SCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
</TABLE>
INDEPENDENT COMMUNITY BANKSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
................................................................
(2) Aggregate number of securities to which transaction applies:
................................................................
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
................................................................
(4) Proposed maximum aggregate value of transaction:
................................................................
(5) Total fee paid:
................................................................
<PAGE>
[ ] Fee paid previously with preliminary materials:
........................................................................
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
................................................................
(2) Form, Schedule or Registration Statement No.:
................................................................
(3) Filing Party:
................................................................
(4) Date Filed:
................................................................
<PAGE>
INDEPENDENT COMMUNITY BANKSHARES, INC.
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of
Shareholders of Independent Community Bankshares, Inc. to be held on Wednesday,
April 19, 2000 at 10:00 a.m. at the Middleburg Community Center, 300 West
Washington Street, Middleburg, Virginia.
Please note the change in location for the Annual Meeting. Plan to
attend the Annual Meeting as we would like to show you the growth and vision for
your Company.
At the Annual Meeting, you will be asked to elect 13 directors for
terms of one year each. You will also vote to amend the Company's 1997 Stock
Option Plan and to ratify the appointment of independent auditors for the
Company for 2000. Enclosed with this letter is a formal notice of the Annual
Meeting, a Proxy Statement and a form of proxy.
Whether or not you plan to attend the Annual Meeting, it is important
that your shares be represented and voted. Please complete, sign, date and
return the enclosed proxy promptly using the enclosed postage-paid envelope. The
enclosed proxy, when returned properly executed, will be voted in the manner
directed in the proxy.
We hope you will participate in the Annual Meeting, either in person or
by proxy.
Sincerely,
/s/ Joseph L. Boling
Joseph L. Boling
Chairman and Chief Executive Officer
Middleburg, Virginia
March 20, 2000
<PAGE>
INDEPENDENT COMMUNITY BANKSHARES, INC.
111 West Washington Street
Middleburg, Virginia 20117
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-------------------
The Annual Meeting of Shareholders (the "Annual Meeting") of
Independent Community Bankshares, Inc. (the "Company") will be held on
Wednesday, April 19, 2000 at 10:00 a.m. at the Middleburg Community Center, 300
West Washington Street, Middleburg, Virginia, for the following purposes:
1. To elect 13 directors to serve for terms of one year each
expiring at the 2001 annual meeting of shareholders;
2. To approve an amendment to the Company's 1997 Stock Option
Plan;
3. To ratify the appointment of the firm of Yount, Hyde &
Barbour, P.C. as independent auditors for the Company for the
fiscal year ending December 31, 2000; and
4. To act upon such other matters as may properly come before the
Annual Meeting.
Only holders of shares of Common Stock of record at the close of
business on March 1, 2000, the record date fixed by the Board of Directors of
the Company, are entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
/s/ Alice P. Frazier
Alice P. Frazier
Senior Vice President and Chief Financial Officer
March 20, 2000
<PAGE>
INDEPENDENT COMMUNITY BANKSHARES, INC.
111 West Washington Street
Middleburg, Virginia 20117
PROXY STATEMENT
This Proxy Statement is furnished to holders of the common stock, par
value $5.00 per share ("Common Stock"), of Independent Community Bankshares,
Inc. (the "Company"), in connection with the solicitation of proxies by the
Board of Directors of the Company to be used at the 2000 Annual Meeting of
Shareholders (the "Annual Meeting") to be held on Wednesday, April 19, 2000 at
10:00 a.m. at the Middleburg Community Center, 300 West Washington Street,
Middleburg, Virginia, and any duly reconvened meeting after adjournment thereof.
Any shareholder who executes a proxy has the power to revoke it at any
time by written notice to the Secretary of the Company, by executing a proxy
dated as of a later date, or by voting in person at the Annual Meeting. It is
expected that this Proxy Statement and the enclosed proxy card will be mailed on
or about March 20, 2000 to all shareholders entitled to vote at the Annual
Meeting.
The cost of soliciting proxies for the Annual Meeting will be borne by
the Company. The Company does not intend to solicit proxies otherwise than by
use of the mails, but certain officers and regular employees of the Company or
its subsidiaries, without additional compensation, may use their personal
efforts, by telephone or otherwise, to obtain proxies. The Company may also
reimburse banks, brokerage firms and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses in forwarding proxy materials to the
beneficial owners of shares of Common Stock.
On March 1, 2000, the record date for determining those shareholders
entitled to notice of and to vote at the Annual Meeting, there were 1,778,994
shares of Common Stock issued and outstanding. Each outstanding share of Common
Stock is entitled to one vote on all matters to be acted upon at the Annual
Meeting. A majority of the shares of Common Stock entitled to vote, represented
in person or by proxy, constitutes a quorum for the transaction of business at
the Annual Meeting.
