As filed with the Securities and Exchange Commission on May 23, 1997.
Registration No. 333-24523
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
INDEPENDENT COMMUNITY BANKSHARES, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Virginia 6120 54-1696103
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
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111 West Washington Street
Middleburg, Virginia 22117
(540) 687-6377
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Joseph L. Boling, President
Independent Community Bankshares, Inc.
111 West Washington Street
Middleburg, Virginia 22117
(540) 687-6377
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Copies of Communications to:
R. Brian Ball, Esquire
Wayne A. Whitham, Jr., Esquire
Williams, Mullen, Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
(804) 643-1991
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a bank holding company and there is compliance
with General Instruction G, check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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INDEPENDENT COMMUNITY BANKSHARES, INC.
CROSS REFERENCE SHEET
Showing Heading or Location in Prospectus of Information
Required by Items in Part I of Form S-4
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Item Number and Caption Heading or Location in Prospectus
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A. Information About the Transaction
1. Forepart of Registration Statement and Outside Front Facing Page of Registration Statement; Cross
Cover of Page of Prospectus Reference Sheet; Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus Available Information; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges, and Summary; Selected Financial Information; Pro
Other Information Forma Financial Information; The Shareholder
Meeting; The Reorganization; The Tredegar
Trust Company
4. Terms of the Transaction Summary; The Reorganization; Description of
ICBI Capital Stock
5. Pro Forma Financial Information Pro Forma Financial Information
6. Material Contacts With the Company Being Acquired Not Applicable
7. Additional Information Required for Reoffering by Not Applicable
Persons and Parties Deemed to be Underwriters
8. Interests of Named Experts and Counsel Experts; Legal Opinion
9. Disclosure of Commission Position on Indemnification for Not Applicable
Securities Act Liabilities
B. Information About the Registrant
10. Information With Respect to S-3 Registrants Not Applicable
11. Incorporation of Certain Information by Reference Not Applicable
12. Information With Respect to S-2 or S-3 Registrants Not Applicable
13. Incorporation of Certain Information by Reference Not Applicable
14. Information With Respect to Registrants Other Than S-3 Independent Community Bankshares, Inc.;
or S-2 Registrants Selected Financial Information; Independent
Community Bankshares, Inc. Management's
Discussion and Analysis of Financial
Condition and Results of Operations
C. Information About the Company Being Acquired
15. Information With Respect to S-3 Companies Not Applicable
16. Information With Respect to S-2 or S-3 Companies Not Applicable
17. Information With Respect to Companies Other Than S-2 or The Tredegar Trust Company; Selected
S-3 Companies Financial Information; The Tredegar Trust
Company Management's Discussion and Analysis
of Financial Condition and Results of
Operations
D. Voting and Management Information
18. Information if Proxies, Consents or Authorizations Are The Shareholder Meeting; The Reorganization;
to be Solicited Independent Community Bankshares, Inc.; The
Tredegar Trust Company
19. Information if Proxies, Consents or Authorizations Are Not Applicable
Not to be Solicited, or in an Exchange Offer
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[LOGO]
The Tredegar Trust Company
________ __, 199_
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "Meeting") of The Tredegar Trust Company ("TTC") to be held at the offices
of TTC, 901 East Byrd Street, Richmond, Virginia on June __, 1997 at 9:30 a.m.
At the Meeting, shareholders will consider and vote on the Agreement
and Plan of Reorganization, dated as of March 28, 1997 (the "Agreement"),
between TTC, Independent Community Bankshares, Inc. ("ICBI") and TTC Acquisition
Subsidiary, Inc., a wholly-owned subsidiary of ICBI ("Acquisition") pursuant to
which, among other things, Acquisition will merge with TTC (the
"Reorganization"). Under the terms of the Agreement, each share of TTC Common
Stock outstanding immediately prior to consummation of the Reorganization will
be exchanged for shares of ICBI Common Stock, with cash being paid in lieu of
issuing fractional shares, as described in the accompanying Proxy
Statement/Prospectus. Following the Reorganization, TTC will continue to carry
on its trust business as a wholly-owned subsidiary of ICBI in substantially the
same manner as before the Reorganization.
The exchange of shares (other than for cash in lieu of any fractional
shares) will be a tax-free transaction for federal income tax purposes. Details
of the proposed Reorganization are set forth in the accompanying Proxy
Statement/Prospectus, which you are urged to read carefully in its entirety.
Approval of the Reorganization requires the affirmative vote of a majority of
the outstanding shares of TTC Common Stock.
Your Board of Directors has approved the Reorganization and believes
that it is in the best interests of TTC and its shareholders. Accordingly, the
Board recommends that you VOTE FOR the Reorganization.
At the Meeting, you also will vote on the election of nine (9)
Directors for a term of one year each. Your Board of Directors unanimously
supports these individuals and recommends that you VOTE FOR them as directors.
We hope you can attend the Meeting. Whether or not you plan to attend,
please complete, sign and date the enclosed proxy card and return it promptly in
the enclosed envelope. Your vote is important regardless of the number of shares
you own. We look forward to seeing you at the Meeting.
Sincerely,
F. E. Deacon, III
President and Chief Executive Officer
901 East Byrd Street
Richmond, Virginia 23219
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THE TREDEGAR TRUST COMPANY NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS To be held
on June __, 1997 at 9:30 a.m.
The Annual Meeting of Shareholders (the "Meeting") of The Tredegar
Trust Company ("TTC") will be held on June __, 1997 at 9:30 a.m. at the offices
of TTC, 901 East Byrd Street, Richmond, Virginia for the following purposes:
1. To approve the Agreement and Plan of Reorganization, dated
as of March 28, 1997, between TTC, Independent Community
Bankshares, Inc. ("ICBI") and TTC Acquisition Subsidiary,
Inc. ("Acquisition") and a related Plan of Merger
(collectively, the "Reorganization Agreement"), providing
for a Merger of TTC and Acquisition (the "Reorganization")
upon the terms and conditions therein, including among other
things that each issued and outstanding share of TTC Common
Stock will be exchanged for shares of ICBI Common Stock,
with cash being paid in lieu of issuing fractional shares.
The Reorganization Agreement is enclosed with the
accompanying Proxy Statement/Prospectus as Appendix A.
2. To elect nine (9) directors to serve for a one year term and
until their successors are elected and qualified.
3. To transact such other business as may properly come before
the Meeting or any adjournments or postponements thereof.
Proxies voting against the proposal to approve the
Reorganization Agreement will not be used by management to
vote for adjournment to permit further solicitation of
proxies.
The Board of Directors has fixed May __, 1997 as the record date for
the Meeting, and only holders of record of TTC Common Stock at the close of
business on that date are entitled to receive notice of and to vote at the
Meeting or any adjournments or postponements thereof.
By Order of the Board of Directors
F. E. Deacon, III
President and Chief Executive Officer
May __, 1997
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY
PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING.
THE BOARD OF DIRECTORS OF THE TREDEGAR TRUST COMPANY
RECOMMENDS THE SHAREHOLDERS VOTE TO APPROVE
THE REORGANIZATION AGREEMENT.
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THE TREDEGAR TRUST COMPANY
PROXY STATEMENT
PROSPECTUS
OF
INDEPENDENT COMMUNITY BANKSHARES, INC.
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to shareholders of
The Tredegar Trust Company ("TTC") in connection with the solicitation of
proxies by the Board of Directors of TTC for use at the Annual Meeting of
Shareholders (the "TTC Meeting"), and any postponements or adjournments of the
meeting.
At the TTC Meeting, shareholders of record of TTC Common Stock as of
the close of business on May __, 1997, will consider and vote on a proposal to
approve the Agreement and Plan of Reorganization, dated as of March 28, 1997,
and the related Plan of Merger (together, the "Reorganization Agreement") by and
among Independent Community Bankshares, Inc., a Virginia corporation ("ICBI"),
TTC Acquisition Subsidiary, Inc., an interim Virginia trust company wholly-owned
by ICBI ("Acquisition"), and TTC, pursuant to which, among other things,
Acquisition will merge into TTC (the "Reorganization"). Upon consummation of the
Reorganization, which is expected to occur on or about July 1, 1997 (the
"Effective Date"), each outstanding share of TTC Common Stock (other than shares
held by dissenting shareholders) shall be converted into and represent the right
to receive a maximum of 0.25 shares of ICBI Common Stock (the "Initial Merger
Consideration"), promptly after the Effective Date, and a maximum of 0.0357
shares of ICBI Common Stock, payable approximately three years after the
consummation of the Reorganization if TTC's net earnings in the three years that
follow the Reorganization equal or exceed $638,946, subject to adjustment as
described herein (the "Contingent Merger Consideration"). Cash will be paid in
lieu of fractional shares.
See "The Reorganization" for a more complete description of the
Reorganization. A copy of the Reorganization Agreement is enclosed as Appendix
A.
At the TTC Meeting shareholders also will vote to elect nine (9)
Directors of TTC for a one year term. See "The Tredegar Trust Company Election
of Directors; Management" for additional information.
This Proxy Statement/Prospectus also serves as the Prospectus of ICBI
relating to approximately 79,029 shares of ICBI Common Stock issuable to the
shareholders of TTC in connection with the Reorganization.
This Proxy Statement/Prospectus is first being mailed to shareholders
of TTC on or about May __, 1997.
