COMMERCIAL BANCSHARES INC \OH\, PRE 14A, 1997-03-11

COMMERCIAL BANCSHARES INC \OH\
PRE 14A, 1997-03-11
STATE COMMERCIAL BANKS

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SCHEDULE 14A
(RULE 14a)
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:

<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>

COMMERCIAL BANCSHARES, 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)(4) 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

COMMERCIAL BANCSHARES, INC.
118 SOUTH SANDUSKY AVENUE
UPPER SANDUSKY, OHIO 43351

PROXY STATEMENT
Dated March 13, 1997
For Annual Meeting of Shareholders
to be Held Wednesday, April 9, 1997

This Proxy Statement is furnished by the Board of Directors and management
of Commercial Bancshares, Inc. (the "Corporation") in connection with the
solicitation of proxies to be voted at the Corporation's 1997 Annual Meeting of
Shareholders (the "Meeting"), which will be held at 4:30 p.m. on Wednesday,
April 9, 1997 at the main office of The Commercial Savings Bank (the "Bank"),
located at 118 South Sandusky Avenue, Upper Sandusky, Ohio, 43351.

Any proxy delivered pursuant to this solicitation may be revoked, at the
option of the person executing the proxy, at any time before it is exercised by
delivering a signed revocation to the Corporation, by submitting a later-dated
proxy, or by attending the Meeting in person and casting a ballot. If proxies
are signed and returned without voting instructions, the shares represented by
the proxies will be voted as recommended by the Board of Directors.

The cost of soliciting proxies will be borne by the Corporation. In
addition to the use of the mails, proxies may be solicited personally or by
telephone by regular employees of the Corporation. The Corporation does not
expect to pay any compensation for the solicitation of proxies, but may
reimburse brokers and other persons holding stock in their names, or in the
names of nominees, for their expense in sending proxy materials to their
principals and obtaining their proxies. The approximate date on which this
Proxy Statement and enclosed form of proxy has been first mailed to
shareholders is March 13, 1997.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The close of business on March 3, 1997 has been designated as the record
date for the determination of shareholders entitled to receive notice of and to
vote at the Meeting. As of that date, 347,152 shares of the Corporations's
Common Stock, par value $12.50 per share, were issued and outstanding. Each
shareholder will be entitled to one vote for each share of Common Stock
registered in his or her name on the books of the Corporation at the close of
business on March 3, 1997 on all matters that come before the Meeting.

To the knowledge of the Corporation's management (the "Management"), the
following is a schedule of shareholders of the Corporation owning beneficially,
directly or indirectly, five percent (5%) or more of the Corporation's Common
Stock as of January 31, 1997:

<PAGE> 3

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF TITLE OF BENEFICIAL OWNERSHIP
BENEFICIAL OWNER CLASS OF COMMON STOCK PERCENT OF CLASS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Myers Properties Limited
Partnership Common Stock
605 Los Corales Circle $12.50 Par Value 20,572 (1) 5.9%
Green Valley, AZ 85614
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The general partners of Myers Properties Limited Partnership are Barbara K.
Emerson, 30062 Morningside Drive, Perrysburg, Ohio 43551 and Marsha S.
McClain, 872 Arrowhead Drive, Bucyrus, Ohio 44820. Barbara K. Emerson is
the spouse of Edwin G. Emerson, a director of the Corporation.

ELECTION OF DIRECTORS

The Corporation's Articles of Incorporation provide for a classified Board
of Directors. The Code of Regulations of the Corporation provides that the
Board of Directors shall consist of not less than nine (9) nor more than
fifteen (15) members who must be shareholders of the Corporation, with the
number of Directors within such range fixed or changed by the shareholders at a
meeting for the election of Directors. The number of Directors has previously
been fixed at twelve (12), and no change in such number is proposed this year.

The Board of Directors proposes the election of four directors at the 1997
Annual Meeting of Shareholders to serve as Class III Directors. The nominees
for Class III Directors, if elected, will each serve a three-year term expiring
at the 2000 Annual Meeting of Shareholders and until their successors are duly
elected and qualified.

Shareholders may vote for up to four (4) nominees, and, if a quorum is
present, the four nominees receiving the highest number of votes shall be
elected as Directors. The Shareholders present in person or by proxy shall
constitute a quorum. Shareholders may not vote cumulatively in the election of
Directors. Votes withheld in respect to the election of Directors will not be
counted in determining the election of Directors. At the Meeting, the results
of shareholder voting will be tabulated by the inspector(s) of elections
appointed for the Meeting. Under Ohio law and the Corporations's Articles of
Incorporation and Code of Regulations, properly executed proxies that are
marked "abstain" or held in "street name" by brokers and are not voted on one
or more particular items (if otherwise voted on at least one item) will be
counted for purposes of determining whether a quorum has been achieved at the
Meeting.

James A. Deer, Raymond E. Graves, Hazel Franks, and Richard Sheaffer are
currently Class III Directors of the Corporation and are being nominated by the
Board of Directors for reelection as Class III Directors.

<PAGE> 4

The following tables set forth the slate of four (4) nominees proposed for
election as Class III Directors and each continuing Director of the Corporation
together with their respective ages, occupations, and amount and nature of
beneficial ownership of shares of Common Stock as of January 31, 1997. Proxies
received in response to this solicitation will be voted, unless authority is
withheld, in favor of the election of the four nominees. Each nominee
contributes to the breadth of business experience represented on the Board of
Directors and has a longstanding record of service to the Corporation and the
Bank. In the event any of the nominees should be unable to serve, which is not
anticipated, the proxy committee, which consists of Directors Loren Dillon,
Hazel Franks and William Gillen, will vote for such other person or persons for
the office of Director as the Board of Directors may recommend.

THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT YOU VOTE FOR THE
ELECTION OF SUCH NOMINEES AS CLASS III DIRECTORS OF THE CORPORATION.

CLASS III DIRECTORS
(TERMS EXPIRE IN 2000)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Name Principal Occupation Director Beneficial Ownership Percent
of Director Age During Past Five Years Since (1) of Common Stock (2) of Class
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James A. Deer 43 Secretary/Treasurer of 1996(3) 752 (4) .2%
Commercial Bancshares,
Inc. and Executive Vice-
President of The
Commercial Savings Bank
- --------------------------------------------------------------------------------------------------------------------
Hazel Franks 76 Retired trucking firm 1985 3,717 1.07%
owner, Upper Sandusky,
Ohio.
- --------------------------------------------------------------------------------------------------------------------
Raymond E. Graves 44 President and CEO, 1986 756 (5) .2%
Commercial Bancshares,
Inc. and The Commercial
Savings Bank, Upper
Sandusky, Ohio.
- --------------------------------------------------------------------------------------------------------------------
Richard Sheaffer 54 President, R.A. Sheaffer, 1976 1,049 (6) .3%
Inc. (a family farming
corporation).
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Directorships were with the Bank alone until April 13, 1995 and with
the Bank and the Corporation since such date.
(2) All shares are held of record with sole voting and investment power
unless otherwise indicated. Beneficial ownership numbers are as of
January 31, 1997.
(3) Due to the death of Director Dr. John H. Bremyer on January 10, 1996,
a vacancy was created in the Class III Director classification.
Pursuant to the Corporation's Code of Regulations, this vacancy was
filled by the Board of Directors acting by a majority of the Directors
then in office. Mr. James A. Deer was chosen to fill Dr. Bremyer's
unexpired term.
(4) Includes 497 shares for which Mr. Deer has shared voting and
investment power.

