AGREEMENT AND PLAN OF REORGANIZATION
by and between
EMCLAIRE FINANCIAL CORP. AND
THE FARMERS NATIONAL BANK OF EMLENTON
and
PEOPLES SAVINGS FINANCIAL CORPORATION AND
PEOPLES SAVINGS BANK
AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
Page
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Recitals...................................................................................... 1
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ARTICLE 1
TERMS OF THE REORGANIZATION
1.1 The Merger.................................................................................... 2
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(a) Effects of the Merger....................................................... 2
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(b) Transfer of Assets.......................................................... 2
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(c) Assumption of Liabilities................................................... 2
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1.2 Articles of Incorporation, Bylaws, Directors, Officers and Name of the
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Surviving Corporation.......................................................................... 3
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(a) Articles of Incorporation............................................................ 3
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(b) Bylaws............................................................................... 3
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(c) Directors and Officers............................................................... 3
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(d) Name................................................................................. 3
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1.3 Availability of Information................................................................... 3
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1.4 Subsidiary Merger and Emclaire's Right to Revise the Structure
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of the Transaction............................................................................ 3
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1.5 PSFC Stock Options............................................................................ 4
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1.6 Employment Agreements......................................................................... 4
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1.7 Employees..................................................................................... 4
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1.8 Anti-dilution Provisions........................................................................4
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ARTICLE 2
DESCRIPTION OF TRANSACTION
2.1 Terms of the Merger........................................................................... 4
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(a) Satisfaction of Conditions to Closing................................................ 4
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(b) Effective Time of the Merger......................................................... 5
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2.2 Conversion of Stock........................................................................... 5
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(a) Consideration......................................................................... 5
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(b) Cash or Stock Merger Consideration.................................................... 5
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(c) Final Market Price.................................................................... 6
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(d) Fractional Shares..................................................................... 6
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(e) Dissenting Shares......................................................................6
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(f) Treatment of Options...................................................................6
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(g) Calculation Schedule.................................................................. 7
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2.3 Election and Allocation Procedures............................................................ 7
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2.4 Election Procedures............................................................................ 8
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2.5 Mechanics of Payment of Consideration ........................................................ 9
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(a) Surrender of Certificates Pursuant to Section 2.2(b)...................................9
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(b) Stock Transfer Books..................................................................10
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(c) Reservation, Registration and Listing of Shares of
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Emclaire Stock........................................................................10
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2.6 Time and Place of Closing..................................................................... 11
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i
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PSFC AND PEOPLES BANK
3.1 Organization and Qualification of PSFC and Subsidiaries....................................... 11
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3.2 Authorization, Execution and Delivery; Reorganization Agreement
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Not in Breach................................................................................. 11
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3.3 No Legal Bar.................................................................................. 12
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3.4 Government and Other Approvals................................................................ 12
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3.5 Licenses, Franchises and Permits.............................................................. 12
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3.6 Charter Documents............................................................................. 13
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3.7 PSFC Financial Statements..................................................................... 13
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3.8 Absence of Certain Changes.................................................................... 13
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3.9 Deposits...................................................................................... 14
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3.10 Properties.................................................................................... 14
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3.11 Condition of Fixed Assets and Equipment....................................................... 14
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3.12 Tax Matters................................................................................... 14
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3.13 Litigation.................................................................................... 15
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3.14 Environmental Materials....................................................................... 15
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3.15 Insurance..................................................................................... 16
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3.16 Books and Records............................................................................. 16
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3.17 Capitalization of PSFC........................................................................ 16
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3.18 Sole Agreement................................................................................ 17
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3.19 Disclosure.................................................................................... 17
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3.20 Absence of Undisclosed Liabilities............................................................ 18
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3.21 Allowance for Possible Loan or REO Losses..................................................... 18
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3.22 Loan Portfolio................................................................................ 18
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3.23 Compliance with Laws.......................................................................... 19
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3.24 Employee Benefit Plans........................................................................ 19
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3.25 Material Contracts............................................................................ 20
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3.26 Material Contract Defaults.................................................................... 20
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3.27 Reports....................................................................................... 21
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3.28 1934 Act and OTC Bulletin Board............................................................... 21
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3.29 Statements True and Correct................................................................... 21
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3.30 Investment Securities......................................................................... 22
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3.31 Certain Regulatory Matters.................................................................... 22
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3.32 Corporate Approval............................................................................ 22
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3.33 Broker's and Finder's Fees........................................................... 23
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ARTICLE 4
REPRESENTATION AND WARRANTIES OF EMCLAIRE AND FARMERS NATIONAL
4.1 Organization and Corporate Authority.......................................................... 23
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4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach................. 23
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4.3 No Legal Bar.................................................................................. 24
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4.4 Government Approvals.......................................................................... 24
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4.5 Capitalization................................................................................ 24
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4.6 Emclaire Financial Statements................................................................. 24
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4.7 1934 Act and OTC Bulletin Board Filings....................................................... 25
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ii
4.8 The Emclaire Common Stock..................................................................... 25
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4.9 Licenses, Franchises, and Permits............................................................. 25
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4.10 Absence of Certain Changes.................................................................... 25
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4.11 Tax Matters................................................................................... 26
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4.12 Litigation.................................................................................... 26
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4.13 Absence of Undisclosed Liabilities............................................................ 27
