Registration No. 333-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4 EF
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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RICHLAND COUNTY BANCSHARES, INC.
(Exact name of registrant as specified in its Charter)
WISCONSIN Applied For 6711
(State of Incorporation) (I.R.S. Employer I.D. No.) (Primary Standard
Industrial Classification
Code No.)
195 WEST COURT STREET
RICHLAND CENTER, WISCONSIN 53581
(608) 647-6306
(Address and telephone number of principal executive offices)
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JUDITH L. DAVIS JOHN E. KNIGHT
195 West Court Street Boardman, Suhr, Curry & Field LLP
Richland Center, WI 53581 One S. Pinckney Street, 4th Floor
(608) 647-6306 Post Office Box 927
Madison, WI 53701-0927
(Name, address, telephone no.
of agent for service) (Copy of Notices)
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Approximate date of commencement of proposed sale of the securities to the
public: upon consummation of the reorganization.
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. [ ] ___________
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Title of each class Proposed maximum Proposed maximum
of securities to be Amount to be offering price per aggregate offering Amount of
registered registered unit* price* registration fee
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Common Stock, 85,500 $166.56 $14,240,880.00 $4,201.06
$1.00 par value
*Based on the book value of the common stock of Richland County Bank on June 30, 1998, estimated solely for
purposes of calculating the registration fee pursuant to Rule 457(f)(2).
</TABLE>
<PAGE>
RICHLAND COUNTY BANCSHARES, INC.
Cross Reference Sheet
Form S-4, Part I
Item Number Location in Prospectus
1 FACING PAGE OF REGISTRATION STATEMENT; OUTSIDE FRONT COVER PAGE
OF PROSPECTUS
2 TABLE OF CONTENTS
3 SUMMARY
4 SUMMARY; THE REORGANIZATION; COMPARISON OF BANK STOCK WITH
HOLDING COMPANY STOCK
5 Not applicable
6 RICHLAND COUNTY BANCSHARES, INC.; RICHLAND COUNTY BANK
7 Not applicable
8 THE REORGANIZATION
9 RICHLAND COUNTY BANCSHARES, INC.; RICHLAND COUNTY BANK
10 Not applicable
11 Not applicable
12 Not applicable
13 Not applicable
14 RICHLAND COUNTY BANCSHARES, INC.; COMPARISON OF BANK STOCK WITH
HOLDING COMPANY STOCK
15 Not applicable
16 Not applicable
17 RICHLAND COUNTY BANK; COMPARISON OF BANK STOCK WITH HOLDING
COMPANY STOCK
18 THE REORGANIZATION; RICHLAND COUNTY BANCSHARES, INC.; RICHLAND
COUNTY BANK; RIGHTS OF DISSENTING STOCKHOLDERS OF BANK
19 Not applicable
<PAGE>
October __, 1998
To the Shareholders of Richland County Bank:
Richland County Bank ("Bank") will hold a special meeting of its
shareholders on November 10, 1998, at 4:00 p.m., at the Richland County Bank,
Richland Center, Wisconsin.
This meeting is of great importance to Bank shareholders, because you will
be asked to consider and approve the formation of a one-bank holding company for
the Bank. A bank holding company is a corporation that owns most or all of the
stock of a bank. If a bank holding company is approved for the Bank, the Bank
shareholders would have their Bank stock exchanged for holding company stock.
The Bank shareholders would become the holding company shareholders, and the
holding company would become the sole shareholder of the Bank. The formation of
a bank holding company would not involve any sale of the Bank.
A Wisconsin corporation, Richland County Bancshares, Inc., has been formed
at the direction of Bank management to serve as a holding company for the Bank.
Richland County Bancshares, Inc.'s current Board of Directors is identical to
the Bank's Board of Directors. If the holding company structure is approved for
the Bank, the Bank shareholders will become shareholders of Richland County
Bancshares, Inc., which would become the sole shareholder of the Bank.
More than 150 one-bank holding companies have been formed throughout
Wisconsin. The Board of Directors believes that a holding company would be
beneficial to the Bank and to its shareholders because it would enable the Bank
to:
1. Respond rapidly and effectively to changes that may occur in the future
in the laws and regulations governing banks and bank-related activities;
2. Be better able to acquire other banks, to be operated either as branches
of the Bank or as separate banks, in areas not now served by the Bank;
3. Offer bank-related services, through nonbanking affiliates to be
acquired or created in the future, to present Bank customers and other members
of the public;
4. Provide a potential market for the stock of the holding company;
5. Meet any future capital requirements, that are not provided by the
future earnings of the Bank, through borrowings by the holding company that are
repaid by nontaxable dividends from the Bank; and
6. Compete more effectively with other bank holding companies.
<PAGE>
If the holding company is approved, shareholders of the Bank will receive
three (3) shares of holding company stock for each share of Bank stock.
This letter is followed by a formal notice of the special meeting of
shareholders and a Prospectus/Proxy Statement ("Prospectus"). The Prospectus
serves two purposes. First, it is the proxy statement of the Bank which
describes the proposed transaction and asks you to send in your Proxy to vote on
the holding company at the special meeting of shareholders. A form of Proxy is
enclosed separately (on blue paper). Second, it is a Prospectus of the holding
company which describes the holding company and its stock.
Financial statements for the Bank prepared in accordance with generally
accepted accounting principles and dated December 31, 1997 and June 30, 1998,
are also included in this mailing.
THE BOARD OF DIRECTORS OF THE BANK UNANIMOUSLY RECOMMENDS APPROVAL OF THE
HOLDING COMPANY FORMATION. ALL OF THE BANK'S DIRECTORS HAVE INDICATED THEIR
INTENTION TO VOTE IN FAVOR OF RICHLAND COUNTY BANCSHARES, INC. AS A HOLDING
COMPANY FOR THE BANK. THE BOARD OF DIRECTORS URGES YOU TO READ THE ENCLOSED
PROSPECTUS CAREFULLY, AND HOPES THAT YOU CHOOSE TO JOIN THEM IN APPROVING THE
HOLDING COMPANY FORMATION.
Please return the enclosed Proxy to ensure that your shares are represented
in the voting on this transaction. IN ORDER TO APPROVE THE HOLDING COMPANY, THE
AFFIRMATIVE VOTE OF A MAJORITY OF ALL OF THE OUTSTANDING SHARES OF THE BANK WILL
BE NEEDED. YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY SHARES YOU OWN. PLEASE
SIGN AND RETURN THE PROXY PROMPTLY IN THE ENCLOSED ENVELOPE, EVEN IF YOU PLAN TO
ATTEND THE MEETING. If you do attend the meeting, you may at that time revoke
your proxy and vote your shares in person at the meeting.
The Directors believe that the formation of a holding company is an
important step forward for the Bank. If you have questions about the holding
company or the Prospectus, please call me at (608) 647-6306.
Very truly yours,
Judith L. Davis, President
<PAGE>
PROXY STATEMENT
OF
RICHLAND COUNTY BANK
AND
PROSPECTUS OF
RICHLAND COUNTY BANCSHARES, INC.
Special Meeting of Richland County Bank
Shareholders to be held November 10, 1998
This Proxy Statement is being furnished to the shareholders of Richland
County Bank, Richland Center, Wisconsin, in connection with the solicitation of
proxies by the Board of Directors of Richland County Bank for use at the special
meeting of shareholders to be held on November 10, 1998. At that meeting, the
shareholders of Richland County Bank ("Bank") will consider and vote upon the
proposed acquisition of Richland County Bank by Richland County Bancshares, Inc.
("Holding Company") by means of a reorganization.
Under its Articles of Incorporation, the Holding Company will have a right
of first refusal to purchase shares of its stock at the price and on the terms
and conditions offered to any Holding Company shareholder by a prospective
purchaser. Such a limitation does not currently exist on the stock of the Bank.
The right of first refusal will apply to Holding Company shares in the hands of
all shareholders, including subsequent transferees. Certificates evidencing
shares of the Holding Company's stock will bear a legend describing the right of
first refusal. The right of first refusal provision may be amended only by the
affirmative vote of not less than seventy-five percent (75%) of the outstanding
shares of voting stock of the Holding Company. The Holding Company's right to
purchase may limit a shareholder's ability to sell shares to other purchasers.
The right of first refusal and the limitation on amendment of this provision
might also limit the formation of a market for the stock outside the Holding
Company. See "RICHLAND COUNTY BANCSHARES, INC. -- Right of First Refusal and
Indemnification Provisions" and "COMPARISON OF BANK STOCK WITH HOLDING COMPANY
STOCK - Market for the Stock."
---------------------------------
Richland County Bancshares, Inc. has filed a Registration Statement on Form
S-4 pursuant to the Securities Act of 1933, as amended, covering the shares of
Richland Bancshares, Inc. common stock to be issued in connection with the
reorganization. These materials constitute the Prospectus of Richland County
Bancshares, Inc. to the shareholders of Richland County Bank.
<PAGE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO PURCHASE THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR
TO OR FROM ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION
OF ANY OFFER. IN THOSE JURISDICTIONS THE SECURITIES OR BLUE SKY LAWS OF WHICH
REQUIRE THIS OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THIS OFFER MAY BE
MADE ON BEHALF OF RICHLAND COUNTY BANCSHARES, INC. ONLY BY REGISTERED BROKERS OR
DEALERS WHO ARE LICENSED UNDER THE LAWS OF SUCH JURISDICTIONS.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, THE INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES TO WHICH THIS
PROSPECTUS RELATES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF RICHLAND COUNTY BANCSHARES, INC. OR
RICHLAND COUNTY BANK SINCE THE DATE OF THIS PROSPECTUS. RICHLAND COUNTY
BANCSHARES, INC. IS REQUIRED TO ADVISE SHAREHOLDERS OF ANY FUNDAMENTAL CHANGE
AFFECTING THE TERMS OF THE TRANSACTION BETWEEN RICHLAND COUNTY BANK AND RICHLAND
COUNTY BANCSHARES, INC.
THE SECURITIES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
-----------------------------------
THE SHARES OF RICHLAND COUNTY BANCSHARES, INC. COMMON STOCK TO BE ISSUED IN
THE REORGANIZATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------------
The date of this Proxy Statement/Prospectus is __________________, 1998.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY
INTRODUCTION
THE REORGANIZATION
General
Reasons for the Reorganization
Summary of the Reorganization
Special Meeting of Shareholders
Operation of the Bank Following the Reorganization
Accounting Treatment of the Transaction
Conditions Precedent to the Reorganization
Closing Date
Resales of Holding Company Stock by "Affiliates"
Tax Considerations
Securities Regulation
Resale of Holding Company Common Stock
Expenses of Reorganization
RIGHTS OF DISSENTING SHAREHOLDERS OF BANK
RICHLAND COUNTY BANCSHARES, INC.
History, Business, and Properties
Management
Principal Shareholders
Description of Holding Company's Common Stock
Executive Compensation
Transactions with Related Parties
Right of First Refusal and Indemnification Provisions
RICHLAND COUNTY BANK
History, Business and Properties
Management
Business Background of Directors and Executive Officers
Executive Compensation
Director Compensation
Board Review of Management Compensation
<PAGE>
Principal Shareholders
Description of the Stock of the Bank
Transactions with Related Parties
Indemnification of Directors and Officers
Shares of the Stock Owned or Controlled by Management
Recommendation of the Bank's Board of Directors
Financial Statements
COMPARISON OF BANK STOCK WITH HOLDING COMPANY STOCK
Authorized Shares and Par Value
Voting Rights
Dividends
Market for the Stock
Value
Other
SUPERVISION AND REGULATION
General
Banking Regulation
Capital Requirements for the Holding Company and the Bank
FDIC Deposit Insurance Premiums
Loan Limits to Borrowers
Recent Regulatory Developments
AVAILABLE INFORMATION
LEGAL MATTERS
EXHIBIT A - Agreement and Plan of Reorganization
EXHIBIT B - Tax Opinion of Boardman, Suhr, Curry & Field
EXHIBIT C - Sections 221.0706 through 221.0718 of the Wisconsin Statutes
EXHIBIT D - Articles of Incorporation of Richland County Bancshares, Inc.
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus/Proxy Statement. This summary is necessarily incomplete and
selective, and is qualified in its entirety by reference to the more detailed
information contained elsewhere in this Prospectus/Proxy Statement. Shareholders
are urged to review carefully the entire Prospectus/Proxy Statement including
the Exhibits.
Parties Richland County Bancshares, Inc.
195 West Court Street
Richland Center, Wisconsin 53581
(608) 647-6306
Richland County Bank
195 West Court Street
Richland Center, Wisconsin 53581
(608) 647-6306
Richland County Bancshares, Inc. ("Holding Company"), a Wisconsin
corporation, was organized at the request of the management of Richland County
Bank ("Bank") for the purpose of becoming a one-bank holding company for the
Bank. The Holding Company is currently in the organizational stage and has no
operating history. See "RICHLAND COUNTY BANCSHARES, INC. - History, Business,
and Properties." The Bank is a bank chartered under the laws of the State of
Wisconsin and has been operating as a commercial bank with its main office in
Richland Center, Wisconsin, since 1881. The Bank offers comprehensive banking
services to the residential, commercial, industrial and agricultural areas that
it serves. These services include agricultural, commercial, real estate and
personal loans; checking, savings and time deposits; investments, and individual
retirement accounts. See "RICHLAND COUNTY BANK - History, Business, and
Properties."
The Reorganization
The Board of Directors of the Bank proposes to form a bank holding company
for the Bank. The Holding Company will acquire all the outstanding shares of the
Bank through a reorganization ("Reorganization"). As a result of the
Reorganization, the Holding Company will be owned by the former Bank
shareholders and the Bank will become a wholly-owned subsidiary of the Holding
Company. No change in the compensation or benefits of Bank directors or
executive officers is contemplated as a result of the Holding Company formation.
The Holding Company will not be required to file reports with the Securities and
Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934.
However, the Holding Company will provide its shareholders, on a voluntary
i
<PAGE>
basis, with the same types of reports as are currently provided by the Bank to
Bank shareholders. See "AVAILABLE INFORMATION." For more information about the
Reorganization, see "THE REORGANIZATION - Summary of the Reorganization" and the
Agreement and Plan of Reorganization attached as Exhibit A.
Special Meeting of Shareholders
A special meeting of the shareholders of the Bank will be held on November
10, 1998, at 4:00 p.m. at the Richland County Bank, Richland Center, Wisconsin.
The purpose of the meeting is to consider and vote upon the formation of a bank
holding company pursuant to the Agreement and Plan of Reorganization.
Shareholders of record as of the close of business on June 30, 1998, will be
entitled to vote at the meeting. The affirmative vote of the holders of a
majority of the outstanding Bank stock will be required to approve the
transaction. Directors and executive officers of the Bank own or control,
directly or indirectly, approximately 45.57% of the outstanding Bank stock. See
"THE REORGANIZATION - Special Meeting of Shareholders."
Recommendation of the Bank's Board of Directors
The Board of Directors of the Bank believes that the proposed
Reorganization will benefit the Bank and is in the best interests of its
shareholders. Accordingly, the Board recommends that its shareholders vote their
Bank shares to approve the Reorganization. See "THE REORGANIZATION - Reasons for
the Reorganization" and "RICHLAND COUNTY BANK - Recommendation of the Bank's
Board of Directors."
Effect on Bank Shareholders
Subject to certain limitations and dissenters' rights provided by law, on
the Closing Date of the Reorganization each share of Bank common stock
outstanding immediately prior to the Closing Date will be exchanged for three
shares of Holding Company stock, and the Bank shareholders will become the
shareholders of the Holding Company.
Dissenters' Rights
Under certain provisions of the Wisconsin Statutes, holders of Bank stock
have the right to dissent from the Reorganization and obtain payment of the fair
value of their shares in cash if they (i) deliver to the Bank before the vote is
taken written notice of the shareholder's or beneficial shareholder's intent to
demand payment for his or her shares if the proposed Reorganization is
effectuated, and refrain from voting his or her shares in favor of the proposed
Reorganization, (ii) demand payment in writing before the date stated in the
ii
<PAGE>
dissenters' notice, (iii) surrender their Bank stock certificates, and (iv) take
certain other actions. See "RIGHTS OF DISSENTING SHAREHOLDERS OF BANK" and
Exhibit B.
Federal Income Tax Consequences
The Reorganization has been structured with the intent that it qualify for
federal income tax purposes as a tax-free transaction, so that shareholders of
the Bank will recognize no gain or loss on the exchange of their Bank stock for
Holding Company stock. Exhibit B to this Prospectus is an opinion of counsel
that the Reorganization is a tax-free transaction. The opinion of counsel will
not be binding on the Internal Revenue Service. See "THE REORGANIZATION - Tax
Considerations."
Date of the Reorganization
The Reorganization will take place as promptly as practicable after receipt
of all necessary approvals of governmental agencies and authorities and
satisfaction of certain other terms and conditions. The Bank will close its
transfer records twenty (20) days prior to the Closing Date. Until the Bank's
transfer records are closed, Bank shareholders may sell or otherwise transfer
their Bank stock. The Reorganization will close no later than April 15, 1999,
unless otherwise agreed in writing by the parties. See "THE REORGANIZATION
Closing Date."
Conditions for the Reorganization
The Reorganization is conditioned upon approval by the Wisconsin Department
of Financial Institutions Division of Banking, the Federal Reserve Board, the
Federal Deposit Insurance Corporation, and a majority of the outstanding stock
of the Bank, and upon other terms and conditions. See "THE REORGANIZATION -
Conditions Precedent to the Reorganization." The Holding Company and the Bank
may amend, modify or waive certain conditions if, in the opinion of the Boards
of Directors of the Holding Company and the Bank, the action would not have a
material adverse effect on the benefits intended for holders of Holding Company
stock.
Right of First Refusal
The Articles of Incorporation of the Holding Company contain a provision
giving the Holding Company a right of first refusal to purchase shares of its
stock at a price and on the terms and conditions offered to a shareholder by a
prospective purchaser. Transactions within a shareholder's immediate family and
stock pledges are permitted (although the stock so transferred or pledged
remains subject to the right of first refusal). The right of first refusal may
limit a shareholder's ability to sell shares to purchasers other than the
iii
<PAGE>
Holding Company. In addition, the right of first refusal may reduce the
likelihood of another buyer obtaining control of the Holding Company through the
acquisition of large blocks of Holding Company stock. Such a limitation does not
currently exist on the stock of the Bank. See "COMPARISON OF BANK STOCK WITH
HOLDING COMPANY STOCK - Market for the Stock."
The Holding Company's Articles of Incorporation further provide that the
provision of the Articles giving the Holding Company a right of first refusal to
purchase its stock may be amended only by the affirmative vote of not less than
75% of the outstanding shares of voting stock of the Holding Company. See
"RICHLAND COUNTY BANCSHARES, INC. - Right of First Refusal and Indemnification
Provisions."
By contrast with the Holding Company, the Bank is not subject to these
latter provisions in its Articles of Incorporation, Bylaws, or under applicable
banking law.
<PAGE>
------------------------------------------
PROXY STATEMENT
AND
PROSPECTUS
------------------------------------------
INTRODUCTION
Richland County Bancshares, Inc. ("Holding Company") is a business
corporation organized at the request of the Board of Directors of Richland
County Bank ("Bank") for the purpose of the reorganization. See "RICHLAND COUNTY
BANCSHARES, INC." The Bank is a state-chartered bank that has been operating as
a commercial bank with its main office in Richland Center, Wisconsin, since
1881. See "RICHLAND COUNTY BANK."
The reorganization is being conducted for the purpose of forming a holding
company for the Bank, according to a plan of reorganization approved by the
Board of Directors of the Holding Company and by the Board of Directors of the
Bank. See "THE REORGANIZATION -Summary of the Reorganization." The Board of
Directors of the Bank believes that the formation of a bank holding company will
benefit the Bank and its shareholders. See "THE REORGANIZATION - Reasons for the
Reorganization" and "RICHLAND COUNTY BANK - Recommendation of the Bank's Board
of Directors."
This Prospectus contains information intended to help each Bank shareholder
decide whether to vote to approve the formation of a bank holding company. See,
for example, "COMPARISON OF BANK STOCK WITH HOLDING COMPANY STOCK." The Board of
Directors of the Holding Company urges each Bank shareholder to carefully read
the entire Prospectus.
1
<PAGE>
THE REORGANIZATION
General
The reorganization is designed to offer shareholders of Richland County
Bank ("Bank") the opportunity to form a bank holding company. Pursuant to the
reorganization, the following steps have already occurred:
1. Richland County Bancshares, Inc. ("Holding Company"), a Wisconsin
business corporation, has been incorporated for the purpose of
participating in the reorganization and becoming a bank holding
company; and
2. the Board of Directors of the Bank and the Board of Directors of the
Holding Company have adopted and approved an Agreement and Plan of
Reorganization.
The following steps, among others, remain to be completed pursuant to the
reorganization (see "THE REORGANIZATION - Conditions Precedent to the
Reorganization"):
1. the shareholders of the Bank must approve the reorganization by the
affirmative vote of a majority of the outstanding Bank stock;
2. the Federal Reserve Board must approve the Holding Company's
application to become a bank holding company under the Bank Holding
Company Act of 1956, as amended;
3. the Wisconsin Department of Financial Institutions Division of Banking
must approve the reorganization; and
4. the Federal Deposit Insurance Corporation must approve the
reorganization.
Reasons for the Reorganization
The Board of Directors of the Bank recommends the reorganization because it
believes that a bank holding company will offer opportunities to the Bank to
compete more effectively and to expand its services in type, in number, and in
geographical scope. In addition, the Board believes that the formation of a
holding company will provide benefits to the shareholders and to its community.
Flexibility. The proposed reorganization will, in the opinion of the Board,
better prepare the Bank for responding flexibly and efficiently to future
changes in the laws and regulations governing banks and bank-related activities.
2
<PAGE>
Often, opportunities arise for bank holding companies that are not available to
banks. The bank holding company corporate structure may prove valuable in taking
advantage of any new opportunities in banking and bank-related fields that are
made available by deregulation or otherwise.
Market for the Stock. Under Wisconsin law, a state-chartered bank is
prohibited from holding or purchasing more than 10% of its own stock, except in
certain limited circumstances. Therefore, any Bank shareholder who desires to
sell his or her Bank stock must generally locate a person willing to purchase
the stock. In the past, there has been a limited market for Bank stock, making
it difficult for a seller to find a buyer, particularly if the seller owns a
large number of shares that would require a substantial purchase price.
The Holding Company will not be prohibited by law from purchasing Holding
Company stock, unless such a purchase would make the Holding Company insolvent.
The Holding Company may therefore become a potential buyer of that stock.
Selling shareholders are required to offer their shares first to the Holding
Company under its right of first refusal. The Holding Company will not be
required to purchase stock, however, but may do so in the discretion of its
Board of Directors. In certain circumstances, approval by the Federal Reserve
Board may be required for the purchase of Holding Company stock. For more
information about the Holding Company's ability to purchase stock, see
"COMPARISON OF BANK STOCK WITH HOLDING COMPANY STOCK - Market for the Stock."
