<PAGE>
<PAGE>
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
[x] Definitive Proxy Statement of the Commission Only
[ ] Definitive Additional Materials (as permitted by Rule
Soliciting Material Pursuant 14a-6(e)(2))
to Rule 14a-11(c) or Rule 14a-12
COMMUNITY NATIONAL CORPORATION
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
1. Title of each class of securities to which transaction
applies:
------------------------------------------------------
2. Aggregate number of securities to which transaction
applies:
------------------------------------------------------
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-
11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
------------------------------------------------------
5. Total fee paid:
------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1. Amount Previously Paid:
------------------------------------------------------
2. Form, Schedule or Registration Statement No.:
------------------------------------------------------
3 Filing Party:
------------------------------------------------------
4. Date Filed:
------------------------------------------------------
<PAGE>
[COMMUNITY NATIONAL CORPORATION LETTERHEAD]
March 31, 1999
Dear Stockholder:
We invite you to attend the 1999 Annual Meeting of
Stockholders of Community National Corporation to be held at
Community National Bank, 19 Natchez Trace Drive, Lexington,
Tennessee on Wednesday, April 28, 1999 at 2:00 p.m., local time.
The accompanying notice and proxy statement describe the
formal business to be transacted at the Annual Meeting. Also
enclosed is an Annual Report to Stockholders for the 1998 fiscal
year. Directors and officers of the Company as well as
representatives of Arnold Spain & Company, P.C., the Company's
independent auditors for the 1998 fiscal year, will be available
to respond to any questions the stockholders may have.
You are cordially invited to attend the Annual Meeting.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND, WE URGE YOU TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE EVEN
IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. This will
not prevent you from voting in person but will assure that your
vote is counted if you are unable to attend the meeting.
Sincerely,
/s/ Howard W. Tignor
Howard W. Tignor
President and Chief Executive Officer
<PAGE>
<PAGE>
COMMUNITY NATIONAL CORPORATION
19 NATCHEZ TRACE DRIVE
LEXINGTON, TENNESSEE 38351
(901) 968-6624
- ----------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 1999
- ----------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of
Stockholders ("Annual Meeting") of Community National Corpora-
tion (the "Company"), will be held at Community National Bank,
19 Natchez Trace Drive, Lexington, Tennessee at 2:00 p.m., local
time, on Wednesday, April 28, 1999.
A Proxy Card and a Proxy Statement for the Annual Meeting
are enclosed.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of two directors of the Company to a
three-year term; and
2. The transaction of such other matters as may properly
come before the Annual Meeting or any adjournments
thereof.
Note: The Board of Directors is not aware of any other
business to come before the Annual Meeting.
Any action may be taken on any one of the foregoing
proposals at the Annual Meeting on the date specified above or
on any date or dates to which, by original or later adjournment,
the Annual Meeting may be adjourned. Stockholders of record at
the close of business on March 26, 1999, are the stockholders
entitled to vote at the Annual Meeting and any adjournments
thereof.
You are requested to fill in and sign the enclosed Proxy
Card which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The Proxy Card will not be
used if you attend and vote at the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Arba M. Taylor
ARBA M. TAYLOR
SECRETARY
Lexington, Tennessee
March 31, 1999
________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A
QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
________________________________________________________________
<PAGE>
<PAGE>
________________________________________________________________
PROXY STATEMENT
OF
COMMUNITY NATIONAL CORPORATION
19 NATCHEZ TRACE DRIVE
LEXINGTON, TENNESSEE 38351
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1999
________________________________________________________________
________________________________________________________________
GENERAL
________________________________________________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Community
National Corporation (the "Company") to be used at the 1999
Annual Meeting of Stockholders of the Company (the "Annual
Meeting") which will be held at Community National Bank, 19
Natchez Trace Drive, Lexington, Tennessee on Wednesday, April
28, 1999, at 2:00 p.m., local time. The accompanying Notice of
Annual Meeting and form of proxy and this Proxy Statement are
being first mailed to stockholders on or about March 31, 1999.
On December 11, 1997 the Company's principal subsidiary,
Lexington First Federal Savings Bank, a federal stock savings
bank, converted to a national bank (the "Bank Conversion") known
as Community National Bank of Tennessee (the "Bank"). Upon
consummation of the Bank Conversion, the Company became a bank
holding company. Unless otherwise noted, references to the Bank
refer to the Bank and its predecessor, Lexington First Federal
Savings Bank.
