| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On December 1, 2022, Middlefield Banc Corp. (the “Company”) completed its previously announced merger with Liberty Bancshares, Inc. (“Liberty”), pursuant to the Agreement and Plan of Merger, dated as of May 26, 2022, by and among the Company, MBCN Merger Subsidiary, LLC, a wholly owned subsidiary of the Company (“Merger Sub”) and Liberty (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”) Liberty merged with and into Merger Sub (the “Merger”), with Merger Sub as the surviving entity in the Merger. Promptly following the consummation of the Merger, Merger Sub was dissolved and liquidated and Liberty National Bank, the banking subsidiary of Liberty, merged with and into The Middlefield Banking Company (“Middlefield Bank”), with Middlefield Bank as the surviving bank (the “Bank Merger”).
Pursuant to the terms of the Merger Agreement, at the Effective Time of the Merger, the shares of voting common stock, $1.25 par value per share, and the shares of non-voting common stock, no par value, of Liberty common stock issued and outstanding immediately prior to the Effective Time, were converted, in accordance with the procedures set forth in the Merger Agreement, into the right to receive, without interest, 2.752 shares of the common stock, no par value per share, of the Company. No fractional Company common shares were issued in the Merger, and Liberty’s shareholders became entitled to receive cash in lieu of fractional Company common shares.
The foregoing description of the Merger and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, included as Exhibit 2.1 to the Current Report on Form 8-K that the Company filed on May 27, 2022, and incorporated herein by reference. The issuance of shares of Company common stock in connection with the Merger was registered under the Securities Act of 1933, as amended, pursuant to a registration statement on Form S-4 (File No. 333-266694) filed by the Company with the Securities and Exchange Commission (the “SEC”) and declared effective on September 22, 2022 (the “Registration Statement”). The joint proxy statement/prospectus included in the Registration Statement (the “Joint Proxy Statement/Prospectus”) contains additional information about the Merger Agreement and the transactions contemplated thereby.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(c) Effective with the completion of the Merger, the title of James R. Heslop, II changed from President and Chief Executive Officer of the Company and Middlefield Bank to Chief Executive Officer of those entities, and Ronald L. Zimmerly, Jr. was appointed as President of the Company and Middlefield Bank. Mr. Zimmerly, 58, has served as President and Chief Executive Officer, and as a director, of Liberty and Liberty National Bank since 2010. The Merger Agreement requires the Company to appoint Mr. Zimmerly to the additional positions of Chief Executive Officer of the Company and Middlefield Bank by January 1, 2024, unless the Company’s board of directors determines otherwise by the affirmative vote of at least 80% of the Company’s directors exclusive of Mr. Zimmerly acting as a director.
As previously described in the Joint Proxy Statement/Prospectus, for his service as President of the Company and Middlefield Bank, Mr. Zimmerly will receive an annual base salary of $295,000 and will be eligible to participate in Middlefield Bank’s annual cash incentive plan at a maximum target benefit of 24% of base salary subject to satisfaction of performance metrics. Mr. Zimmerly will also be entitled to participate in a variable benefit deferred compensation plan of the type available to other executive officers of the Company under which he will receive an annual contribution equal to 5% to 15% of his base salary until he reaches age 65. Contributions exceeding 5% of salary are conditional on achievement of performance goals involving: (x) Middlefield Bank’s net income for the plan year and (y) Middlefield Bank’s peer rankings for the plan year, based on the top 50% of all FDIC-insured commercial banks having assets between $1 billion and $3 billion as reported on the UBPR available from the Federal Financial Institutions Examination Council’s website at www.ffiec.gov/UBPR.htm.
