SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COMMUNITY BANKSHARES, INC.
(Exact name of Registrant as specified in its charter)
South Carolina 6711 57-0840351
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code No.) Identification No.)
791 Broughton Street
Orangeburg, South Carolina 29115
(803) 535-1060
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
WILLIAM W. TRAYNHAM
President
Community Bankshares, Inc.
791 Broughton Street
Orangeburg, South Carolina 29115
(803) 535-1060
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
GEORGE S. KING, JR., ESQ.
SUZANNE HULST CLAWSON, ESQ.
1426 Main Street
Columbia, South Carolina 29201
(803) 779-3080
Approximate date of commencement of proposed sale to the public: From time to
time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [x]
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form if 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(b) 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>
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Proposed maximum Proposed maximum
Title of securities Amount to offering price aggregate Amount of
to be registered be registered per unit (1) offering price(1) registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (no par value) 300,000 $12.00 $3,600,000 $1,241.38
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee based
on the average of the high and low prices of the Registrant's common stock
reported on the American Stock Exchange on December 18, 1996.
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PROSPECTUS
COMMUNITY BANKSHARES, INC.
791 Broughton Street
Orangeburg, South Carolina 29115
(803) 535-1060
DIVIDEND REINVESTMENT
AND
SHAREHOLDER STOCK PURCHASE PLAN
The Dividend Reinvestment and Shareholder Stock Purchase Plan (the
"Plan") of Community Bankshares, Inc. (the "Company") provides holders of shares
of Common Stock, no par value ("Common Stock"), of the Company with a simple and
convenient way to invest cash dividends, as well as up to $3,000.00 in cash each
year, in additional shares of Common Stock without payment of any brokerage
commission or service charge.
The Plan is administered by Registrar and Transfer Company (the
"Administrator"). Shares of the Company's Common Stock may be purchased by the
Administrator for the Plan either in the open market or from the Company. The
Company bears all costs of administering the Plan.
The Common Stock is listed on the American Stock Exchange.
The Plan does not represent a change in the Company's dividend policy,
which will continue to depend upon future earnings, financial requirements and
other factors. Stockholders who do not wish to participate in the Plan will
receive dividends, as declared, by check as usual.
This Prospectus relates only to authorized and unissued shares of Common
Stock of the Company registered for purchase from the Company under the Plan. As
of December 20, 1996, the Company had 300,000 authorized shares of its Common
Stock registered for purchase under the Plan. It is recommended that this
Prospectus be retained for future reference.
INVESTMENT IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" --
PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is December 20, 1996.
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TABLE OF CONTENTS
Page
AVAILABLE INFORMATION....................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 2
RISK FACTORS................................................................ 3
Regulatory Restrictions On Dividends................................ 3
Industry Developments............................................... 3
Market for the Shares............................................... 3
Certain Provisions of the Articles of Incorporation................. 3
Competition......................................................... 3
Loan Losses; Capital Deficiency..................................... 4
Governmental Regulation of the Financial Services Industry.......... 4
Monetary Policy and Other Economic Factors.......................... 4
DESCRIPTION OF THE PLAN..................................................... 4
PURPOSE............................................................. 5
ADVANTAGES.......................................................... 5
ADMINISTRATION...................................................... 5
PARTICIPATION....................................................... 5
CASH CONTRIBUTIONS.................................................. 7
PURCHASES........................................................... 7
COSTS .............................................................. 9
REPORTS TO PARTICIPANTS............................................. 9
DIVIDENDS........................................................... 9
CERTIFICATES FOR SHARES............................................. 9
TERMINATION OF PARTICIPATION OR
WITHDRAWAL OF SHARES FROM THE PLAN.................................. 10
OTHER INFORMATION................................................... 12
USE OF PROCEEDS............................................................. 14
LEGAL MATTERS............................................................... 14
EXPERTS .................................................................... 14
INDEMNIFICATION............................................................. 14
APPENDIX I - COMMUNITY BANKSHARES, INC. DIVIDEND REINVESTMENT
AND SHAREHOLDER STOCK PURCHASE PLAN......................................... 15
APPENDIX II - AUTHORIZATION FORM............................................ 22
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No dealer, salesman or other person has been authorized to give any
information or to make any representations other than as contained herein, and,
if given or made, such information or representations must not be relied upon as
having been authorized. 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 affairs of the Company since the date of this
Prospectus. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (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 can be inspected and copied at the public
reference facilities of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's 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 60661, and copies
of such material can be obtained from the public reference section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. Such material can also
be inspected at the Offices of the American Stock Exchange, 86 Trinity Place,
New York, New York 10006.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
shares of Common Stock offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits
thereto, certain portions of which have been omitted pursuant to the rules and
regulations of the Commission. The Registration Statement may be inspected and
copied, at prescribed rates, at the public reference facilities maintained by
the Commission at the principal or regional offices of the Commission at the
addresses listed above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission are incorporated herein by reference:
(a) Annual Report on Form 10-KSB for the year ended December 31, 1995;
(b) Quarterly Reports on Forms 10-QSB for the quarters ended March 31,
1996, June 30, 1996 and September 30, 1996; and
(c) Description of the Company's Common Stock in Registration
Statement on Form 8-A, and any amendment or report filed for the
purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of this
Offering shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of the filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference will be deemed to be modified or superseded for
the purpose of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is, or is deemed to be,
incorporated by reference herein
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modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
contained herein or delivered herewith. The Company will provide without charge
to each person, including any beneficial owner, to whom this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any or all
of the documents referred to above which have been or may be incorporated into
this Prospectus and deemed to be part hereof (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference).
Written requests should be directed to Mr. William W. Traynham, President,
Community Bankshares, Inc., 791 Broughton Street, Orangeburg, South Carolina
29115. Telephone requests may be directed to Mr. Traynham at (803) 535-1060.
RISK FACTORS
Prospective purchasers should consider carefully the following Risk
Factors as well as the other information contained in this Prospectus.
Regulatory Restrictions On Dividends
Because the Company's principal operations are conducted through its
subsidiaries, Orangeburg National Bank and Sumter National Bank (the "Banks"),
it generates cash to pay dividends primarily through dividends paid to it by the
Banks. The Banks' ability to pay dividends to the Company and the Company's
ability to pay dividends on its Common Stock are, therefore, subject to and
limited by certain legal and regulatory restrictions.
Industry Developments
In the recent past, certain legislation has been enacted which could
have a dramatic effect on both the costs of doing business and the competitive
factors facing the financial institutions industry. Additional such legislation
is constantly being considered by Congress. The Company is unable at this time
to calculate the impact, if any, of future legislation on its financial
condition or operations.
Market for the Shares
Although the Common Stock has recently been listed on the American Stock
Exchange, the Common Stock is not widely traded and is not expected to be widely
traded in the near future.
Certain Provisions of the Articles of Incorporation
The Company's Articles of Incorporation include several provisions that
may have the effect of discouraging or preventing hostile take-over attempts,
and thus of making the removal of incumbent management difficult. The provisions
include staggered terms for the Board of Directors and requirements of
super-majority votes to approve certain business transactions. To the extent
that these provisions are effective in discouraging or preventing take-over
attempts, they may tend to reduce the market price for the Company's Common
Stock.
Competition
The Banks encounter strong competition from established financial
institutions operating in the Sumter and Orangeburg, South Carolina areas. In
addition, established financial institutions not currently operating
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in the Banks' market areas may, under South Carolina law, open branches in the
Banks' market areas at future dates. In the conduct of certain aspects of their
banking business, the Banks also compete with savings and loan associations,
credit unions, mortgage banking firms, consumer finance companies, insurance
companies, money market mutual funds and other financial institutions, some of
which are not subject to the same degree of regulation as the Banks. Many of
these competitors have substantially greater resources and lending limits than
the Banks and offer certain services, such as extensive and established branch
networks, trust services and international banking services, that the Banks do
not provide. Although the Company believes that the Banks will be able to
compete effectively with these institutions through the use of personalized
service, loan participations and other techniques, no assurances can be given in
this regard.
Loan Losses; Capital Deficiency
The Banks lend a substantial portion of their capital and deposits to
individual and commercial borrowers. The Banks' managements endeavor to make all
efforts to be prudent in making such loans, but some loan losses are
unavoidable. Changes in the economy both at the national and local levels and
other factors, both unpredictable and outside the control of the Banks, could
affect the ability of borrowers to repay their loans. It is possible that,
collectively, defaults by the Banks' borrowers could be large enough to impair
the ability of the Banks to continue their operations. Loan losses and other
losses might reduce the Banks' capital below the level required by the Office of
the Comptroller of the Currency and the National Bank Act which could result in
either or both of the Banks being placed in receivership by the Office of the
Comptroller of the Currency and in a partial or complete loss of the Company's
equity in the Banks.
Governmental Regulation of the Financial Services Industry
During the past few years, significant legislative and regulatory
deregulation of certain aspects of the financial services industry has taken
place. Nonbanking financial institutions, such as securities brokerage firms,
insurance companies and money market funds, are now permitted to offer services
which compete directly with services offered by banks. At the same time, the
services which banks are permitted to offer have been expanded, and restrictions
have been reduced on the rates of interest that banks may pay on deposits. The
Banks' profitability is largely dependent upon the rate differential between the
interest earned by the Banks on loans to customers and the rate of return on the
Banks' investments, and the interest paid by the Banks on deposits and other
liabilities. While deregulation and increasing competition may result in the
Banks' paying increased interest rates to obtain deposits, a comparable increase
in interest rates on their loans and the rate of return on their investments may
not be attainable, resulting in reduced "spread" and lower earnings or higher
losses.
Monetary Policy and Other Economic Factors
Changes in governmental economic and monetary policy may affect the
ability of the Banks to attract deposits and make loans. The rates of interest
payable on deposits and chargeable on loans are affected by governmental
regulation and fiscal policy as well as by national, state, and local economic
conditions. Furthermore, because the Banks will for the foreseeable future
operate in a limited geographic area, the Company's ability to operate
profitably will depend significantly upon the economies of the Orangeburg County
and Sumter County market areas.
DESCRIPTION OF THE PLAN
The following is a summary description, in question and answer format,
of the provisions of the Dividend Reinvestment and Shareholder Stock Purchase
Plan and is qualified by reference to the plan, which is attached hereto as
Appendix I.
