SECURITIES AND EXCHANGE COMMISSION
FORM S-4 EF
PLUMAS BANCORP
(Exact Name of Registrant as Specified in Its Charter)
Washington, D.C. 20549
Registration Statement Under the Securities Act of 1933
CALIFORNIA
(State or Other Jurisdiction
of Incorporation or Organization)
6021
(Primary Standard Industrial
Classification Code Number)
75-2987076
(I.R.S. Employer
Identification No.)
35 S. Lindan Avenue, Quincy, California 95971, (530) 283-7305
35 S. Lindan Avenue, Quincy, California 95971
William E. Elliott, PRESIDENT & CEO
35 S. Lindan Avenue, Quincy, California 95971, (530) 283-7305
Copy to:
Thomas Q. Kwan, Esq., Gary Steven Findley & Associates
1470 North Hundley Street, Anaheim, California 92806, (714) 630-7136
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ______________________.
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
CALCULATION OF REGISTRATION FEE
[ ] ______________________.
Title of each Class
Proposed Maximum
Proposed Maximum
of Securities to
Amount to be
Offering Price
Aggregate
Amount of
be Registered
Registered(1)
Per Unit
Offering Price(2)
Registration Fee
Common stock(1)
2,247,839
$
15.30
$
34,391,936.70
$
3,164.06
(No Par Value)
(1)
Represents the maximum number of shares of the Registrants common stock
to be issued in connection with the reorganization described herein.
(2)
Estimated pursuant to Rule 457(f)(1) solely for the purpose of
calculating the registration fee based on the market value of the
securities to be received by the Registrant as determined on March 14,
2002.
Plumas Bank
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of Plumas Bank, which will be held at the Parish Hall of St. Johns Catholic Church located at 176 Lawrence Street, Quincy, California, on May 29, 2002 at 10:30 a.m. At this annual meeting, shareholders will be asked to elect ten directors for the next year and to vote on a plan of reorganization and merger agreement dated , 2002, which details the reorganization of Plumas Bank and the formation of a bank holding company. Following the reorganization, Plumas Bank will become a wholly-owned subsidiary of a new holding company, Plumas Bancorp. In the reorganization, all of the shareholders of Plumas Bank will become shareholders of Plumas Bancorp. The reorganization is subject to certain conditions including shareholder and regulatory approvals.
Plumas Bank is requesting your proxy to vote in favor of all of the nominees for election as directors and in favor of the plan of reorganization and merger agreement. As part of the reorganization, each share of Plumas Bank common stock will be exchanged for one share of Plumas Bancorp common stock. The Board of Directors of Plumas Bank recommends that you vote FOR the election of each of the nominees and FOR approval of the plan of reorganization and merger agreement. The plan of reorganization and merger agreement is attached as Exhibit A to the proxy statement/prospectus.
The proxy statement/prospectus contains information about each of the nominees for directors and about Plumas Bancorp and Plumas Bank and describes the conditions upon which the proposed reorganization will occur. A majority of the outstanding shares of Plumas Banks common stock is needed to approve the plan of reorganization and merger agreement, so we urge you to cast your vote.
To ensure that your vote is represented at this important meeting, please sign, date and return the proxy card in the enclosed envelope as promptly as possible.
Sincerely, |
William E. Elliott
President and Chief Executive Officer |
Neither the Securities and Exchange Commission, Federal Deposit Insurance Corporation nor any state securities regulators have approved either the reorganization described in this proxy statement/prospectus or the Plumas Bancorp common stock to be issued in the reorganization, nor have they determined if this proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.
The date of this proxy statement/prospectus is , 2002
Notice of Annual Meeting of Shareholders
Plumas Bank
To: |
The Shareholders of
Plumas Bank |
Notice is hereby given that, pursuant to its Bylaws and the call of its Board of Directors, the annual meeting of shareholders of Plumas Bank will be held at the Parish Hall of St. Johns Catholic Church located at 176 Lawrence Street, Quincy, California, on Wednesday, May 29, 2002 at 10:30 a.m., for the purpose of considering and voting upon the following matters:
1. | Election of Directors. To elect ten (10) persons to serve as directors of the Bank until their successors are duly elected and qualified. |
Jerry V. Kehr | William E. Elliott | Alvin G. Blickenstaff | ||
Gerald W. Fletcher | Arthur C. Grohs | Christine McArthur | ||
Terrance J. Reeson | Walter Sphar | Thomas Watson | ||
Daniel E. West |
2. | Approval of the Plan of Reorganization and Merger Agreement. To approve the Plan of Reorganization and Merger Agreement dated , 2002, attached as Exhibit A. | |
3. | Transaction of Other Business. To transact such other business as may properly come before the meeting and any adjournment or adjournments thereof. |
The plan of reorganization and merger agreement sets forth the terms of the reorganization of Plumas Bank into a wholly-owned subsidiary of a newly formed holding company, Plumas Bancorp. As a result, all shareholders of Plumas Bank will receive for their shares of Plumas Banks common stock an equal number of shares of Plumas Bancorps common stock. These transactions are more fully described in the enclosed proxy statement/prospectus, and in the plan of reorganization and merger agreement, which is attached as Exhibit A to the proxy statement/prospectus.
The Board of Directors has fixed the close of business on March 22, 2002 as the record date for determination of shareholders entitled to notice of, and the right to vote at, the meeting.
Section 2.3 of the Bylaws of Plumas Bank sets forth the nomination procedure for nominations of directors. Section 2.3 provides:
Section 2.3 NOMINATIONS FOR DIRECTOR. Nominations for election of members of the Board of Directors may be made by the Board of Directors or by |
any shareholder of any outstanding class of voting stock of the Corporation entitled to vote for the election of directors. Notice of intention to make any nominations, other than by the Board of Directors, shall be made in writing and shall be received by the President of the Corporation no more than 60 days prior to any meeting of shareholders called for the election of directors, and no more than 10 days after the date the notice of such meeting is sent to shareholders pursuant to Section 2.2 of these bylaws; provided, however, that if only 10 days notice of the meeting is given to shareholders, such notice of intention to nominate shall be received by the President of the Corporation not later than the time fixed in the notice of the meeting for the opening of the meeting. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the number of shares of voting stock of the Corporation owned by each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of voting stock of the Corporation owned by the notifying stockholder. Nominations not made in accordance herewith shall be disregarded by the then chairman of the meeting, and the inspectors of election shall then disregard all votes cast for each proposed nominee. |
Since the affirmative vote of shareholders holding not less than a majority of the outstanding shares of Plumas Banks common stock is required to ratify and confirm the plan of reorganization and merger agreement, it is essential that all shareholders vote. You are urged to vote in favor of the proposals by signing and returning the enclosed proxy as promptly as possible, whether or not you plan to attend the meeting in person. If you do attend the meeting, you may then withdraw your proxy. The proxy may be revoked at any time prior to its exercise.
By Order of the Board of Directors |
Dated: March 22, 2002 |
Terrance J. Reeson, Secretary |
Proxy Statement of Plumas Bank
Prospectus of Plumas Bancorp
Plumas Bank is providing this proxy statement of Plumas Bank and prospectus of Plumas Bancorp to shareholders of Plumas Bank in connection with the annual meeting of shareholders of Plumas Bank to be held at the Parish Hall of St. Johns Catholic Church located at 176 Lawrence Street, Quincy, California on May 29, 2002 at 10:30 a.m.
Shareholders of Plumas Bank will elect ten directors for the ensuing year and vote upon a proposal to approve the principal terms of the Plan of Reorganization and Merger Agreement dated , 2002. Under the plan of reorganization and merger agreement, shareholders of Plumas Bank will receive shares of Plumas Bancorps common stock for their shares of Plumas Banks common stock. After the reorganization, Plumas Bank will be the sole wholly-owned subsidiary of Plumas Bancorp, and shareholders of Plumas Bank immediately before the reorganization will maintain their proportional interest in Plumas Bancorp immediately after the reorganization.
You should rely only on the information contained in this proxy statement/prospectus or other information referred to in this document. Neither Plumas Bank nor Plumas Bancorp has authorized anyone to provide you with different or other information. This proxy statement/prospectus is dated , 2002. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date, and neither the mailing of this proxy statement/prospectus to shareholders nor the issuance of shares of Plumas Bancorp in the reorganization shall create any implication to the contrary.
Proxy Statement/Prospectus
Table of Contents
Page | |||||
|
|||||
Summary
of Proxy Statement
|
1 | ||||
Introduction
|
4 | ||||
Revocability
of Proxies
|
4 | ||||
Persons
Making The Solicitation
|
5 | ||||
Voting
Securities
|
5 | ||||
Shareholdings
of Certain Beneficial Owners And Management
|
5 | ||||
Bank Holding
Company Reorganization And Merger Between Plumas Bank and Plumas Merger
Company
|
8 | ||||
|
General | 8 | |||
|
Recommendation of Directors | 8 | |||
|
Reasons for the Reorganization:
Benefits of the Use of Holding Company Form to the Shareholders of
Plumas Bank
|
8 | |||
|
Description
of the Reorganization and Merger between Plumas Bank and Plumas Merger
Company
|
9 | |||
|
Ratification
and Approval of the Plan of Reorganization and Merger Agreement:
Effective Date |
10 | |||
|
Federal Income Tax Consequences | 11 | |||
|
Comparison
of Plumas Bank and Plumas Bancorp:Analysis of Corporate Structures
|
12 | |||
|
Authorized and Outstanding Stock | 13 | |||
|
Voting Rights | 13 | |||
|
Dividend Rights | 14 | |||
|
Assessment of Shares | 15 | |||
|
Liquidation Rights | 15 | |||
|
Preemptive Rights | 15 | |||
|
Special
Factors Considered by the Board when Evaluating Certain Transactions
|
15 | |||
|
Supermajority
Vote Required for Certain Business Acquisitions
|
16 | |||
|
Directors | 19 | |||
|
Rights of Dissenting Shareholders of Plumas Bank | 19 | |||
|
Corporate Operation and Management | 19 | |||
Operations
Under Plumas Bancorp
|
20 | ||||
|
Organization | 20 | |||
|
Management and Directors of Plumas Bancorp | 20 | |||
|
Supervision and Regulation of Plumas Bancorp | 21 | |||
|
Indemnification of Plumas Bancorps Directors and Officers | 23 |
i
Proxy Statement/Prospectus
Table of Contents
Page | |||||
|
|||||
Plumas
Merger Company
|
25 | ||||
|
General Background | 25 | |||
|
Initial Capitalization | 25 | |||
Plumas
Bank
|
26 | ||||
|
General | 26 | |||
|
Bank Services | 26 | |||
|
Employees | 28 | |||
|
Properties | 28 | |||
|
Legal Proceedings | 29 | |||
|
Competition | 29 | |||
|
Supervision and Regulation of Plumas Bank | 30 | |||
|
Capital Ratios | 34 | |||
Selected
Financial Information
|
35 | ||||
Price
Range of Plumas Banks Common Stock
|
36 | ||||
Dividends
|
37 | ||||
Unaudited
Pro Forma Capitalization
|
38 | ||||
Financial
Statements and Related Matters
|
39 | ||||
Management
of Plumas Bank
|
40 | ||||
|
Directors and Executive Officers | 40 | |||
|
The Board of Directors and Committees | 41 | |||
|
Compensation of Directors and Executive Officers | 43 | |||
Independent
Accountants
|
50 | ||||
Shareholder
Proposals
|
50 | ||||
Certain
Transactions
|
51 | ||||
Other
Matters
|
51 | ||||
Legal
Matters
|
51 | ||||
Available
Information
|
51 | ||||
Exhibit A:
Plan of Reorganization and Merger Agreement
|
A-1 | ||||
Exhibit B:
Articles of Incorporation Article Eight
|
B-1 |
ii
Summary of Proxy Statement/Prospectus
This summary is qualified in its entirety by the more detailed information appearing elsewhere in this proxy statement/prospectus.
Plumas Bank incorporated Plumas Bancorp under California law for the purpose of becoming the holding company for Plumas Bank. Upon completion of the reorganization as described in the Plan of Reorganization and Merger Agreement dated , 2002 attached to this proxy statement/prospectus as Exhibit A, the business activities of Plumas Bancorp will initially consist solely of the operation of Plumas Bank as a wholly-owned bank subsidiary. It is possible that in the future Plumas Bancorp may acquire or commence additional businesses; however, no specific acquisitions or new business activities are currently planned. Upon completion of the reorganization, Plumas Bancorp may issue trust-preferred securities in an amount up to $6.5 million through a wholly-owned subsidiary of Plumas Bancorp to be formed.
After the reorganization, Plumas Bank will continue its current business and operations as a California state-chartered bank under its current existing name. The existing charter and bylaws of Plumas Bank will not be substantially affected by the reorganization. See Bank Holding Company Reorganization and Merger Between Plumas Bank and Plumas Merger Company.
The principal executive offices of Plumas Bank are located at 35 S. Lindan
Avenue, Quincy, California 95971, and the telephone number is (530) 283-7305.
The principal executive offices of Plumas Bancorp are located at 35 S. Lindan
Avenue, Quincy, California 95971, and the telephone number is (530) 283-7305.
Plumas Bancorp will become the holding company for
Plumas Bank. Under the plan of reorganization and
merger agreement, Plumas Bank organized Plumas
Merger Company as a wholly-owned subsidiary of
Plumas Bancorp. Plumas Bank will be merged with
Plumas Merger Company with Plumas Bank as the
surviving corporation. The shareholders of Plumas
Bank will receive shares of Plumas Bancorps common
stock on a one-for-one basis for their shares of
Plumas Banks common stock. The shareholders of
Plumas Bank will then become the sole shareholders
of Plumas Bancorp in its form as the holding
company for Plumas Bank. The reorganization is
subject to certain conditions including shareholder
and regulatory approvals. See Bank Holding
Company Reorganization and Merger Between Plumas
Bank and Plumas Merger Company Description of
the Reorganization and Merger between Plumas Bank
and Plumas Merger Company.
The reorganization will provide greater flexibility
for operations and future expansion. See Bank
Holding
1
Company Reorganization and Merger Between
Plumas Bank and Plumas Merger Company Reasons
for the Reorganization: Benefits of the Use of
Holding Company Form to the Shareholders of Plumas
Bank.
The plan of reorganization and merger agreement is
structured to qualify the reorganization as a
tax-free reorganization so that, among other
things, no gain or loss will be recognized by the
shareholders of Plumas Bank upon the exchange of
their shares of Plumas Banks common stock for
shares of Plumas Bancorps common stock.
It is anticipated that the Plumas Bancorp common
stock received by Plumas Banks shareholders in the
reorganization will be quoted on the over the
counter electronic bulletin board, however, it is
not anticipated that the shares of Plumas Bancorp
will be more marketable than Plumas Banks common
stock at present. See Price Range of Plumas
Banks Common Stock.
The directors of Plumas Bancorp are, and will be,
the current directors of Plumas Bank. The
executive officers of Plumas Bancorp are, and will
be, the current executive officers of Plumas Bank.
See Management of Plumas Bank.
Plumas Bancorp will be subject to the regulation of
the Federal Reserve Board under the Bank Holding
Company Act, as amended. See Operations Under
Plumas Bancorp Supervision and Regulation of
Plumas Bancorp.
Each shareholder of Plumas Bank will be entitled to
cast one vote for each share of common stock held
of record as of the close of business on March 22,
2002, in voting on the election of directors and
the plan of reorganization and merger agreement.
Directors and executive officers of Plumas Bank
own, in the aggregate, approximately 12.5% of
Plumas Banks common stock entitled to vote.
The ten nominees for directors receiving the most
votes will be elected as directors for the
following year. Approval of the plan of
reorganization and merger agreement requires the
affirmative vote of a majority of the outstanding
shares of Plumas Banks common stock.
California state law does not provide for the
exercise of dissenters rights in the proposed
reorganization.
2
Other Information Concerning the Meeting
The meeting will be held at the Parish Hall of St.
Johns Catholic Church located at 176 Lawrence Street,
Quincy, California on May 29, 2002 at 10:30 a.m.
For additional information, you may telephone William
E. Elliott, President of Plumas Bank, at (530)
283-7305.
3
Introduction
Management is furnishing you with this proxy statement/prospectus in connection with the solicitation of proxies for use at the annual meeting of Plumas Bank, to be held at the Parish Hall of St. Johns Catholic Church located at 176 Lawrence Street, Quincy, California on May 29, 2002 at 10:30 a.m., and at any and all adjournments of the meeting.
It is expected that Plumas Bank will mail this proxy statement/prospectus and accompanying notice and form of proxy to shareholders on or about , 2002.
At the meeting, the shareholders will elect ten directors and consider and vote on approval of the plan of reorganization and merger agreement. Under the plan of reorganization and merger agreement, Plumas Bank will become a wholly-owned subsidiary of the newly formed holding company, Plumas Bancorp, as a result of which shareholders of Plumas Bank will receive on a one-for-one basis shares of Plumas Bancorps common stock for their shares of Plumas Banks common stock. These transactions are more fully described in this proxy statement/prospectus, and in the plan of reorganization and merger agreement attached as Exhibit A.
Revocability of Proxies
A proxy for use at the meeting is enclosed. Any shareholder who executes and delivers such proxy has the right to revoke it at any time before it is exercised, by filing with the Secretary of Plumas Bank an instrument revoking it, or a duly executed proxy bearing a later date. The Secretary of Plumas Bank is Terrance J. Reeson, and any revocation should be filed with him at Plumas Bank, 35 S. Lindan Avenue, Quincy, California 95971. In addition, the powers of the proxyholders will be revoked if the person executing the proxy is present at the meeting and elects to vote in person. Subject to such revocation or suspension, the proxyholders will vote all shares represented by a properly executed proxy received in time for the meeting in accordance with the instructions on the proxy. If no instruction is specified with regard to the matter to be acted upon, the proxyholders will vote the shares represented by the proxy FOR each of the nominees for directors and FOR approval of the principal terms of the plan of reorganization and merger agreement. If any other matter is presented at the meeting, the proxyholders will vote in accordance with the recommendations of management.
4
Persons Making The Solicitation
The Board of Directors of Plumas Bank is soliciting these proxies. Plumas Bank will bear the expense of preparing, assembling, printing and mailing this proxy statement/prospectus and the material used in the solicitation of proxies for the meeting. Plumas Bank contemplates that proxies will be solicited principally through the use of the mail, but officers, directors and employees of Plumas Bank may solicit proxies personally or by telephone, without receiving special compensation for the solicitation. Although there is no formal agreement to do so, Plumas Bank will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding these proxy materials to their principals. In addition, Plumas Bank may utilize the services of individuals or companies not regularly employed by Plumas Bank in connection with the solicitation of proxies, if management of Plumas Bank determines that this is advisable.
Voting Securities
Management has fixed March 22, 2002 as the record date for purposes of determining the shareholders entitled to notice of, and to vote at, the meeting. On March 1 , 2002, there were 2,129,519 shares of Plumas Banks common stock issued and outstanding. Each holder of Plumas Banks common stock will be entitled to one vote for each share of Plumas Banks common stock held of record on the books of Plumas Bank as of the record date. In connection with the election of directors, shares may be voted cumulatively if a shareholder present at the meeting gives notice at the meeting, prior to the voting for election of directors, of his or her intention to vote cumulatively. If any shareholder of Plumas Bank gives that notice, then all shareholders eligible to vote will be entitled to cumulate their shares in voting for election of directors. Cumulative voting allows a shareholder to cast a number of votes equal to the number of shares held in his or her name as of the record date, multiplied by the number of directors to be elected. These votes may be cast for any one nominee, or may be distributed among as many nominees as the shareholder sees fit. If cumulative voting is declared at the meeting, votes represented by proxies delivered pursuant to this proxy statement may be cumulated in the discretion of the proxyholders, in accordance with managements recommendation. The holders of not less than a majority of the outstanding shares of Plumas Banks common stock must vote in favor in order to approve the plan of reorganization and merger agreement.
The effect of broker nonvotes is that such votes are not counted as being voted; however such votes are counted for purposes of determining a quorum. The effect of a vote of abstention on any matter is that such vote is not counted as a vote for or against the matter, but is counted as an abstention.
Shareholdings of Certain Beneficial Owners And Management
Management of Plumas Bank knows of no person who owns, beneficially or of record, either individually or together with associates, 5 percent or more of the outstanding shares of Plumas Banks common stock, except as set forth in the table below. The following table sets forth, as of December 31, 2001, the number and percentage of shares of Plumas Banks outstanding common stock beneficially owned, directly or indirectly, by each of Plumas Banks directors, named executive officers and principal shareholders and by the directors and executive officers of Plumas Bank as a group. The shares beneficially owned are determined under the Securities and Exchange Commission Rules, and do not necessarily indicate ownership for any
5
other purpose. In general, beneficial ownership includes shares over
which the director, named executive officer or principal shareholder has sole
or shared voting or investment power and shares which such person has the right
to acquire within 60 days of March 2, 2002. Unless otherwise indicated, the
persons listed below have sole voting and investment powers of the shares
beneficially owned or acquirable by exercise of stock options. Management is
not aware of any arrangements, which may result in a change of control of
Plumas Bank other than the proposed reorganization.
Amount and Nature of
Beneficial Owner
Beneficial Ownership^
Percent of Class^
Irrevocable Trust
109,021
5.1
211,434
9.9
48,983
(1)
2.3
28,377
(2)
1.3
8,932
(3)
*
1,000
*
32,253
(4)
1.5
27,952
(5)
1.3
12,062
(6)
*
19,337
(7)
*
2,182
(8)
*
34,511
(9)
1.6
33,608
(10)
1.6
5,614
*
15,714
(11)
*
270,525
(12)
12.5
* | Less than one percent | |
^ | Includes 28,278 shares subject to options held by the directors and executive officers that were exercisable within 60 days of March 22, 2002. These are treated as issued and outstanding for the purpose of computing the percentage of each director, named executive officer and the directors and officers as a group, but not for the purpose of computing the percentage of class owned by any other person, including principal shareholders. | |
(1) | Mr. Elliott has shared voting and investment powers as to 36,638 shares and sole investing powers but no voting powers as to 4,569 shares. He also has 7,776 shares acquirable by exercise of stock options. | |
(2) | Mr. Biddle has shared voting and investment powers at to 19,633 shares, sole investing powers but no voting powers as to 2,696 shares and sole voting and investment powers as to 2,160 shares. He also has 3,888 shares acquirable by exercise of stock options. |
6
(3) | Mr. Irvine has sole investing powers but no voting powers as to 4,889 shares, shared voting and investment powers as to 85 shares and sole voting and investment powers as to 70 shares. He also has 3,888 shares acquirable by exercise of stock options. | |
(4) | Mr. Kerr has shared voting and investment powers as to 30,957 shares. He also has 1,296 shares acquirable by exercise of stock options. | |
(5) | Mr. Blickenstaff has shared voting and investment powers as to 26,656 shares. He also has 1,296 shares acquirable by exercise of stock options. | |
(6) | Mr. Fletcher has shared voting and investment powers as to 10,766 shares. He also has 1,296 shares acquirable by exercise of stock options. | |
(7) | Mr. Grohs has shared voting and investment powers as to 18,041 shares. He also has 1,296 shares acquirable by exercise of stock options. | |
(8) | Ms. McArthur has shared voting and investment powers at to 1,282 shares and sole investment powers but no voting powers as to 400 shares. She also has 500 shares acquirable by exercise of stock options. | |
(9) | Mr. Reeson has sole voting and investment powers as to 31,193 shares and sole voting powers but no investment powers as to 2,022 shares. He also has 1,296 shares acquirable by exercise of stock options. | |
(10) | Mr. Sphar has shared voting and investment powers as to 32,312 shares. He also has 1,296 shares acquirable by exercise of stock options. | |
(11) | Mr. West has sole voting powers but no investment powers as to 7,464 shares, shared voting and investment powers as to 3,000 shares, sole voting and investment powers as to 1,500 shares and sole investment powers but no voting powers as to 300 shares. He also has 3,450 shares acquirable by exercise of stock options. |
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Plumas Banks directors and certain executive officers and persons who own more than ten percent of a registered class of Plumas Banks equity securities (collectively, the Reporting Persons), to file reports of ownership and changes in ownership with the Federal Deposit Insurance Corporation. The Reporting Persons are required by the Federal Deposit Insurance Corporations regulation to furnish Plumas Bank with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or written representations from the Reporting Persons that no Forms F-8A were required for those persons, Plumas Bank believes that, during 2001 the Reporting Persons complied with all filing requirements applicable to them.
