UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 28, 2004
(December 21, 2004)
COMMUNITY BANCSHARES, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-16461 63-0868361
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
68149 Main Street, Blountsville, Alabama 35031
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(Address of Principal Executive Offices, including Zip Code)
(205) 429-1000
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(Registrant's Telephone Number, including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2 (b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4 (c))
ITEM 8.01. OTHER EVENTS.
On December 22, 2004 Community Bancshares, Inc. (the "Company") entered
into a Pro Tanto Settlement Agreement (the "Agreement") with respect to the
shareholder derivative cases styled M. Lewis Benson, et al. v. Community
Bancshares, Inc., et al. and John M. Packard, Jr., et al. v. Sheffield
Electrical Contractors, Inc., et al. Pursuant to the Agreement, the Company will
recover a total of $625,000 and all of the individual defendants in the lawsuits
(except for Kennon R. Patterson, Sr., Jimmy Childers and Dewey Hamaker) will be
released from liability. On December 22, 2004 the Circuit Court of Blount
County, Alabama entered an Order Setting a Hearing on a Proposed Settlement
Agreement (the "Order"). A hearing on the fairness of the Agreement is scheduled
for 1:00 p.m. on January 31, 2005 at the Blount County Courthouse in Oneonta,
Alabama. The Order provides that any stockholder of the Company wishing to
object to the Agreement must file the objection with the Clerk of Court no later
than the close of business on January 24, 2005 and must serve the objection on
all attorneys of record in the lawsuits. Pursuant to General Instruction F to
Form 8-K, the Agreement and the Order are attached hereto as Exhibits 99.1 and
99.2, respectively, and are incorporated into this Item 8.01 by reference.
Copies of the Agreement and the Order will be mailed to all stockholders of
record.
On December 21, 2004 the Company and Travelers Casualty & Surety Company
of America ("Travelers") agreed to a settlement of the claim made by the Company
under the fidelity bond issued by Travelers, which claim is the subject of
pending litigation filed by the Company. Pursuant to this settlement, the
Company will receive $450,000 and will release Travelers from any further
liability under the fidelity bond. Travelers will release all claims against
past and present officers and directors of the Company, but will retain
subrogation rights with respect to any restitution order entered in a criminal
or administrative proceeding against Kennon R. Patterson, Sr. or Larry Bishop.
The settlement also provides that in the event the Company obtains a judgment
and recovery in the lawsuit filed by the Company against Mr. Patterson, the
Company will first recover its costs of litigation and collection and then
Travelers will be entitled to the proceeds of such litigation up to the amount
of its payment under the bond.
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ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION
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99.1 Pro Tanto Settlement Agreement dated December 22, 2004
99.2 Order of the Circuit Court of Blount County, Alabama dated December 22, 2004
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMMUNITY BANCSHARES, INC.
/s/ Patrick M. Frawley
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Patrick M. Frawley
Chairman, Chief Executive Officer and
President
Date: December 28, 2004
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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99.1 Pro Tanto Settlement Agreement dated December 22, 2004
99.2 Order of the Circuit Court of Blount County, Alabama dated December 22, 2004