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 PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF ICBI COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
The date of this Proxy Statement/Prospectus is May __, 1997.
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AVAILABLE INFORMATION
Independent Community Bankshares, Inc. ("ICBI") is not subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and, accordingly, does not file reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). ICBI has filed
with the Commission a Registration Statement on Form S-4, as amended, under the
Securities Act of 1933, as amended, with respect to the shares of ICBI Common
Stock issuable in the Reorganization. This Proxy Statement/Prospectus does not
contain all of the information set forth in the Registration Statement, certain
items of which have been omitted in accordance with the rules and regulations of
the Commission.
For further information pertaining to ICBI and the shares of ICBI
Common Stock issuable in the Reorganization, reference is made to the
Registration Statement and amendments and exhibits thereto, which may be
inspected and copied at the offices of the Commission, at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and at regional offices of the
Commission at the following locations: Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and World Trade Center,
New York, New York 10048. 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. In addition, the Commission
maintains a Web site (address: http://www.sec.gov) that contains the
Registration Statement of ICBI.
-------------------------
No person is authorized to give any information or to make any
representation not contained or incorporated by reference in this Proxy
Statement/Prospectus, and, if given or made, such information or representation
should not be relied upon as having been authorized. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase, the securities offered by this Proxy Statement/Prospectus
in any jurisdiction to or from any person to whom it is unlawful to make such an
offer or solicitation in such jurisdiction. Neither the delivery of this Proxy
Statement/Prospectus nor any distribution of the securities being offered
pursuant to this Proxy Statement/Prospectus shall, under any circumstances,
create an implication that there has been no change in the affairs of ICBI or
TTC or the information set forth herein since the date of this Proxy
Statement/Prospectus.
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TABLE OF CONTENTS
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Introduction....................................................................................................1
Available Information...........................................................................................2
Summary.........................................................................................................4
The Companies..............................................................................................4
The Shareholder Meeting....................................................................................4
Glossary of Terms..........................................................................................4
The Reorganization.........................................................................................6
Comparative Per Share Information..............................................................................11
Selected Financial Information.................................................................................13
ICBI Selected Historical Financial Information............................................................14
TTC Selected Historical Financial Information.............................................................15
ICBI and TTC Selected Pro Forma Combined Financial Information............................................16
The Shareholder Meeting........................................................................................17
The Reorganization.............................................................................................19
Financial Advisor's Opinion....................................................................................32
The Tredegar Trust Company.....................................................................................35
The Tredegar Trust Company Election of Directors; Management...................................................35
The Tredegar Trust Company Management's Discussion and Analysis of
Financial Condition and Results of Operations.............................................................42
Independent Accountants........................................................................................45
Other Business.................................................................................................45
Independent Community Bankshares, Inc..........................................................................46
Independent Community Bankshares, Inc. Management..............................................................47
Independent Community Bankshares, Inc. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............................................................53
Description of ICBI Capital Stock..............................................................................73
Comparative Rights of Security Holders.........................................................................73
Supervision and Regulation.....................................................................................80
Experts ......................................................................................................85
Legal Opinion..................................................................................................85
Pro Forma Financial Information (Unaudited)....................................................................86
Pro Forma Combined Condensed Balance Sheet (Unaudited)....................................................87
Pro Forma Combined Condensed Income Statements (Unaudited)................................................88
Notes to Pro Forma Condensed Financial Information (Unaudited)............................................90
Appendices
General
A Agreement and Plan of Reorganization.....................................................................A-1
The Tredegar Trust Company
B The Tredegar Trust Company Financial Statements (including the
audited December 31, 1996 Financial Statements)......................................................B-1
C Opinion of Scott & Stringfellow, Inc.....................................................................C-1
D Excerpts from the Virginia Stock Corporation Act Relating
to Dissenting Shareholders...........................................................................D-1
Independent Community Bankshares, Inc.
E Independent Community Bankshares, Inc. Financial Statements (including the
audited December 31, 1996 Financial Statements)......................................................E-1
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SUMMARY
The following summary is not intended to be complete and is qualified
in its entirety by the more detailed information and financial statements
contained elsewhere in this Proxy Statement/Prospectus, including the Appendices
hereto and the documents incorporated herein by reference.
THE COMPANIES
ICBI. ICBI is a bank holding company headquartered in Middleburg,
Virginia. ICBI has one subsidiary, The Middleburg Bank, a Virginia-chartered
bank that operates three banking offices and offers a full range of banking
services principally to individuals and to small and medium sized businesses in
Loudoun County, Virginia. ICBI was formed in 1993 to serve as the parent bank
holding company for The Middleburg Bank. The Middleburg Bank began business in
1924. At December 31, 1996, ICBI had total assets of $163 million, deposits of
$139 million, and total stockholders' equity of $18 million. ICBI's principal
executive offices are located at 111 West Washington Street, Middleburg,
Virginia 20117 and its telephone number is (540) 687-6377. See "Independent
Community Bankshares, Inc.," "Pro Forma Financial Information" and the documents
relating to ICBI accompanying this Proxy Statement/Prospectus.
TTC. TTC is a Virginia-chartered independent trust company and provides
trust and investment services, primarily to customers in Virginia, through its
office in Richmond, Virginia. At December 31, 1996, TTC had total assets of
$1.36 million and stockholders' equity of $1.33 million. The principal executive
offices of TTC are located at 901 East Byrd Street, Richmond, Virginia 23219 and
its telephone number is (804) 644-2848. In 1995 TTC and The Middleburg Bank
entered into a contract under which TTC provides various services to the trust
department of The Middleburg Bank. TTC also provides investment advisory
services to ICBI. See "The Tredegar Trust Company" and "The Tredegar Trust
Company Management's Discussion and Analysis of Financial Condition and Results
of Operation."
THE SHAREHOLDER MEETING
The TTC Meeting will be held at the offices of TTC, 901 East Byrd
Street, Richmond, Virginia on June __, 1997 at 9:30 a.m. Only holders of record
of TTC Common Stock at the close of business on May __, 1997, will be entitled
to vote at the TTC Meeting. See "The Shareholder Meeting."
GLOSSARY OF TERMS
Depending on the operations of TTC prior to and after the Effective
Date of the Reorganization, the amount of consideration receivable by TTC
shareholders may be variable and involves complex calculations. This Glossary is
intended to help TTC shareholders understand the discussion that follows. All
terms explained below also are defined in Section 1.4 of the Reorganization
Agreement, which is Appendix A to this Proxy Statement/Prospectus. Other
capitalized terms in this section that are not defined here shall have the
respective meanings ascribed to them in the Reorganization Agreement.
Merger Consideration
This term refers to the consideration that TTC shareholders will
receive from ICBI if the Reorganization is consummated. It consists of the
Initial Merger Consideration and the Contingent Merger Consideration.
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Initial Merger Consideration
This term refers to the ICBI Common Stock that will be distributed to
TTC shareholders as soon as practicable after the consummation of the
Reorganization. It will be a maximum of 0.25 shares of ICBI Common Stock for
each share of TTC Common Stock. The Initial Merger Consideration will be less if
TTC Operating Losses (from January 1, 1997 to the Effective Date) exceed
$30,000. For the three months ended March 31, 1997, the TTC Operating Losses
were $8,729. If TTC Operating Losses exceed $30,000, the Initial Merger
Consideration will be the fraction of a share of ICBI Common Stock, the
denominator of which will be 276,600 and the numerator of which will be the
difference between $1,936,200 and the amount by which TTC Operating Losses
exceed $30,000, such difference then to be divided by $28.00.
Unless the performance of TTC from April 1, 1997 to the Effective Date
is materially worse than TTC's performance in the three months ended March 31,
1997, there would not be any adjustment to the Initial Merger Consideration. The
following table, however, illustrates the amount of the potential adjustment to
the Initial Merger Consideration, based on various levels of TTC Operating
Losses.
Hypothetical
TTC Operating Initial Merger
Losses (1) Consideration (2)
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$ 30,000 0.25
50,000 0.2474
75,000 0.2442
100,000 0.2410
(1) For the three months ended March 31, 1997, TTC Operating
Losses were $8,729.
(2) Shares of ICBI Common Stock per share of TTC Common Stock.
There is no minimum number of shares of ICBI Common Stock that TTC
shareholders will receive on a per share basis. TTC will not resolicit
shareholders if the actual per share amount is less than 0.25 shares of ICBI
Common Stock for each share of TTC Common Stock. Cash will be paid in lieu of
fractional shares at the rate of $28.00 per share of ICBI Common Stock.
Contingent Merger Consideration
This term refers to additional consideration that TTC shareholders will
receive if TTC's cumulative net earnings in the three years following the
consummation of the Reorganization exceed the Required Net Earnings. The
Contingent Merger Consideration will be significantly less than the Initial
Merger Consideration. If the Contingent Merger Consideration is earned, its
value will depend on the value of ICBI Common Stock at the time the Contingent
Merger Consideration is paid. The following table illustrates the value of the
Contingent Merger Consideration to a holder of 1,000 shares of TTC Common Stock,
assuming various per share values of ICBI Common Stock at the time of payment:
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Value of Contingent Payment
Value Per Share of ICBI on 1,000 shares of TTC
Common Stock Common Stock
$20 $ 714
25 893
30 1,036
35 1,125
40 1,214
Required Net Earnings
This term is the cumulative amount of net earnings that TTC must
generate in the three years following the Effective Date in order for TTC
shareholders to receive the Contingent Merger Consideration. The Required Net
Earnings will be $638,946 unless the sum of the severance benefits paid to TTC
officers (a total of $106,128) and TTC Transaction Costs exceed $150,000. If
that occurs, the Required Net Earnings will be increased by the difference
between the amount by which such expenses exceed $150,000 and the amount, if
any, by which TTC Operating Losses are less $30,000. As of March 31, 1997, TTC
Transaction Costs (including the $38,724 fee that will be payable to Scott &
Stringfellow, Inc.) totaled approximately $________. In no event will the
Required Net Earnings be less than $638,946.