<PAGE> 5

(5) Includes 489 shares for which Mr. Graves has shared voting and
investment power.
(6) Includes 791 shares for which Mr. Sheaffer has shared voting and
investment power.

CLASS I DIRECTORS
(TERMS EXPIRE IN 1998)

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Name of Principal Occupation Director Beneficial Ownership Percent
Director Age During Last Five Years Since (1) of Common Stock (2) of Class
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
B. E. Beaston 64 Retired, formerly 1990 2,631 (3) .8%
President and General
Manager, Walton Agri-
Service, Inc., Upper
Sandusky, Ohio.
- ---------------------------------------------------------------------------------------------------------------------
Edwin G. Emerson 58 Attorney, Partner with 1985 1,200 (4) .3%
Shumaker, Loop &
Kendrick, LLP
Toledo, Ohio.
- ---------------------------------------------------------------------------------------------------------------------
Michael A. Mastro 40 President of TLM 1995 86 (5) .02%
Management, Inc.,
Marion, Ohio (a restaurant
management company).
- ---------------------------------------------------------------------------------------------------------------------
Douglas C. Smith 54 President of the boat 1985 5,866 (6) 1.7%
manufacturing firm of Baja
Marine Corporation,
Bucyrus, Ohio.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Directorships were with the Bank alone until April 13, 1995 and with
the Bank and the Corporation since such date.
(2) All shares are held of record with sole voting and investment power
unless otherwise indicated. Beneficial ownership numbers are as of
January 31, 1997.
(3) Includes 468 shares for which Mr. Beaston has shared voting and
investment power.
(4) Includes 1,123 shares for which Mr. Emerson has shared voting and
investment power. Mr. Emerson's spouse, Barbara K. Emerson, is a
general partner of Myers Properties Limited Partnership (the
"Partnership") which owns 20,572 shares of Common Stock of the
Corporation. Mr. Emerson disclaims beneficial ownership of the
Partnership shares.
(5) Includes 24 shares for which Mr. Mastro has shared voting and
investment power.
(6) Includes 4,600 shares for which Mr. Smith has shared voting and
investment power.

<PAGE> 6

CLASS II DIRECTORS
(NOMINEES FOR TERMS EXPIRING IN 1999)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Name of Beneficial
Director Principal Occupation Director Ownership of Percent
Nominee Age During Last Five Years Since (1) Common Stock (2) of Class
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Daniel Berg 42 Ohio Unit Business 1990 465 (3) .1%
Leader, Tower
Automotive, Upper
Sandusky/Bluffton, Ohio.
(manufacturer of
automotive products)
- --------------------------------------------------------------------------------------------------------------------
Loren Dillon 63 President and General 1990 358 (4) .1%
Manager, Crow Motor
Sales, Inc., Upper
Sandusky, Ohio.
- --------------------------------------------------------------------------------------------------------------------
Mark Dillon 43 President, Fairborn 1990 1,210 .3%
U.S.A., Upper Sandusky,
Ohio (manufacturer of
loading dock enclosures)
- --------------------------------------------------------------------------------------------------------------------
William T. Gillen 69 President of Bill Gillen 1985 1,708 (5) .5%
Realty, Inc.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

CUMULATIVE SHARE OWNERSHIP

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Name of Principal Occupation Director Beneficial Ownership Percent
Director Age During Last Five Years Since of Common Stock (1) of Class
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
All Directors and -- -- -- 19,583 5.6%
Executive Officers as
a Group (18 persons)
(2)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) All shares are held of record with sole voting and investment power
unless otherwise indicated. Beneficial ownership numbers are as of
January 31, 1997.
(2) Includes all executive officers of the Corporation and all executive
officers of the Bank.

<PAGE> 7

No family relationships exist between the Corporation's Directors,
nominees and executive officers except that Mark Dillon and Loren Dillon,
current Directors, are second cousins. There are no arrangements or
understandings between any Director or nominee and any other person concerning
service or nomination as a Director.

Rules and regulations promulgated under the Securities Act of 1933 (the
"Securities Act"), as amended, and the Securities and Exchange Act of 1934 (the
"Exchange Act"), as amended, require that a Director disclose information
concerning certain legal proceedings that have occurred during the last five
(5) years. In 1994, Director Douglas C. Smith was the Chief Executive Officer
and a Director of Baja Boats, Inc. ("Baja"), an Ohio corporation that
manufactures recreational power boats. On February 2, 1994, Baja filed for
reorganization and protection from creditors under Chapter 11 of the Bankruptcy
Code. Baja has no outstanding loans with the Bank.

The Board of Directors met twelve (12) times during 1996. Each Director
attended at least seventy-five percent (75%) of the total number of Board
meetings and meetings held by committees of the Board on which each served. The
Board has a standing Audit Committee and a Compensation Committee. The
Corporation's Audit Committee, which consisted of Chairman William T. Gillen,
Hazel Franks, Richard Sheaffer and recording secretary, Philip Kinley, met
eleven (11) times during 1996. The Audit Committee's primary responsibility is
overseeing the activities of the Corporation's internal and external auditors.
The Compensation Committee, which consisted of Chairman Richard Sheaffer, Edwin
Emerson, Douglas Smith, and Raymond Graves met three (3) times during 1996. The
function of the Compensation Committee is to review Executive Management's past
performance and thereby formulate salary recommendations of Executive
Management for the ensuing year for the consideration of the full Board of
Directors. The Board of Directors does not have a standing nominating
committee, nor a committee performing a similar function.

During 1996, the Directors of the Bank received Director's fees at the
rate of $400 per Board meeting attended and $200 per committee meeting
attended. Directors who are also officers of the Corporation or the Bank do
not receive compensation for attendance at any committee meetings.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Exchange Act rules and regulations require directors, officers, and
beneficial owners of more than 10% of the Corporation's Common Stock to report,
in a timely manner, transactions involving the sale or purchase of the
Corporation's Common Stock. Transactions by such persons are filed on
Securities and Exchange Commission (the "Commission") Forms 4 and 5. These
rules also require the disclosure of each such person who failed to file a
report in a timely manner during the most recent fiscal year or prior year.

Douglas Smith filed one (1) late report on a Form 5 Annual Statement on
February 7, 1997, to report a single acquisition transaction. A Form 4 Report
reflecting this transaction was due May 10, 1996.

<PAGE> 8

PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION

Article 4 of the Amended Articles of Incorporation of the Corporation
authorizes it to issue and have outstanding 1,000,000 shares of Common Stock
with a par value of $12.50 per share. The Board and Management propose to amend
Article 4 to authorize an additional 3,000,000 shares of Common Stock, thereby
increasing the number of authorized shares of Common stock from 1,000,000 to
4,000,000, and to eliminate par value for all issued shares and for all shares
now or hereafter authorized. The Board believes that the approval of the
proposal will be beneficial to the Corporation and its shareholders. Copies of
the Corporation's current and proposed Articles of Incorporation are attached
hereto as Appendix I.