Expansion. The principal means for a bank to seek continued growth, apart
from utilizing more fully the business potential within its present market area,
is by use of the holding company structure to reach into other geographic
markets. After the reorganization, the Holding Company will be able to, and may,
subject to approval of regulatory authorities, create new banks or acquire
existing banks anywhere in Wisconsin and neighboring states. The Holding Company
has no present plans to acquire any such banks.
Diversification. The proposed bank holding company offers the ability to
diversify the business of the Bank by creating or acquiring corporations engaged
in bank-related activities. Diversification into bank-related activities is
governed by the Bank Holding Company Act of 1956, as amended, and the
regulations of the Federal Reserve Board promulgated pursuant to that Act. The
range of activities in which a holding company may engage through nonbank
subsidiaries includes, subject to approval of the Federal Reserve Board, loan
service companies, mortgage companies, independent trust companies, small loan
and factoring companies, equipment leasing companies, credit life and disability
insurance companies, and certain insurance, advisory, and brokerage operations.
The Holding Company may in the future engage directly or through subsidiaries in
one or more of those activities. However, the timing and extent of those
operations by the Holding Company will depend on many factors, including
competitive and financial conditions existing in the future as well as the then
financial condition of the Holding Company and the Bank.
3
<PAGE>
Capital Requirements. The proposed reorganization will also provide, in the
opinion of the Board, greater flexibility in meeting the financing needs of the
Bank or other banks or corporations acquired by the Holding Company. Currently,
there is no need for the Bank to obtain additional capital. If the need for
additional capital should arise, however, those capital requirements of the Bank
could be obtained through borrowings by the Holding Company, which would then be
paid to the Bank by the Holding Company as a capital contribution or as a
purchase of additional Bank stock. The loan to the Holding Company would be paid
with dividends received from the Bank, which would not be taxable to the Holding
Company if it holds at least 80% of the Bank stock. The interest expense
incurred by the Holding Company on the loan could be used to offset Bank
earnings on a consolidated federal income tax return.
General. The Board believes that greater overall strength will result to
the Bank through the formation of the Holding Company. The formation of the
Holding Company is not part of a plan or effort to adversely affect any
shareholder, or to unduly benefit any shareholder, director, or officer. Except
for those shareholders who exercise dissenters' rights, the proportionate
interests of the Bank shareholders in the Holding Company stock will be
identical to their current proportionate interests in the Bank stock.
Summary of the Reorganization
The Holding Company intends to acquire all of the outstanding stock of the
Bank through a reorganization. To perform the reorganization, the Holding
Company will organize a new bank, called New Richland County Bank ("New Bank"),
as a wholly-owned subsidiary of the Holding Company. New Bank will not conduct
any banking business or any other business. It will have no employees, no
liabilities, no operations, and (except for a nominal capital contribution
required by law) no assets. It will be a "shell" corporation, and will be
incorporated for the sole purpose of assisting in the reorganization.
To perform the reorganization, the Bank will be merged into the New Bank.
The stock of the Bank now held by the shareholders will be converted into
Holding Company stock at the rate of three shares of Holding Company stock for
each one share of Bank stock that they currently own. Therefore, the Bank
shareholders will become shareholders of the Holding Company. In addition, by
virtue of the merger of the Bank into the New Bank, the Bank will become a
wholly-owned subsidiary of the Holding Company.
Currently, the Bank shareholders own 28,500 shares of the Bank's stock.
After the reorganization, the Holding Company will own the Bank, and the former
Bank shareholders will own the Holding Company, as follows:
4
<PAGE>
Current After Reorganization
------------------------- --------------------------------
Shareholders Shareholders
------------------------- --------------------------------
28,500 shares 85,500 shares (100%) of
(100%)of Bank Holding Company stock
stock
--------------------------------
Holding Company
--------------------------------
28,500 shares (100%) of
Bank stock
-------------------------
Bank
------------------------- --------------------------------
Bank
--------------------------------
Special Meeting of Shareholders
Section 221.0702 of the Wisconsin Statutes requires that at least a
majority of the outstanding stock of a state-chartered bank approve a merger of
that bank. Because the reorganization will be conducted as a merger of the New
Bank and the Bank, that requirement must be fulfilled.
A vote on the proposed holding company will be taken at the special meeting
of shareholders of the Bank, to be held on November 10, 1998, at 4:00 p.m., at
the Richland County Bank, Richland Center, Wisconsin. The close of business on
June 30, 1998, has been fixed as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting. On that date
there were outstanding and entitled to vote 28,500 shares of Bank stock. Each
outstanding share of Bank stock entitles the record holder to one vote on all
matters to be acted upon at the meeting. The presence at the meeting in person
or by proxy of the holders of a majority of the issued and outstanding shares of
Bank stock entitled to vote will constitute a quorum for the transaction of
business. The affirmative vote of 14,251 of the issued and outstanding shares of
Bank stock is required to approve the holding company. The Bank's articles of
incorporation and bylaws as well as applicable law do not appear to address the
issue of whether a vote for abstention is treated as a "yes" vote or "no" vote.
Accordingly, for purposes of counting votes at this special meeting of
shareholders, abstentions (that is, proxies on which the box labeled "Abstain"
has been checked) are treated as "no" votes. Also for purposes of counting votes
at the special meeting of shareholders, broker non-votes are treated as
abstentions and therefore as "no" votes. Abstentions are not treated as "no"
votes for purposes of dissenters' rights.
THE BOARD OF DIRECTORS OF THE BANK UNANIMOUSLY RECOMMENDS THAT HOLDERS OF
BANK STOCK VOTE "FOR" THE TRANSACTION. See "RICHLAND COUNTY BANK -
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Recommendations of the Bank's Board of Directors." As of the date of this
Prospectus, the directors and executive officers of the Bank owned or
controlled, directly or indirectly, 12,989 shares, or approximately 45.57%, of
the Bank stock outstanding. See "RICHLAND COUNTY BANK - Management." The
directors and officers of Bank have indicated that they will vote to approve the
transaction, and are soliciting proxies from Bank shareholders.
A shareholder may vote his or her shares in person or by proxy. Each
shareholder is encouraged to return the enclosed Proxy (on blue paper), even if
he or she intends to attend the meeting. All properly executed proxies not
revoked will be voted at the meeting in accordance with the instructions on the
proxy. Proxies containing no instructions will be voted "FOR" approval of the
holding company. On any other matters properly brought before the meeting and
submitted to a vote, all proxies will be voted in accordance with the judgment
of the persons voting the proxies. A proxy may be revoked at any time before it
is voted, either by written notice filed with the Cashier of the Bank or with
the acting secretary of the meeting or by oral notice given by the shareholder
to the presiding officer during the meeting. The presence of a shareholder who
has filed his or her proxy shall not of itself constitute a revocation. Failure
to submit a proxy or to vote at the meeting has the same effect as a negative
vote for purposes of approving or disapproving the reorganization.
Wisconsin law provides appraisal rights to holders of Bank stock who
dissent from the merger, if statutory procedures are followed. See "RIGHTS OF
DISSENTING SHAREHOLDERS OF BANK."
Operation of the Bank Following the Reorganization
The Holding Company anticipates that, following the reorganization, the
business of the Bank will be conducted substantially unchanged from the manner
in which it is now being conducted. The Bank's name will not be changed. The
Holding Company anticipates that the Bank will be operated under substantially
the same management, and no changes in personnel or compensation of Bank
officers or directors are anticipated as a result of the reorganization. After
the reorganization, the Bank will continue to be subject to regulation and
supervision by regulatory authorities, to the same extent as currently
applicable. See "SUPERVISION AND REGULATION." The Bank will continue to prepare
an annual report in the same format as in prior years, and the Holding Company
will send to all of its shareholders a consolidated annual report, in a similar
format as that used in the Bank's report. The Holding Company will convene an
annual meeting of its shareholders, at a similar time and for similar purposes
as the Bank's annual meeting.
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Accounting Treatment of the Transaction
The reorganization will be treated as a "pooling of interests" for
accounting purposes. Accordingly, under generally accepted accounting
principles, the assets and liabilities of the Bank will be recorded in the
financial statements of the Holding Company at their carrying values at the
Effective Date.
Conditions Precedent to the Reorganization
The Agreement and Plan of Reorganization (Exhibit A) provides that the
consummation of the reorganization is subject to certain conditions that have
not yet been met, including, but not limited to, the following:
1. no investigation, action, suit or proceeding before any court or any
governmental or regulatory authority shall have been commenced or
threatened seeking to restrain, prevent or change the reorganization
or otherwise arising out of or concerning the reorganization;
2. the application by the Holding Company to be a registered bank holding
company under the Bank Holding Company Act of 1956, as amended, must
have been approved by the Federal Reserve Board;
3. the Wisconsin Department of Financial Institutions Division of Banking
must have granted all required approvals for consummation of the
reorganization;
4. the Federal Deposit Insurance Corporation must have granted all
required approvals for consummation of the reorganization;
5. the reorganization must have been approved by a majority of
shareholders of the outstanding Bank stock;
6. the Holding Company and the Bank must have received an opinion from
counsel for the Holding Company and the Bank attached to this
Prospectus as Exhibit B to the effect that the transaction will be a
tax-free reorganization for the organizations and participating Bank
shareholders;
7. no change shall have occurred or be threatened in the business,
financial condition or operations of the Bank that, in the judgment of
the Holding Company, is materially adverse;
8. no more than ten percent (10%) (2,850 shares or fewer) of the Bank
stock shall be "dissenting shares" pursuant to the exercise of
dissenters' rights; and
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9. the reorganization must be completed by April 15, 1999, unless
extended by both the Bank and the Holding Company.
These conditions are for the sole benefit of the Holding Company and the Bank,
and may be asserted by them or may be waived or extended by them, in whole or in
part, at any time or from time to time. Any determination by the Holding Company
and the Bank concerning the events described above shall be final and binding.
It is anticipated that these conditions will be met. Any waiver or
extension of conditions not met will be approved only if, in the opinion of the
Boards of Directors of the Holding Company and the Bank, the action would not
have a material adverse effect on the benefits intended for holders of the
Holding Company stock under the reorganization. The reorganization may be
terminated and abandoned by the mutual consent of the Board of Directors of the
Holding Company and the Board of Directors of the Bank at any time prior to the
closing date.
Closing Date
The closing of the reorganization shall take place on a date, the "Closing
Date," to be selected by the Holding Company, at the offices of the Bank, 195
West Court Street, Richland Center, Wisconsin; provided, however, that the
Closing Date shall be a date no later than thirty (30) days after all conditions
have been met and all approvals, consents and authorizations for the valid and
lawful consummation of the reorganization have been obtained. The Bank will
close its transfer records twenty (20) days prior to the Closing Date for a
period through and including the Closing Date. Until the Bank's transfer records
are closed, Bank shareholders may sell or otherwise transfer their Bank stock.
On the Closing Date, all of the Bank shareholders' right, title and
interest in and to the shares of the Bank stock, without any action on the part
of the shareholders, shall automatically become and be converted into a right
only to receive the Holding Company stock. Commencing on the Closing Date, the
Holding Company shall issue and deliver the Holding Company stock to the
shareholders as set forth in the Agreement and Plan of Reorganization (Exhibit
A).
The Closing Date shall be no later than April 15, 1999, unless that date is
extended by mutual written agreement of the parties.
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Resales of Holding Company Stock by "Affiliates"
Under the federal securities laws there are certain restrictions on resales
of Holding Company stock received in the reorganization by persons who are
deemed to be an "affiliate" of the Bank. In general, an affiliate for these
purposes would include directors and executive officers and any person who,
individually or through a group, is deemed to control the Bank. Members of a
family may be regarded as members of a group if, by acting in concert, they
would have the power to control the Bank. "Control" may be evidenced by
ownership of 10% or more of the voting securities of the Bank. Certificates for
shares of Holding Company stock received by an affiliate in the reorganization
will carry a legend referring to the restrictions on resale. Specifically, that
legend will state:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY BE
OFFERED AND SOLD ONLY IF REGISTERED PURSUANT TO THE
PROVISIONS OF THE SECURITIES ACT OF 1933 OR IF AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
The Holding Company will issue stop-transfer instructions to the Holding Company
transfer agent with respect to such certificates. Neither the Bank nor the
Holding Company will register the shares of Holding Company stock for resale,
and any such registration shall be at the expense and instance of any
shareholder desiring such registration.
This Prospectus may not be used by an affiliate of the Bank or the Holding
Company for the resale of Holding Company stock received pursuant to the
reorganization.
Tax Considerations
Corporate Income Tax. After the reorganization, the Holding Company will
own at least 80% of the outstanding stock of the Bank. This will permit the
Holding Company to file a consolidated federal income tax return with the Bank.
The filing of a consolidated federal income tax return will permit the deduction
of any interest expense the Holding Company may incur as an expense against the
income of the Bank, and any dividend paid to the Holding Company by the Bank on
the shares of the Bank's capital stock held by the Holding Company would not be
taxable as income to the Holding Company. In addition, the ability to file a
consolidated federal income tax return may increase the cash flow available to
the Holding Company to meet its obligations. The State of Wisconsin does not
permit consolidated income tax returns.
The creation of the Holding Company creates a separate taxpayer under the
Internal Revenue Code. The Holding Company, through its consolidated tax return
with the Bank and any other subsidiaries that may be formed or acquired in the
future, will be required to pay federal and state income taxes on its net
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income. Immediately after the formation of the Holding Company, the principal
income to the Holding Company will be dividends from the Bank. Those dividends
will not be taxable income to the Holding Company as long as the Holding Company
holds at least 80% of the outstanding Bank stock. Therefore, until such time as
the Holding Company generates substantial income from sources other than Bank
dividends, it is not anticipated that it will incur any significant tax
liability.
As a separate taxpayer, the Holding Company may incur a separate tax on any
liquidation of the Holding Company or on an acquisition of the Holding Company's
assets by a third party. Therefore, a liquidation of the Holding Company or a
sale of Bank stock by the Holding Company could generate a double-level tax, a
tax on the Holding Company and a tax on the Holding Company shareholders. A
double-level tax can be avoided, however, if the third party acquires the
Holding Company stock for cash or acquires Holding Company stock or Bank stock
in a tax-free reorganization.
Individual Income Tax. The Holding Company has been advised by its counsel,
Boardman, Suhr, Curry & Field, Madison, Wisconsin, that as a result of the
transaction contemplated by the reorganization, for federal income tax purposes:
(i) no gain or loss will be recognized to the Bank shareholders on the
conversion of their shares of Bank stock into shares of Holding Company stock;
(ii) the income tax basis of the shares of Holding Company stock in the hands of
the Bank shareholders will be the same as their basis in the shares of the Bank
stock; and (iii) the holding period of the shares of Holding Company stock in
the hands of the Bank shareholders will include the holding period of the shares
of the Bank stock, provided the shares of the Bank stock constituted a capital
asset as of the time of the reorganization. A copy of that opinion is attached
hereto as Exhibit B (which opinion also includes matters pertaining to corporate
tax consequences of the reorganization). Counsel is also of the opinion that the
same treatment will apply for Wisconsin income tax purposes.
The opinion is based on the following representations of the Holding
Company and the Bank:
1. The fair market value of the Holding Company stock received by each Bank
shareholder will be approximately equal to the fair market value of the Bank
stock surrendered in the exchange.
2. There is no plan or intention by the shareholders of the Bank who own
one percent (1%) or more of the Bank stock, and to the best of the knowledge of
the management of the Bank, there is no plan or intention on the part of the
remaining shareholders to sell, exchange, or otherwise dispose of a number of
shares of Holding Company stock received in the transaction that would reduce
the shareholders' ownership of Holding Company stock to a number of shares
having a value, as of the date of the transaction, of less than fifty percent
(50%) of the value of all of the formerly outstanding Bank stock as of the same
date. For purposes of this representation, shares of Bank stock exchanged for
cash or other property, surrendered by dissenters or exchanged for cash in lieu
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of fractional shares of Holding Company stock will be treated as outstanding
Bank stock on the date of the transaction. Moreover, shares of Holding Company
stock held by Bank shareholders and otherwise sold, redeemed or disposed of
prior or subsequent to the transaction will be considered in making this
representation.
3. New Richland County Bank ("New Bank") will acquire at least ninety
percent (90%) of the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held by the Bank
immediately prior to the transaction. For purposes of this representation,
amounts paid by the Bank to dissenters, amounts paid by the Bank to shareholders
who receive cash or other property, Bank assets used to pay its reorganization
expenses, and all redemption and distributions (except for regular, normal
dividends) made by the Bank immediately preceding the transfer, will be included
as assets of the Bank held immediately prior to the transaction.
4. Prior to the transaction, the Holding Company will be in control of the
New Bank within the meaning of ss. 368(c)(1) of the Internal Revenue Code.
5. Following the transaction, the New Bank will not issue additional shares
of its stock that would result in the Holding Company losing control of the New
Bank within the meaning of ss. 368(c)(1) of the Internal Revenue Code.
6. The Holding Company has no plan or intention to reacquire any of its
stock issued in the transaction.
7. The Holding Company has no plan or intention to liquidate the New Bank;
to merge the New Bank with and into another bank or corporation; to sell or
otherwise dispose of the stock of the New Bank; or to cause the New Bank to sell
or to otherwise dispose of any of the Bank's assets acquired in the transaction,
except for dispositions made in the ordinary course of business or transfers
described in ss. 368(a)(2)(C) of the Internal Revenue Code.
8. The liabilities of the Bank assumed by the New Bank, and the liabilities
to which the transferred assets of the Bank are subject, were incurred by the
Bank in the ordinary course of its business.
9. Following the transaction, the New Bank will continue the historic
business of the Bank or use a significant portion of the Bank's business assets
in a business.
10. The Holding Company, the New Bank, the Bank, and the shareholders will
pay their respective expenses, if any, incurred in connection with the
transaction.
11. There is no intercorporate indebtedness existing between the Holding
Company and the Bank or between the New Bank and the Bank that was issued,
acquired or will be settled at a discount.
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12. No two parties to the transaction are investment companies as defined
in ss. 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
13. The Bank is not under the jurisdiction of a court in a Title 11
(bankruptcy) or similar case within the meaning of ss. 368(a)(3)(A) of the
Internal Revenue Code.
14. The fair market value of the assets of the Bank transferred to the New
Bank will equal or exceed the sum of the liabilities assumed by the New Bank,
plus the amount of liabilities, if any, to which the transferred assets are
subject.
15. No stock of the New Bank will be issued in the transaction.
Based on these representations, legal counsel is of the opinion that, under
current law,
(1) The proposed merger will constitute a reorganization within the
meaning of Section 368(a)(1)(A) by reason of Section 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended, and Chapter 71 of the
Wisconsin Statutes. The reorganization will not be disqualified by
reason of the fact that Holding Company common stock is used in the
transaction. (Internal Revenue Code Section 368(a)(2)(D).)
(2) No gain or loss will be recognized to the Bank on the transfer of
substantially all of its assets to the New Bank in exchange for
Holding Company common stock and the assumption by the New Bank of the
liabilities of the Bank.
(3) No gain or loss will be recognized to the Holding Company or the New
Bank upon the receipt by the New Bank of substantially all of the
assets of the Bank in exchange for Holding Company common stock and
the assumption by the New Bank of the liabilities of the Bank.
(4) The basis of the Bank assets in the hands of the New Bank will be the
same as the basis of those assets in the hands of the Bank immediately
prior to the proposed transaction.
(5) The holding period of the assets of the Bank in the hands of the New
Bank will include the period during which such assets were held by the
Bank.
(6) The basis of the New Bank stock in the hands of the Holding Company
will be increased by an amount equal to the basis of the Bank assets
acquired by the New Bank in the transaction, and will be decreased by
the amount of liabilities of the Bank assumed by the New Bank and the
amount of liabilities to which the acquired assets of the Bank are
subject.
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(7) No gain or loss will be recognized by the shareholders on the exchange
of their Bank common stock for Holding Company common stock; provided,
however, that no opinion is expressed with respect to Bank
shareholders who dissent from the transaction and receive cash for
their Bank stock.
(8) The income tax basis of the Holding Company common stock to be
received by the shareholders will be the same as the basis of the Bank
common stock surrendered in exchange.
(9) The holding period of the Holding Company common stock to be received
by the shareholders will include the period during which the Bank
common stock surrendered in exchange was held, provided that the Bank
common stock is held as a capital asset on the date of the exchange.
No tax rulings from the Internal Revenue Service have been obtained, and
the opinion of counsel will not be binding on the Internal Revenue Service.
Therefore, shareholders may find it advisable to consult their own counsel as to
the specific tax consequences to them under the federal tax laws, as well as any
consequences under applicable state or local tax laws.
Shareholders who exercise dissenters' rights and receive cash for their
Bank stock should be aware that the transaction will be a taxable transaction
for federal and state income tax purposes, and those shareholders are urged to
consult their tax advisors to determine the tax consequences to them under the
federal tax laws, as well as any consequence under applicable state or local tax
laws. The opinion of counsel attached as Exhibit B does not pertain to cash
payments received pursuant to the reorganization.
Securities Regulation
The offer to enter into this exchange offer is not being made to (nor can
it be accepted from or on behalf of) holders of Bank stock in any jurisdiction
in which the making of the offer or the acceptance thereof would not be in
compliance with the securities laws of such jurisdiction. The Holding Company is
not, and shall not be, obligated to acquire any shares of Bank stock, or issue
or deliver any shares of its common stock, in any jurisdiction in which the
agreement to do so would not be in compliance with the securities laws of such
jurisdiction. However, the Holding Company, at its discretion, may take such
action as it may deem necessary or desirable to comply with the securities laws
of any such jurisdiction.
This transaction may be registered in certain states, according to the laws
of those states. No securities commissioner, securities department, or similar
office of any state has approved or disapproved the Holding Company stock to be
issued in the reorganization or has passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary may be a criminal offense.
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Resale of Holding Company Common Stock
The Holding Company stock issued in the exchange has been registered under
the Securities Act of 1933, as amended, and may be traded by a shareholder
subject to the Holding Company's right of first refusal. See "COMPARISON OF BANK
STOCK WITH HOLDING COMPANY STOCK - Market For the Stock." Shareholders who, at
the Closing Date, are "affiliates" of the Bank and are affiliates of the Holding
Company at the time of the proposed resale are subject to additional
restrictions on the resale of their shares. See "REORGANIZATION - Resales of
Holding Company Stock by 'Affiliates.'"
Expenses of Reorganization
If the reorganization is consummated, the Holding Company and the Bank will
assume and pay their respective costs and expenses, if any, incurred in
connection with the reorganization. If the reorganization is not consummated,
all costs and expenses will be paid by the Bank. It is estimated that those
costs and expenses will be approximately $35,000.
RIGHTS OF DISSENTING SHAREHOLDERS OF BANK
Sections 221.0706 through 221.0718 of the Wisconsin Statutes, the full text
of which is attached to this Prospectus as Exhibit C, set forth the procedure to
be followed by any shareholder of the Bank who wishes to dissent from the
reorganization and obtain the value of his or her shares of Bank stock in cash
in lieu of Holding Company stock pursuant to the reorganization. Shareholders
should refer to Exhibit C because the following description does not purport to
be a complete summary of those sections.