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4.14 Books and Records............................................................................. 27
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4.15 Compliance with Laws.......................................................................... 27
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4.16 Material Contract Defaults.................................................................... 27
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4.17 Disclosure.................................................................................... 28
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4.18 Certain Regulatory Matters.................................................................... 28
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4.19 Delays.........................................................................................28
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4.20 Corporate Approvals............................................................................28
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4.21 Charter Documents............................................................................. 28
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ARTICLE 5
COVENANTS OF PSFC AND PEOPLES BANK
5.1 Preparation of Registration Statement and Applications For Required Consents.................. 29
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5.2 Conduct of Business -- Affirmative Covenants.................................................. 29
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5.3 Conduct of Business -- Negative Covenants..................................................... 31
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5.4 Conduct of Business -- Certain Actions........................................................ 33
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ARTICLE 6
COVENANTS OF EMCLAIRE
6.1 Regulatory and Other Approvals................................................................ 34
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6.2 Approvals and Registrations................................................................... 35
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6.3 Employee Benefits............................................................................. 35
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6.4 Notification.................................................................................. 35
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6.5 Tax Representations........................................................................... 36
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6.6 Directors and Officers Indemnification and Insurance Coverage................................. 36
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6.7 Conduct of Emclaire and Farmers National Prior to the Effective Time...........................36
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ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of Emclaire..................................................... 37
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(a) Performance.......................................................................... 37
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(b) Representations and Warranties....................................................... 37
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(c) Documents............................................................................ 37
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(d) Inspections Permitted................................................................ 37
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(e) No Material Adverse Change........................................................... 38
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(f) Opinion of PSFC's Counsel............................................................ 38
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(g) Other Business Combinations, Etc..................................................... 39
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(h) Regulatory Approvals................................................................. 39
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(i) PSFC Stockholder Approval............................................................ 39
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(j) Fairness Opinion..................................................................... 39
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iii
7.2 Conditions to the Obligations of PSFC......................................................... 39
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(a) Performance.......................................................................... 39
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(b) No Material Adverse Change........................................................... 39
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(c) Representations and Warranties....................................................... 39
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(d) Documents............................................................................ 39
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(e) Consideration........................................................................ 40
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(f) Opinion of Emclaire's Counsel........................................................ 40
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(g) Emclaire Stockholder Approval.........................................................41
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(h) Fairness Opinion..................................................................... 41
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7.3 Conditions to Obligations of All Parties...................................................... 41
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(a) No Pending or Threatened Claims...................................................... 41
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(b) Governmental Approvals and Acquiescence Obtained..................................... 42
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(c) Approval of Stockholders............................................................. 42
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(d) Effectiveness of Registration Statement.............................................. 42
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(e) Tax Opinion.......................................................................... 42
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ARTICLE 8
TERMINATION
8.1 Termination................................................................................... 42
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8.2 Effect of Termination......................................................................... 43
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8.3 Fees...........................................................................................43
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8.4 Expenses.......................................................................................44
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ARTICLE 9
GENERAL PROVISIONS
9.1 Notices....................................................................................... 45
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9.2 Governing Law................................................................................. 45
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9.3 Counterparts.................................................................................. 46
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9.4 Publicity..................................................................................... 46
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9.5 Entire Agreement.............................................................................. 46
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9.6 Severability.................................................................................. 46
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9.7 Modifications, Amendments and Waivers......................................................... 46
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9.8 Interpretation................................................................................ 47
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9.9 Payment of Expenses........................................................................... 47
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9.10 Attorneys' Fees............................................................................... 47
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9.11 No Survival of Representations and Warranties................................................. 47
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9.12 No Waiver..................................................................................... 47
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9.13 Remedies Cumulative........................................................................... 47
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9.14 Confidentiality............................................................................... 47
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Exhibit A - Plan of Merger (Peoples Savings Financial Corporation and
Emclaire Financial Corp...................................................................... A-1
Exhibit B - Merger Agreement (The Farmers National Bank of Emlenton and Peoples Savings
Bank)........................................................................................ B-1
iv
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization
Agreement"), dated as of April __, 1998, is entered into by and between Emclaire
Financial Corp. ("Emclaire" or the "Surviving Corporation" as the context may
require), a corporation incorporated and existing under the laws of the
Commonwealth of Pennsylvania, which is registered as a bank holding company and
whose executive offices are located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇; The Farmers National Bank of Emlenton ("Farmers National"), a national
association, chartered and existing under the laws of the United States, which
has its main office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and is a
wholly-owned subsidiary of Emclaire; Peoples Savings Financial Corporation
("PSFC"), a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania, which is a registered bank holding company and
whose principal offices are located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇; and Peoples Savings Bank ("Peoples Bank"), a state savings bank,
chartered and existing under the laws of Pennsylvania, which has its main office
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and is a wholly-owned subsidiary
of PSFC.
Emclaire, Farmers National, PSFC and Peoples Bank are sometimes
referred to herein as the "Parties."
RECITALS
A. PSFC is the beneficial owner and holder of record of 100,000 shares
of the common stock, $0.10 par value per share, of Peoples Bank, which
constitute all of the shares of common stock of Peoples issued and outstanding
(the "Peoples Common Stock").
B. The Boards of Directors of PSFC and Peoples Bank deem it desirable
and in the best interests of PSFC and Peoples Bank and the shareholders of PSFC
(the "PSFC Shareholders") that PSFC be merged (the "Merger") with and into
Emclaire (which would survive the merger as the Surviving Corporation, as
defined herein) on the terms and subject to the conditions set forth in this
Reorganization Agreement and in the manner provided in this Reorganization
Agreement and the Plan of Merger (the "Plan of Merger") attached hereto as
Exhibit A.
C. The Board of Directors of Emclaire deems it desirable and in the
best interests of Emclaire and the shareholders of Emclaire that PSFC be merged
with and into Emclaire on the terms and subject to the conditions set forth in
this Reorganization Agreement and in the manner provided in this Reorganization
Agreement and the Plan of Merger.
D. The Parties to this Reorganization Agreement further deem it
desirable and in the best interests of the respective corporations and their
shareholders that Peoples Bank be merged with and into Farmers National (the
"Subsidiary Merger") concurrently with or as soon as reasonably practicable
after the Merger pursuant to the Merger Agreement attached hereto as Exhibit B
(the "Subsidiary Merger Agreement").