________________________________________________________________
VOTING AND REVOCABILITY OF PROXIES
________________________________________________________________
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR
THE NOMINEES FOR DIRECTORS SET FORTH BELOW AND IN FAVOR OF EACH
OF THE OTHER PROPOSALS SET FORTH IN THIS PROXY STATEMENT FOR
CONSIDERATION AT THE ANNUAL MEETING. The proxy confers
discretionary authority on the persons named therein to vote
with respect to the election of any person as a director where
the nominee is unable to serve or for good cause will not serve,
and with respect to matters incident to the conduct of the
Annual Meeting. If any other business is presented at the
Annual Meeting, proxies will be voted by those named therein in
accordance with the determination of a majority of the Board of
Directors. Proxies marked as abstentions will not be counted as
votes cast. In addition, shares held in street name which have
been designated by brokers on proxy cards as not voted will not
be counted as votes cast. Proxies marked as abstentions or as
broker nonvotes, however, will be treated as shares present for
purposes of determining whether a quorum is present.
Stockholders who execute proxies retain the right to revoke
them at any time. Unless so revoked, the shares represented by
properly executed proxies will be voted at the Annual Meeting
and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or
the filing of a later dated proxy prior to a vote being taken on
a particular proposal at the Annual Meeting. A proxy will not
be voted if a stockholder attends the Annual Meeting and votes
in person. The presence of a stockholder alone at the Annual
Meeting will not revoke such stockholder's proxy.
________________________________________________________________
VOTING SECURITIES
________________________________________________________________
The securities entitled to vote at the Annual Meeting
consist of the Company's common stock, par value $1.00 per share
(the "Common Stock"). Stockholders of record as of the close of
business on March 26, 1999 (the "Record Date"), are entitled to
one vote for each share of Common Stock then held. As of the
Record Date, there were 712,877 shares of Common Stock issued
and outstanding.<PAGE>
<PAGE>
________________________________________________________________
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
________________________________________________________________
Persons and groups beneficially owning more than 5% of the
Common Stock are required to file certain reports with respect
to such ownership pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The following table sets
forth, as of the Record Date, certain information as to the
Common Stock beneficially owned by any person or group of
persons who is known to the Company to be the beneficial owner
of more than 5% of the Company's Common Stock, the shares
beneficially owned by the Company's Chief Executive Officer and
shares beneficially owned by all directors and executive
officers as a group. Other than as disclosed below, management
knows of no person who beneficially owned more than 5% of the
Common Stock at the Record Date.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF SHARES OF
NAME AND ADDRESS BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP(1) OUTSTANDING
- ------------------- ----------- ------------
<S> <C> <C>
Pat Carnal 65,812 9.23%
P.O. Box 680
Lexington, TN 38351
All Directors and Executive Officers
as a Group (9 persons) 168,334 23.62%
<FN>
- -------------
(1) Includes all shares held directly as well as by spouses or as
custodian or trustee for minor children, and shares held by a
group acting in concert, over which shares the named individuals
effectively exercise sole voting and investment power, or for a
group acting in concert, share voting and investment power.
</FN>
</TABLE>
________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
________________________________________________________________
The Company's Board of Directors is currently composed of
nine members. Under the Company's Charter, directors are divided
into three classes as nearly equal in number as possible and
elected for terms of three years each and until their successors
are elected and qualified. At the Annual Meeting, two directors
will be elected for terms expiring at the Annual Meeting to be held
in the year 2002. The Board of Directors has nominated Directors
Charlie H. Walker and Stephen M. Lowry, each to serve for an
additional term of three years and until his successor is elected
and qualified. Under Tennessee law, directors are elected by a
majority of the votes present in person or represented by proxy at
the Annual Meeting and entitled to vote in the election of
directors.
Unless contrary instruction is given, the persons named in
the proxies solicited by the Board of Directors will vote each such
proxy for the election of the named nominees. If any of the
nominees is unable to serve, the shares represented by all properly
executed proxies which have not been revoked will be voted for the
election of such substitute as the Board of Directors may recommend.
At this time, the Board knows of no reason why the nominees might be
unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED
BELOW.