In order to exercise such dissenters' rights, a Bank shareholder (1) must
deliver to the Bank before the vote is taken written notice of the shareholder's
or beneficial shareholder's intent to demand payment for his or her shares if
the proposed reorganization is effectuated, and refrain from voting his or her
shares in favor of the proposed reorganization, and (2) must demand payment in
writing and certify whether he or she acquired beneficial ownership of the
shares before the date specified in the dissenters' notice, which demand must be
received by the date stated in the dissenters' notice, which may not be fewer
than 30 days nor more than 60 days after the date on which the dissenters'
notice is delivered. That written demand must be accompanied by the surrender of
the dissenting shareholder's Bank stock certificates. The written demand should
be addressed to: Judith L. Davis, President, Richland County Bank, P.O. Box 677,
Richland Center, Wisconsin 53581. The law does not provide for a dissent with
respect to less than all of the shares beneficially owned by a shareholder.
As soon as the reorganization takes place or upon receipt of a payment
demand, whichever is later, the Bank shall pay each shareholder or beneficial
shareholder who has complied with the demand requirements the amount that the
Bank estimates to be the fair value of the dissenter's shares, plus accrued
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interest. The payment shall be accompanied by, among other things, the Bank's
latest available financial statements, a statement of the Bank's estimate of the
fair value of the shares, and an explanation of how the interest was calculated.
If the dissenter believes that the amount so paid is less than the fair
value of his or her shares or that the interest due is incorrectly calculated,
the dissenter may notify the Bank of the dissenter's estimate of the fair value
of his or her shares and the amount of interest due, and demand payment of his
or her estimate, less any payment received. A dissenter waives his or her right
to demand payment unless the dissenter notifies the Bank of his or her demand in
writing within 30 days after the Bank makes or offers payment for the
dissenter's shares.
If a demand for payment then remains unsettled, the Bank shall bring a
special proceeding within 60 days after receiving the dissenter's payment demand
and petition the court to determine the fair value of the shares and accrued
interest. If the Bank does not bring the special proceeding within the 60-day
period, it shall pay each dissenter whose demand remains unsettled the amount
demanded. Fees and costs of the court proceeding will be allocated by the court
pursuant to statutory guidelines.
RICHLAND COUNTY BANCSHARES, INC.
History, Business, and Properties
The Holding Company was incorporated as a Wisconsin business corporation
under the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin
Statutes, in July, 1998, at the direction of the Board of Directors of the Bank.
The Holding Company was formed to acquire the Bank stock and to engage in
business as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the "Act"). A true and correct copy of the Articles of Incorporation
of the Holding Company is attached to this Prospectus as Exhibit D. A copy of
the Holding Company's bylaws will be provided to any Bank shareholder upon
request.
The Holding Company is in the organizational and developmental stage, and
has no earnings or history of operation. The Holding Company has no employees,
no current business, and owns no property, except that the Holding Company will
own all of the stock of the New Bank immediately prior to the reorganization. It
has not issued any stock. It is not a party to any legal proceedings.
The Holding Company has no present plans to engage in any activities other
than as a holding company for the capital stock of the Bank. The Holding
Company's management, however, believes that the opportunities available to a
bank holding company for diversification of its business and raising of capital
cause the bank holding company to be a more advantageous form of operation than
a bank. The Holding Company may examine and may pursue opportunities from time
to time that arise for expansion of its operations and activities. See "THE
REORGANIZATION - Reasons for the Reorganization."
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Management
The name, age and position of each of the Directors and executive officers
of the Holding Company are as follows:
Name Age Position
Dorsey P. Ames . . . . . . . . . 45 Director, Secretary
Judith L. Davis. . . . . . . . . 60 Director, President
Donald Goplin. . . . . . . . . . 71 Director
Joseph L. Halverson . . . . . . 48 Director
Robert Keegan. . . . . . . . . . 69 Director
Ward McDonald. . . . . . . . . . 72 Director
Gail Surrem. . . . . . . . . . . 54 Director
Each of the directors and executive officers named has had the same
principal occupation or employment for the past five years. Each of the
directors and executive officers named has served in the capacity listed above
since the incorporation of the Holding Company in July, 1998. The term of office
for each of the directors is one year. The term of office for each of the
executive officers named above is one year. Please refer to pages 22-23 of this
Prospectus for a description of the business background of the directors and
executive officers named above.
Principal Shareholders
After the reorganization, the persons beneficially owning 5% or more of
Holding Company common stock will be the same persons who currently own 5% or
more of the Bank stock. See "RICHLAND COUNTY BANK - Principal Shareholders."
Description of Holding Company's Common Stock
The Holding Company's authorized capital stock consists of 100,000 shares,
all of one class, designated as common stock, none of which shares, as of the
date hereof, is issued or outstanding. The maximum number of shares of the
Holding Company's common stock which will be issued to the holders of Bank
stock, upon the terms and subject to the conditions of the reorganization, is
85,500 shares.
For more information about the Holding Company's common stock, see
"COMPARISON OF BANK STOCK WITH HOLDING COMPANY STOCK."
Executive Compensation
Since its incorporation, the Holding Company has not paid any remuneration
to any of its directors or executive officers. No changes in remuneration to any
of its directors or officers are planned. To date the Holding Company has not
established standards or other arrangements by which its directors are
compensated for services as directors, including any additional amounts payable
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for committee participation or special assignments, and no such arrangements are
currently contemplated. No profit-sharing plan or any other benefit plan exists
or is contemplated for the Holding Company.
Transactions with Related Parties
The Holding Company has not engaged in any transactions or entered into any
contracts with any of its directors or executive officers. No such transactions
or contracts are anticipated at this time by the Holding Company.
Right of First Refusal and Indemnification Provisions
The Holding Company's Articles of Incorporation give the Holding Company a
right of first refusal to purchase shares of its stock at a price and on the
terms and conditions offered to a shareholder by a prospective purchaser.
Transactions within a shareholder's immediate family and stock pledges are
permitted (although the stock so transferred or pledged remains subject to the
right of first refusal). The right of first refusal may limit a shareholder's
ability to sell shares to purchasers other than the Holding Company. In
addition, the right of first refusal may reduce the likelihood of another buyer
obtaining control of the Holding Company through the acquisition of large blocks
of Holding Company stock. The Bank's bylaws do not contain a comparable
provision. See "COMPARISON OF BANK STOCK WITH HOLDING COMPANY STOCK - Market for
the Stock."
In addition, the Articles of Incorporation provide that the provisions of
the Articles of Incorporation providing the Holding Company with a right of
first refusal to purchase its stock may be amended only by the affirmative vote
of not less than 75% of the outstanding shares of voting stock of the Holding
Company.
As set forth in Sections 180.0850 through 180.0859 of the Wisconsin
Statutes, the bylaws of the Holding Company require that the Holding Company
indemnify a director or officer from all reasonable expenses and liabilities
asserted against, incurred by, or imposed on that person in any proceeding to
which he or she is made or threatened to be made a party by reason of being or
having been an officer or director of the Holding Company. Indemnification will
not be made if the person breached a duty to the Holding Company in one of the
following ways: (a) a wilful failure to deal fairly with the Holding Company in
a matter in which the director or officer has a material conflict of interest;
(b) a violation of criminal law, unless the person had reasonable cause to
believe his or her conduct was lawful or had no reasonable cause to believe his
or her conduct was unlawful; (c) a transaction from which the person derived
improper personal profit; or (d) wilful misconduct. The right to indemnification
includes, in some circumstances, the right to receive reimbursement of costs and
expenses in such a proceeding as they are incurred.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be available to directors, officers, and controlling
persons of the Holding Company pursuant to the foregoing provisions of its
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bylaws, or otherwise, the Holding Company has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act.
The Holding Company may purchase insurance against liabilities asserted
against its directors, officers, employees, or agents whether or not it has the
power to indemnify them against such liabilities under the provisions of its
bylaws or pursuant to applicable law. Indemnification insurance for directors,
officers, employees, and agents of the Holding Company has not been purchased
either by such persons or by the Holding Company.
RICHLAND COUNTY BANK
History, Business, and Properties
The Bank was chartered by the Wisconsin Commissioner of Banking in 1881.
The Bank offers comprehensive banking services to the residential, commercial,
industrial, and agricultural areas that it serves. Services include
agricultural, commercial, real estate and personal loans; checking, savings, and
time deposits; and other customer services, such as safe deposit facilities. The
Bank also offers alternative investments and individual retirement accounts. The
Bank's loan portfolio, as of June 30, 1998, consisted of approximately 16.36%
consumer loans, 18.09% commercial loans, 17.02% agricultural loans, and 48.53%
real estate loans.
The general banking business in the State of Wisconsin is characterized by
a high degree of competition. The principal methods of competition among
commercial banks are price (including interest rates paid on deposits, interest
rates charged on borrowings, and fees charged) and service (including
convenience and quality of service rendered to customers). In addition to
competition among commercial banks, banks face significant competition from
non-banking financial institutions, including savings and loan associations,
credit unions, small loan companies, and insurance companies.
There are three other commercial banks, one savings bank and one credit
union located in Richland Center. The Bank's competition comes from those
institutions and others located near Richland Center. Insurance companies,
mortgage bankers, and brokerage firms provide additional competition for certain
banking services. The Bank also competes for interest-bearing funds with issuers
of commercial paper and other securities, including the United States
Government.
There are no pending or threatened legal proceedings known to the Bank
that, in the opinion of the directors and officers of the Bank, may be
materially adverse to the Bank's financial condition, business, or operations.
There are no material pending or threatened legal proceedings known to the Bank
in which any director, executive officer, or affiliate of the Bank (or any
associate of any of them) has a material interest that is adverse to the Bank.
18
<PAGE>
The Bank's office is located at 195 West Court Street, Richland Center,
Wisconsin, in a facility built in 1912 and subsequently expanded and remodeled.
On June 30, 1998, the Bank's staff included 10 officers, 22 full-time and 4
part-time employees. There are a total of 80 shareholders of the Bank.
Year 2000 Compliance
A critical issue has emerged in the banking industry and for the economy
overall regarding how existing application software programs and operating
systems can accommodate the date value for the year 2000. Many existing
application software products in the marketplace were designed only to
accommodate a two-digit date position which represents the year (e.g., "98" is
stored on the system and represents the year 1998). As a result, the year 1999
(i.e., "99") could be the maximum date value these systems will be able to
accurately process. The same issue has emerged for non-information technology
systems. These systems typically include embedded technology such as
micro-controllers which must be either repaired or, if this is not possible,
replaced.
Bank management is fully aware of the Year 2000 issue for both information
technology and non-information technology systems and has created a written plan
for the correction of, or contingency plan for, the Year 2000 problem. The Board
of Directors oversees the Bank's Year 2000 efforts and directed the senior
management to report to the board at least quarterly on the progress of the Year
2000 company action plan. The company action plan is divided into five phases as
follows:
a. Awareness Phase. The Board of Directors, senior management, officers and
staff of the Bank have been made aware of the Year 2000 problem. A Year 2000
committee has been appointed to solve this issue. A customer awareness program
has been instituted with the Bank contacting its entire customer base with
brochures to ensure that they understand the problem and to relate the Bank's
status of their Year 2000 plan. The Bank believes that the awareness phase is
100 percent complete.
b. Assessment Phase. The Year 2000 committee has inventoried all equipment
within the Bank and all items by criticality (e.g. how critical the item is to
Bank operations), confidence (e.g. the compliance or non-compliance assessment
of the item), and control (e.g. how much influence the Bank has on the outside
vendor). Based on this risk assessment, the committee has developed a mission
critical list of items deemed necessary for bank operations. The committee has
contacted all outside vendors that provide software that the Bank uses and has
received their Year 2000 plans on their products. The Bank believes that the
assessment phase is 100 percent complete.
c. Renovation Phase. The Bank is in the process of renovating or replacing
systems that are deemed non-compliant as well as tracking all outside software
and hardware vendors with their Year 2000 plans to ensure that all of the Bank's
mission critical systems are Year 2000 compliant by December 31, 1998. The Bank
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<PAGE>
has replaced the older 486 processors with Year 2000 compliant pentium machines.
All processors have been updated with a BIOS upgrade. The server and operating
systems on the server will be updated with a Year 2000 compliant upgrade on
September 26, 1998. The Bank believes that the renovation phase is 50 percent
complete.
d. Validation Phase. The Board of Directors has approved a written plan for
testing which requires that all hardware and software testing should be
substantially completed by December 31, 1998. The Bank's outsourced data
processor will be conducting 19xx testing in August 1998 with renovation
scheduled for October 3, 1998. The Bank will be 19xx testing their code
following their installation. The Bank's data processor will continue with 20xx
testing until March 31, 1999. The Bank will conduct proxy 20xx testing with our
data processor. Internally, the Bank is using The NSTL 2000 testing program to
test its LAN system. A separate server that is Year 2000 compliant has been
setup for the testing process to simulate all of the server's functions. Some
test plans rely on outside vendors supplying the test script and the Bank will
test these products when they receive the proper test scripts. The Bank believes
that the validation phase is 30 percent complete.
e. Implementation Phase. The Bank anticipates that all of its mission
critical systems will be Year 2000 compliant by December 31, 1998. The Bank
believes that the implementation phase is 10 percent complete.
Richland County Bank Year 2000 budget as follows:
To Date Projected Total
--------- ----------- ---------
Hardware Replacement 100,543 0 100,543
Hardware Update 9,921 0 9,921
Software Replacement 32,346 0 32,346
Software Upgrade 2,554 5,056 7,610
Education of Problem 2,200 500 2,700
ATM Upgrade 0 5,000 5,000
Expensed/Implementation 26,500 5,000 31,500
Remodeling/Construction 200,895 0 200,895
TOTALS 374,959 15,056 390,015
Note: Hardware costs capitalized over a 7 year period
Software costs capitalized over a 3 year period
Education/ATM upgrade/Implementation were expensed
Remodeling/Construction costs capitalized over a 7 to 39 year period
20
<PAGE>
Bank management does not believe that these expenditures will have a material
impact on the Bank's financial condition.
Bank management believes that the risks posed by the Year 2000 problem are
manageable and correctable. Outside vendors will be able to provide different
software products if the current products the Bank is using will not be Year
2000 compliant. However, the Bank has a contingency plan in place in the event
its computer systems are unable to adequately address the Year 2000 problem. The
areas of concern for the Bank in its contingency plan are electricity,
communications, and core data processing.
a. Electricity. If the local power company cannot certify that their
systems will be Year 2000 compliant by August 1, 1999, the Bank will purchase
and install a generator to restore electricity to the Bank.
b. Communications. If the Bank's local phone company and long distance
provider cannot certify that its systems will be Year 2000 compliant by August
1, 1999, the Bank will purchase and install a cellular phone system to restore
communications to the Bank. The Bank's data processor will receive work directly
instead of through data lines.
c. Data Processor. If the Bank's current data processor is not Year 2000
compliant by March 31, 1999, the Bank will either find another data processor or
purchase an in-house data processing system.
Although the Bank believes that the foregoing illustrations are its
reasonable worst case scenarios and the contingency plans will satisfy those
Year 2000 problems, there can be no assurance that another worst case scenario
will not materialize or that the contingency plan for such scenario will be
sufficient. Therefore, the Bank cannot predict with any certainty the effect of
the Year 2000 problem on the Bank's results of operations, liquidity, and
financial condition. In addition, the Bank does not know whether there will be
any material lost revenue as a result of the Year 2000 problem, although Bank
management does not believe that the financial impact to the Bank to ensure Year
2000 compliance will be material to the financial position, results of
operations or cash flow of the Bank.
The FDIC is reviewing all the Bank's Year 2000 efforts and may issue formal
supervisory or enforcement actions if the FDIC believes that the Bank's efforts
to date have not been satisfactory. The Bank has not received any such
communication from the FDIC. The Bank continues to study the problem and
implement possible solutions.
Management
The name, age and position of each of the Directors and executive officers
of the Bank are as follows:
21
<PAGE>
Name Age Position
Dorsey P. Ames . . . . . . . . . 45 Cashier, Director
Judith L. Davis . . . . . . . . 60 Director, President
Donald Goplin. . . . . . . . . . 71 Director
Joseph L. Halverson. . . . . . . 48 Director
Robert Keegan. . . . . . . . . . 69 Director
Ward McDonald. . . . . . . . . . 72 Director
Gail Surrem. . . . . . . . . . . 54 Director
The term of office for all directors is one year. The directors are elected
at the annual meeting of the shareholders of the Bank. All executive officers
are appointed to their respective positions for a one-year period by the Board
of Directors at the annual meeting of the Bank. Corey Davis, an Assistant Vice
President of the Bank, is Judith Davis' son. Jarrett McDonald, also an Assistant
Vice President of the Bank, is Ms. Davis' nephew and the son of Ward McDonald, a
director. There are no other family relationships among any of the directors,
executive officers or key personnel of the Holding Company or the Bank.
Business Background of Directors and Executive Officers
Dorsey P. Ames (Cashier, Director). Mr. Ames has been employed with the
Bank since 1978. He has had experience in many areas of Bank operations,
including accounting, general operation, employee benefits, deposit systems, and
loan analysis and review. He served as Secretary to the Bank Board of Directors
from 1992-1996, and has been a Director since 1997. Mr. Ames graduated in 1973
with High Honors from WWTI, LaCrosse, where he studied Business Administration
and Finance & Accounting. Active in the community, Mr. Ames has served as Board
Member, Chairman of the Finance Committee and Treasurer of Schmitt Woodland
Hills, Chairman of the Richland County Revolving Loan Committee, President of
Richland County Wagon Train, Inc., President of the Downtown Center, and
Director of the Richland County Jaycees. In addition, he is involved in many
equestrian organizations.
Judith L. Davis (President, Director). The current President of Richland
County Bank, Ms. Davis has been employed with the Bank since 1970, where she has
had experience in operations, lending, administration, loan workouts, and
personnel. She has been a member of the Board of Directors of the Bank since
1974. In 1980, Ms. Davis graduated from the University of Wisconsin Graduate
School of Banking. She has also attended AIB and WBA seminars. Active in
community affairs, Ms. Davis has been involved with the Richland Hospital Board
of Directors and the Star Spangled Celebration since 1995. She was a founding
Director of Main Street and NHS, a Director of University of Wisconsin Richland
Campus, and an Economic Development Director for Richland County. In addition,
Ms. Davis has been a Campaign Manager for the Heart Association, an instructor
at a number of schools, and has served on the Mayor's Task Force - Development
Zone.
22
<PAGE>
Donald Goplin (Director). A graduate of both Richland Center High School
and the University of Wisconsin, Mr. Goplin has been the owner/operator of the
Goplin Agency, an insurance firm, since 1950. He has served on the Bank's Board
of Directors for 33 years. From 1997 to the present, he has been the Vice
Chairman of the Board. In the community, he has been involved with the Kiwanis
Club, HUD, the Richland County Veterans Service Committee, the American Legion,
the VFW, the Boy Scouts, and the Agent Review Board.
Joseph L. Halverson (Director). In 1974, Mr. Halverson received a B.A. in
Accounting from the University of Wisconsin-Platteville. He subsequently
obtained a Certified Public Accountant Certificate in 1977. He has had 24 years
of public accounting experience, both as part of an accounting firm and as a
sole proprietor in Richland Center. For two years, he taught accounting classes
part-time at the University of Wisconsin Richland Center. In the past, he served
as a Board Member of the Richland Center Chamber of Commerce, as a Board Member
and Treasurer for the Richland County Jaycees, and as Treasurer of the Richland
Center School District Foundation, Inc. His current organizational and civic
affiliations include Richland County Youth Basketball, the City of Richland
Center Revolving Loan Fund, the County of Richland Revolving Loan Fund, and six
years on the Board of Directors of the Bank.
Robert Keegan (Director). Born in 1928 in Richland Center, Mr. Keegan
received his law degree from the University of Wisconsin Law School in 1954. He
was admitted to the bar in 1954. From 1959 through 1991, Mr. Keegan worked as a
partner at the Fowell & Keegan Law Office, and since 1992, he has worked as a
sole practitioner at the same office. For 44 years, he has also been the
Secretary-Treasurer and a shareholder of Keegan Implement.
Ward McDonald (Vice President, Director). A veteran of World War II, Mr.
McDonald is the current Vice President of the Bank. He studied engineering at
St. Martin's College and Business Administration at the University of
Washington. Mr. McDonald has been employed with the Bank for almost thirty
years. In the community, he was a Director for Richland County Community
Programs, Town Chairman for the Town of Orion, and Chairman of Richland County
Community Development Workshop. He is presently a member of Richland School
District Strategic Planning Committee.
Gail Surrem (Director). A 1966 graduate of the University of
Wisconsin-Platteville, Mr. Surrem has been employed with the Bank since 1969. He
has been on the Board of Directors for sixteen years. At the Bank, he is
currently a Senior Lending Officer, handling commercial and agricultural loans,
as well as retail mortgages. Mr. Surrem is the Chairman of the Richland County
Housing Authority and the Vice Chairman of the NHS Revolving Loan Fund. He has
also been involved with the Lions Club, the Jaycees, the Knights of Columbus,
and Who's Who in America.
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<PAGE>
Executive Compensation
The following tables outline the annual compensation and estimated annual
benefits payable upon retirement to Ms. Davis for services rendered in her
capacity as President of the Bank:
<TABLE>
<CAPTION>
Summary Compensation Table
Name and Principal Position Year Salary ($)(1) Bonus ($) Other ($)(2)
- ---------------------------- -------- --------------- ----------- --------------
<S> <C> <C> <C> <C>
Judith L. Davis, President 1997 82,490.22 - 5,866.92
Judith L. Davis, Exec.-Vice 1996 67,070.22 - 5,696.04
President (3)
Judith L. Davis, Exec.-Vice 1995 63,832.41 - 5,530.20
President
<FN>
(1) "Salary" includes 401(k) contributions made by the Bank on behalf of Ms. Davis.
(2) These amounts represent health insurance premiums paid by the Bank.
(3) In December, 1996, Ms. Davis' father died, and Ms. Davis replaced him as President of the Bank. For
this reason, there was no Bank President in 1995 and 1996.
</FN>
</TABLE>
Director Compensation
Directors receive $9,000.00 annually for their services.
Board Review of Management Compensation
The entire Board of Directors reviews and determines the compensation for
the officers of the Bank.
Principal Shareholders
The following table sets forth certain information regarding the beneficial
ownership of the Bank's common stock as of June 30, 1998, by (i) each person who
is known to the Bank to own beneficially more than five percent (5%) of the
Bank's outstanding stock; (ii) each of the Bank's Directors; (iii) each of the
Bank's executive officers; and (iv) all Directors and executive officers of the
Bank as a group.
