SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
COMMUNITY BANCSHARES, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: _________________________________________
2) Form, Schedule or Registration Statement No.: ___________________
3) Filing Party: ___________________________________________________
4) Date Filed: _____________________________________________________
April 30, 1999
To Our Shareholders:
Your are cordially invited to attend the Annual Meeting of Shareholders of
Community Bancshares, Inc. (the "Company"), the holding company for Wilkes
National Bank (the "Bank"), which will be held on Friday, May 28, 1999 at
11:00 a.m., at the Inn at Wilkesboro, 1700 Winkler Street, Wilkesboro,
North Carolina 28697.
The Notice of Annual Meeting and a Proxy Statement, which describe the
formal business to be conducted at the Annual Meeting, follow this letter.
After reading the Proxy Statement, please promptly mark, sign and return
the enclosed proxy in the prepaid envelope to assure that your shares
will be represented. Your shares cannot be voted unless you date, sign
and return the enclosed proxy or attend the Annual Meeting in person.
Regardless of the number of shares you own, your careful consideration
of, and vote on, the matters before our shareholders are important.
A copy of the Company's 1998 Annual Report is also enclosed for your
information.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Dwight E. Pardue
Dwight E. Pardue
Chairman of the Board
COMMUNITY BANCSHARES, INC.
1301 Westwood Lane - Westfield Village
Wilkesboro, North Carolina 28697
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 28, 1999
The Annual Meeting of Shareholders of Community Bancshares, Inc. (the
"Company") will be held on Friday, May 28, 1999 at 11:00 a.m., at the Inn at
Wilkesboro, 1700 Winkler Street, Wilkesboro, North Carolina 28697, for the
following purposes:
(1) To elect four (4) directors to serve for the respective terms set
forth in the accompanying Proxy Statement and until their successors are
elected and qualified; and
(2) To vote in accordance with their best judgment with respect to any
other matters that may properly come before the meeting or any adjournments
or postponements thereof.
Only shareholders of record at the close of business on April 15, 1999
will be entitled to notice of and to vote at the meeting or any adjournments
or postponements thereof.
A Proxy Statement and a proxy solicited by the Board of Directors are
enclosed herewith. Please sign, date and return the proxy promptly. If
you attend the meeting, you may, if you wish, withdraw your proxy and vote
in person.
By Order of the Board of Directors,
/s/ Ronald S. Shoemaker
Ronald S. Shoemaker
President and Chief Executive Officer
Wilkesboro, North Carolina
April 30, 1999
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY SO THAT YOUR
VOTE MAY BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
COMMUNITY BANCSHARES, INC.
1301 Westwood Lane - Westfield Village
Wilkesboro, North Carolina 28697
ANNUAL MEETING OF SHAREHOLDERS
May 28, 1999
__________________________
PROXY STATEMENT
__________________________
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Community Bancshares, Inc. (the "Company")
for the Annual Meeting of Shareholders to be held on Friday, May 28, 1999, and
any adjournments and postponements thereof (the "Annual Meeting"), at the time
and place and for the purposes set forth in the accompanying notice of the
meeting. The expense of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be paid by the Company. In addition to
solicitations by mail, officers and regular employees of the Company, at no
additional compensation, may assist in soliciting proxies by telephone. This
Proxy Statement and the accompanying proxy card are first being mailed to
shareholders on or about April 30, 1999. The address of the principal executive
offices of the Company is 1301 Westwood Lane - Westfield Village, Wilkesboro,
North Carolina 28697.
Any proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives oral notice of his election to
vote in person, without compliance with any other formalities. In addition,
any proxy given pursuant to this solicitation may be revoked prior to the
meeting by delivering to the Secretary of the Company an instrument revoking
it or a duly executed proxy for the same shares bearing a later date. Proxies
which are returned properly executed and not revoked will be voted in
accordance with the shareholder's directions specified thereon. Where no
direction is specified, proxies will be voted for the election of the nominees
named herein.
The Board of Directors has fixed the close of business on April 15, 1999
as the record date (the "Record Date") for the determination of the holders of
the Company's Common Stock entitled to receive notice of and to vote at the
Annual Meeting and at any adjournments or postponements thereof. Only holders
of record of Common Stock at the close of business on the Record Date will be
entitled to vote at the Annual Meeting. At the close of business on the Record
Date, there were 1,447,884 shares of Common Stock issued and outstanding.