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PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide holders of Common Stock of the
Company a convenient means of increasing their investment in the Company,
through regular reinvestment of cash dividends and investment of cash
contributions, if any, in additional shares of Common Stock. To the extent
shares are purchased for the Plan directly from the Company, the Plan also
provides the Company with an additional source of equity funds.
The Plan offers participants the following alternatives: (a) to have
cash dividends on shares of Common Stock enrolled in the Plan automatically
reinvested in additional Common Stock; (b) to have cash dividends on shares of
Common Stock enrolled in the Plan plus cash contributions of not less than $250
a year and up to $3,000 a year invested in additional shares of Common Stock.
ADVANTAGES
2. What are the advantages of the Plan?
Participants may purchase Common Stock of the Company without paying any
commission or service charge in connection with purchases under the Plan. Full
investment of funds is possible under the Plan because the Plan permits
fractions of shares, as well as full shares, to be credited to participants'
accounts. In addition, dividends with respect to such fractions, as well as full
shares, are credited to participants' accounts. Regular statements of account
provide each participant with a record of each transaction.
ADMINISTRATION
3. Who administers the Plan for participants?
Registrar and Transfer Company (the "Administrator"), administers the
Plan for participants, purchases Common Stock for the Plan using cash dividends
paid on enrolled shares and additional cash contributions of participants,
maintains records, sends statements of account to participants and performs
other duties relating to the Plan. Shares of Common Stock purchased under the
Plan will be registered in the name of the Administrator or one of its nominees
as agent for participants in the Plan.
PARTICIPATION
4. Who is eligible to participate?
All holders of record of Common Stock are eligible to participate in the
Plan with respect to a portion of or all of the shares of Common Stock owned of
record by them. Beneficial owners of Common Stock whose shares are held for them
in registered names other than their own, such as in the names of brokers, bank
nominees or trustees, should, if they wish such shares to participate in the
Plan, either arrange for the holder of record to join the Plan or have the
shares transferred into their own names. The Company reserves the right to deny
participation in the Plan to any person if, in the sole judgment of the Company,
the cost of complying with laws and rules to permit the person to participate
would be unduly burdensome.
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5. How does an eligible stockholder participate?
To participate in the Plan, a stockholder of record must complete an
Authorization Form and return it to the Administrator. Authorization Forms will
be provided from time to time to the holders of Common Stock, and may be
obtained at any time by written request to Registrar and Transfer Company, 10
Commerce Drive, Cranford, N.J. 07016, or by telephoning the Administrator at
(800) 346-6084. Those shareholders who do not wish to participate in the Plan
will receive cash dividends, if and as declared, by check.
6. When may an eligible stockholder join the Plan?
A stockholder of record may join the Plan at any time. If the
Authorization Form is received by the Administrator at least five days before
the record date for a dividend payment and the participant elects to reinvest
cash dividends paid on shares of Common Stock registered in his name and
enrolled in the Plan, such reinvestment of cash dividends will begin with that
dividend payment. If the Authorization Form is received after that date, the
reinvestment of cash dividends through the Plan will begin with the next
succeeding dividend.
7. What does the Authorization Form provide?
The Authorization Form, which is attached hereto as Appendix II, allows
the shareholder to indicate the extent to which the shareholder desires to
participate in the Plan, permits the shareholder to elect to make optional cash
payments pursuant to the Plan, and directs the Company to pay to the
Administrator for the account of the participating shareholder of record all
cash dividends on all shares enrolled in the Plan as well as on the shares
credited to the shareholder's account under the Plan. It also appoints the
Administrator as agent for the shareholder and directs the agent to apply such
cash dividends and any cash contributions made by the shareholder to the
purchase of additional shares of Common Stock in accordance with the terms and
conditions of the Plan.
8. Do shares purchased or otherwise acquired outside the Plan by a
participant automatically participate in the Plan?
Shares purchased or otherwise acquired by a participant subsequent to
enrollment in the Plan only participate in the Plan if the shares are
specifically enrolled in the Plan.
9. May a participant change the amount of participation after enrollment?
If a participant elects to participate through the reinvestment of
dividends on all shares registered in the participant's name but later decides
to participate with respect to only a portion of the shares registered in the
participant's name, the participant must notify the Plan Administrator in
writing to that effect, but such notification must be received no later than
five days before a particular dividend record date in order to stop the full
reinvestment of the corresponding dividend. (See number 26 below). If a
participant elects to participate through the reinvestment of dividends on only
a portion of the shares registered in the participant's name but later decides
to participate with respect to additional shares, the participant must
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complete an Authorization Form with respect to such additional shares. The
Authorization Form must be received by the Administrator at least five days
before a record date to be effective as of such record date.
(See 6 above.)
CASH CONTRIBUTIONS
10. Who may make cash contributions to purchase Common Stock?
Only participants in the Plan whose dividends are being reinvested may
make cash contributions.
11. When and how can cash contributions be made?
Cash contributions of not less than $250 and up to $3,000 may be made by
Participants each year. Participants who want to make cash contributions must
send their contributions by check to the Plan Administrator at: Registrar and
Transfer Company, 10 Commerce Drive, Cranford, N.J. 07016.
Cash contributions should be made within 30 days prior to the dividend
payment date. Cash contributions received by the Administrator less than five
business days prior to a dividend payment date will be returned to the
participant. Any cash contribution received more than 30 days before a dividend
payment date will also be returned to the participant. The Authorization Form
attached hereto as Appendix II provides a cash contribution option.
12. Will interest be paid on cash contributions before they are used to
purchase shares of Common Stock?
No. Participants are strongly urged to transmit cash contributions as
close as possible to the dividend payment date.
13. May cash contributions be withdrawn before they are used to purchase
shares of Common Stock?
Yes. Cash contributions will be returned to any participant who requests
the Administrator, in writing, not later than 48 hours prior to investment of
the funds, to return the contribution.
14. Are shares of Common Stock purchased with cash contributions treated
differently under the Plan from shares of Common Stock purchased with
cash dividends.
No, they are treated the same.
PURCHASES
15. When are purchases made?
Purchases under the Plan are made on each "Investment Date," which is a
date no later than 30 days after a cash dividend payment date. Participants will
become owners of shares purchased under the Plan as of the Investment Date.
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16. What is the purchase price per share of Common Stock purchased under the
Plan?
If shares are purchased through the Plan in the market, the purchases
will be made at prevailing market prices. The price to each participant's
account will be based upon the average price of all shares of Common Stock so
purchased. (See number 17 below).
If original issue shares are purchased through the Plan from the
Company, the price per share at which the shares of the Company's Common Stock
will be purchased will be based on the average of the closing prices of the
Common Stock on the American Stock Exchange for the five business days
immediately preceding the date of purchase from the Company (the "Calculated
Market Value"); however, in no event will the Company sell shares to the Plan at
a price less than the book value of the Company's stock as of the end of the
last month preceding the anticipated sale ("Book Value"). (Book Value of the
Company's Common Stock will be calculated by dividing the total of all equity
accounts by the total shares of Common Stock outstanding.) The Company is not,
in any event, obligated to sell shares of its Common Stock to the Plan if the
Board of Directors of the Company determines that it would not be in the best
interest of the Company to do so.
Only the shares that may be sold by the Company to participants under
the Plan are the subject of this Prospectus.
17. How many shares of Common Stock will be purchased for participants?
The number of shares to be purchased depends on the amount of dividends
paid with respect to a participant's enrolled shares, the amount of any cash
contributions made to a participant's account, and the prevailing market price
or the Calculated Market Value, as applicable, of the Common Stock. A
participant's account will be credited with that number of shares, including
fractions, equal to the sum of all cash dividends paid on a dividend payment
date on all shares enrolled in the Plan by the participant and on all shares
held for the benefit of the participant in the Plan, plus cash contributions
credited to the participant's account, divided by the average purchase price per
share paid for all shares purchased for the Plan during the 30 days following
the payment of a single dividend on the Common Stock.
18. How many shares of Common Stock purchased under the Plan will be
original issue shares?
The dividends to be reinvested and cash contributions will in most
instances first be used to purchase shares of Common Stock available in the open
market. If an insufficient amount or no shares of the Common Stock are available
in the open market, the Administrator then plans, to the extent such shares are
available under the plan, to purchase from the Company as many original issue
shares of its Common Stock as the dividends to be reinvested and cash
contributions will purchase and as the Company will agree to sell. The Company
has no obligation to sell shares of Common Stock to the Administrator if the
Board of Directors of the Company determines it would not be in the Company's
best interest to do so.
If an insufficient number of shares is available to meet the entire
reinvestment demand at an investment date, shares shall be purchased first on a
pro rata basis from reinvestment of cash dividends. If, after all cash dividends
have been reinvested, any shares remain available for purchase, shares shall
then be purchased, on a pro rata basis, from cash contributions. If no shares or
an insufficient number of shares to meet the entire demand are available for
purchase under the Plan, the uninvested dividends will be distributed to Plan
participants 30 days after the dividend payment date and any uninvested cash
contributions will be returned 30 days after receipt. Although the Common Stock
has recently been listed on the American Stock Exchange, it is not heavily
traded and it is not likely in the near future that sufficient shares will be
available on the market to fully satisfy dividend reinvestment requirements with
respect to each dividend payment date.
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19. If the Plan Administrator elects to purchase from the Company original
issue shares, when will shares of Common Stock be purchased under the
Plan?
Subject to the limitations in 18 above, shares will be purchased from
the Company promptly after a determination is made that sufficient shares are
not available for purchase in the market on the conditions discussed in 16 and
18 above. In no event will such purchase from the Company be later than 30 days
after receipt of the dividend by the Administrator. No interest will be paid on
dividends pending reinvestment.
20. If the Plan Administrator elects to make market purchases for the Plan,
when will shares of Common Stock be purchased?
Shares will usually be purchased in the market within ten business days
of the Dividend Payment Date, subject to availability of shares in the market
and to applicable regulatory restrictions on such purchases. The Plan
Administrator will make every reasonable effort to reinvest all dividends
promptly after receipt, and in no event later than 30 days of receipt. No
interest will be paid on dividends pending reinvestment.
COSTS
21. Are there any expenses to participants in connection with purchases of
Common Stock from the Company under the Plan?
No. All costs of administration of the Plan, including the
Administrator's fees and brokerage fees and commissions, are paid by the
Company. However, administrative costs paid by the Company to the Administrator
on behalf of a participant's account may be treated as additional dividend
income to that participant (See Number 35 below).