The following table sets forth, for the nominees and each
continuing director, his or her name, age as of the Record Date, the
year he or she first became a director of the Bank and the expiration
of his or her current term as a director of the Company. Except as
noted below, all such persons were initially appointed as directors of
the Company in connection with the incorporation and organization of
the Company and remained as such following the conversion of the
Association from mutual to stock form, its reorganization into the
holding company form of ownership as a subsidiary of the Company, and
its subsequent conversion to a national bank (i.e., the Bank)
(collectively, the "Conversion"). Each director of the Company is
also a member of the Board of Directors of the Bank.
2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST SHARES OF
ELECTED COMMON STOCK
AGE AS DIRECTOR OF CURRENT BENEFICIALLY
OF THE THE BANK OR TERM OWNED AT THE PERCENT
NAME RECORD DATE ASSOCIATION TO EXPIRE RECORD DATE(1) OF CLASS
- ----- ------------ ------------- ----------- --------------- --------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
Charlie H. Walker 70 1962 1999 18,672 2.62%
Stephen M. Lowry 41 1988 1999 5,748 0.80
DIRECTORS CONTINUING IN OFFICE
Howard W. Tignor 55 1997 2000 27,125 3.81
Pope Thomas 68 1961 2000 8,809 1.24
Robert C. Thomas 38 1988 2000 4,167 0.59
Pat Carnal 60 1997 2000 65,812 9.23
Arba Milam Taylor 65 1977 2001 23,923 3.36
Stephen M. Milam 40 1988 2001 7,039 0.99
Richard Walker 38 1988 2001 7,039 0.99
</TABLE>
The principal occupation of each nominee for director and
each continuing director of the Company for the last five years
is set forth below.
CHARLIE H. WALKER served as President and Chief Executive
Officer of Lexington First from 1961 to February 1993. He is a
retired attorney and is the father of Director Richard Walker.
Charlie H. Walker is Arba Milam Taylor's brother-in-law.
STEPHEN M. LOWRY is a plant manager and engineer for the
Decaturville Metal Works in Decaturville, Tennessee. From
August 1979 to July 1996 he was maintenance supervisor with
Harding Machine, Lexington, Tennessee.
HOWARD W. TIGNOR became President and Chief Executive
Officer of the Bank and Mutual Holding Company in February 1997.
Mr. Tignor served as president and chief executive officer of
the Bank of Waynesboro, Waynesboro, Tennessee from January 1995
to January 1997 and from March 1991 to December 1994 was a
self-employed bank consultant with the Southern Banking Group in
Shelbyville, Tennessee.
POPE THOMAS is a retired sales representative for a
furniture manufacturing firm. He is the father of Director
Robert C. Thomas.
ROBERT C. THOMAS is a livestock specialist employed by the
Tennessee Department of Agriculture. He is the son of Director
Pope Thomas.
PAT CARNAL became a member of the Board in April 1997. He
is president and owner of the Pat Carnal Agency, Inc., an
insurance agency located in Lexington, Tennessee. Mr. Carnal is
currently the treasurer for the Lexington Rotary Club.
3
<PAGE>
<PAGE>
ARBA MILAM Taylor was employed with Lexington First from
1961 to her retirement in March 1997 at which time she was
Secretary-Treasurer and office manager of the Bank. She is the
mother of Director Stephen M. Milam and the sister-in-law of
Charlie H. Walker.
STEPHEN M. MILAM is an attorney in general practice of law
in Lexington, Tennessee, Henderson County and the surrounding
counties. He is the son of Director Arba Milam Taylor.
RICHARD WALKER is a practicing attorney in Henderson County
and the surrounding counties with his office located in
Lexington, Tennessee. He is the son of Chairman Charlie Walker.
- ----------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- ----------------------------------------------------------------
The Company's Board of Directors conducts its business
through meetings of the Board. The Board of Directors of the
Company generally holds regular monthly meetings and holds
special meetings as needed. During the year ended December 31,
1998, the Board of Directors of the Company met 15 times and the
Board of Directors of the Bank met 15 times. No director
attended fewer than 75% in the aggregate of the total number of
Board meetings of the Company or the Bank held while he was a
member during the year ended December 31, 1998 and the total
number of meetings held by committees on which he served during
such fiscal year.