Reasons for additional authorized shares

Some of the advantages of increasing the number of authorized shares are
as follows: The authorized shares would enable the Corporation to declare and
issue larger stock splits in the future. The Board believes that a stock split
would be advantageous to shareholders by making the stock more available and
thereby improving its marketability. The authority of the Board to issue such
additional shares or grant options for the purchase of such additional shares
could also be used by the Board to resist a takeover attempt that the Board
deems to be contrary to the best interests of the Corporation and its
shareholders. To Management's knowledge, no other party is currently
threatening a takeover of the Corporation. The additional shares could be used
to facilitate the acquisition of another bank by the Corporation, although no
acquisitions are currently planned. Furthermore, the additional shares could be
used for a public offering which would provide a source of additional capital
for the Corporation. The Board has had discussion from time to time regarding
the possibility of a stock split or the issuance of additional shares of Common
Stock. However, at present, neither action has been approved by the Board.
Further shareholder authorization for the issuance of the shares to be
authorized will not be solicited prior to the issuance of the shares.

Par value and stated capital

Part of the proposal is the elimination of par value for all shares,
including those currently issued and outstanding. Section 1701.69 of the Ohio
Revised Code provides that a corporation's articles of incorporation may be
amended to increase or decrease par value of issued or unissued shares with par
value. In the case of stock, par value is the value as stated in a
corporation's articles of incorporation and on the face of the physical
certificate evidencing such stock. It is an arbitrary dollar amount assigned by
a corporation to its stock and is of little significance so far as the market
value of the stock is concerned. The Corporation's stock currently has a stated
par value of $12.50. While par value does not have significance in terms of
the market value of the Corporation's stock, Ohio law contains a significant
limitation relating to par value. Section 1701.18 of the Ohio Revised Code
provides that shares with par value shall not be issued or disposed of if as a
result thereof, the aggregate liabilities of the corporation plus its stated
capital would exceed its aggregate assets. Further, Section 1701.30 provides
that the stated capital of each outstanding share with par value shall be not
less than its par value. Stated capital includes the sum of the par value of
all shares

<PAGE> 9

issued, and is one component of the Total Shareholder's Equity shown on the
Corporation's Balance Sheet. With par value at its current $12.50 per share,
the Corporation would be unable to issue the full number of shares which are
proposed to be authorized without exceeding the limitation as set forth in
Section 1701.18. Therefore, the advantages of authorizing additional shares
would be greatly diminished without the elimination of par value.

Section 1701.31 of the Ohio Revised Code provides that stated capital may
be reduced or eliminated in a manner not inconsistent with Ohio corporation
law. A result of the approval of the proposal will be the elimination of
stated capital. This will be reflected on the Corporation's balance sheet by
the elimination of the Stated Capital account and a corresponding increase in
the Corporation's Paid in Capital account. This restatement of the
Corporation's capital accounts will be made to properly reflect the elimination
of par value of the Corporation's stock on the Corporation's Balance Sheet.
Therefore, Total Shareholder's Equity as shown on the Corporation's Balance
Sheet will be unchanged. The balance of the Stated capital account as shown on
the Corporation's December 31, 1996 Balance Sheet is $4,339,400.00. The balance
of the Paid in Capital account as shown on the Corporation's December 31, 1996
Balance Sheet is $3,476,113.00. Upon the elimination of Stated Capital, the
restated Paid in Capital account will have a balance of $7,815,513.00. It is
intended by Management that this restatement would be effective no later than
June 30, 1997, the end of the Corporation's second quarter. The elimination of
par value and restatement of capital accounts should have no effect on any
shareholder rights currently provided for in the Corporation's Amended Articles
of Incorporation or Code of Regulations.

Preemptive rights

A stockholder having preemptive rights has the right, in the event
additional shares of common stock are sold in certain types of transactions, to
subscribe for such additional shares in proportion to the number of shares then
owned by the stockholder. In effect, this allows a stockholder to maintain a
proportionate share of ownership in a corporation by purchasing a proportionate
share of new stock issues. Article 5 of the Corporation's Amended Articles of
Incorporation provides that no holders of shares of the Corporation have any
preemptive rights to subscribe for or to purchase any shares of the Corporation
of any class whether now or hereafter authorized. Therefore, no shareholder
shall have preemptive rights for the shares proposed to be authorized.

Summary

In summary, the additional authorized shares should improve the
marketability of the Corporation's Common Stock, provide additional resistance
to takeover attempts, provide an additional source of capital, and make more
stock available for future stock splits and public offerings. The elimination
of par value and stated capital will enable the Corporation to fully realize
the advantages of authorizing the additional shares.

<PAGE> 10

Approval of the Proposal will require the affirmative vote of holders of
record of shares entitling them to exercise a majority of the voting power of
the Corporation.

THE BOARD OF DIRECTORS OF THE CORPORATION HAS VOTED UNANIMOUSLY IN FAVOR
OF THE PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION AND UNANIMOUSLY
RECOMMENDS APPROVAL AND ADOPTION OF SUCH PROPOSAL BY THE CORPORATION'S
SHAREHOLDERS.

THE STOCK OPTION PLAN PROPOSAL

At the Meeting, the Corporation's shareholders will be asked to approve
the adoption of an Incentive Stock Option Plan (the "Plan"). The Board of
Directors of the Corporation realizes the value and necessity of maintaining
the strongest possible management team for the Corporation and the Bank. Toward
this end, the Board of Directors is proposing the adoption of an Incentive
Stock Option Plan. A copy of the written plan is included as Appendix II to
this Proxy Statement. The Board of Directors believes that the adoption of the
proposed Plan will enable the Corporation and Bank to attract, motivate, reward
and retain key management personnel upon whom the continued success of the
Corporation and the Bank depends. The following is a general description of the
Plan and is qualified by reference to the specific terms of the Plan as set
forth in Appendix II.

General description of the Plan

The Plan affords to executive officers of the Bank and Corporation an
opportunity to acquire or increase their proprietary interest in the
Corporation by grants to such persons of options to purchase common stock of
the Corporation. Those officers (the "Optionees") who would be eligible to
participate in the Plan as of January 31, 1997, consist of Raymond E. Graves,
President and C.E.O. of the Corporation and the Bank, James A. Deer, Executive
Vice-President of the Bank and Secretary/Treasurer of the Corporation, Philip
W. Kinley, Vice-President and C.F.O. of the Bank and Vice-President of the
Corporation, Bruce J. Beck, Senior Vice-President in charge of the Bank's loan
department, and James June, Vice-President in charge of the Bank's Branch
Administration and Retail Products. Richard Sheaffer, Chairman of the Board of
the Bank and Corporation is not included in the definition of executive officer
for purposes of the Plan.