E. Pursuant to this Reorganization Agreement, each share of Peoples
Common Stock outstanding at the Effective Time of the Merger will be converted
into either (i) cash in the amount of $26.00 (the "Cash Merger Consideration,"
as defined herein), or (ii) shares of Emclaire Common Stock having a Final
Market Price (as defined herein) equal to $26.00 (the "Stock Merger
Consideration as
defined herein). Shareholders of Peoples Common Stock will be entitled to elect
their preference with respect to each share of Peoples Common Stock held by
them, subject to pro-rata allocation, such that an aggregate of 45.0% will be
converted into the Cash Merger Consideration, and 55.0% will be converted into
the Stock Merger Consideration.
F. It is agreed that the number of outstanding shares of Peoples Common
Stock (including shares issued under any restricted or management stock bonus
plan) outstanding, including 45,297 stock options, is 487,813, resulting in
total aggregate consideration of at least $12,230,168, 55% of which will be paid
in the form of Emclaire Common Stock.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
AGREEMENT
ARTICLE 1
TERMS OF THE REORGANIZATION
1.1 The Merger. Subject to the satisfaction (or
lawful waiver) of each of the condi- tions to the obligations of each of the
Parties to this Reorganization Agreement, at the Effective Time of the Merger
(as defined in Section 2.1(b) herein), PSFC shall be merged with and into
Emclaire, which latter corporation shall survive the Merger and is referred to
herein in such capacity as the "Surviving Corporation." The Merger shall have
the effects set forth in the Pennsylvania Business Corporation Act ("PBCA"),
with respect to mergers of corporate entities.
(a) Effects of the Merger. At the Effective Time
of the Merger, the separate existence of PSFC shall cease, and PSFC shall be
merged with and into Emclaire which, as the Surviving Corporation, shall
thereupon and thereafter possess all of the assets, rights, privileges,
appointments, powers, licenses, permits and franchises of the two merged
corporations, whether of a public or a private nature, and shall be subject to
all of the liabilities, restrictions, disabilities and duties of PSFC. The
Merger is intended to be treated by the parties as a reorganization within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended, (the
"Code").
(b) Transfer of Assets. At the Effective Time of
the Merger, all rights, assets, licenses, permits, franchises and interests of
PSFC in and to every type of property, whether real, personal, or mixed, whether
tangible or intangible, and choses in action shall be deemed to be vested in
Emclaire as the Surviving Corporation by virtue of the Merger becoming effective
and without any deed or other instrument or act of transfer whatsoever.
(c) Assumption of Liabilities. At the Effective
Time of the Merger, the Surviving Corporation shall become and be liable for all
debts, liabilities, obligations and contracts of PSFC whether the same shall be
matured or unmatured; whether accrued, absolute, contingent or otherwise; and
whether or not reflected or reserved against in the balance sheets, other
financial statements, books of account or records of PSFC.
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1.2 Articles of Incorporation, Bylaws, Directors,
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Officers and Name of the Surviving Corporation.
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(a) Articles of Incorporation. At and after the
Effective Time of the Merger, the Articles of Incorporation of Emclaire, as in
effect immediately prior to the Effective Time of the Merger, shall continue to
be the Articles of Incorporation of Emclaire as the Surviving Corporation,
unless and until amended thereafter as provided by law and the terms of such
Articles of Incorporation.
(b) Bylaws. At and after the Effective Time of
the Merger, the Bylaws of Emclaire, as in effect immediately prior to the
Effective Time of the Merger, shall continue to be the Bylaws of Emclaire as the
Surviving Corporation, unless and until amended or repealed as provided by law,
the Articles of Incorporation of Emclaire and such Bylaws.
(c) Directors and Officers. The directors of
Emclaire in office immediately prior to the Effective Time of the Merger shall
continue to be the directors and officers of the Surviving Corporation, to hold
office as provided in the Articles of Incorporation and Bylaws of the Surviving
Corporation, unless and until their successors shall have been elected or
appointed and shall have qualified or until they shall have been removed in the
manner provided in said Articles of Incorporation and Bylaws.
(d) Advisory Board. The Surviving Corporation
shall offer some of the current directors of Peoples a seat on a to-be-formed
Advisory Board of the Surviving Corporation for a period of at least two years.
Emclaire's mandatory retirement age for directors will apply to this Advisory
Board. Such Advisory Board shall meet at least once per quarter and board
members will receive board fees not less than current fees paid for attendance
at committee meetings of the Board of Emclaire for participation thereon.
(e) Name. The name of the Surviving Corporation
following the Merger shall be: Emclaire Financial Corp.
1.3 Availability of Information. Promptly after the
execution by the Parties of this Reorganization Agreement, each Party shall
provide to the other Party, its officers, employees, agents, and representatives
access, on reasonable notice and during customary business hours, to the books,
records, properties and facilities of the Party and shall use its best efforts
to cause its officers, employees, agents and representatives to cooperate with
any of the reviewing Party's reasonable requests for information.
1.4 Subsidiary Merger and Emclaire's Right to Revise the
Structure of the Transaction. The Parties to this Reorganization Agreement shall
take all such action as shall be necessary or appropriate to effect the
Subsidiary Merger pursuant to the terms, subject to the conditions and with the
effects set forth in the Subsidiary Merger Agreement, at or as soon after the
Effective Time of the Merger as is reasonably practicable. With the written
consent of PSFC, which will not unreasonably be withheld, Emclaire shall have
the right to revise the structure of the corporate Reorganization contemplated
by this Reorganization Agreement in order to achieve tax benefits or for
regulatory reasons which Emclaire may deem advisable; Emclaire may exercise this
right of revision by giving written notice to PSFC and Peoples Bank in the
manner provided in this Reorganization Agreement which notice shall be in the
form of an amendment to this Reorganization Agreement or in the form of an
Amended and
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Restated Agreement and Plan of Reorganization provided, however, that such
restructuring may not have a material adverse effect on the benefits of the
Merger to PSFC shareholders.
