<PAGE>
As filed with the Securities and Exchange Commission on June 23, 1998
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
COMMUNITY BANCSHARES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
63-0868361
(I.R.S. Employer Identification Number)
68149 MAIN STREET
P.O. BOX 1000
BLOUNTSVILLE, ALABAMA 35031
(205) 429-1000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
____________________
BISHOP K. WALKER, JR.
COMMUNITY BANCSHARES, INC.
68149 MAIN STREET, P. O. BOX 1000
BLOUNTSVILLE, ALABAMA 35031
(205) 429-1000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
____________________
Copy of communications to:
E. MARLEE MITCHELL
WALLER LANSDEN DORTCH & DAVIS, PLLC
511 UNION STREET, SUITE 2100
NASHVILLE, TENNESSEE 37219-1760
(615) 244-6380
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box: [_]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] _______________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _______________________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed maximum Proposed maximum
securities to Amount to be offering price per aggregate offering Amount of
be registered registered share price registration fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value $.10 per share 500,000 shares $19 (1) $9,500,000 $2,803
===============================================================================================================================
</TABLE>
(1) Determined solely by the Registrant's Board of Directors based primarily on
the Registrant's shareholders' equity, its earnings and prospects, and
prices at which the Registrant believes such shares have recently traded.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
Subject to Completion, June 23, 1998
500,000 SHARES
COMMUNITY BANCSHARES, INC.
COMMON STOCK
_______________________
Community Bancshares, Inc. (the "Company"), a Delaware corporation and a
bank holding company registered under the Bank Holding Company Act of 1956, as
amended (the "Bank Holding Company Act"), hereby offers for sale up to 500,000
shares of its common stock, $.10 par value per share (the "Common Stock"), at
$19.00 per share. The minimum required purchase is 25 shares of Common Stock,
representing an investment of $475. This offering will expire at 5:00 p.m.
Central Time on December 1, 1998 (the "Expiration Date"), unless terminated
earlier by the Company. See "The Offering."
___________________________
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
___________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
___________________________
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS AND PROCEEDS TO THE
PRICE TO PUBLIC (1) COMMISSIONS(2) COMPANY(3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share................. $ 19.00 -0- $ 19.00
Total Minimum(4).......... -0- -0- -0-
Total Maximum............. $ 9,500,000.00 -0- $ 9,500,000.00
===============================================================================================================
</TABLE>
(1) The offering price has been determined solely by the Company's Board of
Directors. See "The Offering." There is no established trading market for
the Common Stock and there can be no assurance that such a market will
develop following this offering. See "Market for Common Stock and Dividend
Policy."
(2) The Common Stock is being offered on a best-efforts basis solely by certain
of the Company's officers who will receive no compensation for such
services but who may be reimbursed for reasonable expenses, if any,
incurred on behalf of the Company in connection therewith. Such officers
are relying in part on the "safe harbor" provisions set forth in Rule 3a4-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
in connection with this offering. See "The Offering."
(3) Before deducting expenses of this offering payable by the Company,
estimated at approximately $55,000. No arrangements have been made to place
the proceeds received from this offering in an escrow or trust account.
Upon acceptance by the Company of a subscription to purchase shares of
Common Stock offered hereby, the subscription price remitted in payment of
such subscription will be available for immediate use by the Company.
(4) The Company has not established a minimum amount of securities to be sold
in this offering, but the minimum required purchase is 25 shares of Common
Stock, representing a minimum investment of $475.
The Common Stock is offered subject to prior sale, approval of certain
legal matters by counsel to the Company and certain other conditions. The
Company reserves the right, in its sole discretion, to withdraw, cancel or
modify this offering, and to accept or reject subscriptions in whole or in part,
and to allocate shares of the Common Stock among subscribers. Delivery of
certificates for shares of Common Stock will be made promptly after acceptance
of subscriptions.
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>
[BLANK PAGE]
<PAGE>
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY........................................... 4
RISK FACTORS................................................. 5
Offering Price Set by Board of Directors; No Underwriting... 5
Limited Trading Market...................................... 5
Effect of Monetary Policies and Economic Factors............ 5
Limitation on Dividends..................................... 5
Competition................................................. 5
Rising Interest Rates....................................... 6
Governmental Regulation and Legislation..................... 6
Lack of Specified Uses For Proceeds......................... 6
Year 2000................................................... 6
Anti-Takeover Provision..................................... 6
THE COMPANY.................................................. 7
General..................................................... 7
Supervision and Regulation.................................. 7
THE OFFERING................................................. 10
General..................................................... 10
Determination of Offering Price............................. 10
Method of Subscription...................................... 10
Processing of Subscriptions................................. 10
Limited Market for Common Stock............................. 11
USE OF PROCEEDS.............................................. 11
MARKET FOR COMMON STOCK AND DIVIDEND POLICY.................. 12
CAPITALIZATION............................................... 13
DESCRIPTION OF CAPITAL STOCK................................. 14
Common Stock................................................ 14
Preferred Stock............................................. 14
Anti-Takeover Provision..................................... 14
AVAILABLE INFORMATION........................................ 15
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............ 15
EXPERTS...................................................... 15
LEGAL MATTERS................................................ 15
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE INTO
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS
SET FORTH OR INCORPORATED BY REFERENCE HEREIN OR AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT ANY INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE ANY
SECURITIES OTHER THAN THE COMMON STOCK TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information in this Prospectus and in the documents and financial statements,
including the notes thereto, incorporated herein by reference, and should be
read together therewith. Unless otherwise specified, all information in this
Prospectus has been adjusted to reflect a three-for-one split of the Common
Stock effected as of June 1, 1993 and a two-for-one split of the Common Stock
effected as of March 26, 1998. Unless the context otherwise indicates, the
"Company" refers to and includes the Company and its direct and indirect
subsidiaries.
THE COMPANY
Community Bancshares, Inc. (the "Company") is a Delaware corporation and a
bank holding company registered with the Board of Governors of the Federal
Reserve System (the "Federal Reserve") under the Bank Holding Company Act of
1956, as amended (the "Bank Holding Company Act"). The Company was organized in
1983 and commenced operations in 1985. The Company has one bank subsidiary,
Community Bank, an Alabama banking corporation, which conducts a general
commercial banking business in northern Alabama and southern Tennessee. At
March 31, 1998, the Company had total assets of approximately $509.7 million and
total deposits of approximately $461.6 million.
Community Bank operates through 26 locations in 11 counties in northern
Alabama and southern Tennessee. It offers a wide range of commercial and retail
banking services, including demand and time deposit accounts, personal and
commercial loans and personal and commercial checking accounts. The majority of
loans by Community Bank are to individuals and small to mid-sized businesses in
Alabama and Tennessee. Community Bank seeks to provide superior service to its
customers and to become a vital component of each of the communities it serves.
Community Bank operates in small non-urban communities, including locations
in Blountsville, Cleveland, Oneonta, Snead and West Blount in Blount County,
Alabama, Fort Payne and Rainsville in DeKalb County, Alabama, Rogersville in
Lauderdale County, Alabama, Elkmont in Limestone County, Alabama, Gurley,
Meridianville and New Hope in Madison County, Alabama, Hamilton in Marion
County, Alabama, Arab and Guntersville in Marshall County, Alabama, Falkville
and Hartselle in Morgan County, Alabama, Uniontown in Perry County, Alabama,
Double Springs and Haleyville in Winston County, Alabama and Pulaski in Giles
County, Tennessee. Four of these offices are located within Wal-Mart stores,
including three offices opened in 1997 and the first quarter of 1998.
1st Community Credit Corporation, another subsidiary of the Company,
operates finance company offices in nine Alabama communities, including
Albertville, Arab, Athens, Boaz, Cullman, Decatur, Gadsden, Hartselle and
Moulton, Alabama. Other subsidiaries of the Company consist of Community
Appraisals, Inc., which operates a real estate appraisal business, and Community
Insurance Corp., which serves as an agent in the sale of title, life,
automobile, homeowners and farmowners insurance policies. In April 1998,
Community Insurance Corp. acquired 100% ownership of the outstanding shares of
capital stock of Southern Select Insurance, Inc., a property and casualty
insurance general agency located in Birmingham, Alabama that serves as the
general agent to over 140 insurance agencies in Alabama. The Company had
acquired a controlling interest in Southern Select Insurance, Inc. in August
1997. In August 1997, the Company merged a second bank subsidiary, Community
Bank, a Tennessee banking corporation, into the Company's Alabama bank
subsidiary.