7
Bank Holding Company Reorganization And Merger
Between Plumas Bank and Plumas Merger Company
General
Plumas Bank is asking its shareholders to consider and approve the plan of reorganization and merger agreement. Under the plan of reorganization and merger agreement, the business of Plumas Bank will be conducted as a wholly-owned subsidiary of Plumas Bancorp. If the plan of reorganization and merger agreement is approved, the current shareholders of Plumas Bank will exchange their shares of Plumas Banks common stock for shares of Plumas Bancorps common stock on a one-for-one basis. Under accounting principles generally accepted in the United States of America, the transaction, as proposed, does not meet the definition of a business combination and is not accounted for under the purchase method. The transaction represents an exchange of shares between entities under common control and is accounted for as a reorganization. Under the reorganization, the assets and liabilities of the Bank shall be recognized at their carrying amounts in the accounts of Plumas Bancorp at the date of transfer, and the consolidated financial statements of Plumas Bancorp will reflect the historical operations of the Bank prior to the reorganization.
The Board of Directors of Plumas Bank approved the plan of reorganization and merger agreement on February 6, 2002, and directed that the plan of reorganization and merger agreement be submitted to the shareholders of Plumas Bank. The Board of Directors of Plumas Bank recommends that the shareholders approve the plan of reorganization and merger agreement.
The detailed terms and conditions of the reorganization are set forth in the plan of reorganization and merger agreement attached to this proxy statement/prospectus as Exhibit A. The statements made in this proxy statement/prospectus regarding the plan of reorganization and merger agreement are qualified in their entirety by the more detailed information appearing in the plan of reorganization and merger agreement.
Recommendation of Directors
The Board of Directors of Plumas Bank has approved the terms and conditions of the plan of reorganization and merger agreement. The Board of Directors of Plumas Bank furthermore recommends that the shareholders of Plumas Bank approve the plan of reorganization and merger agreement.
Reasons for the Reorganization: Benefits of the Use of Holding
Company Form to the Shareholders of Plumas Bank
As stated above, the Board of Directors of Plumas Bank has approved the plan of reorganization and merger agreement, believes that the reorganization is in the best interests of Plumas Bank and its shareholders, and recommends that the shareholders vote in favor of approval of the plan of reorganization and merger agreement.
Management and the Board of Directors of Plumas Bank believe that the formation of a bank holding company, under which Plumas Bank will operate, will result in a more flexible entity for operations and growth. The proposed reorganization will result in additional regulatory
8
requirements and additional costs and overhead. The additional regulatory requirements include regulatory oversight by the Securities and Exchange Commission and the Federal Reserve Board. The annual cost for the additional costs and overhead in connection with the proposed holding company is estimated to be $25,000.
Management expects that Plumas Bancorp will facilitate growth within the banking field and in areas related to banking, either by the creation of new subsidiaries or the acquisition of existing companies and banks. For example, in the event an opportunity for the acquisition of another bank were to develop, it might be desirable to maintain the separate existence of the other bank rather than merge it into Plumas Bank. Neither Plumas Bank nor Plumas Bancorp is currently considering any acquisitions.
The bank holding company structure will also provide a framework for restructuring certain of Plumas Banks existing departments or subsidiaries into separate operating subsidiaries of Plumas Bancorp, although no plans for restructuring are being considered at this time. Upon completion of the reorganization, Plumas Bancorp through a wholly-owned trust subsidiary may issue up to $6.5 million in trust-preferred securities. The proceeds from the issuance of any trust preferred securities would be used to provide adequate regulatory capital for growth in Plumas Banks deposits and could allow for a stock repurchase plan.
Many major banking institutions in the United States and in California have reorganized into bank holding companies and Plumas Banks Board of Directors believes that the reorganization is desirable for Plumas Bank to maintain and enhance its competitive position.
Description of the Reorganization and Merger
between Plumas Bank and Plumas Merger Company
At the direction of the Board of Directors of Plumas Bank, management incorporated Plumas Bancorp for the purpose of becoming a bank holding company under the laws of the State of California. Plumas Merger Company, which is wholly-owned by Plumas Bancorp, was also organized as a California corporation. The reorganization will be accomplished by merging Plumas Bank with Plumas Merger Company. Upon completion of the reorganization, Plumas Bank will be the surviving entity and the name will remain Plumas Bank. Upon the completion date of the reorganization, the shares of capital stock of the respective parties to the plan of reorganization and merger agreement will be converted as follows:
| Each share of Plumas Banks outstanding common stock will be converted into one share of Plumas Bancorps common stock. Shareholders of Plumas Bank will be entitled to exchange their present share certificates for new certificates evidencing shares of Plumas Bancorps common stock. Until the certificates are exchanged, the certificates for shares of Plumas Banks common stock after the reorganization will be deemed to represent shares of Plumas Bancorps common stock. Options to purchase shares of Plumas Banks common stock will be assumed by Plumas Bancorp with the same terms and conditions and for the same number of shares of Plumas Bancorps common stock. | |
| The shares of common stock of Plumas Merger Company outstanding immediately prior to the reorganization will be converted into an equal number of shares of the surviving bank and be owned by Plumas Bancorp. |
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| The shareholders of Plumas Bank will become shareholders of Plumas Bancorp. There are no anticipated changes in Plumas Banks shareholders relative equity ownership interest in Plumas Banks assets. As shareholders of Plumas Bancorp, Plumas Banks shareholders will have essentially the same rights to govern that corporations activities as they have with respect to Plumas Bank. However, as shareholders of Plumas Bancorp, they will not be entitled to vote on matters requiring the approval of Plumas Banks shareholders, as Plumas Bancorp will own 100 percent of Plumas Bank. Shareholders of Plumas Bancorp will be entitled to vote on those matters affecting Plumas Bancorp. A discussion of those rights is contained in the section entitled, Bank Holding Company Reorganization and Merger Between Plumas Bank and Plumas Merger Company Comparison of Plumas Bank and Plumas Bancorp: Analysis of Corporate Structures. | |
| Plumas Bancorp will adopt the Plumas Bank 2001 Stock Option Plan, which will automatically, and without further action on the part of the shareholders, become the stock option plan of Plumas Bancorp. All options previously granted will become an equal number of options to purchase shares of Plumas Bancorp instead of shares of Plumas Bank. The Board of Directors of Plumas Bancorp may grant further options to purchase Plumas Bancorp common stock under the stock option plan, in accordance with the terms of the Plumas Bank 2001 Stock Option Plan. |
Upon the completion of the reorganization, the existing directors of
Plumas Bank will serve as the directors of the surviving bank. The surviving
bank will operate under the charter of Plumas Bank. The following ten persons
who currently serve as directors of Plumas Bank, are expected to serve as
directors of the surviving bank after the reorganization:
Jerry V. Kehr
William E. Elliott
Alvin G. Blickenstaff
Gerald W. Fletcher
Arthur C. Grohs
Christine McArthur
Terrance J. Reeson
Walter Sphar
Thomas Watson
Daniel E. West
Ratification and Approval of the Plan of Reorganization
and Merger Agreement: Effective Date
Approvals of applications in connection with the proposed reorganization must be obtained from the Federal Reserve, the FDIC, and the California Department of Financial Institutions. Applications for the necessary approvals have been made, and are now pending before those regulatory agencies. If any of the above regulatory agencies should fail to give the required approval for this transaction within a reasonable time, the Board of Directors of Plumas Bank reserves the right, in its sole discretion, to terminate and cancel the plan of reorganization and merger agreement. It is presently contemplated that the completion date of the reorganization will be in the second or third quarter of 2002.
Completion of the reorganization between Plumas Bank and Plumas Merger Company is conditioned upon obtaining the required shareholder and regulatory approvals. Approval of the reorganization by Plumas Banks shareholders can only be obtained if the affirmative vote of the holders of not less than a majority of the outstanding shares of Plumas Banks common stock is
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obtained. The directors of Plumas Bank, Plumas Merger Company and Plumas Bancorp have approved the plan of reorganization and merger agreement. However, if any action, suit, or proceeding should be threatened or instituted with respect to the proposed reorganization, the Board of Directors of Plumas Bank reserves the right, in its sole discretion, to terminate the transaction at any time before the effective date.
If the shareholders of Plumas Bank should fail to approve the plan of reorganization and merger agreement, or if the transaction is otherwise terminated as provided above, then the business of Plumas Bank shall continue to operate under the ownership of its existing shareholders as it has prior to the adoption of the plan of reorganization and merger agreement.
It is estimated at this time that the total expenses of the reorganization are approximately $35,000.00, and these expenses will be borne appropriately by the respective parties.
Should the plan of reorganization and merger agreement be terminated or canceled for any of the reasons set forth above or in the attached plan of reorganization and merger agreement, such termination or cancellation will not result in any liability on the part of Plumas Bank, Plumas Bancorp, or any of their respective directors, officers, employees, agents or shareholders.
Federal Income Tax Consequences
The plan of reorganization and merger agreement has been structured to qualify the reorganization as a tax free reorganization under Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended. The Board of Directors of Plumas Bank has reserved the right and intends to terminate the plan of reorganization and merger agreement unless a satisfactory opinion regarding the nontaxability of the proposed transaction is received from either tax counsel or Plumas Banks accountants.
If the reorganization is treated as a tax-free reorganization, it will have the following federal income tax consequences:
| No gain or loss will be recognized by Plumas Bank or any of the other parties to the reorganization as a result of the reorganization. | |
| No gain or loss will be recognized by the shareholders of Plumas Bank upon the exchange of their shares of Plumas Banks common stock solely for shares of Plumas Bancorps common stock. | |
| The basis and holding periods of the assets exchanged between the parties to the reorganization shall remain the same as those prior to the reorganization. | |
| The basis of the shares of Plumas Bancorps common stock to be received by shareholders of Plumas Bank will be the same as the basis of the shares of Plumas Banks common stock surrendered in exchange for the shares. | |
| The holding period of the shares of Plumas Bancorps common stock to be received by shareholders of Plumas Bank will include the holding period of the shares of Plumas Banks common stock surrendered in exchange for the shares, provided that such stock is held as a capital asset on the date of the completion of the reorganization. |
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Management cannot advise individual shareholders and prospective
shareholders of the proper tax consequences or suggest the methods of reporting
the reorganization. Each shareholder is advised to contact his or her
accountant or tax counsel with respect to the reorganization and the means of
reporting the transaction as well as regarding the state and local tax
consequences, which may or may not parallel the federal income tax
consequences.
Comparison of Plumas Bank and Plumas Bancorp:
The following chart constitutes a summarization of a comparison between
Plumas Bank and Plumas Bancorp. Reference should be made to the detailed
explanations included in this proxy statement/prospectus, and this summary is
qualified in its entirety by those detailed explanations.
Analysis of Corporate Structures
Plumas Bank
Plumas Bancorp
Item
Stock
Stock
Authorized and
Outstanding
7,464,960 shares of
common stock, no par
value, with 2,129,519
shares outstanding as of
March 1, 2002.
1,000,000 shares of
preferred stock, with no
shares outstanding as of
March 1, 2002.
10,000,000 shares of common
stock, no par value; total
shares to be outstanding
immediately prior to the
reorganization is 100.
10,000,000 shares of preferred
stock; total shares to be
outstanding prior to the
reorganization is 0.
Voting Rights
One vote per share with
cumulative voting in the
election of directors if
the requirements for
cumulative voting are
satisfied.
One vote per share with
cumulative voting in the
election of directors if the
requirements for cumulative
voting are satisfied.
Dividend Rights
As declared by the Board
of Directors subject to
the laws in the
California Banking Law
and applicable federal
law.
As declared by the Board of
Directors subject to the laws
in the California General
Corporation Law and applicable
federal law.
Assessment
Nonassessable.
Nonassessable.
Liquidation Rights
Pro rata after payment
of debts.
Pro rata after payment of debts.
Redemption
Plumas Bank may redeem
its shares under
restrictive conditions
of the California
Financial Code.
Plumas Bancorp may redeem its
shares under restrictive
conditions of the California
General Corporation Law.
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Plumas Bank
Plumas Bancorp
Item
Stock
Stock
Preemptive Rights
None.
None.
Supermajority
Voting Requirement
on Certain Business
Combinations
None.
Two-thirds vote required for
certain business combinations,
except as expressly provided.
Number of Directors
Fixed in accordance with
the Bylaws.
Fixed in accordance with the
Bylaws.
Authorized and Outstanding Stock
Plumas Bank currently has an authorized capitalization of 7,464,960 shares of common stock, no par value and 1,000,000 shares of preferred stock. Of these authorized capital shares as of March 1, 2002, 2,129,519 shares of Plumas Banks common stock were issued and outstanding, no shares of preferred stock were issued and outstanding and 528,184 shares of Plumas Banks common stock were reserved for issuance upon exercise of options under Plumas Banks stock option plans.
Plumas Bancorp has an authorized capitalization of 10,000,000 shares of common stock, no par value and 10,000,000 shares of preferred stock. Of these authorized capital shares as of March 1, 2002, 100 shares of Plumas Bancorps common stock were issued and outstanding and no shares of preferred stock were issued and outstanding.
Voting Rights
All voting rights are vested in the holders of common stock of Plumas Bank and Plumas Bancorp, each share being entitled to one vote, except with respect to the election of directors, as described below.
For the election of directors, California law provides that every shareholder entitled to vote may cumulate votes for candidates in nomination and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which that shareholders shares are entitled, or distribute the shareholders votes on the same principal among any or all of the candidates, as the shareholder thinks fit. The candidates receiving the highest number of votes, up to the number of directors to be elected, shall be elected. However, a shareholder may cumulate votes only for a candidate or candidates whose names have been placed in nomination prior to the voting, and only if the shareholder has given notice at the meeting prior to the voting at such meeting of his or her intention to cumulate his or her votes. If any one shareholder has given such notice, all shareholders may cumulate votes for candidates in nomination. The shareholders of Plumas Bank now have cumulative voting rights, and the shareholders of Plumas Bancorp will have the same voting rights, as described above.
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Dividend Rights
Holders of Plumas Bank common stock are entitled to dividends legally available therefore, when and as declared by Plumas Banks Board of Directors. The California Financial Code provides that a bank may not make cash distribution to its shareholders in an amount, which exceeds the lesser of:
| the retained earnings, or | |
| the net income of the bank for its last three fiscal years, less the amount of any distributions made by the bank to its shareholders during such period. |
However, a bank may, with the approval of the Commissioner of Financial Institutions, make a distribution to its shareholders in an amount not exceeding the greatest of:
| the retained earnings of the bank, | |
| the net income of the bank for its last fiscal year, or | |
| the net income of the bank for its current fiscal year. |
If the Commissioner of Financial Institutions finds that the shareholders equity of a bank is not adequate or that the payment of a dividend would be unsafe or unsound for the bank, the Commissioner of Financial Institutions may order the bank not to pay any dividend to the shareholders.
In addition, under the Financial Institutions Supervisory Act of 1966, as amended, the FDIC also has the authority and general enforcement powers to prohibit a bank from engaging in practices, which the FDIC considers to be unsafe or unsound. It is possible, depending upon the financial condition of Plumas Bank and other factors, that the FDIC could assert that the payment of dividends or other payments might under some circumstances be such an unsafe or unsound practice and thereby prohibit such payment. The Federal Deposit Insurance Corporation Improvement Act of 1991 further prohibits a bank from paying a dividend if the dividend payment would result in the bank failing to meet any of its minimum capital requirements.
The shareholders of Plumas Bancorp will be entitled to receive dividends when and as declared by its Board of Directors, out of funds legally available for the payment of dividends, as provided in the California General Corporation Law. The California General Corporation Law provides that a corporation may make a distribution to its shareholders if retained earnings immediately prior to the dividend payout at least equal the amount of the proposed distribution. In the event that sufficient retained earnings are not available for the proposed distribution, a corporation may, nevertheless, make a distribution, if it meets both the quantitative solvency and the liquidity tests. In general, the quantitative solvency test requires that the sum of the assets of the corporation equal at least 1-1/4 times its liabilities. The liquidity test generally requires that a corporation have current assets at least equal to current liabilities, or, if the average of the earnings of the corporation before taxes on income and before interest expenses for the two preceding fiscal years was less than the average of the interest expense of the corporation for such fiscal years, then current assets must equal at least 1-1/4 times current
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liabilities. In certain circumstances, Plumas Bancorp may be required to obtain the prior approval of the Federal Reserve Board to make capital distributions to shareholders of Plumas Bancorp.
Assessment of Shares
Shares of Plumas Bank are not subject to assessment and shares of Plumas Bancorp also will not be subject to assessment.
Liquidation Rights
The holders of Plumas Bank common stock are entitled to share equally in Plumas Banks assets legally available for distribution in the event of liquidation or dissolution. Similarly, holders of Plumas Bancorp common stock will have a pro rata right to participate in Plumas Bancorps assets legally available for distribution in the event of liquidation or dissolution.
Preemptive Rights
The holders of Plumas Banks common stock do not have preemptive rights to subscribe to any additional shares of Plumas Banks common stock being issued. The holders of Plumas Bancorps common stock also will not have preemptive rights to subscribe to any additional shares of Plumas Bancorps common stock being issued. Therefore, shares of Plumas Bancorps common stock or other securities may be offered in the future to the investing public or to shareholders at the discretion of Plumas Bancorps Board of Directors.
Special Factors Considered by the Board when Evaluating Certain Transactions
The Articles of Incorporation of Plumas Bank and Plumas Bancorp each contain an article that establishes criteria to be applied by the board of directors of each entity in evaluating a tender or exchange offer or acquisition proposal. Factors which are to be considered include the following: (i) the adequacy of the offered consideration in relation to the current market price of the entitys stock and in relation to the historical and present operating results and financial condition of the entity; (ii) whether the shareholders might obtain a more favorable price at the time of the proposed tender offer or in the future from other offerors and whether the entitys continued existence as an independent entity would affect the future value of the entitys stock; (iii) the impact the offer would have on the employees, clients and customers of the entity and the communities which it serves; (iv) the present and historical financial position of the offeror, its reputation in the communities which it serves and the social and/or economic effect which the reputation and practices of the offeror or its management and affiliates would have upon the employees and customers of the entity and the communities which the entity serves; (v) an analysis of the value of the securities (if any) offered in exchange for the entitys securities; and (vi) the legal and regulatory issues presented by the offer. Upon consideration of these factors, the board of directors of Plumas Bank or Plumas Bancorp, as applicable, may oppose, recommend or remain neutral with respect to a tender offer or other acquisition proposal.
These article provisions could result in the board of directors of Plumas Bank or Plumas Bancorp, as applicable, opposing a proposed acquisition of control that some of the shareholders
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may find financially attractive. These article provisions may also make obtaining board approval of a proposed acquisition of control more difficult, which may delay or discourage acquisition attempts and as a result may have the effect of maintaining the tenure of the incumbent management.
These article provisions may also have the effect of deterring shareholders who disagree with the response of the board of directors to an acquisition attempt from initiating litigation. Such litigation, which may be costly, time-consuming and disruptive to Plumas Bank or Plumas Bancorp, as applicable, could involve allegations that the board of directors breached an obligation to the shareholders by not limiting its evaluation of a proposed acquisition to the then-current market price of the entitys stock.
Supermajority Vote Required for Certain Business Acquisitions
The Articles of Incorporation of Plumas Bank and Plumas Bancorp each contain an article that raises the level required for shareholder approval of certain business combinations from a majority to at least two-thirds of the outstanding voting stock of the respective entity. These supermajority article provisions would exclude from the higher two-thirds level of shareholder approval for a covered business combination if such combination is (i) approved by the directors of the entity who are not associated with the shareholder proposing such transaction, (ii) the combination includes fair price provisions providing shareholders a fair price for the entitys stock, or (iii) if a state regulatory authority having jurisdiction under the circumstances shall have determined specifically, and not by implication, that the proposed business combination is fair to the shareholders. A copy of the Article Eight providing for the supermajority article provisions is included as Exhibit B.
These supermajority article provisions may make certain business combinations opposed by the incumbent board of directors more difficult to effect. These supermajority article provisions may be altered, amended or repealed only by holders of two-thirds or more of the outstanding shares. Pursuant to the California Corporations Code, these supermajority article provisions must be reapproved by a two-thirds shareholder vote every two years. The supermajority article provisions of Plumas Bank have not been reapproved within the last two years and are no longer effective for Plumas Bank. If the shareholders approve the reorganization, the shareholders will also be approving the supermajority article provisions for Plumas Bancorp.
In addition to any affirmative vote required by law or by the articles of incorporation, except as otherwise expressly provided, these supermajority article provisions require that no business combination as defined below be consummated unless such consummation shall have been approved by the affirmative vote of the holders of at least two-thirds of the combined voting power of the then outstanding shares of voting stock of the entity voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law, in the articles of incorporation or otherwise.
A business combination is defined to include the following transactions (i) a merger or consolidation of Plumas Bancorp or any subsidiary with an interested shareholder (or a person who is, or would thereby be, an affiliate of an interested shareholder); (ii) the sale, lease,
16
exchange, mortgage, pledge, transfer, or other disposition by Plumas Bancorp or a subsidiary of assets valued in excess of one million dollars if an interested shareholder is a party to the transaction; (iii) the issuance of securities of Plumas Bancorp or of a subsidiary to an interested shareholder (other than as part of a stock split or dividend in which all shareholders are treated equally); or (iv) any reclassification of securities, recapitalization of Plumas Bancorp, merger or consolidation of Plumas Bancorp with a subsidiary, or other transaction which has the effect, directly or indirectly, of increasing the proportion of the outstanding shares of any class of any equity securities of Plumas Bancorp or a subsidiary beneficially owned by an interested shareholder or as a result of which the shareholders of Plumas Bancorp would cease to be shareholders of a California corporation which has in its articles of incorporation provisions comparable to these supermajority article provisions.
An interested shareholder is defined as anyone (other than Plumas Bancorp or any subsidiary or employee benefit plan of Plumas Bancorp or any subsidiary or any person who was a director of Plumas Bancorp on February 6, 2002) who is the beneficial owner of at least 5% of the voting stock of the entity or who is an affiliate or associate of any such person or who is a member of a group which is the beneficial owner of at least 5% of the common stock of Plumas Bancorp on or after February 6, 2002.
A business combination involving the payment of cash or other consideration to the Plumas Bancorp shareholders for all of their shares of common stock will not require a two-thirds shareholder vote if the payments satisfy certain requirements, described below and certain other requirements are met. In all cases the business combination must provide for the payment to holders of common stock of a consideration having a fair market value on the date the business combination is consummated at least equal in value to the highest of the following: (i) the average fair market value per share of Plumas Bancorp common stock during the 90-day period prior to the first public announcement of the business combination or (ii) the fair market value per share of Plumas Bancorp common stock on the last trading day before the announcement date. In addition, if the interested shareholder became such within 5 years of the announcement date, the required price would also have to be higher than the highest per share price paid by the interested shareholder (before or after becoming an interested shareholder) in acquiring any shares of common stock during such period within 5 years prior to the announcement date. The fair market value of the shares will be adjusted to reflect any stock dividend, stock split, recapitalization, reverse stock split, reorganization or similar event affecting the number of outstanding common shares. Payment to shareholders of the required amount of consideration would be required to be made in cash or in the same form as was previously paid by the interested shareholder involved in the business combination to acquire any shares of voting stock beneficially owned by the interested shareholder. If the interested shareholder beneficially owns shares of voting stock, which were acquired with different forms of consideration, then shareholders could be paid either in cash or with the form of noncash consideration used by the interested shareholder to acquire the largest number of shares of voting stock beneficially owned by it.
Under these supermajority article provisions, the fair market value of any noncash consideration to be received by holders of shares of common stock in a Business Combination must be determined as of the consummation date. These supermajority article provisions use the consummation date as the date for determining the fair market value of any noncash consideration to be paid in a business combination in order to assure that the interested
17
shareholder, and not the other shareholders, would bear the risk of a decline in the value of such consideration prior to the receipt of such consideration by the other shareholders.