A shareholder may abstain or (only with respect to the election of
directors) withhold his or her 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 not be
counted as voting in favor of the relevant item.
A broker who holds shares in "street name" has the authority to vote on
certain items when it has not received instructions from the beneficial owner.
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 nonvote." Under the circumstances where the broker is not permitted to,
or does not, exercise its discretion, assuming proper disclosure to the Company
of such inability to vote, broker nonvotes will not be counted for purposes of
determining the existence of a quorum, and also will not be counted as not
voting in favor of the particular matter.
<PAGE>
The Board of Directors is not aware of any matters other than those
described in this Proxy Statement that may be presented for action at the Annual
Meeting. However, if other matters do properly come before the Annual Meeting,
the persons named in the enclosed proxy card possess discretionary authority to
vote in accordance with their best judgment with respect to such other matters.
PROPOSAL ONE
ELECTION OF DIRECTORS
Thirteen directors will be elected at the Annual Meeting. The
individuals listed below are nominated by the Board of Directors for election at
the Annual Meeting.
The election of each nominee for director requires the affirmative vote
of the holders of a plurality of the shares of Common Stock cast in the election
of directors. If the proxy is executed in such manner as not to withhold
authority for the election of any or all of the nominees for directors, then the
persons named in the proxy will vote the shares represented by the proxy for the
election of the 13 nominees named below. If the proxy indicates that the
shareholder wishes to withhold a vote from one or more nominees for director,
such instructions will be followed by the persons named in the proxy.
Each nominee has consented to being named in this Proxy Statement and
has agreed to serve if elected. The Board of Directors has no reason to believe
that any of the nominees will be unable or unwilling to serve. If, at the time
of the Annual Meeting, any nominee is unable or unwilling to serve as a
director, votes will be cast, pursuant to the enclosed proxy, for such
substitute nominee as may be nominated by the Board of Directors. There are no
current arrangements between any nominee and any other person pursuant to which
a nominee was selected. No family relationships exist among any of the directors
or between any of the directors and executive officers of the Company.
The following biographical information discloses each nominee's age,
business experience in the past five years and the year each individual was
first elected to the Board of Directors or its predecessor:
Nominees for Election Whose Terms Expire in 2001
Howard M. Armfield, 57, has been a director since 1984.
Mr. Armfield is Executive Vice President and owner of Armfield,
Harrison & Thomas, Inc., an independent insurance agency in Leesburg,
Virginia.
Joseph L. Boling, 55, has been a director since 1993.
Mr. Boling has been the Chairman, President and Chief Executive Officer
of the Company and The Middleburg Bank (the "Bank"), a subsidiary of
the Company, since April 1997. From February 1993 to April 1997, he was
President and Chief Executive Officer of the Company and the Bank.
Prior to employment by the Company and the Bank, he was a Senior Vice
President of Crestar Bank in Richmond, Virginia.
Childs Frick Burden, 49, has been a director since 1997.
Mr. Burden is a partner with Secor Group, an investment firm in
Washington, D.C.
J. Lynn Cornwell, Jr., 75, has been a director since 1984.
Mr. Cornwell is President and owner of J. Lynn Cornwell, Inc., a real
estate development company in Loudoun County.
2
<PAGE>
William F. Curtis, 71, has been a director since 1962.
Mr. Curtis is currently retired. Until February 1993, he had served as
President and Chief Executive Officer of the Bank for 25 years.
F. E. Deacon, III, 44, has been a director since 1997.
Mr. Deacon is President and Chief Executive Officer of The Tredegar
Trust Company ("Tredegar"), a trust company headquartered in Richmond,
Virginia and a subsidiary of the Company.
Robert C. Gilkison, 64, has been a director since 1999.
Mr. Gilkison is President of Gilkison Patterson Investment Advisors,
Inc. ("GPIA"), an investment advisory firm based in Alexandria,
Virginia.
C. Oliver Iselin, III, 70, has been a director since 1975.
Mr. Iselin is owner and operator of the Wolver Hill Farm.
Thomas W. Nalls, 58, has been a director since 1997.
Mr. Nalls is a partner with Hazel & Thomas, P.C., a law firm in
Leesburg, Virginia.
John C. Palmer, 64, has been a director since 1974.
Mr. Palmer retired as Senior Vice President of the Bank in 1995 after
27 years of service.
John Sherman, 59, has been a director since 1997.
Mr. Sherman is owner and operator of The Ashby Inn in Paris, Virginia.
Millicent W. West, 78, has been a director since 1975.
Ms. West has served in many volunteer positions in the Garden Club of
America and Garden Club of Virginia.
Edward T. Wright, 63, has been a director since 1972.
Mr. Wright retired as Senior Vice President of the Bank in 1998 after
42 years of service.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES SET FORTH ABOVE.
Executive Officers Who Are Not Directors
Alice P. Frazier (Age 35) has served as Senior Vice President and Chief
Financial Officer since April 1993.
