SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
COMMUNITY BANCSHARES, INC.
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(Name of Registrant as Specified In Its Charter)
EDWARD F. GREENE, STEPHEN B. GREENE
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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PROXY
STATEMENT
As Assembled By The
Committee For
Shareholder Interest*
Edward F. Greene
Stephen B. Greene
Please Record Your Vote
For The Committee's Nominees
By Returning The Enclosed
Proxy Card
COMMUNITY BANCSHARES, INC.
Notice of Annual Meeting of Stockholders
Scheduled To Be Held June 19, 1998
*See Notice Enclosed With This Proxy
LETTER TO THE
SHAREHOLDERS
May 19, 1998
Dear Shareholder:
This proxy statement has been prepared by a three-person minority
group of the Board of Directors of Community BancShares, Inc. (the "Committee
for Shareholder Interest") to relay to you the shareholders certain facts and
events which have occurred in the recent past and impact the future of Community
BancShares, Inc. You will have an opportunity to send a message to the current
majority which controls the Board by electing new board members in June. In
order to properly lay a foundation for our message, we must ask you to remember
the reasons why you originally invested in CBI.
Back in 1990, you and others like you saw a need for a locally
owned and operated bank which would serve the needs of the community and would
provide a good investment for the shareholders. This bank would be financed by
the citizens of Wilkes County, and run in the best interests of those citizens
and shareholders. To that end, you and your neighbors bought stock in the
fledgling company which was to operate as the holding company for the new bank
and other financial entities. This corporation, CBI, promised you and all the
other people like you who invested their hard-earned money, a chance to be
involved in an organization which looked out for the interests of the
shareholders.
The following facts and events illustrate why you should elect new
directors, and why the current Board of Directors of CBI has neglected their
duty to you, the shareholder.
1. There are currently ten directors of CBI. The CBI Board is split
into two distinct groups. Eight directors have banded together as a group
(this group hereinafter referred to as the "Majority"). Two of the
directors, who collectively own approximately 20.8% of the outstanding
stock of CBI (Edward F. Greene and Stephen B. Greene), have refused to join
the Majority and have worked together to try to improve CBI (this group
hereinafter referred to as the "Committee for Shareholder Interest"). The
Committe for Shareholder Interest has been met by the opposition of the
Majority at every turn.
2. The current Board of CBI is comprised entirely of members of the
Wilkes National Bank Board. Accordingly, the exact same people who control
the management of CBI are managing Wilkes National Bank. As such, the
management of Wilkes National Bank is not accountable to anyone but itself
(the Majority). It is the opinion of the Committe for Shareholder Interest
that this has prevented both Boards from becoming
more diversified and obtaining board members with the expertise to more
effectively compete in the highly competitive market for financial
services.
3. In November of 1996 the Majority accepted an earnings goal for 1997
that in opinion of the Committee for Shareholder Interest was far too
modest. When the numbers from the Strategic Plan for 1997 and the Third
Quarter Report for 1996 are analyzed, the resulting projected return on
equity for CBI for 1997 was 4.9%. Specifically, net income was projected to
be $450,000 and total shareholders' equity was listed at $9,159,509. This
results in the following equation: Net Income/Total Shareholders' Equity =
Return on Equity ($450,000/$9,159,509 = 4.9%).
Both CBI and Wilkes National Bank had returns on equity in 1997
which totaled out at or less than 6.5%. The financial statements for CBI in 1997
reflect a 6.2% return on equity. This number was calculated by utilizing the
same formula as above, Net Income/Shareholder's Equity = Return on Equity. In
the Annual Report for 1997 which CBI filed with the Securities and Exchange
Commission, Net Income and Total Shareholder's Equity for CBI for 1997 equaled
$628,122 and $10,105,008 respectively. Thus, Return on Equity for CBI for 1997
was 6.2%. Additionally, in that same report, the section which refers to the
financial performance of Wilkes National Bank lists return on equity for that
entity at 6.5%. It is the opinion of the Committee for Shareholder Interest that
these rates of return on equity are too low.