In addition, under these supermajority article provisions, unless the business combination is determined to be fair by a state regulatory authority having jurisdiction over Plumas Bancorp or approved by a majority of continuing directors as defined below, the business combination would require approval by a two-thirds shareholder vote, even if it satisfied the fair market value requirements, in each of the situations (i) if Plumas Bancorp, after the interested shareholder became an interested shareholder, fails to pay any required dividends on any outstanding shares of preferred stock or reduces the rate of dividends last paid on its common stock, unless such failure or reduction is approved by a majority of the continuing directors, (ii) if the interested shareholder received at any time after it became an interested shareholder, whether in connection with the proposed business combination or otherwise, the benefit, directly or indirectly, of any loan or other financial assistance or tax advantages provided by, or as a result of its equity position in Plumas Bancorp, other than proportionately as a shareholder on a basis generally available to all shareholders, (iii) if a proxy or information statement describing the proposed business combination and complying with the disclosure and other requirements of the rules promulgated under the Securities Exchange Act of 1934 has not been mailed to all shareholders of Plumas Bancorp at least 60 days prior to the consummation of a business combination, whether or not such proxy or information statement is required to be mailed, which statement includes the recommendation, if any, as to the advisability or inadvisability of the proposed business combination of the continuing directors then in office, if any.
A continuing director with regard to a business combination is defined as any member of the board who is not an affiliate or associate or, and not a nominee of, an interested shareholder involved in the business combination and who (i) was a director before the interested shareholder became an interested shareholder or (ii) is a successor of such a director and was nominated or elected as a director by a majority of the continuing directors on the board at the time of his nomination or election.
Tender offers or other non-open market acquisitions of stock are usually made at prices above the prevailing market price of an entitys stock. In addition, acquisitions of stock by persons attempting to acquire control through market purchases may cause the market price of the stock to reach levels that are higher than would otherwise be the case. These supermajority article provisions may discourage such purchases and may therefore deprive some holders of Plumas Bancorps stock of an opportunity to sell their shares at a higher market price. Because the higher percentage requirements may apply for shareholder approval of any subsequent business combination and the possibility of having to pay a higher price to other shareholders in such a business combination, it may become more costly for a purchaser to acquire control of Plumas Bancorp. The supermajority article provisions may therefore decrease the likelihood that an offer will be made for less than two-thirds of the voting stock and, as a result, may adversely affect those shareholders who would desire to participate in such an offer. A potential purchaser of stock seeking to obtain control may also be discouraged from purchasing stock because a two-thirds shareholder vote would be required in order to change or eliminate these provisions.
In certain cases, the fair market value requirements, while providing objective pricing criteria, could be arbitrary and not indicative of value. Another effect of the supermajority article provisions would be to give veto power to the holders of a minority of the voting stock with
18
respect to a business combination that is opposed by the board, but which holders of a majority (but less than two-thirds) of the stock may believe to be desirable and beneficial. The supermajority article provisions may tend to insulate incumbent management against the possibility of removal in the event of a takeover bid since only the continuing directors will have the authority to eliminate the 66-2/3% shareholder vote required for business combinations (unless the fair value and procedural requirements are satisfied or the requisite regulatory fairness determination has been made).
Directors
Plumas Banks Bylaws authorize its Board of Directors or shareholders to designate the number of directors at any number from 8 to 15 with certain limitations, and Plumas Bancorps Bylaws authorize its Board of Directors or shareholders to designate the number of directors at any number from 8 to 15.
Rights of Dissenting Shareholders of Plumas Bank
California state law does not provide for exercise of dissenters rights in the context of the reorganization.
Corporate Operation and Management
The Articles of Incorporation and Bylaws of Plumas Bank and of Plumas Bancorp are substantially similar in all material provisions, except with respect to provisions in Plumas Banks Articles of Incorporation and Bylaws required by California Financial Code and applicable only to banks.
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Operations Under Plumas Bancorp
Organization
Plumas Bancorp was organized and incorporated under the laws of the State of California on January 17, 2002, at the direction of the Board of Directors of Plumas Bank for the purpose of becoming a bank holding company to acquire all of the outstanding capital stock of Plumas Bank. The principal location of Plumas Bancorp and its operations will be at the administrative offices of Plumas Bank located at 35 S. Lindan Avenue, Quincy, California 95971.
In order to effect the reorganization and to initially provide Plumas
Bancorp with working capital, Walter Sphar, a director of Plumas Bank and also
of Plumas Bancorp, loaned $35,000 to Plumas Bancorp, payable with interest. In
addition, Mr. William E. Elliott, President and CEO and a director of Plumas
Bank and Plumas Bancorp has purchased 100 shares of the common stock of Plumas
Bancorp at an aggregate purchase price of $150. Upon the completion of the
reorganization, the loan will be repaid and the 100 shares of Plumas Bancorps
common stock will be repurchased and canceled by Plumas Bancorp for the sum of
$150. Presently, 100 shares of Plumas Bancorps common stock are outstanding,
and Plumas Bancorp will have no additional stock issued until after the
shareholders of Plumas Bank have approved the plan of reorganization and merger
agreement and the reorganization is completed.
Management and Directors of Plumas Bancorp
The present Board of Directors of Plumas Bancorp is composed of the ten
current directors of Plumas Bank, and consists of the following individuals:
Jerry V. Kehr
William E. Elliott
Alvin G. Blickenstaff
Gerald W. Fletcher
Arthur C. Grohs
Christine McArthur
Terrance J. Reeson
Walter Sphar
Thomas Watson
Daniel E. West
Upon completion of the reorganization, the business of Plumas Bank will be conducted as a subsidiary of Plumas Bancorp, and will be carried on with the same directors, officers, personnel, property and name as before the transaction. Plumas Bancorp will not pay its executive officers any amounts in addition to the amounts they receive as executive officers of Plumas Bank.
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The following directors and officers of Plumas Bank have agreed to serve
as the initial directors and officers of Plumas Bancorp:
Position with
Position with
Name
Plumas Bank
Plumas Bancorp
Jerry V. Kehr
Chairman
Chairman
William E. Elliott
President & CEO
President & CEO
Alvin G. Blickenstaff
Director
Director
Gerald W. Fletcher
Director
Director
Arthur C. Grohs
Director
Director
Christine McArthur
Director
Director
Terrance J. Reeson
Director & Secretary
Director & Secretary
Walter Sphar
Director
Director
Thomas Watson
Director
Director
Daniel E. West
Director
Director
Douglas Biddle
Executive VP & CAO
Executive VP & CFO
The business of Plumas Bank will be carried on after the reorganization, with the same officers, employees, properties and directors.
Supervision and Regulation of Plumas Bancorp
Upon completion of the reorganization, Plumas Bancorp will become a bank holding company within the meaning of the Bank Holding Company Act, and will become subject to the supervision and regulation of the Federal Reserve Board. A notice application for prior approval to become a bank holding company has previously been filed by Plumas Bancorp with the Federal Reserve Board.
As a bank holding company, Plumas Bancorp will be required to register with the Federal Reserve Board within 180 days after the reorganization is completed, and, thereafter, to file annual reports and other information concerning its business operations and those of its subsidiaries as the Federal Reserve Board may require. The Federal Reserve Board also has the authority to examine Plumas Bancorp and each of its respective subsidiaries, as well as any arrangements between Plumas Bancorp and any of its respective subsidiaries, with the cost of any such examination to be borne by Plumas Bancorp.
In the future, Plumas Bancorp will be required to obtain the prior approval of the Federal Reserve Board before it may acquire all or substantially all of the assets of any bank, or ownership or control of voting securities of any bank if, after giving effect to such acquisition, Plumas Bancorp would own or control more than 5 percent of the voting shares of such bank.
A bank holding company and its subsidiaries are also prohibited from engaging in certain tie-in arrangements in connection with extensions of credit, leases, sales, or the furnishing of services. For example, Plumas Bank will generally be prohibited from extending credit to a customer on the condition that the customer also obtain other services furnished by Plumas Bancorp, or any of its subsidiaries, or on the condition that the customer promise not to obtain financial services from a competitor. Plumas Bancorp and its subsidiaries will also be subject to
21
certain restrictions with respect to engaging in the underwriting, public sale and distribution of securities.
Plumas Bancorp and any subsidiaries, which it may acquire or organize after the reorganization, will be deemed affiliates of Plumas Bank within the meaning of the Federal Reserve Act. Loans by Plumas Bank to affiliates, investments by Plumas Bank in affiliates stock, and taking affiliates stock by Plumas Bank as collateral for loans to any borrower will be limited to 10 percent of Plumas Banks capital, in the case of each affiliate, and 20 percent of Plumas Banks capital, in the case of all affiliates. In addition, these transactions must be on terms and conditions that are consistent with safe and sound banking practices and, in particular, a bank and its subsidiaries generally may not purchase from an affiliate a low-quality asset, as that term is defined in the Federal Reserve Act. Such restrictions also prevent a bank holding company and its other affiliates from borrowing from a banking subsidiary of the bank holding company unless the loans are secured by marketable collateral of designated amounts.
A bank holding company is also prohibited from itself engaging in or acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company engaged in nonbanking activities. One of the principal exceptions to this prohibition is for activities found by the Federal Reserve Board by order or regulation to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In making these determinations, the Federal Reserve Board considers whether the performance of such activities by a bank holding company or a bank holding company subsidiary would offer advantages to the public, which outweigh possible adverse effects.
After the consummation of the reorganization, Plumas Bancorp will be subject to the regulatory capital requirements of the Federal Reserve Board with respect to a bank holding company, and these requirements are similar to the regulatory capital requirements of the FDIC as applied to Plumas Bank. If the capital of Plumas Bancorp falls below the minimum levels established by Federal Reserve Board, Plumas Bancorp may be denied approval to acquire or establish additional banks or non-bank businesses. In addition, the failure to satisfy applicable capital guidelines could subject Plumas Bancorp to a variety of enforcement actions.
In the calculation of risk-based capital, assets and off-balance sheet items are assigned to broad risk categories. Off-balance sheet items are also taken into account in the calculation of risk-based capital, with each class of off-balance sheet item being converted to a balance sheet equivalent. From these computations, the total of risk-weighted assets is derived. Risk-based capital ratios therefore state capital as a percentage of total risk-weighted assets and off-balance sheet items. The ratios established by guidelines are minimums only.
Current risk-based capital guidelines require all bank holding companies to maintain a minimum risk-based total capital ratio equal to 8% and a Tier 1 capital ratio of 4%. Intangibles other than readily marketable mortgage servicing rights are generally deducted from capital. Tier 1 capital includes common shareholders equity, qualifying perpetual preferred stock (within limits and subject to certain conditions), and minority interests in equity accounts of consolidated subsidiaries, less intangibles. Tier 2 capital includes: (i) the allowance for loan losses up to 1.25% of risk-weighted assets; (ii) any qualifying perpetual preferred stock exceeding the amount includable in Tier 1 capital; (iii) hybrid capital instruments; (iv) perpetual debt; (v) mandatory convertible securities and (vi) subordinated debt and intermediate term preferred stock of up to
22
50% of Tier 1 capital. Total capital is the sum of Tier 1 and Tier 2 capital, less reciprocal holdings of other banking organizations and capital instruments. Plumas Bancorp is expected to be well capitalized as to all of the regulatory capital ratios using the definition of well capitalized as applied to banks at the time of the reorganization.
Federal Reserve Regulation Y sets out those activities which are regarded as closely related to banking or managing or controlling banks, and thus, are permissible activities that may be engaged in by bank holding companies subject to approval in certain cases by the Federal Reserve Board. The Gramm-Leach-Bliley Act (GLBA) allows for a new type of bank holding company under the Bank Holding Company Act. The new bank holding company is allowed to engage in insurance and securities underwriting, merchant banking and insurance company portfolio investment activities. GLBA also allows bank holding companies to engage in any activity considered financial in nature or incidental to such financial activities.
Although Plumas Bancorp has no present plans, agreements or arrangements to engage in any nonbanking activities, Plumas Bancorp may consider in the future engaging in one or more of the above activities, subject to the approval of the Federal Reserve Board.
Directors, executive officers, and principal shareholders of Plumas Bancorp will be subject to restrictions on the sale of their Plumas Bancorp stock under Rule 144 as promulgated under the Securities Act of 1933.
Indemnification of Plumas Bancorps
Directors and Officers
Plumas Bancorps Articles of Incorporation and Bylaws provide for indemnification of agents including directors, officers and employees to the maximum extent allowed by California law. The indemnification law of the State of California generally allows indemnification, in matters not involving the right of the corporation, to an agent of the corporation if such person acted in good faith and in a manner such person reasonably believed to be in the best interests of the corporation, and in the case of a criminal matter had no reasonable cause to believe the conduct of such person was unlawful. California law, with respect to matters involving the right of a corporation, allows indemnification of an agent of the corporation, if such person acted in good faith, in a manner such person believed to be in the best interests of the corporation and its shareholders; provided that there shall be no indemnification for: amounts paid in settling or otherwise disposing of a pending action without court approval; expenses incurred in defending a pending action which is settled or otherwise disposed of without court approval; or matters which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court in which the proceeding is or was pending shall determine that such person is entitled to be indemnified.
The Bylaws provide that Plumas Bancorp will indemnify its directors, officers and employees and that such right to indemnification shall be a contract right. The Bylaws also provide that Plumas Bancorp may purchase and maintain insurance covering its directors, officers and employees against any liability asserted against any of them and incurred by any of them, whether or not Plumas Bancorp would have the power to indemnify them against such liability under the provisions of applicable law or the provisions of the Bylaws.
23
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling Plumas Bancorp pursuant to the foregoing, Plumas Bancorp has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.
24
Plumas Merger Company
General Background
At the direction of the Board of Directors of Plumas Bank, Plumas Merger Company was incorporated on February 1, 2002. It was organized to facilitate the reorganization. On the date of the reorganization, Plumas Bank will merge with Plumas Merger Company, with Plumas Bank as the surviving entity.
Initial Capitalization
Plumas Merger Company was initially capitalized through the purchase of 100 shares of its common stock by Plumas Bancorp for an aggregate sum of $100.00. The 100 shares of capital stock of Plumas Merger Company issued and outstanding immediately prior to the date of reorganization shall be converted into and exchanged by Plumas Bancorp for 100 shares of Plumas Bank common stock. Plumas Merger Company will disappear and all of the outstanding shares of Plumas Bank common stock will be owned by Plumas Bancorp.
25
Plumas Bank
General
Plumas Bank (the Bank) was incorporated under the laws of the State of California on July 30, 1980 and, with the approval of the California State Banking Department, opened for business on December 13, 1980. The Banks primary business is to provide financial services to the local families and businesses of Plumas, Lassen, Sierra, Nevada, Shasta and Modoc Counties. The Bank has no parents, affiliates or subsidiaries. The Bank is a state chartered banking institution, which has chosen not to become a member of the Federal Reserve System. The Banks deposits are insured to the maximum amount permitted by law under the Federal Deposit Insurance Act.
At December 31, 2001, the Bank had total assets of $275.1 million, composed primarily of loans, investment securities (principally U.S. government and agency securities), cash and due from banks and other non-interest earning assets. For the year ended December 31, 2001, the Banks total revenues amounted to $22.0 million. The principal sources of the Banks revenues are: interest and fees on loans, interest on investments and deposit account and other service charges and fees. For the year ended December 31, 2001, these sources comprised 74%, 11%, and 7% respectively, of the Banks total revenues.
Bank Services
Plumas Bank is a locally owned and operated full-service community bank offering a broad range of consumer and commercial banking and investment services. Management is committed to running the Bank as a relationship-based, community bank serving the needs of individuals and small to medium-sized businesses in the local market areas surrounding the Banks branches. The strategy for serving the Banks target markets is the delivery of value-added products and services that satisfy the primary needs of the Banks customers, emphasizing superior service and relationships rather than transaction volume. The Banks operations, like those of other financial institutions operating in California, are significantly influenced by economic conditions in California, including energy and energy-related issues, the strength of the real estate market, and the fiscal and regulatory policies of the federal government and of the regulatory authorities that govern financial institutions. See - Supervision and Regulation.
The Bank is headquartered in Quincy, California and it maintains nine full-service branches in Northeastern California, providing financial services to the communities of Quincy, Portola, Greenville, Westwood, Susanville, Chester, Alturas, Fall River Mills and Truckee and their surrounding communities. The Truckee branch was opened on February 12, 2001. In addition to the full-service branches, the Bank operates four independent ATM sites in the Northeastern California communities of Graeagle, Lake Almanor, Susanville and Cedarville.
The Bank offers a broad range of services to individuals and businesses in its primary service area with an emphasis upon efficiency and personalized attention. The Bank provides a full line of consumer and business products and services, such as, personal and business checking accounts and savings accounts, individual interest-bearing negotiable order of withdrawal accounts (NOW accounts), money market accounts, accounts combining checking and savings
26
accounts with automatic transfers, IRA accounts, and time certificates of deposit. Most of the Banks deposits are attracted from individuals and small and medium-sized business-related sources. The Bank also attracts some deposits from municipalities and other governmental agencies. In connection with the deposits of municipalities or other governmental agencies or entities, the Bank is required to pledge securities to secure such deposits.
As of December 31, 2001, the Bank had 10,961 accounts representing $53.5 million in non-interest bearing demand deposits, with an average balance of $4,885. It also had 3,944 accounts representing $32.5 million in interest bearing demand deposits, with an average balance of $8,230. The Bank had 10,590 accounts representing $35.2 million in savings deposits, with an average balance of $3,326. The Bank had 1,323 accounts representing $44.4 million in money market deposits, with an average balance of $33,595. In addition, it had 3,495 accounts representing $86.5 million in time deposits with an average balance of $24,760.
The Bank also engages in a full complement of lending activities with particular emphasis on short and medium-term obligations. Some of the Banks lending activities include, real estate mortgage, commercial and industrial, real estate construction, Government guaranteed financing, agricultural, consumer loans, as well as overdraft protection lines of credit and standby letters of credit. The Banks loan portfolio is not concentrated in any one industry, although approximately 46% of the Banks loans are secured by real estate. A loan may be secured (in whole or in part) by real estate even thought the purpose of the loan is not to facilitate the purchase or development of real estate. At December 31, 2001, the Bank had loans outstanding of $183.7 million, which represented 72.8% of the Banks total deposits and 66.8% of its total assets.
Real estate mortgage loans are secured by deeds of trust on residential or commercial property. Repayment of real estate mortgage loans is generally from the cash flow of the borrower. Commercial and industrial loans have a high degree of industry diversification. A substantial portion of the commercial and industrial loans not secured by real estate are secured by accounts receivable, inventory, leases or other collateral. The remainder are unsecured; however, extensions of credit are predicated on the financial capacity of the borrower. Repayment of commercial loans is generally from the cash flow of the borrower. Real estate construction loans consist primarily of loans to individuals and residential contractors, which are secured by single-family residential properties. All real estate loans have established equity requirements. Repayment of real estate construction loans is generally from long-term mortgages with other lending institutions. Agricultural loans are generally secured by land, equipment, inventory and receivables. Repayment of this loan category is from the cash flow of the borrower. At December 31, 2001, real estate mortgage loans, commercial and industrial loans, consumer loans, agricultural loans and real estate construction loans constituted approximately 27.7%, 27.2%, 25.7%, 11.9% and 7.5%, respectively of the Banks total loan portfolio.
In the normal course of business, the Bank makes various loan commitments and incurs certain contingent liabilities. At December 31, 2001, these financial instruments included commitments to extend credit of $35.8 million, and standby letters of credit of $279,000. Of the $35.8 million in loan commitments outstanding at December 31, 2001, $20.2 million were on loans with maturities of one year or less. Due to the nature of the business of Plumas Banks
27
customers, there are no seasonal patterns or absolute predictability to the utilization of unused loan commitments; therefore the Bank is unable to forecast the extent to which these commitments will be exercised within the current year. The Bank does not believe that any such utilization will constitute a material liquidity demand. In addition, neither the Banks business or liquidity is seasonal, and there has been no material effect upon the Banks capital expenditures, earnings or competitive position as a result of federal, state or local environmental regulation.
In addition to the loan and deposit services discussed above, the
Bank also offers a wide range of specialized services designed to
attract and service the needs of retail and commercial customers and
account holders. These services include ATMs tied in with major
statewide and national networks, honoring merchant drafts for both VISA
and MasterCard, as well as offering MasterCard and Visa credit cards to
its customers, internet banking, cashiers checks, travelers checks,
money orders, foreign drafts, and direct deposit of social security,
pension and payroll checks. Plumas Bank does not operate a trust
department; however, it makes arrangements with its correspondent bank
to offer trust services to its customers on request.
Employees
As of December 31, 2001, the Bank employed 164 persons, with a full-time
equivalent (FTE) of 146, including 4 executive officers. The Banks employees
are not represented by a union or covered by a collective bargaining agreement.
Management of the Bank believes that, in general, its employee relations are
excellent.
Properties
The Banks administrative office is located at 35 S. Lindan Avenue,
Quincy, California. In total, as of February 28, 2002, the Bank had
fifteen properties consisting of nine branch offices, four off-site
ATMs, the administrative office and a loan service office. The loan
service office is currently under construction with an expected
completion date in the spring of 2002.
Management believes that its existing and proposed facilities are
adequate for its present purposes and anticipated growth in the
foreseeable future.
LEASED PROPERTIES
28
OWNED PROPERTIES
Legal Proceedings
From time to time, Plumas Bank is a party to claims and legal proceedings
arising in the ordinary course of business. The Banks management is not aware
of any material pending litigation proceedings to which it is a party or has
recently been a party to, which will have a material adverse effect on the
financial condition or results of operations of Plumas Bank.
Competition
The banking business in California generally is highly competitive with
respect to both loans and deposits, and is dominated by major banks with many
offices operating over a wide geographic area. The Bank competes for deposits
and loans principally with other commercial banks, savings and loan
associations, finance companies, money market funds, credit unions and other
financial institutions, including a number that are much larger than Plumas
Bank. As of December 31, 2001 there were 29 banking offices, including 11
offices of 4 major chain banks, operating within Plumas Banks primary market
areas in the Plumas, Lassen, Nevada, Modoc, Shasta and Sierra counties. There
has been increased competition for deposit and loan business over the last
several years as a result of deregulation. Many of the major commercial banks
operating in Plumas Banks market areas offer certain services, such as trust
and international banking services, which Plumas Bank does not offer directly.
Additionally, banks with larger capitalization have larger lending limits and
are thereby able to serve larger customers.
In addition to competition from insured depository institutions,
principal competitors for deposits and loans have been mortgage
brokerage companies, insurance companies, brokerage houses, credit card
companies and even retail establishments offering investment vehicles
such as mutual funds, annuities and money market funds, as well as
traditional bank-like services such as check access to money market
funds, or cash advances on credit card accounts. Also, other entities
(both public and private) seeking to raise capital through the issuance
and sale of debt or equity securities also represent a source of
competition for the Bank with respect to acquisition of deposits.
29
In order to compete with the other financial institutions in its
principal marketing area, Plumas Bank relies principally upon local
promotional activities, extended hours and specialized services,
personal contacts by its officers, directors and employees, and close
connections with its community. For customers whose loan demands exceed
the Banks lending limit, the Bank attempts to arrange for such loans on
a participation basis with other commercial community banks. The Bank
also assists customers requiring other services not offered by the
Plumas Bank in obtaining such services from its correspondent banks.
Supervision and Regulation of Plumas Bank
General:
Plumas Bank, as a California state-chartered member bank whose
deposits are insured by the FDIC up to the maximum legal limits thereof, is
subject to regulation, supervision and regular examination by the Commissioner
of Financial Institutions and the Federal Deposit Insurance Corporation.
Plumas Bank is also subject to provisions of the Federal Reserve Act and their
regulations. The regulations of these various agencies govern most aspects of
Plumas Banks business, including required reserves on deposits, investments,
loans, certain of their check clearing activities, issuance of securities,
payment of dividends, branching and numerous other matters. As a consequence
of the extensive regulation of commercial banking activities in California and
the United States, Plumas Banks business is particularly susceptible to
changes in California and federal legislation and regulations which may have
the effect of increasing the cost of doing business, limiting permissible
activities or increasing competition.
Impact of Monetary Policies:
Banking is a business, which depends on
interest rate differentials. In general, the difference between the interest
paid by Plumas Bank on its deposits and its other borrowings and the interest
received by Plumas Bank on loans extended to its customers and securities held
in its portfolio, comprises the major portion of Plumas Banks earnings. These
rates are highly sensitive to many factors, which are beyond the control of
Plumas Bank. Accordingly, the earnings and growth of Plumas Bank are subject
to the influence of domestic and foreign economic conditions, including
inflation, recession and unemployment.