Arch A. Moore (Age 48) has served as Senior Vice President and Senior
Lender since February 1995.
William E. Doyle (Age 47) has served as Senior Vice President, Mortgage
and Retail Services, since November 1997. From 1996 to 1997, he was a private
consultant in the banking industry and, from 1982 to 1996, he was a Senior Vice
President with Crestar Bank.
3
<PAGE>
Security Ownership of Management
The following table sets forth, as of March 6, 2000, certain
information with respect to beneficial ownership of shares of Common Stock by
each of the members of the Board of Directors, by each of the executive officers
named in the "Summary Compensation Table" below and by all directors and
executive officers as a group. Beneficial ownership includes shares, if any,
held in the name of the spouse, minor children or other relatives of a director
living in such person's home, as well as shares, if any, held in the name of
another person under an arrangement whereby the director or executive officer
can vest title in himself at once or at some future time.
Amount and Nature of
Name Beneficial Ownership Percent of Class (%)
- ---- -------------------- --------------------
Howard M. Armfield 17,004 *
Joseph L. Boling (1) 33,420 1.85
Childs Frick Burden 7,760 *
J. Lynn Cornwell, Jr. 4,144 *
William F. Curtis (2) 113,906 6.40
F. E. Deacon, III (1) 17,261 *
William E. Doyle, Jr. (1) 4,178 *
Robert C. Gilkison 1,000 *
C. Oliver Iselin, III 45,733 2.57
Arch A. Moore, III (1) 12,623 *
Thomas W. Nalls 850 *
John C. Palmer 22,486 1.26
John Sherman 708 *
Millicent W. West 258,771 14.55
Edward T. Wright (1) 58,420 3.28
Directors and executive officers
as a group (16 persons) (1) 598,264 32.39
- ------------------
* Percentage of ownership is less than one percent of the outstanding shares of
Common Stock.
(1) Amounts disclosed include shares of Common Stock issuable upon the exercise
of stock options exercisable within 60 days of March 6, 2000, including
stock options granted subject to shareholder approval. See "Proposal Two -
Approval of an Amendment to the 1997 Stock Option Plan."
(2) Amount disclosed include shares of Common Stock beneficially owned by a
trust of which Mr. Curtis serves as trustee.
4
<PAGE>
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of March 6, 2000, certain
information with respect to the beneficial ownership of shares of Common Stock
by each person who owns, to the Company's knowledge, more than five percent of
the outstanding shares of Common Stock.
Name and Address Number of Shares Percent of Class (%)
- ---------------- ---------------- --------------------
Millicent W. West 258,771 14.55
P.O. Box 236
Upperville, Virginia
William F. Curtis (1) 113,906 6.40
3618 Zulla Road
The Plains, Virginia
- ------------------
(1) Amount disclosed include shares of Common Stock beneficially owned by a
trust of which Mr. Curtis serves as trustee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
any persons who own more than 10% of the outstanding shares of Common Stock, to
file with the Securities and Exchange Commission ("SEC") reports of ownership
and changes in ownership of Common Stock. Officers and directors are required by
SEC regulations to furnish the Company with copies of all Section 16(a) reports
that they file. Based solely on review of the copies of such reports furnished
to the Company or written representation that no other reports were required,
the Company believes that, during fiscal year 1999, all filing requirements
applicable to its officers and directors were complied with, except that Robert
C. Gilkison inadvertently filed late a report on Form 3 disclosing his
beneficial ownership at the time that he became a director of the Company.
The Board of Directors and its Committees
There were 12 meetings of the Board of Directors in 1999. Each director
attended greater than 75% of the aggregate number of meetings of the Board of
Directors and meetings of committees of which the director was a member in 1999.
The Company's Executive Committee, which acts for the Board of
Directors when the Board is not in session, consists of Mrs. West and Messrs.
Armfield, Boling, Cornwell, Nalls and William S. Leach. The Executive Committee
met seven times during the year ended December 31, 1999.
The Examining and Compliance Committee, which consists of Mrs. West and
Messrs. Armfield, Burden, Sherman and Iselin, acts as the Company's audit
committee. The Examining and Compliance Committee is responsible for examining
the affairs of the Bank at least annually, reporting the results of examinations
and recommending changes in the manner of doing business. The Examining and
Compliance Committee held three meetings during the year ended December 31,
1999.
The Company's Nominating Committee consists of Mrs. West and Messrs.
Boling, Curtis and Iselin and nominates the individuals proposed for election as
directors. Shareholders entitled to vote for
5
<PAGE>
the election of directors may nominate candidates for consideration by the
Nominating Committee under procedures that the Company has established. See
"Proposals for 2001 Annual Meeting of Shareholders." The Nominating Committee
met one time during the year ended December 31, 1999.