REPORTS TO PARTICIPANTS
22. How are participants advised of their purchases of stock?
As soon as practicable after each purchase for his account, a
participant receives a statement of account from the Administrator. These
statements are a participant's continuing record of the cost of purchases and
should be retained for tax purposes. In addition, participants will continue to
receive copies of communications sent to stockholders, including the Company's
annual and quarterly reports to stockholders, proxy statements and reports of
taxable income required by the Internal Revenue Service. (See Number 34 below).
DIVIDENDS
23. Are participants credited with dividends on shares held in their
accounts under the Plan?
Yes. A participant's account is credited with dividends on full and
fractional shares held in his account. The Administrator reinvests the dividends
in additional shares of Common Stock.
CERTIFICATES FOR SHARES
24. Are stock certificates issued for shares of Common Stock purchased?
Unless requested by a participant, certificates for shares of Common
Stock purchased under the Plan will not be issued. All shares purchased will be
held by the Administrator or its nominee for the benefit of Plan
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participants. The number of shares purchased for each participant's account
under the Plan will be shown on a statement of account. This feature protects
against loss, theft or destruction of stock certificates.
Certificates for any number of full shares credited to a participant's
account under the Plan will be issued without charge upon the participant's
written request. No certificates will be delivered for fractional shares. A
participant may also make a blanket request that certificates for all full
shares be issued to him at regular intervals although the Administrator reserves
the right to suspend the policy of delivering certificates upon blanket
instructions if such policy leads to a proliferation of certificates and becomes
unduly burdensome.
Unless withdrawn from participation in the Plan in accordance with the
requirements for withdrawal set forth in the Plan, shares in a participant's
account with the Administrator for which certificates are issued to the
Participant will continue to be enrolled in the Plan but will no longer be
credited to the Participant's account as shares held by the Administrator in the
Plan.
The shares held by the Administrator for the account of a participant
under the Plan may not be pledged as collateral security for a loan or other
obligation of a participant. A participant who wishes to pledge such shares must
request that certificates for such shares be issued in the participant's name.
Certificates representing fractional interests will not be issued under any
circumstances.
25. In whose name are accounts maintained and certificates registered when
issued?
Accounts under the Plan are maintained in the names in which the
certificates of participants were registered at the time they entered the Plan.
Consequently, certificates for whole shares are similarly registered when
issued.
Upon written request, certificates also can be registered and issued in
names other than the account name subject to compliance with any applicable laws
and the payment by the participant of any applicable taxes, provided that the
request meets the usual requirements of the Company for the recognition of a
transfer of Common Stock of the Company.
TERMINATION OF PARTICIPATION OR WITHDRAWAL OF SHARES FROM THE PLAN
26. When may a participant discontinue participation with respect to some or
all of his or her enrolled shares in the Plan?
The Plan is entirely voluntary and a participant may discontinue his
participation with respect to some or all of his or her enrolled shares at any
time by giving written notification to the Administrator.
If the request from a participant to discontinue his participation is
received by the Administrator at least five days prior to the record date for a
dividend, reinvestment of such participant's dividends will be terminated
beginning with such dividend and such dividend and all subsequent dividends will
be paid to him in cash. If the discontinuance request is received less than five
days prior to the record date for a dividend, such dividend will be invested for
the participant's account under the Plan and the discontinuance will be effected
thereafter.
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27. How may a participant withdraw shares purchased by the Administrator
under the Plan?
A participant for whom the Administrator has purchased shares of the
Company's Common Stock under the Plan may withdraw all or a portion of such
shares from his Plan account by notifying the Plan Administrator in writing to
that effect and specifying in the notice the number of shares to be withdrawn.
This notice should be mailed to:
Registrar and Transfer Company
10 Commerce Drive
Cranford, N. J. 07016
Certificates for whole shares of Common Stock so withdrawn will be
registered in the name of and issued to the Participant. In no case will
certificates representing fractional interests be issued. Any notice of
withdrawal received less than five days prior to a dividend record date will not
be effective until dividends paid for such record date have been reinvested and
the shares credited to the participant's Plan account.
28. What happens to any fractional interest when a participant withdraws all
shares from the Plan?
In lieu of a certificate for any fractional interest, a participant will
receive cash in an amount equal to the last average per share purchase price of
Common Stock purchased for the Plan prior to the effective date of the
withdrawal multiplied by the fractional interest. The amount of cash for any
fractional interest together with certificates for whole shares will be mailed
directly to the withdrawing participant by the Plan Administrator.
29. How may a participant transfer shares held in his account under the
Plan?
A participant who wishes to transfer his shares held in his account
under the Plan must first withdraw those shares from the Plan, following the
procedure set out in number 27 above. Upon receipt of certificates for such
shares, the participant may transfer such shares as he or she would any other
securities.
Shares credited to the account of a participant may not be assigned or
pledged. If a participant desires to assign or pledge the full shares credited
to the participant's account, a request for those shares to be issued in the
participant's name must be delivered to the Plan Administrator as discussed
above.
30. May a participant terminate the reinvestment of dividends on shares
registered in his name and still remain in the Plan?
Yes. A participant who terminates the reinvestment of dividends paid on
shares registered in his name may leave shares purchased by the Administrator
for his account in his Plan account. Dividends paid on the shares left in the
Plan continue to be automatically reinvested for such participant's account. A
participant may not, however, make cash contributions to the Plan after
terminating reinvestment of dividends.
31. What happens to a Participant's Shares in the Plan in the Event of Death
or Legal Incompetency?
Upon receipt by the Plan Administrator of notice of death or
adjudication of incompetency of a participant, no further purchases of shares of
Common Stock will be made for the account of such participant. The shares and
any cash held by the Plan for the participant will be delivered to the
appropriate designated person upon receipt of evidence satisfactory to the
Administrator of the appointment of a legal representative and instructions from
such representative regarding delivery.
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OTHER INFORMATION
32. What happens when a participant sells or transfers the shares enrolled
in the Plan?
Upon receipt of written notice to the Administrator that shares of
Common Stock enrolled in the Plan have been transferred of record, the
Administrator will treat such transfer as discontinuation of participation in
the Plan with respect to the shares transferred. However, the Administrator will
continue to reinvest the dividends on the shares credited to the prior record
holder's account under the Plan until such holder withdraws those shares from
the Plan.
33. What happens if the Company issues a stock dividend or declares a stock
split?
Any shares of Common Stock distributed to shareholders by way of stock
dividends, stock splits, combinations, recapitalizations and similar events with
respect to enrolled shares will be distributed to the holders thereof. Such
distributed shares will only participate in the plan if specifically enrolled
therein. (See numbers 5, 6 and 8 above). Any Common Stock distributed with
respect to shares held by the Administrator in Plan accounts will be retained in
the Plan accounts unless withdrawn therefrom by the participant. Other non-cash
property and non-cash dividends (other than Common Stock) with respect to both
enrolled shares and shares held by the Administrator in Plan accounts will be
distributed to participants.
34. How are a participant's shares held under the Plan voted at meetings of
stockholders?
All shares of Common Stock credited to a participant's account under the
Plan will be voted as the participant directs. If on the record date for a
meeting of shareholders there are shares credited to the participant's account
under the Plan, the participant will be sent the proxy material for such
meeting. The Administrator may elect not to forward proxy solicitation materials
to any Participant whom the Administrator reasonably believes has received such
materials from another source, provided that the Administrator informs such
Participant that such materials will be promptly furnished upon request. When
the participant returns in a timely fashion an executed proxy it will be voted
in accordance with the instructions therein with respect to all shares credited
to the participant. The Administrator shall tally all instructions regarding
fractional shares and where the aggregate fractional votes are greater than one
or more whole shares, the Administrator shall vote that number of whole shares
in accordance with the instructions but any remaining fractional shares shall
not be voted.
35. What are the federal income tax consequences of participation in the
Plan?
Dividends paid to the Administrator to be used to purchase shares of
Common Stock are treated as cash dividends to the participant on the dividend
payment date. The holding period for shares purchased by the Plan Administrator
from cash received as dividends from the Company or from optional cash
contributions from a participant begins on the day following the date such
shares are purchased by the Administrator. The basis of such shares is the price
paid for such shares.
In addition, administrative costs, including commissions, paid by the
Company to the Administrator on behalf of a participant's account may be treated
as additional dividend income to that participant and, if so treated, are
required to be reported by him as income for federal income tax purposes. If the
participant itemizes deductions on his tax return, he may be allowed to deduct
the amount of administrative costs he reports as additional dividend income. The
statements of a participant's account furnished by the Administrator will
identify any such costs that may be considered as dividend income.
For a Plan participant who has not provided the Administrator with a
proper tax identification number or who falls within certain other categories,
federal income taxes equal to 20% of the dividends paid with
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respect to shares held in the Plan for such participant's account will be
withheld by the Administrator. Accordingly, the amount applied to the purchase
of shares of Common Stock for such a participant's account will be reduced by
the amount of taxes withheld. Therefore, any participant who has not provided a
tax identification number to the Administrator should do so immediately.
A participant does not realize any taxable income when he receives
certificates for whole shares credited to his account under the Plan. However, a
participant who receives a cash adjustment for a fraction of a share credited to
his account may realize a gain or loss with respect to such fraction. The amount
of such gain or loss is the difference between the amount which the participant
receives for his fraction of a share and his tax basis therefor.
A participant should consult his tax advisor to determine the particular
tax consequences that may result from participation in the Plan and the
subsequent disposal of shares purchased pursuant to the Plan.
36. What are the responsibilities of the Company and the Administrator under
the Plan?
The Company and the Administrator in administering the Plan will not be
liable for any act done in good faith or for the good faith omission to act,
including, without limitation, any claim of liability arising out of failure to
terminate a participant's account upon such participant's death prior to receipt
of notice of such death in writing from an authorized representative, or with
respect to the prices at which shares are purchased for the participant's
account and the times when such purchases are made, or with respect to any loss
or fluctuation in the market value after purchase of shares.
37. Who bears the risk or market price fluctuations in the Common Stock?
A participant's investment in shares acquired under the Plan is no
different from an investment in directly held shares in this regard. The
participant bears the risk of loss and realizes the benefits of any gain from
market price changes with respect to all such shares held by him in the Plan or
otherwise.