Number of Shares Percentage of Shares
Name(1) Beneficially Owned(2) Beneficially Owned
- ------------------------------- --------------------- ---------------------
Dorsey P. Ames . . . . . . . . . 250 *
Judith L. Davis(3) . . . . . . . 12,064 42.3%
Donald Goplin. . . . . . . . . . 10 *
Joseph L. Halverson. . . . . . . 15 *
Robert Keegan. . . . . . . . . . 450 1.60%
24
<PAGE>
Number of Shares Percentage of Shares
Name(1) Beneficially Owned(2) Beneficially Owned
- ------------------------------- --------------------- ---------------------
Ward McDonald. . . . . . . . . . 50 *
Gail Surrem. . . . . . . . . . . 150 *
Directors and executive officers
as a group 12,989 45.57%
Virginia Breed(4) . . . . . . . 2,231 7.82%
Allan Kent MacDougall(5). . . . 1,535 5.39%
Gordon P. MacDougall(6) . . . . 1,550 5.44%
* Less than one percent (1%)
(1) The address of each Director and executive officer is 195 West Court
Street, Richland Center, Wisconsin 53581.
(2) Based on the number of shares outstanding at June 30, 1998.
(3) Includes 10,100 shares of Bank stock held by Ms. Davis as a personal
representative for the Estates of Martin Paust and Marian Paust.
(4) Ms. Breed's address is 35 Locust Street, Norwich, NY 13815.
(5) Allan MacDougall's address is 911 Oxford Street, Berkeley, CA 94707.
(6) Gordon MacDougall's address is 1025 Connecticut Avenue, NW, Washington,
D.C. 20036.
Description of the Stock of the Bank
As of the date hereof, the Bank is authorized to issue 30,000 shares of
common stock, all of one class, of which 28,500 shares are issued and
outstanding. The Bank has approximately 80 shareholders of record. For further
information about the stock, see "COMPARISON OF BANK STOCK WITH HOLDING COMPANY
STOCK."
Transactions with Related Parties
The Bank has had in the ordinary course of business, and will continue to
have in the future, banking transactions such as personal and business loans
with its directors, officers, and/or the owners of more than ten percent of the
Bank and Holding Company stock. Such loans are now and will continue to be on
the same terms, including collateral and interest rate, as those prevailing at
the same time for comparable transactions with others of similar credit standing
and do not and will not in the future involve more than normal risks of
collectibility or present other unfavorable features.
At no time during 1995, 1996 and 1997, did or has the maximum aggregate
direct and indirect extensions of credit to any director, executive officer or
10% shareholder, and to his or her respective related interest, exceeded fifteen
percent (15%) of the Bank's capital. From time to time, the Bank has entered
25
<PAGE>
into nonbanking business transactions with entities with which some of its
directors are affiliated. Those transactions have been at arm's length and have
been at competitive prices.
Indemnification of Directors and Officers
Wisconsin law governing indemnification of the Bank's directors, officers,
and employees is substantially similar to the law governing indemnification of
the Holding Company's directors, officers, and employees. For a brief discussion
of that law, see "RICHLAND COUNTY BANCSHARES, INC. - Right of First Refusal and
Indemnification Provisions."
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers, and controlling
persons of the Bank pursuant to the foregoing provisions, or otherwise, the Bank
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act.
The Bank has purchased insurance insuring the Bank, its directors and
officers, against liabilities asserted against its directors and officers
subject to certain conditions and limitations. Expenses of an officer or
director in such a proceeding may be advanced based upon her or his agreement to
repay such expenses if it is determined that he or she is not entitled to
indemnification. If the officer or director is successful on the merits his
expenses shall be paid; otherwise indemnification can only be made upon a
showing that he or she met the applicable standard of conduct as determined by a
court, a quorum of disinterested directors, by independent legal counsel, or by
the shareholders.
Shares of the Stock Owned or Controlled by Management
As of the date hereof, the executive officers and directors of the Bank own
or control, directly or indirectly, 12,989 shares, or approximately 45.57 of the
total Bank stock outstanding.
The Holding Company has no knowledge or information as to the existence of
any contract, arrangement, or understanding among the above-named persons with
respect to the shares of the Bank stock. To the knowledge of the Holding Company
no person above named has any material interest in the transaction proposed by
the reorganization, direct or indirect, other than in their status as
shareholders.
Recommendation of the Bank's Board of Directors
The Board of Directors of the Bank recommends that all shareholders vote to
approve the reorganization. The decision of the Board of Directors of the Bank
to recommend the reorganization to the shareholders is based on their belief
that the Bank's affiliation with the Holding Company is in the best interest of
the Bank and its shareholders.
26
<PAGE>
Such belief is based on a number of factors, including recent and
historical transactions in the Bank's capital stock, the Board of Directors'
knowledge of the business, operations, properties, assets, earnings and
prospects of the Bank, and the advantages provided by a holding company
corporate organizational structure. The Board of Directors of the Bank did not
attach a relative weight to the factors it considered in reaching its decision,
but considering all factors made the determination to recommend the
reorganization to the shareholders. See "THE REORGANIZATION - Reasons for the
Reorganization."
Financial Statements
Financial statements prepared in conformity with generally accepted
accounting principles and dated December 31, 1997 accompany this Prospectus.
COMPARISON OF BANK STOCK
WITH HOLDING COMPANY STOCK
Authorized Shares and Par Value
The Bank is authorized to issue 30,000 shares of capital stock, all of one
class, designated as common stock, of which 28,500 shares are issued and
outstanding. The Holding Company is authorized to issue 100,000 shares of
capital stock, all of one class, designated as common stock. No Holding Company
stock has been issued. Either the Bank or the Holding Company could increase the
amount of authorized stock at any time by an amendment to its Articles of
Incorporation approved by its shareholders.
The Holding Company will issue less than the full amount of its 100,000
authorized shares in the reorganization. The Holding Company has no specific
plans at this time regarding the sale or distribution of any authorized but
unissued shares. However, if the Holding Company issues more stock in the
future, the value of the stock held by existing shareholders may be diluted.
Voting Rights
Each share of Bank stock has one vote on all matters presented to the
shareholders of the Bank. Each act by the shareholders of the Bank requires a
majority vote, except as otherwise provided in the articles of incorporation,
by-laws or by law. The Bank by-laws require a two-thirds majority in order to
amend either the articles of incorporation or the by-laws. Bank shareholders are
not entitled to cumulative voting in the election of directors. Similarly, each
share of the Holding Company stock has one vote on all matters presented to the
shareholders of the Holding Company. Each act by the shareholders of the Holding
Company requires a majority vote, except as otherwise provided by the articles
of incorporation or law. The Holding Company articles require a 75% affirmative
vote in order to amend, alter or repeal the provisions of the Holding Company's
articles of incorporation relating to the Holding Company's right of first
refusal. The Holding Company will not have cumulative voting in the election of
directors.
27
<PAGE>
There are many similarities in the voting requirements imposed by the
Wisconsin banking laws as compared to the Wisconsin general corporate laws. For
example, under both the Wisconsin Banking Law and the Wisconsin Business
Corporation Law, a vote of the majority of the outstanding stock can amend the
articles of incorporation, except as otherwise provided by the Holding Company's
or Bank's articles of incorporation.
All of the directors of the Bank are elected at each respective annual
meeting. Currently, the shareholders of the Bank elect the Bank's Board of
Directors at the Bank's annual meeting of shareholders held within the first 90
days of each calendar year. Bank shareholders exercise direct control over the
Bank's affairs by election of the Bank's directors and by the right to vote on
other Bank matters from time to time. Bank directors may be removed by the
affirmative vote of a majority of the outstanding shares entitled to vote for
the election of such director, taken at a special meeting called for that
purpose.
If the proposed reorganization is consummated, the shareholders who receive
Holding Company stock will elect the Holding Company Board of Directors. The
Board of Directors of the Holding Company will initially consist of seven
members. The Holding Company's directors will be elected annually by the
shareholders of the Holding Company.
The officers of the Holding Company will be elected annually by the Holding
Company Board of Directors. The officers of the Holding Company will vote the
shares of Bank stock held by the Holding Company, and therefore will elect the
Bank Board of Directors, acting pursuant to the instructions of the Board of
Directors of the Holding Company.
There is no requirement that the Boards of the Bank and of the Holding
Company be identical. Shareholders of the Holding Company will exercise direct
control over the Holding Company by election of the Holding Company directors
and by other voting rights, and therefore will exercise indirect control over
the Bank. The direct control of the Bank stock will be exercised by the Holding
Company Board of Directors, who are obligated to act in the best interests of
the Holding Company shareholders.
Dividends
The Bank has paid cash dividends on its common stock each year since 1907,
and expects to continue to pay dividends in the future. Recent dividends have
been as follows:
Dividend
Year Paid Per Share
1993 $8.50
1994 $9.50
1995 $12.00
1996 $12.50
1997 $14.00
28
<PAGE>
It is the intention of the Board of Directors of the Holding Company to pay
cash dividends on its common stock at least annually. Substantially all of the
Holding Company's assets will consist of its investment in the Bank, and
immediately after the reorganization the availability of funds for dividends to
be paid by the Holding Company will depend primarily upon the receipt of
dividends from the Bank. Dividends of the Holding Company will also be dependent
on future earnings, the financial condition of the Holding Company and its
subsidiaries, and other factors.
Whether the dividends, if any, paid by the Holding Company in the future
will be equal to, less than, or more than the dividends paid by the Bank in the
past cannot be predicted. However, it is unlikely that dividends paid by the
Holding Company in the initial few years of operation would be significantly
larger than the dividends paid by the Bank in prior years, and such dividends
may not be as large. If the Holding Company incurs indebtedness, such as
expenses for the reorganization or a loan to purchase Holding Company stock,
Bank dividends received by the Holding Company will be applied toward that
indebtedness, at least in part, rather than be paid to Holding Company
shareholders as dividends from the Holding Company.
Under the Wisconsin Banking Law, the Board of Directors of a bank may
declare and pay a dividend from its undivided profits in an amount they consider
expedient. The Board of Directors shall provide for the payment of all expenses,
losses, required reserves, taxes, and interest accrued or due from the bank
before the declaration of dividends from undivided profits. If dividends
declared and paid in either of the two immediately preceding years exceeded net
income for either of those two years respectively, the bank may not declare or
pay any dividend in the current year that exceeds year-to-date net income except
with the written consent of the Department of Financial Institutions Division of
Banking.
A bank's dividends may not in any way impair or diminish the capital of the
bank other than by reducing undivided profits. If a dividend is paid that does
not comply with this limitation, every shareholder receiving the dividend is
liable to restore the full amount of the dividend unless the capital is
subsequently made good. If the Board of Directors of a bank pays dividends when
the bank is insolvent or in danger of insolvency, or not having reason to
believe that there were sufficient undivided profits to pay the dividends, the
members of the Board of Directors are jointly and severally liable to the
creditors of the bank at the time of declaring dividends in an amount equal to
twice the amount of the dividends.
Federal regulators have authority to prohibit a bank from engaging in any
action deemed by them to constitute an unsafe or unsound practice, including the
payment of dividends. In addition to the foregoing, Wisconsin business
corporations such as the Holding Company are prohibited by Wisconsin law from
paying dividends while they are insolvent or if the payment of dividends would
render them unable to pay debts as they come due in the usual course of
business.
29
<PAGE>
Market for the Stock
(a) In General: As of July 1998, the Bank had 80 shareholders of record. No
established public trading market exists for the Bank stock. The stock is
infrequently traded, and the current market for the stock is limited. The Bank
is prohibited by law from holding or purchasing more than 10% of its own shares
except in limited circumstances.
Similarly, there will be no established public trading market for Holding
Company stock. Unlike the Bank, however, the Holding Company will generally be
able to purchase its own shares. In some circumstances, a bank holding company
may not purchase its own shares without giving prior notice to the Federal
Reserve Board. Specifically, if the Holding Company desires to purchase as much
as 10% (in value) of its own stock in any 12-month period, it may be required in
some instances to obtain approval for so doing from the Federal Reserve Board.
Otherwise, the Holding Company is restricted by sound business judgment, its
prior commitments, and the consolidated financial condition of the Holding
Company and its subsidiaries. In no event may a Wisconsin corporation purchase
its own shares when the corporation is insolvent or when such a purchase would
make it insolvent.
Although the Holding Company may generally, in the Board's discretion,
purchase shares of its stock, it is not obligated to do so.
(b) Right of First Refusal. Pursuant to Article 5(b) of its Articles of
Incorporation, the Holding Company shall have a right of first refusal to
purchase any shares of its stock at the price and on the terms and conditions
offered to any Holding Company shareholder by a prospective purchaser.
Shareholders should refer to Article 5(b) of the Articles of Incorporation,
attached as Exhibit D. The following description does not purport to be a
comprehensive statement of the terms of the Holding Company's right of first
refusal.
(i) Summary of the Provision. The right of first refusal shall apply to all
sales, assignments, or dispositions of any right, title or interest in or to
Holding Company shares, whether voluntary or by operation of law, except for (1)
transactions between a shareholder and his or her spouse, a member of his or her
immediate family or lineal descendants of his or her immediate family, and (2)
any pledge of Holding Company stock. For purposes of transactions described in
(1), "immediate family" shall mean a shareholder's children, ancestors, brothers
and sisters (whether by full or half blood), the spouses of such brothers and
sisters, and the lineal decedents of the shareholder's spouse. Transferees in
either of the transactions described in (1) or (2) shall be subject to the
Holding Company's right of first refusal. The Holding Company is not obligated
to make any purchases of the Holding Company stock, but may do so at the
discretion of its Board of Directors.
In the event a shareholder (the "Selling Shareholder"), desires to dispose
of his or her shares of stock, or any portion thereof (the "Offered Shares"),
other than in a transaction of the type described in (1) or (2) above, without
first obtaining the written consent of the Holding Company, the Selling
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Shareholder, first, shall give the Holding Company written notice of his or her
intent to do so, stating the identity of the proposed transferee of the Offered
Shares, the number of Offered Shares the Selling Shareholder proposes to
transfer, the proposed consideration for the Offered Shares and the other terms
and conditions of the proposed transfer of the Offered Shares. The Selling
Shareholder shall also give the Holding Company a copy of the written offer. The
Holding Company shall have a right of first refusal to acquire all, but not less
than all, of the Offered Shares for the consideration and on the other terms and
conditions offered by the proposed transferee and as contained in the written
notice given to the Holding Company by the Selling Shareholder. The Holding
Company shall exercise its right to acquire the Offered Shares by giving written
notice to the Selling Shareholder, indicating the number of Offered Shares it
will acquire, within thirty (30) days following receipt of the written notice
from the Selling Shareholder. If the Holding Company does not exercise its
acquisition rights within that time period, the Selling Shareholder shall be
free for a period of thirty (30) days thereafter to transfer all of the Offered
Shares to the transferee identified in the written notice to the Holding
Company, at the same consideration and on the same terms and conditions set
forth in the notice. After giving notice of the intended transfer, the Selling
Shareholder shall refrain from participating as an officer, director or
shareholder of the Holding Company with respect to the Holding Company's
decision on whether or not to acquire the Offered Shares unless requested by the
other shareholders holding a majority of the Holding Company's outstanding
shares of capital stock, not including the shares held by the Selling
Shareholder. As a condition precedent to the effectiveness of any transfer of
Offered Shares, the transferee shall agree in writing to be bound by all of the
terms and conditions of the Holding Company's right of first refusal.
Each certificate representing shares of Holding Company stock shall bear a
legend in substantially the following form:
"The shares represented by this certificate and any sale,
transfer, or other disposition thereof are restricted
under and subject to the terms and conditions contained
in Article 5 of the Corporation's Articles of Incorporation,
a copy of which is on file at the offices of the
Corporation."
The provisions of the Holding Company's Articles of Incorporation relating
to this right of first refusal may not be amended, altered or repealed except by
the affirmative vote of the holders of at least 75% of the shares of Holding
Company stock.
(ii) Potential Anti-Takeover and Other Effects. The Holding Company's right
of first refusal may reduce the ability of third parties to obtain control of
the Holding Company. In particular, the Holding Company's right to match the
price offered by a prospective buyer might make acquisitions of large blocks of
Holding Company stock by other buyers more difficult. The right of first refusal
might also discourage tender offers, proxy contests, or other attempts to gain
control of the Holding Company through the acquisition of voting stock.
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Shareholders who might support the takeover of the Holding Company in a given
situation could amend, alter or repeal the right-of-first-refusal provision only
by obtaining an affirmative vote of 75% of the issued and outstanding shares.
Because of these effects, this provision may render removal of current
management by a new owner less likely. This could be the case whether or not
such removal would be beneficial to shareholders generally. Another overall
effect of the provision may be to limit shareholder participation in
transactions such as tender offers.
Whether the right of first refusal serves as an advantage to management or
to shareholders depends on the particular circumstances. In a hostile tender
offer, for example, members of management and shareholders who support the
present ownership may benefit from the provision, while shareholders desirous of
participating in the tender offer or removing management would be disadvantaged.
(iii) Reasons for the Right of First Refusal. The Boards of Directors of
the Holding Company and the Bank believe that giving the Holding Company a right
of first refusal to purchase shares of its stock is in the best interests of the
Holding Company and its shareholders and the Bank. One of the purposes of
forming a holding company for the Bank is to enable the Bank to continue under
local control. The proposed right of first refusal effectuates this purpose by
providing a mechanism for assuring local control of the Holding Company and the
Bank. The proposal is not the result of Bank management's knowledge of any
specific effort to obtain control of the Bank by means of a merger, tender
offer, solicitation in opposition to management or otherwise. Nevertheless, the
Boards of Directors are concerned that, without this provision and the other
anti-takeover provisions described herein, local control of the Bank may not be
achieved over the long term.
Value
As of June 30, 1998, the per share book value of the Bank stock, according
to the Bank's internal financial statements, was $499.68.
To the best knowledge of the Bank, there have been 14 different transfers
of Bank stock, involving a total of 1,637 shares of Bank stock, between January
1, 1995, and the date of this Prospectus.
The following is a listing of sales of Bank stock known to the Bank since
January 1, 1995.
DATE SHARES PRICE PER SHARE
10/2/95 100 $250.00
2/14/96 127 $250.00
11/11/96 30 $250.00
3/16/98 220 $254.00
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The 10/2/95 and 11/11/96 sales were conducted between non-family members,
and the 2/14/96 and 3/16/98 sales were conducted between family members. The ten
remaining transfers of Bank stock did not involve a sale of the stock.
At least initially, the value of one share of Holding Company stock will be
approximately equal to one-third of the value of a share of Bank stock because
each shareholder will receive three shares of Holding Company stock for each one
share of Bank stock. There is no assurance, however, that those values will
remain equivalent, particularly if the Holding Company should acquire another
bank or establish a non-banking subsidiary to conduct a banking-related
business. Bank stock will not reflect the value of any other Holding Company
subsidiaries that may be established in the future.
Other
(a) Liquidation Rights. The Shareholders of the Bank and the Holding
Company are entitled to share pro rata in the net assets of the organization,
after payment of all liabilities, if the organization is ever liquidated.
(b) Preemptive Rights. Shareholders of the Bank do not have preemptive
rights to acquire additional shares of the organization that may be issued in
the future. Shareholders of the Holding Company likewise will not have
preemptive rights.
(c) Conversion Rights. Neither the Bank stock nor the Holding Company stock
is convertible into any other security.
(d) Call. Neither the Bank stock nor the Holding Company stock is subject
to any call or redemption rights on the part of the organization.
(e) Assessability. All of the Bank and Holding Company stock issued or to
be issued is or will be fully paid and nonassessable, except as provided by law.
The Wisconsin Business Corporation Law imposes a statutory liability on
shareholders of every corporation up to an amount equal to the par value of
their shares, and to the consideration for which their shares without par value
were issued, for all debts owing to employees of the corporation for services
performed for such corporation, but not exceeding six months' service in any one
case.
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SUPERVISION AND REGULATION
General
Financial institutions and their holding companies are extensively
regulated under federal and state law. Consequently, the growth and earnings
performance of the Holding Company and the Bank can be affected not only by
management decisions and general economic conditions, but also by the statutes
administered by, and the regulations and policies of, various governmental
regulatory authorities including, but not limited to, the Federal Reserve Board,
the Federal Deposit Insurance Corporation ("FDIC"), the Wisconsin Department of
Financial Institutions Division of Banking, the Internal Revenue Service,
federal and state taxing authorities, and the Securities and Exchange Commission
(the "SEC"). The effect of such statutes, regulations and policies can be
significant, and cannot be predicted with a high degree of certainty.
Federal and state laws and regulations generally applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments, reserves against deposits, capital levels relative to
operations, the nature and amount of collateral for loans, the establishment of
branches, mergers, consolidations and dividends. The system of supervision and
regulation applicable to the Holding Company and the Bank establishes a
comprehensive framework for their respective operations and is intended
primarily for the protection of the FDIC's deposit insurance funds and the
depositors, rather than the shareholders, of the Bank.
The following references to material statutes and regulations affecting the
Holding Company and the Bank are brief summaries thereof and do not purport to
be complete, and are qualified in their entirety by reference to such statutes
and regulations. Any change in applicable law or regulations may have a material
effect on the business of the Holding Company and the Bank.
Banking Regulation
The Holding Company, if the reorganization is successful, will be a bank
holding company subject to the supervision of the Board of Governors of the
Federal Reserve System under the Bank Holding Company Act of 1956, as amended
(the "Act"). In accordance with Federal Reserve Board policy, the Holding
Company will be expected to act as a source of financial strength to the Bank
and to commit resources to support the Bank in circumstances where the Holding
Company might not do so absent such policy. As a bank holding company, the
Holding Company will be required to file with the Board of Governors annual
reports and such additional information as the Board of Governors may require
pursuant to the Act. The Board of Governors may make examinations of the Holding
Company and its subsidiary. Because the Bank will be chartered under Wisconsin
law, the Holding Company will also be subject to the examination, supervision,
reporting and enforcement requirements of the Wisconsin Department of Financial
Institutions Division of Banking.
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The Act requires every bank holding company to obtain the prior approval of
the Board of Governors before it may acquire direct or indirect ownership of
more than five percent (5%) of the voting securities or substantially all of the
assets of any bank. The Act limits the activities by bank holding companies to
managing, controlling, and servicing their subsidiary banks and to engaging in
certain non-banking activities which have been determined by the Board of
Governors to be closely related to banking. Similarly, the Act, with specified
exceptions relating to permissible non-banking activities, forbids holding
companies from acquiring voting control (generally, 25% or more of the voting
power) of any company which is not a bank. Some of the activities that the Board
of Governors has determined by regulation to be closely related to banking are
making or servicing loans, leasing real and personal property where the lease
serves as the functional equivalent of an extension of credit, making
investments in corporations or projects designed primarily to promote community
welfare, acting as an investment or financial advisor, providing data processing
services, and acting as an insurance agent or broker, as those activities are
defined and limited by the regulation.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on any extensions of credit to
the bank holding company or any of its subsidiaries, on investments in the stock
or other securities thereof, and on the taking of such stock or securities as
collateral for loans to any borrower. Further, under the Act and regulations of
the Board of Governors, a bank holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with any
extension of credit or provision of any property or services. The Board of
Governors possesses cease and desist powers over bank holding companies and
their non-banking subsidiaries if their actions represent an unsafe or unsound
practice or a violation of law.