The Company does not have a standing compensation committee.
Director Compensation
As compensation for their services to the Company, each member of the
Board of Directors receives a fee of $400 for each meeting of the Board and $300
for each committee meeting attended. Board members who are also officers do not
receive any additional compensation above their regular salary for attending
committee meetings. In 1999, directors received $126,100 in the aggregate as
compensation for their services as directors.
Executive Compensation
The following table shows, for the fiscal years ended December 31,
1999, 1998 and 1997, the cash compensation paid by the Company and its
subsidiaries, as well as certain other compensation paid or accrued for those
years, to each of the named executive officers in all capacities in which they
served:
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#) Compensation ($) (1)
------------------ ---- ---------- --------- ---------------- ----------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph L. Boling 1999 213,990 35,000 * 10,075 --
Chairman, President and 1998 191,407 30,000 * 10,000 --
Chief Executive Officer 1997 186,980 20,000 * 20,000 --
F. E. Deacon, III (2) 1999 148,720 2,974 * 4,075 --
President and Chief 1998 143,000 -0- * 5,000 --
Executive Officer of 1997 52,333 3,900 * 10,000 --
Tredegar
William E. Doyle, Jr. (3) 1999 142,020 9,941 * 4,075 --
Senior Vice President 1998 135,000 9,450 13,964(4) 4,000 --
1997 14,250 5,000 * -- --
Arch A. Moore, III 1999 117,497 8,224 * 4,075 --
Senior Vice President 1998 109,647 7,675 * 4,000 --
1997 101,375 7,096 * 10,000 --
</TABLE>
- ------------------
* All benefits that might be considered of a personal nature did not exceed
the lesser of $50,000 or 10% of total annual salary and bonus.
(1) Amounts presented represent gross value of payments made by the Bank year
pursuant to split-dollar life insurance agreements between the Company and
the named executive officers.
(2) The Company acquired Tredegar on August 1, 1997, and the amounts presented
for 1997 reflect the amounts earned by Mr. Deacon from August 1, 1997 to
December 31, 1997.
(3) Mr. Doyle joined the Company on November 21, 1997.
(4) Amount presented includes $6,000 paid by the Bank for Mr. Doyle's
initiation fees for the Loudoun Golf and Country Club and $7,964 paid by
the Bank associated with moving expenses.
6
<PAGE>
Stock Options
The following table sets forth for the year ended December 31, 1999,
the grants of stock options to the named executive officers:
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Percent of Total
Number of Securities Options Granted to
Underlying Options Employees in Fiscal Exercise or Base
Name Granted (#) (1) Year (%) (2) Price ($/Share) Expiration Date
- ---- --------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Joseph L. Boling 10,000 26.4 24.75 December 16, 2009
75 * 24.50 October 1, 2009
F. E. Deacon, III 4,000 10.6 24.75 December 16, 2009
75 * 24.50 October 1, 2009
William E. Doyle, Jr. 4,000 10.6 24.75 December 16, 2009
75 * 24.50 October 1, 2009
Arch A. Moore, III 4,000 10.6 24.75 December 16, 2009
75 * 24.50 October 1, 2009
</TABLE>
- ------------------
* Percentage is less than one percent.
(1) Stock options were awarded at or above the fair market value of the shares
of Common Stock at the date of award. Amounts disclosed include shares of
Common Stock issuable upon the exercise of stock options granted subject to
shareholder approval. See "Proposal Two - Approval of an Amendment to the
1997 Stock Option Plan."
(2) Options to purchase 37,825 shares of Common Stock were granted to employees
during the year ended December 31, 1999.
7
<PAGE>
No stock options were exercised by the named executive officers during
1999. The following table sets forth the amount and value of stock options held
by the named executive officers as of December 31, 1999.
Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Fiscal Year End (#)(1) at Fiscal Year End ($)(2)
---------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Joseph L. Boling 26,535 13,540 126,420 18,580
F. E. Deacon, III 13,011 6,064 63,210 9,290
William E. Doyle, Jr. 3,603 4,472 1,176 824
Arch A. Moore, III 12,423 5,652 62,916 9,084
</TABLE>
(1) Amounts disclosed include shares of Common Stock issuable upon the exercise
of stock options granted subject to shareholder approval. See "Proposal Two
- Approval of an Amendment to the 1997 Stock Option Plan."
(2) The value of in-the-money options at fiscal year end was calculated by
determining the difference the closing price of a share of Common Stock as
reported on the OTC Bulletin Board on December 31, 1999 and the exercise
price of the options.
Employment Agreements
Effective as of January 1, 1998, the Company and Joseph L. Boling
entered into an employment contract that provides for Mr. Boling's service as
Chairman, President and Chief Executive Officer of both the Company and the
Bank. Mr. Boling's employment contract is for five years at an initial base
annual salary of $191,408, and he is eligible for base salary increases and
bonuses as determined by the Executive Committee of the Board of Directors. Mr.