38. May the Plan be changed or discontinued?
The Plan may be amended, suspended, modified or terminated at any time
without the approval of the participants. Notice of any such suspension or
termination or material amendment or modification will be sent to all
participants, who shall in all events have the right to withdraw from the Plan.
Any question of interpretation arising under the Plan will be determined by the
Company and any such interpretation will be final.
The Company intends to use its best efforts to maintain the
effectiveness of a registration statement filed with the Commission covering the
offer and sale of shares of Common Stock under the Plan. However, the Company
has no obligation to offer, issue or sell shares of its Common Stock to
participants under the Plan if, at the time of the offer, issuance or sale, such
a registration statement is for any reason not effective. Also, the Company may
elect not to offer or sell its Common Stock under the Plan to participants
residing in any jurisdiction or foreign country where, in the judgment of the
Company, the burden or expense of compliance with applicable blue sky or
securities laws makes such offer or sale there impracticable or inadvisable. In
any of these circumstances, dividends will be paid, by check, in the usual
manner directly to the stockholder.
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USE OF PROCEEDS
The Company has no basis for estimating either the number of shares of
Common Stock that will ultimately be purchased from it pursuant to the Plan or
the prices at which such shares will be purchased. The proceeds from any such
purchases will be used for general corporate purposes. The principal reason for
the Plan is to permit shareholders to increase their ownership interest in the
Company while permitting the Company to increase its capital.
LEGAL MATTERS
The legality of the shares of Common Stock to be offered pursuant to the
Plan has been passed upon for the Company by Sinkler & Boyd, P.A., Columbia,
South Carolina.
EXPERTS
The financial statements of the Company as of December 31, 1995 and
1994, and for the years ended December 31, 1995, 1994, and 1993, included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
incorporated by reference herein, have been audited by J. W. Hunt and Company,
LLP, independent certified public accountants, whose report thereon is also
incorporated by reference herein. Such financial statements are incorporated by
reference in reliance upon the report of such independent accountants, given
upon the authority of such firm as experts in accounting and auditing.
INDEMNIFICATION
Under South Carolina law, a corporation has the power to indemnify
directors and officers who meet the standards of good faith and reasonable
belief that their conduct was lawful and in the corporate interest (or not
opposed thereto) set forth by statute. A corporation may also provide insurance
for directors and officers against liability arising out of their positions even
though the insurance coverage is broader than the power of the corporation to
indemnify. Unless limited by its articles of incorporation, a corporation must
indemnify a director or officer who is wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party because he
is or was a director against reasonable expenses incurred by him in connection
with the proceeding. The Company's articles of incorporation do not limit such
indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
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APPENDIX I
COMMUNITY BANKSHARES, INC.
DIVIDEND REINVESTMENT AND SHAREHOLDER STOCK PURCHASE PLAN
Community Bankshares, Inc., a South Carolina corporation (the
"Company"), hereby establishes the following Dividend Reinvestment and
Shareholder Stock Purchase Plan (the "Plan"):
RECITAL
The purpose of the Plan is to provide holders of the Common Stock, no
par value ("Common Stock"), of the Company a convenient means of increasing
their investment in the Company through regular reinvestment of cash dividends
and investment of cash contributions in additional shares of Common Stock.
ARTICLE 1
Definitions
The terms defined in this Article 1 shall, for all purposes of this
Plan, have the following respective meanings:
Account. The term "Account" shall mean, with respect to any Participant,
the account maintained by the Administrator of the Plan reflecting the shares of
Common Stock and cash held from time to time for such Participant by the
Administrator.
Administrator. The term "Administrator" shall mean Registrar and
Transfer Company, or such other successor as may be designated from time to time
by the Company.
Covered Shares. The term "Covered Shares" shall mean such shares of
Common Stock as are held of record by a Participant and are enrolled in the
Plan.
Dividend. The term "Dividend" shall mean a dividend, to the extent paid
in cash, on shares of Common Stock.
Dividend Payment Date. The term "Dividend Payment Date" shall mean a
date on which a Dividend is paid.
Dividend Record Date. The term "Dividend Record Date" shall mean a date
fixed by the Board of Directors of the Company or by law for determining
shareholders entitled to receive a Dividend.
Fractional Share Account. The term "Fractional Share Account" shall mean
such shares of Common Stock, fractions thereof and cash as may from time to time
be held by the Administrator as agent for the Company and administered pursuant
to Section 5.3 hereof.
Investment Date. The term "Investment Date" shall mean the date on which
the Administrator purchases any Plan Shares, which date shall in no event be
later than thirty days after a Dividend Payment Date.
Participant. The term "Participant" shall have the meaning as defined in
Section 2.1 hereof.
Plan Purchase Price. The term "Plan Purchase Price" shall mean the price
at which shares are purchased for the Plan by the Administrator as calculated
pursuant to Section 3.2 below.
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Plan Shares. The term "Plan Shares" shall mean shares of Common Stock
purchased by the Administrator pursuant to the terms of the Plan and held for
the benefit of Participants by the Administrator.
ARTICLE 2
Participation
SECTION 2.1. Election to Participate. Any holder of record of Common
Stock may elect to participate in the Plan; provided, however, that the Company
may exclude a holder from participation if, in the sole judgment of the Company,
the cost of complying with laws or regulations necessary to permit such
participation would be unduly burdensome to the Company. A stockholder who
wishes to participate in the Plan may enroll all or only a portion of the shares
of Common Stock owned of record by such stockholder. Beneficial owners of Common
Stock whose shares are held for them in registered names other than their own,
such as in the names of brokers, bank nominees or trustees, should, if they wish
to participate in the Plan, either arrange for the holder of record to join the
Plan or have the shares they wish to enroll for participation in the Plan
transferred to their own names.
An election to participate shall be made by completing and returning to
the Administrator such documentation as the Company or the Administrator may
from time to time require, prior to or at such time as the Company or the
Administrator may from time to time require. A stockholder who has made and not
revoked such election is herein referred to as a "Participant."
SECTION 2.2. Automatic Dividend Reinvestment. Dividends paid on all
Covered Shares owned by a Participant and on all Plan Shares held by the
Administrator shall be reinvested, as and when paid, in additional shares
(and/or fractional shares) of Common Stock to be credited to the Accounts of
Participants.
SECTION 2.3. Cash Contributions. A Participant may elect to contribute
up to $3,000 annually to such Participant's Account and any such contributions
shall be invested in shares of Common Stock to be credited to the Account of
such Participant. Cash contributions will be subject to a $250 minimum annual
contribution. Contributions shall be made by check and must be received by the
Administrator not later than five nor earlier than 30 days prior to a Dividend
Payment Date. Contributions received at any other time will be returned to the
Participant. The Administrator may deposit and hold contributions received
pending investment with Dividends; provided, however, the Administrator shall in
no event hold any such contributions for more than 30 days prior to investment.
No interest shall be paid on contributions held pending investment. A
Participant shall have the right to demand the return of any voluntary cash
payment up to forty-eight hours before the monies are invested. Any such demand
shall be made in writing to the Administrator.
ARTICLE 3
Purchase of Shares
SECTION 3.1. Investment. On each Investment Date, the Administrator
shall, for the Account of each Participant, purchase shares (and/or fractions of
shares) of Common Stock equal in number to the quotient of: (a) the sum of all
Dividends paid on such Dividend Payment Date on all Covered Shares held by such
Participant plus all Dividends paid on such Dividend Payment Date on all Plan
Shares held for such Participant (and/or fractions thereof), plus the balance of
any cash contributions credited to the Account of such Participant; divided by
(b) the Plan Purchase Price. The shares shall be issued to and registered in the
name of the Administrator or its nominee, as agent for the Participant.
SECTION 3.2. Purchase of Shares. Dividends and cash contributions
credited to a Participant's Account will be commingled with the Dividends and
cash contributions credited to all Accounts under the Plan and will be applied
to the purchase of shares of Common Stock of the Company. The price at which the
Administrator shall be deemed to have acquired shares for the Participant's
Account shall be the average price of all shares purchased by it as agent for
all Participants during the 30 days following the payment of a single
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Dividend. The Administrator may purchase shares for the Plan in the open market
at market price or directly from the Company. If the Administrator purchases
newly issued shares directly from the Company, the Purchase Price at which the
Plan Administrator shall acquire the shares shall be the average of the closing
prices of the Company's Common Stock on the American Stock Exchange for the five
business days immediately preceding the Investment Date ("Calculated Market
Value"), as long as such price is not less than the book value per share of the
Company's Common Stock as of the end of the month preceding the proposed
purchase ("Book Value"). (Book Value per share shall be calculated by dividing
the total equity accounts of the Company by the total outstanding shares of the
Company's Common Stock). In the event the Calculated Market Value per share is
less than the Book Value per share, the Company will not sell shares of the
Company's Common Stock to the Plan. Notwithstanding the foregoing, the Company
shall have no obligation to sell shares of Common Stock to the Administrator if
the Board of Directors of the Company determines that it would not be in the
best interest of the Company to do so.
If an insufficient number of shares is available to meet the entire
reinvestment demand at an Investment Date, shares shall be purchased first on a
pro rata basis from reinvestment of cash dividends. If, after all cash dividends
have been reinvested, any shares remain available for purchase, shares shall
then be purchased, on a pro rata basis, from cash contributions. If no shares or
an insufficient number of shares to meet demand are available for purchase under
the terms of this Plan, the uninvested Dividends will be distributed to
Participants no later than 30 days after the Dividend Payment Date, and any
uninvested cash contributions will be returned no later than 30 days after
receipt.
SECTION 3.3. Exhaustion of Fractional Share Account. Prior to making a
purchase of shares on an Investment Date pursuant to Section 3.1 and 3.2 hereof,
the Administrator shall first purchase, on such date and at the Plan Purchase
Price at which shares could be purchased from the Company hereunder determined
as of such date, from the Fractional Share Account such number of whole shares,
if any, as may be held in such account. To the extent made, such purchases from
the Fractional Share Account shall substitute for purchases required by Section
3.1 and 3.2 hereof.