THE OFFERING
Common Stock offered........................... Up to 500,000 shares.
Common Stock outstanding after this offering... Up to 4,575,854 shares.
Minimum subscription per investor.............. 25 shares ($475).
Use of proceeds by the Company................. For general corporate purposes
and to finance the future
growth of Community Bank.
4
<PAGE>
RISK FACTORS
In evaluating an investment in shares of Common Stock, the following factors
should be considered carefully, along with other matters discussed in or
incorporated by reference into this Prospectus. This Prospectus contains certain
forward-looking statements, including, without limitation, statements relating
to the Company's future growth and "year 2000" compliance. Such forward-looking
statements involve certain risks and uncertainties, including those described
below, that could cause actual results to differ materially from those
anticipated or projected.
OFFERING PRICE SET BY BOARD OF DIRECTORS; NO UNDERWRITING
The price of the Common Stock offered hereby has been determined solely by
the Company's Board of Directors, without negotiation or independent evaluation,
based primarily on the Company's stockholders' equity, its earnings and
prospects, and prices at which the Company believes shares of Common Stock have
recently traded. There can be no assurance that the offering price represents
the fair market value of the Common Stock. At December 31, 1997, an independent
investment banking firm valued the Common Stock at $16.00 per share for purposes
of the Company's Employee Stock Ownership Plan. The Company is aware that during
1997 shares of Common Stock traded at a price per share less than that amount.
The Common Stock is offered directly by the Company, and is not subject to any
underwriting agreements assuring the sale of all the Common Stock offered. See
"The Offering" and "Market for Common Stock and Dividend Policy."
LIMITED TRADING MARKET
No active trading market exists for the Common Stock and no assurance can
be given that an active trading market will develop in the foreseeable future.
The Company does not currently intend to qualify or list the Common Stock on any
securities market or exchange to facilitate such trading. See "The Offering."
For information regarding certain recent trades of the Common Stock, see "Market
for Common Stock and Dividend Policy."
EFFECT OF MONETARY POLICIES AND ECONOMIC FACTORS
The ability of Community Bank to attract deposits and extend loans is
affected by the monetary policies of federal regulatory authorities,
particularly the Federal Reserve, and by economic conditions in the Company's
service area and the United States generally. The nature and timing of any
changes in such conditions and policies and their impact on the Company cannot
be predicted.
LIMITATION ON DIVIDENDS
The Company derives its income solely from dividends upon shares of
Community Bank's common stock. The declaration and payment of such dividends is
limited by law, and any funds held by the Company available for payment of
dividends on the Common Stock are subject to restrictions imposed by Federal
Reserve policy. The declaration and payment of dividends on the Common Stock is
subject to the prior payment of principal and interest on the Company's long-
term debt and certain other factors. See "Capitalization", "Market for Common
Stock and Dividend Policy" and "Description of Capital Stock."
COMPETITION
The banking business in Alabama and southern Tennessee is extremely
competitive. The Company competes, and will compete, with financial institutions
that are well established, several of which have significantly greater resources
and lending limits than the Company. Such competitors perform certain services,
such as trust, investment and international banking services, which the Company
does not provide.
5
<PAGE>
RISING INTEREST RATES
During periods of rising interest rates, the Company may make loans at
interest rates lower than interest rates that the Company is then paying for
certain of its interest-bearing liabilities, which would result in a negative
interest rate spread with respect to those loans. This disparity would have an
adverse effect on the Company's earnings that would increase in the event that
interest rates continued to rise while the Company had outstanding loans at
lower interest rates that could not be adjusted to a higher interest rate.
GOVERNMENTAL REGULATION AND LEGISLATION
The Company is subject to extensive governmental regulation and control.
The nature, timing and effect on the Company of any changes in such regulation
and control cannot be predicted. Changes in applicable laws could have a
material adverse effect on the business and prospects of the Company. See "The
Company - Supervision and Regulation."
LACK OF SPECIFIED USES FOR PROCEEDS
The Company will use the net proceeds from this offering for general
corporate purposes and to finance the future growth of Community Bank. The
Company will have broad discretion, subject to federal and state banking
regulations, over the use of the proceeds without obtaining stockholder
approval. See "Use of Proceeds."
YEAR 2000
Many software applications and operational programs are not designed to
recognize calendar dates beginning in the year 2000. The failure of such
applications or systems to properly recognize the dates beginning in the year
2000 could result in miscalculations or system failures. The Company's business
depends in part upon its ability to store, retrieve, process and manage
significant databases, and periodically, to expand and upgrade its information
processing capabilities. The Company is installing a new computer mainframe and
software system and has developed an implementation plan to resolve potential
problems arising from the year 2000. The Company expects its year 2000 date
conversion project to be completed on a timely basis, and anticipates that the
related effect on the Company's business, financial condition and results of
operations should be immaterial. The year 2000 issue may affect the systems of
various entities with which the Company interacts, including the Company's
suppliers, and the Company is coordinating its efforts to address the year 2000
issue with those entities. There can be no assurance, however, that the systems
of other companies on which the Company's systems rely will be timely converted,
or that a failure to convert by another company, or a conversion that is
incompatible with the Company's systems, would not have material adverse effect
on the Company.
ANTI-TAKEOVER PROVISION
Section 203 of the Delaware General Corporation Law generally prevents a
corporation from entering into certain business combinations with an interested
stockholder (defined as any person or entity that is the beneficial owner of at
least 15% of a corporation's voting stock) or its affiliates for a period of
three years after the date of the transaction in which the person became an
interested stockholder, unless (i) the transaction is approved by the board of
directors of the corporation prior to such business combination, (ii) the
interested stockholder acquires 85% of the corporation's voting stock in the
same transaction in which it exceeds 15%, or (iii) the business combination is
approved by the board of directors and by a vote of two-thirds of the
outstanding voting stock not owned by the interested stockholder. The Delaware
General Corporation Law provides that a corporation may elect not to be governed
by Section 203. The Company has made no such election and is therefore governed
by Section 203. This anti-takeover provision may have an adverse effect on the
market for the Company's securities.
6
<PAGE>
THE COMPANY
GENERAL
The Company is a Delaware corporation and a bank holding company registered
with the Federal Reserve under the Bank Holding Company Act. The Company was
organized in 1983 and commenced operations in 1985. The Company has one bank
subsidiary, Community Bank, an Alabama banking corporation, which conducts a
general commercial banking business in northern Alabama and southern Tennessee.
At March 31, 1998, the Company had total assets of approximately $509.7 million
and total deposits of approximately $461.6 million.
Community Bank operates through 26 locations in 11 counties in northern
Alabama and southern Tennessee. It offers a wide range of commercial and retail
banking services, including demand and time deposit accounts, personal and
commercial loans and personal and commercial checking accounts. The majority of
loans by Community Bank are to individuals and small to mid-sized businesses in
Alabama and Tennessee. Community Bank seeks to provide superior service to its
customers and to become a vital component of each of the communities it serves.
Community Bank operates in small non-urban communities, including locations
in Blountsville, Cleveland, Oneonta, Snead and West Blount in Blount County,
Alabama, Fort Payne and Rainsville in DeKalb County, Alabama, Rogersville in
Lauderdale County, Alabama, Elkmont in Limestone County, Alabama, Gurley,
Meridianville and New Hope in Madison County, Alabama, Hamilton in Marion
County, Alabama, Arab and Guntersville in Marshall County, Alabama, Falkville
and Hartselle in Morgan County, Alabama, Uniontown in Perry County, Alabama,
Double Springs and Haleyville in Winston County, Alabama and Pulaski in Giles
County, Tennessee. Four of these offices are located within Wal-Mart stores,
including three offices opened in 1997 and the first quarter of 1998.
1st Community Credit Corporation, another subsidiary of the Company,
operates finance company offices in nine Alabama communities, including
Albertville, Arab, Athens, Boaz, Cullman, Decatur, Gadsden, Hartselle and
Moulton, Alabama. Other subsidiaries of the Company consist of Community
Appraisals, Inc., which operates a real estate appraisal business, and Community
Insurance Corp., which serves as an agent in the sale of title, life,
automobile, homeowners and farmowners insurance policies. In April 1998,
Community Insurance Corp. acquired 100% ownership of the outstanding shares of
capital stock of Southern Select Insurance, Inc., a property and casualty
insurance general agency located in Birmingham, Alabama that serves as the
general agent to over 140 insurance agencies in Alabama. The Company had
acquired a controlling interest in Southern Select Insurance, Inc. in August
1997. On August 8, 1997, the Company merged a second bank subsidiary, Community
Bank, a Tennessee banking corporation, into the Company's Alabama bank
subsidiary.