The Plan shall be administered by a committee composed of the
Corporation's Board of Directors, excluding those directors who are employees
of the Bank or Corporation and those otherwise disqualified. The committee may
grant options to any eligible individual subject to the limitations as stated
in the terms of the Plan, and shall on an annual basis determine the number of
shares for which an Optionee will have an option. The committee shall have sole
discretion and authority to determine from time to time the individuals to whom
options may be granted, the number of shares of stock to be subject to each
option, the period during which such option may be exercised and the price at
which such option may be exercised.

The Plan contains several limitations relating to the granting and
exercise of options by Optionees. The aggregate number of shares of common
stock with respect to which options may be

<PAGE> 11

granted during the term of the Plan may not exceed 50,000. Shares with respect
to which options may be granted may be either authorized and unissued shares or
treasury shares. Also, the aggregate fair market value of shares, with respect
to which such options are exercisable for the first time by an Optionee during
any calendar year may not exceed $100,000. Although Optionees are not required
to make payment to the Corporation for their options (other than the value of
their services), Optionees will be required to pay an option exercise price, not
less than the market value of the stock on the date the option is granted. The
market value of a share of common stock of the Corporation as of January 31,
1997 was $56.50.

An option, subject to certain exceptions and to the discretion of the
Committee, may not be exercised within a period of five years from the date it
was granted. An exception to the vesting schedule will operate to shorten the
vesting time. Among the exceptions to the vesting schedule are the Optionee's
attaining the age of 65, the death or total disability of an Optionee, and a
change in corporate control as defined as the term "applicable event" is
defined in the Plan. No option under the Plan may be exercised more than ten
years from the date it is granted.

The Plan also contains several other provisions. Among these are
provisions addressing the procedures for an Optionee to exercise options,
including the applicable time periods for exercising options where an exception
to the vesting schedule has occurred; antidilution of shares; the forms in
which an Optionee may pay an exercise price; and the nontransferability of
options by an Optionee.

The Plan shall terminate, if not sooner, upon the tenth anniversary of its
effective date. The proceeds received by the Corporation from the sale of stock
under the Plan shall be used for general corporate purposes. The Board of
Directors of the Corporation may at any time and from time to time and in any
respect amend, modify, or terminate the Plan, with the exception of certain
amendments for which shareholder approval is required under Commission or
Internal Revenue Service rules.

The exact amount of the benefits that may be received by eligible officers
under the Plan cannot be determined at the present time as it is dependent upon
the discretion of the Committee administering the Plan and the future market
value of the Corporation's stock during the term of the Plan.

Federal Income Tax Consequences

The Plan meets the requirements for an Incentive Stock Option Plan under
Section 422 of the Internal Revenue Code. For plans meeting the requirements of
this Section there are no federal income tax consequences at the time the
options are granted or at time they are exercised. Therefore, there will be no
federal income tax consequences to the Corporation or Optionees upon the
granting or exercise of Options under the Plan. However, an Optionee exercising
a stock option may recognize taxable income for federal income tax purposes if
he is then subject to the alternative minimum tax, or if he immediately resells
shares purchased by exercising the option. In addition, an Optionee who
exercises an option and later resells the shares purchased with the exercise
before the first anniversary

<PAGE> 12

of the date the option was granted would be forced to recognize part of the
proceeds as taxable compensation. In either case, the Corporation would be
entitled to deduct an amount equal to the taxable income recognized by the
Optionee.

Approval of this Proposal will require the affirmative vote of holders of
record of a majority of shares represented in person or by proxy at the Meeting
and entitled to vote.

THE BOARD OF DIRECTORS OF THE CORPORATION HAS VOTED UNANIMOUSLY IN FAVOR
OF THE PROPOSED INCENTIVE STOCK OPTION PLAN AND UNANIMOUSLY RECOMMENDS APPROVAL
AND ADOPTION OF SUCH PROPOSAL BY THE CORPORATION'S SHAREHOLDERS.

EXECUTIVE OFFICERS

The following information is furnished concerning executive officers of the
Corporation and the Bank:

<TABLE>
<CAPTION>
Name Age Position and Business Background
---- --- --------------------------------
<S> <C> <C>
Richard Sheaffer 54 Mr. Sheaffer is Chairman of the Board of Directors of the
Corporation and the Bank and has served in such position since
1990. He was first elected as a Director of the Bank in 1976.

Raymond E. Graves 44 Mr. Graves is President and Chief Executive Officer of the
Corporation and the Bank and has served in such position since
1986. He joined the Bank in 1985 as Executive Vice-President,
coming from a bank in Illinois as its President.

James A. Deer 43 Mr. Deer has served as Executive Vice-President of the Bank
since 1993 and also serves as Secretary/Treasurer of the
Corporation. He joined the Bank in 1985 and served as a real
estate loan officer from 1985 to 1987 and as Cashier/CFO from
1987 to 1993.

Philip Kinley 37 Mr. Kinley serves as Vice-President of the Corporation and
Vice-President/Chief Financial Officer of the Bank. He joined
the Bank in 1984 and served as a loan officer. In 1989 he
became the Bank's Branch Administrator and Personnel
Director. He was named Vice-President/Cashier in 1992 until
1995 when he assumed his present position.
</TABLE>

<PAGE> 13

<TABLE>
<S> <C> <C>
Bruce J. Beck 45 Mr. Beck, a practicing attorney, serves as Senior Vice-President
in charge of the loan department of the Bank having joined the
Bank in that capacity in 1995. Prior thereto, he was the Bank's
outside legal counsel and a partner in the law firm of Burson
and Beck, Carey, Ohio.

James June 55 Mr. June joined the Bank as an Assistant Vice-President in 1994
and in 1995 became a Vice-President in charge of Branch
Administration and Retail Products. Prior to 1994, he served
as a branch manager for the Tiffin Avenue office of Society
National Bank in Findlay, Ohio.
</TABLE>

EXECUTIVE COMPENSATION

The following table sets forth information as to the compensation paid or
accrued by the Corporation or the Bank during 1994, 1995 and 1996 for Mr.
Raymond E. Graves, President and Chief Executive Officer of the Corporation. No
other executive officer of the Corporation or the Bank received compensation
for services to the Corporation or the Bank during 1996 in excess of $100,000.

- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Long Term All Other
Compensation Compensation
Annual Compensation Awards (2)
- --------------------------------------------------------------------------------------------------------------------------------
Name and Principal Year Salary ($)(1) Bonus ($) Other Annual Restricted
Position Compensation Stock
($)(2) Awards ($) Options ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Raymond E. Graves, 1996 120,270.88 17,039.96 N/A N/A N/A 373.77
President and Chief 1995 115,676.14 17,961.15 N/A N/A N/A 268.21
Executive Officer 1994 100,761.74 13,238.76 N/A N/A N/A N/A
</TABLE>

- ----------------------

(1) Mr. Graves salary includes fees received by him for services as a Director
of the Corporation in 1996 and as a Director for the Bank in 1995 and 1994
of $4,800; $4,800; and $5,200, respectively.

(2) Amount accrued pursuant to the Bank's supplementary executive retirement
plan described below.

SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN

In an effort to attract, reward, motivate and retain the most qualified
people available, the Bank has provided certain executive officers with a
retirement and death benefit plan that will supplement those benefits available
under the Bank's qualified benefit plans. This plan was adopted in 1995 and was
designed to provide the following executives with annual retirement benefits
initially

<PAGE> 14

equal to a minimum percent of each executive's respective salary for the year
prior to retirement, payable for life. The amount of each annual benefit is
indexed to the financial performance of an insurance policy over a selected
opportunity rate and is designed to increase each year.

<TABLE>
<CAPTION>
Name of Executive Position
----------------- --------
<S> <C>
Raymond E. Graves President and Chief Executive Officer
James A. Deer Executive Vice-President
Philip Kinley Vice-President/Chief Financial Officer
</TABLE>

The plan is zero percent vested until the 6th year of employment, and
vesting increases 20% annually thereafter, reaching 100% vesting after 10 full
years of continuous employment. The Bank's obligations under this plan are
unfunded; however, the Bank has purchased life insurance policies on each
executive that are actuarially designed to offset the annual expenses
associated with the plan and will, given reasonable actuarial assumptions,
provide a complete recovery of all plan costs. All three above named executives
are presently 100% vested in the plan.

The death benefit for each executive is an endorsement of 80% of the
net-at-risk life insurance portion of each of the life insurance policies
purchased to recover the retirement plan's costs.

For the year 1996, expenses of $2,433.33 were accrued to account for this
obligation

INDEBTEDNESS OF AND TRANSACTIONS WITH OFFICERS AND DIRECTORS

The Bank has had and expects to have transactions in the ordinary course
of business with Directors, officers and principal shareholders of the
Corporation and the Bank and associates of such persons on substantially the
same terms as those prevailing at the same time for comparable transactions
with others. The Bank, in 1996, did consult the law firm of Shumaker, Loop &
Kendrick, LLP in which Director Edwin Emerson is a partner, on a case by case
basis. The Bank has also utilized the services of Certified Appraisal Service
on a case by case basis, which is a subsidiary of Bill Gillen Realty, Inc.,
whose president is Director William Gillen.

The Bank has had and expects to have banking transactions in the ordinary
course of business with directors, officers and principal shareholders of the
Corporation and the Bank and associates of such persons on substantially the
same terms, including interest rates and collateral, as those prevailing at the
same time for comparable transactions with other persons and that do not
involve more than normal risk of collectability or present other unfavorable
features. Loans to Directors and executive officers, including their immediate
families and companies in which they are principal owners, totaled
$1,883,877.00 or 13.1% of total shareholders' equity at December 31, 1996. The
nature and amount of such indebtedness and transactions during 1996 is such
that no disclosure is required for any individual items.

<PAGE> 15

RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Corporation has engaged the firm of Crowe, Chizek and Company, LLP,
Independent Certified Public Accountants, Columbus, Ohio to report upon the
consolidated financial statements included in the Annual Report submitted
herewith. A representative from said firm will be in attendance at the Annual
Meeting, will have the opportunity to make a statement if desired, and will be
available to respond to any questions from those in attendance. The Corporation
has not yet selected an accounting firm to report upon its 1997 financial
statements, although it intends to again engage Crowe, Chizek and Company, LLP
for such purpose.

OTHER BUSINESS

Management of the Corporation does not know of any other business that may
be presented at the Annual Meeting. If any matter not described herein should
be presented for shareholder action at the Meeting, the persons named in the
enclosed Proxy will vote the shares represented thereby in accordance with
their best judgment.

SHAREHOLDER PROPOSALS FOR PRESENTATION AT THE 1998 ANNUAL MEETING

The Board of Directors requests that any shareholder proposals intended
for presentation at the 1998 Annual Meeting be submitted in writing to Raymond
E. Graves, President, at the Corporation's office located at 118 South
Sandusky Avenue, Upper Sandusky, Ohio 43351, by no later than November 10, 1997
for consideration for inclusion in the Corporation's proxy materials for such
meeting.

FINANCIAL STATEMENTS
AND OTHER CORPORATION INFORMATION

The following audited financial statements of the Corporation are being
furnished to shareholders of the Corporation as part of the Corporation's 1996
Annual Report and are hereby incorporated by reference: Consolidated Balance
Sheets as at December 31, 1995 and 1996; Consolidated Statements of Income for
the years December 31, 1995 and 1996; Consolidated Statements of Changes in
Shareholders' Equity for the years ended December 31, 1995 and 1996;
Consolidated Statements of Cash Flows for the years ended December 31, 1995 and
1996; and the accompanying notes to such statements. Also incorporated by
reference herein from the Corporation's 1996 Annual Report are the sections
entitled "Description of Business," "Management's Discussion and Analysis of
Financial Condition and Results of Operation," and "Report of Independent
Auditors".

A copy of the Corporation's 1996 Annual Report is being delivered with
this Proxy Statement.

<PAGE> 16

By Order of the Board of Directors

Dated: March 13, 1997 James A. Deer
Secretary/Treasurer

TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY FOR WHICH
A RETURN ENVELOPE IS PROVIDED.

APPENDICES TO PROXY STATEMENT

APPENDIX I - Current and Proposed Articles of Incorporation of Commercial
Bancshares, Inc.

APPENDIX II - Proposed Incentive Stock Option Plan

<PAGE> 17

APPENDIX I TO
PROXY STATEMENT

CURRENT ARTICLES OF INCORPORATION

COMMERCIAL BANCSHARES, INC.

---------------------------

1. Name. The name of the Corporation shall be Commercial Bancshares, Inc.

2. Principal Office. The place in the State of Ohio where the principal
office of the Corporation is to be located is in the City of Upper Sandusky,
County of Wyandot.

3. Purpose. The purpose for which the Corporation is formed is to engage
in any lawful act or activity for which corporations may be formed under
Sections 1701.01 to 1701.98, inclusive, of the ORC.

4. Authorized Shares. The number of shares that the Corporation is
authorized to have outstanding is One Million (1,000,000), which shall be
common shares with par value on $12.50 per share (the "Common Shares").

5. Preemptive Rights. No holder of shares of the Corporation shall have
any preemptive right to subscribe for or to purchase any shares of the
Corporation of any class whether now or hereafter authorized.

6. Purchases of Securities. The Board of Directors of the Corporation,
without action by the shareholders, is hereby authorized to use and apply the
Corporation's surplus, however created or arising, or any part thereof, at any
time or from time to time in the purchase or acquisition of shares of any
class, voting trust certificates for shares, bonds, debentures, notes, scrip,
warrants, obligations, evidences of indebtedness of the Corporation or other
securities of the Corporation, to such extent or amount and in such manner and
upon such terms as the Board of Directors of the Corporation shall deem
expedient and as shall be agreed upon by the holder of the securities to be
purchased or acquired, to the extent not prohibited by law.

7. Special Voting Requirements. Except as these Articles or the Code of
Regulations of the Corporation may otherwise provide and notwithstanding any
provision in Sections 1701.01 to 1701.98, inclusive, of the ORC requiring for
any purpose the vote, consent, waiver or release of the holders of a designated
portion (but less than all ) of the shares of any particular class, of each
class, or of all classes of the issued and outstanding capital stock of the
Corporation, the vote, consent, waiver or release of the holders of a majority
of the shares of such class or classes will suffice for any such purpose.