1.5 PSFC Stock Options. As of the date of this
Reorganization Agreement, there are 45,297 validly issued, outstanding and
currently exercisable options to purchase shares of PSFC Common Stock (the "PSFC
Stock Options"), and no other options, rights, warrants, scrip or similar rights
to purchase shares of PSFC Common Stock are issued and outstanding. Upon
consummation of the Merger and the payment of the amount set forth in Section
2.2(f), there will be no issued and outstanding PSFC Stock Options.
1.6 Employment Agreements. It is acknowledged that PSFC
currently has outstanding, valid and enforceable employment agreement
("Employment Agreement") with ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. Immediately prior to the
Closing as defined in Section 2.1(a), PSFC will pay out the "Change of Control"
provision of the Agreement in a lump sum payment provided for in Section 11 of
the Employment Agreement estimated in accordance with Schedule 1.6, subject to
final adjustment, as of the Closing Date. At the closing of the acquisition, the
Surviving Corporation will offer ▇▇. ▇▇▇▇▇ a position at Farmers without a
written contract that allows ▇▇. ▇▇▇▇▇ to maximize his abilities.
1.7 Employees. Except as provided in Section 1.6 of this
Reorganization Agreement, the Surviving Corporation shall retain all employees
of PSFC and Peoples Bank subject to the needs of Emclaire's business. Except as
to ▇▇. ▇▇▇▇▇, who is covered by Section 1.6, Emclaire will guarantee such
employees employment at their current compensation level for a period of at
least three months after the Effective Time of the Merger.
1.8 Anti-dilution Provisions. In the event Emclaire
changes the number of shares of Emclaire Common Stock issued and outstanding
prior to the Effective Time of the Merger as a result of a stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding Emclaire Common stock and the record date therefor shall be after
the first date of the Pricing Period (as defined below) and prior to the
Effective Time of the Merger, the Per Share Stock Consideration (as defined
below) shall be proportionately adjusted.
ARTICLE 2
DESCRIPTION OF TRANSACTION
2.1 Terms of the Merger.
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(a) Satisfaction of Conditions to Closing. After the
transactions contemplated herein have been approved by the shareholders of PSFC
and each other condition to the obligations of the Parties hereto, other than
those conditions which are to be satisfied by delivery of documents by any Party
to any other Party, has been satisfied or, if lawfully permitted, waived by the
Party or Parties entitled to the benefits thereof, a closing (the "Closing")
will be held on the date and at the time of day and place referred to in this
Reorganization Agreement. At the Closing the Parties shall use their respective
best efforts to deliver the certificates, letters and opinions which constitute
conditions to effecting the Merger and the Subsidiary Merger and each Party will
provide the other Parties with such proof or indication of satisfaction of the
conditions to the obligations of such other Parties to consummate the Merger as
such other Parties may reasonably require. If all conditions to the obligations
of each of the Parties shall have been satisfied or lawfully waived by the Party
entitled to the benefits thereof, the Parties shall, at the
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Closing, duly execute Articles of Merger for filing with the Secretary of State
of the Commonwealth of Pennsylvania and promptly thereafter PSFC and Emclaire
shall take all steps necessary or desirable to consummate the Merger in
accordance with all applicable laws, rules and regulations and the Plan of
Merger. The Parties shall thereupon take such other and further actions as
Emclaire shall reasonably direct or as may be required by law or this
Reorganization Agreement to consummate the transactions contemplated herein.
(b) Effective Time of the Merger. Upon the
satisfaction of all conditions to Closing, the Merger shall become effective on
the date and at the time of filing of the Articles of Merger with the Secretary
of State of the Commonwealth of Pennsylvania or at such later date and/or time
as may be agreed upon by the Parties and set forth in the Articles of Merger so
filed (the "Effective Time of the Merger").
2.2 Conversion of Stock.
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(a) Consideration. At the Effective Time of the
Merger, each share of common stock of PSFC, par value $0.10 per share (the "PSFC
Common Stock") then issued and outstanding (other than shares held directly or
indirectly by Emclaire, excluding shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
represent the right to receive the cash and/or shares of stock of Emclaire
constituting the Per Share Merger Consideration (as defined in paragraph (b)
below). As of the Effective Time of the Merger, each share of the PSFC Common
Stock held directly or indirectly by Emclaire, excluding shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted, shall be
canceled, retired and cease to exist, and no exchange or payment shall be made
with respect thereto.
(b) Cash or Stock Merger Consideration. As used
herein, the term "Per Share Merger Consideration" shall mean either the amount
of cash set forth in clause (i) below (the "Cash Merger Consideration") or that
number of shares of common stock of Emclaire, par value $1.25 per share
("Emclaire Common Stock") as set forth in clause (ii) below (the "Stock Merger
Consideration"), at the election of the holder of each share of PSFC Common
Stock, subject however to proration as set forth below.
(i) If Cash Merger Consideration is to be paid
with respect to a share of PSFC Common
Stock, the Per Share Merger Consideration
with respect to such share of PSFC Common
Stock shall be in the amount of Twenty- six
dollars ($26.00).
(ii) If Stock Merger Consideration is to be paid
with respect to a share of PSFC Common
Stock, the Per Share Merger Consideration
with respect to such share of PSFC Common
Stock shall be that number of shares of
Emclaire Stock (the "Conversion Number")
equal to:
(A) If the Final Market Price (as
defined below) shall be equal or
greater than $15.00 but equal to or
less than $21.00, then the Stock
Merger Consideration shall be
Twenty-six dollars ($26.00) divided
by the Final Market Price.
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(B) If the Final Market Price (as
defined below) shall be greater than
$21.00, then the Stock Merger
Consideration shall be 1.24 shares
of Emclaire Common Stock.
(C) If the Final Market Price (as
defined below) shall be less than
$15.00, either Emclaire or Peoples
can terminate this Agreement.