After the Effective Date, the trust business of The Middleburg Bank
will be transferred to TTC and The Middleburg Bank will cease to operate a
separate trust department. As a result, after the Effective Date, TTC will have
all of the revenue and expense of The Middleburg Bank's trust department. See
"The Reorganization Transfer of Trust Business of The Middleburg Bank" and "The
Tredegar Trust Company."
TTC Operating Losses
This term refers to the excess, if any, of TTC expenses over TTC
revenues from January 1, 1997 to the Effective Date. The parties agreed,
however, that certain expenses related to the Reorganization will be excluded
from the computation of TTC Operating Losses. The excluded expenses are
severance benefits paid to TTC officers, TTC Transaction Costs, the amortization
or write-off of TTC start-up costs and any fees payable by TTC to The Middleburg
Bank after June 30, 1997. If TTC Operating Losses exceed $30,000, the Initial
Merger Consideration will be reduced. For the three months ended March 31, 1997,
the TTC Operating Losses were $8,729.
TTC Transaction Costs
This term refers to expenses of TTC accrued after December 31, 1996 in
connection with the Reorganization. Such costs include fees and expenses of
consultants, investment bankers, accountants, counsel and printers.
THE REORGANIZATION
The Reorganization Agreement provides for the conversion of each
outstanding share of TTC Common Stock into the Merger Consideration. ICBI will
then serve as the parent holding company for TTC, which will continue to carry
on its business in substantially the same manner as before the
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Reorganization and with no material change in its management, except that the
President of ICBI will become the Chairman of the Board of Directors of TTC.
The Initial Merger Consideration will be paid as promptly as
practicable after the consummation of the Reorganization, and the Contingent
Merger Consideration, if payable, will be paid approximately three years after
the consummation of the Reorganization.
Recommendation of the Board of Directors
The Board of Directors of TTC has approved the Reorganization,
including the Reorganization Agreement. Several factors influenced the TTC
Board's decision. First, the business relationship between TTC and ICBI's
subsidiary, The Middleburg Bank, had demonstrated the compatibility of the
management of ICBI and TTC and their similar cultures and shared philosophies of
direct customer contact and service. In addition, the Reorganization would add a
presence for TTC in Loudoun County and, considering the area's relative
affluence and the profile of ICBI's customer base, would enhance TTC's prospects
for continued growth. Moreover the post-Reorganization TTC would operate under
the same name as before the Reorganization and would retain its management with
headquarters in Richmond, Virginia. Other important factors included the
dividend paid on ICBI Common Stock, the undertaking of ICBI to seek to have its
stock quoted on the Nasdaq SmallCap Market or OTC Bulletin Board and the opinion
of TTC's financial advisor that ICBI's operating performance and financial
condition compare favorably with selected other banks and that the market value
of ICBI Common Stock is reasonable in comparison to those other banks. No steps
will be taken in furtherance of ICBI's undertaking to have the ICBI Common Stock
quoted on the Nasdaq SmallCap Market or OTC Bulletin Board until after the
Effective Date. See "Comparative Per Share Information," "The Reorganization -
Background and Reasons for the Reorganization" and "Financial Advisor's
Opinion." The Board of Directors believes that the Reorganization is fair to and
in the best interests of shareholders of TTC and recommends a VOTE FOR the
Reorganization.
Interests of Certain Persons in the Reorganization
Holders of voting stock of TTC should be aware that members of TTC's
Board of Directors and senior management have certain interests in the
Reorganization that are in addition to the interests of shareholders of TTC
generally. The potential shares of ICBI Common Stock which the TTC directors may
receive in aggregate pursuant to the Reorganization are 13,625 shares, which
would have had a value of approximately $381,500 as of March 31, 1997. It is
expected that all directors of TTC will continue to serve as directors of TTC
after the Effective Date. In the past, TTC has not paid directors' fees. See
"The Reorganization - Interest of Certain Persons in the Reorganization."
On March 27, 1997 TTC and F. E. Deacon, III, its President and Chief
Executive Officer, entered into an Employment Agreement. Previously, ICBI had
indicated to TTC that ICBI would be unwilling to enter into the Reorganization
Agreement unless Mr. Deacon and TTC entered into an Employment Agreement in form
and substance satisfactory to ICBI. The Employment Agreement will terminate if
the Reorganization Agreement terminates. If the Reorganization is consummated,
the term of the Agreement will end on the third anniversary of the Effective
Date. Under the Employment Agreement, Mr. Deacon's annual base salary is
$119,000 and he will be entitled to bonuses if TTC's cumulative net earnings
equal or exceed 27%, 60% and 100%, respectively, of the Required Net Earnings in
the three years following the Effective Date. The maximum amount of such bonus
in any year will be $27,000. Mr. Deacon's base salary represents a reduction in
his salary in 1995 and 1996. The bonus arrangement was structured in order that
any bonus to which Mr. Deacon is entitled will be related to the amount of net
earnings that TTC
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must achieve in order for its shareholders to receive the Contingent Merger
Consideration. The Employment Agreement does not provide for any additional
compensation in the event of a change in control of ICBI and does prohibit Mr.
Deacon from competing with TTC for a period of one year following a termination
of his employment by TTC for any reason.
Opinion of Financial Advisor
Scott & Stringfellow, Inc. ("Scott & Stringfellow") has served as
financial advisor to TTC in connection with the Reorganization and has rendered
its opinion to the Board of Directors of TTC that, as of the date of this Proxy
Statement/Prospectus and on the basis of the matters referred to herein, the
consideration to be received pursuant to the Reorganization Agreement is fair,
from a financial point of view, to the TTC shareholders. A copy of the opinion
of Scott & Stringfellow is attached as Appendix C to this Proxy
Statement/Prospectus and should be read in its entirety for information with
respect to the assumptions made and other matters considered by Scott &
Stringfellow in rendering its opinion. See "Financial Advisor's Opinion."
Vote Required
Approval of the Reorganization requires the affirmative vote of the
holders of a majority of the outstanding shares of TTC Common Stock. As of the
record date for the TTC Meeting, directors of TTC and their affiliates owned
beneficially an aggregate of 54,500 shares of TTC Common Stock, or approximately
19.7% of the shares of TTC Common Stock outstanding on such date. The directors
of TTC have indicated their intention to vote their shares of TTC Common Stock
in favor of the Reorganization. See "The Shareholder Meeting." In addition,
Joseph L. Boling, President and Chief Executive Officer of ICBI, owned
beneficially an aggregate of 2,000 shares of TTC Common Stock on the record
date. Mr. Boling intends to vote his shares in favor of the Reorganization.
Effective Date
If the Reorganization is approved by the requisite vote of the
shareholders of TTC, and if the applications of ICBI to acquire TTC pursuant to
the Reorganization are approved by the Federal Reserve and the Virginia State
Corporation Commission (the "SCC"), and if other conditions to the
Reorganization are satisfied (or waived to the extent permitted by applicable
law), the Reorganization will be consummated and effected upon the issuance of a
Certificate of Merger by the SCC pursuant to the Virginia Stock Corporation Act
(the "Effective Date"). If the Reorganization is approved by the shareholders,
the Federal Reserve and the SCC, it is anticipated that the Effective Date will
be on or about July 1, 1997, or as soon thereafter as practicable.
Under the Reorganization Agreement, either party may terminate the
Reorganization Agreement if the transaction is not consummated by September 30,
1997.
Post-Closing Audit
The Initial Merger Consideration will be 0.25 shares of ICBI Common
Stock for each share of TTC Common Stock unless TTC Operating Losses exceed
$30,000. Under the Agreement, if the parties do not agree on the size of any TTC
Operating Loss, an audit of TTC from January 1, 1997 through the Effective Date
will be performed by Yount, Hyde and Barbour, P.C., the independent certified
public accountants for ICBI. If either party objects to the post-closing audit,
the dispute will be resolved by
-8-
<PAGE>
arbitration. A similar process will be employed if the parties do not agree on
whether or not the Contingent Merger Consideration is payable.
Distribution of Stock Certificates and Payment for Fractional Shares
If no post-closing audit is necessary, as soon as practicable after the
Effective Date, The Middleburg Bank, as the exchange agent, will mail to each
TTC shareholder (other than dissenting shareholders) a letter of transmittal and
instructions for use in order to surrender the certificates, which immediately
prior to the Effective Date represented shares of TTC Common Stock, in exchange
for certificates for shares of ICBI Common Stock representing the Initial Merger
Consideration. Cash (without interest) will be paid to TTC shareholders in lieu
of the issuance of any fractional shares in an amount equal to the fraction of a
share of ICBI Common Stock to which such shareholder would otherwise be
entitled, multiplied by $28.00.