The holders of shares of Common Stock outstanding on the Record Date will
be entitled to one vote for each share held of record upon each matter properly
submitted at the Annual Meeting. The presence, in person or by proxy, of at
least a majority of the total number of outstanding shares of Common Stock is
necessary to constitute a quorum at the Annual Meeting. Shares which are
present in person or by proxy but abstain from voting with respect to one or
more proposals voted upon at the Annual Meeting will be included for purposes
of determining a quorum at the Annual Meeting.
AGENDA ITEM ONE
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of nine directors. The
Company's Articles of Incorporation provide for a classified board of directors,
whereby approximately one-third of the members of the Company's Board of
Directors are elected each year at the Company's Annual Meeting of Shareholders.
At each Annual Meeting of Shareholders, successors to the class of directors
whose term expires at the Annual Meeting will be elected for a three year term.
Four Class II directors are presently standing for election to the Board. In
order to correct an imbalance in the allocation of directors among the three
classes, Robert F. Ricketts, one of the Class II directors up for election this
year, has agreed to be designated as a Class III director, to serve until the
2000 annual meeting of shareholders. At next year's annual meeting, Mr.
Ricketts will again be up for election, along with the other two Class III
directors, to serve for a term of three years. As a result of this
reallocation, each of the three classes of directors of the Company will
consist of three members.
The Board of Directors recommends the election of the four nominees listed
below. In the event that any nominee withdraws or for any reason is not able to
serve as director, the proxy will be voted for such other person as may be
designated by the Board of Directors, but in no event will the proxy be voted
for more than four nominees. The affirmative vote of a plurality of all votes
cast at the meeting by the holders of the Common Stock is required for the
election of the four nominees standing for election. Management of the Company
has no reason to believe that any nominee will not serve if elected.
The following persons have been nominated by management for election to
the Board of Directors as Class II directors, to serve for a term of three years
and until their successors are elected and qualified:
BRENT F. ELLER, age 59, has served as Secretary and Treasurer of the
Company since June 1990. Mr. Eller served as an operations specialist with
Lowe's Companies, Inc., a retail building materials and home center chain, from
1980 until his retirement in 1994.
JACK R. FERGUSON, age 72, is presently retired. From 1954 to 1985, he
served in various capacities with Lowe's Companies, Inc., including most
recently as manager of the Hendersonville, North Carolina store.
RONALD S. SHOEMAKER, age 58, has served as President of the Company and
the Bank since June 1990, and has been engaged in the organization of the
Company and the Bank since February 1990. Mr. Shoemaker served as Senior Vice
President and City Executive for Southern National Bank of North Carolina from
1985 to 1988.
The following person has been nominated by management for election to the
Board of Directors as Class III director, to serve for a term of one year and
until his successor is elected and qualified:
ROBERT F. RICKETTS, DDS, age 49, is a dentist who has been engaged in
private practice in North Wilkesboro since 1976.
The following persons are members of the Board of Directors who are not
standing for election to the Board this year and whose term will continue after
the Annual Meeting of Shareholders.
Class III Directors, serving for a term expiring at the 2000 Annual
Meeting of Shareholders:
DWIGHT E. PARDUE, age 70, is presently retired. Mr. Pardue served as
Chairman of the Board of the Company since 1992. From 1956 to January 1990,
Mr. Pardue served in various capacities with Lowe's Companies, Inc., including
most recently Senior Executive Vice President.
R. COLIN SHOEMAKER, age 55, has served as Controller and Officer Manager
of Key City Furniture Company, Inc. since 1985.
Class I Directors, serving for a term expiring at the 2001 Annual Meeting
of Shareholders:
GILBERT R. MILLER, age 69, is presently retired. From 1947 to 1986,
Mr. Miller served as President and Chief Executive Officer of Miller Brothers
Lumber Company.
RANDY D. MILLER, age 43, has served as President of Randy Miller Lumber
Company since 1983. Mr. Miller has also served as President of Randy Miller
Trucking Company since 1983, and as President of Pine Log Company since 1995.