4. Based upon information and belief, during the Spring and Summer of
1997, general counsel for the Company, Smith, Gambrell & Russell in Atlanta
provided personal legal services to the individual members of the Majority
related to the aborted buy/sell attempt between the individual members of
the Majority and the Committee for Shareholder Interest, which the Majority
then had paid by CBI.
5. The best chance to maximize shareholder value for all shareholders
slipped through our hands last summer when the opportunity to effect a
non-taxable exchange with a high performing community bank was rejected by
the CBI Board 8-4. In July, 1997, the CBI Board was presented with a share
exchange proposal from First Community Bank of West Virginia ("FCB"). The
proposal was for a pooling of interest, tax-free, share exchange that would
have provided CBI shareholders with between .33 and .394 shares of FCB
stock for each share of CBI stock exchanged. FCB is a holding company that
would allow Wilkes National Bank to continue to operate as Wilkes National
Bank serving the community in the same manner that it has since its
inception. FCB is the same entity that recently acquired Blue Ridge Bank.
In response to the proposal, the Majority retained the consulting
firm of Robinson- Humphrey from Atlanta to analyze the "value" of CBI stock. In
performing its analysis, Robinson-Humphrey utilized projections for CBI's future
performance provided by the Majority. The projections of Robinson Humphrey were
used by the majority to justify why the overture from FCB should be turned down
by the Board. Robinson-Humphrey did not analyze the value of FCB stock despite
the fact that FCB stock would have been received by CBI
shareholders if the proposal had gone through. It is the Committee for
Shareholder Interest's opinion that the exchange would have been an attractive
affiliation because:
(a) FCB has historically achieved a return on equity of more than 15%
compared to less than 6.5% for CBI and Wilkes National Bank in 1997.
(b) From July of 1997 (the time of the proposal) to the present, FCB stock
has increased in value from $31.50 to $48.75 per share.
(c) FCB has a dividend approaching 4% per year compared to no dividend for
CBI. The dividend alone for one share of FCB stock would be approximately equal
to the annual earnings of a share of CBI stock.
(d) As is reflected in the 1997 Annual Report of FCB, their lending limit
is roughly ten times that of CBI. This would have allowed more and larger loans
to be made by Wilkes National Bank, thus increasing income, return on equity,
and asset value of the Bank.
Despite the above, the Majority refused to present the FCB letter
of intent to the shareholders. The owners of CBI, people like yourself and your
neighbors, who have invested their hard-earned money into CBI, weren't allowed
the opportunity to decide what was the best course of action for CBI. Had the
July 1997 proposal been accepted by the Board, and approved by the shareholders,
the FCB shares received in exchange for CBI shares could possibly have realized
a 54% gain in share value from July 1997 to the present, depending on the impact
a merger with CBI would have had on FCB's stock. (See item 5(b) above.) It is
unclear what appreciation, if any, of FCB stock would have occurred if the
merger with CBI had been approved. In addition, in 1997, FCB shares paid an
indicated annual dividend of $1.30 per share.
6. In November 1997, the Majority unexpectedly and without notice to
the Committee for Shareholder Interest passed a resolution for the issuance
of more stock in CBI at a price of $12.50 per share. At the time, CBI stock
was trading in the $15 to $16 dollar range. There was a restriction
included in the proposal to issue stock that only those individuals who
owned less than 10% of the outstanding stock of CBI could purchase the new
issue. This restriction applied only to the members of the Committee for
Shareholder Interest.
The resolution was passed without research by the Additional
Capital Committee of the Board or even a review by CBI's corporate accountants.
This issuance of additional stock would have diluted your interest in CBI,
reduced the Return on Equity, and probably caused the price of your stock to go
down. Further, cost to CBI to issue the new stock would have been substantial.
These costs would have been incurred even though an independent consultant hired
by the Committee for Shareholder Interest verified that CBI did not need any
additional capital. This stock offering was only halted after the Committee for
Shareholder Interest filed a lawsuit to stop the sale of the stock.
The bottom line is that the time has come for a change. This
Spring, the 1998 Annual Meeting is a perfect opportunity for you and the other
shareholders like you to take back your Company. There are three Directors up
for reelection at this meeting and two of them are members of the Majority.
Unseat them, and send a message to the rest of the Majority. The soliciting
parties recommend that you vote for the following slate of directors at the 1998
Annual Meeting.