The Bank's Loan Committee consists of Directors Tignor,
Carnal, Robert C. Thomas, Stephen M. Milam and Stephen M. Lowry.
The committee met seven times in 1998.
The Bank's Executive Committee meets on an as-needed basis
to conduct business between the Bank's regular Board meetings.
This committee, which currently includes Directors Charlie H.
Walker, Arba M. Taylor, Pope Thomas and Howard W. Tignor met 11
times during fiscal 1998. Each member is paid a fee of $75.00
per meeting.
The Company's Board of Directors has an Audit Committee
consisting of Directors Lowry, Taylor, Tignor and Robert C.
Thomas. This Committee did not meet during the year ended
December 31, 1998 as the full Board of Directors reviewed the
Bank's financial condition with management and reviewed with the
independent auditors the systems of internal control, and
monitored the Bank's adherence in accounting and financial
reporting to generally accepted accounting principles.
The Compensation Committee reviews existing compensation and
makes recommendations with respect thereto to the Board of
Directors. The Compensation Committee consists of Directors
Charlie H. Walker, Pat Carnal, Stephen Lowry and Howard W.
Tignor, and met one time in fiscal 1998.
The Bank has no established nominating committee. A
nominating committee is appointed on a annual basis by the Board
of Directors.
- ----------------------------------------------------------------
DIRECTORS' COMPENSATION
- ----------------------------------------------------------------
Each member of the Company's and the Bank's Boards of
Directors (the same nine individuals) receives a fee of $250
per Board meeting attended for their service as Company
directors, and for their service as Bank directors. During the
year ended December 31, 1998, directors' fees for service on the
Company's and the Bank's Board totaled $37,500.
DEFERRED COMPENSATION PLAN. The Company's Board of Direc-
tors has established a Deferred Compensation Plan (the
"Deferred Compensation Plan") for its directors, including Mr.
Tignor. Before each calendar year begins, each
4<PAGE>
<PAGE>
non-employee director may elect to defer receipt of all or part
of the fees that the Bank or the Company would otherwise have
provided, and Mr. Tignor may elect to defer receipt of up to 25%
of his future compensation. In addition, the Company made a
one-time credit of $207,730 to Mr. Tignor's account. Of this
amount, $100,000 is vested pro-rata over ten years of Mr.
Tignor's future service beginning December 11, 1997; $53,865
vested December 11, 1997, $26,932.50 vested December 11, 1998,
and $26,932.50 will vest December 11, 1999. For the $107,730
portion of the credit only, vesting accelerates to 100% if Mr.
Tignor is terminated without "just cause" and not in connection
with a "change in control" (as these terms are defined in the
Employment Agreement). In addition, Mr. Tignor will receive a
$100,000 credit to his account if he is terminated without just
cause at a time when a validly executed employment agreement is
not in force between Mr. Tignor and the Bank or the Company.
Deferred amounts will be credited at the end of the calendar
year to a bookkeeping account in the participant's name along
with the investment return which would have resulted if such
deferred amounts had been invested, based upon the participant's
choice, between the measures selected by the Company's
directors. Initially, those measures are expected to include,
at a minimum, the dividend-adjusted rate of return on Common
Stock and the Bank's highest annual rate of interest on
certificates of deposit having a one-year term. Each partici-
pant may make an election to receive benefit distributions
either in a lump sum or in annual installments over a period up
to ten years. The Company will recognize the plan's compensa-
tion expense on a quarterly basis for both (i) the annual
credits and investment returns on Deferred Compensation Plan
amounts and (ii) as vesting occurs on the one-time credit of
$207,730 to Mr. Tignor's account.
The Company expects to make annual contributions to a
grantor trust in an amount equal to the financial expense
associated with the Deferred Compensation Plan. The trust's
assets would remain subject to the claims of the Company's
general creditors, and be available for eventual payments to
participants.