The Company maintains its principal executive offices at 68149 Main Street,
P.O. Box 1000, Blountsville, Alabama 35031, and its telephone number is (205)
429-1000.
SUPERVISION AND REGULATION
The banking industry is highly regulated. To the extent that the following
information describes or summarizes statutory or regulatory provisions, it is
qualified in its entirety by reference to the particular statutory or regulatory
provision. The following supervision and representation affect the Company's
operations:
Federal Reserve. The Company is a bank holding company within the meaning
of the Bank Holding Company Act, and is registered with, and subject to
supervision by, the Federal Reserve and the Federal Reserve Bank of Atlanta. The
Company is required to file periodic reports and such additional information as
the Federal Reserve may require pursuant to the Bank Holding Company Act. The
Federal Reserve may also examine the Company and its subsidiaries.
7
<PAGE>
Subject to certain exceptions, the Bank Holding Company Act requires
Federal Reserve approval before the Company can acquire substantially all the
assets of any bank if as a result of the acquisition the Company would own or
control more than 5% of the voting shares of the bank, or for a merger or
consolidation with another bank holding company. The Company may, however,
engage in or acquire an interest in a company that engages in activities which
the Federal Reserve has determined by regulation or order to be so closely
related to banking or managing or controlling banks as to be properly incidental
thereto.
The Federal Reserve has adopted a risk-based capital adequacy assessment
system for bank holding companies. Assets are weighted by a risk factor and a
ratio is calculated by dividing qualifying capital by the risk-weighted assets.
Tier I capital generally includes common stock and retained earnings. Tier II
capital generally includes certain allowances for loan losses and subordinated
debt. Total capital is comprised of Tier I capital and Tier II capital. The
Company's Tier I and total capital ratios exceeded the required minimum levels
at March 31, 1998.
FDIC. Deposits in Community Bank are insured by the Federal Deposit
Insurance Corporation ("FDIC") and, therefore, Community Bank is subject to
examination by the FDIC. Pursuant to provisions of the Federal Deposit Insurance
Act, any FDIC-insured subsidiary of the Company can be held liable for any loss
incurred by, or reasonably expected to be incurred by, the FDIC in connection
with the default of a commonly controlled FDIC-insured subsidiary or any
assistance by the FDIC to any commonly controlled FDIC-insured subsidiary in
danger of default. The FDIC charges an annual assessment for the insurance of
deposits based upon the risk a particular institution poses to the FDIC's
deposit insurance fund.
FDICIA. The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") implemented a number of provisions applicable to insured banks and
bank holding companies. Federal bank regulatory agencies are required to
establish standards for safety and soundness of banks and bank holding companies
relating to internal controls and audit systems, loan documentation, credit
underwriting, interest rate risk exposure, asset growth and compensation. The
FDICIA also requires bank holding companies to guarantee compliance with any
capital restoration plans entered into by a subsidiary bank and the FDIC. The
activities of insured state banks, including non-subsidiary equity investment,
is generally limited under the FDICIA to those permitted for national banks. The
FDICIA also requires regulations by federal banking agencies establishing
minimum loan to value ratios for all real estate mortgage and construction
loans. The FDICIA also requires regulations to limit risks posed by an insured
bank's "exposure" to another bank. Exposure includes extension of credit,
purchases of securities issued by the other bank or acceptance of securities
issued by the other bank as collateral for an extension of credit. Regulations
pursuant to FDICIA limit such exposure.
Interstate Banking. The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 ("IBBEA") permits adequately capitalized and managed bank
holding companies to acquire control of banks in states other than their home
states, subject to federal regulatory approval, without regard to whether such a
transaction is prohibited by the laws of any state. IBBEA permits states to
continue to require that an acquired bank have been in existence for a certain
minimum time period, which may not exceed five years. A bank holding company may
not, following an interstate acquisition, control more than 10% of the nation's
total amount of bank deposits or 30% of bank deposits in the relevant state
(unless the state enacts legislation to raise the 30% limit). States retain the
ability to adopt legislation to effectively lower the 30% limit. Federal banking
regulators may approve merger transactions involving banks located in different
states, without regard to laws of any state prohibiting such transactions,
except that mergers may not be approved with respect to banks located in states
that, prior to June 1, 1997, enacted legislation prohibiting mergers by banks
located in such states with out-of-state institutions. Federal banking
regulators may permit an out-of-state bank to open new branches in another state
if such state has enacted legislation permitting interstate branching.
Affiliated institutions are authorized to accept deposits for existing accounts,
8
<PAGE>
renew time deposits, and close and service loans for affiliated institutions
without being deemed an impermissible branch of the affiliate.
FIRREA. The Financial Institutions Reform, Recovery and Enforcement Act of
1989 ("FIRREA") permits, among other things, the acquisition by bank holding
companies of savings associations, irrespective of their financial condition.
FIRREA also provides that commonly controlled federally insured financial
institutions must reimburse the FDIC for losses incurred by the FDIC in
connection with the default of another commonly controlled financial institution
or in connection with the provision of FDIC assistance to such a commonly
controlled financial institution in danger of default. Reimbursement liability
under FIRREA is superior to any obligations to shareholders of such federally
insured institutions (including a bank holding company such as the Company if it
were to acquire another federally insured financial institution), arising as a
result of their status as a shareholder of a reimbursing financial institution.
CRA. The Community Reinvestment Act of 1977 ("CRA") and its implementing
regulations are intended to encourage regulated financial institutions to meet
the credit needs of their local community or communities, including low and
moderate income neighborhoods, consistent with the safe and sound operation of
such financial institutions. The regulations provide that the appropriate
regulatory authority will assess CRA reports in connection with applications for
establishment of domestic branches, acquisition of banks or mergers involving
bank holding companies. Regulators are placing increased emphasis on CRA
assessments. An unsatisfactory CRA rating may serve as a basis to deny an
application to acquire or establish a new bank, to establish a new branch or to
expand banking services.
State Regulation. Community Bank is subject to regulation and examination
by the Alabama Superintendent of Banks. State regulations in Alabama relate to
such matters as loans, mortgages, consolidations, required reserves, allowable
investments, issuance of securities, payment of dividends, establishment of
branches, filing of periodic reports and other matters affecting the business of
Community Bank.
9
<PAGE>
THE OFFERING
GENERAL
This offering of up to 500,000 shares is being made by the Company.
Subscriptions to purchase Common Stock, which will be processed by designated
officers of the Company, will be taken until 5:00 p.m. Central Time on December
1, 1998, the Expiration Date, unless this offering is terminated earlier by the
Company. The Company reserves the right, in its sole discretion and without
notice, to terminate this offering at any time. Management of the Company will
consider the number of shares of Common Stock for which subscriptions are
received by the Company, the number of requests for a Prospectus and other
indications of interest in subscribing for shares of Common Stock, among other
factors, in determining whether to terminate this offering. The Company has not
established a minimum number of shares of Common Stock to be sold in this
offering, other then the requirement that each investor must purchase a minimum
of 25 shares ($475) of Common Stock.
In determining which subscriptions to accept and in what amounts, the
Company may take into account the order in which subscriptions are received, a
subscriber's potential to do business with, or to direct customers to, its
subsidiaries, and the Company's desire to have a broad distribution of stock
ownership. The Company reserves the right in its sole discretion to accept or
reject subscriptions for shares of Common Stock in whole or in part and to
allocate Common Stock among subscribers.
No discounts or commissions will be granted or paid in connection with the
sale of the Common Stock. Certain of the Company's officers will solicit offers
to purchase Common Stock from prospective subscribers, and may be reimbursed for
their reasonable expenses incurred on behalf of the Company in connection
therewith.
DETERMINATION OF OFFERING PRICE
The offering price of $19.00 per share of Common Stock was determined
solely by the Company's Board of Directors, based primarily on the Company's
stockholders' equity, its earnings and prospects, and prices at which the
Company believes shares of Common Stock have recently traded.
METHOD OF SUBSCRIPTION
Subscription applications may be made by completing and signing the
subscription agreement (the "Subscription Agreement") accompanying this
Prospectus, and delivering the Subscription Agreement, accompanied by a check
for the full subscription price, to the Company at 68149 Main Street, P.O. Box
1000, Blountsville, Alabama 35031, Attention: Bishop K. Walker, Jr. All checks
in payment of subscriptions should be made payable to "Community Bancshares,
Inc."