(c) Final Market Price. The "Final Market Price"
shall be the average closing price per share of the "last" real time trades
(i.e., closing price) of the Emclaire Common Stock as reported on the OTC
Bulletin Board for each of the thirty (30) OTC Bulletin Board general market
trading days preceding one week prior to the Closing Date on which the OTC
Bulletin Board was open for business (the "Pricing Period"), provided, however,
that if there are less than 10 business days during such period when Emclaire
Common Stock trades and on which there is a closing price, then the Pricing
Period shall be extended backwards for such period as is necessary until there
are ten days on which Emclaire Common Stock trades and on which there is a
closing price if such extension backwards will result in a lower calculated
Final Market Price. In the event the Emclaire Common Stock does not trade on one
or more of the trading days during the Pricing Period (a "No Trade Date"), any
such No Trade Date shall be disregarded in computing the average closing price
per share of Emclaire Common Stock and the average shall be based upon the
"last" real time trades and number of days on which the Emclaire Common Stock
actually traded during the Pricing Period.
(d) Fractional Shares. Fractional shares of
Emclaire Common Stock shall not be issued and each holder of PSFC Common Stock
who would otherwise be entitled to receive any such fractional shares (taking
into account all share amounts to which such holder is otherwise entitled
hereunder) shall receive cash (without interest) in lieu thereof in an amount
equal to the fraction of the share of Emclaire Common Stock to which such holder
would otherwise be entitled multiplied by the Final Market Price. No such holder
will be entitled to dividends, voting rights or any other rights of a
stockholder of Emclaire or PSFC in respect of any such fractional share.
(e) Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, shares of PSFC Common Stock which are issued
and outstanding immediately prior to the Effective Time of the Merger and which
are held by a shareholder who has the right (to the extent such right is
available by law) to demand and receive payment of the fair value of his shares
of PSFC Common Stock (the "Dissenting Shares") pursuant to Section 1571 of the
PBCA, shall not be converted into or be exchangeable for the right to receive
the consideration provided in this Section 2.2 unless and until such holder
shall fail to perfect his or her right to an appraisal or shall have effectively
withdrawn or lost such right under the PBCA, as the case may be. If such holder
shall have so failed to perfect his right to dissent or shall have effectively
withdrawn or lost such right, each of his shares of PSFC Common Stock shall
thereupon be deemed to be Cash Election Shares as defined in Section 2.3 of this
Agreement.
(f) Treatment of Options. At the Effective Time
of the Merger, each unexercised PSFC Stock Option shall be deemed canceled and
as consideration therefor each holder of a PSFC Stock Option (the "Option
Holders") shall have the right to receive a cash payment amount (the "Cash Out")
equal to the excess of (A) $26.00 over the exercise price per share of PSFC
Common Stock covered by that Option Holder's PSFC Stock Option(s), multiplied by
(B) the total number of shares of PSFC Common Stock covered by such PSFC Stock
Option(s).
- 6 -
(g) Calculation Schedule. The calculations of
the respective amounts of cash and Emclaire Common Stock payable and issuable
pursuant to the terms of this Reorganization Agreement shall be jointly prepared
and agreed to by Emclaire and PSFC and set forth in reasonable detail in a
schedule that shall be delivered to Farmers National (the "Exchange Agent") no
later than two business days after the end of the Election Period.
2.3 Election and Allocation Procedures.
----------------------------------
(a) Subject to and in accordance with the
allocation and election procedures set forth herein, each record holder of a
share of PSFC Common Stock (the "PSFC Shareholders") shall, prior to the
Election Deadline (as hereinafter defined) specify (i) the number of whole
shares of PSFC Common Stock held by such Shareholder as to which such
Shareholder shall desire to receive the Cash Merger Consideration, and (ii) the
number of whole shares of PSFC Common Stock held by such Shareholder as to which
such Shareholder shall desire to receive the Stock Merger Consideration..
(b) An election as described in clause (i) of
Paragraph (a) of this Section and all Dissenting Shares are herein referred to
as a "Cash Election," and shares of PSFC Common Stock as to which a Cash
Election has been made are herein referred to as "Cash Election Shares." An
election as described in clause (ii) of Paragraph (a) is herein referred to as a
"Stock Election," and shares as to which a Stock Election has been made are
herein referred to as "Stock Election Shares." A failure to indicate a
preference in accordance herewith is herein referred to as a "Non-Election," and
shares as to which there is a Non-Election are herein referred to as
"Non-Electing Shares."
(c) Notwithstanding anything herein to the
contrary, and after taking into consideration Dissenting Shares and the Cash
Out, 55.0% of the outstanding PSFC Common Stock shall be exchanged for Emclaire
Common Stock. Payment of cash pursuant to the Cash Merger Consideration, the
Cash Out and Dissenting Shares, if any, and issuance of Emclaire Common Stock
pursuant to the Stock Merger Consideration, shall be allocated to holders of
PSFC Stock such that the number of shares of PSFC Common Stock as to which cash
is paid shall equal 45.0% of the aggregate number of shares of PSFC Common Stock
outstanding plus those subject to PSFC Stock Options (the "Aggregate Shares"),
and the number of shares of PSFC Common Stock (outstanding or subject to PSFC
Stock Options) as to which PSFC Stock are issued shall equal 55.0% of the
Aggregate Shares, as follows:
(1) If the number of Cash Election
Shares is in excess of 45.0% of the
Aggregate Shares, then (i)
Non-Electing Shares shall be deemed
to be Stock Election Shares, (ii)
Option Holders shall be treated as
Cash Election Shares without
adjustment, (iii) Dissenting Shares
shall be treated as Cash Election
Shares without adjustment, and
(iv)(A) Cash Election Shares of each
Shareholder who made the Cash
Election shall be reduced pro rata
by multiplying the number of Cash
Election Shares of such Shareholder
by a fraction, the numerator of
which is the number of shares of
PSFC Common Stock equal to 45.0% of
the Aggregate Shares minus the Cash
Out and Dissenting Shares and the
denominator of which is the
aggregate number of Cash Election
Shares of all Shareholders, and (B)
the shares of such Shareholder
representing the difference between
such Shareholder's initial Cash
Election and such Shareholder's
- 7 -
reduced Cash Election pursuant to
clause (A) shall be converted into
and be deemed to be Stock Election
Shares.