STEPHEN B. GREENE
(Incumbent & Member of the Committe for Shareholder Interest)
JANICE S. ROBERTSON
ROGER MATHIS
Whether you will be attending the Meeting or voting through the enclosed proxy
card, your vote is critical to the effort to return CBI to the control of the
shareholders and to the ideal concept of shareholders' interest being paramount.
We thank you for time you've spent in reading this letter and look forward to
seeing you at the Annual Meeting this Spring.
Sincerely,
"The Committee for Shareholder Interest"
Edward F. Greene & Stephen B. Greene
PROXY STATEMENT
INTRODUCTION
All shareholders of Community BancShares, Inc. are hereby invited to
the 1998 Annual Meeting of the Shareholders of Community BancShares, Inc. The
Meeting is currently scheduled to take place at 11:00 a.m. local time on June
19, 1998 at the Holiday Inn Express in Wilkesboro, North Carolina. The record
date for the determination of share ownership and the right to vote at the
Meeting is May 8, 1998.
This proxy statement been assembled in connection with an effort by the
Committe for Shareholder Interest to solicit proxies on behalf of the
shareholders of the Company. In addition, as this proxy statement is assembled
and being distributed on behalf of parties other than the registrant, those
parties have no knowledge of the guidelines proposed by the registrant for the
submission of shareholder proposals for the next annual meeting (1999). The only
agenda item for the 1998 Annual Meeting which the filing parties are aware of at
this point is the election of the newest "class" of directors to the Board of
Directors of Community BancShares, Inc. With regard to any other agenda items
which are brought before the shareholders for a vote at the 1998 meeting,
proxies granted to the Committee for Shareholder Interest will be voted by the
Committee in the best interest of the shareholders as can be reasonably
determined by that body.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives oral notice of his election to
vote in person, without compliance with any other formalities. In addition, any
proxy given pursuant to this solicitation may be revoked prior to the meeting by
delivering to the Secretary of the Company an instrument revoking the proxy or a
duly executed proxy bearing a later date. Proxies which are returned properly
executed and not revoked shall be voted in accordance to the specified
directions of the shareholder thereon. Where no specification is made, the
proxies will be voted according to the recommendations of the Committe for
Shareholder Interest. In addition, the Committee for Shareholder Interest
requests that written notice of revocation of a previously granted proxy be
delivered prior to the start of business on the day of the 1998 Annual Meeting
of Community BancShares, Inc. to counsel for the Committee: McElwee & McElwee,
906 Main Street, North Wilkesboro, North Carolina, 28659.
AGENDA ITEM: ELECTION OF DIRECTORS
As is noted above, the only matter to be acted upon at the annual
meeting which the Committee for Shareholder Interest is aware of is the election
of directors to the board.
The Board of Directors is made up of eleven directors. The Articles of
Incorporation and Bylaws of Community BancShares, Inc. call for a "classified"
board of directors. The definition of "classified" is that at each and every
Annual Meeting of the shareholders of the Company,
one-third of the members of the Board of Directors are elected to serve
three-year terms. Three directors are presently standing for re-election to the
Board. The Committee for Shareholder Interest recommends voting for the three
nominees listed immediately below. In the event that any of these nominees
chooses to withdraw from consideration for election as a director or for any
other reason is unable to serve as director, any proxy granted to the Committee
for Shareholder Interest will be voted for such other person as is nominated by
the Committee for Shareholder Interest. The affirmative vote of a majority of
the votes cast at the meeting is required to elect the three nominees of the
Committee for Shareholder Interest standing for election. Mr. Stephen B. Greene
has been a director of the Company since its inception. Ms. Robertson and Mr.
Mathis have never been directors of the Company. The Committee for Shareholder
Interest has no reason to believe any of the nominees will refuse to serve if
elected.
The following persons have been nominated by the Committee for
Shareholder Interest according to the by-laws of the Company for election to the
Board of Directors as Class I directors, to serve for a term of three years and
until successors are elected and qualified. The Committee for Shareholder
Interest recommends voting for these individuals:
Janice S. Robertson, age 35, has been employed as a Certified Public
Accountant with Benson, Blevins & Associates, P.L.L.C. since August of 1988. She
has been a member of the Board of Directors of CHR Enterprises, Inc. and held
the offices of Secretary and Treasurer with that corporation since July of 1997.