The earnings and growth of Plumas Bank are affected not only by general
economic conditions, both domestic and international, but also by the monetary
and fiscal policies of the United States and its agencies, particularly the
Federal Reserve Board. The Federal Reserve Board can and does implement
national monetary policy such as seeking to curb inflation and combat
recession, by its open market operations in U.S. Government securities, by
adjusting the required level of reserves for financial institutions subject to
reserve requirements and by varying the discount rates applicable to borrowings
by banks from the Federal Reserve System. The actions of the Federal Reserve
Board influence the growth of bank loans, investments and deposits and also
affect interest rates charged on loans and paid on deposits. The nature and
impact that future changes in fiscal or monetary policies or economic controls
may have on Plumas Banks business and earnings cannot be predicted. In
addition, adverse economic conditions could make a higher provision for loan
losses a prudent course and could cause higher loan charge-offs, thus adversely
affecting Plumas Banks net income.
Recent Legislation and Other Changes:
From time to time, legislation is
enacted which has the effect of increasing the cost of doing business, limiting
or expanding permissible activities or affecting the competitive balance
between banks and other financial institutions.
30
Proposals to change the laws and regulations governing the operations and
taxation of banks and other financial institutions are frequently made in
Congress, in the California legislature and before various bank regulatory
agencies. Certain of the potentially significant changes which have been
enacted recently and others, which are currently under consideration by
Congress or various regulatory agencies, are discussed below.
The terrorist attacks in September, 2001, have impacted the financial
services industry and have already led to federal legislation that attempts to
address certain issues involving financial institutions. On October 26, 2001,
President Bush signed into law the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001.
Part of the USA Patriot Act is the International Money Laundering
Abatement and Financial Anti-Terrorism Act of 2001 (IMLA). IMLA authorizes
the Secretary of the Treasury, in consultation with the heads of other
government agencies, to adopt special measures applicable to banks, bank
holding companies, and/or other financial institutions. These measures may
include enhanced recordkeeping and reporting requirements for certain financial
transactions that are of primary money laundering concern, due diligence
requirements concerning the beneficial ownership of certain types of accounts,
and restrictions or prohibitions on certain types of accounts with foreign
financial institutions.
Among its other provisions, IMLA requires each financial institution to:
(i) establish an anti-money laundering program; (ii) establish due diligence
policies, procedures and controls with respect to its private banking accounts
and correspondent banking accounts involving foreign individuals and certain
foreign banks; and (iii) avoid establishing, maintaining, administering, or
managing correspondent accounts in the United States for, or on behalf of, a
foreign bank that does not have a physical presence in any country. In
addition, IMLA contains a provision encouraging cooperation among financial
institutions, regulatory authorities and law enforcement authorities with
respect to individuals, entities and organizations engaged in, or reasonably
suspected of engaging in, terrorist acts or money laundering activities. IMLA
expands the circumstances under which funds in a bank account may be forfeited
and requires covered financial institutions to respond under certain
circumstances to requests for information from federal banking agencies within
120 hours. IMLA also amends the Bank Holding Company Act and the Bank Merger
Act to require the federal banking agencies to consider the effectiveness of a
financial institutions anti-money laundering activities when reviewing an
application under these acts.
Whether or not regulations are adopted, IMLA becomes effective July 23,
2002. Additional regulations are to be adopted during 2002 to implement
minimum standards to verify customer identity, to encourage cooperation among
financial institutions, federal banking agencies, and law enforcement
authorities regarding possible money laundering or terrorist activities, to
prohibit the anonymous use of concentration accounts, and to require all
covered financial institutions to have in place a Bank Secrecy Act compliance
program.
The Federal Reserve Board and the Secretary of the Treasury in January
2001 jointly adopted a final rule governing merchant banking investments made
by financial holding companies. The rule implements provisions of the
Gramm-Leach-Bliley Act discussed below that permit financial holding companies
to make investments as part of a bona fide securities
31
underwriting or merchant or investment banking activity. The rule
provides that a financial holding company may not, without Federal Reserve
Board approval, directly or indirectly acquire any additional shares, assets or
ownership interests or make any additional capital contribution to any company
the shares, assets or ownership interests of which are held by the financial
holding company subject to the rule if the aggregate carrying value of all
merchant banking investments held by the financial holding company exceeds:
A separate final rule will establish the capital charge of merchant
banking investments for the financial holding company.
The American Homeownership and Economic Opportunity Act of 2000 was
enacted in late 2000 and provides for certain regulatory and financial relief
to depository institutions. With respect to savings and loan associations, the
Home Owners Loan Act was amended to
With respect to national banks, the Banking Act of 1933 was amended to
allow a national bank to
In addition, federal banking law was amended to authorize the Comptroller
to waive the citizenship requirement for a minority of the directors on a
national bank board and to repeal the 20% surplus requirement for national
banks. As to depository institutions, in general, the federal banking agencies
are to develop a system for the electronic filing and dissemination of
depository institution call reports.
The Gramm-Leach-Bliley Act (GLBA) was enacted in late 1999. GLBA, among
other things, repeals the Glass-Steagall Act. The Glass-Steagall Act enacted
in the depression era
32
prohibited banks from affiliating with securities firms. In addition,
GLBA allows for a new type of bank holding company under the Bank Holding
Company Act. The new bank holding company will be allowed to engage in
insurance and securities underwriting, merchant banking and insurance company
portfolio investment activities. Currently, bank holding companies are
strictly limited in the amount of insurance and securities underwriting
activities in which they may engage.
GLBA also allows bank holding company companies to engage in any activity
considered financial in nature or incidental to such financial activities.
Under the existing Bank Holding Company Act, incidental activities are limited
to those that are banking in nature or incidental to such banking activities.
Financial activities include, as well as lending, providing insurance as
an agent, broker or as principal, issuing annuities, underwriting, and dealing
in or making a market in securities. All insurance activities that are to be
conducted must be conducted in compliance with applicable state laws. In
connection with insurance sales the United States Supreme Court case of
Barnett
Bank of Marion County N.A. v. Nelson
, 116 S. Ct. 1103 (1996) is followed by
GLBA, and GLBA further provides that no state may, by statute, regulation,
order, interpretation, or other action, prevent or significantly interfere with
the ability of an insured depository institution, or a subsidiary or affiliate
thereof, to engage, directly or indirectly, either by itself or in conjunction
with a subsidiary, affiliate, or any other party, in any insurance sales,
solicitation, or cross-marketing activity.
The Community Reinvestment Act provisions in GLBA require that any new
bank holding company that is formed meet the conditions that all of the
companys insured depository institutions are well capitalized, well managed
and received at least a satisfactory rating in the most recent Community
Reinvestment Act examination.
Other key aspects of GLBA include the following:
33
It is impossible to predict what effect the enactment of certain of the
above-mentioned legislation will have on Plumas Bank and on the financial
institutions industry in general. Moreover, it is likely that other bills
affecting the business of banks may be introduced in the future by the United
States Congress or California legislature.
Capital Ratios
As of December 31, 2001, Plumas Banks leverage ratio was 7.4%, its Tier 1
risk-based capital ratio was 9.3%, and its total risk-based capital ratio was
10.3%. Based upon these capital ratios and Plumas Banks standing with the
FDIC, Plumas Bank is considered a well capitalized institution.
34
315 Birch Street
11429 Donner Pass Road
Westwood, California
Truckee, California
7597 Highway 89
Peninsula Drive & Big
Cove Road
Graeagle, California *^
Lake Almanor, California *^
50 Grand Avenue
502 Main Street
Susanville, California *^
Cedarville, California *^
Table of Contents
35 S. Lindan Avenue
336 West Main Street
Quincy, California ^
Quincy, California
120 N. Pine Street
121 Crescent Street
Portola, California
Greenville, California
43163 Highway 299E
3000 Riverside Drive
Fall River Mills, California
Susanville, California
255 Main Street
510 N. Main Street
Chester, California
Alturas, California
32 Central Avenue
Quincy, California ^
^
Non-branch property
*
ATM-only location
Table of Contents
Table of Contents
Table of Contents
30 percent of the Tier 1 capital of the financial holding company, or
after excluding interests in private equity funds, 20 percent of the Tier
1 capital of the financial holding company.
repeal the savings association liquidity requirements, and
permit a savings and loan holding company with prior approval to acquire
more than 5% of the voting shares of a nonsubsidiary savings association
or nonsubsidiary savings and loan holding company.
specifically reorganize into a bank holding company structure or merge
with subsidiaries and nonbank affiliates
have more than 25 directors as may be allowed by the Comptroller,
have director terms of up to three years,
have a classified board, and
allow the repurchase of stock to prevent loss upon a previously
contracted debt without having to dispose of it within a period of six
months.
Table of Contents
streamlining bank holding company supervision by defining the roles of the Federal Reserve and other federal and state
regulators;
prohibiting FDIC assistance to affiliates and subsidiaries of banks and thrifts;
allowing a national bank that is well capitalized and well managed to establish new operating subsidiaries that may engage in
financial activities other than insurance underwriting, merchant banking, insurance company portfolio investments, real estate
development and real estate investment, so long as the aggregate assets of all financial subsidiaries do not exceed 45% of the
parents assets or $50 billion, whichever is less;
permitting national banks to underwrite municipal bonds;
providing that securities activities conducted by a bank subsidiary will be subject to regulation by the Securities and
Exchange Commission;
providing that insurance activities conducted by a bank subsidiary will be subject to regulation by the applicable state
insurance authority;
Table of Contents
replacing broker-dealer exemptions allowed to banks with limited exemptions;
providing that de novo unitary thrift holding company applications received by the Office of Thrift Supervision after May 4,
1999 shall not be approved;
providing that existing unitary thrift holding companies may only be sold to financial companies;
adopting new privacy provisions which allow customers to opt out of sharing nonpublic personal information with
nonaffiliated third parties subject to certain exceptions;
requiring that ATMs which impose a fee on noncustomers to disclose on the ATM screen the amount of the fee prior to a
transaction becoming irrevocable on the ATM;
providing regulatory relief to smaller banks with less than $250 million in total assets with respect to the frequency of CRA
examinations. The time between examinations may be as long as five years for small banks and savings and loans; and
requiring plain language for federal banking agency regulations.
Table of Contents
Selected Financial Information
The following table sets forth selected financial information concerning
Plumas Bank for the five-year period ended December 31, 2001:
2001
2000
1999
1998
1997
$
275,090
$
243,601
$
212,315
$
201,046
$
159,744
183,676
164,004
128,883
102,173
90,233
2,153
1,888
1,608
1,361
1,263
252,206
223,256
194,163
184,905
145,457
20,617
18,165
16,813
15,349
13,568
18,981
18,279
15,332
14,168
12,179
6,373
6,724
5,096
5,222
4,320
12,608
11,555
10,236
8,946
7,859
725
500
480
400
400
3,022
2,343
2,142
2,057
1,562
10,480
9,431
8,188
7,429
6,073
2,758
2,563
2,268
2,004
1,809
1.31
1.23
1.08
0.98
0.90
1.29
1.19
1.01
0.90
0.83
9.69
8.84
7.98
7.28
6.44
2,109,318
2,079,975
2,091,823
2,048,532
2,010,437
2,137,271
2,157,121
2,235,163
2,197,290
2,168,207
1.07
%
1.12
%
1.10
%
1.06
%
1.17
%
15.18
%
15.24
%
14.78
%
14.77
%
15.13
%
14.20
%
14.90
%
14.09
%
13.94
%
14.19
%
72.83
%
73.46
%
66.38
%
55.26
%
62.03
%
5.50
%
5.84
%
5.53
%
5.40
%
5.63
%
67.05
%
67.86
%
66.15
%
67.52
%
64.46
%
35
Price Range of Plumas Banks Common Stock
The shares of Plumas Banks common stock are quoted on the OTC Bulletin
Board under the symbol PLBA. The shares of Plumas Banks common stock are
not listed on a national exchange, and there is no established public market
for Plumas Bank common stock. Plumas Bank currently has three market makers in
its shares of common stock. These include Pacific Crest Securities, First
Security Van Kasper and Hoefer & Arnett. Plumas Bank is also aware of 29
securities dealers, many of which periodically act as brokers in Plumas Banks
common stock. The high and low sales prices and volume of trades concerning
Plumas Banks common stock are provided in the chart below.
Sales Prices(1)
Calendar Quarter
High
Low
$
15.50
$
15.30
15.00
11.15
13.70
11.25
12.25
10.50
11.69
9.56
10.50
9.63
10.88
9.75
11.13
10.00
13.00
10.50
* | Through March 14, 2002 |
36
Dividends
Plumas Bank has paid cash dividends of $0.30 per share on April 10, 2001, $0.30 per share on April 3, 2000 and $0.60 per share on April 9, 1999. The dividend of April 9, 1999 was adjusted for a three-for-two stock split that occurred on June 15, 1999. The payment of dividends in the future is subject to the discretion of the Board of Directors of Plumas Bank and will depend on Plumas Banks earnings, financial condition and other relevant factors, including applicable regulatory orders and restrictions with respect to dividends. After the reorganization, it is expected that Plumas Bank will pay a dividend to Plumas Bancorp in the amount of approximately $50,000 to pay for the reorganization costs and initial capitalization and provide Plumas Bancorp with working capital. If the reorganization is approved, Plumas Bancorp may pay future dividends to shareholders. The payment of cash dividends by Plumas Bancorp in the future is subject to the discretion of the Board of Directors of Plumas Bancorp and will depend on Plumas Bank paying a cash dividend to Plumas Bancorp. Plumas Banks ability to pay a cash dividend to Plumas Bancorp will depend on Plumas Banks earnings, financial condition and other relevant factors, including applicable regulatory orders and restrictions with respect to dividends.
37
Unaudited Pro Forma Capitalization
The following table sets forth the audited actual capitalization of Plumas Bank at December 31, 2001, the unaudited proposed capitalization of Plumas Merger Company and Plumas Bancorp immediately prior to completion of the reorganization, and the pro forma capitalization of Plumas Bank and Plumas Bancorp on a consolidated basis to reflect the completion of the reorganization.
Pro Forma of | |||||||||||||||||||
Plumas Bancorp | |||||||||||||||||||
Plumas | Plumas | and | |||||||||||||||||
Plumas Bank | Merger Company(1) | Bancorp(2) | Plumas Bank | ||||||||||||||||
|
|
|
|
||||||||||||||||
(Audited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
Shareholders Equity:
|
|||||||||||||||||||
Common stock
|
$ | 2,347,000 | $ | 100 | $ | 150 | $ | 2,347,000 | |||||||||||
Other capital accounts
|
18,270,000 | 18,270,000 | |||||||||||||||||
Total
|
$ | 20,617,000 | $ | 100 | $ | 150 | $ | 20,617,000 | |||||||||||
Per Share Data:
|
|||||||||||||||||||
Common stock
|
|||||||||||||||||||
Authorized
|
7,464,960 | 1,000,000 | 10,000,000 | 10,000,000 | |||||||||||||||
Outstanding
|
2,128,223 | 100 | 100 | 2,128,323 |
(1) | Funds to capitalize Plumas Merger Company were obtained by issuing 100 shares to Plumas Bancorp for $100. At the time of the reorganization, Plumas Bancorp will receive $100, and the shares of Plumas Merger Company common stock will be exchanged for shares of Plumas Bank common stock. | |
(2) | Funds to capitalize Plumas Bancorp were obtained by a loan in the amount of $35,000 and the issuing of a total of 100 shares of Plumas Bancorp for the sum of $150.00. Upon completion of the reorganization, the loan will be repaid and Plumas Bancorp will repurchase the 100 shares. |
As of December 31, 2001, Plumas Bank had issued and outstanding 2,128,223 shares of common stock, which, based upon the December 31, 2001 total shareholders equity of Plumas Bank of $20.6 million, results in a book value of $9.69 per share for Plumas Bank common stock. After the reorganization and the one-for-one share exchange of Plumas Bank common stock for Plumas Bancorp common stock, and based on the shares outstanding as of the March 22, 2002 record date, Plumas Bancorp will have 2,129,519 shares of common stock issued and outstanding, plus any additional shares up to 120,480 shares of common stock which become outstanding pursuant to the exercise of outstanding stock options under Plumas Banks 1991 and 2001 Stock Option Plans.
38
Financial Statements and Related Matters
Plumas Banks audited statements of condition as of December 31, 2001 and 2000 and related audited statements of income, changes in shareholders equity and cash flows for each of the years in the three-year period ended December 31, 2001, prepared in conformity with accounting principles generally accepted in the United States of America, report of independent public accountants, and managements discussion and analysis of financial condition and the results of operations are set forth in Plumas Banks 2001 Annual Report to Shareholders which is being delivered with this proxy statement/prospectus.
39
Management of Plumas Bank
Directors and Executive Officers
The following table sets forth, as of March 1, 2002, the names of, and
certain information regarding, the directors of Plumas Bank.
Year First
Principal Occupation
Name and Title
Appointed
During the
Other than Director
Age
Director
Past Five Years
William E. Elliott
President and CEO
Director
61
1987
President and CEO of Plumas Bank since
March 1987, Quincy, CA.
Jerry V. Kehr
72
1980
Real Estate Broker, Coldwell Banker,
Kehr/OBrien Real Estate, Chester, CA.
Alvin G. Blickenstaff
65
1988
Farmer and Rancher, owner and operator of
Blickenstaff Ranch, Janesville, CA.
Gerald W. Fletcher
59
1988
Rancher and Real Estate Broker,
Susanville, CA.
Arthur C. Grohs
65
1988
Retired. Former Retailer, Susanville, CA.
Christine McArthur
40
1999
Owner and operator of McArthur Farm
Supply, Inc., ranching operation,
McArthur Livestock, McArthur, CA.
Terrance J. Reeson
57
1985
Executive Director, Main Street Chamber
of Commerce, Quincy, CA.
Walter Sphar
71
1988
Owner and operator of Walt Sphar
Trucking, Likely, CA.
Thomas Watson
58
2001
Owner and operator of Truckee River
Associates, a real estate development
management firm in Truckee, CA.
Daniel E. West
48
1997
Operations Manager, Graeagle Land & Water
Co., a land management company.
President, Graeagle Water Co, a private
water utility, Graeagle, CA
40
All of the above directors are nominees for the members of Plumas Banks Board of Directors. In addition, all of the directors named above have served as members of Plumas Banks Board of Directors during the year 2001. All nominees will continue to serve if elected at the meeting until the 2003 annual meeting of shareholders and until their successors are elected and have been qualified. None of the directors were selected pursuant to any arrangement or understanding other than with the directors and executive officers of Plumas Bank acting within their capacities as such. There are no family relationships between any of the directors of Plumas Bank. No director of Plumas Bank serves as a director of any company that has a class of securities registered under, or which is subject to the periodic reporting requirements of, the Securities Exchange Act of 1934, or of any company registered as an investment company under the Investment Company Act of 1940.
The Board of Directors and Committees
Plumas Banks Board of Directors met 14 times in 2001. None of Plumas Banks directors attended less than 75 percent of all Board of Directors meetings and committee meetings of which they were a member, except Mr. Sphar who missed 50 percent of the Audit Committee meetings.
Audit Committee
Plumas Bank has an audit committee composed of Mr. Reeson, Chairman and Messrs. Grohs, Sphar and Watson. The audit committee met six times during 2001. The audit committee functions are to review all internal and external audits including the audit by Perry-Smith LLP, Plumas Banks independent auditor, report any significant findings of audits to the Board of Directors, and ensure that the internal audit plans are met, programs are carried out, and weaknesses are addressed. The audit committee meets annually to discuss and review the overall audit plan. The Board of Directors has adopted a written charter for the audit committee.
Audit Committee Report
This report of the audit committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Plumas Bank specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts.
The Board of Directors and the audit committee has reviewed Plumas Banks audited financial statements and discussed such statements with management. The Board of Directors and the audit committee has discussed with Perry-Smith LLP, Plumas Banks independent auditors during the year 2001, the matters required to be discussed by Statement of Auditing Standards No. 61 (Communication with Audit and Finance Committees, as amended).
The audit committee received written disclosures and a letter from Perry-Smith LLP, required by Independence Standards Board Standard No. 1 and has discussed with them their independence from management. The audit committee has also considered whether the independent auditors provision of other non-audit services is compatible with the auditors independence.
41
Based on the review and discussions noted above, the audit committee recommended to the Board of Directors that Plumas Banks audited financial statements be included in Plumas Banks Annual Report on Form 10-K for the year ended December 31, 2001, for filing with the Federal Deposit Insurance Corporation.
Each of the audit committee members satisfies the definition of independent director as established in the NASDAQ listing standards. The audit committee has also confirmed that there have been no new circumstances or developments since their respective appointments to the audit committee that would impair any members ability to act independently.
Audit Committee Members
Terrance J. Reeson
Thomas Watson |
Arthur C. Grohs | Walter Sphar |
Personnel Committee
Plumas Bank has a personnel committee that met one time in 2001. The personnel committee consists of Mr. Grohs, Chairman and Messrs. Kehr, Blickenstaff and Elliott. The purpose of the personnel committee is to set policies, review salary recommendations, grant stock options and approve other personnel matters, which are in excess of managements authority.
Personnel Committee Report
The personnel committee establishes the overall executive compensation guidelines of Plumas Bank and establishes the compensation plans and specific compensation levels of the Chief Executive Officer and other executive officers. The personnel committee reviews its approach to executive compensation annually.
The personnel committee believes that executive officer compensation should be closely aligned with the performance of Plumas Bank on a short-term and long-term basis, and that such compensation should be structured to assist Plumas Bank in attracting and retaining key executives critical to its long-term success. To that end, the personnel committees policy for compensation packages of executive officers consists of three components: (i) an annual base salary; (ii) the potential to earn incentive bonuses dependent on Plumas Banks performance and, in certain cases, individual performance as well, and (iii) stock option awards and salary continuation plans designed to link shareholder interests with those of executive management by providing long-term incentives to executive officers of Plumas Bank. The performance based aspects, items (ii) and (iii) above, are considered major elements of the overall compensation program.
42
Compensation of Directors and Executive Officers
Director Compensation
During 2000, directors, except the Chairman, each received $1,200 per
month for serving on the Banks Board of Directors and committees. The Chairman
received $1,500 per month.
Deferred Fee Agreement:
Effective May 1998 the Bank entered into Deferred
Fee Agreements with board members Kehr and Schoensee. On March 3, 2001 the
Bank entered into a Deferred Fee Agreement with board member Watson. The
purpose of the Deferred Fee Agreements is to provide a board member an
opportunity to defer his or her director fees as an incentive to continue
service with the Bank. The agreement provides for deferral of director fees to
the earlier of an agreed upon distribution date or the termination of director
services for any reason. The Bank will accrue interest on all deferred
director fees at an annual floating percentage rate of the current Prime Rate
minus 1%. In the event of death prior to retirement, the beneficiary will
receive full-deferred fee benefits. In the event of disability wherein the
director does not continue service with the Bank, the director is entitled to
the full-deferred fee benefit accrued up to the point of directors termination
of service.
Non-Qualified Stock Options:
In August 1991, the Bank granted
non-qualified stock options totaling 97,200 shares of its common stock at an
exercise price of $2.81 per share to directors pursuant to its 1991 Stock
Option Plan (the 1991 Plan). The 1991 Plan was adopted by the Board of
Directors in March 1991 and approved by the shareholders at the 1991 Annual
Meeting. Non-qualified stock options representing 3,750 shares of stock were
granted to a director of the Bank at an exercise price of $11.58 per share in
November 1997. Non-qualified stock options representing 18,030 shares of stock
were granted to directors of the Bank at an exercise price of $11.15 per share
in November 1998. Non-qualified stock options representing 2,500 shares of
stock were granted to a director of the Bank at an exercise price of $10.50 per
share in August 2000.
In November 2001, the Bank granted non-qualified stock options totaling
2,500 shares of its common stock at an exercise price of $12.44 per share to a
director pursuant to its 2001 Stock Option Plan (the 2001 Plan). The 2001
Plan was adopted by the Board of Directors in March 2001 and approved by the
shareholders at the 2001 Annual Meeting.
As of December 31, 2001, the Bank had 24,620 non-qualified stock options
outstanding to directors of the Bank, of which 13,022 were exercisable. All
stock options were granted at an exercise price of not less than one hundred
percent (100%) of the fair market value of the stock on the date of the grant.
The amount of options outstanding at December 31, 2001 (as well as the original
option grant information presented above) has been adjusted to reflect the
2-for-1 stock split effective April 15, 1993, the 6-for-5 stock split effective
May 15, 1995, the 6-for-5 stock split effective May 15, 1996 and the 3-for-2
stock split effective June 15, 1999.