Boling's employment may be terminated by the Company with or without cause. If
he resigns for "good reason" or is terminated without "cause" (as those terms
are defined in the employment agreement), however, he is entitled to salary and
certain benefits for the greater of the remainder of his contract or three
years. Mr. Boling's contract also contains a covenant not to compete if his
employment terminates for any reason other than a change in control of the
Company.
A deferred compensation plan has been adopted for the Chairman and
Chief Executive Officer. Benefits are to be paid in monthly installments for 15
years following retirement or death. The agreement provides that, if employment
is terminated for reasons other than death or disability prior to age 65, the
amount of benefits would be reduced. The deferred compensation expense for 1999,
1998 and 1997, based on the present value of the retirement benefits, was
$16,936, $15,698 and $16,627, respectively. The plan is unfunded. However, life
insurance has been acquired on the life of the employee in an amount sufficient
to discharge the obligation.
Effective as of March 27, 1997, Tredegar and F. E. Deacon, III, who
serves as President and Chief Executive Officer of Tredegar, entered into an
employment agreement that will expire on August 1, 2000. Mr. Deacon's current
base annual salary is $156,156, and he is eligible for base salary increases and
bonuses as determined by the Board of Directors. He will also be entitled to a
bonus, up to a
8
<PAGE>
maximum of $27,000 in any year, if Tredegar's cumulative net earnings equal or
exceed certain levels as described in the agreement. This employment agreement
does not provide for any additional compensation in the event of a change in
control of the Company and does prohibit Mr. Deacon from competing with Tredegar
for a period of one year following a termination of his employment by Tredegar
for any reason.
Transactions with Management
Robert C. Gilkison, a director of the Company, is President of GPIA and
the owner of 49.5% of its capital stock. On August 9, 1999, the Company
purchased 100 shares of the capital stock of GPIA, which represents one percent
of the issued and outstanding capital stock of GPIA. In connection with this
purchase, the Company also purchased the option to acquire GPIA on or after July
1, 2001. The Company paid $1.2 million for the option to acquire GPIA. If the
option to acquire GPIA is exercised, the Company will purchase all of the
remaining issued and outstanding shares of GPIA's capital stock for an
additional $4.8 million in cash and shares of the Common Stock.
Some of the directors and officers of the Company are at present, as in
the past, customers of the Company, and the Company has had, and expects to have
in the future, banking transactions in the ordinary course of its business with
directors, officers, principal shareholders and their associates, on
substantially the same terms, including interest rates and collateral on loans,
as those prevailing at the same time for comparable transactions with others.
These transactions do not involve more than the normal risk of collectibility or
present other unfavorable features. The balance of loans to directors, executive
officers and their associates totaled $3,233,000 at December 31, 1999, or 14.0%
of the Company's equity capital at that date.
There were no transactions during 1999 between the Company's directors
or officers and the Company's retirement or profit sharing plans, nor are there
any proposed transactions. Additionally, there are no legal proceedings to which
any director, officer or principal shareholder, or any affiliate thereof, is a
party that would be material and adverse to the Company.
PROPOSAL TWO
APPROVAL OF AN AMENDMENT
TO THE 1997 STOCK OPTION PLAN
General
On November 12, 1997, the Board of Directors of the Company approved
the 1997 Stock Option Plan (the "Stock Option Plan"), which was submitted to and
approved by the Company's shareholders on April 22, 1998. The Stock Option Plan
is intended to provide a means for selected key employees of the Company to
increase their personal financial interest in the Company, thereby stimulating
the efforts of these employees and strengthening their desire to remain with the
Company. References to the "Company" in this section will include any subsidiary
corporation. The principal features of the Stock Option Plan, as amended, are
summarized below.
The Stock Option Plan permits the award of Incentive Stock Options
("ISOs") and Non-Qualified Stock Options ("NQSOs") to eligible officers and key
employees of the Company and its subsidiaries upon such terms as the Board of
Directors may determine, consistent with the terms of the Stock Option Plan.
9
<PAGE>
Amendment to the Stock Option Plan
The Stock Option Plan initially authorized the issuance of up to 45,000
shares of Common Stock to assist the Company in recruiting and retaining key
management personnel. On November 24, 1997, the Company effected a two-for-one
stock split and, as provided therein, the Stock Option Plan currently authorizes
the issuance of up to 90,000 shares of Common Stock.
On July 21, 1999, the Board of Directors resolved that the Stock Option
Plan be amended to increase the number of shares of Common Stock currently
reserved for issuance by 100,000, subject to shareholder approval. As a result,
the Stock Option Plan, as so amended, reserves 190,000 shares of Common Stock
for issuance. As of March 6, 2000, the market value of the 190,000 shares that
are issuable under the Stock Option Plan, as amended, was $4,370,000. Except for
increasing the number of shares issuable, the Stock Option Plan has not been
amended.