REBECCA ANN SEBASTIAN, age 63, is presently retired. Ms. Sebastian served
as Media Coordinator at the North Wilkesboro Elementary School from 1972 until
her retirement in 1994.
Each of the above persons (with the exception of Jack Ray Ferguson and
Randy D. Miller) has been a director of the Company since 1990. Mr. Ferguson
has been a director of the Company since 1991 and Randy D. Miller has been a
director of the Company since 1998.
Ronald S. Shoemaker, President and a director of the Company and the Bank,
is the brother of R. Colin Shoemaker, a director of the Company and the Bank.
Randy D. Miller, a director of the Company and the Bank, is the son of Gilbert
R. Miller, a director of the Company and the Bank.
EXECUTIVE OFFICERS
Ronald S. Shoemaker, the President and Chief Executive Officer of the
Company, is the sole executive officer of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1994
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons who own more than 10%
of the outstanding common stock of the Company, to file with the Securities
and Exchange Commission reports of changes in ownership of the common stock
of the Company held by such persons. Officers, directors and greater than
10% shareholders are also required to furnish the Company with copies of
all forms they file under this regulation. To the Company's knowledge,
based solely on a review of the copies of such reports furnished to the
Company and representations that no other reports were required, during
fiscal 1998, the Company has complied with all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
shareholders, except as follows: R. Colin Shoemaker, Brent F. Eller,
Jack R. Ferguson, Rebecca Ann Sebastian, Robert F. Ricketts, Dwight E.
Pardue and Gilbert R. Miller, each had a late filing relating to the
grant of non-employee director options in July 1998. In addition, to the
best knowledge and belief of the Company, Edward F. Greene failed to file
one report relating to a total of five transactions.
MEETINGS OF THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held 11 meetings during the year
ended December 31, 1998. Each director attended at least 75% or more of the
aggregate number of meetings held by the Board of Directors and the committees
on which he or she served. The Company's Board of Directors has four standing
committees -- the Executive Committee, the Real Estate Committee, the Stock
Option/Executive Compensation Committee and the Audit Committee.
The Executive Committee presently consists of Ronald S. Shoemaker, Robert
F. Ricketts, Brent F. Eller and Jack Ray Ferguson. The Executive Committee
exercises all of the authority of the Board of Directors and the management of
the Company during the period of time between meetings of the Board of
Directors. The Executive Committee did not meet during 1998.
The Real Estate Committee presently consists of R. Colin Shoemaker,
Gilbert R. Miller, Jack Ray Ferguson and Ronald S. Shoemaker. The Real Estate
Committee has been assigned the functions of making recommendations to the full
Board regarding real estate requirements and opportunities for the Company. The
Real Estate Committee held four meetings during 1998.
The Stock Option/Executive Compensation Committee presently consists of
Robert F. Ricketts, Jack Ray Ferguson, Gilbert R. Miller and Rebecca Ann
Sebastian. The Stock Option/Executive Compensation Committee has been assigned
the function of administrating the Company's stock option plan and granting
options thereunder, recommends incentives for hiring qualified personnel and
reviews executive compensation. The Stock Option/Executive Compensation
Committee held one meeting during 1998.
The Audit Committee presently consists of Brent F. Eller, Rebecca Ann
Sebastian R. Colin Shoemaker and Randy D. Miller. The Audit Committee has been
assigned the principal functions of (i) recommending the independent auditors,
(ii) reviewing and approving the annual report of the independent auditors,
(iii) approving the annual financial statements and (iv) reviewing and
approving summary reports to the auditors' findings and recommendations.
The Audit Committee held four meetings during 1998.