PROCESSING OF SUBSCRIPTIONS
Subscriptions are not binding on the Company unless and only to the extent
accepted by the Company. The Company will decide whether to accept a
subscription within ten business days after the receipt of such subscription and
good collectible and available funds in full payment thereof. Upon acceptance by
the Company of a subscription, the subscription price remitted in payment of
such subscription will be available for immediate use by the Company. In the
event the Company rejects all or a portion of any subscription, it will refund
by mail to the subscriber all or the appropriate portion of the amount remitted
with the subscription, without interest. If the Company accepts a portion of a
subscription and returns funds remitted with respect to the rejected portion of
a subscription to a subscriber, the subscriber may not cancel the portion of the
subscription accepted
10
<PAGE>
by the Company. Subscribers may revoke subscriptions, in whole or in part, by
written notice to the Company prior to acceptance by the Company. After all
appropriate refunds have been mailed to the address shown in the Subscription
Agreement upon rejection of a subscription in whole or in part, or termination
or expiration of this offering, the Company and its directors, officers,
employees and agents will have no further liability to the subscribers whose
subscriptions are returned.
The Company will confirm all sales of Common Stock. Certificates
representing shares of Common Stock duly subscribed and fully paid for will be
issued by the Company promptly after the Company's acceptance of the
subscriptions.
LIMITED MARKET FOR COMMON STOCK
Except for the shares of Common Stock acquired by the Company's directors,
executive officers and other affiliates, the Common Stock will be freely
transferable immediately upon issuance and will not be subject to any specific
transfer restrictions. However, there is no active market for the Common Stock
and no assurance can be given that an active trading market will develop in the
foreseeable future. The Company does not presently intend to qualify or list the
Common Stock on any securities market or exchange to facilitate such trading.
Therefore, prospective subscribers should invest only if they can afford to hold
the Common Stock as a long-term investment. See "Risk Factors."
USE OF PROCEEDS
The net proceeds from the sale of the Common Stock offered hereby, after
deducting estimated offering expenses of $55,000, will be $9,445,000 if the
maximum number of shares of Common Stock offered is sold. The Company has not
established a minimum number of shares of Common Stock to be sold in this
offering, other then the requirement that each investor must purchase a minimum
of 25 shares ($475) of Common Stock. The Company will use the net proceeds from
the sale of Common Stock offered hereby for general corporate purposes and to
finance the future growth of Community Bank.
11
<PAGE>
MARKET FOR COMMON STOCK AND DIVIDEND POLICY
The Common Stock was held by approximately 1,295 stockholders of record at
March 31, 1998. There is no established trading market for shares of the Common
Stock, which have been inactively traded in private transactions. Therefore, no
reliable information is available as to trades of the Common Stock, or as to the
prices at which the Common Stock have been traded. Management has reviewed the
limited information provided to the Company in its capacity as an escrow agent
for certain actual purchases and sales of Common Stock with respect to the
ranges at which shares of Common Stock have been sold. The following data
regarding the Common Stock is provided for informational purposes only and
should not be viewed as necessarily indicative of the actual market value of the
Common Stock. At December 31, 1997, an independent investment banking firm
valued the Company's Common Stock at $16.00 per share for purposes of the
Company's Employee Stock Ownership Plan.
<TABLE>
<CAPTION>
Estimated Price Range
Per Share (1)
---------------------- Dividends
High Low Per Share (1)
------ ----- -------------
<S> <C> <C> <C>
1998
First Quarter........................... $15.00 $ 15.00 $ 0.50
Second Quarter (through June 1, 1998)... 19.00 19.00 --
1997
First Quarter........................... $12.50 $ 11.50 $0.375
Second Quarter.......................... 13.00 12.50 --
Third Quarter........................... 15.00 13.00 --
Fourth Quarter.......................... 15.00 14.095 --
1996
First Quarter........................... $10.00 $ 10.00 $ 0.25
Second Quarter.......................... 10.00 10.00 --
Third Quarter........................... 10.00 10.00 --
Fourth Quarter.......................... 11.50 11.00 --
</TABLE>
__________________
(1) Adjusted to reflect a three-for-one split of the Common Stock effected as
of June 1, 1993 and a two-for-one split of the Common Stock effected as of
March 26, 1998.
The payment of dividends on the Common Stock is subject to regulatory
restrictions, the Company's subsidiaries attaining sufficient earnings and
capital and prior payment of principal and interest on the Company's long-term
debt. There can be no assurance that the Company will declare or pay dividends
on its Common Stock in the future, given the restrictions imposed by applicable
regulatory authorities on the Company and on Community Bank, the need to
maintain adequate capital and to support the Company's growth, and amounts
required to be paid to service the Company's indebtedness. The Company derives
its income solely from the payment of dividends on shares of common stock of its
subsidiaries. Accordingly, the Company's ability to declare and pay dividends
is limited by restrictions applicable to the payment of dividends by Community
Bank. In addition, the Company, as a corporation organized under the laws of the
State of Delaware, is prohibited from paying any dividend unless it has capital
surplus or net profits available for such purpose. See "The Company -
Supervision and Regulation" and "Description of Capital Stock - Dividends."
Under the Alabama Banking Code, unless the surplus of an Alabama state bank
(such as Community Bank) equals at least 20% of its capital, it cannot declare
or pay a dividend in excess of 90% of its net earnings for that year, and at
least 10% of an Alabama bank's net earnings must be
12
<PAGE>
transferred to surplus each year until surplus of the bank equals at least 20%
of its capital. After an Alabama bank's surplus equals or exceeds 20% of
capital, prior written approval of the Alabama Superintendent of Banks is
required for dividends declared in any calendar year in excess of net earnings
for that year combined with retained net earnings of the preceding two years,
less any required transfers to surplus. No dividends, withdrawals or transfers
may be made from an Alabama bank's surplus without the prior written approval of
the Alabama Superintendent of Banks.
CAPITALIZATION
The following table sets forth the capitalization of the Company at March
31, 1998 and as adjusted to give effect to the sale of all 500,000 shares of
Common Stock offered hereby and receipt of the net proceeds therefrom.
<TABLE>
<CAPTION>
March 31, 1998
---------------------------------
Actual As Adjusted
-------- -----------
(in thousands)
<S> <C> <C>
Long-term debt.............................................................. $ 7,174 $ 7,174
------- -------
Common Stock, $.10 par value; 5,000,000 shares authorized; 4,075,854 shares
issued; 4,575,854 shares issued as adjusted................................ 408 458
Preferred Stock, $.10 par value; 200,000 shares authorized; no shares
issued and outstanding..................................................... -- --
Capital surplus............................................................. 18,669 28,064(1)
Retained earnings........................................................... 17,145 17,145
Unearned ESOP shares (199,702 shares at March 31, 1998)..................... (1,972) (1,972)
Unrealized losses on investment securities available for sale, net of
deferred tax benefit....................................................... 509 509
------- -------
Total stockholders' equity............................................... 34,759 44,204
------- -------
Total long term debt and stockholders' equity............................ $41,933 $51,378
======= =======
</TABLE>
_______________________
(1) Net of estimated offering expenses of $55,000.
13
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 5,000,000 shares of
Common Stock and 200,000 shares of preferred stock, $.10 par value (the
"Preferred Stock"). At March 31, 1998, there were 4,075,854 shares of Common
Stock issued and outstanding and no shares of Preferred Stock were outstanding.
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders of the Company. In the event of
a voluntary or involuntary liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all of the
assets remaining after payment of liabilities, including all distributions to
holders of Preferred Stock having a liquidation preference over the Common
Stock. Holders of Common Stock are entitled to receive dividends and other
distributions when, as and if declared from time to time by the Board of
Directors of the Company out of funds legally available therefor. The
declaration, payment and amount of future dividends, if any, is dependent on the
future earnings, results of operations, financial position and capital
requirements of the Company and its subsidiaries, and the prior payment of
principal and interest on the Company's long-term debt, among other factors.
See "The Company - Supervision and Regulation" and "Market For Common Stock and
Dividend Policy."
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes 200,000 shares of
Preferred Stock, in one or more classes or series with voting, dividend and
liquidation rights, and preferences, redemption, sinking fund and conversion
provisions, and other rights, preferences and provisions as the Board of
Directors of the Company may determine, without any further vote or action by
the stockholders of the Company. The Board of Directors designated 20,000 shares
of Preferred Stock as Series 1984-1 Cumulative Preferred Stock. On December 31,
1993, the Company redeemed all of the 11,692 issued and outstanding shares of
Series 1984-1 Cumulative Preferred Stock, which may be reissued by the Company.