Each option granted under both the 1991 and 2001 Plans expires no later
than ten (10) years from the date the option was granted. Both Plans allows
the options granted to be exercised by the optionee according to a vesting
schedule. The vesting of stock options occurs at a rate that provides for a
20% vesting for each completed year of service from the anniversary of the
option grant date, for a total vesting of 100% after the completion of five
years of service.
43
Director Emeritus Plans
Director Retirement Agreement:
Effective March 1, 1998 the Bank entered
into Director Retirement (fee continuation) Agreements with board members
Fletcher, Reeson, West, Blickenstaff, Wellenbrock, Grohs, Kehr, Schoensee and
Sphar. The purpose of the fee continuation agreements is to provide a
retirement benefit to the board members as an incentive to continue service
with the Bank. The agreement provides for fee continuation benefits of up to
$8,100 per year for 5 years after retirement. In the event of death prior to
retirement, the beneficiary will receive full fee continuation benefits. In
the event of disability wherein the director does not continue service with the
Bank, the director is entitled to fee continuation benefits, at a reduced
amount depending on the length of service with the Bank, beginning the month
following termination of service. If the director terminates service with the
Bank for a reason other than death or disability prior to the retirement age of
75, he/she will be entitled to fee continuation benefits at a reduced amount
depending on the length of service with the Bank. The vesting of fee
continuation benefits occurs at a rate that provides for a 6.67% vesting for
each completed year of service, for a total vesting of 100% after the
completion of fifteen years of service. The fee continuation benefits are
informally funded by single premium life insurance policies. The directors are
the insured parties and the Bank is the beneficiary of the policies.
During April and May of 2000, the Director Retirement Agreements for the
directors described above were modified to increase the amount of the annual
benefit to $10,000 and extend the term to 12 years after retirement with these
benefits beginning after the third anniversary of the directors retirement.
Additionally at this time, the Bank entered into a Director Retirement
Agreement with board member McArthur. This increase in benefits was informally
funded by single premium life insurance policies. The directors are the
insured parties and the Bank is the beneficiary of the policies.
Consulting Agreement:
In May 2000, the Bank entered into Consulting
Agreements with board members Blickenstaff, Fletcher, Grohs, Kehr, McArthur,
Reeson, Schoensee, Sphar, Wellenbrock and West. The purpose of the Consulting
Agreements is to provide consideration to the board members in exchange for
consulting services. The agreements provide for consulting fees of $10,000 per
year for 3 years after retirement. In the event of death prior to completion
of the consulting services, the beneficiary will receive death benefits equal
to the remaining unpaid consulting fee benefits. In the event of disability
wherein the retired director is unable to continue consulting services with the
Bank, the Bank may terminate the directors consulting services. If the
retired director voluntarily terminates his or her consulting services for
other than good reason or if the Bank terminates the directors consulting
services for cause, the Consulting Agreement shall terminate.
44
Executive Officers
The following table sets forth information, as of March 1, 2002,
concerning executive officers of Plumas Bank:
Executive Compensation
The persons serving as the executive officers of Plumas Bank received during
2001, and are expected to continue to receive in 2002, cash compensation in
their capacities as executive officers of Plumas Bank.
The following Summary Compensation Table indicates the compensation of Plumas
Banks executive officers.
45
Summary Compensation Table
46
Option/SAR Exercises and Year-End Value Table
Aggregated Option/SAR Exercises in Last Fiscal Year and Year-End Option/SAR Value
47
The Board of Directors of the Bank entered into an employment agreement
with Mr. Elliott dated February 9, 1990, subsequently restated on October 15,
1999. Under the terms of the agreement the Bank has provided and will provide
employment to Mr. Elliott from October 15, 1999 to July 1, 2004. His current
annual base salary is $152,000 with future base salary increases to be granted
at the sole discretion of the Board of Directors. The Bank also provides a
$100,000 term life insurance policy on behalf of Mr. Elliott. Mr. Elliott is
entitled to participate in any and all other employee benefits and plans
existing or developed by the Bank. The Bank has the right to terminate the
agreement for cause, as defined in the agreement. If the Board of Directors
of the Bank determines that Mr. Elliotts continued employment would be
detrimental to the best interests of the shareholders, he will be entitled to
termination pay of one (1) years salary or the balance due per the employment
agreement, whichever is less.
On October 13, 1993, the Banks Board of Directors entered into a salary
continuation agreement with Mr. Elliott. The purpose of the salary
continuation agreement is to provide special incentive to Mr. Elliott for his
continuing employment with the Bank on a long-term basis. The agreement
provides Mr. Elliott with salary continuation benefits of up to $75,000 per
year for 15 years after retirement. In the event of death prior to retirement,
Mr. Elliotts beneficiary will receive the full salary continuation benefits.
In the event of disability wherein Mr. Elliott does not continue employment
with the Bank, Mr. Elliott is entitled to salary continuation benefits (which
are reduced if at the time of disability he does not have 12 years of service
with the Bank) beginning at age 65 or on the date on which he is no longer
entitled to disability benefits under the Banks group disability insurance,
whichever is earlier. If Mr. Elliott terminates employment with the Bank for a
reason other than death or disability prior to the retirement age of age 65, he
will be entitled to salary continuation benefits at a reduced amount depending
on the length of service with the Bank. The vesting of salary continuation
benefits is at the rate of 5% per year for the first four years of service, 10%
per year for the next four years of service, 15% per year for the next two
years of service and 5% per year for the next two years of service, for a total
vesting of 100%. The salary continuation benefits are informally funded by
single premium life insurance policies with Mr. Elliott as the insured party
and the Bank as the beneficiary of the policies.
On June 2, 1994, the Banks Board of Directors entered into salary
continuation agreements with Mr. Biddle and Mr. Irvine. The purpose of the
salary continuation agreements is to provide special incentive to Mr. Biddle
and Mr. Irvine to continue employment with the Bank on a long-term basis. The
agreement provides Mr. Biddle and Mr. Irvine with salary continuation benefits
of up to $45,000 per year for 15 years after retirement. In the event of death
prior to retirement, Mr. Biddle and Mr. Irvines beneficiary will receive
salary continuation benefits at a reduced amount depending on the length of
service with the Bank. In the event of disability wherein Mr. Biddle or Mr.
Irvine does not continue employment with the Bank, Mr. Biddle and Mr. Irvine
are entitled to salary continuation benefits, at a reduced amount depending on
the length of service with the Bank, beginning at age 65 or on the date on
which he is no longer entitled to disability benefits under the Banks group
disability insurance, whichever is earlier. If Mr. Biddle or Mr. Irvine
terminate employment with the Bank for a reason other than death or disability
prior to the retirement age of age 65, he will be entitled to salary
continuation benefits at a reduced amount depending on the length of service
with the Bank. The vesting of salary continuation benefits occurs at a rate
that provides for a 90% vesting at age 60 and 2% per year for the next five
years of service, for a total vesting of 100%. The salary continuation
benefits are informally funded by single premium life insurance policies with
48
Mr. Biddle and Mr. Irvine as the insured parties and the Bank as the
beneficiary of the policies.
As of December 28, 1999, the salary continuation agreements for Mr.
Elliott, Mr. Biddle and Mr. Irvine were modified to increase the amount of the
annual benefit to $110,000, $62,000 and $62,000, respectively. This increase
in benefits is informally funded by single premium life insurance policies.
Mr. Elliott, Mr. Biddle and Mr. Irvine are the insured parties and the Bank is
the beneficiary of the policies.
49
Independent Accountants
The firm of Perry-Smith LLP served as certified independent public
accountants for Plumas Bank with respect to the year 2001, and Perry-Smith LLP
has been appointed as Plumas Banks certified independent public accountants
for 2002. Plumas Banks Board has determined the firm of Perry-Smith LLP to be
fully independent of the operations of Plumas Bank.
Aggregate fees billed by Perry-Smith LLP to Plumas Bank for the year ended
2001 are as follows:
The Audit Committee of the Bancorp has considered the provision of
nonaudit services provided by Perry-Smith LLP to be compatible with maintaining
the independence of Perry-Smith LLP.
Perry-Smith & Co., LLP audited Plumas Banks financial statements for the
year ended December 31, 2001. It is anticipated that a representative of
Perry-Smith LLP will be present at the meeting and will be available to respond
to appropriate questions from shareholders at the meeting.
Shareholder Proposals
Shareholder proposals to be submitted for presentation at the 2003 annual
meeting of shareholders of Plumas Bank must be received by Plumas Bank no later
than December 31, 2002. In the case of shareholder proposals, which are not
contained in the proxy statement, FDIC rules specify that certain requirements
in the bylaws of Plumas Bank be satisfied. The bylaws require that any
shareholder wishing to make a nomination for director give advance notice of
the nomination which shall be received by the President of Plumas Bank no more
than 60 days prior to any meeting of shareholders called for the election of
directors, and no more than 10 days after the date the notice of such meeting
is sent to shareholders; provided, however, that if only 10 days notice of the
meeting is given to shareholders, such notice of intention to nominate shall be
received by the President not later than the time fixed in the notice of the
meeting for the opening of the meeting.
Assuming the consummation of the reorganization, there will be no annual
meeting of shareholders of Plumas Bank, and the first annual meeting of
shareholders of Plumas Bancorp will be held sometime in late May 2003, and the
deadline for shareholder proposals for that meeting is February 1, 2003.
Shareholder proposals should be addressed to Mr. William E.
50
Elliott at Plumas Bank, 35 S Lindan Avenue, Quincy, California 95971.
Similarly, if the reorganization is consummated, then shareholder proposals,
which are not contained in the proxy statement, SEC rules specify that certain
requirements in the bylaws of Plumas Bancorp be satisfied. The bylaws require
that any shareholder wishing to make a nomination for director give advance
notice of the nomination which shall be received by the President of Plumas
Bancorp no more than 60 days prior to any meeting of shareholders called for
the election of directors, and no more than 10 days after the date the notice
of such meeting is sent to shareholders; provided, however, that if only 10
days notice of the meeting is given to shareholders, such notice of intention
to nominate shall be received by the President not later than the time fixed in
the notice of the meeting for the opening of the meeting.
Table of Contents
Table of Contents
Position and Principal Occupation
Name
Age
For the Past Five Years
William E. Elliott
61
President and Chief Executive Officer of Plumas Bank.
Dennis Irvine
55
Executive Vice President and Chief Technology Officer
of Plumas Bank.
Douglas Biddle
48
Executive Vice President and Chief Administrative
Officer of Plumas Bank.
Robert Herr
53
Executive Vice President and Chief Credit Officer of
Plumas Bank.
Table of Contents
Annual Compensation
Long Term Compensation
Awards
Payouts
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Other
Annual
Restricted
All Other
Compen-
Stock
LTIP
Compen-
Salary
Bonus
sation
Award(s)
Options/
Payouts
sation
Name and Principal Position
Year
($)
($)
($)(1)
($)
SARs
($)
($)(2)
William E. Elliott
2001
158,938
53,000
4,503
President and Chief
2000
150,501
45,000
4,515
Executive Officer
1999
145,582
42,500
4,800
Dennis Irvine
2001
102,457
22,500
3,010
Executive Vice President and
2000
96,334
22,500
2,890
Chief Technology Officer
1999
93,980
20,000
2,770
Douglas Biddle
2001
107,072
25,000
3,145
N/a
Executive Vice President and
2000
100,834
22,500
3,700
N/a
Chief Administrative Officer
1999
98,465
20,000
3,503
N/a
Robert Herr
2001
95,806
15,000
2,269
Executive Vice President and
2000
80,284
0
0
Chief Credit Officer
1999
N/a
N/a
N/a
(1)
This amount represents Plumas Banks contribution under Plumas Banks
401(k) Plan.
(2)
This amount represents Plumas Banks cost of premiums for excess
disability, medical and life insurance.
Table of Contents
(a)
(b)
(c)
(d)
(e)
Value of
Number of
Unexercised In-
Unexercised
the-Money
Options/SARs at
Options/SARs at
Year-End(#)
Year-End($)
Shares Acquired on
Value Realized
Exercisable/
Exercisable/
Name
Exercise(#)
($)
Unexercisable
Unexercisable
William E. Elliott
18,500
$
147,954
Options Only
7,776/5,184
Options Only
$29,000/$19,300
Dennis Irvine
3,900
$
30,531
Options Only
3,888/2,592
Options Only
$14,500/$9,700
Douglas Biddle
28,200
$
225,530
Options Only
3,888/2,592
Options Only
$14,500/$9,700
Robert Herr
0
$
0
Options Only
1,000/4,000
Options Only
$4,100/$16,500
Table of Contents
Table of Contents
Table of Contents
$
64,600
0
13,200
7,300
70,100
17,000
$
172,200
Table of Contents
Certain Transactions
Some of the directors and executive officers of Plumas Bank and their immediate families, as well as the companies with which they are associated, are customers of, or have had banking transactions with, Plumas Bank in the ordinary course of Plumas Banks business, and Plumas Bank expects to have banking transactions with such persons in the future. In managements opinion, all loans and commitments to lend in such transactions were made in compliance with applicable laws and on substantially the same terms, including interest rates and collateral, as those prevailing for comparable transactions with other persons of similar creditworthiness and in the opinion of management did not involve more than a normal risk of collectibility or present other unfavorable features.
Other Matters
Management does not know of any matters to be presented at the meeting other than those set forth above. However, if other matters come before the meeting, it is the intention of the persons named in the accompanying proxy to vote the shares represented by the proxy in accordance with the recommendations of management on such matters, and discretionary authority to do so is included in the proxy.
Legal Matters
Gary Steven Findley & Associates, Anaheim, California, will pass upon certain legal matters in connection with the issuance of the shares of Plumas Bancorps common stock.
Available Information
Plumas Banks common stock is registered under the Securities Exchange Act of 1934 and as a result Plumas Bank is required to file annual reports, quarterly reports and other periodic filings with the FDIC and those and other filings may be inspected and/or copied from the FDIC, Registration, Disclosure and Securities Operations Unit, Room F-6043, 550 Seventeenth St., NW, Washington, D.C. 20429, telephone (202) 898-8913, facsimile (202) 898-3909. Call reports of Plumas Bank may be obtained from the FDIC at its website at www.fdic.gov. The
51
registration of Plumas Banks common stock will be terminated after the consummation of the reorganization.
Plumas Bancorp has filed a registration statement on Form S-4 with the Securities and Exchange Commission to register the common stock under the Securities Act of 1933, and will after the reorganization register the common stock of Plumas Bancorp under the Securities Exchange Act of 1934 as a successor issuer. The SECs website for Plumas Bancorp filings with the SEC may be obtained at www.sec.gov.
PLUMAS BANKS 10-K FOR THE YEAR ENDED DECEMBER 31, 2001 IS AVAILABLE TO SHAREHOLDERS UPON REQUEST WITHOUT CHARGE BY WRITING TO MS. KATHY JOHN AT PLUMAS BANK, 35 S. LINDAN AVENUE, QUINCY, CALIFORNIA 95971 OR BY TELEPHONING HER AT (530) 283-7305.
A COPY OF PLUMAS BANKS ANNUAL DISCLOSURE STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2001 MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO MS. KATHY JOHN AT PLUMAS BANK, 35 S. LINDAN AVENUE, QUINCY, CALIFORNIA 95971 OR BY TELEPHONING HER AT (530) 283-7305.
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Exhibit A
PLAN OF REORGANIZATION AND MERGER AGREEMENT
This Plan of Reorganization and Merger Agreement (Agreement) is made and entered into as of this day of , 2002 by and between Plumas Bank (the Bank) and Plumas Merger Company (Subsidiary), to which Plumas Bancorp (the Holding Company) is a party.
RECITALS AND UNDERTAKINGS
A. The Bank is a California banking corporation with its head banking office in Quincy, County of Plumas, State of California. Subsidiary and the Holding Company are each corporations duly organized and existing under the laws of the State of California with their principal offices in Quincy, County of Plumas, State of California.
B. As of the date hereof, the Bank has 7,464,960 shares of no par value common stock authorized and 2,129,519 shares outstanding and 1,000,000 shares of preferred stock authorized and no shares outstanding. It is anticipated that prior to the Effective Date (as defined in Section 1.2 herein), the Bank will have no more than 2,247,839 shares outstanding, reflecting the number of shares of common shares outstanding as of the date of this Agreement (2,129,519) plus the possible exercise of all stock options presently granted but unexercised (118,320).
C. As of the date hereof, Subsidiary has an authorized maximum number of shares of capital stock of 1,000,000 shares, and at the Effective Date of the merger 100 of such shares will be issued and outstanding, all of which shares will be owned by the Holding Company.
D. As of the date hereof, the Holding Company has an authorized maximum number of shares of capital stock consisting of 20,000,000 shares of no par value common stock, 100 of which will be outstanding at the time of the merger referred to herein.
E. The Boards of Directors of the Bank and Subsidiary have, respectively, approved this Agreement and authorized its execution, and the Board of Directors of the Holding Company has approved this Agreement, undertaken that the Holding Company shall join in and be bound by it, and authorized the undertakings hereinafter made by the Holding Company.
F. The parties intend by this Agreement to set forth the terms and conditions of a reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual agreements of the parties contained herein, the parties hereby agree as follows:
Section 1. General
1.1 The Merger. On the Effective Date, Subsidiary shall be merged into the Bank, and the Bank shall be the surviving corporation (the Surviving Corporation) and a subsidiary of the Holding Company, and its name shall continue to be Plumas Bank.
1.2 Effective Date. This Agreement shall become effective at the close of business on the
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day on which this Agreement shall have been filed with the Secretary of State of the State of California in accordance with Section 1103 of the California General Corporation Law (the Effective Date).
1.3 Articles of Incorporation and Bylaws. On the Effective Date, the Articles of Incorporation of the Bank, as in effect immediately prior to the Effective Date, shall be and remain the Articles of Incorporation of the Surviving Corporation; the Bylaws of the Bank shall be and remain the Bylaws of the Surviving Corporation until altered, amended or repealed; the certificate of authority of the Bank issued by the Commissioner of the California Department of Financial Institutions (CDFI) shall be and remain the certificate of authority of the Surviving Corporation; and the Banks insurance of deposits coverage by the Federal Deposit Insurance Corporation (FDIC) shall be and remain the deposit insurance of the Surviving Corporation.
1.4 Directors and Officers of the Surviving Corporation. On the Effective Date, the directors and officers of the Bank immediately prior to the Effective Date shall be and remain the directors and officers of the Surviving Corporation. Directors of the Surviving Corporation shall serve until the next annual meeting of shareholders of the Surviving Corporation or until such time as their successors are elected and have qualified.
1.5 Effect of the Merger.
a. Assets and Rights. Upon the merger becoming effective, all rights, privileges, franchises and property of Subsidiary, and all debts and liabilities due or to become due to Subsidiary, including things in action and every interest or asset of conceivable value or benefit, shall be deemed fully and finally and without any right of reversion transferred to and vested in the Surviving Corporation without further act or deed, and the Surviving Corporation shall have and hold the same in its own right as fully as the same was possessed and held by Subsidiary.
b. Liabilities. Upon the merger becoming effective, all debts, liabilities, and obligations due or to become due of, and all claims or demands for any cause existing against Subsidiary shall be and become the debts, liabilities, obligations of, and the claims and demands against, the Surviving Corporation in the same manner as if the Surviving Corporation had itself incurred or become liable for them.
c. Creditors Rights and Liens. Upon the merger becoming effective, all rights of creditors of Subsidiary, and all liens upon the property of Subsidiary, shall be preserved unimpaired, limited in lien to the property affected by the liens immediately prior to the time of the merger.
d. Pending Actions. Upon the merger becoming effective, any action or proceeding pending by or against Subsidiary shall not be deemed to have abated or been discontinued, but may be prosecuted to judgment, with the right to appeal or review as in other cases, as if the merger had not taken place or the Surviving Corporation may be substituted for Subsidiary.
1.6 Further Assurances. The Bank and Subsidiary each agree that at any time, or from time to time, as and when requested by the Surviving Corporation, or by its successors and
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assigns, it will execute and deliver, or cause to be executed and delivered in its name by its last acting officers, or by the corresponding officers of the Surviving Corporation, all such conveyances, assignments, transfers, deeds or other instruments, and will take or cause to be taken such further or other action as the Surviving Corporation, its successors or assigns may deem necessary or desirable, in order to evidence the transfer, vesting or devolution of any property right, privilege or franchise or to vest or perfect in or confirm to the Surviving Corporation, its successors and assigns, title to and possession of all the property, rights, privileges, powers, immunities, franchises and interests referred to in this Section 1 and otherwise to carry out the intent and purposes hereof.
Section 2. Capital Stock of the Surviving Corporation
2.1 Stock of Subsidiary. Upon the merger becoming effective, the shares of capital stock of Subsidiary issued and outstanding immediately prior to the Effective Date shall thereupon be converted into and exchanged by the Holding Company for 100 shares of fully paid and nonassessable common stock of the Bank as the Surviving Corporation.
2.2 Stock of the Bank. Upon the merger becoming effective, each and every share of common stock of the Bank issued and outstanding shall, by virtue of the merger and without any action on the part of the holders thereof, be exchanged for and converted into one share of fully paid and nonassessable common stock of the Holding Company, without par value.
2.3 Exchange of Stock. Upon the merger becoming effective:
a. the shareholders of record of the Bank shall be entitled to receive and shall be allocated one share of common stock of the Holding Company for each share of common stock of the Bank;
b. the Holding Company shall issue the shares of its common stock which the shareholders of the Bank shall be entitled to receive; and
c. each holder of a certificate representing shares of common stock of the Bank shall, upon presentation of such certificate for surrender to the Holding Company, be entitled to receive in exchange thereof, a certificate or certificates representing the number of shares of common stock of the Holding Company to which such holder shall be entitled. Until so surrendered, each outstanding certificate, which prior to the merger represented shares of common stock of the Bank, shall be deemed, for all corporate purposes, to evidence ownership of an equal number of shares of common stock of the Holding Company. On and after the Effective Date, each issued and outstanding share of common stock of the Bank shall represent one (1) share of common stock of the Holding Company. Such certificates may, but need not be, surrendered and exchanged by the holders thereof after the Effective Date, for new certificates representing the number of shares of common stock of the Holding Company to which the shareholders are entitled as set forth in this Agreement. Certificates evidencing ownership of shares of common stock of the Holding Company shall be issued to the holders of lost or destroyed shares of common stock of the Bank upon presentation to the Holding Company of such evidence of ownership and agreement of indemnity as the Holding Company may reasonably require.
2.4 Stock Options. Upon and by reason of the merger becoming effective, the options to
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purchase shares of common stock of the Bank which have been granted by the Bank pursuant to Plumas Bank stock option plans shall be deemed to be options granted by the Holding Company and the obligations of the Bank with respect thereto shall be assumed by the Holding Company with the same terms and conditions, and each option to acquire one share of common stock of the Bank which is not exercised prior to the Effective Date, shall be deemed to be an option to acquire one share of common stock of the Holding Company.
Section 3. Approvals
3.1 Shareholder Approval. This Agreement shall be submitted to the shareholders of the Bank and Subsidiary for ratification and approval in accordance with the applicable provisions of law.
3.2 Regulatory Approvals. The parties shall obtain the waivers, consents and approvals of all regulatory authorities as required by law for consummation of the merger and plan of reorganization on the terms herein provided, including, without being limited to, those consents and approvals referred to in Paragraph 4.1b.
Section 4. Conditions Precedent, Termination and Payment of Expenses
4.1 Conditions Precedent to the Merger. Consummation of the merger is conditioned upon:
a. ratification and approval of this Agreement by the shareholders of the Bank and Subsidiary, as required by law;
b. obtaining all other consents and approvals, and satisfaction of all other requirements prescribed by law which are necessary for consummation of the merger, including, but not limited to, approval of the FDIC, approval of the CDFI, approval of the Board of Governors of the Federal Reserve System under the Bank Holding Company Act, as amended, and any required action under the Securities Act of 1933 with respect to the securities of the Holding Company issuable upon consummation of the merger;
c. obtaining all consents or approvals, governmental or otherwise, which are or, in the opinion of counsel for the Bank may be, necessary to permit or enable the Surviving Corporation, upon and after the merger, to conduct all or any part of the business and activities of the Bank up to the time of the merger, in the manner in which such activities and business are then conducted;
d. the Banks obtaining for the Holding Company, prior to the Closing Date, a letter, in form and substance satisfactory to the Holding Companys legal counsel, signed by each person who is an affiliate of the Bank for purposes of Rule 145 of the Securities and Exchange Commission to the effect that (i) such person will not dispose of any shares of common stock of the Holding Company to be received pursuant to the reorganization and merger, in violation of the Securities Act of 1933 or the rules and regulations of the Securities and Exchange Commission promulgated thereunder, or in any event prior to such time as financial results covering at least 30 days of post-merger combined operations have been published, and (ii) such person consents to the placing of a legend on the certificate(s) evidencing such shares referring to the issuance of such shares in a transaction to which Rule 145 is applicable and to the giving of
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stop-transfer instructions to the Holding Companys transfer agent with respect to such certificate(s);
e. for the benefit of the Bank and unless waived, the Holding Company shall have received an opinion from a law firm or tax accounting firm, in form and substance satisfactory to both the Bank and the Holding Company, to the effect that: the merger of Subsidiary with and into the Bank and the exchange of shares of common stock of the Bank for shares of common stock of the Holding Company, as provided for herein, will be considered a reorganization within the meaning of Section 368(a)(1)(A) of the Code; no gain or loss will be recognized by the Bank pursuant to consummation of the merger; and no gain or loss will be recognized by the shareholders of the Bank upon the exchange of their shares of common stock of the Bank for shares of common stock of the Holding Company, as provided for herein; and
f. performance by each party hereto of all of its obligations hereunder to be performed prior to the merger becoming effective.