The Board of Directors does not have a standing nominating committee, such
function being reserved to the full Board of Directors. Any shareholder entitled
to vote for the election of directors may nominate a person or persons for
election as a director only if written notice of such shareholder's intention to
make any such nomination is given to the Company not less than 90 days nor more
than 120 days prior to the meeting; provided, however, that if less than 100
days' notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder will be timely if received not
later than the close of business on the seventh day following the day on which
such notice of the date of the meeting or such public disclosure was given or
made. Notice of the date of the meeting shall be deemed to have been given by
the Company more than 100 days in advance of the annual meeting if the annual
meeting is called on the last Friday in May, without regard to when notice or
public disclosure thereof is made. Each such notice shall set forth: (a) the
name and address of the shareholder who intends to make the nomination; (b) a
representation that such shareholder is a holder of record of shares of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the notice;
(c) as to each person to be nominated (i) such person's name and address,
employment history for the past five years, affiliations, if any, with the
Company and other corporations, the class and number of shares of the
corporation that are owned of record or beneficially by such person and
information concerning any transactions in such shares within the prior 60
days, whether such person has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) within the past
five years and the details thereof, whether such person has been a party to
any proceeding or subject to any judgment, decree or final order with respect
to violations of federal or state securities laws within the past five years
and the details thereof, and the details of any contract, arrangement,
understanding or relationships with any person with respect to any securities
of the Company, (ii) such person's written consent to being named as a nominee
and to serving as a director if elected, and (iii) a description of all
arrangements and understandings between the shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the shareholder.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 15, 1999 with
respect to ownership of the outstanding Common Stock of the Company by (i) all
persons known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock of the Company, (ii) each director and director nominee
of the Company, and (iii) all executive officers and directors of the Company as
a group.
Amount and
Nature of Percent of
Beneficial Outstanding
Beneficial Owner Ownership (1) Shares
---------------- ------------- -----------
Brent F. Eller (2).......................29,524 2.0%
Jack R. Ferguson (3)....................225,289 15.2
Gilbert R. Miller (4)....................72,994 5.0
Randy D. Miller (5)......................57,368 3.9
Dwight E. Pardue (6)....................234,647 15.9
Robert F. Ricketts, DDS (7)....... ......58,897 4.0
Rebecca Ann Sebastian (8)................66,310 4.5
R. Colin Shoemaker (9)...................26,201 1.8
Ronald S. Shoemaker (10).................84,878 5.6
Thomas and Mary Severt (11)........ ....169,301 11.2
John F. Yearick (12)....................102,106 7.1
All executive officers and directors
as a group (9 persons)................874,104 52.8
_______________
(1) Except as otherwise indicated, each person named in this table possesses
sole voting and investment power with respect to the shares beneficially
owned by such person. "Beneficial Ownership" includes shares for which
an individual, directly or indirectly, has or shares voting or investment
power or both and also includes warrants and options which are exercisable
within sixty days of the date hereof. Beneficial ownership as reported in
the above table has been determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934. The percentages are based upon 1,447,884
shares outstanding, except for certain parties who hold presently
exercisable warrants or options to purchase shares. The percentages for
those parties who hold presently exercisable warrants or options are based
upon the sum of 1,447,884 shares plus the number of shares subject to
presently exercisable warrants or options held by them, as indicated in
the following notes.
(2) Includes 8,724 shares subject to presently exercisable stock purchase
warrants and 10,000 shares subject to presently exercisable stock options.
(3) Includes 20,742 shares subject to presently exercisable stock purchase
warrants and 10,000 shares subject to presently exercisable stock options.
Also includes 2,000 shares held by the Ferguson Educational Trust.
Mr. Ferguson's address is 71 Beaverdam Road, Candler, North Carolina
28715.
(4) Includes 10,000 shares subject to presently exercisable stock options.
Mr. Miller's address is P.O. Box 1497, Millers Creek, North Carolina
28651.
(5) Includes 2,000 shares subject to presently exercisable stock options.
(6) Includes 20,742 shares subject to presently exercisable stock purchase
warrants and 10,000 shares subject to presently exercisable stock options.
Also includes 1,500 shares owned by Mr. Pardue's spouse and 500 shares
held by Mr. Pardue as custodian for his grandchild. Mr. Pardue's address
is P.O. Box 791, North Wilkesboro, North Carolina 28659.
(7) Includes 4,262 shares subject to presently exercisable stock purchase
warrants and 10,000 shares subject to presently exercisable stock options.
(8) Includes 5,000 shares owned jointly by Ms. Sebastian with a relative and
10,000 shares subject to presently exercisable stock options.