Options to purchase 121,825 shares have been granted, and 68,175 shares
remain available for grants and awards under the Stock Option Plan. The grants
of all options to purchase shares of Common Stock not included in the 90,000
shares of Common Stock initially reserved for issuance under the Stock Option
Plan were made by the Company subject to the approval by the shareholders of the
increase in the number of shares of Common Stock reserved for issuance under the
Stock Option Plan.
The following table sets forth information relating to all grants of
stock options under the Stock Option Plan to (i) the named executive officers,
(ii) all current executive officers as a group, (iii) all current directors who
are not executive officers as a group, and (iv) all employees, including all
current officers who are not executive officers, as a group.
<TABLE>
Number of Securities Value of Unexercised
Underlying Options Exercise or Base In-the-Money Options at
Granted (1) Price ($/Share) March 6, 2000 ($) (2)
----------- --------------- ---------------------
<S> <C> <C> <C>
Joseph L. Boling 40,075 17.00 - 24.75 120,000
F. E. Deacon, III 19,075 17.00 - 24.75 60,000
William E. Doyle, Jr. 8,075 17.00 - 24.75 60,000
Arch A. Moore, III 18,075 17.00 - 24.75 60,000
Executive Group 103,375 17.00 - 24.75 360,000
Non-Executive Director Group(3) -- -- --
Non-Executive Officer Employee Group 18,450 17.00 - 27.00 12,000
</TABLE>
- ------------------
(1) Stock options were awarded at the average of the bid and ask price of a
share of Common Stock as reported on the OTC Bulletin Board at the date of
award. Amounts disclosed include shares of Common Stock issuable upon the
exercise of stock options granted subject to shareholder approval.
(2) The value of in-the-money options was calculated by determining the
difference between the closing price of a share of Common Stock as reported
on the OTC Bulletin Board on March 6, 2000 and the exercise price of the
options.
(3) The Stock Option Plan does not permit the grants of options to directors
who are not also employees of the Company.
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<PAGE>
The Company intends to continue to grant options to purchase shares of
Common Stock under the Stock Option Plan to directors, eligible officers and key
employees. No determination has been made as to which of the persons eligible to
participate in the Stock Option Plan will receive awards under the Stock Option
Plan in the future and, therefore, the future benefits to be allocated to any
individual or to various groups of participants are not presently determinable.
Administration
The Stock Option Plan is administered by the Board of Directors. The
Board of Directors has the sole discretion, subject to certain limitations, to
interpret the Stock Option Plan; to select Stock Option Plan participants; to
determine the type, size, terms and conditions of awards under the Stock Option
Plan; to authorize the grant of such awards; and to adopt, amend and rescind
rules relating to the Stock Option Plan. All determinations of the Board of
Directors are conclusive. All expenses of administering the Stock Option Plan
will be borne by the Company.
Eligibility
Any officer or employee of the Company or its subsidiaries who, in the
judgment of the Board of Directors, has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Company or
a subsidiary is eligible to participate in the Stock Option Plan. Directors of
the Company who are employees may also participate in the Stock Option Plan.
Individual Agreements
The Board of Directors has broad authority to fix the terms and
conditions of the individual agreements with participants. All awards granted
under the Stock Option Plan are intended to comply with the applicable
requirements of Rule 16b-3 promulgated under the Exchange Act, which exempts,
grants and awards under qualifying employee benefit plans from certain
"short-swing" profit recovery provisions of the Exchange Act.
Shares Available
Subject to the provisions of the Stock Option Plan providing for
proportional adjustments in the event of various changes in the capitalization
of the Company, no more than 190,000 shares of authorized but unissued Common
Stock may be issued pursuant to the Stock Option Plan. Any shares of Common
Stock subject to an Incentive Stock Option or Non-Qualified Stock Option that
are not issued prior to the expiration of such awards will again be available
for award under the Stock Option Plan.
Incentive Stock Options and Non-Qualified Stock Options ("Options")
The Board of Directors may authorize the grant of either ISOs, as
defined under Section 422 of the Internal Revenue Code of 1986, as amended, or
NQSOs, which are subject to certain terms and conditions including the
following: (1) the option price per share will be determined by the Board of
Directors, but for ISOs will not, in any event, be less than 100 percent of the
fair market value of Common Stock on the date that the Option is granted; (2)
the term of the Option will be fixed by the Board of Directors, but the maximum
period in which an ISO may be exercised shall not, in any event, exceed ten
years from the date that the ISO is granted; (3) Options will not be
transferable other than by will or the laws of descent and distribution; (4) the
purchase price of Common Stock issued upon exercise of an Option will be paid in
full to the Company at the time of the exercise of the Option in cash, or at the
discretion of the Board of Directors, by surrender to the Company of previously
acquired shares of
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<PAGE>
Common Stock, which will be valued at the fair market value of such shares on
the date preceding the date that the Option is exercised; (5) an Option may
expire upon termination of employment or within a specified period of time after
termination of employment as provided by the Board of Directors; (6) the
aggregate fair market value (determined on the date of grant) of the shares of
Common Stock with respect to which ISOs are exercisable for the first time by
any individual during any calendar year shall not exceed $100,000; and (7) the
Board of Directors may elect to cash out all or part of the portion of any
Option to be exercised by a participant by payment in cash or Common Stock of an
amount determined in accordance with the Stock Option Plan.