Prior to that time she was a member of the Board of Directors of Robby's Sales,
Inc. and held the offices of Assistant Secretary and Assistant Treasurer with
that corporation from June of 1994 to November of 1997. Ms. Robertson's business
address is Benson, Blevins & Associates, P.L.L.C., 302 Ninth Street, North
Wilkesboro, North Carolina 28659.
Roger Mathis, age 48, has been President and Chief Executive Officer of
Mathis Electric Company, Inc., an electrical contractor, since 1979. He has also
been the Chief Executive Officer of MECI & Associates, Inc., another electrical
contractor, since 1993. In addition, Mr. Mathis has been the President of Lil'
Grandfather Mountain Christmas Tree Farm since 1992. Mr. Mathis' business
address is Mathis Electric Company, Inc., P.O. Box 546, North Wilkesboro, North
Carolina 28659.
Stephen Brian Greene, age 40, has been self-employed as an insurance
broker with the Thompson Financial Group since 1988. Prior to that he was a life
insurance salesman and financial planner with the McNeill Financial Group from
1987 to 1988 and a life insurance salesman and financial planner with New York
Life from 1982 to 1987. Additionally, he has served as Vice President of Severt
& Greene, Inc. since 1996 and has been a Director of Community BancShares, Inc.,
since its inception in 1991. Mr. Greene's business address is P.O.Box 1943,
North Wilkesboro, North Carolina 28659.
The Committee for Shareholder Interest believes that the following
persons will be nominated by the current Board of Directors of Community
BancShares, Inc. for election to the Board of Directors as Class I directors, to
serve for a term of three years and until successors are elected and qualified.
The Committee for Shareholder Interest recommends against voting for
these individuals:
Rebecca Ann Sebastian, age 62, is presently retired. Ms. Sebastian
served as Media Coordinator at the North Wilkesboro Elementary School from 1972
until she retired in 1994. Ms. Sebastian's address is 159 Little Mountain Church
Road, North Wilkesboro, North Carolina, 28659.
Gilbert R. Miller, age 68, is presently retired. From 1947 to 1986, Mr.
Miller served as President and Chief Executive Officer of Miller Brothers Lumber
Company. Mr. Miller's address is P.O. Box 1497, Millers Creek, North Carolina,
28651.
Randy Miller, age 42, is currently the president of Randy Miller
Lumber, Randy Miller Trucking, and Pine Log Company and has served as such since
1983. Prior to that date he was employed by Miller Brothers Lumber from 1976 to
1983. Mr. Miller's address is 164 Old N.C. 60, Millers Creek, North Carolina,
28651.
The following persons are members of the Board of Directors who are not
standing for election to the Board this year and whose term will continue after
the Annual Meeting of Shareholders.
Dwight E. Pardue, age 69, is presently retired. Currently, Mr. Pardue
is serving as the Chairman of the Board of Community BancShares, Inc. Mr. Pardue
served in various capacities with Lowe's Companies, Inc. from 1956 to 1990,
including Senior Executive Vice President. Mr. Pardue's address is P.O. Box 791,
North Wilkesboro, North Carolina 28659.
Joe D. Severt, age 67, has been retired since 1971. Mr. Severt worked
in several capacities for Lowe's Companies, Inc. over the period from 1956 to
1971, including Office and Credit Manager of its Roanoke, Virginia store. Mr.
Severt's address is 7326 Sunnybrook Drive, Roanoke, Virginia 24019.***See notice
enclosed with this proxy.
R. Colin Shoemaker, age 54, is currently employed as Controller and
Office Manager of Key City Furniture Company, Inc. since 1985. Mr. Shoemaker's
address is 516 Germantown Road, Wilkesboro, North Carolina 28697
Jack R. Ferguson, age 71, is presently retired. From 1954 to 1985, he
served in various capacities with Lowe's Companies, Inc., including most
recently as manager of the Hendersonville, North Carolina Store. Mr. Ferguson's
address is 71 Beaverdam Road, Candler, North Carolina, 28715.