If a post-closing audit is necessary, the exchange of shares of TTC
Common Stock for the Initial Merger Consideration will be delayed. Such a delay
would likely be for at least 90 days and, if the parties resort to arbitration,
significantly longer.
The Contingent Merger Consideration will not be represented by any form
of certificate or instrument, will not have voting or dividend rights, will not
be assignable or transferable, except by operation of law, and will not
represent a separate security with a separate trading market.
Certain Federal Income Tax Consequences
Williams, Mullen, Christian & Dobbins, counsel for ICBI, will deliver
an opinion that, among other things, (i) the Reorganization will constitute a
"reorganization" under the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) no gain or loss will be recognized by TTC shareholders who, as a
result of the Reorganization, receive shares of ICBI Common Stock, including any
shares received as Contingent Merger Consideration, pursuant to the
Reorganization, and any TTC shareholder who receives cash in lieu of a
fractional share of TTC Common Stock will be treated as having received a
distribution in redemption of such fractional shares, subject to the Code, (iii)
the aggregate tax basis of ICBI Common Stock received by a TTC shareholder will
equal the aggregate tax basis of the TTC Common Stock surrendered in exchange
therefor by such shareholder (reduced by any amount allocable to fractional
share interests for which cash is received), (iv) the holding period of the ICBI
Common Stock received will include the holding period of the TTC stock
surrendered if the TTC Common Stock is held as a capital asset at the Effective
Date, and (v) no gain, other income or loss will be recognized by ICBI,
Acquisition or TTC as a result of the Reorganization. For a more complete
description of the federal income tax consequences of the Reorganization, see
"The Reorganization - Federal Income Tax Matters." Due to the individual nature
of the tax consequences of the Reorganization, it is recommended that each TTC
shareholder consult his or her own tax advisor concerning the tax consequences
of the Reorganization.
Conditions to Consummation of the Reorganization
Consummation of the Reorganization is subject to various conditions,
including among other matters: (i) receipt of the approval of the shareholders
of TTC solicited hereby; (ii) receipt of an opinion of counsel as to the
tax-free nature of the Reorganization for shareholders (except for cash received
in lieu of fractional shares or upon the exercise of dissenters' rights); (iii)
approval of the Federal Reserve under the Bank Holding Company Act of 1956, as
amended ("BHC Act"); and (iv) approval of the SCC. It is a condition of ICBI's
obligation to consummate the Reorganization that the sum of TTC Transaction
Costs,
-9-
<PAGE>
severance benefits payable to TTC officers and TTC Operating Losses not exceed
$200,000 without the consent of ICBI. At March 31, 1997, the total of such items
was $________. Substantially all of the conditions to consummation of the
Reorganization may be waived, in whole or in part, to the extent permissible
under applicable law by the party for whose benefit the condition has been
imposed, without the approval of the shareholders of that party. Shareholder and
regulatory approvals, however, may not be waived. See "The Reorganization -
Representations and Warranties; Conditions to the Reorganization" and "The
Reorganization - Regulatory Approvals."
The Reorganization Agreement may be terminated and the Reorganization
abandoned notwithstanding shareholder approval (i) by mutual agreement of the
Boards of Directors of ICBI and TTC or (ii) by either ICBI or TTC if the
Effective Date has not occurred by September 30, 1997, or (iii) if certain
specified events occur. See "The Reorganization - Waiver, Amendment and
Termination."
Effects of the Reorganization on the Rights of TTC Shareholders
Upon consummation of the Reorganization, TTC shareholders shall become
shareholders of ICBI. The rights of the former shareholders of TTC, now governed
by the Virginia Stock Corporation Act (the "Virginia SCA"), will continue to be
governed by the Virginia SCA after the Effective Date and the rights of TTC
shareholders will also be as provided for under the Articles of Incorporation
and Bylaws of ICBI. The provisions of the Articles of Incorporation and Bylaws
of ICBI differ in certain material respects from the Articles of Incorporation
and Bylaws of TTC. See "Comparative Rights of Security Holders."
Accounting Treatment
It is intended that the Reorganization will be treated as a purchase
for accounting and financial reporting purposes.
Rights of Dissent and Appraisal
Each holder of TTC shares may dissent from the Reorganization and is
entitled to the rights and remedies of dissenting shareholders provided in
Article 15 of the Virginia SCA, subject to compliance with the procedures set
forth therein, including the right to appraisal of his or her stock. A copy of
Article 15 is attached as Appendix D to this Proxy Statement/Prospectus and a
summary thereof is included under "The Reorganization - Rights of Dissenting
Shareholders."
Markets and Market Prices
ICBI Common Stock is neither listed on any stock exchange nor quoted on
the Nasdaq Stock Market and trades infrequently. ICBI Common Stock has
periodically been sold in a limited number of privately negotiated transactions.
Based on information available to it, ICBI believes that the per share selling
price of ICBI Common Stock ranged from $28.00 to $29.00 in 1996 and was $28.00
in the first two months of 1997. There may, however, have been other
transactions at other prices not known to ICBI. TTC Common Stock is neither
listed on any stock exchange nor quoted on the Nasdaq Stock Market and trades
sporadically.
The information below provides the price per share of ICBI Common Stock
and TTC Common Stock prior to the public announcement of the Reorganization on
February 10, 1997 and as of a recent date. The historical price of ICBI Common
Stock, $28.00, is based on the last known sale of ICBI Common Stock prior to the
public announcement of the Reorganization, a trade involving 30 shares on
-10-
<PAGE>
December 20, 1996. The historical price of TCC Common Stock, $12.50, is based on
the last known sale of TCC Common Stock prior to the public announcement of the
Reorganization, a trade involving 2,500 shares on June 30, 1996.
ICBI Common Stock TTC Common Stock
----------------- ----------------
Equivalent
Historical Price Historical Price Per Share Price*
---------------- ---------------- ----------------
February 10, 1997 $28.00 $12.50 $7.00
May __, 1997
- ---------------------
* TTC shareholders will receive a maximum of 0.25 shares of ICBI Common
Stock for each share of TTC Common Stock outstanding as the Initial
Merger Consideration. The Contingent Merger Consideration is not shown
because its receipt is dependent on future events, the occurrence of
which is uncertain. This table merely reflects the historical value of
the Initial Merger Consideration (i) on the last date before the
Reorganization Agreement was announced that ICBI Common Stock was
traded and (ii) on a recent date for ICBI Common Stock.
No assurance can be given as to the market price or trading value of
ICBI Common Stock at or after the Effective Date.
COMPARATIVE PER SHARE INFORMATION
The following unaudited consolidated financial information reflects
certain comparative per share data relating to the Reorganization. The
information shown below should be read in conjunction with the historical
financial statements of ICBI and TTC, including the respective notes thereto,
which are included elsewhere in this Proxy Statement/Prospectus or in documents
delivered herewith, and in conjunction with the unaudited pro forma consolidated
financial information appearing elsewhere in this Proxy Statement/Prospectus.
See "Pro Forma Financial Information."
The following information is not necessarily indicative of the results
of operations or combined financial position that would have resulted had the
Reorganization been consummated at the beginning of the periods indicated, nor
is it necessarily indicative of the results of operations in future periods.
The following table presents selected comparative consolidated
unaudited per share information (i) for ICBI on a historical basis and on a pro
forma combined basis assuming the Reorganization had been effective during the
periods presented and accounted for as a purchase and (ii) for TTC on a
historical basis and on a pro forma equivalent basis.
-11-
<PAGE>
ICBI AND TTC
<TABLE>
<CAPTION>
For the Three
Months Ended For the Year Ended December 31,
------------ ----------------------------------------------------------
March 31, 1997 1996 1995 1994
-------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Per Common Share:
Net Income:
ICBI historical (1) $ 0.71 $ 2.36 $ 1.92 $ 2.06
TTC historical (4)(5) (0.67) (1.40) (2.28) (3.38)
Pro forma combined 0.44 1.69 1.19 1.32
TTC pro forma equivalent (2) 0.11 0.42 0.30 0.33
Cash Dividends Declared:
ICBI historical (1) $ - $ 0.84 $ 0.80 $ 0.80
TTC historical (4) - - - -
Pro forma combined (3) - 0.84 0.80 0.80
TTC pro forma equivalent (2)(3) - 0.21 0.20 0.20
Book Value:
ICBI historical(1) $ 21.30 $ 20.94 $ 19.72 $ 17.52
TTC historical 4.15 4.82 6.21 7.37
Pro forma combined 22.11 21.94 20.33 18.16
TTC pro forma equivalent (2) 5.53 5.49 5.08 4.54
</TABLE>
(1) All information for ICBI has been adjusted to reflect a 100% stock
dividend paid in February 1994.
(2) TTC pro forma equivalent amounts represent pro forma combined
information multiplied by the maximum Initial Merger Consideration of
0.25 shares of ICBI Common Stock for each share of TTC Common Stock.
(3) Pro forma combined dividends per share represent historical dividends
per share paid by ICBI. See "The Reorganization - ICBI and TTC Market
Prices and Dividends" for additional information.
(4) TTC commenced business on January 12, 1994.
(5) The per share loss of ($.67) for the three months ended March 31, 1997
includes all costs related to the Reorganization. The per share loss
exclusive of these items was ($.03).