(2) If the number of Stock Election
Shares is in excess of 55.0% of the
Aggregate Shares, then (i)
Non-Electing Shares shall be deemed
to be Cash Election Shares and (ii)
(A) Stock Election Shares of each
Holder shall be reduced pro rata by
multiplying the number of Stock
Election Shares of such Holder by a
fraction, the numerator of which is
the number of shares of PSFC Common
Stock equal to 55.0% of the
Aggregate Shares and the denominator
of which is the aggregate number of
Stock Election Shares of all
Holders, and (B) the shares of such
Holder representing the difference
between such Holder's initial Stock
Election and such Holder's reduced
Stock Election pursuant to clause
(A) shall be converted into to and
be deemed to be Cash Election
Shares.
(3) If the number of Cash Election
Shares is less than 45.0% of the
Aggregate Shares and the number of
Stock Election Shares is less than
55.0% of the Aggregate Shares, then
(i) there shall be no adjustment to
the elections made by electing
Holders, (ii) there shall be no
adjustment to the Cash Out or
Dissenting Shares, if any, and (iii)
Non-Electing Shares of each Holder
shall be treated as Stock Elections
Shares and/or as Cash Election
Shares in proportion to the
respective amounts by which the Cash
Election Shares and the Stock
Election Shares are less than the
45.0% and 55.0% limits,
respectively.
(d) After taking into account the foregoing
adjustment provisions, each Cash Election Share (including those deemed to be
Cash Election Shares) shall receive in the Merger the Cash Merger Consideration
pursuant to Section 2.2(b) and each Stock Election Share (including those deemed
to be Stock Election Shares) shall receive in the Merger the Stock Merger
Consideration (and cash in lieu of fractional shares) pursuant to Section
2.2(b).
(e) Satisfaction of Conditions to Closing.
Notwithstanding any other provision of this Agreement, if the application of the
provisions of this Section would result in Holders receiving a number of shares
of Emclaire Common Stock that would prevent the Per Share Merger Consideration
from consisting in the aggregate of 45.0% Cash Merger Consideration and 55.0%
Stock Merger Consideration or otherwise prevent the satisfaction of any of the
conditions set forth in Article 7 hereof, the number of shares otherwise
allocable to Holders pursuant to this section shall be adjusted in an equitable
manner as shall be necessary to enable the satisfaction of all conditions.
2.4 Election Procedures.
-------------------
(a) PSFC and Emclaire shall prepare a form for
purposes of making elections and containing instructions with respect thereto
(the "Election Form"). The Election Form shall be distributed to each Holder at
such time as PSFC and Emclaire shall determine and shall specify the date by
which all such elections must be made (the "Election Deadline") which date shall
be the date of the
- 8 -
meeting of PSFC Shareholders to approve the Merger or such other date determined
by PSFC and Emclaire. In the event the Closing does not take place within ten
(10) business days after the meeting of PSFC Shareholders to approve the Merger,
new Election Forms shall be sent via first class mail to PSFC Shareholders
providing such shareholders an opportunity to change their election by a
specific time period ("New Election Deadline"). Such new Election Deadline be no
less than ten (10) business days from the Closing.
(b) Elections shall be made by Holders by
mailing to the Exchange Agent a completed Election Form. To be effective, an
Election Form must be properly completed, signed and submitted to the Exchange
Agent accompanied by certificates representing the shares of PSFC Common Stock
as to which the election is being made (or by an appropriate guaranty of
delivery by a commercial bank or trust company in the United States or a member
of a registered national security exchange or the National Association of
Security Dealers, Inc.), or by evidence that such certificates have been lost,
stolen or destroyed accompanied by such security or indemnity as shall be
reasonably requested by Emclaire. An Election Form and accompanying share
certificates must be received by the Exchange Agent by the close of business on
the Election Deadline. An election may be changed or revoked but only by written
notice received by the Exchange Agent prior to the Election Deadline including,
in the case of a change, a properly completed revised Election Form.
(c) Emclaire will have the discretion, which it
may delegate in whole or in part to the Exchange Agent, to determine whether the
Election Forms have been properly completed, signed and submitted or changed or
revoked and to disregard immaterial defects in Election Forms. The decision of
Emclaire (or the Exchange Agent) in such matters shall be conclusive and
binding. Neither Emclaire nor the Exchange Agent will be under any obligation to
notify any person of any defect in an Election Form submitted to the Exchange
Agent.
(d) For the purposes hereof, a Holder who does
not submit an effective Election Form to the Exchange Agent prior to the
Election Deadline shall be deemed to have made a Non-Election.
(e) In the event that this Agreement is
terminated pursuant to the provisions hereof and any shares or PSFC Stock
Options have been transmitted to the Exchange Agent pursuant to the provisions
hereof, Emclaire and PSFC shall cause the Exchange Agent to promptly return such
shares to the person submitting the same.