Edward F. Greene, age 68, is presently retired. Mr. Greene currently
serves as President of Severt & Greene, Inc., an investment company based in
North Wilkesboro. Mr. Greene served in numerous capacities with Lowe's
Companies, Inc. from 1954 to 1984, most recently as a Senior Vice President. Mr.
Greene's address is 216 Fairway Lane, Wilkesboro, North Carolina 28697.
Robert Ricketts, DDS, age 48, is a dentist in North Wilkesboro who has
been engaged in private practice since 1976. Dr. Ricketts' address is P.O. Box
157, North Wilkesboro, North Carolina 28659.
Ronald S. Shoemaker, age 57, has been President of Community
BancShares, Inc. since June 1990 and was engaged in the organization of the
Company and Wilkes National Bank since February 1990. Mr. Shoemaker served as
Senior Vice President and City Executive for Southern National Bank from 1985 to
1988. Mr. Shoemaker's address is 924 Pleasant Home Church Road, Miller's Creek,
North Carolina 28651.
Ronald S. Shoemaker, President and director of Community BancShares,
Inc. and Wilkes National Bank, is the brother of R. Colin Shoemaker, a director
of Community BancShares, Inc. and Wilkes National Bank. Stephen B. Greene, a
director of Community BancShares, Inc., is the son of Edward F. Greene, a
director of Community BancShares, Inc. Randy Miller is the son of Gilbert
Miller, a director of Community BancShares, Inc.
BENEFICIAL OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth a body of information required to be
disclosed by law which, to the best of the knowledge of the Committee for
Shareholder Interest is correct, concerning the beneficial ownership as defined
in 17 C.F.R. Section 240.13d-3, of the outstanding Common Stock of Community
BancShares, Inc. by those identified as participants in instructions to Items
(4) and (5) of Schedule 14A of the Securities & Exchange Act of 1938 as amended.
(17 C.F.R. Section 240.14a-101)
Except as otherwise indicated, each person listed below possesses sole
voting and investment power of the shares noted as beneficially owned. The term
"beneficial ownership" is defined in the applicable regulation (17 C.F.R.
Section 240.13d-3) as including those shares in which an individual, directly or
indirectly, has or shares either investment or control power or both. This
definition includes in "shares beneficially owned" those options or warrants
which are exercisable within 60 days of the date on which notice is mailed to
the shareholders.
The percentages listed in the table below are based on a total of
1,298,756 shares, the amount of outstanding shares reported in the Company's
Annual Report to the Securities and Exchange Commission for 1997. For those
individuals who are beneficial owners of warrants and options, the total number
of shares outstanding used for the purposes of determining ownership percentages
is equal to 1,298,756 plus the number of shares subject to the presently
exercisable options or warrants beneficially owned by that individual.
SECURITY OWNERSHIP OF PARTICIPANTS
AS DEFINED IN RULE 13d-3 UNDER THE ACT.
(17 C.F.R.Section 240.13d-3)
Reporting Person Common Stock Warrants(1) Options(2) % of Class per RP
- ---------------- ------------ ----------- ---------- -----------------
Edward Greene (3) 206,000 62,226 8,000 20.2%
Joe Severt (4) 208,550 62,226 8,000 20.4%
Stephen Greene 63,500 62,226 8,000 9.8%
Roger Mathis (5) 15,100 0 0 1.2%
Janice S. Robertson 15,338 500 0 1.2%
Dwight Pardue 40,000 34,096 8,000 6.1%
R. Colin Shoemaker (6) 6,600 5,624 8,000 1.5%
Jack R. Ferguson (7) 33,200 31,538 8,000 5.4%
Robert F. Ricketts 25,000 12,786 8,000 3.6%
Ronald S. Shoemaker 12,595 9,300 62,668 6.1%
Rebecca A. Sebastian (8) 35,000 21,310 8,000 4.8%
Gilbert Miller (9) 38,638 20,190 8,000 5.0%
Brent Eller (10) 2,000 1,704 8,000 *
Randy Miller 36,862 14,306 0 3.9%
* Less than one percent of the shares outstanding
(1) These are presently exercisable stock purchase warrants
granted in connection with the initial stock offering of
Community BancShares, Inc.