- ----------------------------------------------------------------
EXECUTIVE COMPENSATION AND OTHER BENEFITS
- ----------------------------------------------------------------
Summary Compensation Table. The following table sets forth
the cash and noncash compensation for each of the last three
fiscal years awarded to or earned by the Chief Executive Officer
who receives no compensation other than his fees as director and
chairman. No executive officer of the Company earned a salary
and bonus during fiscal year 1998 exceeding $100,000 for
services rendered in all capacities to the Bank.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------------
NAME AND -------------------------------- RESTRICTED SECURITIES
PRINCIPAL FISCAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Howard W. Tignor (1) 1998 $66,365 $1,450 -- -- -- $36,932 (2)
1997 65,000 700 -- -- -- 53,865
<FN>
________________
(1) In February 1997 Howard W. Tignor replaced Tim Johnson, who was dismissed as President and
Chief Executive Officer of the Bank in December 1996. During the period from December 1996
to February 1997, Charlie H. Walker, Chairman of the Board of Directors, acted as interim
President of the Bank. Mr. Walker received no additional compensation for his role.
(2) Represents deferred compensation contributed to Mr. Tignor's account pursuant to his
employment agreement.
</FN>
</TABLE>
5<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT. In February 1997, the Bank entered
into an employment agreement (the "Employment Agreement" ) with
Howard W. Tignor who became the Bank's President and Chief
Executive Officer. The Employment Agreement has been restated
in its entirety in connection with the Stock Conversion and
Reorganization. In addition, the Company has entered into an
agreement guaranteeing the Bank's obligations under the
Employment Agreement. Overall, the Boards of the Bank and the
Company believe that these agreements assure fair treatment of
Mr. Tignor by assuring him of some financial security.
The term of the Employment Agreement is three years, and may
be extended for additional one-year periods, on an annual basis
beyond the then effective expiration date, upon a determination
by the Board of Directors that the performance of Mr. Tignor has
met the required performance standards and that such term should
be extended. The Employment Agreement entitles Mr. Tignor to
receive an annual base salary equal to $65,000, with a salary
review by the Board of Directors not less often than annually,
and with annual salary increases at least equal to the average
annual increase in the Consumer Price Index. Mr. Tignor's
salary for 1999 is $66,365. Mr. Tignor is entitled to
participate in the Bank's plans and programs for bonuses,
retirement, medical, and customary fringe benefits. He was also
reimbursed for his expenses incurred in moving from Waynesboro,
Tennessee to Lexington, Tennessee.
The Bank may at any time terminate the Employment Agreement
for "just cause" (as defined therein), in which case no
severance benefits are available. Mr. Tignor is able to
voluntarily terminate his Employment Agreement by providing 90
days' written notice to the Bank's Board of Directors, in which
case he will receive only his compensation, vested rights, and
benefits up to the date of termination. The Employment
Agreement terminates automatically upon Mr. Tignor's death, in
which case his estate will receive his salary through the last
day of the calendar month in which Mr. Tignor's death occurred.
If the Employment Agreement is terminated due to Mr. Tignor's
"disability" (as defined in the Employment Agreement), Mr.
Tignor will be entitled to a continuation of his salary and
benefits through the date of such termination, including any
period prior to the establishment of Mr. Tignor's disability.
In the event that Mr. Tignor prevails or obtains a written
settlement in any legal dispute as to the Employment Agreement,
he will be reimbursed for his legal and other expenses.
Under the Employment Agreement, Mr. Tignor will receive the
greater of $100,000, or the amount to be paid under the
remaining term of the Agreement in the event of either (i) his
involuntary termination of employment other than for his
"disability" or "just cause" or (ii) his voluntary termination
within 90 days due to specified events, such as a significant
reduction in salary, benefits, duties or authority.
The Employment Agreement also provides that, within 10 days
of a "Change in Control" (as defined below), Mr. Tignor will
receive $50,000. In addition, he will be paid $100,000 in the
event of either (i) his involuntary termination of employment
other than for "just cause " during the period beginning six
months before a Change in Control and ending on the later of the
first anniversary of the Change in Control or the expiration
date of the Employment Agreement (the "Protected Period") or
(ii) his voluntary termination due to certain specified events
within the Protected Period. Payments made to or on behalf of
Mr. Tignor would be limited to the extent necessary to avoid
the golden parachute penalties imposed by Code Section 280G.
The term "Change in Control" generally means the occurrence of a
plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Bank or the Company or
similar transaction in which the Bank or the Company is not the
resulting entity.
The Employment Agreement further provides that within ten
business days of a Change in Control, the Bank shall fund, or
cause to be funded, a grantor trust in the amount of the
severance benefit, that could become payable to Mr. Tignor.