4.2 Termination of the Merger. If any condition in Paragraph 4.1 has not been fulfilled, or, if in the opinion of a majority of the Board of Directors of any of the parties:
a. any action, suit, proceeding or claim has been instituted, made or threatened relating to the proposed merger which makes consummation of the merger inadvisable; or
b. for any other reason consummation of the merger is inadvisable;
then this Agreement may be terminated at any time before the merger becomes effective. Upon termination, this Agreement shall be void and of no further effect, and there shall be no liability by reason of this Agreement or the termination thereof on the part of the parties or their respective directors, officers, employees, agents or shareholders, except as provided in Section 4.3 hereof.
4.3 Expenses of the Merger. Subject to applicable federal laws and regulations, each party shall bear its own expenses of the merger, including filing fees, printing costs, mailing costs, accountants fees and legal fees.
Section 5. Miscellaneous
5.1 Assignment. Neither party shall have the right to assign its rights or obligations under this Agreement.
5.2 Execution. This Agreement may be executed in counterparts, each of which when so executed shall be deemed an original and such counterparts shall together constitute one and the same instrument.
5.3 Governing Law. This Agreement is made and entered into in the State of California, and the laws of said State shall govern the validity and interpretation hereof.
5.4 Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the plan of reorganization and merger and supersedes all prior
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arrangements or understandings with respect thereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.
PLUMAS BANK |
By: |
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Its: |
President, William E. Elliott
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By: |
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Its: |
Secretary, Terrance Reeson
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PLUMAS MERGER COMPANY |
By: |
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Its: |
President and Secretary, William E. Elliott
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PLUMAS BANCORP |
By: |
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Its: |
President, William E. Elliott
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By: |
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Its: |
Secretary, Terrance Reeson
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Exhibit B
PLUMAS BANCORP ARTICLES OF INCORPORATION
ARTICLE EIGHT: VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS . |
A. | Definitions. For the purposes of this Article EIGHT: | |||||
1. | Affiliate shall mean any person who, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with another person. | |||||
2. | Announcement Date shall mean the date of the first public announcement of a proposed Business Combination. | |||||
3. | Approved by a Majority of Continuing Directors with respect to any matter shall mean that such matter has been approved by a majority vote of the members of the Board of Directors who are Continuing Directors. | |||||
4. | Associate shall mean (i) with respect to a corporation or association, any executive officer or director thereof or of a subsidiary thereof, (ii) with respect to a partnership, any general partner thereof or any limited partner thereof having a 10 percent ownership interest in such partnership, (iii) with respect to a business trust, any officer or trustee thereof or of any subsidiary thereof, (iv) with respect to any other trust or an estate, any trustee, executor or similar fiduciary and any person who has a substantial interest as a beneficiary of such trust or estate, (v) with respect to a natural person, the spouse thereof and any other brother, sister, lineal ancestor or descendant of such person, and (vi) any Affiliate of any such person. | |||||
5. | Beneficial Owner shall mean, as to any shares of Voting Stock, a person: | |||||
a. | who beneficially owns, directly or indirectly, such shares; or | |||||
b. | who has (i) the right to acquire such shares from another person (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise or (ii) the right to vote or to direct the voting thereof pursuant to any agreement, arrangement or understanding. For purposes of this definition, a Person shall be deemed to own any shares and possess all rights owned or possessed, directly or indirectly, by all of its Associates and Affiliates or by any other person with which such Person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. |
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6. | Business Combination shall mean any transaction which is referred to in any one or more of subparagraphs 1 through 4 of paragraph B of this Article EIGHT. | |||||
7. | Continuing Director shall mean any member of the Board of Directors of the corporation who is neither an Affiliate nor an Associate of, and not a nominee of, an Interested Shareholder involved in a Business Combination, and who (i) was a member of the Board of Directors prior to the time that such Interested Shareholder became such, or (ii) is a successor of such a member who was nominated to succeed such a member by a majority of Continuing Directors then on the Board. | |||||
8. | Determination Date shall mean the date on which an Interested Shareholder became such. | |||||
9. | Fair Market Value shall mean: (a) in the case of stock, the closing sale price on the date in question of a share of such stock on the National Market System of the National Association of Securities Dealers Automated Quotation System or any system then in use on any national securities exchange or automated quotation system, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors in good faith; and (b) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by a majority of the Continuing Directors in good faith. | |||||
10. | Interested Shareholder shall mean any Person (other than the corporation, any Subsidiary, any employee benefit plan or trust of the corporation or a Subsidiary or any Person who on February 6, 2002 was a director of the corporation) who or which on or after February 6, 2002: | |||||
a. | is the beneficial owner, directly or indirectly, of more than 5% of the combined voting power of the then outstanding Voting Stock, or is an Affiliate or Associate of such Person; or | |||||
b. | acts with any other Person through or as a partnership (general or limited), syndicate, or other group for the purpose of acquiring, holding or disposing of securities of the corporation, which entity or group is the Beneficial Owner, directly or indirectly, of 5% of the combined voting power of the outstanding Voting Stock; or | |||||
c. | is an assignee of or has otherwise succeeded to the beneficial ownership of any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by an Interested Shareholder, unless such assignment or succession shall have occurred pursuant to a Public Transaction or any series of transactions involving a Public Transaction. |
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Any reference to an Interested Shareholder involved in a Business Combination shall also refer to any Affiliates or Associates thereof, any predecessor thereto, and all members of any partnership, syndicate or group which includes such Interested Shareholder. For purposes of determining whether a person is an Interested Shareholder, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of definition 5 above but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. | ||||||
11. | Person shall mean any individual, firm, trust, partnership, association, corporation or other entity. | |||||
12. | Public Transaction shall mean any (a) purchase of shares offered pursuant to an effective registration statement under the Securities Act of 1933 or a permit issued by the California Commissioner of Corporations or (b) open-market purchase of shares if, in either such case, the price and other terms of sale are not negotiated by the purchaser and the seller of the beneficial interest in the shares. | |||||
13. | Subsidiary shall mean any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the corporation; provided, however, that, for the purposes of the definition of Interested Shareholder the term Subsidiary shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the corporation. | |||||
14. | Voting Stock shall mean stock of all classes and series of the corporation entitled to vote generally in the election of directors. | |||||
B. | Transactions Requiring 66-2/3% Affirmative Vote. In addition to any affirmative vote required by law, by these Articles of Incorporation, or otherwise, and except as otherwise expressly provided in paragraph C of this Article EIGHT none of the following transactions shall be consummated unless such consummation shall have been approved by the affirmative vote of the holders of at least 66-2/3% of the combined voting power of the then outstanding shares of Voting Stock voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law, in these Articles of Incorporation or otherwise. | |||||
1. | Any merger or consolidation of the corporation or any Subsidiary with (a) an Interested Shareholder or (b) any other corporation (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder. |
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2. | Any sale, lease, exchange, mortgage, pledge, grant of a security interest, transfer or other disposition (in one transaction or a series of transactions) directly or indirectly, to or with (a) an Interested Shareholder or (b) any other person (whether or not itself an Interested Shareholder) which is, or after such transaction would be, an Affiliate or Associate of an Interested Shareholder of any of the assets of the corporation (including, without limitation, any voting securities of a Subsidiary) or any Subsidiary having an aggregate Fair Market Value of one million dollars or more. | |||||
3. | The issuance or transfer by the corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the corporation or any Subsidiary, or both, to (a) an Interested Shareholder or (b) any other person (whether or not itself an Interested Shareholder) which is, or after such issuance or transfer would be, an Affiliate or Associate of an Interested Shareholder, except as part of a stock split or dividend in which all shareholders of such class are treated equally, or on the conversion or exchange of securities of the corporation or a Subsidiary acquired by the Interested Shareholder in a transaction approved as herein provided. | |||||
4. | Any reclassification of securities (including any reverse stock split), or recapitalization of the corporation, or any merger or consolidation of the corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the corporation or any Subsidiary directly or indirectly beneficially owned by (a) an Interested Shareholder or (b) any other person (whether or not itself an Interested Shareholder) which is, or after such reclassification, recapitalization, merger or consolidation or other transaction would be, an Affiliate or Associate of an Interested Shareholder; or as a result of which the shareholders of the corporation would cease to be shareholders of a corporation incorporated under the laws of the State of California having, as part of its articles of incorporation, provisions to the same effect as this Article EIGHT. | |||||
C. | Exceptions to 66-2/3% Affirmative Vote Requirement. The requirements of paragraph B of this Article EIGHT shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law, by any other provision of these Articles of Incorporation or otherwise, if the Business Combination shall have been Approved by a Majority of the Continuing Directors, or if a state regulatory authority having jurisdiction under the circumstances shall have determined specifically, and not by implication, that the Business Combination is fair to the holders of the Voting Stock, or if all of the following conditions (other than those which are, by their terms, inapplicable) shall have been met. | |||||
1. | The transaction constituting the Business Combination shall provide for a consideration per share to be received by all holders of Common Stock in exchange for all of their shares of Common Stock, and the aggregate amount of |
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cash and the Fair Market Value as of the date of the consummation of the Business Combination of any consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the highest of the following: | ||||||
a. | The Fair Market Value per share of Common Stock on the last trading day before the Announcement Date. | |||||
b. | The average of the Fair Market Values of a share of Common Stock over each trading day in the 90 calendar days immediately prior to the Announcement Date. | |||||
c. | If the Announcement Date of such Business Combination is within five years of the Determination Date in respect of the Interested Shareholder involved in such Business Combination, the highest per-share price (including any brokerage commissions, transfer taxes and soliciting dealers fees) paid by such Interested Shareholder to acquire any shares of Common Stock which are or were at any time within such five year period Beneficially Owned by such Interested Shareholder and were acquired by it at any time within such five year period. The price determination in accordance with this subparagraph 1 and the following subparagraph 2 of this paragraph shall be subject to appropriate adjustment in the event of any recapitalization, stock dividend, stock split, combination of shares or similar event. | |||||
2. | If the transaction constituting the Business Combination shall provide for a consideration to be received by holders of any class or series of outstanding Voting Stock other than Common Stock, the aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of each such class or series of Voting Stock shall be determined in the same manner as provided in subparagraph 1 above. | |||||
3. | The consideration to be received by holders of a particular class or series of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as was previously paid by the Interested Shareholder involved in such Business Combination in order to acquire shares of such class or series of Voting Stock which are beneficially owned by an Interested Shareholder and, if an Interested Shareholder beneficially owns shares of any class or series of Voting Stock which were acquired with varying forms of consideration, the form of consideration for such class or series of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class or series of Voting Stock beneficially owned by such Interested Shareholder. | |||||
4. | After such Interested Shareholder has become such and prior to the consummation of such Business Combination: |
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a. | Except as Approved by a Majority of the Continuing Directors, there shall have been no failure to declare and pay at the regular dates therefor the full amount of any dividends (whether or not cumulative) payable on any outstanding class of stock having a preference over the Common Stock as to dividends. | |||||
b. | There shall have been (i) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock) other than as Approved by a Majority of the Continuing Directors and (ii) an increase in such annual rate of dividends as necessary to prevent any such reduction in the event of any reclassification (including any reverse stock split or combination of shares), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is Approved by a Majority of the Continuing Directors. | |||||
5. | After the Determination Date such Interested Shareholder shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the corporation, whether in anticipation of or in connection with such Business Combination or otherwise. | |||||
6. | A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall, at the corporations expense, be mailed to the shareholders of the corporation, no later than the earlier of (a) 30 days prior to any vote on the proposed Business Combination or (b) if no vote on such Business Combination is required, 60 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). Such proxy statement shall contain at the front thereof, in a prominent place, any recommendations as to the advisability (or inadvisability) of the Business Combination of the Continuing Directors, then in office, if any, and furnished in writing, and an opinion of a reputable investment banking firm as to the fairness (or lack of fairness) of the terms of such Business Combination, from the point of view of the holders of Voting Stock other than an Interested Shareholder if such requirement has been Approved by a Majority of Continuing Directors, (such investment banking firm to be Approved by a Majority of the Continuing Directors, to be furnished with all information it reasonably requests and to be paid a reasonable fee for its services upon receipt by the corporation of such opinion). | |||||
D. | Approval by a Majority of the Continuing Directors. The power and duty to determine for the purposes of this Article EIGHT, on the basis of information known to them after reasonable inquiry, all facts necessary to determine compliance |
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with this Article EIGHT, including, without limitation, (1) whether a Person is an Interested Shareholder, (2) the number of shares of Voting Stock beneficially owned by any Person, (3) whether a Person is an Affiliate or Associate of another, (4) whether the requirements of paragraph C of this Article EIGHT have been met and (5) such other matters with respect to which a determination is required under this Article EIGHT shall be exercised in a manner Approved by a Majority of Continuing Directors. The good faith determination with respect to such Approval by a Majority of the Continuing Directors on such matters shall be conclusive and binding for all purposes of this Article EIGHT. | ||||||
E. | No Effect on Fiduciary Obligations of Interested Shareholders. Nothing contained in this Article EIGHT shall be construed to relieve an Interested Shareholder of any fiduciary obligation imposed by law. | |||||
F. | Amendment, Repeal, etc. Notwithstanding any other provisions of these Articles of Incorporation or the Bylaws of the corporation or the fact that a lesser percentage may be specified by law, these Articles of Incorporation or the Bylaws of the corporation, the affirmative vote of the holders of at least 66-2/3% of the combined voting power of the then outstanding Voting Stock, voting together as a single class, shall be required to amend, alter, adopt any provision inconsistent with or repeal this Article EIGHT. |
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PART II
Item 20. Indemnification of Directors and Officers
The Articles of Incorporation and Bylaws of Plumas Bancorp (Registrant)
provide for indemnification of agents including directors, officers and
employees to the maximum extent allowed by California law including the use of
an indemnity agreement. Registrants Articles further provide for the
elimination of director liability for monetary damages to the maximum extent
allowed by California law. The indemnification law of the State of California
generally allows indemnification in matters not involving the right of the
corporation, to an agent of the corporation if such person acted in good faith
and in a manner such person reasonably believed to be in the best interests of
the corporation, and in the case of a criminal matter, had no reasonable cause
to believe the conduct of such person was unlawful. California law, with
respect to matters involving the right of a corporation, allows indemnification
of an agent of the corporation, if such person acted in good faith, in a manner
such person believed to be in the best interests of the corporation and its
shareholders; provided that there shall be no indemnification for: (i) amounts
paid in settling or otherwise disposing of a pending action without court
approval; (ii) expenses incurred in defending a pending action which is settled
or otherwise disposed of without court approval; (iii) matters in which such
person shall have been adjudged to be liable to the corporation unless and only
to the extent that the court in which the proceeding is or was pending shall
determine that such person is entitled to be indemnified; or (iv) other matters
specified in the California General Corporation Law.
Registrants Bylaws provide that Registrant shall to the maximum extent
permitted by law have the power to indemnify its directors, officers and
employees. Registrants Bylaws also provide that Registrant shall have the
power to purchase and maintain insurance covering its directors, officers and
employees against any liability asserted against any of them and incurred by
any of them, whether or not Registrant would have the power to indemnify them
against such liability under the provisions of applicable law or the provisions
of Registrants Bylaws.
Item 21. Exhibits
II-1
Item 28. Undertakings
The undersigned Registrant hereby undertakes:
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus with is part of the registration statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
Registrant undertakes that every prospectus: (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial
bona fide
offering thereof.
II-2
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
2.
Agreement and Plan of Reorganization and Merger by and between
Registrant, Plumas Merger Company and Plumas Bank attached as Exhibit A to
the proxy statement-prospectus contained in Part I of this Registration
Statement
3.1
Articles of Incorporation of Registrant
3.2
Bylaws of Registrant
4.
Specimen form of certificate for Plumas Bancorp common stock
5.
Opinion re: legality
21.
Sole Subsidiary of the Registrant is Plumas Merger Company, a California
corporation.
23.1
Consent of Counsel is included with the opinion re: legality as Exhibit 5
to this Registration Statement.
Table of Contents
(1)
To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i)
To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii)
To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; provided, however, that paragraphs (1)(i)
and (1)(ii) do not apply if the Registration Statement is on Form
S-3 or Form S-8 and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2)
That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
Table of Contents
Table of Contents
Signatures
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Quincy, California, on March 19, 2002.
Plumas Bancorp |
/s/ William E. Elliott
William E. Elliott, President & CEO |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
/s/ Jerry V. Kehr
Jerry V. Kehr |
, Chairman | March 19, 2002 | ||
/s/ Alvin G. Blickenstaff
Alvin G. Blickenstaff |
, Director | March 19, 2002 | ||
/s/ William E. Elliott
William E. Elliott |
, Director
Principal Executive Officer |
March 19, 2002 | ||
, Director | ||||
Gerald Fletcher |
||||
/s/ Arthur Grohs
Arthur Grohs |
, Director | March 19, 2002 | ||
, Director | ||||
Christine McArthur |
II-4
II-5
Exhibit Index
Exhibit
No.
Description
3.1
Articles of Incorporation as amended of Registrant
3.2
Bylaws of Registrant
4.
Specimen form of certificate for Plumas Bancorp
5.
Opinion re: legality
EXHIBIT 3.1
ARTICLES OF INCORPORATION AS AMENDED OF THE REGISTRANT
ARTICLES OF INCORPORATION
OF
PLUMAS BANCORP
ONE: NAME
The name of the corporation is:
Plumas Bancorp
TWO: PURPOSE
The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporations Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.
THREE: AUTHORIZED STOCK
The corporation is authorized to issue only one class of shares of stock, designated "Common Stock," and the total number of shares which the corporation is authorized to issue is twenty million (20,000,000).
FOUR: DIRECTOR LIABILITY
The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law.
FIVE: INDEMNIFICATION
The corporation is authorized to indemnify its agents (as defined from time to time in Section 317 of the California Corporations Code) to the fullest extent permissible under California law. Any amendment, repeal or modification of the provisions of this Article shall not adversely affect any right or protection of an agent of the corporation existing at the time of such amendment, repeal or modification.
SIX: AGENT FOR SERVICE OF PROCESS
The name and address in this State of this corporation's initial agent for service of process is:
Gary Steven Findley
1470 North Hundley Street
Anaheim, California 92806
IN WITNESS WHEREOF, for the purpose of forming this corporation under the laws of the State of California, the undersigned, constituting the incorporator of this corporation, has executed these Articles of Incorporation.
Dated: January 16, 2002 /s/Gary Steven Findley ---------------------------------------- Gary Steven Findley |
I hereby declare that I am the person who executed the foregoing Articles of Incorporation, which execution is my act and deed.
/s/Gary Steven Findley ---------------------------------------- Gary Steven Findley |
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
PLUMAS BANCORP
A CALIFORNIA CORPORATION
The undersigned certify that:
1. They are the President and Secretary, respectively, of Plumas Bancorp.
2. The following amendments to the Articles of Incorporation of Plumas Bancorp have been duly approved by the Board of Directors.
3. Article Three shall be amended to read as follows:
THREE: AUTHORIZED STOCK
The corporation is authorized to issue two classes of shares of stock:
one class of shares to be called "Common Stock," the second class of
shares to be called "Serial Preferred Stock." The total number of shares
of stock which the corporation shall have authority to issue is twenty
million (20,000,000) of which ten million (10,000,000) shall be Common
Stock and ten million (10,000,000) shall be Serial Preferred Stock.
The designations and the powers, preferences and the rights and the qualifications, limitations or restrictions thereof, of each class of stock of the corporation shall be as follows:
(a) Serial Preferred Stock
The Serial Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized to fix or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of preferred shares, and the number of shares constituting any such series and a designation thereof, or any of them; and to increase or decrease the number of shares of any series subsequent to the issue of shares of that series, but not below the number of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
(b) Common Stock
After the requirements with respect to preferential dividends upon all classes and series of stock entitled thereto shall have been paid or declared and set apart for
payment and after the corporation shall have complied with all requirements, if any, with respect to the setting aside of sums as a sinking fund or for a redemption account of any class of stock, then and not otherwise, the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors.
After distribution in full of the preferential amounts to be distributed to the holders of all classes and series of stock entitled thereto in the event of a voluntary or involuntary liquidation, dissolution or winding up of the corporation, the holders of the Common Stock shall be entitled to receive all the remaining assets of the corporation.
Each holder of Common Stock shall have one (1) vote in respect of each share of such stock held by him, subject, however, to such special voting rights by class as are or may be granted to holders of Serial Preferred Stock.
4. Article Seven shall be added to the Articles of Incorporation of Plumas Bancorp and shall read in the entirety as follows:
SEVEN: CONSIDERATION OF NONMONETARY FACTORS IN CERTAIN TRANSACTIONS
The Board of Directors of the corporation may, and it is hereby declared a proper corporate purpose for the Board of Directors, if it deems it advisable, to oppose any offer, proposal or attempt by any corporation or other business entity, person or group to (a) make any tender or other offer to acquire any of the corporation's stock; (b) merge or consolidate the corporation with or into another entity; (c) purchase or otherwise acquire all or substantially all of the assets of the corporation; or (d) make any transaction similar in purpose or effect to any of the above. In considering whether to oppose, recommend or remain neutral with respect to any of the aforesaid offers, proposals or plans, the Board of Directors shall evaluate what is in the best interests of the corporation and shall consider any pertinent factors which may include but are not limited to any of the following:
A. Whether the offering price, whether in cash or in securities, is adequate and acceptable based upon both the current market price of the corporation's stock and the historical and present operating results and financial condition of the corporation;
B. Whether a price more favorable to the shareholders may be obtained now or in the future from other offerors and whether the corporation's continued existence as an independent corporation will affect the future value of the corporation;
C. The impact the offer would have on the employees, depositors, clients and customers of the corporation or its subsidiaries and the communities which it serves;
D. The present and historical financial position of the offeror, the offeror's reputation in the communities which the offeror serves and the social and/or economic effect which the reputation and practices of the offeror or the offeror's management and
affiliates would have upon the employees, depositors and customers of the corporation and the community which the corporation serves;
E. An analysis of the value of securities (if any) offered in exchange for the corporation's securities; and
F. Any legal or regulatory issues raised by the offer.
5. Article Eight shall be added to the Articles of Incorporation of Plumas Bancorp and shall read in the entirety as follows:
EIGHT: VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS.
A. Definitions. For the purposes of this Article EIGHT:
1. "Affiliate" shall mean any person who, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with another person.
2. "Announcement Date" shall mean the date of the first public announcement of a proposed Business Combination.
3. "Approved by a Majority of Continuing Directors" with respect to any matter shall mean that such matter has been approved by a majority vote of the members of the Board of Directors who are Continuing Directors.
4. "Associate" shall mean (i) with respect to a corporation or association, any executive officer or director thereof or of a subsidiary thereof, (ii) with respect to a partnership, any general partner thereof or any limited partner thereof having a 10 percent ownership interest in such partnership, (iii) with respect to a business trust, any officer or trustee thereof or of any subsidiary thereof, (iv) with respect to any other trust or an estate, any trustee, executor or similar fiduciary and any person who has a substantial interest as a beneficiary of such trust or estate, (v) with respect to a natural person, the spouse thereof and any other brother, sister, lineal ancestor or descendant of such person, and (vi) any Affiliate of any such person.