<PAGE> 18

8. Waiver of Cumulative Voting. The shareholders of the Corporation may
not vote cumulatively in the election of directors.

9. Amendments. These Articles of Incorporation may be amended, repealed or
added to at any meeting of shareholders called for that purpose by the
affirmative vote of holders of record of shares entitling them to exercise a
majority of the voting power of the Corporation in the election of directors,
provided, however, that any amendment, repeal or addition to these Articles
that would be subject to special voting provisions if adopted as an amendment,
repeal or addition to the Code of Regulations of the Corporation shall be
subject to such further special voting provisions as set forth in the Code of
Regulations.

<PAGE> 19

PROPOSED ARTICLES OF INCORPORATION

COMMERCIAL BANCSHARES, INC.

----------------------------

1. Name. The name of the Corporation shall be Commercial Bancshares, Inc.

2. Principal Office. The place in the State of Ohio where the principal
office of the Corporation is to be located is in the City of Upper Sandusky,
County of Wyandot.

3. Purpose. The purpose for which the Corporation is formed is to engage
in any lawful act or activity for which corporations may be formed under
Sections 1701.01 to 1701.98, inclusive, of the ORC.

4. Authorized Shares. The number of shares that the Corporation is
authorized to have outstanding is Four Million (4,000,000), which shall be
common shares without par value (the "Common Shares").

<PAGE> 20

8. Waiver of Cumulative Voting. The shareholders of the Corporation may
not vote cumulatively in the election of directors.

<PAGE> 21

APPENDIX II TO
PROXY STATEMENT

COMMERCIAL BANCSHARES INC.
1997 STOCK OPTION PLAN

ARTICLE I
DEFINITIONS

Section 1.1 Definitions: As used herein, the following terms shall have the
meaning set forth below, unless the context clearly requires otherwise:

(a) "Applicable Event" shall mean (i) the expiration of a tender offer or
exchange offer (other than an offer by the Company) pursuant to which more
than 30% of the Company's issued and outstanding stock has been purchased,
or (ii) the approval by the shareholders of the Company of an agreement to
merge or consolidate the Company with or into another entity where the
Company is not the surviving entity, an agreement to sell or otherwise
dispose of all or substantially all of the Company's assets (including a
plan of liquidation), or the approval by the shareholders of the Company of
an agreement to merge or consolidate the Company with or into another
entity where the Company is the surviving entity, pursuant to which more
than 30% of the Company's issued and outstanding stock has been
transferred.

(b) "Bank" shall mean the Commercial Savings Bank, and any subsidiary of
Commercial Bancshares Inc.

(c) "Committee" shall mean a Committee consisting of all members of the Board
of Directors of the Company, who are not employees of the Bank or the
Company, or otherwise disqualified.

(d) "Company" shall mean Commercial Bancshares Inc.

(e) "Director" shall mean a member of the Board of Directors of the Company

(f) "Effective Date" with respect to the Plan shall mean the date specified in
Section 2.3 as the Effective Date.

(g) "Fair Market Value" with respect to a share of Stock shall mean the fair
market value of the Stock, as determined by application of such reasonable
valuation methods as the Committee shall adopt or apply. The Committee's
determination of Fair Market Value shall be conclusive and binding on the
Company and the Optionee.

<PAGE> 22

(h) "Option" shall mean an option to purchase Stock granted pursuant to the
provisions for the Plan. Options granted under the Plan shall be Incentive
Stock Options, except to the extent Options shall be treated as
non-qualifying Options by reason of Section 5.3. An Incentive Stock Option
shall mean an Option to purchase shares of Stock which is designated as an
Incentive Stock Option by the Committee and is intended to meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as
amended.

(i) "Optionee" shall mean an executive, officer or employee of the Bank or the
Company to whom an Option has been granted.

(j) "Plan" shall mean the Commercial Bancshares Inc. 1997 Stock Option Plan,
the terms of which are set forth herein.

(k) "Stock" shall mean the Common Stock of the Company or, in the event that
the outstanding shares of Stock are changed into or exchanged for shares of
a different stock or securities of the Company or some other entity, such
other stock or securities.

(l) "Stock Option Agreement" shall mean the agreement between the Company and
the Optionee under which the Optionee may purchase Stock pursuant to the
terms of the Plan.

ARTICLE II
THE PLAN

Section 2.1 Name. This plan shall be known as the "Commercial Bancshares Inc.
1997 Stock Option Plan."

Section 2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its shareholders by affording to executive officers of the Company
and the Bank an opportunity to acquire or increase their proprietary interest
in the Company by the grant to such persons of Options under the terms set
forth herein. By encouraging such persons to become owners of the Company, the
Company seeks to attract, motivate, reward and retain those highly competent
individuals upon whose judgment, initiative, leadership and efforts the success
of the Company depends.

Section 2.3 Effective Date and Term. The Plan was approved by the Board of
Directors of the Company on ________ and shall be effective retroactively on
________ as approved by a majority of the shareholders of the Company present in
person or by proxy at the meeting of shareholders of the Company held on
________. The Plan shall terminate upon the tenth anniversary of the Effective
Date.

<PAGE> 23

ARTICLE III
ADMINISTRATION

Section 3.1 Administration.

(a) The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have sole discretion and
authority to determine from time to time the individuals to whom Options
may be granted, the number of shares of Stock to be subject to each Option,
the period during which such Option may be exercised and the price at which
such Option may be exercised.

(b) Meetings of the Committee shall be held at such times and places as shall
be determined from time to time by the Committee. A majority of the members
of the Committee shall constitute a quorum for the transaction of business
and the vote of a majority of those members present at any meeting shall
decide any question brought before the meeting. In addition, the Committee
may take any action otherwise proper under the Plan by a written action
without a meeting, approved in writing, by all of the members.

(c) No members of the Committee shall be liable for any act or omission of any
other member of the Committee or for any act of omission on his own part,
including, but not limited to, the exercise of any power or discretion
given to him under the Plan, except those resulting from his own gross
negligence or willful misconduct. All questions of interpretations and
application with respect to the Plan or Option granted thereunder shall be
subject to the determination, which shall be final and binding, of a
majority of the whole Committee.

Section 3.2 Company Assistance. The Company and the Bank shall supply full and
timely information to the Committee on all matters relating to eligible
employees, their employment, death, retirement, disability or other termination
of employment and such other pertinent facts as the Committee may require. The
Company and the Bank shall furnish the Committee with such clerical and other
assistance as is necessary in the performance of its duties.

ARTICLE IV
OPTIONEES

Section 4.1 Eligibility. Executive officers of the Company and the Bank shall
be eligible to participate in the Plan. The Committee may grant Options to any
eligible individual subject to the provisions of Section 5.1.

<PAGE> 24

ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN

Section 5.1 Grant of Options and Limitations.

(a) Initial Plan Year. Upon approval of the Plan, the Committee may grant
Options to such executive officers as are designated by the Committee for
the number of shares of Stock determined by the Committee.

(b) Subsequent years. After the Effective Date, current optionees and such
other individuals as are designated by the Committee shall be eligible to
receive Options for the number of shares of Stock determined by the
Committee.