2.5 Mechanics of Payment of Consideration.
-------------------------------------
(a) Surrender of Certificates Pursuant to
Section 2.2(b). Within five business days after the Effective Time of the
Merger, the Exchange Agent shall deliver to each of the PSFC Record Holders who
have not previously submitted properly completed Election Forms, accompanied by
all certificates (or other appropriate documentation) in respect of all shares
of PSFC Common Stock held of record by such PSFC Record Holders, such materials
and information deemed necessary by the Exchange Agent to advise the PSFC Record
Holders of the procedures required for proper surrender of their certificates
evidencing and representing shares of the PSFC Common Stock in order for the
PSFC Record Holders to receive the Consideration to which they are entitled as
provided herein. Such materials shall include, without limitation, a Letter of
Transmittal, an Instruction Sheet, and a return mailing envelope addressed to
the Exchange Agent (collectively the "Shareholder Materials"). All Shareholder
Materials shall be sent by United States mail to the PSFC Record Holders at the
addresses
- 9 -
set forth on a certified shareholder list to be delivered by PSFC to Emclaire at
the Closing (the "Shareholder List"). Emclaire shall deposit with the Exchange
Agent sufficient certificates representing Emclaire Common Stock and cash to
enable the Exchange Agent to distribute the Merger Consideration as determined
pursuant to this Reorganization Agreement. Emclaire shall also make appropriate
provisions with the Exchange Agent to enable PSFC Record Holders to obtain the
Shareholder Materials from, and to deliver the certificates formerly
representing shares of PSFC Common Stock to, the Exchange Agent in person,
commencing on or not later than the second business day following the Closing
Date. Upon receipt of the appropriate Shareholder Materials, together with the
certificates formerly evidencing and representing all of the shares of PSFC
Common Stock which were validly held of record by such holder, the Exchange
Agent shall take prompt action to process such certificates formerly evidencing
and representing shares of PSFC Common Stock received by it (including the
prompt return of any defective submissions with instructions as to those actions
which may be necessary to remedy any defects) and to mail to the former PSFC
Record Holders in exchange for the certificate(s) surrendered by them, the
Consideration to be issued or paid for each such PSFC Record Holder's shares
pursuant to the terms hereof. After the Effective Time of the Merger and until
properly surrendered to the Exchange Agent, each outstanding certificate or
certificates which formerly evidenced and represented the shares of PSFC Common
Stock of a PSFC Record Holder, subject to the provisions of this Section, shall
be deemed for all corporate purposes to represent and evidence only the right to
receive the Consideration into which such PSFC Record Holder's shares of PSFC
Common Stock were converted and aggregated at the Effective Time of the Merger.
Unless and until the outstanding certificate or certificates, which immediately
prior to the Effective Time of the Merger evidenced and represented the PSFC
Record Holder's PSFC Common Stock shall have been properly surrendered as
provided above, the Consideration issued or payable to the PSFC Record Holder(s)
of the canceled shares as of any time after the Effective Date of the Merger
shall not be paid to the PSFC Record Holder(s) of such certificate(s) until such
certificates shall have been surrendered in the manner required. Each PSFC
Record Holder will be responsible for all federal, state and local taxes which
may be incurred by him on account of his receipt of the Consideration to be paid
in the Merger. The PSFC Record Holder(s) of any certificate(s) which shall have
been lost or destroyed may nevertheless, subject to the provisions of this
Article, receive the Consideration to which each such PSFC Record Holder is
entitled, provided that each such PSFC Record Holder shall deliver to Emclaire
and to the Exchange Agent: (i) a sworn statement certifying such loss or
destruction and specifying the circumstances thereof and (ii) a lost instrument
bond in form satisfactory to Emclaire and the Exchange Agent which has been duly
executed by a corporate surety satisfactory to Emclaire and the Exchange Agent,
indemnifying the Surviving Corporation, Emclaire, the Exchange Agent (and their
respective successors) to their satisfaction against any loss or expense which
any of them may incur as a result of such lost or destroyed certificates being
thereafter presented. Any costs or expenses which may arise from such
replacement procedure, including the premium on the lost instrument bond, shall
be paid by the PSFC Record Holder.
(b) Stock Transfer Books. At the Effective Time
of the Merger, the stock transfer books of PSFC shall be closed and no transfer
of shares of PSFC Common Stock shall be made thereafter.
(c) Reservation, Registration and Listing of
Shares of Emclaire Common Stock. Emclaire shall reserve for issuance, register
under the Securities Laws and apply for listing for trading on the OTC Bulletin
Board a sufficient number of shares of Emclaire Common Stock for the purpose of
issuing shares of Emclaire Common Stock to the PSFC Record Holders in accordance
with the terms and conditions of this Article.
- 10 -
2.6 Time and Place of Closing. Unless this Reorganization
Agreement shall have been herein terminated and the transactions herein
contemplated shall have been abandoned pursuant to Section 8.01 and subject to
the satisfaction or waiver of the conditions set forth in Article 7, the closing
of the Merger (the "Closing") will take place at 10:00 a.m. on the second
business day after satisfaction of the conditions set forth in Section 7.03 (or
as soon as practicable thereafter following satisfaction or waiver of the
conditions set forth in Sections 7.01 and 7.02) (the "Closing Date"), at the
offices of ▇▇▇▇▇▇▇, Spidi, Sloane & ▇▇▇▇▇, P.C., ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, unless another date, time or place is agreed to in
writing by the parties hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PSFC AND PEOPLES BANK
Except as otherwise disclosed in one or more schedules (the "PSFC
Schedule(s)") dated as of the date hereof and delivered concurrently with this
Reorganization Agreement, both as of the date hereof and as of the Effective
Time of the Merger, each of PSFC and Peoples Bank represents and warrants to
Emclaire and Farmers National as follows:
3.1 Organization and Qualification of PSFC and
Subsidiaries. PSFC is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania and (i) has all
requisite corporate power and authority to own, operate and lease its properties
and to carry on its business as it is currently being conducted; (ii) is in good
standing and is duly qualified to do business in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
business is such that a failure to be so qualified would have a material adverse
effect on PSFC and Peoples Bank taken as a whole; and (iii) is registered as a
bank holding company with the Board of Governors of the Federal Reserve System
("Federal Reserve System"). Peoples Bank is a state chartered stock savings
bank, duly organized, validly existing and in good standing under the laws of
the Commonwealth of Pennsylvania and engages only in activities (and holds
properties only of the types) permitted by the Commonwealth of Pennsylvania and
the rules and regulations promulgated by the Pennsylvania Department of Banking
("PADB") thereunder and the FDIC for insured depository institutions. Peoples
Bank's deposit accounts are insured by the Savings Association Insurance Fund
(the "SAIF") as administered by the FDIC to the fullest extent permitted under
applicable law.