The Bank is a Wisconsin-chartered bank. Its deposit accounts are insured by
the Bank Insurance Fund (the "BIF") of the FDIC. As a BIF-insured,
Wisconsin-chartered bank, the Bank is subject to the examination, supervision,
reporting and enforcement requirements of the Wisconsin Department of Financial
Institutions Division of Banking, as the chartering authority for Wisconsin
banks, and the FDIC, as administrator of the BIF. Areas subject to regulation by
the authorities include reserves, investments, loans, mergers, issuance of
securities, payment of dividends, establishment of branches, and other aspects
of banking operations.
Capital Requirements for the Holding Company and the Bank
The Federal Reserve Board and the FDIC use capital adequacy guidelines in
their examination and regulation of bank holding companies and banks. If capital
falls below minimum guideline levels, a bank holding company may, among other
things, be denied approval to acquire or establish additional banks or non-bank
businesses.
The Federal Reserve Board and the FDIC's capital guidelines establish the
following minimum regulatory capital requirements for bank holding companies: a
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risk-based requirement expressed as a percentage of total risk-weighted assets,
and a leverage requirement expressed as a percentage of total assets. The
risk-based requirement consists of a minimum ratio of total capital to a total
risk-weighted assets of 8%, of which at least one-half must be Tier 1 capital
(which consists principally of shareholders' equity). The leverage requirement
consists of a minimum ratio of Tier 1 capital to total assets of 3% for the most
highly rated companies, with minimum requirements of 4% to 5% for all others.
As of June 30, 1998, on a pro forma basis, the Holding Company's ratio of
total capital to risk-weighted assets was 29.99%, its ratio of Tier 1 capital to
risk-weighted assets was 28.74%, and its ratio of Tier 1 capital to average
assets was 13.55%. Also as of June 30, 1998, the Bank's ratio of total capital
to risk-weighted assets was 29.99%, its ratio of Tier 1 capital to risk-weighted
assets was 28.74%, and its ratio of Tier 1 capital to average assets was 13.55%.
The risk-based and leverage standards presently used by the Federal Reserve
Board and the FDIC are minimum requirements, and higher capital levels will be
required if warranted by the particular circumstances or risk profiles of
individual banking organizations. Further, any banking organization experiencing
or anticipating significant growth would be expected to maintain capital ratios,
including tangible capital positions (i.e., Tier 1 capital less all intangible
assets), well above the minimum levels.
The Federal Reserve Board's regulations provide that the foregoing capital
requirements will generally be applied on a bank-only (rather than a
consolidated) basis in the case of a bank holding company with less than $150
million in total consolidated assets.
FDIC Deposit Insurance Premiums
The Bank pays deposit insurance premiums to the FDIC based on a risk-based
assessment system established by the FDIC for all institutions insured by the
Bank Insurance Fund of the FDIC ("BIF"). Beginning January 1, 1998, and for each
of the years 1998, 1999, and 2000, the Bank will pay premiums on its BIF-insured
deposits at the minimum rate for top rated banks. The premiums assessable in
1998 for BIF insurance would be approximately $10,000.
Loan Limits to Borrowers
Generally, under the Wisconsin Banking Law, a Wisconsin-chartered bank may
make to any one borrower total loans and extensions of credit not fully secured
by collateral having a market value at least equal to the loan in an amount not
to exceed 20% of the capital of the bank. Bank holding companies are not subject
to specific limitations on loans to one borrower. However, bank holding company
lending activities require the prior approval of the Federal Reserve Board under
Regulation Y.
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Recent Regulatory Developments
On September 23, 1994, the "Riegle Community Development and Regulatory
Improvement Act of 1994" (the "Riegle Act") was signed into law. The provisions
of Title III of the Riegle Act are intended to reduce the paperwork and
regulatory burdens of federally-insured financial institutions and their holding
companies. These provisions require the federal banking regulators, among other
things: (i) to consider the burdens and benefits to depository institutions and
their customers of proposed regulatory and administrative requirements; (ii)
within two years of the enactment of the Riegle act, to eliminate from their
regulations and written supervisory policies regulatory inconsistencies,
outmoded or duplicative requirements and unwarranted constraints on credit
availability and to adopt uniform requirements to implement common statutory
schemes or regulatory concerns; (iii) to create a unified examination process
for financial institutions subject to the jurisdiction of more than one
regulator; (iv) within six months of enactment of the Riegle Act, to establish
an internal regulatory appeals process by which regulated institutions may
obtain review of agency determinations relating to such matters as examination
ratings, adequacy of loan loss reserves and significant loan classifications;
(v) to streamline the quarterly call report format; and (vi) in considering
revisions to risk-based capital requirements, to ensure that the standards take
into account the size, activities and reporting burdens of institutions. The
Riegle Act also gives the federal banking agencies greater flexibility with
respect to the implementation and enforcement of certain provisions of the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"),
including the FDICIA provisions regarding safety and soundness standards,
examination frequency and independent audit requirements.
In addition, on September 29, 1994, the "Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994" (the "Riegle-Neal Act") was signed into law.
Effective September 29, 1995, the Riegle-Neal Act allows bank holding companies
to acquire banks located in any state in the United States without regard to
geographic restrictions or reciprocity requirements imposed by state law, but
subject to certain conditions, including limitations on the aggregate amount of
deposits that may be held by the acquiring holding company and all of its
insured depositor institution affiliates. Effective June 1, 1997 (or earlier if
expressly authorized by applicable state law), the Riegle-Neal Act allows banks
to establish interstate branch networks through acquisitions of other banks,
subject to certain conditions, including certain limitations on the aggregate
amount of deposits that may be held by the surviving bank and all of its insured
depository institution affiliates. The establishment of de novo interstate
branches or the acquisition of individual branches of a bank in another state
(rather than the acquisition of an out-of-state bank in its entirety) is allowed
by the Riegle-Neal Act only if specifically authorized by state law. The
legislation allows individual states to "opt-out" of certain provisions of the
Riegle-Neal Act by enacting appropriate legislation prior to June 1, 1997. As a
result of the delayed effective dates of the interstate banking provisions of
the Riegle-Neal Act, and the need for state legislation action to permit earlier
interstate transactions and authorize de novo interstate branching, the
Riegle-Neal Act is not expected to have an immediate significant impact on the
Holding Company or the Bank. Over time, however, the provisions of the
Riegle-Neal Act may increase competition in the market served by the Holding
Company and the Bank.
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Under FDICIA, as implemented by final regulations adopted by the FDIC,
FDIC- insured state banks are prohibited, subject to certain exceptions, from
making or retaining equity investments of a type, or in an amount, that are not
permissible for a national bank. FDICIA, as implemented by FDIC regulations,
also prohibits FDIC-insured state banks and their subsidiaries, subject to
certain exceptions, from engaging as principal in any activity that is not
permitted for a national bank or its subsidiary, respectively, unless the bank
meets, and continues to meet, its minimum regulatory capital requirements and
the FDIC determines the activity would not pose a significant risk to the
deposit insurance fund of which the bank is a member. Impermissible investments
and activities must be divested or discontinued within certain time frames set
by the FDIC in accordance with FDICIA. These restrictions are not currently
expected to have a material impact on the operations of the Bank.
AVAILABLE INFORMATION
The Holding Company has filed with the Securities and Exchange Commission
("SEC"), Washington, D.C., a Registration Statement (No. 333-______) on Form S-4
under the Securities Act of 1933, for the registration of Holding Company stock
to be issued in the reorganization. This Prospectus constitutes the Prospectus
that was filed as a part of that registration statement.
The Bank currently is not subject to the requirements of the Securities
Exchange Act of 1934 ("Exchange Act"), and files no reports or proxy statements
with the SEC pursuant thereto. After consummation of the reorganization, the
Holding Company will be subject to the reporting requirements of the Exchange
Act, pursuant to Section 15(d) thereof, but the Holding Company's duty to file
such reports is automatically suspended as to each fiscal year at the beginning
of which the Holding Company's stock is held by fewer than 300 shareholders.
Immediately upon completion of the reorganization, the Holding Company's stock
will be held by no more than 83 shareholders. Accordingly, the Holding Company
will not for the foreseeable future file reports or proxy statements with the
SEC. However, the Holding Company will voluntarily provide shareholders with
reports of the same nature, and with the same frequency, as are currently
provided by the Bank to Bank shareholders.
The SEC maintains a Web site, http://www.sec.gov, that contains filings
made electronically with the SEC, including those of the Holding Company.
LEGAL MATTERS
Certain legal matters in connection with the reorganization will be passed
upon for the Holding Company and the Bank by Boardman, Suhr, Curry & Field, One
South Pinckney Street, P.O. Box 927, Madison, Wisconsin 53701-0927.
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT and Plan of Reorganization ("Agreement") is made on
________________, 1998, by and between RICHLAND COUNTY BANK, a state banking
organization ("Bank"), and RICHLAND COUNTY BANCSHARES, INC., a Wisconsin
corporation ("Corporation").
RECITALS
The parties consider it advantageous to form a one-bank holding company,
which will be the Corporation, to own all of the outstanding stock of the Bank.
To form the holding company, the Corporation will organize a wholly-owned
subsidiary bank, called New Richland County Bank, a state banking organization
("New Bank"). Bank will then merge with and into New Bank, leaving New Bank as
the survivor, and converting the outstanding stock of Bank into stock of the
Corporation, so that the shareholders of Bank will become the shareholders of
the Corporation.
This reorganization is comprised of the organization of New Bank and the
merger of Bank into New Bank, as the surviving entity (the "merger"). Pursuant
to the terms of this Agreement, and a Merger Agreement between Bank and New Bank
(to be executed after New Bank is formed), as of the Effective Date of the
Merger, each of the then issued and outstanding shares of Bank Common Stock
("Bank Common") will be converted into three shares of the authorized but
previously unissued common stock of the Corporation ("Corporation Common").
NOW, THEREFORE, the parties do adopt this plan of reorganization and agree
as follows:
1. Merger. Subject to compliance with all requirements of law and the terms
and conditions set forth in this Agreement, Bank will be merged with and into
New Bank.
(a) Effective Date; Surviving Bank. The Effective Date of this Merger (the
"Effective Date") shall be the date set forth in the Merger Agreement. At the
Effective Date, Bank shall be merged with and into New Bank, the separate
existence of Bank shall cease and New Bank, as the surviving corporation (the
"Surviving Bank"), shall succeed to and possess all of the properties, rights,
privileges, immunities, and powers, and shall be subject to all the liabilities,
obligations, restrictions, and duties, of Bank and New Bank.
(b) Charter Number. The charter number of the New Bank shall be the charter
number of the Surviving Bank.
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(c) Articles of Incorporation; Name. From and after the Effective Date and
until thereafter amended as provided by law, the Articles of Incorporation of
the Surviving Bank shall be the Articles of Incorporation of Bank, as amended or
restated, and the name of Surviving Bank shall be that of Bank.
(d) Bylaws. From and after the Effective Date and until thereafter amended
as provided by law, the Bylaws of Bank in effect immediately prior to the
Effective Date shall constitute the Bylaws of Surviving Bank.
(e) Directors and Officers. From and after the Effective Date and until
their respective successors are elected, the members of the Board of Directors
and the officers of Surviving Bank shall consist of those persons who are
serving as directors and officers of Bank immediately prior to the Effective
Date.
(f) Conversion of Stock. As of the Effective Date, by virtue of the merger
and without any action on the part of the shareholders of Bank, all of the Bank
Common outstanding immediately prior to the Effective Date shall cease to exist
and shall be converted into Corporation Common, at the rate of three (3) shares
of Corporation Common for each one (1) share of Bank Common. As of the Effective
Date, by virtue of the merger and without any action on the part of the
shareholders of New Bank, all of the New Bank common stock outstanding
immediately prior to the Effective Date shall cease to exist and shall be
converted to 28,500 shares of common stock of the Surviving Bank, $100 par
value.
(g) Transmittal Procedure. Bank will close its transfer records on a date
twenty (20) days prior to the Effective Date for a period through and including
the Effective Date. When the Effective Date is established, the date of closing
of transfer records will also be set, and the shareholders of Bank will be
notified of such. Bank will make every reasonable effort to have its
shareholders of record tender their certificates for Bank Common to the Exchange
Agent at least three (3) days prior to the Effective Date. Bank will serve as
the Exchange Agent for this transaction. On the Effective Date, the Corporation
shall provide to Bank, and Bank shall mail or deliver to its shareholders, stock
certificates of Corporation Common to which those shareholders are entitled by
reason of the merger; provided, however, that no Corporation Common certificate
shall be mailed or delivered to a Bank shareholder who is eligible to exercise
dissenter's rights or who has not delivered to Bank all certificates of Bank
Common owned by such shareholder (or if a certificate has been lost, an
indemnity bond or other agreement satisfactory to the Corporation).
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Until so delivered to Bank, each outstanding certificate which prior to the
Effective Date represented shares of Bank Common will be deemed for all purposes
to evidence only the right to receive the ownership of the shares of Corporation
Common into which such Bank Common has been converted; provided, however, that
until such Bank Common certificates are so delivered to Bank, no dividend
payable on Corporation Common at any time after the Effective Date shall be paid
to the holder of such undelivered certificate. Upon the delivery of such
certificate after the Effective Date, the Corporation shall pay, without
interest, any unpaid dividends by reason of the preceding sentence to the record
holder thereof, and Bank shall deliver the stock certificate for Corporation
Common.
(h) Dissenting Shares of Bank. If any shares of Bank Common are dissenting
shares, Bank shall proceed according to applicable law to determine and pay the
fair value of those dissenting shares. "Dissenting shares" shall mean each
outstanding share of Bank Common as to which the holder has strictly complied
with the provisions of applicable law in order effectively to withdraw from Bank
and obtain the right to receive the fair value of his or her shares of Bank
Common.
As of the Effective Date or the date that the last action is taken to
exercise dissenter's rights, whichever is later, dissenting shares shall, by
virtue of the merger, cease to represent any ownership interest or ownership
rights to the Bank or the Corporation, and shall be converted into the right to
receive fair value of those shares as provided by law.
(i) Business. From and after the Effective Date, the business of the
Surviving Bank shall be that of a state bank, conducted at the offices of Bank
where located immediately prior to the Effective Date.
(j) Assets and Liabilities. From and after the Effective Date, the
Surviving Bank shall be liable for all liabilities of New Bank and Bank; and all
deposits, debts, liabilities, and contracts of New Bank and Bank, respectively,
matured or unmatured, whether accrued, absolute, contingent or otherwise, and
whether or not reflected or reserved against on balance sheets, books of account
or records of New Bank or Bank, shall be those of the Surviving Bank and shall
not be released or impaired by reason of the merger; and all rights of creditors
and other obligees and all liens on property of either New Bank or Bank shall be
preserved unimpaired. Further, all rights, franchises and interests of New Bank
and Bank, respectively, in and to every type of property (real, personal and
mixed) and choices in action shall be transferred to and vested in Surviving
Bank by virtue of such merger without any deed or other transfer, and Surviving
Bank, without any order or other action on the part of any court or otherwise,
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shall hold and enjoy all rights of property, franchises and interests, including
appointments, designations and nominations, and all other rights and interests
in every fiduciary capacity, in the same manner and to the same extent as such
rights, franchises and interests were held or enjoyed by New Bank and Bank,
respectively, on the Effective Date.
(k) Tax Consequences. The parties intend and desire that the merger shall
be treated for income tax purposes as a forward triangular merger under Section
368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code. The parties
shall act in all respects consistently with that intent.
(l) Shareholder Approvals. This Agreement and Plan of Reorganization will
be submitted to the respective shareholders of Bank and New Bank for
ratification and confirmation at share holder meetings to be called and held in
accordance with the applicable provisions of law and the respective Articles of
Incorporation and Bylaws of Bank and New Bank. Each shareholder meeting shall be
called as soon as reasonably possible. Bank and New Bank will proceed
expeditiously and cooperate fully in the procurement of any other consents and
approvals and in the taking of any other action, and the satisfaction of all
other requirements prescribed by law or otherwise, necessary for consummation of
the merger. The Corporation, as sole shareholder of New Bank, shall vote its
stock in New Bank to approve the merger and the transactions set forth in this
Agreement.
(m) Regulatory Approvals. The parties shall prepare and submit for filing
any and all applications, filings, and registrations with, and notifications to,
all federal and state authorities required for the merger to be consummated as
contemplated by this Agreement. Thereafter, the parties shall pursue all such
applications, filings, registrations, and notifications diligently and in good
faith, and shall file such supplements, amendments, and additional information
in connection therewith as may be reasonably necessary for the merger to be
consummated.
(n) Merger Agreement. The Corporation shall form New Bank promptly
following execution of this Agreement and shall cause New Bank to execute the
Merger Agreement attached hereto as Exhibit A. Within three days after execution
by New Bank, Bank shall execute the Merger Agreement.
2. Representations and Warranties by Bank. Bank represents and warrants to
the Corporation that this Agreement has been approved by the Board of Directors
of Bank, and upon approval by the shareholders of Bank will be fully authorized
by all necessary corporation action.
3. Representations and Warranties by the Corporation. The Corporation
represents and warrants to Bank that the shares of the Corporation Common to be
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delivered to Bank shareholders pursuant to this Agreement will, upon issuance,
be duly and validly authorized and issued and fully paid and nonassessable
voting shares, except as otherwise required by law, and will constitute all of
the issued and outstanding shares of the Corporation as of the Effective Date.
4. Closing. Subject to the satisfaction of all closing conditions contained
herein or their waiver, the closing shall occur on the Effective Date, which
will be within thirty (30) days after the satisfaction of the last closing
condition. The Closing shall take place at the offices of Bank, or at such other
place as the Corporation and Bank may hereafter agree.
5. Conditions to Obligations of Both Parties. The obligations of each party
to be performed on the Effective Date shall be subject to the following
conditions unless waived in writing by the parties:
(a) Regulatory Approval. On or before the Effective Date, Bank shall have
received the approval from those regulatory agencies whose approval of the
merger is required and any mandatory waiting period(s) associated with such
approval(s) shall have expired.
(b) No Litigation. At the Effective Date, no litigation or governmental
investigation shall have been commenced or, to the best knowledge of the
Corporation or Bank, threatened or proposed, which would have a material,
adverse effect on the value of Bank or an adverse effect on the ability of any
party to close this transaction, or which arises out of or concerns the
transactions contemplated by this Agreement.
(c) Closing Not Later Than April 15, 1999. The closing of the transactions
contemplated hereunder shall have occurred on or before April 15, 1999, unless
such date is extended by mutual written agreement of the parties.
(d) Shareholder Approval. This Agreement shall have been approved and
adopted by the shareholders of Bank and of New Bank in such manner as required
by law.
(e) Tax Opinion. The parties shall have received a written opinion of tax
counsel that the transactions contemplated by this Agreement and the Merger
Agreement will constitute a tax-free reorganization under the provisions of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code with respect
to those shareholders of Bank who will receive Corporation Common in the merger.
(f) Securities Law Compliance. The Corporation Common stock to be issued in
the merger shall have been registered, qualified or exempted under all
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applicable federal and state securities laws, and there shall have been no stop
order issued or threatened by the SEC or any state that suspends the
effectiveness of any such registration, qualification, or exemption.
6. Conditions to Obligations of Corporation and New Bank. The obligations
of the Corporation and New Bank to be performed on the Effective Date shall be
subject to the following conditions unless waived in writing by the Corporation
and New Bank:
(a) Representations and Warranties True; Covenants and Obligations
Performed. All representations and warranties of Bank shall be true and correct
in all material respects on the Effective Date, and Bank shall have performed
all acts required of it under the terms of this Agreement.
(b) Dissenting Shares. There shall be not more than ten percent (10%) of
the total outstanding shares of Bank that as of the Effective Date are eligible
to elect dissenter's rights by reason of having complied with the procedures
required by applicable law.
(c) No Material Adverse Change. The assets, business, operation, and
prospects of Bank shall not have been materially and adversely affected by a
loss or destruction not fully compensated by insurance, by any governmental
proceeding or action, or by any other event or occurrence, which in the
reasonable judgment of the Corporation would defeat or frustrate the purposes of
the reorganization or otherwise make the reorganization undesirable.
7. Conditions to Obligations of Bank. The obligations of Bank to be
performed on the Effective Date shall be subject to the following conditions
unless waived in writing by Bank: all representations and warranties of the
Corporation shall be true and correct in all material respects on the Effective
Date, and the Corporation and New Bank shall have performed all acts required of
them under the terms of this Agreement.
8. Additional Covenants of the Parties.
(a) Cooperation. The parties will fully cooperate with each other and their
respective counsels and accountants in connection with any steps to be taken as
part of their obligations under this Agreement, including without limitation,
the preparation of financial statements and the supplying of information in
connection with the preparation of regulatory applications.
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(b) Expenses. All costs and expenses and charges incurred by a party hereto
shall be borne by such party, including the fees of their respective accountants
and attorneys; provided, however, that if the merger is not consummated for any
reason, all costs and expenses incurred by the Corporation and New Bank shall be
paid by Bank.
(c) Affiliates. The parties acknowledge that (i) shares of Corporation
Common received in the reorganization by persons who are affiliates of the
parties for purposes of Rule 145, promulgated by the Securities and Exchange
Commission pursuant to the Securities Act of 1933, are subject to certain
restrictions on the public resale of such shares; (ii) certificates evidencing
shares of Corporation Common received by affiliates pursuant to the
reorganization shall carry a legend referring to Rule 145 and the transfer
restrictions imposed thereunder; and (iii) such shares shall be subject to
stop-transfer instructions to the Corporation's transfer agent. For purposes of
Rule 145 an "affiliate" means a person who was, as of the date of consummation
of the reorganization, an executive officer of Bank, or a director of Bank, or a
person deemed to control Bank (including without limitation a Bank shareholder
owning more than 10% of the Bank stock outstanding). Neither Bank nor the
Corporation is obligated to register shares of Corporation Common for resale,
and any such registration shall be at the expense and instance of any
shareholder, including an affiliate, desiring such registration.
9. Termination. This Agreement and merger may be terminated and abandoned
upon prompt written notice to the other party before the Effective Date,
notwithstanding authorization and adoption of this Agreement by the shareholders
of one or both of Bank and New Bank:
(a) By mutual consent of Bank and the Corporation through their Boards of
Directors;
(b) By Bank at any time after April 15, 1999 (or such later date as shall
have been agreed to in writing by the parties) if any of the conditions provided
for in Paragraphs 5 or 7 of this Agreement have not been met and have not been
waived in writing by Bank; or
(c) By the Corporation at any time after April 15, 1999 (or such later date
as shall have been agreed to in writing by the parties) if any of the conditions
provided for in Paragraphs 5 or 6 of this Agreement have not been met and have
not been waived in writing by the Corporation.
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10. Miscellaneous.
(a) Assignment. This Agreement and the rights, interests, and benefits
hereunder shall not be assigned, transferred, or pledged in any way, and shall
not be subject to execution, attachment, or similar process. Any attempt to
assign, transfer, pledge, or make any other disposition of this Agreement or of
the rights, interests, and benefits contrary to the foregoing provision, or the
levy of any attachment or similar process thereupon, shall be null and void and
without effect.