-12-
<PAGE>
SELECTED FINANCIAL INFORMATION
The following tables set forth certain selected historical financial
information for ICBI and TTC and certain consolidated pro forma financial
information giving effect to the Reorganization using the purchase method of
accounting. See "The Reorganization - Accounting Treatment." The selected
historical financial information is based on, derived from and should be read in
conjunction with the historical consolidated financial statements of ICBI and
the historical financial statements of TTC and the respective notes thereto
included elsewhere in this Proxy Statement/Prospectus. See "Available
Information." All of the following selected financial information should be read
in conjunction with the unaudited pro forma consolidated financial information,
including the notes thereto, appearing elsewhere in this Proxy
Statement/Prospectus. See "Pro Forma Financial Information." The pro forma
financial information is not necessarily indicative of the results that actually
would have occurred had the Reorganization been consummated on the dates
indicated or that may be obtained in the future.
-13-
<PAGE>
INDEPENDENT COMMUNITY BANKSHARES, INC.
Selected Historical Financial Information
<TABLE>
<CAPTION>
Three Months
Ended March 31, Years Ended December 31,
---------------------- ------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(In thousands, except ratios and per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Interest income $2,958 $2,563 $11,111 $9,855 $8,931 $8,285 $9,546
Interest expense 1,227 1136 4,647 4,096 3,198 3,151 4,183
---------- ---------- ----------- ----------- ---------- ----------- -----------
Net interest income 1,731 1,427 6,464 5,759 5,733 5,134 5,363
Provision for loan losses 55 - 65 55 0 228 163
---------- ---------- ----------- ----------- ---------- ----------- -----------
Net interest income after
provision for loan losses 1,676 1,427 6,399 5,704 5,733 4,906 5,200
Noninterest income 228 179 721 817 650 569 511
Securities gains 3 14 21 (123) (125) 111 5
Noninterest expense 1,077 1,050 4,383 4,067 3,672 3,228 2,869
---------- ---------- ----------- ----------- ---------- ----------- -----------
Income before income taxes 830 570 2,758 2,331 2,586 2,358 2,847
Income taxes 223 139 728 625 748 609 827
---------- ---------- ----------- ----------- ---------- ----------- -----------
Net income $607 $431 $2,030 $1,706 $1,838 $1,749 $2,020
========== ========== =========== =========== ========== =========== ===========
Per Share Data (1):
Net Income $0.71 $0.50 $2.36 $1.92 $2.06 $1.95 $2.25
Cash Dividends - 0.18 0.84 0.80 0.80 0.80 0.80
Book value at period end 21.30 19.68 20.94 19.72 17.52 17.98 16.91
Balance Sheet Data:
Assets $166,123 $141,817 $162,966 $142,013 $134,045 $120,662 $121,714
Loans, net of unearned income 93,627 81,468 93,711 80,048 78,767 70,339 66,203
Securities 51,907 47,422 52,402 48,291 41,411 35,160 30,011
Deposits 142,028 120,965 138,790 121,522 118,084 104,097 106,171
Shareholders' equity 17,828 16,929 18,008 16,953 15,660 16,106 15,149
Average shares outstanding (1) 855 860 860 889 892 896 896
Performance Ratios:
Return on Average Assets (3) 1.49% 1.22% 1.35% 1.26% 1.45% 1.46% 1.71%
Return on Average Equity (3) 13.36% 10.17% 11.83% 9.72% 11.03% 11.23% 13.73%
Capital to Assets 11.15% 11.94% 11.63% 12.41% 12.26% 12.93% 11.97%
Dividend payout - 35.94% 35.57% 41.44% 38.90% 40.99% 35.50%
Efficiency (2) 52.20% 62.00% 59.5% 59.0% 55.0% 53.8% 47.0%
Capital and Liquidity Ratios:
Risk-based capital ratios:
Tier 1 capital 18.9% 21.1% 19.3% 20.9%
Total capital 19.8% 22.2% 20.2% 21.9%
Leverage 11.3% 12.4% 12.4% 12.9%
</TABLE>
(1) Restated giving retroactive effect to 100% stock dividend declared in 1994.
(2) Computed by dividing noninterest expense by the sum of net interest income
on a tax equivalent basis and noninterest income, net of securities gains
or losses.
(3) Annualized for three months ended March 31, 1997 and 1996.
-14-
<PAGE>
THE TREDEGAR TRUST COMPANY
Selected Historical Financial Information (1)
<TABLE>
<CAPTION>
Three months
Ended March 31, Years Ended December 31,
------------------------------------------------------------------
1997 1996 1995 1994
---- ---- ---- ----
(In thousands, except ratios and per share amounts)
<S> <C> <C> <C> <C>
Income Statement Data:
Interest income $14 $69 $68 $55
Interest expense - - - -
------------------- ------------- ------------- -------------
Net interest income 14 69 68 55
Provision for loan losses 0 - - -
------------------- ------------- ------------- -------------
Net interest income after
provision for loan losses 14 69 68 55
Noninterest income 184 562 314 69
Securities gains - - - -
Noninterest expense 383 1,017 939 730
------------------- ------------- ------------- -------------
Loss before income taxes (185) (386) (557) (606)
Income taxes - - - -
------------------- ------------- ------------- -------------
Net loss ($185) ($386) ($557) ($606)
=================== ============= ============= =============
Per Share Data:
Net Loss ($0.67) ($1.40) ($2.28) ($3.38)
Cash Dividends - - - -
Book value at period end 4.15 4.82 6.21 7.37
Balance Sheet Data:
Assets $1,154 $1,362 $1,726 $1,732
Loans, net - - - -
Securities 924 1,117 1,420 1,358
Deposits 0 - - -
Long Term Debt - - 2 4
Shareholders' equity 1,147 1,332 1,719 1,699
Average shares outstanding 277 277 244 179
Performance Ratios:
Return on Average Assets -14.70% -25.91% -36.47% -33.51%
Return on Average Equity -14.76% -26.13% -36.64% -33.72%
Dividend payout - - - -
Efficiency (2) 198.48% 161.2% 245.8% 588.7%
Capital and Liquidity Ratios:
Risk-based capital ratios:
Tier 1 capital n/a n/a n/a
Total capital n/a n/a n/a
Leverage n/a n/a n/a
</TABLE>
(1) TTC began operations on January 12, 1994.
(2) Computed by dividing noninterest expense by the sum of net interest income
on a tax equivalent basis and noninterest income, net of securities gains or
losses.
-15-
<PAGE>
INDEPENDENT COMMUNITY BANKSHARES, INC.
AND THE TREDEGAR TRUST COMPANY
Selected Pro Forma Combined Financial Information
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
------------------------------------- -----------------
1997 1996 1996
---- ---- ----
(In thousands, except ratios and per share amounts)
<S> <C> <C> <C>
Income Statement Data:
Interest income $2,972 $2,581 $11,180
Interest expense 1,227 1,136 4,647
------------------ ----------------- ------------------
Net interest income 1,745 1,445 6,533
Provision for loan losses 55 - 65
------------------ ----------------- ------------------
Net interest income after
provision for loan losses 1,690 1,445 6,468
Noninterest income 384 296 1,236
Securities gains 3 14 20
Noninterest expense 1,449 1,291 5,422
------------------ ----------------- ------------------
Income before income taxes 628 464 2,302
Income taxes 223 140 728
------------------ ----------------- ------------------
Net income $405 $324 $1,574
================== ================= ==================
Per Share Data :
Net Income $0.44 $0.35 $1.69
Cash Dividends - 0.18 0.84
Book value at period end 22.11 21.10 21.94
Balance Sheet Data:
Assets $168,338 $144,509 $165,352
Loans, net 93,627 81,468 93,711
Securities 52,982 48,750 53,519
Deposits 142,029 120,965 138,790
Shareholders' equity 20,036 19,599 20,364
Average shares outstanding 924 929 929
Performance Ratios:
Return on Average Assets (2) 0.99% 0.95% 1.04%
Return on Average Equity (2) 8.34% 7.33% 8.37%
Capital to Assets 11.90% 13.56% 12.32%
Dividend payout - 51.61% 49.58%
Efficiency (1) 58.72% 69.90% 66.7%
Capital and Liquidity Ratios:
Risk-based capital ratios:
Tier 1 capital 19.35% 22.30% 20.6%
Total capital 20.28% 23.39% 21.5%
Leverage 12.12% 13.60% 12.5%
</TABLE>
(1) Computed by dividing noninterest expense by the sum of net interest
income on a tax equivalent basis and noninterest income, net of
securities gains or losses.
(2) Annualized for the three months ended 1997 and 1996.
-16-
<PAGE>
THE SHAREHOLDER MEETING
Date, Place and Time. The TTC Meeting will be held at the offices of
TTC, 901 East Byrd Street, Richmond, Virginia on June __, 1997 at 9:30 a.m.
Record Date. The Board of Directors of TTC has fixed the close of
business on May __, 1997 as the record date (the "TTC Record Date") for the
determination of the holders of TTC Common Stock entitled to receive notice of
and to vote at the TTC Meeting. At the close of business on the TTC Record Date,
there were 276,600 shares of TTC Common Stock outstanding held by 72
shareholders of record.