(9) Includes 2,060 shares subject to presently exercisable stock purchase
warrants and 10,000 shares subject to presently exercisable stock options.
Also includes 1,210 shares owned by his wife's IRA.
(10) Includes 60,000 shares subject to presently exercisable stock options.
Mr. Shoemaker's address is 924 Pleasant Home Church Road, Miller's Creek,
North Carolina 28651.
(11) Includes 62,226 shares subject to presently exercisable stock purchase
warrants. The Severts' address is P.O. Box 222, Jefferson, North Carolina
28640.
(12) Mr. Yearick's address is 45796 Circle Drive, Great Mills, Maryland 20634.
EXECUTIVE COMPENSATION
The following table provides certain summary information for the fiscal
years ended December 31, 1998, 1997 and 1996 concerning compensation paid or
accrued by the Company to or on behalf of the Company's Chief Executive Officer.
None of the other executive officers of the Company had a total annual salary
and bonus which exceeded $100,000 during the last fiscal year.
Summary Compensation Table
Long Term
Annual Compensation Compensation
------------------- ------------
Name and Other Number of
Principal Annual Options All other
Position Year Salary Bonus Compensation Awarded Compensation
-------- ---- ------ ----- ------------ ------- ------------
Ronald S. Shoemaker, 1998 $99,937 $18,000 15,113(1) 10,000 $4,553
President and Chief 1997 89,406 18,000 13,462(1) 10,000 4,470
Executive Officer 1996 88,830 18,000 11,659(1) 10,264 4,333
_______________
(1) Includes an annual automobile allowance of $6,600 and insurance premiums
totaling $8,513, $6,862 and $5,059 paid by the Company in 1998, 1997 and
1996, respectively.
(2) Represents the Company's matching contribution under its 401(k) Plan.
Currently, the directors of the Company receive no cash compensation for
their services. Each of the Company's outside directors receives an automatic
annual grant of options to purchase 2,000 shares of Common Stock of the Company
on each July 1, provided that such director has served on the Board of Directors
of the Company during the twelve month period immediately preceding the option
grant. All new directors will also receive an option to purchase 2,000 shares
of Common Stock upon their election to the Board of Directors of the Company.
EMPLOYMENT AGREEMENT
In February 1995, the Company entered into an Employment Agreement with
Ronald S. Shoemaker, pursuant to which Mr. Shoemaker serves as President and
Chief Executive Officer of the Company. The Employment Agreement is for a term
of five years, provided, however, that during each of the first five years, an
additional year will be added to the term of the agreement, so that the
Employment Agreement will expire on February 1, 2005. The Employment Agreement
provides for an annual base salary of $84,000 and bonuses to be determined in
the discretion of the Board of Directors. Mr. Shoemaker has also been granted
an option to purchase 40,000 shares of Common Stock of the Company, exercisable
over a term of ten years at an exercise price of $10.00 per share. The
Employment Agreement requires the Bank to maintain a key man life insurance
policy on Mr. Shoemaker in the amount of $500,000. The Employment Agreement
provides for certain severance payments to be paid to Mr. Shoemaker in the event
of a change of control of the Company. In the event of a change in control, if
Mr. Shoemaker cannot reach agreement with respect to his employment arrangements
following such change in control, Mr. Shoemaker will be entitled to receive a
lump sum cash payment equal to $300,000. In addition, in the event Mr.
Shoemaker is terminated by the Company without cause, he will receive during the
balance of his term of employment the annual base salary which would otherwise
be payable to Mr. Shoemaker had he remained in the employ of the Company.
The Employment Agreement contains noncompete provisions, effective through
the actual date of termination of the Employment Agreement and for a period of
one year thereafter in the event Mr. Shoemaker terminates his employment with
the Company. The noncompete provisions of the Employment Agreement may not be
enforceable under North Carolina law if judicially deemed to be unreasonable.
STOCK OPTION PLAN
On May 28, 1993, the Company's shareholders adopted a 1993 Incentive Stock
Option Plan (the "Plan") for employees who are contributing significantly to the
management or operation of the business of the Company or its subsidiaries as
determined by the committee administering the Plan. The Plan provides for the
grant of up to 400,000 options at the discretion of the Board of Directors or a
committee designated by the Board of Directors to administer the Plan. The
option exercise must be at least 100% (110% in the case of a holder of 10% or
more of the Common Stock) of the fair market value of the stock on the date the
option is granted and the options are exercisable by the holder thereof in full
at any time prior to their expiration in accordance with the terms of the Plan.