5. "Beneficial Owner" shall mean, as to any shares of Voting Stock, a person:
a. who beneficially owns, directly or indirectly, such shares; or
b. who has (i) the right to acquire such shares from another person (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise or (ii) the right to vote or to direct the voting thereof pursuant to any agreement, arrangement or
understanding. For purposes of this definition, a Person shall be deemed to own any shares and possess all rights owned or possessed, directly or indirectly, by all of its Associates and Affiliates or by any other person with which such Person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock.
6. "Business Combination" shall mean any transaction which is referred to in any one or more of subparagraphs 1 through 4 of paragraph B of this Article EIGHT.
7. "Continuing Director" shall mean any member of the Board of Directors of the corporation who is neither an Affiliate nor an Associate of, and not a nominee of, an Interested Shareholder involved in a Business Combination, and who (i) was a member of the Board of Directors prior to the time that such Interested Shareholder became such, or (ii) is a successor of such a member who was nominated to succeed such a member by a majority of Continuing Directors then on the Board.
8. "Determination Date" shall mean the date on which an Interested Shareholder became such.
9. "Fair Market Value" shall mean: (a) in the case of stock, the closing sale price on the date in question of a share of such stock on the National Market System of the National Association of Securities Dealers Automated Quotation System or any system then in use on any national securities exchange or automated quotation system, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors in good faith; and (b) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by a majority of the Continuing Directors in good faith.
10. "Interested Shareholder" shall mean any Person (other than the corporation, any Subsidiary, any employee benefit plan or trust of the corporation or a Subsidiary or any Person who on February 6, 2002 was a director of the corporation) who or which on or after February 6, 2002:
a. is the beneficial owner, directly or indirectly, of more than 5% of the combined voting power of the then outstanding Voting Stock, or is an Affiliate or Associate of such Person; or
b. acts with any other Person through or as a partnership (general or limited), syndicate, or other group for the purpose of acquiring, holding or disposing of securities of the corporation, which entity or group is the Beneficial Owner, directly or indirectly, of 5% of the combined voting power of the outstanding Voting Stock; or
c. is an assignee of or has otherwise succeeded to the beneficial ownership of any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by an Interested Shareholder, unless such assignment or succession shall have occurred pursuant to a Public Transaction or any series of transactions involving a Public Transaction.
Any reference to an Interested Shareholder involved in a Business Combination shall also refer to any Affiliates or Associates thereof, any predecessor thereto, and all members of any partnership, syndicate or group which includes such Interested Shareholder. For purposes of determining whether a person is an Interested Shareholder, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of definition 5 above but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
11. "Person" shall mean any individual, firm, trust, partnership, association, corporation or other entity.
12. "Public Transaction" shall mean any (a) purchase of shares offered pursuant to an effective registration statement under the Securities Act of 1933 or a permit issued by the California Commissioner of Corporations or (b) open- market purchase of shares if, in either such case, the price and other terms of sale are not negotiated by the purchaser and the seller of the beneficial interest in the shares.
13. "Subsidiary" shall mean any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the corporation; provided, however, that, for the purposes of the definition of Interested Shareholder the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the corporation.
14. "Voting Stock" shall mean stock of all classes and series of the corporation entitled to vote generally in the election of directors.
B. Transactions Requiring 66-2/3% Affirmative Vote. In addition to any affirmative vote required by law, by these Articles of Incorporation, or otherwise, and except as otherwise expressly provided in paragraph C of this Article EIGHT none of the following transactions shall be consummated unless such consummation shall have been approved by the affirmative vote of the holders of at least 66-2/3% of the combined voting power of the then outstanding shares of Voting Stock voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law, in these Articles of Incorporation or otherwise.
1. Any merger or consolidation of the corporation or any Subsidiary with (a) an Interested Shareholder or (b) any other corporation (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder.
2. Any sale, lease, exchange, mortgage, pledge, grant of a security interest, transfer or other disposition (in one transaction or a series of transactions) directly or indirectly, to or with (a) an Interested Shareholder or (b) any other person (whether or not itself an Interested Shareholder) which is, or after such transaction would be, an Affiliate or Associate of an Interested Shareholder of any of the assets of the corporation (including, without limitation, any voting securities of a Subsidiary) or any Subsidiary having an aggregate Fair Market Value of one million dollars or more.
3. The issuance or transfer by the corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the corporation or any Subsidiary, or both, to (a) an Interested Shareholder or (b) any other person (whether or not itself an Interested Shareholder) which is, or after such issuance or transfer would be, an Affiliate or Associate of an Interested Shareholder, except as part of a stock split or dividend in which all shareholders of such class are treated equally, or on the conversion or exchange of securities of the corporation or a Subsidiary acquired by the Interested Shareholder in a transaction approved as herein provided.
4. Any reclassification of securities (including any reverse stock split), or recapitalization of the corporation, or any merger or consolidation of the corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the corporation or any Subsidiary directly or indirectly beneficially owned by (a) an Interested Shareholder or (b) any other person (whether or not itself an Interested Shareholder) which is, or after such reclassification, recapitalization, merger or consolidation or other transaction would be, an Affiliate or Associate of an Interested Shareholder; or as a result of which the shareholders of the corporation would cease to be shareholders of a
corporation incorporated under the laws of the State of California having, as part of its articles of incorporation, provisions to the same effect as this Article EIGHT.
C. Exceptions to 66-2/3% Affirmative Vote Requirement. The requirements of paragraph B of this Article EIGHT shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law, by any other provision of these Articles of Incorporation or otherwise, if the Business Combination shall have been Approved by a Majority of the Continuing Directors, or if a state regulatory authority having jurisdiction under the circumstances shall have determined specifically, and not by implication, that the Business Combination is fair to the holders of the Voting Stock, or if all of the following conditions (other than those which are, by their terms, inapplicable) shall have been met.
1. The transaction constituting the Business Combination shall provide for a consideration per share to be received by all holders of Common Stock in exchange for all of their shares of Common Stock, and the aggregate amount of cash and the Fair Market Value as of the date of the consummation of the Business Combination of any consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the highest of the following:
a. The Fair Market Value per share of Common Stock on the last trading day before the Announcement Date.
b. The average of the Fair Market Values of a share of Common Stock over each trading day in the 90 calendar days immediately prior to the Announcement Date.
c. If the Announcement Date of such Business Combination is within five years of the Determination Date in respect of the Interested Shareholder involved in such Business Combination, the highest per- share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by such Interested Shareholder to acquire any shares of Common Stock which are or were at any time within such five year period Beneficially Owned by such Interested Shareholder and were acquired by it at any time within such five year period. The price determination in accordance with this subparagraph 1 and the following subparagraph 2 of this paragraph shall be subject to appropriate adjustment in the event of any recapitalization, stock dividend, stock split, combination of shares or similar event.
2. If the transaction constituting the Business Combination shall provide for a consideration to be received by holders of any class or series of outstanding Voting Stock other than Common Stock, the aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share by holders of shares of each such class or series of Voting Stock shall be determined in the same manner as provided in subparagraph 1 above.
3. The consideration to be received by holders of a particular class or series of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as was previously paid by the Interested Shareholder involved in such Business Combination in order to acquire shares of such class or series of Voting Stock which are beneficially owned by an Interested Shareholder and, if an Interested Shareholder beneficially owns shares of any class or series of Voting Stock which were acquired with varying forms of consideration, the form of consideration for such class or series of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class or series of Voting Stock beneficially owned by such Interested Shareholder.
4. After such Interested Shareholder has become such and prior to the consummation of such Business Combination:
a. Except as Approved by a Majority of the Continuing Directors, there shall have been no failure to declare and pay at the regular dates therefor the full amount of any dividends (whether or not cumulative) payable on any outstanding class of stock having a preference over the Common Stock as to dividends.
b. There shall have been (i) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock) other than as Approved by a Majority of the Continuing Directors and (ii) an increase in such annual rate of dividends as necessary to prevent any such reduction in the event of any reclassification (including any reverse stock split or combination of shares), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is Approved by a Majority of the Continuing Directors.
5. After the Determination Date such Interested Shareholder shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the corporation, whether in anticipation of or in connection with such Business Combination or otherwise.
6. A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder
(or any subsequent provisions replacing such Act, rules or regulations) shall, at the corporation's expense, be mailed to the shareholders of the corporation, no later than the earlier of (a) 30 days prior to any vote on the proposed Business Combination or (b) if no vote on such Business Combination is required, 60 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). Such proxy statement shall contain at the front thereof, in a prominent place, any recommendations as to the advisability (or inadvisability) of the Business Combination of the Continuing Directors, then in office, if any, and furnished in writing, and an opinion of a reputable investment banking firm as to the fairness (or lack of fairness) of the terms of such Business Combination, from the point of view of the holders of Voting Stock other than an Interested Shareholder if such requirement has been Approved by a Majority of Continuing Directors, (such investment banking firm to be Approved by a Majority of the Continuing Directors, to be furnished with all information it reasonably requests and to be paid a reasonable fee for its services upon receipt by the corporation of such opinion).
D. Approval by a Majority of the Continuing Directors. The power and duty to determine for the purposes of this Article EIGHT, on the basis of information known to them after reasonable inquiry, all facts necessary to determine compliance with this Article EIGHT, including, without limitation, (1) whether a Person is an Interested Shareholder, (2) the number of shares of Voting Stock beneficially owned by any Person, (3) whether a Person is an Affiliate or Associate of another, (4) whether the requirements of paragraph C of this Article EIGHT have been met and (5) such other matters with respect to which a determination is required under this Article EIGHT shall be exercised in a manner Approved by a Majority of Continuing Directors. The good faith determination with respect to such Approval by a Majority of the Continuing Directors on such matters shall be conclusive and binding for all purposes of this Article EIGHT.
E. No Effect on Fiduciary Obligations of Interested Shareholders. Nothing contained in this Article EIGHT shall be construed to relieve an Interested Shareholder of any fiduciary obligation imposed by law.
F. Amendment, Repeal, etc. Notwithstanding any other provisions of these Articles of Incorporation or the Bylaws of the corporation or the fact that a lesser percentage may be specified by law, these Articles of Incorporation or the Bylaws of the corporation, the affirmative vote of the holders of at least 66-2/3% of the combined voting power of the then outstanding Voting Stock, voting together as a single class, shall be required to amend, alter, adopt any provision inconsistent with or repeal this Article EIGHT.
6. The foregoing amendments to the Articles of Incorporation of Plumas Bancorp have been duly approved by the required vote of the shareholders in accordance with Section 902, California Corporations Code. The total number of outstanding shares of Plumas Bancorp
is 100. The number of shares voting in favor of the amendment to amend Article THREE to the Articles of Incorporation of Plumas Bancorp equaled or exceeded the vote required, and the percentaged vote required was more than 50%. The number of shares voting in favor of the amendment to add Article SEVEN to the Articles of Incorporation of Plumas Bancorp equaled or exceeded the vote required, and the percentage vote required was more than 50%. The number of shares voting in favor of the amendment to add Article EIGHT to the Articles of Incorporation of Plumas Bancorp equaled or exceeded the vote required, and the percentage vote required was more than 66 2/3%.
We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge.
/s/William E. Elliott ---------------------------------------- William E. Elliott President /s/Terrance J. Reeson ---------------------------------------- Terrance J. Reeson Secretary |
EXHIBIT 3.2
BYLAWS OF THE REGISTRANT
BYLAWS
OF
PLUMAS BANCORP
ARTICLE I
OFFICES
SECTION 1.1. PRINCIPAL OFFICE. The principal executive office of the corporation is hereby located at such place as the board of directors (the "board") shall determine. The board is hereby granted full power and authority to change said principal executive office from one location to another.
SECTION 1.2. OTHER OFFICES. Other business offices may, at any time, be established by the board at such other places as it deems appropriate.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.1. PLACE OF MEETINGS. Meetings of shareholders may be held at such place within or outside the state of California designated by the board. In the absence of any such designation, shareholders' meetings shall be held at the principal executive office of the corporation.
SECTION 2.2. ANNUAL MEETING. The annual meeting of shareholders shall be held for the election of directors on a date and at a time designated by the board. The date so designated shall be within fifteen (15) months after the last annual meeting. At such meeting, directors shall be elected, and any other proper business within the power of the shareholders may be transacted.
SECTION 2.3. SPECIAL MEETINGS. Special meetings of the shareholders may be called at any time by the board, the chairperson of the board, the president, or by the holders of shares entitled to cast not less than ten percent (10%) of the votes at such meeting. If a special meeting is called by any person or persons other than the board, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or by registered mail to the chairperson of the board, the president, any vice president or the secretary of the corporation. The officer receiving the request shall cause notice to be promptly given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than 35 nor more than 60 days after receipt of the request. If the notice is not given within 20 days after receipt of the request, the person or persons requesting the meeting
may give the notice. Nothing in this paragraph shall be construed as limiting, fixing or affecting the time when a meeting of shareholders called by action of the board may be held.
SECTION 2.4. NOTICE OF MEETINGS. Written notice, in accordance with Section 2.5 of this Article II, of each annual or special meeting of shareholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (a) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (b) in the case of the annual meeting, those matters which the board, at the time of the mailing of the notice, intends to present for action by the shareholders, but, subject to the provisions of applicable law, any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the board for election.
If action is proposed to be taken at any meeting for approval of (a) a contract
or transaction in which a director has a direct or indirect financial interest,
pursuant to Section 310 of the California Corporations Code, as amended (the
"Code"), (b) an amendment of the articles of incorporation, pursuant to Section
902 of the Code, (c) a reorganization of the corporation, pursuant to Section
1201 of the Code, (d) a voluntary dissolution of the corporation, pursuant to
Section 1900 of the Code, or (e) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pursuant to Section
2007 of the Code, the notice shall also state the general nature of that
proposal.
SECTION 2.5. MANNER OF GIVING NOTICE. Notice of a shareholders' meeting shall be given either personally or by first-class mail or telegraphic or other written communication, charges prepaid, addressed to the shareholder at the address of that shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice. If no such address appears on the corporation's books or is given, notice shall be deemed to have been given if sent to that shareholder by first-class mail or telegraphic or other written communication to the corporation's principal executive office or if published at least once in a newspaper of general circulation in the county in which the principal executive office is located. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram or other means of written communication. An affidavit of mailing or other means of giving any notice in accordance with the above provisions, executed by the secretary, assistant secretary or any transfer agent, shall be prima facie evidence of the giving of the notice.
If any notice addressed to the shareholder at the address of such shareholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the shareholder at such address, all future notices shall be deemed to have been duly given without further mailing if the same shall be available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice to all other shareholders.
SECTION 2.6. QUORUM. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders. The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.
SECTION 2.7. ADJOURNED MEETING AND NOTICE THEREOF. Any shareholders' meeting, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy at the meeting, but in the absence of a quorum (except as provided in Section 2.6 of this Article II) no other business may be transacted at such meeting.
When any meeting of shareholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken. However, when any shareholders' meeting is adjourned for more than 45 days from the date set for the original meeting, or, if after adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting.
SECTION 2.8. VOTING. The shareholders entitled to notice of any meeting or to vote at any such meeting shall be only persons in whose name shares stand on the stock records of the corporation on the record date determined in accordance with Section 2.9 of this Article II.
Voting of shares of the corporation shall in all cases be subject to the provisions of Sections 700 through 711, inclusive, of the Code.
The shareholders' vote may be by voice or ballot; provided, however, that any election for directors must be by ballot if demanded by any shareholder before the voting has begun. On any matter other than election of directors, any shareholder may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal (other than the election of directors), but, if the shareholder fails to specify the number of shares which the shareholder is voting affirmatively, it will be conclusively presumed that the shareholder's approving vote is with respect to all shares that the shareholder is entitled to vote. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on any matter (other than the election of directors) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Code or by the articles of incorporation.
Subject to the following sentence and the provisions of Section 708 of the Code, every shareholder entitled to vote at any election of directors may cumulate such shareholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder's shares are entitled, or distribute the shareholder's votes on the same principle among as many candidates as the shareholder thinks fit. No shareholder shall be entitled to cumulate votes for any candidate or candidates pursuant to the preceding sentence unless such candidate's or candidates' names have been placed in nomination prior to the voting and the shareholder has given notice at the meeting and prior to the voting of the shareholder's intention to cumulate the shareholder's votes. If any one shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination.
In any election of directors, the candidates receiving the highest number of affirmative votes of the shares entitled to be voted for them, up to the number of directors to be elected, shall be elected. Votes against the director and votes withheld shall have no legal effect.
SECTION 2.9. RECORD DATE. The board may fix, in advance, a record date for the determination of the shareholders entitled to notice of any meeting or to vote or to receive payment of any dividend or other distribution, or allotment of any rights, or to exercise any rights in respect of any other lawful action. The record date so fixed shall be not more than 60 days nor less than 10 days prior to the date of the meeting nor more than 60 days prior to any other action. When a record date is so fixed, only shareholders of record on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution, or allotment of rights, or to exercise rights, as the case may be, notwithstanding any transfer of shares on the books of the corporation after the record date. A record date for a meeting of shareholders shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting. The board shall fix a new record date if the meeting is adjourned for more than 45 days.
If no record date is fixed by the board, the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice of the meeting is given or, if notice is waived, the close of business on the business day next preceding the day on which the meeting is held. The record date for determining shareholders for any purpose other than as set forth in this Section 2.9 or Section 2.11 of this Article II shall be at the close of business on the day on which the board adopts the resolution relating thereto, or the sixtieth day prior to the date of such other action, whichever is later.
SECTION 2.10. CONSENT OF ABSENTEES. The transactions of any meeting of shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, who was not present in person or by proxy, signs a written waiver of notice, or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by the Code to be included in the notice but not so included, if such objection is expressly made at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of shareholders need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes of the meeting, except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of Section 2.4 of this Article II, the waiver of notice, consent or approval shall state the general nature of the proposal.
SECTION 2.11. ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Subject to Section 603 of the Code, any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action so taken, is signed by the holders of the outstanding shares, or their proxies, having not less than the minimum
number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. All such consents shall be filed with the secretary of the corporation and shall be maintained in the corporate records; provided, however, that (1) unless the consents of all shareholders entitled to vote have been solicited in writing, notice of any shareholder approval without a meeting by less than unanimous consent shall be given, as provided by Section 603(b) of the Code, and (2) in the case of election of directors, such a consent shall be effective only if signed by the holders of all outstanding shares entitled to vote for the election of directors; provided, however, that subject to applicable law, a director may be elected at any time to fill a vacancy on the board that has not been filled by the directors, by the written consent of the holders of a majority of the outstanding shares entitled to vote for the election of directors. Any written consent may be revoked by a writing received by the secretary of the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the secretary.
Unless a record date for voting purposes be fixed as provided in Section 2.9 of this Article II, the record date for determining shareholders entitled to give consent pursuant to this Section 2.11, when no prior action by the board has been taken, shall be the day on which the first written consent is given.
SECTION 2.12. PROXIES. Every person entitled to vote shares or execute written consents has the right to do so either in person or by one or more persons authorized by a written proxy executed and dated by such shareholder and filed with the secretary of the corporation prior to the convening of any meeting of the shareholders at which any such proxy is to be used or prior to the use of such written consent. A validly executed proxy which does not state that it is irrevocable continues in full force and effect unless: (1) revoked by the person executing it prior to the vote pursuant thereto, by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting of shareholders, by attendance at such meeting and voting in person by the person executing the proxy; or (2) written notice of the death or incapacity of the maker of the proxy is received by the corporation before the vote pursuant thereto is counted; provided, however, that no proxy shall be valid after the expiration of 11 months from the date of its execution unless otherwise provided in the proxy.
SECTION 2.13. INSPECTORS OF ELECTION. In advance of any meeting of shareholders, the board may appoint any persons other than nominees for office as inspectors of election to act at such meeting and any adjournment thereof. If no inspectors of election are so appointed, or if any persons so appointed fail to appear or refuse to act, the chairperson of any such meeting may, and on the request of any shareholder or shareholder's proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting on the request of one or more shareholders or proxies, the holders of a majority of shares or their proxies present shall determine whether one (1) or three (3) inspectors are to be appointed.
The duties of such inspectors shall be as prescribed by Section 707(b) of the Code and shall include: determining the number of shares outstanding and the voting power of each; determining the shares represented at the meeting; determining the existence of a quorum; determining the authenticity, validity and the effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and
tabulating all votes or consents; determining when the polls shall close; determining the result; and doing such acts as may be proper to conduct the election or vote with fairness to all shareholders. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all.
SECTION 2.14. CONDUCT OF MEETINGS. The president shall preside at all meetings of the shareholders and shall conduct each such meeting in a businesslike and fair manner, but shall not be obligated to follow any technical, formal or parliamentary rules or principles of procedure. The presiding officer's rulings on procedural matters shall be conclusive and binding on all shareholders, unless at the time of ruling a request for a vote is made to the shareholders entitled to vote and represented in person or by proxy at the meeting, in which case the decision of a majority of such shares shall be conclusive and binding on all shareholders. Without limiting the generality of the foregoing, the presiding officer shall have all the powers usually vested in the presiding officer of a meeting of shareholders.
ARTICLE III
DIRECTORS
SECTION 3.1. POWERS. Subject to the provisions of the Code and any limitations in the articles of incorporation and these bylaws relating to actions required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board. The board may delegate the management of the day-to-day operations of the business of the corporation to a management company or other person provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the board shall have the following powers in addition to the other powers enumerated in these bylaws:
(a) to select and remove all the other officers, agents and employees of the corporation, prescribe any qualifications, powers and duties for them that are consistent with law, the articles of incorporation or these bylaws, fix their compensation, and require from them security for faithful service;
(b) to conduct, manage and control the affairs and business of the corporation and to make such rules and regulations therefor not inconsistent with law, the articles of incorporation or these bylaws, as they may deem best;
(c) to adopt, make and use a corporate seal, to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time as in their judgment they may deem best;
(d) to authorize the issuance of shares of stock of the corporation from time to time, upon such terms and for such consideration as may be lawful;
(e) to borrow money and incur indebtedness for the purposes of the corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory and capital notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor and any agreements pertaining thereto;
(f) to prescribe the manner in which and the person or persons by whom any or all of the checks, drafts, notes, contracts and other corporate instruments shall be executed;
(g) to appoint and designate, by resolution adopted by a majority of the authorized number of directors, one or more committees, each consisting of two or more directors, including the appointment of alternate members of any committee who may replace any absent member at any meeting of the committee; and
(h) generally, to do and perform every act or thing whatever that may pertain to or be authorized by the board of directors of a corporation incorporated under the laws of this state.
SECTION 3.2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of directors of the corporation shall not be less than eight (8) nor more than fifteen (15) until changed by an amendment of the articles of incorporation or by a bylaw amending this Section 3.2 duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote. The exact number of directors shall be fixed from time to time, within the range specified in the articles of incorporation or in this Section 3.2: (i) by a resolution duly adopted by the board; (ii) by a bylaw or amendment thereof duly adopted by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of the holders of a majority of the outstanding shares entitled to vote; or (iii) by approval of the shareholders (as defined in Section 153 of the Code.
SECTION 3.3. NOMINATIONS OF DIRECTORS. Nominations for election of members of the board may be made by the board or by any holder of any outstanding class of capital stock of the corporation entitled to vote for the election of directors. Notice of intention to make any nominations (other than for persons named in the notice of the meeting called for the election of directors) shall be made in writing and shall be delivered or mailed to the president of the corporation by the later of: (i) the close of business twenty-one (21) days prior to any meeting of shareholders called for the election of directors; or (ii) ten (10) days after the date of mailing of notice of the meeting to shareholders. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the number of shares of capital stock of the corporation owned by each proposed nominee; (d) the name and residence address of the notifying shareholder; (e) the number of shares of capital stock of the corporation owned by the notifying shareholder; (f) the number of shares of capital stock of any bank, bank holding company, savings and loan association or other depository institution owned beneficially by the nominee or by the notifying shareholder and the identities and locations of any such institutions; and (g) whether the proposed nominee has ever been convicted of or pleaded nolo contendere to any criminal offense involving dishonesty or breach of trust, filed a petition in bankruptcy or been adjudged bankrupt. The notification shall be signed by the nominating shareholder and by each nominee, and shall be accompanied by a written consent to be named as a nominee for election as a director from each proposed nominee. Nominations not made in accordance with these procedures shall be disregarded by the chairperson of the meeting,
and upon his or her instructions, the inspectors of election shall disregard all votes cast for each such nominee. The foregoing requirements do not apply to the nomination of a person to replace a proposed nominee who has become unable to serve as a director between the last day for giving notice in accordance with this paragraph and the date of election of directors if the procedure called for in this paragraph was followed with respect to the nomination of the proposed nominee.