ARTICLE 4
Treatment of Accounts
SECTION 4.1. Revocation of Election. A Participant may at any time
revoke an election to participate in the Plan made pursuant to Article 2 hereof,
by notifying the Administrator in writing. Such revocation may be made with
respect to all or only a portion of the Covered Shares. Any such notice to the
Administrator received less than five days prior to a Dividend Record Date will
not become effective until dividends paid on the Dividend Payment Date have been
invested. Upon revocation of an election to participate in the Plan with respect
to all or a portion of a Participant's Covered Shares, the Administrator will
continue to reinvest the Dividends paid on Plan Shares held for the former
Participant's Account unless such Plan Shares are withdrawn from the Plan
pursuant to Section 4.2 hereof.
SECTION 4.2. Right of Withdrawal. Any Participant may at any time or
from time to time withdraw from the Plan all or a portion (other than fractions)
of the shares of Common Stock credited to his Account, by written instruction to
that effect to the Administrator. Any such notice of withdrawal received by the
Plan Administrator less than five days prior to a Dividend Record Date will not
become effective until dividends paid on the Dividend Payment Date have been
invested. Upon such a withdrawal of shares from the Plan by a Participant, the
Administrator shall promptly request the Company to deliver to the Administrator
certificates representing whole shares of Common Stock requested by such
Participant. The Administrator shall, upon receipt of such certificates,
promptly cause to be delivered to such Participant (a) such certificates and (b)
a cash payment for any fraction of a share credited to the Account of such
Participant. Such fraction of a share, if any, shall be valued at an amount
equal to the last average per share Plan Purchase Price of the Common
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Stock purchased for the Plan by the Administrator prior to receipt by the
Administrator of written notice of the Participant's withdrawal from the Plan.
SECTION 4.3. Non-Cash Distributions With Respect to Common Stock. Shares
of Common Stock distributed to shareholders by way of stock dividends, stock
splits, combinations, recapitalizations and similar events affecting the Common
Stock ("Distribution Shares") distributed with respect to Covered Shares shall
be distributed to the holders thereof. Such Distribution Shares will not become
Covered Shares unless specifically enrolled in the Plan. Distribution Shares
which are whole shares distributed with respect to Plan Shares shall be retained
in Participants' accounts and treated as Plan Shares unless withdrawn pursuant
to Section 4.2 hereof. Distribution Shares which are fractional shares
distributed with respect to Plan Shares shall be credited to Participants'
Accounts on a pro rata basis. Other non-cash property and non-cash dividends
(other than Common Stock) distributed with respect to either Covered Shares or
Plan Shares shall be distributed to Participants.
SECTION 4.4. Voting Rights and Proxy Materials. Participants shall have
the right to direct all voting rights respecting Plan Shares credited to their
respective Accounts. The Administrator shall promptly forward any proxy
soliciting materials to the Participants together with appropriate forms and
instructions to permit each Participant to direct the voting of the shares of
Common Stock credited to his Account or to obtain a proxy for the whole shares
of Common Stock credited to his Account. The Administrator may elect not to
forward proxy solicitation materials to any Participant whom the Administrator
reasonably believes has received such materials from another source, provided
that the Administrator informs such Participant that such materials will be
promptly furnished upon request. The Administrator shall vote the Plan Shares in
accordance with the instructions received from Participants. The Administrator
shall tally all instructions regarding fractional shares and where the aggregate
fractional votes are greater than one or more whole shares, the Administrator
shall vote that number of whole shares in accordance with the instructions but
any remaining fractional shares shall not be voted. Notwithstanding the
foregoing, the Administrator, in the absence of instructions from Participants,
may vote or give a proxy respecting Plan Shares to the extent, but only to the
extent, permitted by applicable law and the rules and regulations of any stock
exchanges on which the Common Stock is then listed.
SECTION 4.5. Notices. The Participant shall notify the Administrator
promptly in writing of any change in address. Notices or statements from the
Administrator to the Participant may be given or made by letter addressed to the
Participant at his or her last address of record with the Administrator, and any
such notice or statement shall be deemed given or made when received by the
Participant or five days after mailing whichever occurs first.
SECTION 4.6. Sale, Pledge, Hypothecation, Assignment or Transfer of Plan
Shares. The Participant shall not sell, pledge, hypothecate, assign or transfer
any Plan Shares held for his account in the Plan unless such Plan Shares are
first withdrawn from the Participant's Account in the Plan, nor shall the
Participant have any right to draw checks or drafts against his Plan account.
The Administrator has no obligation to follow any instructions of the
Participant with respect to the Plan Shares or any cash held in his Account
except as expressly provided under the terms and provisions of this Plan.
SECTION 4.7. Transfer of Covered Shares. Upon receipt of written notice
to the Administrator that Covered Shares have been transferred of record by the
holder thereof, the Administrator will treat such record transfer as revocation
pursuant to Section 4.1 hereof of the election to participate in the Plan with
respect to the Covered Shares transferred. Plan Shares held by the Administrator
for the benefit of the former recordholder will continue to be credited to such
former record holder's Plan Account unless withdrawn from the Plan pursuant to
Section 4.2 hereof.
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ARTICLE 5
Certificates and Fractions of Shares
SECTION 5.1. Certificates. The Administrator may hold the Plan Shares of
all Participants together in its name or in the name of its nominee. No
certificates will be delivered to a Participant for Plan Shares except (i) upon
written request, (ii) upon withdrawal of Plan Shares from the Account, or (iii)
upon termination of the Account. A Participant may request issuance of
certificates for any full shares credited to his Account at any time. A
Participant may also make a blanket request that all certificates for full
shares be delivered to him at regular intervals, although the Administrator
reserves the right to suspend the policy of delivering certificates upon blanket
instructions if such policy leads to a proliferation of certificates and becomes
unduly burdensome. No certificates will be delivered for fractional shares.
Unless withdrawn from participation in the Plan in accordance with the
requirements for withdrawal set forth elsewhere herein, Plan Shares as to which
certificates are issued to a Participant will become Covered Shares, but will no
longer be Plan Shares.
Accounts under the Plan will be maintained in the name in which the
Participant's certificates are registered when the Participant enrolls in the
Plan, and certificates for full shares will be similarly registered when issued
to the Participants. Certificates will be issued and registered in names other
than the account name, subject to compliance with applicable laws and payment by
the Participant of any applicable fees and taxes, provided that the Participant
makes a written request therefor in accordance with the usual requirements of
the Company for the registration of a transfer of the Common Stock of the
Company.
SECTION 5.2. Fractions of Shares. Fractions of shares of Common Stock
shall be credited to Accounts as provided in Article 3 hereof; provided,
however, that no fraction of a share shall be distributed to any Participant
upon withdrawal of Plan Shares from the Plan; and provided, further, that the
Administrator shall purchase only whole shares of Common Stock hereunder.
SECTION 5.3. Fractional Share Account. Concurrently, with the initial
purchase to be made by the Administrator pursuant to this Plan, and as needed
thereafter, the Company shall contribute to the Administrator, as agent for the
Company, an amount of money equal to the Plan Purchase Price of one share of
Common Stock. The Administrator shall immediately upon receipt thereof use such
money to purchase from the Company one share of Common Stock to be held in the
Fractional Share Account. In the event that the aggregate number of shares of
Common Stock to be purchased by the Administrator on an Investment Date is a
whole number plus a fraction, such fraction shall be purchased by the
Administrator from the Fractional Share Account at the Plan Purchase Price on
such date. In the event that, upon withdrawal of all Plan Shares from the Plan,
the Account of a Participant is credited with a fraction of a share of Common
Stock, such fraction shall be sold to the Fractional Share Account as provided
in Section 3.3. The Company shall from time to time lend to the Administrator
such amounts of money as may be necessary to fund such sales to the Fractional
Share Account; provided, however, that the Company may at any time or from time
to time direct the Administrator to distribute, and thereupon the Administrator
shall distribute, to the Company such portion of the cash held in the Fractional
Share Account as the Company may, in its discretion, deem to be in excess of the
amount needed to fund the operations of the Fractional Share Account.
ARTICLE 6
Concerning the Plan
SECTION 6.1. Suspension, Modification and Termination. The Company may
at any time, at its sole option, suspend, modify or terminate the Plan. Written
notice of any such suspension, modification or termination shall be given to all
Participants. Upon complete termination of the Plan, the Accounts of all
Participants shall be treated as if each Participant had elected to withdraw
entirely from the Plan.
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SECTION 6.2. Rules and Regulations. The Company may from time to time
adopt such administrative rules and regulations concerning the Plan as it deems
necessary or desirable for the administration of the Plan.
SECTION 6.3. Costs. All costs of administration of the Plan and all
brokerage fees incurred to purchase Common Stock in the market shall be paid by
the Company.
SECTION 6.4. Governing Law. This Plan, all authorizations and other
documents executed pursuant hereto, and the Accounts of Participants maintained
under this Plan shall be governed by and construed in accordance with the laws
of the State of South Carolina.
ARTICLE 7
Concerning the Administrator
SECTION 7.1. Selection. The Administrator shall be appointed by the
Company. The Administrator's appointment to serve as such may be revoked by the
Company at any time. The Administrator may resign at any time upon not less than
20 days' written notice to the Company.
SECTION 7.2. Compensation. The officers of the Company shall make such
arrangements regarding compensation, reimbursement of expenses and
indemnification of the Administrator as they from time to time deem reasonable
and appropriate.
SECTION 7.3. Records and Reports. The Administrator shall keep
appropriate records concerning Accounts of Participants and shall send a
statement of account to each Participant following each purchase of shares for
the Account of such Participant.
SECTION 7.4. Liability and Indemnification. Neither the Administrator
nor its nominee(s) shall be liable hereunder for any act or omission to act by
the Company or for any action taken in good faith or for any good faith omission
to act, including, without limitation, any claims of liability (a) arising out
of failure to terminate the Participant's Account upon the Participant's death
prior to receipt of written notice of such death accompanied by documentation
satisfactory to the Administrator; or (b) with respect to the prices at which
Plan Shares are either purchased or sold for the Participant's Account or the
timing of, or terms on which, such purchases or sales are made; or (c) for the
market value or fluctuations in market value after purchase of Plan Shares
credited to the Participant's Account. The Company further agrees to indemnify
and hold harmless the Administrator and its nominee(s) from all taxes, charges,
expenses, assessments, claims and liabilities, and any cost incident thereto,
arising under federal or state law from the Administrator's or the Company's
acts or omissions to act in connection with this Plan; provided that neither the
Administrator nor its nominee(s) shall be indemnified against any liabilities or
costs incident thereto arising out of the Administrator's or its nominee's own
negligence, willful misfeasance, bad faith, gross negligence or reckless
disregard of its duty under this Plan.