Vote Required. Each share of TTC Common Stock outstanding on the TTC
Record Date entitles the holder to cast one vote upon each matter properly
submitted at the TTC Meeting. The affirmative vote of the holders of a majority
of the shares of TTC Common Stock outstanding, as of the TTC Record Date, in
person or by proxy, is required to approve the Reorganization Agreement. In the
election of directors, those receiving the greatest number of votes will be
elected even if they do not receive a majority. Abstentions and broker non-votes
will not be considered a vote for, or a vote against, a director.
As of the TTC Record Date, directors and executive officers of TTC and
their affiliates, persons and entities as a group, owned of record and
beneficially a total of 54,500 shares of TTC Common Stock, or approximately
19.7% of the shares of TTC Common Stock outstanding on such date. The Directors
and the executive officer of TTC have indicated an intention to vote their
shares of TTC Common Stock FOR the Reorganization and FOR the election of the
nominees set forth on the enclosed proxy. In addition to these votes, Preston S.
Smith and A.G. Goodykoontz, former officers of TTC, have agreed to vote their
shares for the Reorganization. They owned of record and beneficially a total of
8,300 shares of TTC Common Stock, or 3.0% of the shares of TTC Common Stock
outstanding. Together, these individuals collectively owned of record and
beneficially a total of 60,000 shares or 21.7% of the shares of TTC Common Stock
outstanding on the Record Date.
A failure to vote, either by not returning the enclosed proxy or by
checking the "abstain" box thereon, will have the same effect as a vote against
approval of the Reorganization Agreement.
A shareholder may abstain or (only with respect to the election of TTC
directors) withhold his vote (collectively, "abstentions") with respect to each
item submitted for shareholder approval. Abstentions will be counted for
purposes of determining the existence of a quorum. Abstentions will be counted
as not voting in favor of the relevant item. Since the election of TTC directors
is determined by a plurality vote, abstentions will not affect such election.
Since approval of the Reorganization Agreement requires an affirmative vote of a
specified number of shares outstanding, abstentions will have the effect of a
negative vote with respect thereto.
Brokers who hold shares in street name have the authority to vote on
certain items if they have not received instructions from the beneficial owners.
Except for certain items for which brokers are prohibited from exercising their
discretion, a broker is entitled to vote on matters put to shareholders without
instructions from the beneficial owner. Where brokers do not have or do not
exercise such discretion, the inability or failure to vote is referred to as a
broker non-vote. Under the circumstances where the broker is not permitted to or
does not exercise its discretion, assuming proper disclosure to TTC of such
inability to vote, broker non-votes will be counted for purposes of determining
the existence of a quorum, but also will be counted as not voting in favor of
the particular matter. Because the TTC election of directors is determined by a
plurality vote, broker non-votes, if any, will not have any effect on the
outcome of any
-17-
<PAGE>
matter submitted for shareholder approval. Because the approval of the
Reorganization Agreement requires an affirmative vote of a specified number of
shares outstanding, broker non-votes, if any, and abstentions will have the
effect of a negative vote with respect thereto.
Voting and Revocation of Proxies. Shareholders of TTC are requested to
complete, date and sign the accompanying form of proxy and return it promptly to
TTC in the enclosed envelope. If a proxy is properly executed and returned in
time for voting, it will be voted as indicated thereon. If no voting
instructions are given, proxies received by TTC will be voted for approval of
the Reorganization Agreement and for approval of the directors slated for
election on the proxy. With respect to the election of directors, each
shareholder entitled to vote at the TTC Meeting has one vote per share owned at
the TTC Record Date. TTC shareholders have no cumulative voting rights. The
directors will be elected by plurality of the votes cast assuming that at least
a majority of the total number of outstanding shares of TTC Common Stock is
present in person or by proxy at the TTC Meeting to constitute a quorum.
A proxy may be revoked at any time before it is voted by giving written
notice of revocation to TTC by executing and delivering a substitute proxy to
TTC or by attending the TTC Meeting and voting in person. If a TTC shareholder
desires to revoke a proxy by written notice, such notice should be mailed or
delivered on or prior to the meeting date to Delman H. Eure, Secretary, The
Tredegar Trust Company, 901 East Byrd Street, Richmond, Virginia 23219. If a
proxy is signed and returned without indicating any voting instructions, shares
of TTC Common Stock represented by the proxy will be voted FOR the
Reorganization Agreement and FOR those nominated by the Board of Directors.
If a sufficient number of signed proxies enabling the persons named as
proxies to vote in favor of the Reorganization are not received by TTC by the
time scheduled for the TTC Meeting, the persons named as proxies may propose one
or more adjournments of the meeting to permit continued solicitation of proxies
with respect to such approval. If an adjournment is proposed, the persons named
as proxies will vote in favor of such adjournment those proxies which are
entitled to be voted in favor of the Reorganization Agreement and against such
adjournment those proxies containing instructions to vote against approval of
the Reorganization Agreement, unless the shareholder clearly writes on the face
of that proxy specific instructions stating how that proxy should be voted in
the case of an adjournment proposed prior to a vote on the Reorganization.
Adjournment of the TTC Meeting will be proposed only if the Board of Directors
of TTC believes that additional time to solicit proxies might permit the receipt
of sufficient votes to approve the Reorganization Agreement, or at the request
of ICBI. It is anticipated that any such adjournment would be for a relatively
short period of time, but in no event for more than 120 days. Any shareholder
may revoke such shareholder's proxy during any period of adjournment in the
manner described above.
Solicitation of Proxies. TTC will bear the cost of the solicitation of
proxies. Solicitations may be made by mail, facsimile, telephone, telegraph or
personally by directors, officers and employees at TTC, none of whom will
receive additional compensation for performing such services. TTC shall pay all
of the expenses of printing and mailing the Proxy Statement/Prospectus.
-18-
<PAGE>
THE REORGANIZATION
The following is a summary description of the material terms of the
Reorganization Agreement, and is qualified in its entirety by reference to the
Reorganization Agreement which is attached as Appendix A hereto. All holders of
TTC Common Stock are urged to read the Reorganization Agreement in its entirety.
Background and Reasons for the Reorganization
In early December 1996, ICBI informed TTC of ICBI's interest in
acquiring TTC. TTC convened a meeting of its Long Range Planning Committee and
Chief Executive Officer on December 12, 1996 to meet with ICBI representatives.
At the meeting, Joseph L. Boling, President and Chief Executive Officer of ICBI
and The Middleburg Bank, presented the Committee with an unsolicited proposal
which the Committee decided to present to TTC's full Board of Directors later
that same day.
Following a discussion of the proposal, the Board appointed a Special
Committee to explore and make various recommendations to the full Board with
respect to an acquisition of, or business combination involving, TTC or TTC's
remaining independent, and authorized the Special Committee to retain the
necessary professionals required to help the Special Committee carry out its
responsibilities. The members of the Special Committee were James W. Harkness,
Jr. (Chairman), formerly a director of TTC, and Messrs. Siegel and Wheat.
The Special Committee met on December 13, 1996. At the meeting,
representatives of Scott & Stringfellow, Inc. ("Scott & Stringfellow"),
financial advisor to TTC, were invited to provide the Committee with a
preliminary assessment of the ICBI proposal. Scott & Stringfellow was selected
by the TTC Board of Directors based upon its expertise and reputation in
providing valuation, merger and acquisition, and advisory services to financial
institutions. See "Financial Advisor's Opinion." The Special Committee directed
Scott & Stringfellow not only to evaluate the ICBI proposal, but also to
identify and contact other potential buyers. The Special Committee wanted to let
the market determine the fair market value of TTC through a modified auction
process. The Special Committee placed no instructions or limits on Scott &
Stringfellow with respect to the investigation to be made or the procedures to
be followed in pursuing potential buyers. There are no material relationships
between Scott & Stringfellow and TTC, ICBI, or such outside parties.
On December 19, 1996, the Board met to receive a report from the
Special Committee, including a report about the efforts by Scott & Stringfellow
to determine the interest of others in a transaction with TTC. In addition to
exploring options involving third parties, the Board also considered the merits
of remaining independent, based on analyses submitted by certain officers of
TTC.
During the last three weeks of December 1996, Scott & Stringfellow
identified and contacted ten potential buyers. These potentials buyers included
regional banks with material trust operations, another local independent trust
company, a regional broker-dealer with a large money management and trust
subsidiary, and several national trust companies. Scott & Stringfellow provided
each of these parties with a preliminary due diligence package that described
TTC's business, financial condition, and results of operations since its
inception, as well as material contracts and resumes of key personnel.
Only one of the contacted parties expressed interest in acquiring TTC,
for an amount, either in cash or in that party's stock, less than that offered
by ICBI. This offer would have given TTC shareholders an interest in a company
with very small capitalization, few shareholders and no liquid market
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for its stock. On January 3, 1997, the Special Committee met again to review the
status of various contacts made by Scott & Stringfellow on behalf of TTC.
In mid-January, the Special Committee and the Board of Directors met
again to review various options available to TTC, and set a deadline of January
21, 1997 for receipt of all final proposals. The Board also received Scott &
Stringfellow's report concerning other possible merger or acquisition prospects
and two proposals for reorganizing the Company and remaining independent. After
considering the options, the Board authorized Scott & Stringfellow to contact
ICBI and determine if it would raise its bid to $7.00 per share plus a potential
$1.00 per share in Contingent Merger Consideration. Although ICBI initially
stated the amount of consideration to be paid, extensive negotiations resulted
in the final transaction amounts. Scott & Stringfellow expressed the opinion
that the ICBI offer of $7.00 of ICBI stock up-front with the potential for an
additional $1.00 in Contingent Merger Consideration, to be paid one-half in
stock and one-half in cash, was more favorable to shareholders than the other
proposed offer.