These provisions may have an anti-takeover effect by making it
more expensive for a potential acquiror to obtain control of the
Company. The aggregate payment that would be made to Mr. Tignor
assuming his termination of employment under the foregoing
circumstances at December 31, 1998 would have been approximately
$240,797.
6<PAGE>
<PAGE>
PENSION PLAN
The Association annually contributes an amount to the
Retirement Plan as necessary to fund the actuarially determined
minimum funding requirements in accordance with Mr. Tignor
Retirement Income Security Act of 1974, as amended ("ERISA").
For the year ended September 30, 1991, the Retirement Plan was
completely funded. Upon the normal retirement age, at or after
age 65, a participant is entitled to an annual retirement bene-
fit in the amount equal to 1.5% of the participant's average
annual compensation (as defined in the Retirement Plan) multi-
plied by the participant's years of benefit service at normal
retirement. Under the Retirement Plan, employees may partici-
pate in the Retirement Plan after one year of employment with
the Association. Benefits are also payable under the Retirement
Plan for termination due to disability, early retirement and
upon death. Benefits become vested after a participant com-
pletes five years of service.
The following table indicates the annual retirement benefit
that would be payable under the plan upon retirement at age 65
to a participant electing to receive his retirement benefit in
the standard form of benefit, assuming various specified levels
of plan compensation and various specified years of credited
service.
<TABLE>
<CAPTION>
Highest Five 5 Years 10 Years 20 Years 25 Years 30 Years 35 Years 40 Years
Years Average Benefit Benefit Benefit Benefit Benefit Benefit Benefit
Compensation Service Service Service Service Service Service Service
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$10,000 $ 1,000 $ 2,000 $ 4,000 $ 5,000 $ 6,000 $ 7,000 $ 8,000
15,000 1,500 3,000 6,000 7,500 9,000 10,500 12,000
25,000 2,500 5,000 10,000 12,500 15,000 17,500 20,000
35,000 3,500 7,000 14,000 17,500 21,000 24,500 28,000
45,000 4,500 9,000 18,000 22,500 27,000 31,500 38,000
55,000 5,500 11,000 22,000 27,500 33,000 38,500 44,000
65,000 6,500 13,000 26,000 32,500 39,000 45,500 52,000
75,000 7,500 15,000 30,000 37,500 45,000 52,500 60,000
</TABLE>
- ----------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- ----------------------------------------------------------------
The Bank offers loans to its directors and officers. These
loans currently are made in the ordinary course of business with
the same collateral, interest rates and underwriting criteria as
those of comparable transactions prevailing at the time and to
not involve more than the normal risk of collectibility or
present other unfavorable features. The Bank's loans to direc-
tors and executive officers are required to be made on substan-
tially the same terms, including interest rates and collateral,
as those prevailing for comparable transactions and must not
involve more than the normal risk of repayment or present other
unfavorable features. Furthermore, all loans to such persons
must be approved in advance by a disinterested majority of the
Board of Directors. At December 31, 1998, the Bank's loans to
directors and executive officers totaled $601,576 or 7% of
stockholders' equity at that date.
On January 27, 1998 the bank sold a commercial lot to
Walker, Walker, & Walker, Attorneys for $65,000. Director and
Chairman Charlie H. Walker and Director Richard Walker are
members of the Walker, Walker, & Walker law firm. The lot was
originally purchased by the bank for a branch location. The lot
was sold to the Walker law firm for the purpose of constructing
a new law office with the understanding that the law firm would
vacate upstairs space rented from the bank. The lot was sold at
the Bank's original cost of $65,000 on September 16, 1996.
7<PAGE>
<PAGE>
- ----------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- ----------------------------------------------------------------
Pursuant to regulations promulgated under the Exchange Act,
the Company's officers, directors and persons who own more than
ten percent of the outstanding Common Stock are required to file
reports detailing their ownership and changes of ownership in
such Common Stock, and to furnish the Company with copies of all
such reports. Based solely on the Company's review of such
reports which the Company received during the last fiscal year,
or written representations from such persons that no annual
report of change in beneficial ownership was required, the
Company believes that, during the last fiscal year, all persons
subject to such reporting requirements have complied with the
reporting requirements.
________________________________________________________________
OTHER MATTERS
________________________________________________________________
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described
above in this Proxy Statement and matters incident to the
conduct of the Annual Meeting. However, if any other matters
should properly come before the Annual Meeting, it is intended
that proxies in the accompanying form will be voted in respect
thereof in accordance with the determination of a majority of
the Board of Directors.