Stock options granted pursuant to the Plan will expire on or before (1) the date
which is the tenth anniversary of the date the option is granted, or (2) the
date which is the fifth anniversary of the date the option is granted in the
event that the option is granted to a key employee who owns more than 10% of the
total combined voting power of all classes of stock of the Company or any
subsidiary of the Company.
In May 1994, the Plan was amended to, among other things, provide for the
automatic annual grant of options to purchase 2,000 shares of Common Stock to
each of the Company's outside directors.
The following table provides certain information concerning individual
grants of stock options made during the fiscal year ended December 31, 1998 to
Ronald S. Shoemaker:
Option Grants in Last Fiscal Year
Individual Grants
----------------------------------------
% of Total
Options
Options Granted to Exercise
Granted Employees in or Base Price Expiration
Name (#) Fiscal Year ($ Per Share) Date
---- ------- ------------ ------------- ----------
Ronald S. Shoemaker 10,000(1) 62.5% $10.00 1/1/08
____________________________
(1) Options vest immediately.
The following table presents information regarding warrants exercised during
1998 and the value of unexercised options held at December 31, 1998 by Ronald S.
Shoemaker. No stock options were exercised by Mr. Shoemaker and there were no
SARs outstanding during fiscal 1998.
Number of Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired at Fiscal Year End at Fiscal Year End
on Value ----------------------- -----------------------
Name Exercise Realized Exercisable/Unexcisable Exercisable/Unexcisable
---- -------- -------- ----------------------- -----------------------
Ronald S. 9,500(1) $99,750 60,000/0 $450,000/$0
Shoemaker
__________________
(1) Dollar values calculated by determining the difference between the
estimated fair market value of the Company's Common Stock at December
31, 1998 ($16.00) and the exercise price of such options.
(2) Represents stock purchase warrants granted in connection with the Company's
initial stock offering.
CERTAIN TRANSACTIONS
On June 27, 1991, the Company entered into a Lease Agreement with Edward F.
Greene and his wife, Frances C. Greene to lease the Company's Curtis Bridge Road
office, an approximately 1,600 square foot facility in Wilkesboro, North
Carolina. On June 27, 1996, this Lease Agreement expired and the Bank entered
into a New Lease Agreement with Mr. and Mrs. Greene to lease the same facility.
On November 17, 1993, the Company also entered into a lease agreement with
Edward F. Greene and Joe D. Severt to lease the Company's North Wilkesboro
branch office, an approximately 1,200 square foot facility in North Wilkesboro,
North Carolina. Lease payments by the Company pursuant to these agreements,
including property taxes, totaled $65,990 during 1998 and $72,949 during 1997.
Edward F. Greene and Joe D. Severt served as directors of both the Company and
the Bank during 1997 and 1998.
On December 23, 1997, the Company, along with eight of its directors, were
sued by Edward F. Greene and Joe Severt, individually and derivatively on behalf
of the Company. This lawsuit was dismissed on September 24, 1998. Shortly
after the lawsuit was dismissed, the plaintiffs threatened to refile their
lawsuit against the Company. On December 23, 1998, the Company settled the
proposed derivative action involving the Company and eight of its directors.
All claims made by all parties have been dismissed pursuant to the settlement.
Under the terms of the settlement agreement, six of the directors of the Company
purchased substantially all of the common stock of the Company owned by Edward
F. Greene and Stephen B. Greene, and certain of their affiliates. In addition,
the Company and two of its directors purchased from Edward F. Greene and Stephen
B. Greene all stock purchase warrants and stock options of the Company held by
the Greenes. These purchases were completed on February 18, 1999. In connection
therewith, the Company repurchased 82,986 common stock purchase warrants and
options to purchase 20,000 shares of common stock, for a total purchase price of
$1,155,100.
Pursuant to the terms of the settlement agreement, the Company purchased its
Curtis Bridge Road bank premises from Edward F. Greene in December 1998 at a
purchase price of $314,100, which represents the appraised value of this
property.