Change of Control
At the discretion of the Board of Directors, in the event of a Change
in Control, any outstanding Option may become fully exercisable and vested to
the full extent of the original grant. Under the Stock Option Plan, a "Change of
Control" shall be deemed to have taken place if (i) a third person, excluding
certain directors of the Company, but including a "group" as defined in Section
13(d)(3) of the Exchange Act becomes the beneficial owner of shares of Common
Stock having 20% or more of the total number of votes that may be cast for the
election of directors of the Company, or (ii) as the result of, or in connection
with, any cash or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing transactions
(a "Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company.
Amendment or Termination
The Board of Directors may amend or terminate the Stock Option Plan;
however, no amendment may become effective until shareholder approval is
obtained if the amendment (i) materially increases the aggregate number of
shares that may be issued pursuant to Options, (ii) materially increases the
benefits to participants under the Stock Option Plan, or (iii) materially
changes the requirements as to eligibility for participation in the Stock Option
Plan. No amendment shall, without a participant's consent, adversely affect any
rights of such participant under any Option outstanding at the time that such
amendment is made. No amendment shall be made if it would disqualify the Stock
Option Plan from the exemption provided by Rule 16b-3.
Duration of Plan
No Option may be granted under the Stock Option Plan after November 12,
2007. Options granted before November 12, 2007, shall remain valid in accordance
with their terms.
Tax Status
Under current federal income tax laws, the principal federal tax
consequences to participants and to the Company of the grant and exercise of
ISOs and NQSOs, pursuant to the provisions of the Stock Option Plan, are
summarized below.
Incentive Stock Options. An employee will generally not recognize
income on receipt or exercise of an ISO so long as he or she has been an
employee of the Company or its subsidiaries from the date that the Option was
granted until three months before the date of exercise; however, the amount by
which the fair market value of the Common Stock at the time of exercise exceeds
the option price is a required adjustment for purposes of the alternative
minimum tax applicable to the employee. If the employee holds the Common Stock
received upon exercise of the Option for one year after exercise (and for two
years from the date of grant of the Option), any difference between the amount
realized upon the
12
<PAGE>
disposition of the stock and the amount paid for the stock will be treated as
long-term capital gain (or loss, if applicable) to the employee. If the employee
exercises an ISO and satisfies these holding period requirements, the Company
may not deduct any amount in connection with the ISO.
In contrast, if an employee exercises an ISO but does not satisfy the
holding period requirements with respect to the Common Stock acquired on
exercise, the employee generally will recognize ordinary income in the year of
the disposition equal to the excess, if any, of the fair market value of the
Common Stock on the date of exercise over the option price; and any excess of
the amount realized on the disposition over the fair market value on the date of
exercise will be taxed as long- or short-term capital gain (as applicable). If,
however, the fair market value of the Common Stock on the date of disposition is
less than on the date of exercise, the employee will recognize ordinary income
equal only to the difference between the amount realized on disposition and the
option price. In either event, the Company will be entitled to deduct an amount
equal to the amount constituting ordinary income to the employee in the year of
the premature disposition.
Non-Qualified Stock Options. NQSOs granted under the Stock Option Plan
are not taxable to a participant at grant but result in taxation at exercise, at
which time the individual will recognize ordinary income in an amount equal to
the difference between the option exercise price and the fair market value of
the Common Stock on the exercise date. The Company will be entitled to deduct a
corresponding amount as a business expense in the year that the participant
recognizes this income.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE IN FAVOR
OF THE AMENDMENT TO THE 1997 STOCK OPTION PLAN. AN AFFIRMATIVE VOTE OF A
MAJORITY OF THE SHARES PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE ANNUAL
MEETING IS REQUIRED FOR APPROVAL OF THIS PROPOSAL.
PROPOSAL THREE
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, subject to shareholder approval,
the firm of Yount, Hyde & Barbour, P.C. as independent public accountants to
audit the consolidated financial statements of the Company for the fiscal year
ending December 31, 2000. Yount, Hyde & Barbour, P.C. has audited the financial
statements of the Company and the Bank for over 25 years. A majority of the
votes cast by holders of the Common Stock is required for the ratification of
the appointment of the independent public accountants.