(b) Waiver. No failure or delay of any party in exercising any right or
power given to it under this Agreement shall operate as a waiver thereof. No
waiver of any breach of any provision of this Agreement shall constitute a
waiver of any prior, concurrent, or subsequent breach. No waiver of any breach
or modification of this Agreement shall be effective unless contained in a
writing executed by both parties.
(c) Entire Agreement. This Agreement supersedes any other representations
or agreement, whether written or oral, that may have been made or entered into
by the Corporation, Bank, New Bank or by any officer or officers of such parties
relating to the acquisition of Bank, or its assets or business, by the
Corporation. This Agreement constitutes the entire agreement by the parties, and
there are no agreements or commitments except as set forth herein.
(d) Amendment. This Agreement may be modified or amended only by a written
agreement executed by duly authorized officers of both parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
ATTEST: RICHLAND COUNTY BANK
_______________________ By:________________________________
ATTEST: RICHLAND COUNTY BANCSHARES, INC.
_______________________ By:________________________________
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EXHIBIT A
MERGER AGREEMENT
MERGER AGREEMENT ("Merger Agreement") made this _____ day of
__________________, 1998, by and between RICHLAND COUNTY BANK, a state banking
organization ("Bank"), and NEW RICHLAND COUNTY BANK, a state banking
organization ("New Bank").
WITNESSETH
WHEREAS, Bank and Richland County Bancshares, Inc. ("Corporation") have
entered into an Agreement and Plan of Reorganization dated _____________, 1998
("Agreement"), pursuant to which Bank has agreed to merge with and into the
Corporation's wholly-owned subsidiary, New Bank, in a forward triangular merger;
and
WHEREAS, Bank and New Bank wish to agree on the terms of the merger now
that New Bank has been formed;
NOW, THEREFORE, the parties agree as follows:
1. Incorporation of Plan of Reorganization. The terms and conditions of the
Agreement are incorporated herein by reference in their entirety, and made a
part of this Merger Agreement with the same effect as if New Bank had been a
party to the Agreement.
2. Cooperation. New Bank shall cooperate with Bank to achieve a prompt
consummation of the transactions contemplated in the Agreement, and shall
perform all actions necessary or convenient to be performed by it for that
purpose.
3. Articles of Incorporation. Effective as of the time this merger shall
become effective as specified in the Agreement, the articles of incorporation of
that bank resulting from the merger of Bank and New Bank shall read in their
entirety as stated in the attached Articles of Incorporation.
4. Capital Stock. The amount of capital stock of New Bank shall be $50,000,
divided into 500 shares of common stock, each of $100 par value. At the time the
merger shall become effective (and after the temporary capitalization of the
interim bank has been returned to the Corporation), the resulting bank shall
have $____________ in capital, a surplus of $____________, and undivided profits
of $____________, adjusted, however, for earnings and expenses between
_________, 199__, and the Effective Date of the merger. At the time the merger
shall become effective, the 500 shares of New Bank stock then outstanding shall
be converted into 28,500 shares, each of $100 par value, of the resulting bank.
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5. Effective Date. The Effective Date of the Merger shall be
_________________.
IN WITNESS WHEREOF, the parties have executed this Merger Agreement by
their proper corporate officers duly authorized to execute this Agreement, as of
the date first above written.
Attest: RICHLAND COUNTY BANK
_________________________ By_________________________________
Attest: NEW RICHLAND COUNTY BANK
_________________________ By_________________________________
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EXHIBIT B
TAX OPINION OF BOARDMAN, SUHR, CURRY & FIELD
<PAGE>
SPECIMEN
____________________, 1998
The Board of Directors
Richland County Bancshares, Inc.
195 West Court Street
Richland Center, WI 53581
The Board of Directors
Richland County Bank
195 West Court Street
Richland Center, WI 53581
Ladies and Gentlemen:
You have requested that we render an opinion as to the tax consequences to
Richland County Bancshares, Inc. ("Holding Company"), Richland County Bank
("Bank"), New Richland County Bank ("New Bank"), and the shareholders
("Shareholders") of the Bank of a corporate reorganization to form a one-bank
holding company, as described in an Agreement and Plan of Reorganization dated
_______________, 1998, between the Holding Company and the Bank ("Agreement")
and in a certain Prospectus/Proxy Statement dated _____________, 1998.
We acknowledge that this opinion is provided for the benefit and guidance
of the Holding Company and Bank.
In making this opinion, we have relied on the Agreement, the
Prospectus/Proxy Statement, the Merger Agreement (to be executed between the
Bank and the New Bank), and on the truth and completeness of the warranties,
representations, statements and facts contained in those documents. We have also
relied upon the truth and completeness of the following representations of the
Holding Company and the Bank:
1. The fair market value of the Holding Company stock received by each Bank
shareholder will be approximately equal to the fair market value of the Bank
stock surrendered in the exchange.
2. There is no plan or intention by the shareholders of the Bank who own
one percent (1%) or more of the Bank stock, and to the best of the knowledge of
the management of the Bank, there is no plan or intention on the part of the
remaining shareholders to sell, exchange, or otherwise dispose of a number of
<PAGE>
____________________, 1998
Page 2
shares of Holding Company stock received in the transaction that would reduce
the shareholders' ownership of Holding Company stock to a number of shares
having a value, as of the date of the transaction, of less than fifty percent
(50%) of the value of all of the formerly outstanding Bank stock as of the same
date. For purposes of this representation, shares of Bank stock exchanged for
cash or other property, surrendered by dissenters or exchanged for cash in lieu
of fractional shares of Holding Company stock will be treated as outstanding
Bank stock on the date of the transaction. Moreover, shares of Holding Company
stock held by Bank shareholders and otherwise sold, redeemed or disposed of
prior or subsequent to the transaction will be considered in making this
representation.
3. New Richland County Bank ("New Bank") will acquire at least ninety
percent (90%) of the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held by the Bank
immediately prior to the transaction. For purposes of this representation,
amounts paid by the Bank to dissenters, amounts paid by the Bank to shareholders
who receive cash or other property, Bank assets used to pay its reorganization
expenses, and all redemption and distributions (except for regular, normal
dividends) made by the Bank immediately preceding the transfer, will be included
as assets of the Bank held immediately prior to the transaction.
4. Prior to the transaction, the Holding Company will be in control of the
New Bank within the meaning of ss. 368(c)(1) of the Internal Revenue Code.
5. Following the transaction, the New Bank will not issue additional shares
of its stock that would result in the Holding Company losing control of the New
Bank within the meaning of ss. 368(c)(1) of the Internal Revenue Code.
6. The Holding Company has no plan or intention to reacquire any of its
stock issued in the transaction.
7. The Holding Company has no plan or intention to liquidate the New Bank;
to merge the New Bank with and into another bank or corporation; to sell or
otherwise dispose of the stock of the New Bank; or to cause the New Bank to sell
or to otherwise dispose of any of the Bank's assets acquired in the transaction,
except for dispositions made in the ordinary course of business or transfers
described in ss. 368(a)(2)(C) of the Internal Revenue Code.
8. The liabilities of the Bank assumed by the New Bank, and the liabilities
to which the transferred assets of the Bank are subject, were incurred by the
Bank in the ordinary course of its business.
<PAGE>
____________________, 1998
Page 3
9. Following the transaction, the New Bank will continue the historic
business of the Bank or use a significant portion of the Bank's business assets
in a business.
10. The Holding Company, the New Bank, the Bank, and the shareholders will
pay their respective expenses, if any, incurred in connection with the
transaction.
11. There is no intercorporate indebtedness existing between the Holding
Company and the Bank or between the New Bank and the Bank that was issued,
acquired or will be settled at a discount.
12. No two parties to the transaction are investment companies as defined
in ss. 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
13. The Bank is not under the jurisdiction of a court in a Title 11
(bankruptcy) or similar case within the meaning of ss. 368(a)(3)(A) of the
Internal Revenue Code.
14. The fair market value of the assets of the Bank transferred to the New
Bank will equal or exceed the sum of the liabilities assumed by the New Bank,
plus the amount of liabilities, if any, to which the transferred assets are
subject.
15. No stock of the New Bank will be issued in the transaction.
We have not undertaken to verify independently any of the factual matters
upon which we rely in providing this opinion. Moreover, we have assumed that no
changes have occurred or will occur with respect to the documents described
above or the representations set forth in paragraphs 1 through 15 above.
Based upon and subject to the foregoing, it is our opinion under current
law that for federal and State of Wisconsin income tax purposes:
(1) The proposed merger will constitute a reorganization within the
meaning of Section 368(a)(1)(A) by reason of Section 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended, and Chapter 71 of the
Wisconsin Statutes. The reorganization will not be disqualified by
reason of the fact that Holding Company common stock is used in the
transaction. (Internal Revenue Code Section 368(a)(2)(D).)
<PAGE>
____________________, 1998
Page 4
(2) No gain or loss will be recognized to the Bank on the transfer of
substantially all of its assets to the New Bank in exchange for
Holding Company common stock and the assumption by the New Bank of the
liabilities of the Bank.
(3) No gain or loss will be recognized to the Holding Company or the New
Bank upon the receipt by the New Bank of substantially all of the
assets of the Bank in exchange for Holding Company common stock and
the assumption by the New Bank of the liabilities of the Bank.
(4) The basis of the Bank assets in the hands of the New Bank will be the
same as the basis of those assets in the hands of the Bank immediately
prior to the proposed transaction.
(5) The holding period of the assets of the Bank in the hands of the New
Bank will include the period during which such assets were held by the
Bank.
(6) The basis of the New Bank stock in the hands of the Holding Company
will be increased by an amount equal to the basis of the Bank assets
acquired by the New Bank in the transaction, and will be decreased by
the amount of liabilities of the Bank assumed by the New Bank and the
amount of liabilities to which the acquired assets of the Bank are
subject.
(7) No gain or loss will be recognized by the shareholders on the exchange
of their Bank common stock for Holding Company common stock; provided,
however, that no opinion is expressed with respect to Bank
shareholders who dissent from the transaction and receive cash for
their Bank stock.
(8) The income tax basis of the Holding Company common stock to be
received by the shareholders will be the same as the basis of the Bank
common stock surrendered in exchange.
(9) The holding period of the Holding Company common stock to be received
by the shareholders will include the period during which the Bank
common stock surrendered in exchange was held, provided that the Bank
common stock is held as a capital asset on the date of the exchange.
Our opinion is limited to specific issues addressed. We express no opinion
and make no representation, and no inference is intended or should be drawn from
any statement in this letter, as to any other issues involving the transaction.
BOARDMAN, SUHR, CURRY & FIELD
<PAGE>
EXHIBIT C
SECTIONS 221.0706 THROUGH 221.0718
OF THE WISCONSIN STATUTES
<PAGE>
Wisconsin Acts (Advance)
1995 WISCONSIN ACT 336
October 16, 1996
221.0706 Right to dissent. (1) MANDATORY DISSENTERS' RIGHTS. A shareholder or
beneficial shareholder may dissent from, and obtain payment of the fair value of
his or her shares in the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the issuer bank is a party.
(b) Consummation of a plan of share exchange if the issuer bank's shares will be
acquired, and the shareholder or the shareholder holding shares on behalf of the
beneficial shareholder is entitled to vote on the plan.
(c) Except as provided in sub. (2), any other corporate action taken pursuant to
a shareholder vote to the extent that the articles of incorporation, the bylaws
or a resolution of the board of directors provides that the voting or nonvoting
shareholder or beneficial shareholder may dissent and obtain payment for his or
her shares.
(2) PERMISSIVE DISSENTERS' RIGHTS. The articles of incorporation may allow a
shareholder or beneficial shareholder to dissent from an amendment of the
articles of incorporation and obtain payment of the fair value of his or her
shares if the amendment materially and adversely affects rights in respect of a
dissenter's shares because it does any of the following:
(a) Alters or abolishes a preferential right of the shares.
(b) Creates, alters or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of the
shares.
(c) Alters or abolishes a preemptive right of the holder of shares to acquire
shares or other securities.
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(d) Excludes or limits the right of the shares to vote on any matter or to
cumulate votes, other than a limitation by dilution through issuance of shares
or other securities with similar voting rights.
(e) Reduces the number of shares owned by the shareholder or beneficial
shareholder to a fraction of a share if the fractional share so created is to be
acquired for cash under s. 221.0506.
(3) RIGHTS OF DISSENTER. A shareholder or beneficial shareholder entitled to
dissent and obtain payment for his or her shares under ss. 221.0701 to 221.0718
may not challenge the corporate action creating his or her entitlement unless
the action is unlawful or fraudulent with respect to the shareholder, beneficial
shareholder or issuer bank.
221.0707 Dissent by shareholders and beneficial shareholders. (1) PARTIAL
EXERCISE OF DISSENTERS' RIGHTS. A shareholder may assert dissenters' rights as
to fewer than all of the shares registered in his or her name only if the
shareholder dissents with respect to all shares beneficially owned by any one
person and notifies the bank in writing of the name and address of each person
on whose behalf he or she asserts dissenters' rights. The rights of a
shareholder, who asserts dissenters' rights under this subsection as to fewer
than all of the shares registered in his or her name, are determined as if the
shares as to which he or she dissents and his or her other shares were
registered in the names of different shareholders.
(2) RIGHTS OF BENEFICIAL SHAREHOLDERS. A beneficial shareholder may assert
dissenters' rights as to shares held on his or her behalf only if the beneficial
shareholder does all of the following:
(a) Submits to the bank the shareholder's written consent to the dissent not
later than the time that the beneficial shareholder asserts dissenters' rights.
(b) Submits the consent under par. (a) with respect to all shares of which he or
she is the beneficial shareholder.
221.0708 Notice of dissenters' rights. (1) ACTION AT SHAREHOLDER MEETING. If
proposed corporate action creating dissenters' rights under s. 221.0706 is
submitted to a vote at a shareholders' meeting, the meeting notice shall state
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that shareholders and beneficial shareholders are or may be entitled to assert
dissenters' rights under ss. 221.0701 to 221.0718 and shall be accompanied by a
copy of those sections.
(2) ACTION WITHOUT SHAREHOLDER VOTE. If corporate action creating dissenters'
rights under s. 221.0706 is authorized without a vote of shareholders, the bank
shall notify, in writing and in accordance with s. 221.0103, all shareholders
entitled to assert dissenters' rights that the action was authorized and send
them the dissenters' notice described in s. 221.0710.
221.0709 Notice of intent to demand payment. (1) METHOD OF ASSERTING DISSENTERS'
RIGHTS. If proposed corporate action creating dissenters' rights under s.
221.0706 is submitted to a vote at a shareholders' meeting, a shareholder or
beneficial shareholder who wishes to assert dissenters' rights shall do all of
the following:
(a) Deliver to the issuer bank before the vote is taken written notice that
complies with s. 221.0103 of the shareholder's or beneficial shareholder's
intent to demand payment for his or her shares if the proposed action is
effectuated.
(b) Refrain from voting his or her shares in favor of the proposed action.
(2) FAILURE TO COMPLY. A shareholder or beneficial shareholder who fails to
comply with sub. (1) is not entitled to payment for his or her shares under ss.
221.0701 to 221.0718.
221.0710 Dissenters' notice. (1) WHEN REQUIRED. If a proposed corporate action
creating dissenters' rights under s. 221.0706 is authorized at a shareholders'
meeting, the bank shall deliver a written dissenters' notice to all shareholders
and beneficial shareholders who satisfied s. 221.0709 (1).
(2) TIMING AND CONTENT OF NOTICE. The dissenters' notice shall be sent no later
than 10 days after the corporate action is authorized at a shareholders' meeting
or without a vote of shareholders, whichever is applicable, and all necessary
regulatory approvals are obtained. The dissenters' notice shall comply with
section 221.0103 and shall include or have attached all of the following:
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(a) A statement indicating where the shareholder or beneficial shareholder must
send the payment demand and where and when certificates for certificated shares
must be deposited.
(b) For holders of uncertificated shares, an explanation of the extent to which
transfer of the shares will be restricted after the payment demand is received.
(c) A form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and that requires the shareholder or beneficial shareholder
asserting dissenters' rights to certify whether he or she acquired beneficial
ownership of the shares before that date.
(d) A date by which the bank must receive the payment demand, which may not be
fewer than 30 days nor more than 60 days after the date on which the dissenters'
notice is delivered.
(e) A copy of ss. 221.0701 to 221.0718.
221.0711 Duty to demand payment. (1) MANNER OF DEMANDING PAYMENT. A shareholder
or beneficial shareholder who is sent a dissenters' notice described in s.
221.0710, or a beneficial shareholder whose shares are held by a nominee who is
sent a dissenters' notice described in s. 221.0710, must demand payment in
writing and certify whether he or she acquired beneficial ownership of the
shares before the date specified in the dissenters' notice under s. 221.0710 (2)
(c). A shareholder or beneficial shareholder with certificated shares must also
deposit his or her certificates in accordance with the terms of the notice.
(2) EFFECT OF DEMAND ON HOLDERS OF CERTIFICATED SHARES. A shareholder or
beneficial shareholder with certificated shares who demands payment and deposits
his or her share certificates under sub. (1) retains all other rights of a
shareholder or beneficial shareholder until these rights are canceled or
modified by the effectuation of the corporate action.
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(3) EFFECT OF FAILURE TO DEMAND. A shareholder or beneficial shareholder with
certificated or uncertificated shares who does not demand payment by the date
set in the dissenters' notice, or a shareholder or beneficial shareholder with
certificated shares who does not deposit his or her share certificates where
required and by the date set in the dissenters' notice, is not entitled to
payment for his or her shares under ss. 221.0701 to 221.0718.
221.0712 Restriction on uncertificated shares. (1) WHEN TRANSFER RESTRICTIONS
PERMITTED. The issuer bank may restrict the transfer of uncertificated shares
from the date that the demand for payment for those shares is received until the
corporate action is effectuated or the restrictions released under s. 221.0714.
(2) EFFECT OF DEMAND ON HOLDERS OF UNCERTIFICATED SHARES. The shareholder or
beneficial shareholder who asserts dissenters' rights as to uncertificated
shares retains all of the rights of a shareholder or beneficial shareholder,
other than those restricted under sub. (1), until these rights are canceled or
modified by the effectuation of the corporate action.
221.0713 Payment. (1) WHEN PAYMENT MADE. Except as provided in s. 221.0715, as
soon as the corporate action is effectuated or upon receipt of a payment demand,
whichever is later, the bank shall pay each shareholder or beneficial
shareholder who has complied with s. 221.0711 the amount that the bank estimates
to be the fair value of his or her shares, plus accrued interest.
(2) MATERIAL TO ACCOMPANY PAYMENT. The payment shall be accompanied by all of
the following:
(a) The bank's latest available financial statements, including a balance sheet
as of the end of a fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of changes in
shareholders' equity for that year and the latest available interim financial
statements, if any.
(b) A statement of the bank's estimate of the fair value of the shares.
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(c) An explanation of how the interest was calculated.
(d) A statement of the dissenter's right to demand payment under s. 221.0716 if
the dissenter is dissatisfied with the payment.
(e) A copy of ss. 221.0701 to 221.0718.
221.0714 Failure to take action. (1) ACTION NOT TAKEN. If an issuer bank does
not effectuate the corporate action within 60 days after the date set under s.
221.0710 for demanding payment, the issuer bank shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) ACTION TAKEN AT A LATER DATE. If, after returning deposited certificates and
releasing transfer restrictions, the issuer bank effectuates the corporate
action, the bank shall deliver a new dissenters' notice under s. 221.0710 and
repeat the payment demand procedure.
221.0715 After-acquired shares. (1) WITHHOLDING FOR AFTER-ACQUIRED SHARES. A
bank may elect to withhold payment required by s. 221.0713 from a dissenter
unless the dissenter was the beneficial owner of the shares before the date
specified in the dissenters' notice under s. 221.0710 (2) (c) as the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action.
(2) PAYMENT. To the extent that the bank elects to withhold payment under sub.
(1) after effectuating the corporate action, the bank shall estimate the fair
value of the shares, plus accrued interest, and shall pay this amount to each
dissenter who agrees to accept it in full satisfaction of his or her demand. The
bank shall send with its offer a statement of its estimate of the fair value of
the shares, an explanation of how the interest was calculated, and a statement
of the dissenter's right to demand payment under s. 221.0716 if the dissenter is
dissatisfied with the offer.
221.0716 Procedure if dissenter is dissatisfied with payment or offer. (1)
RIGHTS OF DISSENTER. A dissenter may, in the manner provided in sub. (2), notify
the bank of the dissenter's estimate of the fair value of his or her shares and
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the amount of interest due, and demand payment of his or her estimate, less any
payment received under s. 221.0713, or reject the offer under s. 221.0715 and
demand payment of the fair value of his or her shares and interest due, if any
of the following applies:
(a) The dissenter believes that the amount paid under s. 221.0713 or offered
under s. 221.0715 is less than the fair value of his or her shares or that the
interest due is incorrectly calculated.
(b) The bank fails to make payment under s. 221.0715 within 60 days after the
date set under s. 221.0710 for demanding payment.
(c) The issuer bank, having failed to effectuate the corporate action, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within 60 days after the date set under s. 221.0710 for
demanding payment.
(2) WAIVER OF RIGHTS. A dissenter waives his or her right to demand payment
under this section unless the dissenter notifies the bank of his or her demand
under sub. (1) in writing within 30 days after the bank makes or offers payment
for his or her shares. The notice shall comply with s. 221.0103.
221.0717 Court action. (1) WHEN SPECIAL PROCEEDING REQUIRED. If a demand for
payment under s. 221.0716 remains unsettled, the bank shall bring a special
proceeding within 60 days after receiving the payment demand under s. 221.0716
and petition the court to determine the fair value of the shares and accrued
interest. If the bank does not bring the special proceeding within the 60-day
period, it shall pay each dissenter whose demand remains unsettled the amount
demanded.
(2) WHERE PROCEEDING TO BE BROUGHT. The bank shall bring the special proceeding
in the circuit court for the county where its principal office or, if none in
this state, its registered office is located. If the bank is a foreign bank
without a registered office in this state, it shall bring the special proceeding
in the county in this state in which was located the registered office of the
issuer bank that merged with or whose shares were acquired by the foreign bank.
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(3) PARTIES TO THE PROCEEDING. The bank shall make all dissenters, whether or
not residents of this state, whose demands remain unsettled parties to the
special proceeding. Each party to the special proceeding shall be served with a
copy of the petition as provided in s. 801.14.
(4) JURISDICTION. The jurisdiction of the court in which the special proceeding
is brought under sub. (2) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend a decision on the
question of fair value. An appraiser has the power described in the order
appointing him or her or in any amendment to the order. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(5) JUDGMENTS. Each dissenter made a party to the special proceeding is entitled
to judgment for any of the following:
(a) The amount, if any, by which the court finds the fair value of his or her
shares, plus interest, exceeds the amount paid by the bank.
(b) The fair value, plus accrued interest, of his or her shares acquired on or
after the date specified in the dissenters' notice under s. 221.0710 (2) (c),
for which the bank elected to withhold payment under s. 221.0715.