A copy of the preceding paragraph shall be set forth in the notice to shareholders of any meeting at which directors are to be elected.
SECTION 3.4. ELECTION AND TERM OF OFFICE. The directors shall be elected at each annual meeting of shareholders, but if any annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. Each director shall hold office until the next annual meeting and until a successor has been elected and qualified.
SECTION 3.5. VACANCIES. Vacancies on the board, except for a vacancy created by the removal of a director, may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected shall hold office until the next annual meeting and until such director's successor has been elected and qualified. A vacancy on the board created by the removal of a director may only be filled by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of the holders of all of the outstanding shares.
The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors. Any such election by written consent other than to fill a vacancy created by removal requires the consent of a majority of the outstanding shares entitled to vote.
Any director may resign effective upon giving written notice to the chairperson of the board, the president, secretary, or the board, unless the notice specifies a later time for the effectiveness of such resignation. If the board accepts the resignation of a director tendered to take effect at a future time, the board or the shareholders shall have power to elect a successor to take office when the resignation is to become effective.
A vacancy or vacancies on the board shall be deemed to exist in case of the death, resignation or removal of any director, or if the authorized number of directors is increased, or if the shareholders fail, at any annual or special meeting of shareholders at which any director or directors are elected, to elect the full authorized number of directors to be voted for at that meeting.
The board may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony.
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of the director's term of office.
SECTION 3.6. PLACE OF MEETINGS. Regular or special meetings of the board shall be held at any place within or outside the state of California which has been designated in the notice of meeting or if there is no notice, at the principal executive office of the corporation, or at a place designated by resolution of the board or by the written consent of the board. Any regular or special meeting is valid
wherever held if held upon written consent of all members of the board given either before or after the meeting and filed with the secretary of the corporation.
SECTION 3.7. REGULAR MEETINGS. Immediately following each annual meeting of shareholders, the board shall hold a regular meeting for the purpose of organization, any desired election of officers and the transaction of other business. Notice of this meeting shall not be required.
Other regular meetings of the board shall be held without notice on the third Wednesday of each month at the hour of 8:30 a.m., or at such different date and time as the board may from time to time fix by resolution; provided, however, should said day fall upon a legal holiday observed by the corporation at its principal executive office, then said meeting shall be held at the same time and place on the next succeeding full business day of the corporation. Call and notice of all regular meetings of the board are hereby dispensed with.
SECTION 3.8. SPECIAL MEETINGS. Special meetings of the board for any purpose or purposes may be called at any time by the chairperson of the board, the president, any vice president, the secretary or by any two directors.
Special meetings of the board shall be held upon four days' written notice by mail or 48 hours' notice delivered personally or by telephone, telegraph, telex or other similar means of communication. Any such notice shall be addressed or delivered to each director at the director's address as shown upon the records of the corporation or as given to the corporation by the director for purposes of notice or, if such address is not shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. Such notice may, but need not, specify the purpose of the meeting, or the place if the meeting is to be held at the principal executive office of the corporation.
Notice by mail shall be deemed to have been given at the time a written notice is deposited in the United States mails, postage prepaid. Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means or by facsimile transmission, to the recipient. Oral notice shall be deemed to have been given at the time it is communicated, in person or by telephone or wireless, to the recipient or to a person at the office of the recipient whom the person giving the notice has reason to believe will promptly communicate it to the recipient.
SECTION 3.9. QUORUM. A majority of the authorized number of directors
constitutes a quorum of the board for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the board, unless a greater number be
required by the articles of incorporation and subject to the provisions of
Section 310 of the Code (as to approval of contracts or transactions in which a
director has a direct or indirect material financial interest) and Section
317(e) of the Code (as to indemnification of directors). A meeting at which a
quorum is initially present may continue to transact business notwithstanding
the withdrawal of directors, if any action taken is approved by at least a
majority of the required quorum for such meeting.
SECTION 3.10. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the
board may participate in a meeting through use of a conference telephone or
similar communications equipment, so long as all members participating in such
meeting can hear one another. Participation in a meeting pursuant to this
Section 3.10 constitutes presence in person at such meeting.
SECTION 3.11. WAIVER OF NOTICE. Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes of the meeting, whether before or after the meeting, or who attends the meeting without protesting, before the meeting or at its commencement, the lack of notice to such director. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.
SECTION 3.12. ADJOURNMENT. A majority of the directors present, whether or not a quorum is present, may adjourn any directors' meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given, unless the meeting is adjourned for more than twenty-four hours, in which case notice of the time and place shall be given before the time of the adjourned meeting to the directors who were not present at the time of the adjournment.
SECTION 3.13. ACTION WITHOUT MEETING. Any action required or permitted to be taken by the board may be taken without a meeting if all members of the board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the board. Such action by written consent shall have the same effect as a unanimous vote of the board.
SECTION 3.14. FEES AND COMPENSATION. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the board. This Section 3.14 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise, and receiving compensation for those services.
SECTION 3.15. RIGHTS OF INSPECTION. Every director of the corporation shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation and also of its subsidiary corporations, domestic or foreign. Such inspection by a director may be made in person or by agent or attorney, and the right of inspection includes the right to copy and make extracts.
SECTION 3.16. REMOVAL OF DIRECTOR WITHOUT CAUSE. Any or all of the directors of the corporation may be removed without cause if the removal is approved by the outstanding shares, subject to the following:
(a) Except if the corporation has a classified board, no director may be removed (unless the entire board is removed) when the votes cast against removal, or not consenting in writing to the removal, would be sufficient to elect the director if voted cumulatively at an election at which the same total number of votes were cast (or, if the action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of the director's most recent election were then being elected.
(b) When by the provisions of the articles the holders of the shares of any class or series, voting
as a class or series, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series.
(c) When the corporation has a classified board, a director may not be removed if the votes cast against removal of the director, or not consenting in writing to the removal, would be sufficient to elect the director if voted cumulatively (without regard to whether shares may otherwise be voted cumulatively) at an election at which the same total number of votes were cast (or, if the action is taken by written consent, all shares entitled to vote were voted) and either the number of directors elected at the most recent annual meeting of shareholders, or if greater, the number of directors for whom removal is being sought, were then being elected.
SECTION 3.17. REMOVAL OF DIRECTORS BY SHAREHOLDER'S SUIT. The superior court of the proper county may, at the suit of the shareholders holding at least 10 percent of the number of outstanding shares of any class, remove from office any director in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation and may bar from reelection any director so removed for a period prescribed by the court. The corporation shall be made a party to such action.
ARTICLE IV
OFFICERS
SECTION 4.1. OFFICERS. The officers of the corporation shall be a president, a secretary and a chief financial officer. The corporation may also have, at the discretion of the board, a chairperson of the board, a vice chairperson of the board, one or more vice presidents, one or more assistant secretaries, one or more assistant financial officers and such other officers as may be elected or appointed in accordance with the provisions of Section 4.3 of this Article IV. One person may hold two or more offices, except those of president and secretary.
SECTION 4.2. APPOINTMENT. The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 4.3 or Section 4.5 of this Article IV, shall be chosen by, and shall serve at the pleasure of, the board, and shall hold their respective offices until their resignation, removal or other disqualification from service, or until their respective successors shall be appointed, subject to the rights, if any, of an officer under any contract of employment.
SECTION 4.3. SUBORDINATE OFFICERS. The board may appoint, or may empower the president to appoint, such other officers as the business of the corporation may require, each to hold office for such period, have such authority and perform such duties as are provided in these bylaws or as the board may from time to time determine.
SECTION 4.4. REMOVAL AND RESIGNATION. Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the board at any time, or, except in the case of an officer chosen by the board, by any officer upon whom such power of removal may be conferred by the board.
Any officer may resign at any time by giving written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
SECTION 4.5. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointment to such office.
SECTION 4.6. CHAIRPERSON. The chairperson of the board, if there shall be such an officer, shall, if present, preside at all meetings of the board and exercise and perform such other powers and duties as may be assigned from time to time by the board.
SECTION 4.7. VICE CHAIRPERSON. The vice chairperson of the board, if there shall be such an officer, shall, in the absence of the chairperson of the board, preside at all meetings of the board and exercise and perform such other powers and duties as may be assigned from time to time by the board.
SECTION 4.8. PRESIDENT. Subject to such powers, if any, as may be given by the board to the chairperson of the board, if there shall be such an officer, the president is the general manager and chief executive officer of the corporation and has, subject to the control of the board, general supervision, direction and control of the business and affairs of the corporation. The president shall preside at all meetings of the shareholders and in the absence of both the chairperson of the board and the vice chairperson, or if there be none, at all meetings of the board. The president has the general powers and duties of management usually vested in the office of president and chief executive officer of a corporation and such other powers and duties as may be prescribed by the board.
SECTION 4.9. VICE PRESIDENT. In the absence or disability of the president, the vice presidents in order of their rank as fixed by the board or, if not ranked, the vice president designated by the board, shall perform all the duties of the president and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the bylaws, the board, the president or the chairperson of the board.
SECTION 4.10. SECRETARY. The secretary shall keep or cause to be kept, at the principal executive office or such other place as the board may order, a book of minutes of all meetings of shareholders, the board and its committees, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice or waivers of notice thereof given, the names of those present at the board and committee meetings, the number of shares present or represented at shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, a copy of the bylaws of the corporation at the principal executive office or business office in accordance with Section 213 of the Code. The secretary shall keep, or cause to be kept, at the principal executive office or at the office of the corporation's transfer agent or registrar, if one is appointed, a record of its shareholders, or a duplicate record of its
shareholders, giving the names and addresses of all shareholders and the number and class of shares held by each.
The secretary shall give, or cause to be given, notice of all the meetings of the shareholders, of the board and of any committees thereof required by these bylaws or by law to be given, shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the board.
SECTION 4.11. ASSISTANT SECRETARY. The assistant secretary or the assistant secretaries, in the order of their seniority, shall, in the absence or disability of the secretary, or in the event of such officer's refusal to act, perform the duties and exercise the powers of the secretary and shall have such additional powers and discharge such duties as may be assigned from time to time by the president or by the board.
SECTION 4.12. CHIEF FINANCIAL OFFICER. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of the properties and financial and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares, and shall send or cause to be sent to the shareholders of the corporation such financial statements and reports that by law or these bylaws are required to be sent to them. The books of account shall at all times be open to inspection by any director of the corporation.
The chief financial officer shall deposit all monies and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the board. The chief financial officer shall disburse the funds of the corporation as may be ordered by the board, shall render to the president and directors, whenever they request it, an account of all transactions engaged in as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board.
SECTION 4.13. ASSISTANT FINANCIAL OFFICER. The assistant financial officer or the assistant financial officers, in the order of their seniority, shall, in the absence or disability of the chief financial officer, or in the event of such officer's refusal to act, perform the duties and exercise the powers of the chief financial officer, and shall have such additional powers and discharge such duties as may be assigned from time to time by the president or by the board.
SECTION 4.14. SALARIES. The salaries of the officers shall be fixed from time to time by the board and no officer shall be prevented from receiving such salary by reason of the fact that such officer is also a director of the corporation.
SECTION 4.15. OFFICERS HOLDING MORE THAN ONE OFFICE. Any two or more offices, except those of president and secretary, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity.
SECTION 4.16. INABILITY TO ACT. In the case of absence or inability to act of any officer of the corporation and of any person herein authorized to act in his or her place, the board may from time to time delegate the powers or duties of such officer to any other officer, or any director or other person whom it may select.
ARTICLE V
INDEMNIFICATION
SECTION 5.1. DEFINITIONS. For use in this Article V, certain terms are defined as follows:
(a) "Agent": A director, officer, employee or agent of the corporation or a person who is or was serving at the request of the corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise (including service with respect to employee benefit plans and service on creditors' committees with respect to any proceeding under the Bankruptcy Code, assignment for the benefit of creditors or other liquidation of assets of a debtor of the corporation), or a person who was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another enterprise at the request of the predecessor corporation.
(b) "Loss": All expenses, liabilities, and losses including attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon, and any federal, state, local, or foreign taxes imposed on any Agent as a result of the actual or deemed receipt of any payments under this Article.
(c) "Proceeding": Any threatened, pending or completed action, suit or proceeding including any and all appeals, whether civil, criminal, administrative or investigative.
SECTION 5.2. RIGHT TO INDEMNIFICATION. Each person who was or is a party or is threatened to be made a party to or is involved (as a party, witness or otherwise) in any Proceeding, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was an Agent, is entitled to indemnification. Agent shall be indemnified and held harmless by the corporation to the fullest extent authorized by law. The right to indemnification conferred in this Article V shall be a contract right. It is the corporation's intention that these bylaws provide indemnification in excess of that expressly permitted by Section 317 of the Code, as authorized by the corporation's articles of incorporation.
SECTION 5.3. AUTHORITY TO ADVANCE EXPENSES. The right to indemnification provided in Section 5.2 of these bylaws shall include the right to be paid, in advance of a Proceeding's final disposition, expenses incurred in defending that Proceeding, provided, however, that if required by the California General Corporation Law, as amended, the payment of expenses in advance of the final disposition of the Proceeding shall be made only upon delivery to the corporation of an undertaking by or on behalf of the Agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation as authorized under this Article V or otherwise. The Agent's obligation to reimburse the corporation for advances shall be unsecured and no interest shall be charged thereon.
SECTION 5.4. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 5.2 or 5.3 of these bylaws is not paid in full by the corporation within thirty (30) days after a written claim has been received by the corporation, the claimant may at any time there-after bring suit against the corporation to
recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expenses (including attorneys' fees) of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition) that the claimant has not met the standards of conduct that make it permissible under the California General Corporation Law for the corporation to indemnify the claimant for the amount claimed. The burden of proving such a defense shall be on the corporation. Neither the failure of the corporation (including its board of directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that the indemnification of the claimant is proper under the circumstances because he or she has met the applicable standard of conduct set forth in the California General Corporation Law, nor an actual determination by the corporation (including its board of directors, independent legal counsel, or its shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not already met the applicable standard of conduct.
SECTION 5.5. PROVISIONS NONEXCLUSIVE. The rights conferred on any person by this Article V shall not be exclusive of any other rights that such person may have or hereafter acquire under any statute, provision of the articles of incorporation, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. To the extent that any provision of the articles of incorporation, agreement, or vote of the shareholders or disinterested directors is inconsistent with these bylaws, the provision, agreement, or vote shall take precedence.
SECTION 5.6. AUTHORITY TO INSURE. The corporation may purchase and maintain insurance to protect itself and any Agent against any Loss asserted against or incurred by such person, whether or not the corporation would have the power to indemnify the Agent against such Loss under applicable law or the provisions of this Article V. If the corporation owns all or a portion of the shares of the company issuing the insurance policy, the company and/or the policy must meet one of the two sets of conditions set forth in Section 317 of the Code.
SECTION 5.7. SURVIVAL OF RIGHTS. The rights provided by this Article V shall continue as to a person who has ceased to be an Agent and shall inure to the benefit of the heirs, executors, and administrators of such person.
SECTION 5.8. SETTLEMENT OF CLAIMS. The corporation shall not be liable to indemnify any Agent under this Article V: (a) for any amounts paid in settlement of any action or claim effected without the corporation's written consent, which consent shall not be unreasonably withheld; or (b) for any judicial award, if the corporation was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action.
SECTION 5.9. EFFECT OF AMENDMENT. Any amendment, repeal or modification of this Article V shall not adversely affect any right or protection of any Agent existing at the time of such amendment, repeal or modification.
SECTION 5.10. SUBROGATION. Upon payment under this Article V, the corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Agent, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the corporation effectively to bring suit to enforce such rights.
SECTION 5.11. NO DUPLICATION OF PAYMENTS. The corporation shall not be liable under this Article V to make any payment in connection with any claim made against the Agent to the extent the Agent has otherwise actually received payment (under any insurance policy, agreement, vote or otherwise) of the amounts otherwise indemnifiable hereunder.
ARTICLE VI
OTHER PROVISIONS
SECTION 6.1. INSPECTION OF CORPORATE RECORDS.
(a) A shareholder or shareholders of the corporation holding at least five percent (5%) in the aggregate of the outstanding voting shares of the corporation or who hold at least one percent (1%) of the outstanding voting shares and have filed a Schedule 14B with the United States Securities and Exchange Commission relating to the election of directors of the corporation shall have an absolute right to do either or both of the following:
(i) inspect and copy the record of shareholders' names and addresses and shareholdings during usual business hours upon five business days' prior written demand upon the corporation; or
(ii) obtain from the transfer agent, if any, for the corporation, upon written demand and upon the tender of its usual charges for such a list (the amount of which charges shall be stated to the shareholder by the transfer agent upon request), a list of the shareholders' names and addresses who are entitled to vote for the election of directors and their shareholdings, as of the most recent record date for which it has been compiled, or as of a date specified by the shareholder subsequent to the date of demand. The corporation shall have a responsibility to cause the transfer agent to comply with this Section 6.1;
(b) The record of shareholders shall also be open to inspection and copying by any shareholder or holder of a voting trust certificate at any time during usual business hours upon written demand on the corporation, for a purpose reasonably related to such holder's interest as a shareholder or holder of a voting trust certificate. A written demand for such inspection shall be accompanied by a statement in reasonable detail of the purpose of the inspection.
(c) The accounting books and records and minutes of proceedings of the shareholders and the board and committees of the board shall be open to inspection upon written demand on the corporation by any shareholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to such holder's interest as a
shareholder or as a holder of such voting trust certificate. The right of inspection created by this Section 6.1(c) shall extend to the records of each subsidiary of the corporation. A written demand for such inspection shall be accompanied by a statement in reasonable detail of the purpose of the inspection.
(d) Any inspection and copying under this Section 6.1 may be made in person or by agent or attorney.
SECTION 6.2. INSPECTION OF BYLAWS. The corporation shall keep at its principal executive office in California the original or a copy of these bylaws as amended to date, which shall be open to inspection by shareholders at all reasonable times during office hours.
SECTION 6.3. EXECUTION OF DOCUMENTS, CONTRACTS. Subject to the provisions of applicable law, any note, mortgage, evidence of indebtedness, contract, share certificate, initial transaction statement or written statement, conveyance or other instrument in writing and any assignment or endorsement thereof executed or entered into between the corporation and any other person, when signed by the chairperson of the board, the president or any vice president and the secretary, any assistant secretary, the chief financial officer or any assistant financial officer of the corporation, or when stamped with a facsimile signature of such appropriate officers in the case of share certificates, shall be valid and binding upon the corporation in the absence of actual knowledge on the part of the other person that the signing officers did not have authority to execute the same. Any such instruments may be signed by any other person or persons and in such manner as from time to time shall be determined by the board, and unless so authorized by the board, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or amount.
SECTION 6.4. CERTIFICATES OF STOCK. Every holder of shares of the corporation shall be entitled to have a certificate signed in the name of the corporation by the chairperson or the vice chairperson of the board or the president or a vice president and by the secretary or an assistant secretary or the chief financial officer or an assistant financial officer, certifying the number of shares and the class or series of shares owned by the shareholder. The signatures on the certificates may be facsimile signatures. If any officer, transfer agent or registrar who has signed a certificate or whose facsimile signature has been placed upon the certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue.
Except as provided in this Section 6.4, no new certificate for shares shall be issued in lieu of an old certificate unless the latter is surrendered and canceled at the same time. The board may, however, in case any certificate for shares is alleged to have been lost, stolen or destroyed, authorize the issuance of a new certificate in lieu thereof, and the corporation may require that the corporation be given a bond or other adequate security sufficient to indemnify it against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate.
Prior to the due presentment for registration of transfer in the stock transfer book of the corporation, the registered owner shall be treated as the person exclusively entitled to vote, to receive notifications and otherwise to exercise all the rights and powers of an owner, except as expressly provided otherwise by the laws of the state of California.
SECTION 6.5. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The president or any other officer or officers authorized by the board or the president are each authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares or other securities of any other corporation or corporations standing in the name of the corporation. The authority herein granted may be exercised either by any such officer in person or by any other person authorized to do so by proxy or power of attorney duly executed by said officer.
SECTION 6.6. SEAL. The corporate seal of the corporation shall consist of two concentric circles, between which shall be the name of the corporation, and in the center shall be inscribed the word "Incorporated" and the date of its incorporation.
SECTION 6.7. FISCAL YEAR. The fiscal year of the corporation shall begin on the first day of January and end on the 31st day of December of each year.
SECTION 6.8. CONSTRUCTION AND DEFINITIONS. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the Code and the California General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person.
SECTION 6.9. BYLAW PROVISIONS CONTRARY TO OR INCONSISTENT WITH PROVISIONS OF
LAW. Any article, section, subsection, subdivision, sentence, clause or phrase
of these bylaws which, upon being construed in the manner provided in this
Section 6.9, shall be contrary to or inconsistent with any applicable provision
of the Code or other applicable laws of the state of California or of the United
States shall not apply so long as said provisions of law shall remain in effect,
but such result shall not affect the validity or applicability of any other
portions of these bylaws, it being hereby declared that these bylaws would have
been adopted and each article, section, subsection, subdivision, sentence,
clause or phrase thereof, irrespective of the fact that any one or more
articles, sections, subsections, subdivisions, sentences, clauses or phrases is
or are illegal.
ARTICLE VII
AMENDMENTS
SECTION 7.1. AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or these bylaws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the articles of incorporation of the corporation set forth the number of authorized directors of the corporation, the authorized number of directors may be changed only by an amendment of the articles of incorporation and provided also that a bylaw reducing the fixed number or the minimum number of directors to a number less than five cannot be adopted if the votes cast against adoption at a meeting, or the shares not consenting in the case of action by written consent, are equal to more than 16 2/3 percent of the outstanding shares entitled to vote.
SECTION 7.2. AMENDMENT BY DIRECTORS. Subject to the rights of the shareholders as provided in Section 7.1 of this Article VII, bylaws, other than a bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable board or vice versa, may be adopted, amended or repealed by the board.
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting secretary of Plumas, a California corporation; and
2. That the foregoing Bylaws, comprising 19 pages, constitute the Bylaws of Plumas Bancorp as duly adopted by action of the board of directors of Plumas Bancorp duly taken on February 6, 2002.
/s/ Terrance J. Reeson ---------------------------------------- Terrance J. Reeson, Secretary |
EXHIBIT 4
SPECIMEN STOCK CERTIFICATE OF PLUMAS BANCORP
Common Stock Common Stock Number Shares
______________ Plumas Bancorp ____________
Incorporated under the laws of the State of California See Reverse for Certain Definitions
CUSIP _________
This certifies that:
is the record holder of:
shares of no par value common stock of Plumas Bancorp
hereinafter designated the "Company", transferable on the share register of the Company in person or by duly authorized attorney upon surrender of this Certificate properly endorsed or assigned. By the acceptance of this Certificate, the holder hereof assents to and agrees to be bound by all of the provisions of the Articles of Incorporation and all amendments thereto.
Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers.
Dated:
Terrance J. Reeson Plumas Bancorp William E. Elliott Secretary President and Chief Executive Officer Incorporated Jan. 17, 2002 California |
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -__________Custodian_______ (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to Minors Act____________ JT TEN - as joint tenants with right (State) of survivorship and not as tenants in common |
Additional abbreviations may also be used though not in the above list.
For valued received, _________________ hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
__________________________________________________________________________shares
of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint __________________________________Attorney to transfer said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated_______________________
Signature(s) Guaranteed
EXHIBIT 5
OPINION RE: LEGALITY
[LETTERHEAD OF GARY STEVEN FINDLEY & ASSOCIATES]
March 15, 2002
Plumas Bancorp
35 S. Lindan Avenue
Quincy, California 95971
Re: Registration Statement on Form S-4
Gentlemen:
At your request, we have examined the form of Registration Statement to be filed with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, for the offer and sale of up to 2,247,839 shares of your common stock, no par value (the "Bancorp common stock"). We are familiar with the actions taken or to be taken in connection with the authorization, issuance and sale of the Bancorp common stock.
It is our opinion that, subject to said proceedings being duly taken and completed as now contemplated before the issuance of the Bancorp common stock, the Bancorp common stock, will, upon the issuance and sale thereof be legally and validly issued and fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to said Registration Statement.
Respectfully submitted,
GARY STEVEN FINDLEY & ASSOCIATES
By: /s/ Gary Steven Findley Gary Steven Findley Attorney at Law |