The Company's subsidiary, Wilkes National Bank, has outstanding loans to
certain of the Company's directors, executive officers, their associates and
members of the immediate families of such directors and executive officers.
These loans were made in the ordinary course of business, on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with persons not affiliated with the Company or
the Bank and do not involve more than the normal risk of collectibility or
present other unfavorable features.
INDEPENDENT PUBLIC ACCOUNTANTS
Francis & Company has served as independent auditors of the Company for the
fiscal year ended December 31, 1998 and have been selected by the Board of
Directors to serve as independent auditors of the Company for the fiscal year
ending December 31, 1999. Representatives of Francis & Company are expected to
be present at the shareholders' meeting and will have the opportunity to make a
statement if they desire to do so and to respond to appropriate questions.
ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998, as filed with the Securities and Exchange Commission, is
available to shareholders who make written request therefor to the Company at
1301 Westwood Lane - Westfield Village, Wilkesboro, North Carolina 28697.
Copies of exhibits and basic documents filed with that report or referenced
therein will be furnished to shareholders of record upon request.
SHAREHOLDER PROPOSALS
Any proposal of stockholders to be presented at next year's Annual Meeting
must be received at the principal executive offices of the Company not later
than December 31, 1999 directed to the attention of the Corporate Secretary, in
order to be eligible for inclusion in the Company's proxy statement and form of
proxy relating to that meeting. Proxies solicited by the Company for the 2000
annual Meeting may confer discretionary authority to vote on any proposals
received after February 28, 2000 without a description of them in the proxy
materials for that meeting. Any stockholder proposals must comply in all
respects with the rules and regulations of the Securities and Exchange
Commission and the Company's bylaws. A copy of the Company's bylaws may be
obtained by writing to the Corporate Secretary.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
annual meeting. However, if other matter should come before the annual meeting
it is the intention of the persons named in the enclosed form of Proxy to vote
the Proxy in accordance with their judgment of what is in the best interest of
the Company.
By Order of the Board of Directors,
/s/ Ronald S. Shoemaker
Ronald S. Shoemaker
President and Chief Executive Officer
Wilkesboro, North Carolina
April 30, 1999
APPENDIX A
COMMUNITY BANCSHARES, INC.
1301 Westwood Lane - Westfield Village
Wilkesboro, North Carolina 28697
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 1999
ANNUAL MEETING OF SHAREHOLDERS.
The undersigned hereby appoints Ronald S. Shoemaker and Brent F. Eller, or
either of them, with power of substitution to each, the proxies of the
undersigned to vote the Common Stock of the undersigned at the Annual Meeting of
Shareholders of COMMUNITY BANCSHARES, INC. to be held on Friday, May 28, 1999,
at 11:00 a.m. at the Inn at Wilkesboro, 1700 Winkler Street, Wilkesboro, North
Carolina, and any adjournments or postponements thereof:
1. To elect four (4) directors for a terms set forth below and until their
successors are elected and have qualified.
___ FOR all nominees listed below ___ WITHHOLD AUTHORITY to
(except as marked to the vote for all nominees listed below
contrary below)
Class II Directors (to serve for a term expiring at the 2002 Annual Meeting of
Shareholders):
Brent F. Eller, Jack Ray Ferguson and Ronald S. Shoemaker.
Class III Director (to serve for a term expiring at the 2000 Annual Meeting of
Shareholders):
Robert F. Ricketts.
INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name in the space provided below.
- -----------------------------------------------------------------------------
2. To vote in accordance with their best judgment with respect to any other
matters that may properly come before the meeting and any adjournments or
postponements thereof.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ABOVE PROPOSALS AND UNLESS
INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED, THIS PROXY
WILL BE SO VOTED.
Please date and sign this Proxy exactly as
name(s) appears on the mailing label.
______________________________________
______________________________________
Print Name(s):________________________
NOTE: When signing as an attorney,
trustee, executor, administrator or
guardian, please give your title as such.
If a corporation or partnership, give
full name by authorized officer. In the
case of joint tenants, each joint owner
must sign.
Dated: ______________________________