(2) These amounts represent presently exercisable stock options
granted in blocks of 2000 per year as annual compensation to
members of the Board of Directors of Community BancShares,
Inc.
(3) This amount includes 198,000 shares held in Mr. Greene's IRA,
800 shares held by his wife for which Mr. Greene has voting
power, and 1600 shares held by Severt & Greene, Inc., a
company in which Edward Greene has a 50% interest.
(4) This amount includes 1600 shares held by Severt & Greene,
Inc., a company in which Joe Severt has a 50% interest.***See
notice enclosed with this proxy.
(5) This amount includes 15,000 shares which are held and
controlled by Roger Mathis as the beneficial owner and 100
shares which are in the name of his minor grandson, but are
controlled by Roger Mathis as guardian.
(6) Of the 6,600 shares of common stock which Mr. Shoemaker
beneficially owns, 4,180 are owned jointly with his wife,
1,210 shares are owned by Mr. Shoemaker's IRA, and 1,210
shares are owned by his wife's IRA.
(7) The shares of common stock which Mr. Ferguson owns are held
jointly with his wife.
(8) The amount of common stock includes 5,000 shares owned jointly
by Ms. Sebastian and her aunt.
(9) The shares of common stock which Mr. Miller owns are held
jointly with his wife.
(10) All of the shares beneficially owned by Mr. Eller are owned by
his IRA.
There is no evidence that any of the above individuals are or have been
in the past year, a party to any contract, arrangement, or understanding with
any person with respect to any securities of the registrant, including, but not
limited to joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or profits,
or the giving or withholding of proxies.
There is no evidence that any of the above individuals or any of their
associates have any contract, arrangement, or understanding with any person with
respect to any future employment by the registrant or its affiliates or with
respect to any future transaction which Community BancShares, Inc. may be a
party to.
With regard to the securities issued by Community BancShares, Inc., the
only purchase of said securities by Edward F. Greene or Joe Severt in the last
two years was the purchase of the balance of the latest stock offering of the
registrant so that said offering could be completed in September 1996. Mr.
Greene purchased 121,000 shares of common stock and Mr. Severt purchased 120,950
shares of common stock. These transactions were financed via cash received from
the sale of other securities by Mr. Greene and funds borrowed at brokerage rates
through a margin account at Wheat First Securities by Mr. Severt. The only sales
of said securities by either Mr. Greene or Mr. Severt were by Mr. Greene as
follows.
1997 1998
March: 500 sh. common stock sold February: 100 sh. common stock sold
April : 100 sh. common stock sold
The following sales of securities of Community BancShares, Inc.
beneficially owned by Stephen Brian Greene took place over the last two years.
1996 1997
January: 200 sh. common stock sold January: 300 sh. common stock sold
March: 100 sh. common stock sold February: 500 sh. common stock sold
May: 500 sh. common stock sold April: 100 sh. common stock sold
July: 100 sh. common stock sold June: 200 sh. common stock sold
September: 100 sh. common stock sold July: 100 sh. common stock sold
November: 200 sh. common stock sold September: 100 sh. common stock sold
November: 500 sh. common stock sold
CERTAIN MATERIAL TRANSACTIONS
According to law, the existence of transactions which meet certain
criteria must be made known to the shareholders whose proxy is sought. The
following paragraphs address this requirement.
Stephen Brian Greene deposited the Community BancShares, Inc. stock and
warrants owned by him with Wilkes National Bank as the guarantee for a loan of
$850,000 made to Edward F. Greene in September of 1997 for real estate
investment. In January of 1998, the loan was paid off in full and the shares and
warrants returned to Stephen Brian Greene.
Roger Mathis has been involved in only one material transaction which
has occurred in the last fiscal year. A mortgage with Wilkes National Bank was
taken out on May 23, 1997 for the purpose of real estate investment in the
amount of $72,500. Payments are currently being made on said mortgage.
In 1991, the Company entered into a lease with Edward F. Greene and his
wife Francis C. Greene to lease a facility of approximately 1,800 square feet in
Wilkesboro for use as offices of the Company's subsidiary, Wilkes National Bank.