SECTION 7.5. Timing of Purchases. It is understood that all purchases of
Common Stock pursuant to the Plan will be made by the Administrator as the agent
of the Participant and that neither the Company nor any of its affiliates shall
have any authority or power to direct the time and price at which securities may
be purchased pursuant to the Plan, the amount of securities to be purchased, or
to direct the selection of any broker or dealer through whom purchases are to be
made.
20
<PAGE>
ARTICLE 8
Tax Matters
It is understood that the automatic reinvestment of dividends does not
relieve the Participant of any income tax which may be payable on such
dividends. The Administrator will comply with all applicable Internal Revenue
Service requirements concerning the filing of information returns for Dividends
credited to each Account under the Plan and such information will be provided to
the Participants by a duplicate of that form or in a final statement of account
for each calendar year. With respect to foreign Participants whose dividends are
subject to United States income tax withholding, the Administrator will comply
with all applicable Internal Revenue Service requirements concerning the amount
of tax to be withheld, which will be deducted from the Dividends prior to
investment.
DATED DECEMBER 16, 1996.
21
<PAGE>
APPENDIX II
AUTHORIZATION FORM
-----------------------
(Taxpayer ID No.)
TO: COMMUNITY BANKSHARES, INC. AND
REGISTRAR AND TRANSFER COMPANY
AS PLAN ADMINISTRATOR, OR
ITS DULY APPOINTED SUCCESSOR:
In order to reinvest all or some portion of my cash dividends on shares of
Community Bankshares, Inc. Common Stock ("Common Stock") in additional shares of
Common Stock, I hereby authorize and direct Community Bankshares, Inc. (the
"Company") to pay to Registrar and Transfer Company (the "Plan Administrator")
for my account cash dividends payable to me on Common Stock of the Company
registered in my name and enrolled in the Community Bankshares, Inc. Dividend
Reinvestment Plan (the "Plan"), as follows:
[ ] Full Dividend Reinvestment. I want to reinvest dividends on all shares
registered in my name or held for me in the Plan by the Plan
Administrator.
[ ] Partial Dividend Reinvestment. I want to reinvest dividends on only
_____________ shares registered in my name. I understand that dividends
on all shares held for me in the Plan by the Plan Administrator will be
reinvested.
[ ] Optional Cash Payments. I wish to make an optional cash payment to my
plan account.
AMOUNT ENCLOSED $___________________________
(Check must be included)
In order to facilitate the recordkeeping required by the Plan, a shareholder
wishing to enroll only a portion of the shares of Common Stock owned will be
required to have separate certificates issued with respect to enrolled shares
and non-enrolled shares.
I hereby appoint the Plan Administrator, or its duly appointed successor, as my
agent subject to the terms and conditions set forth in the Plan (a copy of which
I have received and read). I hereby authorize it, (i) to retain for credit to my
account any cash dividends and any shares of Common Stock of the Company
distributed as a non-cash dividend or otherwise on the shares of Common Stock
purchased pursuant to the Plan ("Plan Shares") and credited to my account, and
to distribute to me any other non-cash property paid on such Plan Shares; and
(ii) to take all acts necessary to apply cash dividends payable on shares of
Common Stock of the Company registered in my name and enrolled in the Plan, cash
dividends payable on Plan Shares, and any cash contributed by me pursuant to the
terms of the Plan to the purchase of full and fractional shares of Common Stock
of the Company in accordance with the terms and conditions of the Plan.
In the event that the certificates representing shares purchased by me are held
by the Plan Administrator or its nominee, I hereby authorize the Plan
Administrator or its nominee to merge such certificates into one or more
certificates of larger denominations.
This authorization and appointment is given with the understanding that I may
terminate it with respect to some or all of the shares of Common Stock of the
Company registered in my name at any time by notifying the Plan Administrator in
writing at least five days before the record date of any dividend payment.
________________________________________
________________________________________
PLEASE SIGN EXACTLY AS YOUR NAME(S)
APPEARS ON YOUR STOCK CERTIFICATE. THIS
AUTHORIZATION IS INVALID UNLESS SIGNED
BY ALL PERSONS WHOSE NAMES APPEAR ON
YOUR STOCK CERTIFICATE.
Date:___________________
PLEASE MAIL THIS FORM TO: REGISTRAR AND TRANSFER COMPANY, 10 COMMERCE DRIVE,
CRANFORD, NJ 07016.
22
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses of this offering are estimated to be as follows:
SEC Registration Fee........................................$ 1,241.38
*Printing and Distribution................................... 2,200.00
*Accounting Fees and Expenses................................ 1,000.00
*Legal Fees and Expenses..................................... 12,000.00
*Blue Sky Fees............................................... 1,000.00
*Miscellaneous............................................... 500.00
*Total..............................................$17,941.38
*Estimated
Item 15. Indemnification of Directors and Officers
Section 33-8-500 through -580 of the South Carolina Business
Corporation Act, as amended, provides broad authority for indemnification of
directors and officers, which may include liability under the Securities Act of
1933, as amended (the "Securities Act").
Item 16. Exhibits and Financial Statement Schedules
4.1 - Dividend Reinvestment and Shareholder Stock Purchase Plan
(included as Appendix I to the Prospectus)
4.2 - Articles of Incorporation and Bylaws of Registrant
5 - Opinion of Sinkler & Boyd, P.A.
23.1 - Consent of Sinkler & Boyd, P.A. (included in Exhibit 5).
23.2 - Consent of J. W. Hunt and Company, LLP
24 - Power of Attorney
Item 17. Undertakings
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Act"), each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that is incorporated by reference in the registration statement
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.
The undersigned 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 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
24
<PAGE>
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 prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% 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; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the 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.
25
<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
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Orangeburg, State of South Carolina on December 18,
1996.
COMMUNITY BANKSHARES, INC.
Hugo S. Sims, Jr.
*By:_______________________________
Hugo S. Sims, Jr.
Principal Executive Officer
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.
Signatures Title
*s/E. J. Ayers, Jr. Director
- ------------------------------
(E. J. Ayers, Jr.)
*s/Avis J. Bynum Director
- ------------------------------
(Alvis J. Bynum)
*s/Martha Rose C. Carson Director
- ------------------------------
(Martha Rose C. Carson)
*s/Anna O. Dantzler Director
- ------------------------------
(Anna O. Dantzler)
*s/J. M. Guthrie Director
- ------------------------------
(J. M. Guthrie)
*s/Phil P. Leventis Director
- ------------------------------
(Phil P. Leventis)
*s/William H. Nock, III Director
- ------------------------------
(William H. Nock, III)
*s/Samuel F. Reid, Jr. Director
- ------------------------------
(Samuel F. Reid, Jr.)
*s/Hugo S. Sims, Jr. Chief Executive Officer
- ------------------------------
(Hugo S. Sims, Jr.) and Director
s/William W. Traynham Chief Financial Officer,
- ------------------------------ Principal Accounting
(William W. Traynham) Officer, President and
Director
Director
- ------------------------------
(J. Otto Warren)
*s/Michael A. Wolfe Director
- ------------------------------
(Michael A. Wolfe)
*s/Russell S. Wolfe, II Director
- ------------------------------
(Russell S. Wolfe, II)
*By:/s/William W. Traynham
- ------------------------------
Attorney in Fact
26
<PAGE>
Exhibit Index
Exhibit No. Exhibits and Financial Statement Schedules
4.1 - Dividend Reinvestment and Shareholder Stock Purchase Plan
(Incorporated by reference to Appendix I to Prospectus).
4.2 - Articles of Incorporation and Bylaws of Registrant
5 - Opinion of Sinkler & Boyd, P.A.
23.1 - Consent of Sinkler & Boyd, P.A. (included in Exhibit 5).
23.2 - Consent of J. W. Hunt and Company, LLP
24 - Power of Attorney
27
EXHIBIT 4.2
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
ARTICLES OF INCORPORATION
(filed November 30, 1992, as amended March 15, 1995)
1. The name of the proposed corporation is Community Bankshares,
Inc.
2. The initial registered office of the corporation is 1820 Columbia
Road, N.E., Orangeburg, South Carolina 29115.
and the initial registered agent at such address is William W.
Traynham
3. The corporation is authorized to issue shares of stock as
follows: Complete a or b, whichever is applicable:
a.[x] If the corporation is authorized to issue a single class of
shares, the total number of shares authorized is 6,000,000.
b.[ ] The corporation is authorized to issue more than one class
of shares:
Class of Shares Authorized No. of Each Class
_______________ _________________________
_______________ _________________________
The relative rights, preferences, and limitations of the shares
of each class, and of each series within a class, are as follows:
Common Stock - Shares of this class shall have
unlimited voting rights and shall be entitled, together
with any other class having such rights, to receive the
net assets of the Corporation upon dissolution.
4. The existence of the corporation shall begin when these articles
are filed with the Secretary of State unless a delayed date is
indicated (See ss.33-1-230(b)) :
5. The optional provisions which the corporation elects to include
in the articles of incorporation are as follows (See ss.33-2-102
and the applicable comments thereto; and ss.ss. 35-2-105 and
35-2-221 of the 1976 South Carolina Code):
A. Quorum. One-third of the shares entitled to vote
thereat shall constitute a quorum at a meeting of
shareholders for the transaction of any business.
B. Mergers, Consolidations, Exchanges, Sales of Assets
or Dissolution. With respect to any plan of merger,
consolidation or exchange or any plan for the sale of
all, or substantially all, the property and assets,
with or without the good will, of the Corporation or
any resolution to dissolve the Corporation, which plan
or resolution shall not have been adopted by the
affirmative vote of at least two-thirds
1
<PAGE>
of the full board of directors, such plan or resolution
must be approved by the affirmative vote of holders of
80% of the outstanding shares of the Corporation.
C. Classified Board of Directors. There shall be not
less than nine nor more than 24 directors who shall be
divided into three classes, each class to be as nearly
equal in number as possible and the election and terms
of directors shall be as provided in Sections 33-8-104
and -106 of the South Carolina Business Corporation
Act.
D. Nomination of Directors. No person shall be eligible
to be elected a director of the Corporation at a
meeting of shareholders unless that person has been
nominated by a shareholder entitled to vote at such
meeting by giving written notice of such nomination to
the secretary of the Corporation at least thirty days
prior to the date of the meeting.
