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 Sect.240.14a-11(c) or Sect.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.
) Title of each class of securities to which transaction applies:
) Aggregate number of securities to which transaction applies:
) 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):
) 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.
) Amount Previously Paid: ____________________________________
) Form, Schedule or Registration Statement No.: __________________
) Filing Party: ____________________________________
) Date Filed: ____________________________________
April 26, 2000
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "Annual Meeting") of Community Bancshares, Inc. (the "Company"), the
holding company for Wilkes National Bank (the "Bank"), which will be held on
Friday, May 26, 2000 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 is important.
A copy of the Company's 1999 Annual Report is also enclosed for your
information.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Jack Ray Ferguson
----------------------------
Jack Ray Ferguson
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 26, 2000
The Annual Meeting of Shareholders of Community Bancshares, Inc. (the
"Company") will be held on Friday, May 26, 2000 at 11:00 a.m., at the Inn at
Wilkesboro, 1700 Winkler Street, Wilkesboro, North Carolina 28697, for the
following purposes:
(1) To elect three (3) 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 14, 2000
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 26, 2000
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 26, 2000
-------------------------
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
26, 2000, 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 26, 2000.
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 Annual 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 Annual 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 14, 2000
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 1,467,384 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 of Shareholders will be
elected for a three year term. Three Class III directors are presently
standing for election to the Board.
The Board of Directors recommends the election of the three 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 three nominees. The affirmative vote of a plurality of
all votes cast at the Annual Meeting by the holders of the Common Stock is
required for the election of the three 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 III directors, to serve for a term of three
years and until their successors are elected and qualified:
ROBERT F. RICKETTS, DDS, age 50, is a dentist who has been engaged in
private practice in North Wilkesboro since 1976.
DWIGHT E. PARDUE, age 71, is presently retired. Mr. Pardue served as
Chairman of the Board of Directors of the Company from 1992 until May 1999.
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 56, has served as Controller and Officer Manager
of Key City Furniture Company, Inc. since 1985.
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.
Class I Directors, serving for a term expiring at the 2001 Annual
Meeting of Shareholders:
GILBERT R. MILLER, age 70, 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 44, 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 64, is presently retired. Ms. Sebastian
served as Media Coordinator at the North Wilkesboro Elementary School from
1972 until her retirement in 1994.
Class II Directors, serving for a term expiring at the 2002 Annual
Meeting of Shareholders:
BRENT F. ELLER, age 60, 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 RAY FERGUSON, age 73, 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. Mr. Ferguson
has served as Chairman of the Board of Directors of the Company, since May
1999.
RONALD S. SHOEMAKER, age 59, 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.
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 1999, the
Company has complied with all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% shareholders.
MEETINGS OF THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held seven meetings during the
year ended December 31, 1999. 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 held two meetings during 1999.
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 did not meet during 1999.
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 administering 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 no meetings during 1999.
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 five meetings during 1999.
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 annual meeting;
provided, however, that if less than 100 days' notice or prior public
disclosure of the date of the annual 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 annual meeting or such public disclosure was given or made.
Notice of the date of the annual 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 annual meeting and intends to appear in
person or by proxy at the annual 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 7, 2000
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 Ray Ferguson (3).....................227,289............15.2
Gilbert R. Miller (4)......................74,994.............5.0
Randy D. Miller (5)........................68,083.............4.6
Dwight E. Pardue (6)......................236,647............15.8
Robert F. Ricketts, DDS (7)................60,897.............4.0
Rebecca Ann Sebastian (8)..................68,310.............4.6
R. Colin Shoemaker (9).....................28,201.............1.9
Ronald S. Shoemaker (10)...................81,878.............5.4
Thomas and Mary Severt (11)...............173,301............11.3
John F. Yearick (12)......................106,106.............7.2
All executive officers and directors
as a group (9 persons)..................875,823............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 1,467,384 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 1,467,384 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 400 shares subject to presently exercisable stock purchase
warrants and 4,000 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, and 3,000 shares subject to presently exercisable options. The
Severts' address is P.O. Box 222, Jefferson, North Carolina 28640.
(12) Includes 3000 shares subject to presently exercisable options. 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, 1999, 1998 and 1997 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 No. of All Other
Principal Annual Options Compen-
Position Year Salary Bonus C Awarded sation (2)
---- ------ ----- --- ------- ----------
Ronald S. Shoemaker, 1999 101,674 25,000 15,270(1) 10,000 4,267
President and Chief 1998 99,937 18,000 15,113(1) 10,000 4,553
Executive Officer 1997 89,406 18,000 13,462(1) 10,000 4,470
_______________
(1) Includes an annual automobile allowance of $6,600 and insurance
premiums totaling $8,670, $8,513 and $6,862 paid by the Company in
1999, 1998 and 1997, respectively.
(2) Represents the Company's matching contribution under its 401(k) Plan.
On May 28, 1999, the Board of Directors adopted the following
compensation schedule: (i) each outside director receives $2000 as annual
compensation; (ii) each director receives $100 for each board meeting
attended; and (iii) each director receives $50 for each committee meeting
attended, but only when the committee meeting is held at a different time than
a regular board meeting. Further, 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, at the then current fair market value, as
determined by the Company's Board of Directors, 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 at a price equal to the then-current
fair market value, as determined by the Company's Board of Directors.
The following table provides certain information concerning individual
grants of stock options made during the fiscal year ended December 31, 1999 to
Ronald S. Shoemaker:
Option Grants in Last Fiscal Year
Individual Grants
---------------------------------
% of Total
Options Options Granted Exercise
Granted to Employees in or Base Price Expiration
Name (#) Fiscal Year ($ per share) Date
---- ------- --------------- ------------- ----------
Ronald S. Shoemaker 2,404(1) 49.02% $10.00 1-1-09
____________________________
(1) Options vest immediately.
The following table presents information regarding options exercised
during 1999 and the value of unexercised options held at December 31, 1999 by
Ronald S. Shoemaker.
Value
Number of of Unexercised
Unexercised In-the-Money
Options at Options at
Shares Fiscal Year End Fiscal Year End(1)
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
---- ----------- -------- ------------- -------------
Ronald S. Shoemaker -0- (2) $-0- 60,000/0 $510,000/$0
__________________
(1) Dollar values calculated by determining the difference between the
estimated fair market value of the Company's Common Stock at December 31,
1999 ($17.00) 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 82,968
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, 1999 and have been selected by the Board of
Directors to serve as independent auditors of the Company for the fiscal year
ending December 31, 2000. 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, 1999, 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, 2000 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, 2001 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 26, 2000
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 2000
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 26,
2000, 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 three (3) 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
contrary below) listed below
Class III Directors (to serve for a term expiring at the 2003 Annual Meeting
of Shareholders):
Robert F. Ricketts, Dwight E. Pardue and R. Colin Shoemaker
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: ___________________________