221.0718 Court costs and counsel fees. (1) ASSESSMENT OF AND LIABILITY FOR
COSTS. (a) Notwithstanding ss. 814.01 to 814.04, the court in a special
proceeding brought under s. 221.0717 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court and shall assess the costs against the bank, except as
provided in par. (b).
(b) Notwithstanding ss. 814.01 and 814.04, the court may assess costs against
all or some of the dissenters, in amounts that the court finds to be equitable,
to the extent that the court finds the dissenters acted arbitrarily, vexatiously
or not in good faith in demanding payment under s. 221.0716.
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(2) WHEN LIABLE FOR FEES AND COSTS. The parties shall bear their own expenses of
the proceeding, except that, notwithstanding ss. 814.01 to 814.04, the court may
also assess the fees and expenses of counsel and experts for the respective
parties, in amounts that the court finds to be equitable, as follows:
(a) Against the bank and in favor of any dissenter if the court finds that the
bank did not substantially comply with ss. 221.0708 to 221.0716.
(b) Against the bank or against a dissenter, in favor of any other party, if the
court finds that the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously or not in good faith with respect to the rights
provided by this chapter.
(3) PAYMENT OF COUNSEL AND EXPERTS FROM RECOVERY. Notwithstanding ss. 814.01 to
814.04, if the court finds that the services of counsel and experts for any
dissenter were of substantial benefit to other dissenters similarly situated,
the court may award to these counsel and experts reasonable fees to be paid out
of the amounts awarded the dissenters who were benefited.
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EXHIBIT D
ARTICLES OF INCORPORATION
OF RICHLAND COUNTY BANCSHARES, INC.
<PAGE>
ARTICLES OF INCORPORATION
Stock (for profit)
Executed by the undersigned for the purpose of forming a Wisconsin
for-profit corporation under Chapter 180 of the Wisconsin Statutes repealed and
recreated by 1989 Wis. Act 303:
ARTICLE 1. Name of Corporation: Richland County Bancshares, Inc.
ARTICLE 2. The Corporation shall be authorized to issue 100,000 shares. The
par value of each share shall be $1.00.
ARTICLE 3. The street address of the initial registered office is: 195 West
Court Street, Richland Center, Wisconsin 53581.
ARTICLE 4. The name of the initial registered agent at the above registered
office is: Judith L. Davis.
ARTICLE 5. Other provisions (OPTIONAL): Article 5 continued on attached
pages incorporated by reference.
ARTICLE 6. Executed on July 27, 1998.
Name and complete address of each incorporator:
John E. Knight
Boardman, Suhr, Curry & Field LLP
P.O. Box 927
Madison, Wisconsin 53701-0927
/s/ John E. Knight
(Incorporator Signature)
This document was drafted by John E. Knight.
DFI CORP FILE ID NO. B033595
Document stamped Received July 27, 1998, 2:02 p.m. by State of Wisconsin,
Department of Financial Institutions.
Document stamped Filed July 31, 1998, by State of Wisconsin, Department of
Financial Institutions.
<PAGE>
RICHLAND COUNTY BANCSHARES, INC.
ARTICLES OF INCORPORATION
Article 5. (Continued):
A. Board of Directors. The names and addresses of the persons who are to
serve as directors until the first annual meeting of the shareholders or until
their successors are elected and shall qualify are:
Judith L. Davis Joseph Halverson
567 East Seminary Street 339 South Park Street
Richland Center, WI 53581 Richland Center, WI 53581
Donald Goplin Robert Keegan
100 West Court Street 1100 Valley View Drive
Richland Center, WI 53581 Richland Center, WI 53581
Dorsey P. Ames Gail B. Surrem
313 North McKinley Avenue 27208 Hillview Drive
Viola, WI 54664 Richland Center, WI 53581
Ward D. McDonald
23395 Whippoorwill Road
Richland Center, WI 53581
B. Transfer Restrictions.
1. Shareholders of the Corporation's capital stock, herein the "Stock," may
not sell, transfer, assign, encumber, pledge, hypothecate, or in any way dispose
of or alienate any of their shares of the Stock, or any right, title or interest
therein, whether voluntarily or by operation of law, or by gift or otherwise, in
this Part B called a "transfer", without the prior written consent of the
Corporation. Provided, however, that the prior written consent of the
Corporation shall not be required as to: (i) any transfer between a shareholder
and his or her spouse; or (ii) any pledge or hypothecation of shares of the
Stock, provided, that as a condition precedent to the effectiveness of either of
the transfers described in (i) or (ii) herein, the transferee in any such
transfer shall be bound by all of the terms and conditions of this Article 5B.
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2. In the event a shareholder, herein the "Selling Shareholder", desires to
transfer his or her shares of Stock, or any portion of it, called the "Offered
Shares", other than in a transaction of the type described in (i) or (ii) above,
without first obtaining the written consent of the Corporation, the Selling
Shareholder, first, shall give the Corporation written notice of his or her
intent to do so, stating in the notice the identity of the proposed transferee
of the Offered Shares, the number of Offered Shares the Selling Shareholder
proposes to transfer, the proposed consideration for the Offered Shares and the
other terms and conditions of the proposed transfer of the Offered Shares. The
Selling Shareholder shall include with the written notice given to the
Corporation under this paragraph a copy of the written offer to purchase the
Offered Shares. The Corporation shall have a right of first refusal to acquire
all, but not less than all, of the Offered Shares for the consideration and on
the other terms and conditions offered by the proposed transferee and as
contained in the written notice given to the Corporation by the Selling
Shareholder. The Corporation shall exercise its right to acquire the Offered
Shares by giving written notice to the Selling Shareholder, indicating the
number of Offered Shares it will acquire, within thirty (30) days following
receipt of the written notice of the Selling Shareholder. In the event the
Corporation does not exercise its acquisition rights within the time period as
provided herein with respect to all of the Offered Shares, the Selling
Shareholder shall be free for a period of thirty (30) days thereafter to
transfer all of the Offered Shares to the transferee identified in the written
notice to the Corporation, and at the same consideration and on the same terms
and conditions as set forth in such written notice. After giving any notice of
intended transfer of any shares of the Stock pursuant to this Article 5B, the
Selling Shareholder, unless requested by the other shareholders of the
Corporation holding a majority of the Corporation's outstanding shares of
capital stock, not including the shares of the Stock held by the Selling
Shareholder, shall refrain from participating as an officer, director or
shareholder of the Corporation with respect to the Corporation's decision on
whether or not to acquire the Offered Shares and, if so requested to
participate, the Selling Shareholder shall cooperate with the other shareholders
and the Corporation in every reasonable way to effectuate the purpose of this
Article 5B. Except as provided in this Article 5B, the Selling Shareholder shall
be bound by the restrictions and limitations imposed by this Article 5B after
any notice of a desire to transfer is given and whether or not any such transfer
actually occurs. As a condition precedent to the effectiveness of any transfer
of Offered Shares to any person or entity, such transferee shall agree in
writing to be bound by all of the terms and conditions of this Article 5B.
C. Stock Certificates. Each certificate representing shares of the Stock
shall have endorsed thereon a legend in substantially the following form:
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The shares represented by this certificate and any sale,
transfer, or other disposition thereof are restricted under
and subject to the terms and conditions contained in Article 5
of the Corporation's Articles of Incorporation, a copy of
which is on file at the offices of the Corporation.
Any attempted or purported sale, transfer, assignment, encumbrance, pledge,
hypothecation or other disposition or alienation of any of the shares of the
Stock by a shareholder in violation of this Article 5 shall be null, void and
ineffectual, and shall not operate to transfer any right, title or interest
whatsoever in or to such shares of the Stock.
D. Amendment. The provision of this Article 5, may not be amended, altered
or repealed except by the affirmative vote of holders of at least seventy five
percent (75%) of the shares of the capital stock of the Corporation issued and
outstanding and entitled to vote, at any regular or special meeting of the
shareholders if notice of the proposed amendment, alteration or repeal be
contained in the notice of meeting.
4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors.
Sections 180.0850 through 180.0859 of the Wisconsin Statutes permit and in
some cases require indemnification of directors, officers, employees, and agents
of a Wisconsin corporation. In general, such indemnification is required unless
the person violates a duty of loyalty or a duty of care as specifically set
forth in the statutes. Section 180.0851, Wis. Stats.
Article VII of the registrant's bylaws provide for indemnification of
officers and directors under terms and conditions that follow the statutory
language cited above. A complete copy of the bylaws is included in Exhibit 3
hereto.
Item 21. Exhibits and Financial Statement.
Schedules
(a) Exhibits. The following exhibits are submitted:
Exhibit No. Description
2 Agreement and Plan of Reorganization (set forth as an
exhibit to the Prospectus)
3 Articles of Incorporation (set forth as an exhibit to
the Prospectus) and bylaws of Richland County
Bancshares, Inc.
4 Specimen stock certificate of Richland County
Bancshares, Inc.
5 Opinion of Boardman, Suhr, Curry & Field
8 Tax Opinion of Boardman, Suhr, Curry & Field (set forth
as an exhibit to the Prospectus)
23 Consent of Boardman, Suhr, Curry & Field (included in
opinion)
99 Form of Proxy for shareholders of Richland County Bank
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<PAGE>
(b) No financial statement schedules are required to be filed with regard
to Richland County Bancshares, Inc. or Richland County Bank.
Item 22. Undertakings.
(1) The registrant will file, during any period in which it offers or
sells securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended ("Act");
(ii) 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 together, represent a fundamental change in
the information in the registration statement; and
(iii)Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Act, the registrant will
treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
(3) The registrant will file a post-effective amendment to remove
from registration any of the securities that remain unsold at the
end of the offering.
(4) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Items 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.
(5) 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.
(6) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of
the SEC such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against liability arising
under the Act (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
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<PAGE>
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
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 Richland Center, State of
Wisconsin, on the 8th day of September, 1998.
RICHLAND COUNTY BANCSHARES, INC.
By:
/s/ Judith L. Davis
Judith L. Davis, President
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities
indicated on the 8th day of September, 1998.
Signature Title(s)
/s/ Joseph L. Halverson Director
Joseph L. Halverson
/s/ Robert L. Keegan Director
Robert L. Keegan
/s/ Ward L. McDonald Director
Ward L. McDonald
/s/ Dorsey P. Ames Secretary, Director
Dorsey P. Ames
/s/ Gail B. Surrem Director
Gail B. Surrem
/s/ Donald Goplin Vice President, Director
Donald Goplin
/s/ Judith L. Davis President, Director
Judith L. Davis
3
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-4 EF
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------
RICHLAND COUNTY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
E X H I B I T S
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
2 Agreement and Plan of Reorganization (set forth as an
exhibit to the Prospectus)
3 Articles of Incorporation (set forth as an exhibit to the
Prospectus) and bylaws of Richland County Bancshares, Inc.
4 Specimen stock certificate of Richland County Bancshares,
Inc.
5 Opinion of Boardman, Suhr, Curry & Field
8 Tax Opinion of Boardman, Suhr, Curry & Field (set forth as
an exhibit to the Prospectus)
23 Consent of Boardman, Suhr, Curry & Field (included in
opinion)
99 Form of Proxy for shareholders of Richland County Bank
EXHIBIT 3(ii)
BYLAWS OF
RICHLAND COUNTY BANCSHARES, INC.
<PAGE>
BYLAWS OF
RICHLAND COUNTY BANCSHARES, INC.
ARTICLE I. OFFICES
The principal office of the Corporation shall be located in the City of
Richland Center, Richland County, Wisconsin.
ARTICLE II. SHAREHOLDERS
SECTION l. Annual Meeting. The annual meeting of the Shareholders shall be
held at such place, on such date, and at such time as the Board of Directors
shall each year fix for the purposes of electing Directors and for the
transaction of such other business as may come before the meeting. If the
election of Directors is not held on the day designated for any annual meeting
of the Shareholders, or at any adjournment thereof, the Board of Directors shall
cause the election to be held at a special meeting of the Shareholders as soon
thereafter as may be convenient.
SECTION 2. Special Meetings. Special meetings of the Shareholders, for any
purpose, unless otherwise prescribed by statute, may be called by the President
or the Board of Directors, and shall be called by the President at the request
of Shareholders owning, in the aggregate, not less than ten percent (10%) of all
the outstanding shares of the Corporation entitled to vote at the meeting,
provided that such Shareholders deliver a signed and dated written demand to the
Corporation, describing the purpose(s) for which the meeting is to be held.
SECTION 3. Place of Meeting. The President may designate any place, either
within or without the State of Wisconsin, as the place of meeting for any annual
meeting or for any special meeting called by the Board of Directors. If no
designation is made, or if a special meeting is otherwise called, the place of
meeting shall be the principal office of the Corporation in the State of
Wisconsin. Any meeting may be adjourned to reconvene at any place designated by
vote of a majority of the shares represented at the meeting.
SECTION 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting, and, in case of a special meeting, the purpose for which
the meeting is called, shall be delivered not less than ten (10) days (unless a
longer period is required by law) nor more than sixty (60) days before the date
of the meeting, either personally or by mail, by or at the direction of the
President or the Secretary, to each Shareholder of record entitled to vote at
the meeting. If mailed, the notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the Shareholder at his or her
address as it appears on the stock record books of the Corporation, postage
prepaid.
<PAGE>
SECTION 5. Quorum; Manner of Acting. Except as otherwise provided by law,
the Articles of Incorporation or these Bylaws, a majority of the outstanding
shares of the Corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of Shareholders and a majority of votes
cast at any meeting at which a quorum is present shall be decisive of any
motion, except that each Director shall be elected by a plurality of the votes
cast by the shares entitled to vote. Though less than a quorum of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the original
meeting.
SECTION 6. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining Shareholders entitled to notice of or to vote at any
meeting of Shareholders or any adjournment thereof, or Shareholders entitled to
receive payment of any dividend, or in order to make a determination of
Shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, sixty (60) days. If the stock transfer books shall be
closed for the purpose of determining Shareholders entitled to notice of or to
vote at a meeting of Shareholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of Shareholders, such date in any case to be not
more than sixty (60) days and, in case of a meeting of Shareholders, not less
than ten (10) days prior to the date on which the particular action, requiring
such determination of Shareholders, is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of Shareholders
entitled to notice of or to vote at a meeting of Shareholders, or Shareholders
entitled to receive payment of a dividend, the close of business on the date
next preceding the date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
Shareholders. When a determination of Shareholders entitled to vote at any
meeting of Shareholders has been made as provided in this section, such
determination shall be applied to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
SECTION 7. Proxies. At all meetings of Shareholders, a Shareholder entitled
to vote may vote by proxy appointed in writing by the Shareholder or by his or
her duly authorized attorney in fact. Proxies shall be filed with the Secretary
of the Corporation before or at the time of the meeting. No proxy shall be valid
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<PAGE>
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy. A proxy may be revoked at any time before it is voted,
either by written notice filed with the Secretary of the Corporation or the
acting secretary of the meeting, or by oral notice given by the Shareholder to
the presiding officer during the meeting. The Board of Directors shall have the
power and authority to make rules establishing presumptions as to the validity
and sufficiency of proxies. Proxies may be subject to the examination by any
Shareholder at the meeting, and all proxies shall be filed and preserved.
SECTION 8. Voting of Shares. Each outstanding share entitled to vote shall
be entitled to one (l) vote upon each matter submitted to a vote at a meeting of
Shareholders, except to the extent that the voting rights of the shares of any
class or classes are limited or denied by the Articles of Incorporation.
SECTION 9. Voting of Shares by Certain Shareholders. Shares standing in the
name of another corporation may be voted either in person or by proxy, by the
president of such corporation or any other officer appointed by such president.
A proxy executed by any principal officer of such other corporation or assistant
thereto shall be conclusive evidence of the signer's authority to act, in the
absence of express notice to this Corporation, given in writing to the Secretary
of this Corporation, of the designation of some other person by the board of
directors or the bylaws of such other corporation. A Shareholder whose shares
are pledged shall be entitled to vote such shares until the shares have been
transferred into the name of the pledgee, and thereafter the pledgee shall be
entitled to vote the shares so transferred.
SECTION 10. Waiver of Notice by Shareholders. Whenever any notice is
required to be given to any Shareholder of the Corporation under the Articles of
Incorporation, these Bylaws or any provision of law, a waiver of such notice, in
writing, signed at any time (whether before or after the time of meeting) by the
Shareholder entitled to such notice, shall be deemed equivalent to the giving of
such notice. A waiver with respect to any matter of which notice is required
under any provision of Chapter 180, Wisconsin Statutes, shall contain the same
information as would have been required to be included in the notice, except the
time and place of meeting.
ARTICLE III. BOARD OF DIRECTORS
SECTION l. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
SECTION 2. Number of Directors. The number of Directors of the Corporation
shall be not less than six (6) nor more than nine (9), the exact number of
Directors to be determined from time to time by resolution adopted by a majority
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<PAGE>
of the entire Board of Directors, and such exact number shall be eight (8) until
otherwise determined by resolution adopted by a majority of the entire Board of
Directors. As used in this Section, "entire Board of Directors") means the total
number of Directors which the Corporation would have if there were no vacancies.
Whenever the authorized number of Directors is increased between annual meetings
of the Shareholders, a majority of the Directors then in office shall then have
the power to elect such new Directors for the balance of a term and until their
successors are elected and qualified. Any decrease in the authorized number of
Directors shall not become effective until the expiration of the term of the
Directors then in office unless, at the time of such decrease, their shall be
vacancies on the Board which were being eliminated by the decrease.
SECTION 3. Nominations for Director. Nominations for election to the Board
of Directors may be made by the Board of Directors or by a Shareholder of any
outstanding class of stock of the Corporation entitled to vote for the election
of Directors. Nominations, other than those made by the Board of Directors,
shall be made in writing and shall be delivered or mailed to the President of
the Corporation not less than ten (10) days nor more than fifty (50) days prior
to any meeting of Shareholders called for the election of Directors, provided,
however, that if less than twenty-one (21) days' notice of the meeting is given
to the Shareholders, such nominations shall be mailed or delivered to the
President of the Corporation not later than the close of business on the seventh
day following the day on which the notice of meeting was mailed. 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 name and residence
address of the notifying Shareholder; and (d) the number of shares of the
capital stock of the Corporation owned by the notifying Shareholder. Nominations
not made in accordance herewith may, in his or her discretion, be disregarded by
the chairman of the Shareholders meeting, and upon his or her instructions, the
vote tellers may disregard all votes cast for each such nominee.
SECTION 4. Election and Term. The Directors shall be elected by the
Shareholders at the regular annual meeting of Shareholders. Each Director shall
hold office until the next election of the class for which such Director shall
have been elected and until his or her successor has been elected or until his
or her death, resignation or removal in the manner provided in this Article. The
Board of Directors shall be divided into three (3) classes as nearly equal in
number as possible, with the term of office of one class expiring each year.
Directors of the first class (Class I) shall be elected to hold office for a
term expiring at the next succeeding annual meeting, Directors of the second
class (Class II) shall be elected to hold office for a term expiring at the
second succeeding annual meeting, and Directors of the third class (Class III)
4
<PAGE>
shall be elected to hold office for a term expiring at the third succeeding
annual meeting. Subject to the foregoing, at each annual meeting of the
Shareholders, Directors chosen to succeed those terms then expired shall be
elected for a term of office expiring at the third succeeding annual meeting of
Shareholders after their election, so that the term of one class of Directors
shall expire each year. The persons receiving the greatest number of votes (up
to the number of Directors then to be elected) shall be the persons elected.
The provisions of this Section may not be amended, altered or repealed
except by the affirmative vote of holders of at least eighty percent (80%) of
the shares of the capital stock of the Corporation issued and outstanding and
entitled to vote, at any regular or special meeting of the Shareholders if the
notice of the proposed amendment, alteration or repeal is contained in the
notice of meeting.
SECTION 5. Regular Meetings. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of Wisconsin,
for the holding of regular meetings of the Board of Directors without other
notice than such resolution.
SECTION 6. Special Meetings. Special meetings of the Board of Directors may
be called at any time by or at the request of the President, and shall be called
at the request of three or more directors. The person or persons authorized to
call special meetings of the Board of Directors may fix any place, either within
or without the State of Wisconsin, as the place for holding any special meeting
of the Board of Directors called by them.
SECTION 7. Notice. Notice of any special meeting shall be given at least
forty-eight (48) hours in advance of the meeting by written notice delivered
personally or mailed to each Director at his or her business address, or by
telegram. If mailed, the notice shall be deemed to be delivered when deposited
in the United States mail so addressed with postage prepaid. If notice is given
by telegram, it shall be deemed to be delivered when the telegram is delivered
to the telegraph company. Whenever any notice is required to be given to any
Director of the Corporation under the Articles of Incorporation, these Bylaws or
any provision of law, a waiver of such notice, in writing, signed at any time
(whether before or after the time of meeting) by the Director entitled to such
notice, shall be deemed equivalent to the giving of such notice. The attendance
of a Director at a meeting shall constitute a waiver of notice of that meeting,
except where a Director attends a meeting and at the meeting objects to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
5
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SECTION 8. Quorum. Except as otherwise provided by law, the Articles of
Incorporation, or these Bylaws, a majority of the number of Directors then in
office shall constitute a quorum for the transaction of business at any meeting
of the Board of Directors, but a majority of the Directors present (though less
than such quorum) may adjourn the meeting from time to time without further
notice.
SECTION 9. Participation in Meetings By Conference Telephone. Members of
the Board of Directors, or of any committee of the Board, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communication equipment by which all persons participating in the meeting can
hear each other and such participation shall constitute presence in person at
such meeting. All participating Directors shall be informed that a meeting is
taking place at which official business may be transacted by conference
telephone or similar communication equipment.
SECTION 10. Manner of Acting. The act of the majority of the Directors then
in office shall be the act of the Board of Directors, unless the act of a
greater number is required by law, the Articles of Incorporation, or these
Bylaws.
SECTION 11. Removal and Resignation. No Director of the Corporation shall
be removed from office with or without cause unless such removal is approved
either by the holders of eighty percent (80%) of the shares of the capital stock
of the Corporation issued and outstanding and entitled to vote or by the
affirmative vote of eighty percent (80%) of the Directors in office at the time
the determination is made. A Director may resign at any time by filing a written
resignation with the Secretary of the Corporation.
The provisions of this Section may not be amended, altered or repealed
except by the affirmative vote of holders of at least eighty percent (80%) of
the shares of the capital stock of the Corporation issued and outstanding and
entitled to vote, at any regular or special meeting of the Shareholders if the
notice of the proposed amendment, alteration or repeal is contained in the
notice of meeting.
SECTION 12. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of Directors, may be
filled until the next succeeding annual Shareholders' meeting by the affirmative
vote of a majority of the Directors then in office.
SECTION 13. Compensation. The Board of Directors, irrespective of any
personal interest of any of its members, may establish reasonable compensation
of all Directors for services to the Corporation as Directors, officers or
otherwise, or may delegate such authority to an appropriate committee. The Board
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of Directors also shall have authority to provide for, or to delegate authority
to, an appropriate committee to provide for reasonable pensions, disability or
death benefits, and other benefits or payments, to Directors, officers and
employees and to their estates, families, dependents, or beneficiaries on
account of prior services rendered to the Corporation.