(c) Stock Available for Options. Subject to adjustment pursuant to the
provisions of Section 8.3 hereof, the aggregate number of shares with
respect to which Options may be granted during the term of the Plan shall
not exceed 50,000 shares of Company Stock determined as of the Effective
Date. Shares with respect to which Options may be granted may be either
authorized and unissued shares or shares issued and thereafter acquired by
the Company.

(d) Limit on Annual Grants. The maximum number of shares of Stock with respect
to which Options may be granted to a single Optionee during any one
calendar year shall be limited to 50,000 shares.

Section 5.2 Options Under the Plan. Shares of Stock with respect to which an
Option granted hereunder shall have been exercised shall not again be available
for grant hereunder. If Options granted hereunder shall expire, terminate or be
canceled for any reason without being wholly exercised, new Options may be
granted hereunder covering the number of shares to which such Option
expiration, termination or cancellation relates.

Section 5.3 Limitation on Exercisability. The aggregate fair market value of
the shares (under all plans of the Company), with respect to which such Options
are exercisable for the first time by an Optionee during any calendar year may
not exceed $100,000. The aggregate fair market value of the shares is
determined at the date of grant.

To the extent this $100,000 limitation would otherwise be exceeded, by reason
of accelerated vesting under Sections 6.4 or otherwise, the Option shall be
deemed to consist of Incentive Stock Options for the maximum number of shares
which may be covered by Incentive Stock Options pursuant to this paragraph, and
non-qualifying stock options for the remaining shares subject to the Option.

<PAGE> 25

ARTICLE VI
OPTIONS

Section 6.1 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of at least a majority
of the members of the Committee and by a written Stock Option Agreement dated
as of the date of grant and executed by the Company and the Optionee. The Stock
Option Agreement shall set forth such terms and conditions as may be determined
by the Committee consistent with the Plan.

Section 6.2 Option Price. The exercise price of the Stock subject to each
Option shall not be less than the Fair Market Value of the Stock on the date
the Option is granted. The option price for each Incentive Stock Option granted
to an optionee, who owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, may not be less than 110%
of the Fair Market Value of the stock.

Section 6.3 Option Grant and Exercise Periods. No Option may be granted after
the tenth anniversary of the Effective Date. The period for exercise of each
Option shall be determined by the Committee, but in no instance shall such
period extend beyond the tenth anniversary of the date of grant of the Option.
The period of exercise for each Incentive Stock Option granted to an Optionee,
who owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company, may not be more than 5 years from the date
of grant of the Option.

Section 6.4 Option Exercise.

(a) The Company shall not be required to sell or issue shares under any Option
if the issuance of such shares shall constitute or result in a violation by
the Optionee or the Company of any provisions of any law, statute or
regulation of any governmental authority. Specifically, in connection with
the Securities Act of 1933, upon exercise of any Option, the Company shall
not be required to issued such shares unless the Committee has received
evidence satisfactory to it to the effect that registration under the Act
and applicable state securities laws is not required, unless the offer and
sale of securities under the Plan is registered or qualified under the Act
or applicable state laws. Any determination in this connection by the
Committee shall be final, binding and conclusive . If shares are issued
under any Option without registrations under the Act of applicable state
securities laws, the Optionee may be required to accept the shares subject
to such restriction on transferability as may in the reasonable judgment of
the Committee be required to comply with exemptions from registrations
under such laws. The Company may, but shall in no event be obligated to,
register any securities covered hereby pursuant to the Act or applicable
state securities laws. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of an Option or the
issuance of shares pursuant thereto to comply with any law or regulation of
any governmental authority.

<PAGE> 26

(b) Subject to Section 6.4(c) and such terms and conditions as may be
determined by the Committee in its sole discretion upon the grant of an
Option, an Option may be exercised in whole or in part and from time to
time by delivering to the Corporate Secretary of the Company at its
principal office written notice of intent to exercise the Option with
respect to a specified number of shares.

(c) Unless the Committee determines otherwise at the time the Option is
granted, an Option shall be exercisable according to the following vesting
schedule:

0% up to five years from the date of grant
100% on or after five years from the date of grant

Provided, however, that upon the earlier of (i) the Optionee's 65th birth
date, (ii) the occurrence of an Applicable Event, (iii) the death of
Optionee, (iv) or total disability of the Optionee, all Options granted to
the Optionee shall be fully exercisable in accordance with terms of the
Plan. For purposes of this Plan, an Optionee is totally disabled if he is
receiving disability benefits under the Social Security Act as the result
of a total and permanent disability, is determined to be totally disabled
under any long-term disability plan sponsored by the Bank or Company, or if
the Committee receives a satisfactory certification of the Optionee's total
disability from a physician mutually acceptable to the Committee and the
Optionee.

At the discretion of the Committee, all or a portion of Options previously
granted to a Participant can be amended to reduce the vesting schedule or
immediately 100% vest such Options.

(d) Subject to such terms and conditions as may be determined by the Committee
in its sole discretion upon grant of any Option, Payment for the shares to
be acquired pursuant to exercise of the Option shall be made as follows:

1. by delivering to the Company at its principal office a check payable to
the order of the Company, in the amount of the Option price for the
number of shares of Stock with respect to which the Option is then being
exercised; or

2. by delivering to the Company at its principal office certificates
representing Stock, duly endorsed for transfer to the Company, having an
aggregate Fair Market Value as of the date of exercise equal to the
amount of the Option price, for the number of shares of Stock with
respect to which the Option is then being exercised; or

3. by any combination of payments delivered pursuant to paragraphs (d)(1)
and (d)(2) above.

<PAGE> 27

4. Alternatively, the Committee may permit the Optionee to pay for the
shares issuable pursuant to the exercise of an Option by delivery of a
signed, irrevocable notice of exercise, accompanied by payment in full
of the Option Price by the Optionee's stockbroker (or other agent) and
an irrevocable instruction to the Committee to deliver shares of Common
Stock issuable upon exercise of the Option promptly to the stockbroker
to be sold for the Optionee's account, provided that at the time of such
exercise and resale, such exercise and resale would not subject the
Optionee to liability under Section 16 (b) of the Securities Exchange
Act of 1934.

Section 6.5 Rights as Shareholder. An Optionee shall have no rights as a
Shareholder with respect to any share subject to such Option prior to the
exercise of the Option and the purchase of such shares.

Section 6.6 Limited Rights. Within the earlier of (i) the occurrence of an
Applicable Event, or (ii) 30 days following the date on which the Company
obtains knowledge of and notifies an Optionee of an Applicable Event, an
Optionee shall have the right (without regard to the limitation on the exercise
of Options set forth in Section 6.4(c) of the Plan and similar limitations in
the Stock Option Agreement) to exercise Options and then held, or to surrender
unexercised Options in exchange for a cash amount. Such cash amount shall be
equal to the product of (1) the number of shares of Stock subject to the
Option, or portion thereof which is surrendered, multiplied by (2) the amount
by which the highest price paid or to be paid per share pursuant to an
Applicable Event exceeds the exercise price.