ANTI-TAKEOVER PROVISION
Section 203 of the Delaware General Corporation Law generally prevents a
corporation from entering into certain business combinations with an interested
stockholder (defined as any person or entity that is the beneficial owner of at
least 15% of a corporation's voting stock) or its affiliates for a period of
three years after the date of the transaction in which the person became an
interested stockholder, unless (i) the transaction is approved by the board of
directors of the corporation prior to such business combination, (ii) the
interested stockholder acquires 85% of the corporation's voting stock in the
same transaction in which it exceeds 15%, or (iii) the business combination is
approved by the board of directors and by a vote of two-thirds of the
outstanding voting stock not owned by the interested stockholder. The Delaware
General Corporation Law provides that a corporation may elect not to be governed
by Section 203. The Company has made no such election and is therefore governed
by Section 203. This anti-takeover provision may have an adverse effect on the
market for the Company's securities.
14
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as the following Commission Regional Offices: New York
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048; and
Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60601-2511. Copies can be obtained by mail at prescribed rates. Requests should
be directed to the Commission's Public Reference Section, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains
an Internet web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
The Company has filed with the Commission a Registration Statement on Form
S-2 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the securities offered hereby. This
Prospectus, which is a part of the Registration Statement, does not contain all
the information set forth in the Registration Statement and the exhibits
thereto. Certain items have been omitted in accordance with the Commission's
rules and regulations. For further information with respect to the Company and
the securities offered hereby, reference is made to the Registration Statement,
including all amendments thereto and the exhibits filed as a part thereof.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1997 and Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1998, an amendment thereto on Form 10-Q/A-1 filed with the Commission on June
16, 1998, each as filed with the Commission by the Company, accompany this
Prospectus and are incorporated herein by reference.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document which
also is or is deemed to be incorporated by reference in this Prospectus modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
EXPERTS
The audited financial statements of the Company have been included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997
delivered with this Prospectus in reliance upon the report of Dudley, Hopton-
Jones, Sims & Freeman PLLP, independent certified public accountants, and upon
the authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered hereby
will be passed upon for the Company by Waller Lansden Dortch & Davis, A
Professional Limited Liability Company, Nashville, Tennessee.
15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the fees and expenses to be incurred in
connection with the issuance and distribution of the Common Stock offered
hereby.
Securities and Exchange Commission Registration Fee.............. $ 2,803
Blue Sky Fees and Expenses....................................... 1,500
Legal Fees and Expenses.......................................... 29,500
Accounting Fees.................................................. 3,000
Printing and Engraving Costs..................................... 18,000
Miscellaneous Expenses........................................... 197
-------
Total......................................................... $55,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Bylaws contain provisions similar to those of Section 145
of the General Corporation Law of the State of Delaware, and authorize the
Registrant to indemnify its officers, directors, employees and agents to the
full extent permitted by law. The Registrant has directors' and officers'
liability and indemnification insurance pursuant to standard form policies. The
risks covered by such policies may include certain liabilities under the
securities laws.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted pursuant to the foregoing provisions to directors, officers or
persons controlling the Registrant, the Registrant has been informed that, in
the opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
ITEM 16. EXHIBITS.
Exhibit
Number Description
- ------- -----------
3.1 Certificate of Incorporation, as amended (1)
3.2 Certificate of Amendment to the Certificate of Incorporation, changing
name of the Registrant to Community Bancshares, Inc. (2)
3.3 Certificate of Amendment to the Certificate of Incorporation, providing
indemnification (3)
3.4 Certificate of Amendment to the Certificate of Incorporation, increasing
authorized shares (4)
3.5 Bylaws of the Registrant (1)
4.1 Form of Subscription Agreement
4.2 Specimen Stock Certificate (5)
5 Opinion of Waller Lansden Dortch & Davis, A Professional Limited Liability
Company
10.1 Subordinated Promissory Note between the Registrant as borrower and Jack
Cornelius as holder (6)
10.2 Commercial Lease Agreements and Addendum, dated as of January 23, 1990, by
and between Com-Pac as lessor and Community Bank as lessee (7)
II-1
<PAGE>
10.3 Employment Agreement, dated as of March 1, 1990, by and between Jeffrey K.
Cornelius and Community Bank (8)
10.4 Employment Agreement, dated as of March 1, 1990, by and between Denny
Kelly and Community Bank (8)
10.5 Employment Agreement, dated as of March 1, 1990, by and between Birl
Bryson and Community Bank (8)
10.6 Employment Agreement, dated as of March 1, 1990, by and between Hodge
Patterson III and Community Bank (8)
10.7 Loan Agreement, Term Note and Pledge Agreement by and between the
Registrant and Colonial Bank, N.A. (9)
10.8 Note Modification Agreement and First Amendment to Pledge Agreement by and
between the Registrant and Colonial Bank, N.A. (8)
10.9 Service Contract, dated as of December 23, 1992, by and between Royal
Acres and Community Bank (8)
10.10 Plan document for the Community Bancshares, Inc. Benefit Restoration Plan
dated April 12, 1994, effective January 1, 1995 (10)
10.11 Amendment No. 3 to the Community Bancshares, Inc. Employee Stock
Ownership Plan dated October 3, 1994 (10)
10.12 Subordinated Promissory Note, dated October 4, 1994, between the
Registrant as borrower and Jeffrey K. Cornelius as holder (10)
10.13 Employment Agreement dated December 9, 1995 by and between Kennon R.
Patterson, Sr. and the Registrant (10)
10.14 Employment Agreement dated December 9, 1995 by and between Bishop K.
Walker, Jr. and the Registrant (10)
10.15 Stock Option Agreement between the Registrant and Kennon R. Patterson,
Sr. dated March 28, 1996 (11)
10.16 Stock Option Agreement between the Registrant and Bishop K. Walker, Jr.
dated March 28, 1996 (11)
10.17 Stock Option Agreement between the Registrant and Denny Kelly dated March
28, 1996 (11)
10.18 Stock Option Agreement between the Registrant and Hodge Patterson III
dated March 28, 1996 (11)
10.19 Stock Option Agreement between the Registrant and Loy McGruder dated
March 28, 1996 (11)
10.20 Stock Option Agreement between the Registrant and R.C. Corr, Jr. dated
March 28, 1996 (11)
10.21 Stock Option Agreement between the Registrant and C. Kenneth Copeland
dated March 28, 1996 (11)
10.22 Stock Option Agreement between the Registrant and Merritt Robbins dated
March 28, 1996 (11)
10.23 Stock Option Agreement between the Registrant and Wayne Washam dated
March 28, 1996 (11)
10.24 Stock Option Agreement between the Registrant and Glynn Debter dated
March 28, 1996 (11)
II-2
<PAGE>
10.25 Stock Option Agreement between the Registrant and Robert Summerford dated
March 28, 1996 (11)
10.26 Change in Control Agreement dated March 28, 1996 by and between Kennon R.
Patterson, Sr. and the Registrant (11)
10.27 Change in Control Agreement dated March 28, 1996 by and between Bishop K.
Walker, Jr. and the Registrant (11)
10.28 Change in Control Agreement dated March 28, 1996 by and between Hodge
Patterson III and the Registrant (11)
10.29 Change in Control Agreement dated March 28, 1996 by and between Denny
Kelly and the Registrant (11)
10.30 Change in Control Agreement dated March 28, 1996 by and between Loy
McGruder and the Registrant (11)
10.31 Stock Option Agreement between the Registrant and Jon Owings dated March
28, 1996 (11)
10.32 Stock Option Agreement between the Registrant and Kennon R. Patterson,
Sr. dated March 27, 1997 (12)
10.33 Stock Option Agreement between the Registrant and Bishop K. Walker, Jr.
dated March 27, 1997 (12)
10.34 Stock Option Agreement between the Registrant and Denny Kelly dated March
27, 1997 (12)
10.35 Stock Option Agreement between the Registrant and Hodge Patterson III
dated March 27, 1997 (12)
10.36 Stock Option Agreement between the Registrant and Loy McGruder dated
March 27, 1997 (12)
10.37 Stock Option Agreement between the Registrant and R.C. Corr, Jr. dated
March 27, 1997 (12)
10.38 Stock Option Agreement between the Registrant and C. Kenneth Copeland
dated March 27, 1997 (12)
10.39 Stock Option Agreement between the Registrant and Merritt Robbins dated
March 27, 1997 (12)
10.40 Stock Option Agreement between the Registrant and Wayne Washam dated
March 27, 1997 (12)
10.41 Stock Option Agreement between the Registrant and Glynn Debter dated
March 27, 1997 (12)
10.42 Stock Option Agreement between the Registrant and Robert Summerford dated
March 27, 1997 (12)
10.43 Stock Option Agreement between the Registrant and Bryan A. Corr dated
March 27, 1997 (12)
10.44 Stock Option Agreement between the Registrant and Kennon R. Patterson,
Jr. dated March 27, 1997 (12)
10.45 Stock Option Agreement between the Registrant and John J. Lewis, Jr.
dated March 27, 1997 (12)
10.46 Stock Option Agreement between the Registrant and Stacey W. Mann dated
March 27, 1997 (12)
II-3
<PAGE>
10.47 Stock Option Agreement between the Registrant and Edward Ferguson dated
March 27, 1997 (12)
10.48 Stock Option Agreement under the Registrant's 1996 Stock Option Plan For
Directors
11 Statement of computation of earnings per common share (12)
13 Registrant's Quarterly Report on Form 10-Q for the three months ended
March 31, 1998 (13)
23.1 Consent of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company (See Exhibit 5)
23.2 Consent of Dudley, Hopton-Jones, Sims & Freeman PLLP
24 Power of Attorney (included in Page II-6)
________________
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-14, Registration No. 2-92974.