On January 23, 1997, the Board of Directors met to consider the final
ICBI proposal. After an extensive review of the alternatives, including
consideration of remaining independent or a sale to or affiliation with another
party, the Board approved the ICBI proposal.
In deciding to enter into the Reorganization Agreement, the TTC Board
of Directors considered a number of factors. While the Board did not assign any
relative or specific weights to the factors considered, several principal
factors led to the approval of the proposal of ICBI by the TTC Board. First, the
business relationship between TTC and ICBI's subsidiary, The Middleburg Bank,
had demonstrated the compatibility of the management of ICBI and TTC and their
similar cultures and shared philosophies. Both companies emphasize direct
customer contact and personal service. The Reorganization also would not require
any systems or operational conversions, as ICBI is currently using TTC's system
for the management of its trust assets, and would provide operational benefits
of a combination, including the management and economic resources available to
TTC from ICBI. In addition, the Reorganization would add a presence for TTC in
Loudoun County and, considering the area's relative affluence and the profile of
ICBI's customer base, would enhance TTC's prospects for continued growth.
Following consummation of the Reorganization, TTC, as a subsidiary of ICBI,
would also retain a certain amount of autonomy. After the Reorganization, TTC
would operate under the same name as before the Reorganization and would retain
its management and Board of Directors, with headquarters in Richmond, Virginia.
Other material factors considered were the belief of TTC's financial
advisor, Scott & Stringfellow, Inc., that the ICBI proposal presented TTC
shareholders with a reasonable opportunity for appreciation, compared to their
investment in TTC; the ability of TTC to compete more effectively for larger
trust accounts and estates with ICBI's larger capital base; the Merger
Consideration offered for TTC Common Stock; the agreement by ICBI to list its
stock on the Nasdaq SmallCap Market or OTC Bulletin Board and the resulting
increased marketability of ICBI Common Stock; the historical dividend paid on
ICBI Common Stock; the financial condition and history of performance of ICBI;
and diversification of risk associated with ownership of an institution with a
broader geographic market area; and the well capitalized position and historical
earnings of ICBI.
The TTC Board has concluded that the terms of the Reorganization
Agreement, which were determined on the basis of arms-length negotiations, are
fair to TTC shareholders. As explained below, this conclusion is supported by
the opinion of an independent financial advisor. In determining that the Merger
Consideration and the exchange ratio of .25 were fair to TTC, the Board of TTC
and its financial advisor considered the estimated value per share of ICBI
Common Stock at the close of business on January 23, 1997 ($28.00) and the
dollar value of the Initial Merger Consolidation which would have been
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received by TTC shareholders on that day ($7.00 per share); information
concerning the financial condition, results of operations and prospects of TTC
and ICBI; and, the tax-free nature of the Reorganization to the shareholders of
TTC to the extent they receive ICBI Common Stock in exchange for their shares of
TTC Common Stock. In establishing the Merger Consideration, the representatives
of TTC also considered the Merger Consideration in relation to the market value
and earnings per share of TTC Common Stock and ICBI Common Stock, and
information concerning the financial condition, results of operations and the
prospects of TTC and ICBI.
For example, the Board gave considerable weight to the belief that the
price of ICBI Common Stock is low as compared to the other community banks in
Virginia with assets under $2.5 billion. The Board also noted the impressive
historical growth of capital by ICBI. The Board felt that such growth was likely
to continue and offered the potential for increased value for the TTC
shareholders. The Board noted that ICBI's book value is approximately $21.00 per
share. The Board considered, for example, if ICBI grows (after dividends) by 10%
over each of the next four years, then the book value would grow to $30.66 per
share.
The Board also reviewed market valuations for similar institutions. The
Board believed that, if ICBI Common Stock traded at its current valuation
multiple of 1.3 times book value (a number that is low compared to ICBI's peer
group and the industry average), it would trade at $40.00 per share (equivalent
to $10.00 per share of TTC Common Stock). If ICBI Common Stock traded at the
industry comparable average of 1.7 times book value, then it would trade at
$52.00 per share (equivalent to $13.00 per share of TTC Common Stock). In
addition, the Board realized the potential impact of the Contingent Merger
Consideration. The potential earn out represented by the Contingent Merger
Consideration may add approximately $1.00 per share to the purchase price of
$7.00 per share.
The historical market price for TTC share has been set by two different
private offerings. The price determined for the first offering was $10.00 per
share, and the price determined for the second offering was $12.50 per share.
While the Board of Directors recognized that the ICBI offer is below such
offering prices, the Board believes that the transaction offers many benefits
for TTC shareholders that make up for the difference in ICBI's offering price
and the most recent price stated for shares offered by TTC. These reasons
include: (1) the valuation of ICBI Common Stock relative to its peer group, (2)
the economies of scale and scope of resources generated by the combined entity,
(3) the liquidity provided by the Nasdaq SmallCap Market or the OTC Bulletin
Board, (4) the ICBI stock dividend, (5) the quality of ICBI management, (6) the
excellent working relationship that management and staff of both companies have
enjoyed during the past two years, (7) the reputation of The Middleburg Bank,
(8) the historical performance of The Middleburg Bank, and (9) the
recommendation of Scott & Stringfellow. Based upon these and other factors,
TTC's Board of Directors believes that the exchange ratio is fair and
potentially affords TTC shareholders substantially greater appreciation than
that of TTC's remaining independent or accepting the other offer. See also
"Financial Advisor's Opinion."
Pursuant to the Reorganization Agreement, the directors, officers and
employees of TTC will not change as a result of the Reorganization, except that
ICBI is expected to designate Joseph L. Boling, the President and Chief
Executive Officer of ICBI, to serve as Chairman of TTC's Board of Directors from
and after the Effective Date. The Reorganization Agreement notwithstanding, ICBI
will have the power after the Effective Date to elect the entire Board of
Directors of TTC.
The Board of Directors of TTC believes that the Reorganization is in
the best interests of TTC and its shareholders. The TTC directors have all
committed to vote shares under their control in favor of the Reorganization to
the extent of their fiduciary ability. The TTC Board of Directors recommends
that TTC
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shareholders vote FOR the approval of the Reorganization Agreement. All TTC
directors voted for the Reorganization Agreement with the exception of one, who
abstained.
Terms of the Reorganization
The Reorganization Agreement provides for the conversion of each
outstanding share of TTC Common Stock into the Merger Consideration. The Merger
Consideration consists of the Initial Merger Consideration, which will be paid
as promptly as practicable after the consummation of the Reorganization and the
Contingent Merger Consideration, which, if payable, will be paid approximately
three years after the consummation of the Reorganization. The Initial Merger
Consideration will consist of a maximum of 0.25 shares of ICBI Common Stock for
each share of TTC Common Stock. The Contingent Merger Consideration will consist
of a maximum of 0.0357 shares of ICBI Common Stock for each share of TTC Common
Stock. See "Summary - Glossary of Terms."
Shareholders of TTC are entitled to exercise their dissenters' rights
with respect to the Reorganization. See "The Reorganization - Rights of
Dissenting Shareholders."
Transfer of Trust Business of The Middleburg Bank
The Reorganization Agreement provides that, as soon as practicable
after the Effective Date, ICBI shall cause the trust business of The Middleburg
Bank to be transferred to TTC. It is anticipated that such transfer will occur
within sixty days of the Effective Date. The Reorganization Agreement, however,
provides that for purposes of computing the Required Net Earnings of TTC, the
revenue and expense of TTC shall be deemed to include the revenue and expense of
the trust department of The Middleburg Bank from and after the Effective Date.
Lock-Up Option
In addition to the Reorganization Agreement, ICBI and TTC each entered
into an agreement on February 5, 1997 providing for ICBI to have an option to
purchase TTC Common Stock under certain conditions (the "Lock-Up Option").
Specifically, the Lock-Up Option provides that ICBI shall have an option to
purchase 68,800 shares of TTC Common Stock at a price no greater than $7.00 per
share. The TTC Board agreed to this $7.00 price because it is consistent with
the value of the ICBI Common Stock to be offered to TTC shareholders in the
Reorganization. Both the number of options available and the price will be
proportionately adjusted automatically in the event TTC increases (or decreases)
the number of shares of TTC Common Stock outstanding. The option is exercisable
only under limited circumstances.
The Lock-Up Option provides that ICBI has an option to purchase stock
in TTC only upon the occurrence of the following events: (i) TTC authorizes,
recommends or publicly proposes (or publicly announces an intention to
authorize, recommend or propose) or enters into an agreement with a third person
to engage in a merger, consolidation, sale of substantially all the assets of
TTC, or sale of securities representing more than 9.9% of the voting power of
TTC or (ii) a third person acquires 9.9% or more of the outstanding TTC Common
Stock.
The exercise price represents the estimate of fair value per share of
TTC Common Stock at the time the Lock-Up Option was executed.
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Effective Date
If the Reorganization Agreement is approved by the requisite vote of
the shareholders of TTC and ICBI and by the Federal Reserve and the SCC (see
"The Reorganization - Regulatory Approvals") and other conditions to the
Reorganization are satisfied (or waived to the extent permitted by the
Reorganization Agreement and applicable law), the Reorganization will be
consummated and effected at the time a Certificate of Merger is issued by the
SCC pursuant to the Virginia SCA. See "The Reorganization - Representations and
Warranties; Conditions to the Reorganization."