ARTICLE VII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN

Section 7.1 Termination. The Plan shall expire with respect to the granting of
Stock Options at the close of the business on ________. The Board of Directors
of the Company may at any time and from time to time and in any respect amend,
modify or terminate the Plan; provided, however, that no such action shall
modify the terms or the Plan without the approval of holders representing a
majority of the voting shares of stock of the Company, if such stockholder
approval is required by Code Section 422 or IRS regulations thereunder, by
Securities and Exchange Commission rules, or by the listing rules of any stock
market on which the Company's stock is traded.

ARTICLE VIII
MISCELLANEOUS

Section 8.1 Nontransferability of Option. No Option may be transferred by an
Optionee under any circumstances. During the lifetime of an Optionee the Option
shall be exercisable only by the Optionee.

<PAGE> 28

Section 8.2 Effect of termination of Employment or Death.

(a) If an Optionee's status as an employee of the Company or the Bank
terminates for any reason, other than disability, before the date of
expiration of Incentive Stock Options held by such Optionee, such Incentive
Stock Options shall become null and void on the day three months following
the date of such termination. For an Optionee who terminates employment
with the Company due to disability, as defined in Internal Code Section 22
(e) (3), the three month period specified in the prior sentence shall
become one year.

(b) In the event of the death of an Optionee, the executors, administrators,
legatees or distributes of the estate of the Optionee shall have the right
to exercise any options which became exercisable prior to or on account of
the Optionee's death but only within a period of twelve (12) months from
the date of the Optionee's death (but in no event later than the
termination date of the Option), after which time any unexercised portion
of all outstanding options shall expire.

Section 8.3 Antidilution. The provisions of subsections (a) and (b) shall apply
in the event that the outstanding shares of Stock are changed into or exchanged
for a different number or kind of shares or other securities of the Company or
another entity by reason or any merger, consolidation, reorganization,
recapitalization, reclassification, combination, stock split or stock dividend.

(a) The aggregate number and kind of shares subject to Options which may be
granted hereunder shall be adjusted appropriately.

(b) Where dissolution or liquidation of the Company or any merger or
combination in which the Company is not a surviving company is involved,
each outstanding Option granted hereunder shall, subject to Section 6.6,
terminate.

The Foregoing adjustments and the manner of application of the foregoing
provisions shall be determined solely by the Committee and any such adjustment
may provide for the elimination of fractional share interest.

Section 8.4 Application of Funds. The proceeds received by the Company from the
sale of Stock pursuant to Options shall be used for general corporate purposes.

Section 8.5 Tenure. Nothing in the Plan or in any Option granted hereunder or
in any Stock Option Agreement relating thereto shall confer upon any officer or
employee, the right to continue in such position with the Company or the Bank.

Section 8.6 Other Compensation Plans. The adoption of the Plan shall not affect
any other stock option or incentive or other compensation plans in effect for
the Company or the Bank, nor shall the Plan preclude the Company or the Bank
from establishing any other forms of incentive or other compensation for
Directors, officers or employees of the Company or the Bank.

<PAGE> 29

Section 8.7 No Obligation to Exercise Options. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.

Section 8.8 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.

Section 8.9 Singular, Plural Gender. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include
feminine.

Section 8.10 Headings, Etc., No Part of Plan. Headings of Articles and Section
hereof are inserted for convenience of reference; they constitute no part of
the plan.

Section 8.11 Governing Law. Except as otherwise required by law, the validity,
construction and administration of this Plan shall be determined under the Laws
of the State of Ohio.

Signed this ________ day of ____________ 1997.

COMMERCIAL BANCSHARES INC.

By: __________________________________
Chairman of the Board of Directors

<PAGE> 30

COMMERCIAL BANCSHARES, INC.
118 SOUTH SANDUSKY AVENUE
UPPER SANDUSKY, OHIO 43351

PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
APRIL 9, 1997. THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.

The undersigned, having received notice of the Annual Meeting of
Shareholders of Commercial Bancshares, Inc. (the "Corporation") to be held at
4:30 p.m. local time on Wednesday, April 9, 1997, hereby designates and
appoints Loren H. Dillon, Hazel D. Franks, and William T. Gillen, and each of
them with authority to act without the others, as attorneys and proxies for the
undersigned, with full power of substitution, to vote all shares of Common
Stock, par value of $12.50 per share, of Commercial Bancshares, Inc. that the
undersigned would possess if personally present, such proxies being directed to
vote as specified below and in their discretion on any other business that may
properly come before the Meeting.

1. ELECTION OF DIRECTORS. To elect the following four (4) nominees as
Class III Directors: JAMES A. DEER, HAZEL D.
FRANKS, RAYMOND E. GRAVES, and RICHARD
SHEAFFER.

_____ FOR ALL NOMINEES (EXCEPT AS MARKED BELOW)

_____ WITHHOLD AUTHORITY FOR ALL NOMINEES

IF YOU WISH TO WITHHOLD AUTHORITY FOR INDIVIDUAL NOMINEE(S), ENTER THE NAME(S)
ON THIS LINE :

- ------------------------------------------------------------------------------

2. AMENDMENT OF ARTICLES OF INCORPORATION PROPOSAL. To consider and act
upon a proposal to amend the Corporation's Articles of Incorporation to
increase the number of authorized shares of Common Stock of the Corporation
from 1,000,000 to 4,000,000; to eliminate par value for all shares, including
those currently issued and outstanding, and to eliminate the Corporation's
Stated Capital account.

____ FOR ____ AGAINST ____ ABSTAIN

- ------------------------------------------------------------------------------

3. INCENTIVE STOCK OPTION PLAN PROPOSAL. To consider and act upon a
proposal for the adoption of an Incentive Stock Option Plan for executive
officers of the Bank and Corporation whereby such executive officers would be
eligible to receive options to purchase shares of the Corporation pursuant to
the terms of the Plan.

____ FOR ____ AGAINST ____ ABSTAIN

- ------------------------------------------------------------------------------

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF THE
NAMED NOMINEES AND FOR THE PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION AND
FOR THE INCENTIVE STOCK OPTION PROPOSAL.

THIS PROXY WILL BE VOTED: (1) AS DIRECTED ON THE MATTERS LISTED ABOVE; (2)
IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATION WHERE A CHOICE IS NOT
SPECIFIED; AND (3) IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES ON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.

PROXY CONTINUED ON REVERSE SIDE

<PAGE> 31

The undersigned reserves the right to revoke this Proxy at any time prior
to the Proxy being voted at the Meeting. The Proxy may be revoked by delivering
a signed revocation to the Corporation at any time prior to the Meeting, by
submitting a later-dated Proxy, or by attending the Meeting in person and
casting a ballot. The undersigned hereby revokes any proxy previously given to
vote such shares at the Meeting.

Dated:__________________________________

Number of Shares________________ ________________________________________
Printed Name of Shareholder

________________________________________
Signature of Shareholder

Please sign Proxy as your name appears on
your stock certificate(s). JOINT OWNERS
SHOULD EACH SIGN PERSONALLY. When signing as
attorney, executor, administrator, trustee,
guardian, or corporate officer, please give
your full title as such.

PLEASE COMPLETE, SIGN, DATE, AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.