The original agreement expired in June 1996 and the Company entered into an
agreement with Mr. and Mrs. Greene to continue leasing the facility. In November
of 1993, the Company entered into a lease agreement with Edward F. Greene and
Joe Severt to lease a 1,700 square foot facility in North Wilkesboro for use as
a branch office of Wilkes National Bank. Total payments made under these
agreements were $66,960* in 1997 and $72,110 during 1996. Mr. Edward Greene had
a line of credit with Wilkes National Bank for $850,000 which was utilized in
September of 1997. The balance was paid off in January of 1998 and there is
currently no money due on the loan and the line of credit is closed.
[* This amount includes rental payments only. No other costs (i.e. property
taxes, inspection fees, etc.) are included in the calculations.]
RULE 16A COMPLIANCE
The regulations which govern the application of the Securities Exchange
Act of 1934 and the resulting amendments to that Act require the reporting of
certain transactions to the Securities Exchange Commission which involve the
securities issued by the registrant and those individuals who according to the
criteria contained within Rule 13d-3 beneficially own more than 10% of said
securities and/or are Directors of the registrant. The Committee for Shareholder
Interest has complied with these requirements through late filings of Forms 4
and 5 with the S.E.C. and is unaware of whether or not the Majority has complied
as well.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
To the best knowledge of the Committee for Shareholder Interest, there
are currently 1,298,756 shares of common stock issued by the registrant
outstanding and entitled to vote. Each share of common stock is entitled to one
vote. As was stated above, the record date for the Meeting is May 8, 1998, with
the Meeting currently scheduled to take place on June 19, 1998. Cumulative
voting rules will not be in effect.
STOCK OPTION PLAN
"On May 28, 193, the Company's shareholders adopted a 1993 Incentive
Stock Option Plan (the "Plan") for employees who are contributing significantly
to the management or operation of the business of the Company or its
subsidiaries as determined by the committee administering the Plan. The Plan
provides for the grant of up to 400,000 options at the discretion of the Board
of Directors or a committee designated by the Board of Directors to administer
the Plan. The option exercise must be at least 100% (110% in the case of a
holder of 10% or more of the Common Stock) of the fair market value of the stock
on the date the option is granted and the options are exercisable by the holder
thereof in full at any time prior to their expiration in accordance with the
Plan. Stock options granted pursuant to the Plan will expire on or before (1)
the date which is the tenth anniversary of the date the option is granted, or
(2) the date which the fifth anniversary of the date the option is granted in
the event that the option is granted to a key employee who owns more than 10% of
the total combined voting power of all classes of stock of the Company or any
subsidiary of the Company." (Quoted from the Company's Proxy Statement for the
1997 Annual Meeting.)
"In May 1994, the Plan was amended to, among other things, provide for
the automatic annual grant of options to purchase 2,000 shares of Common Stock
to each of the Company's outside directors." (Quoted from the Company's Proxy
Statement for the 1997 Annual Meeting.)
DIRECTORS AND EXECUTIVE OFFICERS
The following relates the current status of the members of the
Committee for Shareholder Interest as directors and their affiliation with
various committees of the Company and its affiliate, Wilkes National Bank.
Mr. Edward F. Greene is a member of the additional capital committee of
the Company. which held no meetings over the 1997 fiscal year of the Company. He
is also a member of the executive committee, which met twice in 1997. In
addition, he is a member of the loan and asset liability committees of the
subsidiary of the Company, Wilkes National Bank. Those committees respectively
met twice and almost weekly over the course of the Company's 1997 fiscal year.
Mr. Joe Severt was a member of the additional capital, executive, and
audit committees of the Company. These committees did not meet during the
Company's 1997 fiscal year in the case of the additional capital and audit
committees, and only twice in the case of the executive committee.***See notice
enclosed with this proxy.
Mr. Stephen Brian Greene is a member of the site and search committee
of the Company. The committee had two meetings over the course of the Company's
last fiscal year, both attended by Mr. Stephen Brian Greene.
There were ten (10) meetings of the Board of Directors of the Company
over the course of their last fiscal year. Mr. Edward F. Greene attended all of
them, as did Mr. Joe Severt. Mr.