________________________________________________________________
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
________________________________________________________________
Arnold Spain & Company, P.C., which were the Company's
independent auditors for the 1998 fiscal year, have been
retained by the Board of Directors to be the Company's auditors
for the 1999 fiscal year. A representative of Arnold Spain
& Company, P.C. is expected to be present at the Annual Meeting
to respond to appropriate stockholders' questions and will have
the opportunity to make a statement if he so desires.
________________________________________________________________
MISCELLANEOUS
________________________________________________________________
The cost of soliciting proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by
them in sending proxy materials to the beneficial owners of
Common Stock. In addition to solicitations by mail, directors,
officers and regular employees of the Company may solicit
proxies personally or by telegraph or telephone without
additional compensation.
The Company's 1998 Annual Report to Stockholders, including
financial statements, accompanies this Proxy Statement, which
has been mailed to all stockholders of record as of the close of
business on the Record Date. Any stockholder who has not
received a copy of such Annual Report may obtain a copy by
writing to the Secretary of the Company. Such Annual Report is
not to be treated as a part of the proxy solicitation material
or as having been incorporated herein by reference.
8
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________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________
In order to be eligible for inclusion in the Company's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Company's executive office at 19 Natchez Trace
Drive, Lexington, Tennessee 38351 no later than December 1,
1999. Any such proposals shall be subject to the requirements
of the proxy rules adopted under the Exchange Act.
Stockholder proposals to be considered at the Annual
Meeting, other than those submitted pursuant to the Exchange
Act, must be stated in writing, delivered or mailed to the
Secretary of the Corporation, not less than thirty days nor more
than sixty days prior to the date of the Annual Meeting. If
less than forty days notice is given to stockholders, such
notice shall be delivered or mailed to the Secretary not later
than the close of business on the tenth day following the day on
which notice of the meeting was mailed to stockholders.
________________________________________________________________
FORM 10-KSB
________________________________________________________________
A COPY OF THE COMPANY'S FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 1998 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS
OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY,
COMMUNITY NATIONAL CORPORATION, 19 NATCHEZ TRACE DRIVE,
LEXINGTON, TENNESSEE 38351.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Arba M. Taylor
Arba M. Taylor
Secretary
Lexington, Tennessee
March 31, 1999
9
<PAGE>
<PAGE>
REVOCABLE PROXY
COMMUNITY NATIONAL CORPORATION
------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1999
------------------------------------
The undersigned hereby appoints Arba M. Taylor, Robert C.
Thomas and Richard Walker with full powers of substitution to
act, as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of Community National Corporation which
the undersigned is entitled to vote at the 1999 Annual Meeting
of Stockholders (the "Annual Meeting"), to be held at Community
National Bank, 19 Natchez Trace Drive, Lexington, Tennessee on
Wednesday, April 28, 1999 at 2:00 p.m., local time, and at any
and all adjournments thereof, as indicated below and in
accordance with the determination of a majority of the Board of
Directors with respect to other matters which come before the
Annual Meeting.
VOTE
FOR WITHHELD
--- --------
1. The election as directors of [ ] [ ]
all the nominees listed below
(except as marked to the
contrary below).
Charlie H. Walker
Stephen M. Lowry
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR
ANY INDIVIDUAL NOMINEE, INSERT THAT NOMINEE'S
NAME ON THE LINE PROVIDED BELOW.
--------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES
LISTED ABOVE.
________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED
ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD
OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS
THEREOF TO VOTE WITH RESPECT TO THE ELECTION OF ANY PERSONS AS
DIRECTORS WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR GOOD
CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE CONDUCT OF THE
ANNUAL MEETING.
________________________________________________________________<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after notifi-
cation to the Secretary of the Company at the Annual Meeting of
the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated
and of no further force and effect. The undersigned hereby
revokes any and all proxies heretofore given with respect to the
shares of Common Stock held of record by the undersigned.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of a Notice of Annual Meeting,
the Company's Proxy Statement for the Annual Meeting and an
Annual Report for the 1998 fiscal year.
Dated: ____________________, 1999
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in
which this card was mailed. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title.
If shares are held jointly, each holder should sign.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
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