(2) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1985.
(3) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1987.
(4) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.
(5) Incorporated by reference to the Registrant's Registration Statement on
Form S-1, Registration No. 33-7032.
(6) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1988.
(7) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1990.
(8) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1991.
(9) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1992.
(10) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995.
(11) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996.
(12) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997.
(13) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the three months ended March 31, 1998.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-
effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of
II-4
<PAGE>
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purposes of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted against
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Blountsville, State of Alabama, on June 9, 1998.
COMMUNITY BANCSHARES, INC.
By: /s/ Kennon R. Patterson, Sr.
-----------------------------
Kennon R. Patterson, Sr.
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Kennon R. Patterson, Sr. and Bishop K. Walker, Jr., his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this registration statement
(including post-effective amendments and amendments thereto) and any
registration statement relating to the same offering as this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Kennon R. Patterson, Sr Chairman, Chief Executive June 9, 1998
- -------------------------------------- Officer and Director (Principal
Kennon R. Patterson, Sr. Executive Officer)
/s/ Paul W. Williams Chief Accounting Officer June 9, 1998
- -------------------------------------- (Principal Financial and
Paul W. Williams Accounting Officer)
/s/ Bryan A. Corr Director June 9, 1998
- --------------------------------------
Bryan A. Corr
/s/ Glynn Debter Director June 9, 1998
- --------------------------------------
Glynn Debter
/s/ Edward E. Ferguson Director June 9, 1998
- --------------------------------------
Edward E. Ferguson
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Denny Kelly Director June 9, 1998
- ---------------------------------------
Denny Kelly
/s/ John J. Lewis, Jr. Director June 9, 1998
- ---------------------------------------
John J. Lewis, Jr.
/s/ Stacey W. Mann Director June 9, 1998
- ---------------------------------------
Stacey W. Mann
/s/ Loy McGruder Director June 9, 1998
- ---------------------------------------
Loy McGruder
/s/ Hodge Patterson III Director June 9, 1998
- ---------------------------------------
Hodge Patterson III
/s/ Kennon R. Patterson, Jr. Director June 9, 1998
- ---------------------------------------
Kennon R. Patterson, Jr.
/s/ Merritt Robbins Director June 9, 1998
- ---------------------------------------
Merritt Robbins
/s/ Henry H. Sims Director June 9, 1998
- ---------------------------------------
Henry H. Sims
/s/ Robert O. Summerford Director June 9, 1998
- ---------------------------------------
Robert O. Summerford
/s/ Bishop K. Walker, Jr. Director June 9, 1998
- ---------------------------------------
Bishop K. Walker, Jr.
/s/ Wayne Washam Director June 9, 1998
- ---------------------------------------
Wayne Washam
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------- -----------
3.1 Certificate of Incorporation, as amended (1)
3.2 Certificate of Amendment to the Certificate of Incorporation, changing
name of the Registrant to Community Bancshares, Inc. (2)
3.3 Certificate of Amendment to the Certificate of Incorporation, providing
indemnification (3)
3.4 Certificate of Amendment to the Certificate of Incorporation, increasing
authorized shares (4)
3.5 Bylaws of the Registrant (1)
4.1 Form of Subscription Agreement
4.2 Specimen Stock Certificate (5)
5 Opinion of Waller Lansden Dortch & Davis, A Professional Limited Liability
Company
10.1 Subordinated Promissory Note between the Registrant as borrower and Jack
Cornelius as holder (6)
10.2 Commercial Lease Agreements and Addendum, dated as of January 23, 1990, by
and between Com-Pac as lessor and Community Bank as lessee (7)
10.3 Employment Agreement, dated as of March 1, 1990, by and between Jeffrey K.
Cornelius and Community Bank (8)
10.4 Employment Agreement, dated as of March 1, 1990, by and between Denny
Kelly and Community Bank (8)
10.5 Employment Agreement, dated as of March 1, 1990, by and between Birl
Bryson and Community Bank (8)
10.6 Employment Agreement, dated as of March 1, 1990, by and between Hodge
Patterson III and Community Bank (8)
10.7 Loan Agreement, Term Note and Pledge Agreement by and between the
Registrant and Colonial Bank, N.A. (9)
10.8 Note Modification Agreement and First Amendment to Pledge Agreement by and
between the Registrant and Colonial Bank, N.A. (8)
10.9 Service Contract, dated as of December 23, 1992, by and between Royal
Acres and Community Bank (8)
10.10 Plan document for the Community Bancshares, Inc. Benefit Restoration Plan
dated April 12, 1994, effective January 1, 1995 (10)
10.11 Amendment No. 3 to the Community Bancshares, Inc. Employee Stock
Ownership Plan dated October 3, 1994 (10)
10.12 Subordinated Promissory Note, dated October 4, 1994, between the
Registrant as borrower and Jeffrey K. Cornelius as holder (10)
10.13 Employment Agreement dated December 9, 1995 by and between Kennon R.
Patterson, Sr. and the Registrant (10)
10.14 Employment Agreement dated December 9, 1995 by and between Bishop K.
Walker, Jr. and the Registrant (10)
II-8
<PAGE>
10.15 Stock Option Agreement between the Registrant and Kennon R. Patterson,
Sr. dated March 28, 1996 (11)
10.16 Stock Option Agreement between the Registrant and Bishop K. Walker, Jr.
dated March 28, 1996 (11)
10.17 Stock Option Agreement between the Registrant and Denny Kelly dated March
28, 1996 (11)
10.18 Stock Option Agreement between the Registrant and Hodge Patterson III
dated March 28, 1996 (11)
10.19 Stock Option Agreement between the Registrant and Loy McGruder dated
March 28, 1996 (11)
10.20 Stock Option Agreement between the Registrant and R.C. Corr, Jr. dated
March 28, 1996 (11)
10.21 Stock Option Agreement between the Registrant and C. Kenneth Copeland
dated March 28, 1996 (11)
10.22 Stock Option Agreement between the Registrant and Merritt Robbins dated
March 28, 1996 (11)
10.23 Stock Option Agreement between the Registrant and Wayne Washam dated
March 28, 1996 (11)
10.24 Stock Option Agreement between the Registrant and Glynn Debter dated
March 28, 1996 (11)
10.25 Stock Option Agreement between the Registrant and Robert Summerford dated
March 28, 1996 (11)
10.26 Change in Control Agreement dated March 28, 1996 by and between Kennon R.
Patterson, Sr. and the Registrant (11)