E. Removal of Directors. An affirmative vote of 80% of
the outstanding shares of the Corporation shall be
required to remove any or all of the directors without
cause.
F. Duty of Directors. When evaluating any proposed plan
of merger, consolidation, exchange or sale of all, or
substantially all, of the assets of the corporation,
the board of directors shall consider the interests of
the employees of the Corporation and the community or
communities in which the Corporation and its
subsidiaries, if any, do business in addition to the
interests of the Corporation's shareholders.
G. No Preemptive Rights. Shareholders of the
Corporation shall not have preemptive rights with
respect to shares, options or rights of the
Corporation.
H. No Cumulative Voting. Cumulative voting with respect
to shares of the Corporation shall not be permitted.
I. Amendment to Articles of Incorporation. Any
amendment to the Articles of Incorporation of the
Corporation which amends, alters, repeals or is
inconsistent with any of provisions B, C, D, E, F, G or
H above, unless such amendment shall have been approved
by the affirmative vote of at least two-thirds of the
full board of directors, shall not be effective unless
it is approved by the affirmative vote of 80% of the
outstanding shares of the Corporation.
2
<PAGE>
6. The name and address of each incorporator is as follows (only one
is required):
Name Address Signature
- --------------------------------------------------------------------------------
William W. Traynham 1820 Columbia Road, N.E. s/William W. Traynham
Orangeburg, SC 29115
- --------------------------------------------------------------------------------
E. J. Ayers, Jr. See above s/E. J. Ayers, Jr.
- --------------------------------------------------------------------------------
J. Robert Bryant See above s/J. Robert Bryant
- --------------------------------------------------------------------------------
Martha Rose C. Carson See above s/Martha Rose C. Carson
- --------------------------------------------------------------------------------
J. M. Guthrie See above s/J. M. Guthrie
- --------------------------------------------------------------------------------
Hugo S. Sims, Jr. See above s/Hugo S. Sims, Jr.
- --------------------------------------------------------------------------------
J. Otto Warren See above s/J. Otto Warren
- --------------------------------------------------------------------------------
Kenneth O. Westbury See above s/Kenneth O. Westbury
- --------------------------------------------------------------------------------
Michael A. Wolfe See above s/Michael A. Wolfe
- --------------------------------------------------------------------------------
Russell S. Wolfe, II See above s/Russell S. Wolfe, II
- --------------------------------------------------------------------------------
7. I, Suzanne Hulst Clawson, an attorney licensed to practice in the
State of South Carolina, certify that the corporation, to whose
articles of incorporation this certificate is attached, has
complied with the requirements Section 33-2-102 of the 1976 South
Carolina Code.
Date November 25, 1992 s/Suzanne Hulst Clawson
(Signature)
Suzanne Hulst Clawson
P. O. Box 11889
Columbia, South Carolina 29211
3
<PAGE>
BY-LAWS OF COMMUNITY BANKSHARES, INC.
ARTICLE 1
OFFICES
Section 1. Office. Community Bankshares, Inc. (hereinafter referred to
as the "Corporation"), is a South Carolina corporation. The main office of the
Corporation shall be located in the City of Orangeburg, County of Orangeburg,
and State of South Carolina.
Section 2. Additional Offices. The Corporation may also have offices
and places of business at such other places, within or without the State of
South Carolina, as the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Time and Place. The annual meeting of the shareholders for
the election of directors and all special meetings of shareholders for that or
for any other purpose may be held at such time and place within or without the
State of South Carolina as shall be stated in the notice of the meeting, or in a
duly executed waiver of notice thereof.
Section 2. Annual Meetings. An annual meeting of shareholders shall be
held each year at the time and place set by the Board of Directors. At each
annual meeting the shareholders shall elect directors and transact such other
business as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the place, date
and hour of the annual meeting shall be given personally or by mail to each
shareholder entitled to vote thereat not less than ten (10) nor more than sixty
(60) days prior to the meeting.
Section 4. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
articles of incorporation, may be called by the president or the chairman of the
Board of Directors or a majority of the directors and shall be called by the
president or the secretary at the request in writing of a majority of the
directors, or at the request in writing of shareholders owning at least ten per
cent (10%) in amount of the shares of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 5. Notice of Special Meeting. Written notice of a special
meeting of shareholders stating the place, date and hour of the meeting, the
purpose or purposes for which the meeting is called, and by or at whose
direction it is being issued shall be given personally or by mail to each
shareholder entitled to vote thereat not less than ten (10) nor more than sixty
(60) days prior to the meeting.
1
<PAGE>
Section 6. Quorum. The holders of one-third of the shares of the
Corporation issued and outstanding and entitled to vote thereat present in
person or represented by proxy shall be necessary to and shall constitute a
quorum for the transaction of business at all meetings of the shareholders.
If, however, such quorum shall not be present or represented at any
meeting of the shareholders, the shareholders entitled to vote thereat present
in person or represented by proxy shall have power to adjourn the meeting from
time to time, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed.
Section 7. Voting. At any meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote in person or by
proxy. Except as otherwise provided by law or the articles of incorporation,
each shareholder of record shall be entitled to one vote for every share of
stock standing in his name on the books of the Corporation. All elections shall
be determined by a plurality vote, and, except as otherwise provided by law or
the articles of incorporation, all other matters shall be determined by vote of
a majority of the shares present or represented at such meeting and voting on
such questions.
Section 8. Proxies. Every proxy must be executed in writing and dated
by the shareholder or by his attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof, unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
shareholder executing it, except in those cases where an irrevocable proxy is
permitted by law and the proxy expressly states that it is irrevocable.
Section 9. Consents. Whenever by any provision of law the vote of
shareholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action, the meeting and vote of shareholders may
be dispensed with if all the shareholders who would have been entitled to vote
upon the action if such meeting were held shall consent in writing to such
corporate action being taken.
ARTICLE III
DIRECTORS
Section 1. Number; Tenure. The number of directors which shall
constitute the entire Board of Directors shall be not less than nine nor more
than twenty-four. Directors' terms shall be staggered by dividing the total
number of directors into three groups with each group to be as nearly equal in
number as possible. Initially, one group will be elected for one year, one group
will be elected for two years, and one group will be elected for three years.
Thereafter, each group will be elected for three years. The election and terms
of directors are authorized by Section 33-8-106 of the South Carolina Business
Corporation Act. Directors shall be elected at the annual meeting of the
shareholders, except as provided in Section 3 of this Article III, and each
director shall be elected to serve until his successor has been elected and has
qualified.
2
<PAGE>
Section 2. Resignation; Removal. Any director may resign at any time.
The shareholders entitled to vote for the election of directors may remove a
director, with or without cause; provided, however, an affirmative vote of 80%
of the outstanding shares of the Corporation shall be required to remove any or
all of the directors without cause.
Section 3. Vacancies. If any vacancies occur in the Board of Directors
by reason of the death, resignation, retirement, disqualification or removal
from office of any director, the remaining directors, although less than a
quorum, may by majority vote choose a successor or successors, and the directors
so chosen shall hold office until the next annual meeting of the shareholders
and until their successors shall be duly elected and qualified, unless sooner
displaced; provided, however, that if in the event of any such vacancy the
directors remaining in office shall be unable, by majority vote, to fill such
vacancy within thirty (30) days of the occurrence thereof, the president or the
secretary may call a special meeting of the shareholders at which such vacancy
shall be filled. The board of directors may increase or decrease by not more
than thirty percent the number of directors last approved by the shareholders,
so long as any such increase in the number of directors does not increase the
number of directors above the maximum number of directors provided for under
Article III, Section 1 above, and any such decrease does not decrease the number
of directors below the minimum provided for under Article III, Section 1 above.
Any vacancy on the board of directors created by the increase in the number of
directors may be filled by a majority vote of the board of directors or by the
shareholders. Any director elected to fill a vacancy created by an increase in
the number of directors shall serve until the next annual meeting of
shareholders.
ARTICLE IV
MEETINGS OF THE BOARD
Section 1. Place. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of South
Carolina.
Section 2. First Meeting. A first meeting of the Board of Directors
shall be held immediately following each annual meeting of shareholders at which
such directors are elected, and no notice of such meeting to the directors shall
be necessary in order to constitute the meeting, provided a quorum shall be
present. In the event such meeting is not held at such time , the meeting may be
held at the time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors or as shall
be specified in a duly executed waiver of notice thereof.
Section 3. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time to
time be determined by the Board of Directors.
Section 4. Special Meetings. Special meetings of the Board of Directors
may be called by the chairman of the Board of Directors, if any, or by the
president on two days notice to each director, either
3
<PAGE>
personally or by telephone, facsimile, courier, mail or other legal method.
Special meetings shall be called by the chairman, president or secretary in like
manner and on like notice at the written request of 25% or more of the
directors.
Section 5. Quorum. At all meetings of the Board of Directors, a
majority of the directors then in office shall be necessary to and constitute a
quorum for the transaction of business, and the vote of a majority of the
directors present at the time of the vote if a quorum is present shall be the
act of the Board of Directors. If a quorum shall not be present at any meeting
of the Board of Directors, the directors present thereat may adjourn the meeting
from time to time until a quorum shall be present. Notice of any such
adjournment shall be given to any directors who were not present and, unless
announced at the meeting, to the other directors.
Section 6. Compensation. Directors, as such, shall not receive any
stated salary for their services, but, by resolution of the Board of Directors a
fixed fee and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the board (or of any committee of the board),
provided that nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
ARTICLE V
NOTICES
Section 1. Form; Delivery. Except as otherwise provided in these
Bylaws, notices to directors and shareholders shall be in writing and may be
delivered personally or by mail, courier or telegram. Notice by mail shall be
deemed to be given at the time when deposited in the post office or a letter
box, in a post-paid sealed wrapper, and addressed to the directors or the
shareholders at their addresses appearing on the records of the Corporation.
Section 2. Waiver. Whenever a notice is required to be given by any
statute, the articles of incorporation or these by-laws, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to such notice. ln
addition, any shareholder attending a meeting of shareholders in person or by
proxy without protesting prior to the conclusion of the meeting the lack of
notice thereof to him, and any director attending a meeting of the Board of
Directors without protesting prior to the meeting or at its commencement such
lack of notice shall be conclusively deemed to have waived notice of such
meeting.
