undersigned under the Commercial National Financial
Corporation Dividend Reinvestment Plan in accordance with the specifications,
if any, made in this proxy.
1. Election of Directors:
[ ] VOTE FOR all nominees (except as [ ] WITHHOLD AUTHORITY to vote
marked to the contrary). for all nominees listed
below.
Richard F. Abbott, Jefferson P. Arnold, Don J. Dewey, David A. Ferguson,
Kenneth R. Luneack, Dean E. Milligan, Kim C. Newson, Howard D. Poindexter,
Scott E. Sheldon, Russell M. Simmet, and Joseph B. Simon.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name in the space below.)
2. Shareholder Proposal on sale survey.
[ ] VOTE FOR Shareholder [ ] VOTE AGAINST Shareholder [ ] ABSTAIN
Proposal Proposal
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE SHAREHOLDER PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COMMERCIAL NATIONAL FINANCIAL CORPORATION. IF THIS PROXY IS PROPERLY EXECUTED
AND DELIVERED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED.
IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED "FOR" ELECTION OF ALL
NOMINEES NAMED ON THIS PROXY AND "AGAINST" THE SHAREHOLDER PROPOSAL. THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXIES
ON ANY OTHER MATTERS WHICH MAY COME BEFORE THE MEETING.
Number of Shares: Dated: , 1996
--------------------- ------------------
X
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Signature
X
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Signature, if held jointly
Please sign exactly as your
name(s) appear(s). Joint owners
should each sign personally.
Executors, administrators, trustees
and persons signing for corporations
or partnerships should give their
title as such. If a corporation,
please sign in full corporate name by
president or authorized officer. If
partnership, please sign in
partnership name by properly
authorized person.
PLEASE SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE TO:
COMMERCIAL NATIONAL FINANCIAL CORPORATION
P.O. BOX 280
101 NORTH PINE RIVER STREET
ITHACA, MICHIGAN 48847