10.27 Change in Control Agreement dated March 28, 1996 by and between Bishop K.
Walker, Jr. and the Registrant (11)
10.28 Change in Control Agreement dated March 28, 1996 by and between Hodge
Patterson III and the Registrant (11)
10.29 Change in Control Agreement dated March 28, 1996 by and between Denny
Kelly and the Registrant (11)
10.30 Change in Control Agreement dated March 28, 1996 by and between Loy
McGruder and the Registrant (11)
10.31 Stock Option Agreement between the Registrant and Jon Owings dated March
28, 1996 (11)
10.32 Stock Option Agreement between the Registrant and Kennon R. Patterson,
Sr. dated March 27, 1997 (12)
10.33 Stock Option Agreement between the Registrant and Bishop K. Walker, Jr.
dated March 27, 1997 (12)
10.34 Stock Option Agreement between the Registrant and Denny Kelly dated March
27, 1997 (12)
10.35 Stock Option Agreement between the Registrant and Hodge Patterson III
dated March 27, 1997 (12)
10.36 Stock Option Agreement between the Registrant and Loy McGruder dated
March 27, 1997 (12)
10.37 Stock Option Agreement between the Registrant and R.C. Corr, Jr. dated
March 27, 1997 (12)
II-9
<PAGE>
10.38 Stock Option Agreement between the Registrant and C. Kenneth Copeland
dated March 27, 1997 (12)
10.39 Stock Option Agreement between the Registrant and Merritt Robbins dated
March 27, 1997 (12)
10.40 Stock Option Agreement between the Registrant and Wayne Washam dated
March 27, 1997 (12)
10.41 Stock Option Agreement between the Registrant and Glynn Debter dated
March 27, 1997 (12)
10.42 Stock Option Agreement between the Registrant and Robert Summerford dated
March 27, 1997 (12)
10.43 Stock Option Agreement between the Registrant and Bryan A. Corr dated
March 27, 1997 (12)
10.44 Stock Option Agreement between the Registrant and Kennon R. Patterson,
Jr. dated March 27, 1997 (12)
10.45 Stock Option Agreement between the Registrant and John J. Lewis, Jr.
dated March 27, 1997 (12)
10.46 Stock Option Agreement between the Registrant and Stacey W. Mann dated
March 27, 1997 (12)
10.47 Stock Option Agreement between the Registrant and Edward Ferguson dated
March 27, 1997 (12)
10.48 Stock Option Agreement under the Registrant's 1996 Stock Option Plan For
Directors
11 Statement of computation of earnings per common share (12)
13 Registrant's Quarterly Report on Form 10-Q for the three months ended
March 31, 1998 (13)
23.1 Consent of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company (see Exhibit 5)
23.2 Consent of Dudley, Hopton-Jones, Sims & Freeman PLLP
24 Power of Attorney (included in Page II-6)
________________
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-14, Registration No. 2-92974.
(2) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1985.
(3) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1987.
(4) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.
(5) Incorporated by reference to the Registrant's Registration Statement on
Form S-1, Registration No. 33-7032.
(6) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1988.
(7) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1990.
(8) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1991.
(9) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1992.
(10) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995.
II-10
<PAGE>
(11) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996.
(12) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997.
(13) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the three months ended March 31, 1998.
II-11
<PAGE>
EXHIBIT 4.1
SUBSCRIPTION AGREEMENT
______________
COMMUNITY BANCSHARES, INC.
Ladies and Gentlemen:
The undersigned (individually and collectively, the "Subscriber"),
intending to be legally bound, hereby applies to Community Bancshares, Inc. (the
"Company") to purchase the number specified below of shares of the Company's
common stock, $.10 par value per share (the "Shares"), at $19.00 per Share (the
"Purchase Price"), in accordance with the terms and conditions of this
Subscription Agreement and the offer and sale of the Shares (the "Offering") as
described in the Company's Prospectus, dated ___________, 1998 (the "Final
Prospectus"), relating to the Offering.
1. Receipt of Prospectus. The Subscriber understands that this Subscription
shall be an indication of interest with respect to the purchase of Shares until
the delivery of a Final Prospectus to the Subscriber, at which time and upon
acceptance by the Company, this Subscription shall be a binding obligation of
the Subscriber to immediately purchase and pay for the Shares subscribed and
allocated to such Subscriber. The Subscriber may revoke his or her indication
of interest at any time by written notice to the Company requesting the return
of his or her Subscription Agreement, provided such notice is received by the
Company prior to acceptance by the Company.
2. Purchase for Subscriber's Account Only. The Subscriber represents, warrants
and covenants that this Subscription Agreement is offered, and purchase of the
Shares is solely, for the Subscriber's own account and for the person(s) in
whose name(s) such Shares are to be registered as set forth below.
3. Payment of Subscription. All Subscriptions shall be accompanied by a check
in full payment of all Shares subscribed. All checks in payment of
Subscriptions must represent good, collected funds and be for the full amount
subscribed, and shall be payable to "Community Bancshares, Inc." All Shares
subscribed and made available to the undersigned Subscriber by the Company must
be paid in full before the Company shall be obligated to issue Shares to the
Subscriber.
4. Delivery of Subscriptions. All Subscription Agreements and checks for
Shares subscribed shall be delivered by mail or in person to:
COMMUNITY BANCSHARES, INC.
68149 Main Street
P. O. Box 1000
BLOUNTSVILLE, ALABAMA 35031
ATTN: BISHOP K. WALKER, JR.
5. Allocation of Shares. The Subscriber understands and agrees that if fewer
than all Shares subscribed for by the undersigned are accepted by the Company,
the excess subscription will be returned to the undersigned without interest.
The Subscriber understands and agrees that the Company has, in its sole
discretion, the right to allocate shares among Subscribers, and to accept or
reject subscriptions in whole or in part.
6. Tax Matters. All Subscribers must complete, date and sign the attached
Internal Revenue Service Form W-9 to avoid back-up withholding under the Federal
income tax laws.
<PAGE>
7. Miscellaneous. The Subscriber warrants that all information supplied by the
Subscriber is accurate and complete, and shall constitute representations,
warranties and covenants which shall survive the execution, delivery and
acceptance of this Subscription Agreement and the issuance and delivery of
Shares to the Subscriber. When accepted by the Company after the delivery of a
Final Prospectus, this Subscription Agreement shall bind the Subscriber and his
or her successors and assigns, personal and legal representatives, and heirs to
pay for all Shares subscribed and allocated to such Subscriber. The Subscriber
may not assign or transfer this Subscription Agreement or any interest herein,
and, except as specifically provided in Section 1 hereof, this Subscription
Agreement may not be revoked by the Subscriber. The Subscriber hereby consents
to the release of any subscription information requested by the Superintendent
of Banks of the State of Alabama, the Department of Financial Institutions of
the State of Tennessee, the Board of Governors of the Federal Reserve System,
the Federal Deposit Insurance Corporation, or any other governmental or self-
regulatory authority having jurisdiction over the Company or its subsidiaries.
Headings used herein are for convenience of reference only and shall not be
considered in construing the terms of this Subscription Agreement. All
capitalized terms used herein shall have the same meaning as in the Final
Prospectus, unless otherwise defined. This Subscription Agreement shall be
governed by, and construed in accordance with, the laws of the State of Alabama.
8. Registration. Shares purchased by the undersigned shall be registered as
listed below. If certificates for Shares are to be issued in more than one
name, please specify whether ownership is to be as tenants in common, joint
tenants, etc. If certificates for Shares are to be issued in the name of one
person for the benefit of another, please indicate whether registration should
be as trustee or custodian for such person, and if as trustee, please provide
the full name and date of such trust.
2
<PAGE>
IN WITNESS WHEREOF, the undersigned, acting with full authority and
capacity, has executed, or caused to be executed, this Subscription Agreement.
FOR INDIVIDUALS:
Number of Shares subscribed at $19.00 per Share: ___________________________
(Minimum Subscription - 25 Shares ($475.00))
How Shares Are to be Registered:
(please print)
------------------------------
------------------------------
[ ] Individual [ ] Joint Tenants
[ ] Trustee [ ] Tenants in Common
[ ] Custodian [ ] Other
<TABLE>
<S> <C>
- --------------------------------------------- ----------------------------------------------
Sign Here Sign Here
Date Date
- --------------------------------------------- ----------------------------------------------
Name (Please print or type) Name (Please print or type)
- --------------------------------------------- ----------------------------------------------
Residence Address Residence Address
- --------------------------------------------- ----------------------------------------------
Mailing Address (if different) Mailing Address (if different)
- --------------------------------------------- ----------------------------------------------
City and State Zip City and State Zip
- --------------------------------------------- ----------------------------------------------
Home Telephone No. Home Telephone No.
- --------------------------------------------- ----------------------------------------------
Age Age
- --------------------------------------------- ----------------------------------------------
Occupation Occupation
- --------------------------------------------- ----------------------------------------------
Employer Employer
- --------------------------------------------- ----------------------------------------------
Spouse's Name and Occupation Spouse's Name and Occupation
- --------------------------------------------- ----------------------------------------------
Spouse's Employer Spouse's Employer
- --------------------------------------------- ----------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Business Address Business Address
- ------------------------------------------------ ---------------------------------------------------
City and State Zip City and State Zip
- ------------------------------------------------ ---------------------------------------------------
Business Telephone No. Business Telephone No.