SECTION 14. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors or a committee thereof at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless the dissent or abstention of the Director shall be
entered in the minutes of the meeting or unless the Director shall file a
written dissent to such action with the person acting as the Secretary of the
meeting before adjournment or shall forward such dissent by certified mail to
the Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a Director who voted in favor
of such action.
SECTION 15. Committees. The Board of Directors may designate one or more
committees, each committee to consist of three or more Directors elected by the
Board of Directors, which to the extent provided in said resolution shall have
and may exercise, when the Board of Directors is not in session, the powers of
the Board of Directors in the management of the business and affairs of the
Corporation, except action in respect to dividends to Shareholders, election of
the principal officers, action under or pursuant to the Articles of
Incorporation, amendment, alteration or repeal of these Bylaws, or the removal
or filling of vacancies in the Board of Directors or committees created pursuant
to this section. The Board of Directors may elect one or more of its members as
alternate members of any such committee who may take the place of any absent
member or members at any meeting of such committee, upon request by the
President or upon request by the chairman of such meeting. Each such committee
shall fix its own rules governing the conduct of its activities and shall make
such reports to the Board of Directors of its activities as the Board of
Directors may request.
SECTION 16. Informal Action Without Meeting. Any action required or
permitted by the Articles of Incorporation, these Bylaws, or any provision of
law to be taken by the Board of Directors at a meeting or by resolution may be
taken without a meeting if a consent in writing, setting forth the action so
taken, is signed by all of the Directors then in office.
ARTICLE IV. OFFICERS
SECTION l. Number, Election and Term of Office. The principal Officers of
the Corporation shall be a President, a Vice President, and a Secretary, each of
whom shall be elected by the Board of Directors. Such other Officers and
Assistant Officers as may be deemed necessary may be elected or appointed by the
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Board of Directors. Any two or more offices may be held by the same person. Each
Officer shall hold office until his or her successor shall have been duly
elected or until his or her death or until he or she resigns or is removed in
the manner provided below.
SECTION 2. Removal. Any Officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever in its judgment
the best interests of the Corporation will be served thereby. Any such removal
shall be without prejudice to the contract rights, if any, of the person being
removed. Election or appointment shall not of itself create contract rights.
SECTION 3. Vacancies. A vacancy in any principal office because of death,
resignation, removal, disqualification, or otherwise, shall be filled by the
Board of Directors.
SECTION 4. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. The President shall, when present, preside at all
meetings of the Shareholders and of the Board of Directors. The President shall
have authority, subject to such rules as may be prescribed by the Board of
Directors, to appoint such agents and employees of the Corporation as he shall
deem necessary, to prescribe their powers, duties and compensation, and to
delegate authority to them. Such agents and employees shall hold office at the
discretion of the President. The President shall have authority to sign,
execute, and acknowledge, on behalf of the Corporation, all deeds, mortgages,
bonds, stock certificates, contracts, leases, reports, and all other documents
or instruments necessary or proper to be executed in the course of the
Corporation's regular business, or which shall be authorized by resolution of
the Board of Directors. Except as otherwise provided by law or the Board of
Directors, the President may authorize any Vice President or other Officer or
agent of the Corporation to sign, execute, and acknowledge such documents or
instruments in his place and stead. In general, the President shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 5. The Vice President. In the case of the removal of the President
from office, or death or resignation, the powers and duties of the office shall
devolve upon the Vice President, who shall perform all duties of the office
until a meeting of the directors is held and a President is elected. The Board
of Directors shall empower a Vice President to discharge the duties of the
President in the event of absence or disability of the President. In general,
the Vice President shall perform all duties incident to the office of Vice
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President and such other duties as may be prescribed by the Board of Directors
and the President from time to time.
SECTION 6. The Secretary. The Secretary shall: (a) keep the minutes of the
Shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these Bylaws or as required by law; (c) be custodian of
the corporate records; (d) keep a register of the post office address of each
Shareholder which shall be furnished to the Secretary by such Shareholder; (e)
sign with the President, or Vice President, certificates for shares of the
Corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
the Corporation; and (g) in general, perform all duties incident to the office
of Secretary and have such other duties and exercise such authority as from time
to time may be designated or assigned to the Secretary by the President or by
the Board of Directors.
SECTION 7. Compensation. The compensation of the Officers shall be fixed
from time to time by the Board of Directors and no Officer shall be prevented
from receiving such compensation by reason of the fact that he or she is also a
Director of the Corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION l. Contracts. The Board of Directors may authorize any Officer or
Officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such
authorization may be general or confined to specific instances.
SECTION 2. Loans. No loans may be contracted on behalf of the Corporation
and no evidences of indebtedness may be issued in its name unless authorized by
or under the authority of a resolution of the Board of Directors. Such
authorization may be general or confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts, or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the Corporation shall be signed by such Officer or Officers, agent or agents
of the Corporation and in such manner as shall from time to time be determined
by or under the authority of a resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies, or other depositories as may be selected by or under the
authority of the Board of Directors.
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SECTION 5. Voting of Securities Owned by this Corporation. Subject always
to the specific directions of the Board of Directors, (a) any shares or other
securities issued by any other corporation and owned or controlled by this
Corporation may be voted at any meeting of security holders of such other
corporation by the President of this Corporation if he be present, or, in his
absence, by the Vice President of this Corporation, and (b) whenever, in the
judgment of the President, or in his absence, the Vice President, it is
desirable for this Corporation to execute a proxy or written consent in respect
to any shares or other securities issued by any other corporation and owned by
this Corporation, such proxy or consent shall be executed in the name of this
Corporation by the President or Vice President of this Corporation, without
necessity of any authorization by the Board of Directors, affixation of
corporate seal or countersignature or attestation by another officer. Any person
or persons designated in the manner above stated as the proxy or proxies of this
Corporation shall have full right, power, and authority to vote the shares or
other securities issued by such other corporation and owned by this Corporation
the same as such shares or other securities might be voted by this Corporation.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION l. Certificates for Shares. Certificates representing shares of the
Corporation shall be in such form as shall be determined by the Board of
Directors. Each certificate shall be signed by the President or Vice President
and by the Secretary. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificates shall be issued until the former certificates for a like
number of shares shall have been surrendered and canceled, except that in case
of a lost, destroyed, or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation shall
be made only on the stock transfer books of the Corporation by the holder of
record or by his or her legal representative, who shall furnish proper evidence
of authority to transfer, or by the holder's attorney authorized by power of
attorney duly executed and filed with the Secretary of the Corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes.
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SECTION 3. Restriction Upon Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the Corporation upon the transfer of such shares.
SECTION 4. Lost, Destroyed or Stolen Certificates. Where the owner claims
that his or her certificate for shares has been lost, destroyed or wrongfully
taken, a new certificate shall be issued in place thereof if the owner (a) so
requests before the Corporation has notice that such shares have been acquired
by a bona fide purchaser, (b) files with the Corporation a sufficient indemnity
bond, and (c) satisfies such other reasonable requirements as the Board of
Directors may prescribe.
SECTION 5. Consideration for Shares. The shares of the Corporation may be
issued for such consideration as shall be fixed from time to time by the Board
of Directors. The consideration to be paid for shares may be paid in whole or in
part in money, in other property, tangible or intangible, or in labor or
services actually performed for the Corporation. When payment of the
consideration for which shares are to be issued shall have been received by the
Corporation, such shares shall be deemed to be fully paid and nonassessable by
the Corporation, except as required by law. No certificate shall be issued for
any share until such share is fully paid.
SECTION 6. Stock Regulations. The Board of Directors shall have the power
and authority to make all such further rules and regulations not inconsistent
with the statutes of the State of Wisconsin as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of the
Corporation.
ARTICLE VII. LIABILITY AND INDEMNIFICATION OF
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS; INSURANCE
SECTION 1. Liability of Directors. No Director shall be liable to the
Corporation, its Shareholders, or any person asserting rights on behalf of the
Corporation or its Shareholders, for damages, settlements, fees, fines,
penalties, or other monetary liabilities arising from a breach of, or a failure
to perform, any duty resulting solely from his or her status as a Director of
the Corporation (or from his or her status as a director, officer, partner,
trustee, member of any governing or decision-making committee, employee or agent
of another corporation or foreign corporation, partnership, joint venture, trust
or other enterprise, including service to an employee benefit plan, which
capacity the Director is or was serving in at the Corporation's request while a
Director of the Corporation) to the fullest extent not prohibited by law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent such amendment permits the Corporation to further limit or
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eliminate the liability of a Director than the law permitted the Corporation to
provide prior to such amendment); provided, however, that this limitation on
liability shall not apply where the breach or failure to perform constitutes (a)
a willful failure to deal fairly with the Corporation or its Shareholders in
connection with a matter in which the Director has a material conflict of
interest; (b) a violation of criminal law, unless the Director had reasonable
cause to believe his or her conduct was lawful or no reasonable cause to believe
his or her conduct was unlawful; (c) a transaction from which the Director
derived an improper personal benefit; or (d) willful misconduct.
SECTION 2. Liability of Officers. No Officer shall be liable to the
Corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken by him or her as an officer of the Corporation (or as an
officer, director, partner, trustee, member of any governing or decision-making
committee, employee or agent of another corporation or foreign corporation,
partnership, joint venture, trust or other enterprise, including service to an
employee benefit plan, which capacity the Officer is or was serving in at the
Corporation's request while being an Officer of the Corporation) in good faith,
if such person (a) exercised and used the same degree of care and skill as a
prudent person would have exercised or used under the circumstances in the
conduct of his or her own affairs, or (b) took or omitted to take such action in
reliance upon information, opinions, reports or statements prepared or presented
by: (1) an officer or employee of the Corporation whom the officer believed in
good faith to be reliable and competent in the matters presented, or (2) legal
counsel, public accountants and other persons as to matters the officer believed
in good faith were within the person's professional or expert competence.
SECTION 3. Indemnification of Directors, Officers, Employees and Agents.
(a) Right of Directors and Officers to Indemnification. Any person shall be
indemnified and held harmless to the fullest extent permitted by law, as the
same may exist or may hereafter be amended (but, in the case of any such
amendment, only to the extent such amendment permits the Corporation to provide
broader indemnification rights than the law permitted the Corporation to provide
prior to such amendment), from and against all reasonable expenses (including
fees, costs, charges, disbursements, attorney fees and any other expenses) and
liability (including the obligation to pay a judgment, settlement, penalty,
assessment, forfeiture or fine, including an excise tax assessed with respect to
an employee benefit plan) asserted against, incurred by or imposed on him or her
in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative ("proceeding") to which he or she is made or
threatened to be made a party by reason of his or her being or having been a
Director or Officer of the Corporation (or by reason of, while serving as a
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Director or Officer of the Corporation, having served at the Corporation's
request as a director, officer, partner, trustee, member of any governing or
decision-making committee, employee or agent of another corporation or foreign
corporation, partnership, joint venture, trust or other enterprise, including
service to an employee benefit plan); provided, however, in situations other
than a successful defense of a proceeding, the Director or Officer shall not be
indemnified where he or she breached or failed to perform a duty to the
Corporation and the breach or failure to perform constitutes (a) a willful
failure to deal fairly with the Corporation or its Shareholders in connection
with the matter in which the Director or Officer has a material conflict of
interest; (b) a violation of criminal law, unless the Director or Officer had
reasonable cause to believe his or her conduct was lawful or no reasonable cause
to believe his or her conduct was unlawful; (c) a transaction from which the
Director or Officer derived an improper personal benefit; or (d) willful
misconduct. Such rights to indemnification shall include the right to be paid by
the Corporation reasonable expenses as incurred in defending such proceeding;
provided, however, that payment of such expenses as incurred shall be made only
upon such person delivering to the Corporation (a) a written affirmation of his
or her good faith belief that he or she has not breached or failed to perform
his or her duties to the Corporation, and (b) a written undertaking, executed
personally or on his or her behalf, to repay the allowance to the extent it is
ultimately determined that such person is not entitled to indemnification under
this provision. The Corporation may require that the undertaking be secured and
may require payment of reasonable interest on the allowance to the extent that
it is ultimately determined that such person is not entitled to indemnification.
(b) Right of Director or Officer to Bring Suit. If a claim under subsection
(a) is not paid in full by the Corporation within 30 days after a written claim
has been received by the Corporation, the claimant may at any time thereafter
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 reasonable expense 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 any proceeding in advance of its final
disposition where the required undertaking has been tendered to the Corporation)
that the claimant has not met the standards of conduct under this Section which
make it permissible for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
(c) Indemnification For Intervention, Etc. The Corporation shall not,
however, indemnify a Director or Officer under this Section for any liability
incurred in a proceeding otherwise initiated (which shall not be deemed to
include counterclaims or affirmative defenses) or participated in as an
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intervenor by the person seeking indemnification unless such initiation of or
participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of the majority of the Directors in
Office.
(d) Right of Employees and Agents to Indemnification. The Corporation by
its Board of Directors may on such terms as the Board deems advisable indemnify
and allow reasonable expenses of any employee or agent of the Corporation with
respect to any action taken or failed to be taken in his or her capacity as such
employee or agent.
SECTION 4. Contract Rights; Amendment or Repeal. All rights under this
Article shall be deemed a contract between the Corporation and the Director or
Officer pursuant to which the Corporation and the Director or Officer intend to
be legally bound. Any repeal, amendment or modification of this Article shall be
prospective only as to conduct of a Director or Officer occurring thereafter,
and shall not affect any rights or obligations then existing.
SECTION 5. Scope of Article. The rights granted by this Article shall not
be deemed exclusive of any other rights to which a Director, Officer, employee
or agent may be entitled under any statute, agreement, vote of Shareholders or
disinterested Directors or otherwise. The indemnification and advancement of
expenses provided by or granted pursuant to this Article shall continue as to a
person who has ceased to be a Director or Officer in respect to matters arising
prior to such time, and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.
SECTION 6. Insurance. The Corporation may purchase and maintain insurance,
at its expense, to protect itself and any person who is a Director, Officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, partner, trustee, member of any governing or
decision-making committee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including service to an
employee benefit plan, against any liability asserted against that person or
incurred by that person in any such capacity, or arising out of that person's
status as such, whether or not the Corporation would have the power to indemnify
such person against such expense, liability or loss under this Article.
SECTION 7. Prohibited Indemnification and Insurance. Notwithstanding any
other Section in this Article, the Corporation shall not be required to
indemnify and may not purchase and maintain insurance if such indemnification or
insurance is prohibited under applicable federal law or regulation, but shall
indemnify and may purchase and maintain insurance in accordance with this
Article to the extent such indemnification and insurance is not prohibited under
applicable federal law or regulation.
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ARTICLE VIII. TRANSACTIONS WITH
CORPORATION; DISALLOWED EXPENSE
SECTION 1. Transactions with the Corporation. Any contract or other
transaction between the Corporation and one or more of its Directors, or between
the Corporation and any firm of which one or more of its Directors are members
or employees, or in which they are interested, or between the Corporation and
any corporation or association of which one or more of its Directors are
Shareholders, members, directors, officers, or employees, or in which they are
interested, shall be valid for all purposes, notwithstanding the presence of
such Director or Directors at the meeting of the Board of Directors of the
Corporation, which acts upon, or in reference to, such contract or transaction,
and notwithstanding his or their participation in such action, if the fact of
such interest shall be disclosed or known to the Board of Directors and the
Board of Directors shall, nevertheless, authorize, approve and ratify such
contract or transaction by a vote of a majority of the Directors present, such
interested Director or Directors to be counted in determining whether a quorum
is present, but not counted in calculating the majority of such quorum necessary
to carry such vote. This Section shall not be construed to invalidate any
contract or other transaction which would otherwise be valid under the common
and statutory law applicable thereto.
SECTION 2. Reimbursement of Disallowed Expenses. In the event any payment
(either as compensation, interest, rent, expense reimbursement or otherwise) to
any Officer, Director or Shareholder which is claimed as a deduction by this
Corporation for federal income tax purposes shall subsequently be determined not
to be deductible in whole or in part by this Corporation, the recipient shall
reimburse the Corporation for the amount of the disallowed payment, provided
that this provision shall not apply to any expense where the Board, in its sole
discretion, determines such disallowance (including any concession of such issue
by the Corporation in connection with the settlement of other issues in a
disputed case) is manifestly unfair and contrary to the facts. For purposes of
this provision, any such payment shall be determined not to be deductible when
and only when either (a) the same may have been determined by a court of
competent jurisdiction and either the Corporation shall not have appealed from
such determination or the time for perfecting an appeal shall have expired or
(b) such disallowed deduction shall constitute or be contained in a settlement
with the Internal Revenue Service which settlement may have been authorized by
the Board of Directors.
ARTICLE IX. FISCAL YEAR
The fiscal year of the Corporation shall begin on the 1st day of January
and end on the 31st day of December in each year.
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ARTICLE X. DIVIDENDS
The Board of Directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE XI. SEAL
The Corporation shall not have a corporate seal, and all formal corporate
documents shall carry the designation "No Seal" along with the signature of the
Officers.
ARTICLE XII. AMENDMENT
SECTION 1. By Shareholders. Except as otherwise provided in Article III,
Sections 3, 4 and 11, these Bylaws may be altered, amended or repealed and new
Bylaws may be adopted by the Shareholders by affirmative vote of not less than a
majority of the outstanding shares of the Corporation entitled to vote.
SECTION 2. By Directors. Except as otherwise provided in Article III,
Sections 3, 4 and 11, these Bylaws may also be altered, amended or repealed and
new Bylaws may be adopted by the Board of Directors by affirmative vote of not
less than a majority of the directors then in office; but no Bylaw adopted by
the Shareholders shall be amended or repealed by the Board of Directors if the
Bylaw so adopted so provides.
SECTION 3. Implied Amendments. Any action taken or authorized by the
Shareholders which would be inconsistent with the Bylaws then in effect but is
taken or authorized by affirmative vote of not less than the number of shares
required to amend the Bylaws so that the Bylaws would be consistent with such
action shall be given the same effect as though the Bylaws had been temporarily
amended or suspended so far, but only so far, as is necessary to permit the
specific action so taken or authorized.
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EXHIBIT 4
STOCK CERTIFICATE
<PAGE>
SPECIMEN
STOCK CERTIFICATE
NUMBER: SHARES:
RESTRICTED STOCK
Incorporated under the laws of the State of Wisconsin.
RICHLAND COUNTY BANCSHARES, INC.
Authorized Common _____ Shares $1.00 Par Value
This certifies that ______________________ is the owner of
______________________ (common shares--no par value) full paid and
non-assessable transferable on the books of the Corporation in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF the said Corporation has caused this Certificate to be
signed by its duly authorized officers and sealed with the Seal of the
Corporation this _____ day of ___________ A.D., 19___.
- ---------------------------- -----------------------------
Secretary President
ON REVERSE:
FOR VALUE RECEIVED, _____ hereby sell, assign and transfer unto
______________________________________________ __________ Shares represented by
the within Certificate, and do hereby irrevocably constitute and appoint
_____________________________ Attorney to transfer the said Shares on the books
of the within named Corporation with full power of substitution in the premises.
Dated ______________________, 19___.
In presence of:
- ---------------------------- ------------------------------
THE SHARES REPRESENTED BY THIS CERTIFICATE AND ANY SALE,
TRANSFER, OR OTHER DISPOSITION THEREOF ARE RESTRICTED UNDER
AND SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN ARTICLE
5(C) OF THE CORPORATION'S ARTICLES OF INCORPORATION, A COPY OF
WHICH IS ON FILE AT THE OFFICES OF THE CORPORATION.
EXHIBIT 5
OPINION OF BOARDMAN, SUHR, CURRY & FIELD
<PAGE>
SPECIMEN
_______________, 1998
Richland County Bancshares, Inc.
195 West Court Street
Richland Center, Wisconsin 53581
Reference is made to the Registration Statement on Form S-4 (the
"Registration Statement") to be filed by Richland County Bancshares, Inc. (the
"Corporation") with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), with
respect to shares of Common Stock of the Corporation, no par value, issuable by
the Corporation in connection with a reorganization ("Common Stock"), as
described in the Prospectus included in the Registration Statement.
As counsel to the Corporation for purposes of the reorganization, we are
familiar with the Articles of Incorporation and the Bylaws of the Corporation.
We also have examined, or caused to be examined, such other documents and
instruments and have made, or caused to be made, such further investigation as
we have deemed necessary or appropriate to render this opinion.
Based upon the foregoing, it is our opinion that:
(1) The Corporation is duly incorporated and validly existing as a
corporation under the laws of the State of Wisconsin.
(2) The shares of Common Stock of the Corporation when issued upon
consummation of the reorganization and delivered to the shareholders
of Richland County Bank in accordance with the provisions of the
Agreement and Plan of Reorganization dated_______________, 1998, will
be validly issued, fully paid and non-assessable under applicable
Wisconsin law, except for statutory liability under Section
180.0622(2)(b) of the Wisconsin Business Corporation Law.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement, and we further consent to the use of our name in
the Registration Statement under the captions "Legal Matters" and "Tax
Considerations." In giving this consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the
Securities Act or the Rules and Regulations of the Commission issued
thereunder.
BOARDMAN, SUHR, CURRY & FIELD
EXHIBIT 99
PROXY
<PAGE>
PROXY
SPECIAL MEETING OF SHAREHOLDERS
Know all men by these presents that I, the undersigned shareholder in
Richland County Bank, do hereby appoint __________________________________, and
each of them individually, or _____________________,* my true and lawful
attorney, substitute, and proxy, with power of substitution, for me and in my
name to vote at the Special Meeting of Shareholders of Richland County Bank, to
be held on ________________, 1998, or at any adjournment of that meeting, with
all powers I should have if personally present, hereby revoking all proxies
heretofore given. I acknowledge that I have received a Notice of Special Meeting
of Shareholders and a Proxy Statement relating to the meeting. I hereby direct
that the person(s) designated above vote as follows:
(1) FOR [ ] AGAINST [ ] ABSTAIN [ ]
the following resolution:
RESOLVED, that the formation of a bank holding company for Richland
County Bank, pursuant to the terms and conditions of an Agreement and Plan
of Reorganization between Richland County Bank and Richland County
Bancshares, Inc. and a Merger Agreement between Richland County Bank and
New Richland County Bank, whereby (i) Richland County Bank will become a
wholly-owned subsidiary of Richland County Bancshares, Inc., and (ii)
shareholders of Richland County Bank will become shareholders of Richland
County Bancshares, Inc., is hereby authorized and approved.
(2) In his/her discretion as to any other matters that may properly come before
the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE REORGANIZATION.
This proxy, when properly signed, will be voted in the manner directed by
the undersigned shareholder. If the manner in which to vote is not supplied, the
undersigned shareholder will be deemed to have designated a vote "FOR" the
formation of the bank holding company.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN THIS PROXY, USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name appears on your stock certificates. When shares
are held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated:________________, 1998.
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Signature
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Signature if held jointly, or title
* If a name is inserted here, only that person will be entitled to vote the
proxy.