Representatives of Yount, Hyde & Barbour, P.C. are expected to be
present at the Annual Meeting, will have an opportunity to make a statement, if
they desire to do so, and are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPOINTMENT OF YOUNT, HYDE & BARBOUR, P.C. AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2000.
13
<PAGE>
PROPOSALS FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
Under the regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 2001 annual
meeting of shareholders must cause such proposal to be received, in proper form,
at the Company's principal executive offices at 111 West Washington Street,
Middleburg, Virginia 20117, no later than November 20, 2000, in order for the
proposal to be considered for inclusion in the Company's Proxy Statement for
that meeting. The Company presently anticipates holding the 2001 annual meeting
of shareholders on April 18, 2001.
The Company's Bylaws also prescribe the procedure a shareholder must
follow to nominate directors or to bring other business before shareholders'
meetings. For a shareholder to nominate a candidate for director at the 2001
annual meeting of shareholders, notice of nomination must be received by the
Secretary of the Company not less than 60 days and not more than 90 days prior
to the date of the 2001 annual meeting. The notice must describe various matters
regarding the nominee and the shareholder giving the notice. For a shareholder
to bring other business before the 2001 annual meeting of shareholders, notice
must be received by the Secretary of the Company not less than 60 days and not
more than 90 days prior to the date of the 2001 annual meeting. The notice must
include a description of the proposed business, the reasons therefor, and other
specified matters. Any shareholder may obtain a copy of the Company's Bylaws,
without charge, upon written request to the Secretary of the Company. Based upon
an anticipated date of April 18, 2001 for the 2001 annual meeting of
shareholders, the Company must receive any notice of nomination or other
business no later than February 17, 2001 and no earlier than January 18, 2001.
OTHER MATTERS
THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
1999, INCLUDING FINANCIAL STATEMENTS, IS BEING MAILED TO SHAREHOLDERS WITH THIS
PROXY STATEMENT. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR 1999
FILED WITH THE COMMISSION, EXCLUDING EXHIBITS, MAY BE OBTAINED WITHOUT CHARGE BY
WRITING TO ALICE P. FRAZIER, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
WHOSE ADDRESS IS P.O. BOX 5, MIDDLEBURG, VIRGINIA 20118.
14
<PAGE>
<TABLE>
<CAPTION>
PLEASE MARK VOTES REVOCABLE PROXY
|X| AS IN THIS EXAMPLE INDEPENDENT COMMUNITY BANKSHARES, INC.
<S> <C>
With- For All
Proxy Solicited on Behalf of the Board of Directors For hold Except
The undersigned hereby appoints Arch A. 1. To elect as directors the 13 _ _ _
Moore, III and Alice P. Frazier, jointly and persons listed as nominees below. |_| |_| |_|
severally, proxies, with full power to act alone, and
with full power of substitution, to represent the Howard M. Armfield F.E. Deacon, III John C. Palmer
undersigned and to vote, as designated below and upon Joseph L. Boling Robert C. Gilkison John Sherman
any and all other matters that may properly be Childs Frick Burden C. Oliver Iselin, III Millicent W. West
brought before such meeting, all shares of Common J. Lynn Cornwell, Jr. Thomas W. Nalls Edward T. Wright
Stock that the undersigned would be entitled to vote William F. Curtis
at the Annual Meeting of Shareholders of Independent
Community Bankshares, Inc., a Virginia corporation INSTRUCTION: To withhold authority to vote for any individual
(the "Corporation"), to be held at the Middleburg nominee, mark "For All Except" and write that nominee's name in the
Community Center, 300 West Washington Street, space provided below.
Middleburg, Virginia, on Wednesday, April 19, 2000,
at 10:00 a.m., local time, or at any adjournments _____________________________________________________________________
thereof, for the following purposes:
For Against Abstain
_ _ _
2. To approve an amendment to the |_| |_| |_|
Corporation's 1997 Stock Incentive
Plan.
_ _ _
3. To ratify the appointment of Yount, |_| |_| |_|
Hyde, & Barbour, P.C. as
independent auditors for the
Corporation for the fiscal year
ending December 31, 2000.
4. In their discretion, the proxies are authorized to vote upon
any other business that may properly come before the meeting,
or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS
------------------------- PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN ITEM 1 AND FOR ITEMS
Please be sure to sign and date | Date | 2 AND 3.
this Proxy in the box below | |
---------------------------------------------------------- If signing as Attorney, Executor, Administrator, Guardian or
| | Trustee, please add your title as such.
| |
|-Stockholder sign above---Co-holder (if any) sign above-|
</TABLE>
^ Detach above card, sign, date and mail in postage paid envelope provided. ^
INDEPENDENT COMMUNITY BANKSHARES, INC.
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| PLEASE ACT PROMPTLY |
| SIGN, DATE & MAIL YOUR PROXY CARD TODAY |
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