EXHIBIT 99.1
State of Alabama
Judicial Department - Circuit Court
Forty-First Judicial Circuit - Xxxxxx County
CIVIL ACTION NO. CV - 00- 268
X. XXXXX XXXXXX, ET AL.
PLAINTIFFS
VS.
COMMUNITY BANCSHARES, INC., ET AL.
DEFENDANTS
AND
CIVIL ACTION NO. CV -- 03-319
XXXX X. XXXXXXX, XX., ET AL.
PLAINTIFFS
VS.
SHEFFIELD ELECTRICAL CONTRACTORS, INC., ET AL.
DEFENDANTS
Pro Tanto Settlement Agreement
The parties principally involved in these lawsuits have reached an
agreement -- contingent upon its approval by the Circuit Court of Xxxxxx County,
Alabama after all appropriate notices, and upon its not being altered (except as
hereafter appears) in any appellate proceeding -- to settle, pro tanto, these
lawsuits.
This is a statement of the terms of that agreement.
1) This agreement cannot be construed or represented as an admission or
other evidence of liability.
2) The defendants making this settlement are all of the individual
defendants in this case (known hereinafter as the "Director Defendants") except
for Xxxxxx X. Xxxxxxxxx, Xx., Xxxxx Xxxxxxxx, and Xxxxx Xxxxxxx.
3) The defendants Xxxxxx Xxxxxxxx, Xxxxx X. Xxxxx, Xxxxx Xxxxxxxxx, Xxxxxx
X. Xxxxxxxxx, Xx., Xxxxxxx Xxxxxxx, Xxx XxXxxxxx, Xxxxxx X. Xxxxxxxxxx, and
Xxxxxx X. Xxxxxx, Xx., no longer serve as Directors of either Community Bank or
of Community Bancshares, Inc.,
but are included as "Director Defendants" in the text herein.
4) Xxxxx Xxxxxx is not a Director Defendant but is a person included in
this settlement agreement. As a part of this agreement, Xxxxxx agrees that he
will not seek or accept employment in the future by any federally insured
financial institution and will execute a written statement to that effect for
delivery to the regulatory agencies affected. Xxxxx Xxxxxx also will release the
named derivative plaintiffs, Community Bank, Community Bancshares, Inc., and the
Director Defendants from any and all claims of whatsoever nature; Community Bank
and Community Bancshares, Inc., (for themselves and on behalf of their past and
present officers, directors, and agents) will release Xxxxx Xxxxxx from any and
all claims of whatsoever nature.
5) On behalf of the Director Defendants, the sum of One Million Six
Hundred Seventy-five Thousand Dollars ($1,675,000.00) will be paid by their
insurance carrier, subject to the approval of the Court, as follows:
a) $1,035,000.00 (but not more than that) to Xxxxxxx, Xxxxxx & Xxxx as and
for their fees and expenses as attorneys for the derivative plaintiffs in
both pending lawsuits;
b) $625,000 to Community Bank and/or Community Bancshares, Inc. (as they may
between themselves allocate) as damages recovered by them for both
actions; and,
c) $5,000.00 each (for a total payment of $15,000.00) to the derivative
plaintiffs, viz., Xx. Xxxxxxx, Xx. Xxxx, and Dr. and Xxx. Xxxxxx
(jointly), in recognition of their service as named plaintiffs on behalf
of the corporations, and as compensation for any individual claims
asserted in these two actions only. The derivative plaintiffs will release
no personal claims against Community Bank and Community Bancshares, Inc.,
other than those set out in the two captioned cases.
6) If the Court sets the amount of the fee and expenses to be paid to
Xxxxxxx, Xxxxxx & Xxxx as counsel for the derivative plaintiffs at a sum less
than the $1,035,000 paid for that purpose, the derivative plaintiffs and their
counsel have the right to appeal such lesser award. The right to appeal the
award of a fee and expenses less than the agreed amount shall not affect in any
other respect the validity and finality of any judgment of the Circuit Court of
Xxxxxx County, Alabama, approving the settlement.
7) The Director Defendants (by and through their insurance company) shall
pay the agreed amount to those entitled to receive it the next business day
following the expiration of the time for taking an appeal from an order of the
Circuit Court of Xxxxxx County, Alabama approving this settlement. Payment of
the agreed amount shall fully and completely release the Director Defendants and
Xxxxx Xxxxxx from any and all further liability herein.
8) If any shareholder or other affected party to these lawsuits files an
appeal, before the expiration of the time for taking an appeal, from an order of
the Circuit Court of Xxxxxx County, Alabama, approving this settlement, then the
payments called for by this settlement shall be paid to those entitled to
receive them not later than five (5) business days following the entry of a
final order in the appeals courts affirming the order of the Circuit Court of
Xxxxxx County, Alabama, approving this settlement.
9) If an appeal is taken with respect to the amount of the payment to
Xxxxxxx, Xxxxxx & Xxxx for its fee and expenses and, after the final action of
any appellate court, there remains any difference between the amount awarded and
or fixed after any such appeal, then and in that case any such remaining balance
of the payment contemplated in Section 5, above, shall be paid to
Community Bank as its additional damages herein.
10) In exchange for the above, all Bank-related defendants (i. e,
Community Bancshares, Inc., Community Bank, all Director Defendants, and Xxxxx
Xxxxxx) save and except Xxxxxx X. Xxxxxxxxx, Xx., will be dismissed with
prejudice from these two actions.
11) Community Bank shall be realigned as party plaintiff in the two
actions to pursue, to the extent that it deems appropriate and in the best
interests of the Bank and Community Bancshares, Inc., any remaining defendants,
the derivative plaintiffs shall be dismissed as parties to the two actions, and
the lawsuits shall proceed thenceforth as regular civil actions and not as
derivative lawsuits.
12) All parties to this agreement will give their best efforts to
accomplish the settlement so soon as practicable.
13) This Settlement Agreement is conditioned upon and entered into in
anticipation of the settlement and dismissal of the action styled Community Bank
and Community Bancshares, Inc., vs. Travelers Casualty & Surety Company of
America now pending as CV 04-BE-2885-S in the United States District Court for
the Northern District of Alabama, Southern Division, the consequential dismissal
of all third-party and other ancillary claims against the Director Defendants
and Xxxxx Xxxxxx therein pending, and Travelers' Motion for Leave to Intervene
in these actions. The parties are informed that an agreement to accomplish that
result has been reached as of 21st December, 2004, between Community Bank and
Community Bancshares, Inc., on the one hand, and Travelers Casualty & Surety
Company of America on the other. Should that settlement fail to be accomplished,
then this Pro Tanto Settlement Agreement will become ineffective.
Witness our hands this the 22nd day of December, 2004.
/s/ Xxxxx X. Xxxxxxx /s/ X. Xxxxx Xxxxxxx /s/ Xxxx X. Xxxxxxxxxx
-------------------- -------------------- ----------------------
Xxxxx X. Xxxxxxx X. Xxxxx Xxxxxxx Xxxx X. Xxxxxxxxxx
Attorney for the Director Attorney for Xxxxx Xxxxxx Attorney for the
Defendants Derivative Plaintiffs
/s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Attorneys for Community
Bank and Community
Bancshares, Inc.,