- ------------------------------------------------ ---------------------------------------------------
Social Security No./ Taxpayer Identification No. Social Security No./Taxpayer Identification No.
</TABLE>
DO NOT WRITE BELOW THIS LINE
_______________________________________________________________________________
ACCEPTED:
Number of Shares: _________________________________
COMMUNITY BANCSHARES, INC.
By: ________________________________________
Name:
Title:
Date: __________________________________, 1998
__________________________
FOR ENTITIES:
Number of Shares Subscribed at $19.00 per Share:____________________________
(Minimum Subscription - 25 Shares ($475.00))
How Shares Are to be Registered:
(please print)
________________________________________________
________________________________________________
Name of Entity: _____________________________________________________________
Principal Office Address:____________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
By:____________________________ Telephone No.:____________________________
Name:__________________________ Taxpayer Identification No.:______________
Title:_________________________ Principal Business:_______________________
Date: ___________________, 1998
4
<PAGE>
DO NOT WRITE BELOW THIS LINE
_______________________________________________________________________________
ACCEPTED:
Number of Shares _________________________________
COMMUNITY BANCSHARES, INC.
By:________________________________________________
Name:
Title:
Date: _________________________________________, 1998
5
<PAGE>
EXHIBIT 5
WALLER LANSDEN DORTCH & DAVIS,
A PROFESSIONAL LIMITED LIABILITY COMPANY
511 Union Street, Suite 2100
Post Office Box 198966
Nashville, Tennessee 37219-8966
(615) 244-6380
Facsimiles: (615) 244-6804; (615) 244-5686
June 19, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Community Bancshares, Inc.
Registration Statement on Form S-2
Ladies and Gentlemen:
We are acting as counsel to Community Bancshares, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933 (the "Act"), of 500,000 shares of the Company's Common
Stock, $.10 par value per share (the "Shares"), pursuant to the above-referenced
Registration Statement (the "Registration Statement"). In connection with this
opinion, we have examined and relied upon such records, documents and other
instruments as in our judgment are necessary or appropriate in order to express
the opinions hereinafter set forth and have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to original documents of all documents submitted to us as
certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the Shares, when
issued and delivered in the manner and on the terms described in the
Registration Statement, will be duly authorized, validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the reference to us under the
caption "Legal Matters" in the prospectus included in the Registration
Statement.
Very truly yours,
Waller Lansden Dortch & Davis,
A Professional Limited Liability Company
<PAGE>
EXHIBIT 10.48
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE
COMMUNITY BANCSHARES, INC.
1996 STOCK OPTION PLAN FOR DIRECTORS
______________
Grantee: __________________
Number of Shares Subject to Option: __________
Option Price Per Share: $__________
Date of Grant: ____________, 199_
1. Grant of Option: Community Bancshares, Inc. (the "Company") hereby grants
to the Grantee named above (the "Grantee"), under the Community Bancshares, Inc.
1996 Stock Option Plan for Directors (the "Plan"), a Nonqualified Stock Option
to purchase, on the terms and conditions set forth in this agreement (this
"Option Agreement"), the number of shares indicated above the Company's Common
Stock of the par value of $.10 each (the "Stock"), at the option price per share
set forth above, which is the Fair Market Value per share of Stock on the date
of grant. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned such terms of the Plan.
2. Period of Option and Limitations on Right to Exercise. The Nonqualified
Stock Option granted hereby will, to the extent not previously exercised, lapse
at 5:00 p.m., Central Time, on the day immediately prior to the fifth
anniversary of the date of grant (the "Expiration Date") unless sooner
terminated in whole or in part as follows:
(a) Termination of Directorship. Upon termination of the Grantee's
membership on the Board of Directors of the Company for any reason other than
for cause of death, the Option granted hereby shall terminate ninety (90) days
following the date of termination of the Grantee's membership on the board or,
if earlier, on the Expiration Date. If the Grantee exercised the Option after
termination of the Grantee's service on the Board of Directors, the Grantee may
exercise the Option only with respect to the shares that were otherwise
exercisable on the date of termination on the Grantee's service on the Board.
If the Grantee's membership on the Board of Directors is terminated for cause,
the Option granted hereby shall expire upon such termination.
(b) Death. In the event of the death of the Grantees, the Grantee's
personal representatives, heirs or legatees (the "Grantee's Successors") may
exercise the Option granted hereby on the date of death, upon proof satisfactory
to the company of their authority. The Grantee's Successors must exercise such
Option within one (1) year after the Grantee's death and in any event prior to
the Expiration Date.
3. Exercise of Option. The terms, times and conditions of exercise of the
Nonqualified Stock Option granted hereby are as follows:
(a) The Option shall be exercisable at any time after the date of grant
prior to its lapse as stated in paragraph "2."
(b) The Option granted hereby shall be exercised by written notice directed
to the Secretary of the Company at the principal executive offices of the
Company. Such written notice shall be accompanied by full payment in cash or by
check for the number of Shares specified in such written notice. To the extent
permitted under Regulation T of the Federal Reserve Board, and subject to
applicable securities laws, the Option may be exercised through a broker in a
so-called "cashless exercise" whereby the broker sells the option shares and
delivers cash sales proceeds to the Company in payment of the exercise price.
(c) Subject to the terms of this Option Agreement, the Nonqualified Stock
Option granted hereby may be exercised at any time and without regard to any
other option held by the Grantee to purchase stock of the Company.
<PAGE>
(d) In addition, the terms contained in the Plan are incorporated into and
made a part of this Option Agreement and this Option Agreement shall be governed
by and construed in accordance with the Plan.
4. Nontransferability. The Option granted hereby is not assignable or
transferable by the Grantee other than by will or the laws of descent and
distribution and is subject to the provisions of Section 8 hereof. The Option
may be exercised during the lifetime of the Grantee only by the Grantee.
5. Limitation of Rights. The Option granted hereby does not confer to the
Grantee or the Grantee's personal representative any rights of a stockholder of
the Company unless and until shares of Stock are in fact issued to such person
in connection with the exercise of the Option. Nothing in this Option Agreement
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate the Grantee's directorship at any time, nor confer upon
the Grantee any right to continue in as a director of the Company or any
Subsidiary.
6. Stock Reserve. The Company shall at all times during the term of this
Option Agreement reserve and keep available such number of shares of Stock as
will be sufficient to satisfy the requirements of this Option Agreement.
7. Grantee's Covenant. The Grantee hereby agrees to his or her best efforts to
serve as a director of the Company in a diligent and loyal manner and to promote
the Company's interests.
8. Restrictions on Transfer and Pledge. No right or interest of the Grantee in
the Option granted hereby may be pledged, encumbered, or hypothecated to or in
favor of any party other than the Company or a subsidiary, or shall be subject
to any lien, obligation, or liability of the Grantee to any other party other
than the Company or a Subsidiary.
9. Restrictions on Issuance of Shares. If any time the Board shall determine
in its discretion, that listing, registration or qualification of the shares of
Stock covered by the Option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition to the exercise of the Option, the Option
may not be exercised in whole or in part unless and until such listing,
registration, qualification, consent or approval shall have been affected or
obtained free of any conditions not acceptable to the Board.
10. Plan Controls. In the event of any actual or alleged conflict between the
provision of the Plan and the provisions of this Option Agreement, the
provisions of the Plan shall be controlling and determinative.
11. Successors. This Option Agreement shall be binding upon any successor of
the Company, in accordance with the terms of this Option Agreement and the Plan.
IN WITNESS WHEREOF, Community Bancshares, Inc., acting by and through its
duly authorized officers, has caused this Option Agreement to be executed, and
the Grantee has executed this Option Agreement, all as of the day and year first
above written.
COMMUNITY BANCSHARES, INC.
By:________________________________
Name:
Title:
"GRANTEE"
___________________________________
Name:
2
<PAGE>
EXHIBIT 23.2
CONSENT OF DUDLEY, HOPTON-JONES, SIMS & FREEMAN PLLP,
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the reference to our firm under the caption "Experts"
in the Registration Statement and related Prospectus of Community Bancshares,
Inc. for the registration of 500,000 shares of its common stock and to the
incorporation by reference therein of our report dated February 13, 1998, with
respect to the consolidated financial statements of Community Bancshares, Inc.
included and incorporated by reference in its Annual Report (Form 10-K) for the
year ended December 31, 1997, filed with the Securities and Exchange Commission.
Dudley, Hopton-Jones, Sims & Freeman PLLP
Birmingham, Alabama
June 9, 1998