It is anticipated that the Effective Date will be on or about July 1,
1997, but there can be no assurance as to whether or when the Reorganization
will occur.
Post-Closing Audit
The Initial Merger Consideration will be 0.25 shares of ICBI Common
Stock for each share of TTC Common Stock unless TTC Operating Losses exceed
$30,000. Under the Agreement, if ICBI and F. E. Deacon, III (representing the
TTC shareholders) do not agree on the size of any TTC Operating Losses, an audit
of TTC from January 1, 1997 through the Effective Date will be performed by
Yount, Hyde & Barbour, P.C., the independent certified public accountants for
ICBI. If either party objects to the post-closing audit, the dispute will be
resolved by arbitration. A similar process (with Mr. Deacon acting as the
representative of the TTC shareholders) will be employed if the parties do not
agree on whether or not the Contingent Merger Consideration is payable. For the
three months ended March 31, 1997, the TTC Operating Losses were $8,729.
Distribution of Stock Certificates and Payment for Fractional Shares
If no post-closing audit is necessary, as soon as practicable after the
Effective Date, The Middleburg Bank, as the exchange agent, will mail to each
TTC shareholder (other than dissenting shareholders) a letter of transmittal and
instructions for use in order to surrender the certificates which immediately
prior to the Effective Date represented the shares of TTC Common Stock in
exchange for certificates for shares of ICBI Common Stock representing the
Initial Merger Consideration. Cash (without interest) will be paid to TTC
shareholders in lieu of the issuance of any fractional shares in an amount equal
to the fraction of a share of ICBI Common Stock to which such shareholder would
otherwise be multiplied by $28.00.
If a post-closing audit is necessary, the exchange of shares of TTC
Common Stock for the Initial Merger Consideration will be delayed. Such a delay
would likely be for at least 90 days and, if the parties resort to arbitration,
significantly longer.
TTC SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE SUCH INSTRUCTIONS.
Promptly after surrender of one or more certificates for TTC Common
Stock, together with a properly completed letter of transmittal, the holder of
such certificates will receive a certificate or certificates representing the
number of shares of ICBI Common Stock to which he or she is entitled and, where
applicable, a check for the amount payable in cash in lieu of issuing a
fractional share. Lost, stolen, mutilated or destroyed certificates will be
treated in accordance with the existing procedures of ICBI.
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The shares of ICBI Common Stock representing the Initial Merger
Consideration will be deemed issued as of the Effective Date. After the
Effective Date, TTC shareholders will be entitled to vote the number of shares
of ICBI Common Stock constituting the Initial Merger Consideration for which
their TTC Common Stock has been exchanged, regardless of whether they have
surrendered their TTC certificates. The Reorganization Agreement provides,
however, that no dividend or distribution payable to the holders of record of
ICBI Common Stock at or as of any time after the Effective Date will be paid to
the holder of any TTC certificate until such holder physically surrenders such
certificate, promptly after which time all such dividends or distributions will
be paid (without interest). With respect to the dividend for the three months
ending June 30, 1997, ICBI will not declare or establish a record date for such
dividend prior to July 9, 1997.
Three years after the Effective Date, TTC's net earnings for such three
year period will be calculated and if such earnings exceed the Required Net
Earnings, each person who was a holder of TTC Common Stock at the Effective Date
will receive a ratable share of the Contingent Merger Consideration. After the
Effective Date, TTC will operate as a subsidiary of ICBI and separate financial
records of TTC will be maintained. Financial statements of TTC after the
Effective Date will be audited by ICBI's independent certified public
accountants. The initial determination of whether or not the Contingent Merger
Consideration is due will be made by ICBI, together with F. E. Deacon, III, who
will act as the representative of the TTC shareholders. If ICBI and Mr. Deacon
do not agree, the dispute will be resolved by arbitration.
Shares of ICBI Common Stock representing the Contingent Merger
Consideration will not be considered issued or outstanding for any purpose until
such shares are issued. In addition, the right to receive the Contingent Merger
Consideration will not be represented by any form of certificate or instrument,
will not have voting or dividend rights, will not be assignable or transferable,
except by operation of law, and will not represent a separate security with a
separate trading market.
Representations and Warranties; Conditions to the Reorganization
The Reorganization Agreement contains representations and warranties by
ICBI and TTC regarding, among other things, their respective organizations,
authorizations to enter into the Reorganization Agreement, capitalization,
financial statements and pending and threatened litigation. These
representations and warranties (except as otherwise provided in the
Reorganization Agreement) will not survive the Effective Date.
The obligations of ICBI and TTC to consummate the Reorganization are
subject to the following conditions, among others: approval and adoption of the
Reorganization Agreement by the requisite TTC shareholder votes; receipt of all
regulatory approvals necessary to consummate the Reorganization, not conditioned
or restricted in a manner that, in the judgment of the Boards of Directors of
ICBI and TTC, materially adversely affects the economic or business benefits of
the Reorganization so as to render inadvisable consummation thereof; the absence
of certain actual or threatened proceedings before a court or other governmental
body relating to the Reorganization; receipt of a current fairness opinion from
the financial advisor for TTC; and the receipt of an opinion of counsel as to
certain Federal income tax consequences of the Reorganization. Also, under the
terms of the Reorganization Agreement, ICBI agreed that, following the Effective
Date, it will indemnify those persons associated with TTC and its subsidiaries
who are entitled to indemnification as of the Effective Date of the
Reorganization. It is a condition of ICBI's obligation to consummate the
Reorganization that the sum of TTC's Transaction Costs, severance benefits
payable to TTC officers and TTC's Operating Losses after December 31, 1996 not
exceed $200,000 without the consent of ICBI. As of March 31, 1997, the sum of
such items was $________.
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In addition, each party's obligation to effect the Reorganization,
unless waived, is subject to performance by the other party of its obligations
under the Reorganization Agreement, the accuracy, in all material respects, of
the representations and warranties of the other party contained therein, and the
receipt of certain opinions and certificates from the other party.
Regulatory Approvals
ICBI's acquisition of TTC pursuant to the Reorganization is subject to
approval by the Federal Reserve under the BHC Act, which requires that the
Federal Reserve take into consideration the financial and managerial resources
of ICBI, the future prospects of the existing and proposed institutions and the
effect of the transaction on competition. The BHC Act prohibits the Federal
Reserve from approving the Reorganization if it would result in a monopoly or if
it would be in furtherance of any combination or conspiracy to monopolize or to
attempt to monopolize the business of banking in any part of the United States,
or if its effect may be substantially to lessen competition or to tend to create
a monopoly, or if it would be in any other manner a restraint of trade, unless
the Federal Reserve finds that the anti-competitive effects of the
Reorganization are clearly outweighed in the public interest by the probable
effect of the transaction in meeting the convenience and needs of the
communities to be served.
The BHC Act provides for the publication of notice and the opportunity
for administrative hearings relating to the applications, and it authorizes the
regulatory agency to permit interested parties to intervene in the proceedings.
If an interested party is permitted to intervene, such intervention could
substantially delay the regulatory approvals required for consummation of the
Reorganization.
The Reorganization is further subject to the approval of the SCC. To
obtain such approval, the SCC must conclude that after the Reorganization, TTC
will be operated efficiently and fairly, in the public interest and in
accordance with law.
Applications for approval of the Reorganization have been filed with
the Federal Reserve and the SCC. None of the agencies has yet approved the
applications. ICBI and TTC are not aware of any other governmental approvals or
actions that are required for consummation of the Reorganization, except as
described above. Should any such approval or action be required, it is currently
contemplated that such approval or action would be sought. There can be no
assurance that any such approval or action, if needed, could be obtained.
Business Pending the Reorganization
Until consummation of the Reorganization (or termination of the
Reorganization Agreement), TTC is obligated to operate its businesses only in
the ordinary and usual course, consistent with past practice, and to use its
best efforts to maintain its business organization, employees and business
relationships and to retain the services of its officers and key employees.
Until consummation of the Reorganization (or termination of the Reorganization
Agreement) TTC may not, without the consent of ICBI, among other things: (a)
declare or pay dividends on its capital stock; (b) enter into any merger,
consolidation or business combination (other than the Reorganization) or any
acquisition or disposition of a material amount of assets or securities or
solicit proposals in respect thereof; (c) amend its charter or bylaws (except as
may be required by the Reorganization Agreement); (d) incur any obligation in
excess of $5,000 without the prior consent of ICBI; (e) issue any capital stock;
or (f) purchase or redeem any of its capital stock. No options or warrants to
purchase TTC Common Stock will be exercised before the Effective Date and all
such options and warrants will be terminated on or prior to the Effective Date.
-25-
<e schedule.
If you have any questions or comments concerning the foregoing
responses, please do not hesitate to contact me at (804) 783-6452, R. Brian Ball
at (804) 783-6426, or Wayne A. Whitham, Jr. at (804) 783-6473.
Sincerely yours,
/s/ John M. Oakey, III
John M. Oakey, III
cc: David J. Sparks, Esq.
Alfred J.T. Byrne, Esq. (counsel to TTC)
R. Brian Ball, Esq.
Wayne A. Whitham, Jr., Esq.