ARTICLE VI
OFFICERS
Section 1. Executive Officers. The executive officers of the
Corporation shall be the chairman of the board of directors, and a president,
secretary, treasurer and such assistant officers or vice presidents as may
4
<PAGE>
from time to time be appointed by the Board. The board will designate whether
the chairman or the president will serve as the chief executive officer.
Section 2. Authority and duties. All officers, as between themselves
and the Corporation, shall have such authority and perform such duties in the
management of the Corporation as may be provided by these by-laws, or, to the
extent not so provided, by the Board of Directors.
Section 3. Term of Office; Removal. All officers shall be elected by
the Board of Directors and shall hold office for such term as may be prescribed
by the Board. Any officer elected or appointed by the Board may be removed with
or without cause at any time by the Board.
Section 4. Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board of Directors and the compensation of
agents shall either be so fixed or shall be fixed by officers thereunto duly
authorized.
Section 5. Vacancies. If an office becomes vacant for any reason, the
Board of Directors shall fill such vacancy. Any officer so appointed or elected
by the Board shall serve only until such time as the unexpired term of his
predecessor shall have expired unless re-elected or reappointed by the Board.
ARTICLE VII
SHARE CERTIFICATES
Section 1. Form; Signature. The certificates for shares of the
Corporation shall be in such form as shall be determined by the Board of
Directors and shall be numbered consecutively and entered in the books of the
Corporation as they are issued. Each certificate shall exhibit the registered
holder's name and the number and class of shares, and shall be signed by the
president or a vice-president and the secretary or an assistant secretary, and
shall bear the seal of the Corporation or a facsimile thereof. Where any such
certificate is countersigned by a transfer agent, or registered by a registrar,
the signature of any such officer may be a facsimile signature. In case any
officer who signed or whose facsimile signature or signatures were placed on any
such certificate shall have ceased to be such officer before such certificate is
issued, it may nevertheless be issued by the Corporation with the same effect as
if he were such officer at the date of issue.
Section 2. Lost Certificates. The Board of Directors may direct a new
share certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the compliance with notice, affidavit and bond requirements of
S. C. Code Section 36- 8-405, unless compliance with such requirements shall
have been waived for good cause by the Board.
Section 3. Registration of Transfer. Upon surrender to the Corporation
or any transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation or such transfer
agent to issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
5
<PAGE>
Section 4. Registered Shareholders. Except as otherwise provided by
law, the Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends or
other distributions, and to vote as such owner, and shall not be bound to
recognize any equitable or legal claim to or interest in such share or shares on
the part of any other person.
Section 5. Record date. For the purpose of determining the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action affecting the interests of shareholders, the Board
of Directors may fix, in advance, a record date. Such date shall not be more
than seventy (70) days before the date of any such meeting or other action
requiring a determination of shareholders.
In each such case, except as otherwise provided by law, only such
persons as shall be shareholders of record on the date so fixed shall be
entitled to notice of, and to vote at, such meeting and any adjournment thereof,
or to express such consent or dissent, or to receive payment of such dividend,
or such allotment of rights, or otherwise to be recognized as shareholders for
the related purpose, notwithstanding any registration of transfer of shares on
the books of the Corporation after any such record date so fixed.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Instruments Under Seal. All deeds, bonds, mortgages,
contracts, and other instruments requiring a seal may be signed in the name of
the Corporation by the president or by any other officer authorized to sign such
instrument by the Board of Directors.
Section 2. Checks, etc. All checks or demands for money and notes or
other instruments evidencing indebtedness or obligations of the Corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall begin
on the first day of January and end on the last day of December in each calendar
year, unless a different fiscal year shall be fixed by resolution of the Board
of Directors.
Section 5. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation and shall be in such form as is determined by the Board
of Directors. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced. Such seal may be used in the
discretion of the officers and directors, and no document, contract or act of
the Corporation shall be invalid because it has not been sealed.
6
<PAGE>
ARTICLE IX
AMENDMENTS
Section 1. Power to Amend. The Board of Directors shall have power to
amend, repeal or adopt by-laws at any regular or special meeting of the Board,
with the exception of any by-law adopted by the shareholders that expressly
provides that the Board may not adopt, amend or repeal that bylaw or any bylaw
on that subject. Any by-law adopted by the Board may be amended or repealed by
vote of the holders of a majority of the shares entitled at the time to vote for
the election of directors. Neither the directors nor the shareholders shall,
however, have the power to adopt, amend or repeal any by-law if such adoption,
amendment or repeal would cause the Corporation's by-laws to be inconsistent
with the Corporation's articles of incorporation.
Section 2. Amendment Affecting Election of Directors; Notice. If any
by-law is adopted, amended or repealed by the Board, there shall be set forth in
the notice of the next meeting of shareholders for the election of directors the
by-law so adopted, amended or repealed, together with a concise statement of the
changes made. Any notice of meeting of directors or shareholders at which
by-laws are to be adopted, amended or repealed shall include notice of such
proposed action.
7
EXHIBIT 5
Sinkler & Boyd, P.A.
Attorneys at Law
The Palmetto Center
1426 Main Street, Suite 1200
Columbia, South Carolina 29201
(803) 779-3080
December 18, 1996
Community Bankshares, Inc.
1820 Columbia Road, N.E.
Orangeburg, South Carolina 29115
Gentlemen:
In connection with the registration under the Securities Act of 1933
(the "Act") of 300,000 shares of the common stock, no par value (the "Common
Stock"), of Community Bankshares, Inc., a South Carolina corporation (the
"Company") for issuance pursuant to the Community Bankshares, Inc. Dividend
Reinvestment Plan, we have examined such corporate records, certificates and
other documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion.
Upon the basis of such examination, it is our opinion that the Common
Stock, when issued upon the terms and conditions set forth in the Registration
Statement filed by the Company in connection with the registration of the Common
Stock, and upon receipt of the consideration therefor, will be legally issued,
fully paid and nonassessable.
We consent to be named in the Registration Statement as attorneys who
will pass upon certain legal matters in connection with the offering described
in the Registration Statement, and to the filing of a copy of this opinion as an
exhibit to the Registration Statement. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
Sinkler & Boyd, P.A.
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
Board of Directors
Community Bankshares, Inc.
We consent to the incorporation by reference in Community Bankshares,
Inc.'s Registration Statement on Form S-3, relating to the registration of up to
300,000 shares of its common stock for issuance pursuant to the Community
Bankshares, Inc. Dividend Reinvestment Plan, of our report dated January 31,
1996, which is included in Community Bankshares, Inc.'s Annual Report on Form
10-KSB for the year ended December 31, 1995.
J. W. Hunt and Company, L.L.P.
Columbia, South Carolina
December 20, 1996
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of Community Bankshares, Inc.
and the several undersigned Officers and Directors thereof whose signatures
appear below hereby makes, constitutes and appoints Hugo S. Sims, Jr. and
William W. Traynham, and each of them acting individually, its and his true and
lawful attorneys, with power to act without the other and with full power of
substitution, to execute, deliver and file in its or his name and on its or his
behalf, and in each of the undersigned Officer's and Director's capacity or
capacities as shown below, (a) a Registration Statement on Form S-3 (or other
appropriate form) with respect to the registration under the Securities Act of
1933, as amended, of 300,000 shares of common stock of Community Bankshares,
Inc. to be offered pursuant to the Community Bankshares, Inc. Dividend
Reinvestment Plan, and all documents in support thereof or supplemental thereto
and any and all amendments, including any and all post-effective amendments, to
the foregoing (hereinafter called the "Registration Statement"), and (b) such
registration statements, petitions, applications, consents to service of process
or other instruments, any and all documents in support thereof or supplemental
thereto, and any and all amendments or supplements to the foregoing, as may be
necessary or advisable to qualify or register the securities covered by said
Registration Statement; and each of Community Bankshares, Inc. and said Officers
and Directors hereby grants to said attorneys, and to each of them, full power
and authority to do and perform each and every act and thing whatsoever as said
attorneys or attorney may deem necessary or advisable to carry out fully the
intent of this power of attorney to the same extent and with the same effect as
Community Bankshares, Inc. might or could do, and as each of said Officers and
Directors might or could do personally in his capacity or capacities as
aforesaid, and each of Community Bankshares, Inc. and said Officers and
Directors hereby ratifies and confirms all acts and things which said attorneys
or attorney might do or cause to be done by virtue of this power of attorney and
its or his signatures as the same may be signed by said attorneys or attorney,
or any of them, to any or all of the following (and/or any and all amendments
and supplements to any or all thereof): such Registration Statement under the
Securities Act of 1933, as amended, and all such registration statements,
petitions, applications, consents to service of process and other instruments,
and any and all documents in support thereof or supplemental thereto, under such
securities laws, regulations and requirements as may be applicable.
<PAGE>
IN WITNESS WHEREOF, Community Bankshares, Inc. has caused this power of
attorney to be signed on its behalf, and each of the undersigned Officers and
Directors in the capacity or capacities noted has hereunto set his hand, on the
dates indicated below.
COMMUNITY BANKSHARES, INC.
s/Hugo S. Sims, Jr.
Date: October 21, 1996 By:
Hugo S. Sims, Jr.
Its Chief Executive Officer
Signature Title Date
s/E. J. Ayers, Jr.
Director October 21, 1996
(E. J. Ayers, Jr.)
/s/ Alvis J. Bynum Director October 21, 1996
(Alvis J. Bynum)
/s/ Martha Rose C. Carson Director October 21, 1996
(Martha Rose C. Carson)
/s/ Anna O. Dantzler Director October 21, 1996
(Anna O. Dantzler)
/s/ J. M. Guthrie Director October 21, 1996
(J. M. Guthrie)
/s/ Phil P. Leventis Director October 21, 1996
(Phil P. Leventis)
/s/ William H. Nock, III Director October 21, 1996
(William H. Nock, III)
s/Samuel F. Reid, Jr.
Director October 21, 1996
(Samuel F. Reid, Jr.)
s/Hugo S. Sims, Jr.
Chief Executive Officer
(Hugo S. Sims, Jr.) and Director October 21, 1996
s/William W. Traynham
Chief Financial Officer,
(William W. Traynham) President and Director October 21, 1996
Director
(J. Otto Warren, Jr.)
s/Michael A. Wolfe
Director October 21, 1996
(Michael A. Wolfe)
s/Russell S. Wolfe, II
Director October 21, 1996
(Russell S. Wolfe, II)