Stephen Brian Greene attended seven (7) of them.
DISSENTER'S RIGHTS
Briefly, dissenters have the following rights under North Carolina law.
A shareholder is entitled to dissent from, and obtain payment for the fair value
of his shares in the event of a merger, share exchange, sale or exchange of
corporate assets, amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares, or any corporate
action taken pursuant to a shareholder vote to the extent the articles of
incorporation, bylaws, or a resolution of the board of directors provides that
voting or nonvoting shareholders are entitled to dissent and obtain payment for
their shares.
A shareholder entitled to dissent and obtain payment for his shares
under North Carolina Law may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders. Further, a beneficial shareholder may
assert dissenters' rights as to shares held on his behalf only if he submits to
the corporation the record shareholder's written consent to the dissent with
respect to all shares of which he is the beneficial shareholder not later than
the time the beneficial shareholder asserts dissenters' rights.
In order to dissent, an individual must follow the statutory procedure.
To begin with, if the proposed corporate action creating dissenters' rights is
submitted to a vote at a shareholders' meeting, the meeting notice must state
that shareholders are or may be entitled to assert dissenters' rights under
North Carolina law and be accompanied by a copy of the pertinent statute. If
corporate action creating dissenters' rights is taken without a vote of
shareholders, the corporation shall no later than 10 days thereafter notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in the statute. If a
corporation fails to comply with the requirements of the statute, the corporate
action still stands, but any shareholder entitled to recover under the statute
may do so for the full amount of any damages they may have suffered via a civil
action against the corporation filed within three years after the corporation
acting.
In order for a dissenting shareholder to recover, demand for payment
must be made to the corporation. The dissenting shareholder must make sure the
corporation receives written notice of his intent to demand payment for his
shares if the disputed action is taken, and the dissenting shareholder must not
vote his shares in favor of the proposed action.
In the case that a corporate action creating dissenters' rights is
authorized at a shareholders' meeting, the corporation must mail by registered
or certified mail no later than 10 days after the corporate action was taken,
return receipt requested, a written dissenters' notice to all shareholders who
satisfied the requirements to dissent. The notice must state where payment
demand must be sent and where and when certificates for certificated shares must
be deposited,
inform holders of uncertificated shares to what extent transfer of the shares
will be restricted after the payment demand is received, supply a form for
demanding payment, set a date 30-60 days from the date notice is mailed by which
the corporation must receive the payment demand, and be accompanied by a copy of
the applicable statute. In order to recover under this scenario, a shareholder
sent a dissenters' notice must demand payment and deposit his share certificates
in accordance with the terms of the notice, otherwise he loses his rights. The
shareholder who demands payment and deposits his share certificates in such a
manner retains all other rights of a shareholder until these rights are canceled
or modified by the taking of the proposed corporate action.
THE SOLICITING INDIVIDUALS AND OTHER DETAILS OF THE SOLICITATION
This solicitation is to be made on behalf of the shareholders of
Community BancShares, Inc. by the Committee for Shareholder Interest (Edward F.
Greene and Stephen B. Greene); the nominees of the Committee for Shareholder
Interest for election to the Board of Directors; and those other individuals
which the Committee for Shareholder Interest may employ to assist in the
solicitation. Solicitation will be made via mailed communications, personal
face-to-face conversations, and telephone calls to registered shareholders of
Community BancShares, Inc. This item will be updated via supplemental filings if
there are other methods which are used by the solicitors.
To this point, there has been a negligible amount spent by the
soliciting parties for and in furtherance of soliciting security holders. The
amount spent to this point in connection with said solicitation, including
preparation and filing of the requisite forms and schedules with the Securities
& Exchange Commission is approximately $25,000. The anticipated total outlay by
the soliciting parties is expected to be in the neighborhood of $60,000,
however, that number is at best a rough estimate as the soliciting parties are
inexperienced in gauging the cost of a proxy contest. The costs of the
solicitation will be borne by the soliciting parties initially, with a
likelihood that the question of reimbursement will be submitted to a vote by the
security holders.
This the 29th day of May, 1998.
"The Committe for Shareholder Interest
/s/ Edward Greene /s/ Stephen Greene
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Edward Greene Stephen Greene