3.2 Authorization, Execution and Delivery; Reorganization
-----------------------------------------------------
Agreement Not in Breach.
-----------------------
(a) PSFC and Peoples Bank have all requisite
corporate power and authority to execute and deliver this Reorganization
Agreement and the Plan of Merger and to consummate the transactions contemplated
hereby. The execution and delivery of this Reorganization Agreement and the Plan
of Merger and the consummation of the proposed transactions have been duly
authorized by at least a majority of the entire Boards of Directors of both PSFC
and Peoples Bank and no other corporate proceedings on the part of PSFC and
Peoples Bank are necessary to authorize the execution and delivery of this
Reorganization Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby, except for the approval of their
respective shareholders. This Reorganization Agreement and all other agreements
and instruments herein contemplated to be executed by PSFC and Peoples Bank have
been (or upon execution will have been) duly executed and delivered by PSFC and
Peoples Bank and constitute (or upon execution will constitute) legal, valid and
enforceable obligations of PSFC and Peoples Bank, subject, as to enforceability,
to applicable bankruptcy, insolvency,
- 11 -
receivership, conservatorship, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and to the application
of equitable principles and judicial discretion.
(b) The execution and delivery of this
Reorganization Agreement and the Plan of Merger, the consummation of the
transactions contemplated hereby and thereby, and the fulfillment of the terms
hereof and thereof will not result in a material violation or breach of any of
the terms or provisions of, or constitute a material default under (or an event
which, with the passage of time or the giving of notice, or both, would
constitute such a default under), or conflict with, or permit the acceleration
of, any material obligation under, any material mortgage, lease, covenant,
agreement, indenture or other instrument to which PSFC or any PSFC Subsidiary is
a party or by which PSFC or any PSFC Subsidiary is bound, the Articles of
Incorporation and Bylaws of PSFC or the Articles of Incorporation and bylaws of
Peoples Bank; or any material judgment, decree, order, regulatory letter of
understanding or award of any court, governmental body, authority or arbitrator
by which PSFC or any PSFC Subsidiary is bound, or any material permit,
concession, grant, franchise, license, law, statute, ordinance, rule or
regulation applicable to PSFC or any PSFC Subsidiary or the properties of any of
them; or result in the creation of any material lien, claim, security interest,
encumbrance, charge, restriction or right of any third party of any kind
whatsoever upon the properties or assets of PSFC or any PSFC Subsidiary, except
the Government approvals shall be required for PSFC and Peoples Bank to
consummate the Merger and Subsidiary Merger.
3.3 No Legal Bar. Neither PSFC nor Peoples Bank is a
party to, or subject to or bound by, any material agreement, judgment, order,
letter of understanding, writ, prohibition, injunction or decree of any court or
other governmental authority or body of competent jurisdiction, or any law which
would prevent the execution of this Reorganization Agreement or the Plan of
Merger by PSFC or Peoples Bank, the delivery thereof to Emclaire and Farmers
National or the consummation of the transactions contemplated hereby and
thereby, and no action or proceeding is pending against PSFC or Peoples Bank in
which the validity of this Reorganization Agreement, any of the transactions
contemplated hereby or any action which has been taken by any of the Parties in
connection herewith, or, in connection with any of the transactions contemplated
hereby, is at issue.
3.4 Government and Other Approvals. Except for the
Government Approvals described in Section 4.4, no consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by PSFC
or Peoples Bank in connection with the execution and delivery of this
Reorganization Agreement or the consummation of the transactions contemplated by
this Reorganization Agreement nor is any consent or approval required from any
landlord, licensor or other non-governmental party which has granted rights to
PSFC or Peoples Bank in order to avoid forfeiture or impairment of such rights.
Neither PSFC nor Peoples Bank is aware of any facts, circumstances or reasons
why such Government Approvals should not be forthcoming or which would prevent
or hinder such approvals from being obtained.
3.5 Licenses, Franchises and Permits. PSFC and all PSFC
Subsidiaries hold all licenses, franchises, permits and authorizations necessary
for the lawful conduct of their respective businesses. Except as disclosed in
Schedule 3.5, the benefits of all of such licenses, franchises, permits and
authorizations are in full force and effect and may continue to be enjoyed by a
successor to PSFC and Peoples Bank subsequent to the Closing of the transactions
contemplated herein without any consent or approval, subject to the legal right
and authority of such successor to engage in the activities licensed,
franchised, permitted or authorized thereby. Neither PSFC nor any PSFC
Subsidiary has received notice of any proceeding for the suspension or
revocation of any such license, franchise, permit, or authorization
- 12 -
and no such proceeding is pending or, to the best knowledge of PSFC and the PSFC
Subsidiaries, has been threatened by any governmental authority.
3.6 Charter Documents. Included in Schedule 3.6 hereto
are true and correct copies of the Articles of Incorporation and Bylaws of PSFC
and Peoples Bank.
3.7 PSFC Financial Statements. PSFC has delivered or will
deliver to Emclaire copies of the consolidated statements of financial condition
of PSFC as of June 30, for the fiscal years 1996 and 1997, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the fiscal years 1995 through 1997, inclusive, as incorporated by
reference in PSFC's Annual Report to Stockholders in each case accompanied by
the audit report of S.R. ▇▇▇▇▇▇▇▇▇, ▇.▇., independent public accountants with
respect to PSFC (the "Audited Financial Statements"), and the unaudited
consolidated statements of financial condition of PSFC as of December 31, 1997
and the related unaudited consolidated statements of operations, changes in
stockholders' equity and cash flows for the six month periods then ended as
reported in PSFC's quarterly report to shareholders. The consolidated statements
of financial condition of PSFC referred to herein (including the related notes,
where applicable) fairly present the consolidated financial condition of PSFC as
of the respective dates set forth therein, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows
(including the related notes, where applicable) fairly present the results of
the consolidated operations, changes in stockholders' equity and cash flows
(including the related notes, where applicable) fairly present the results of
the consolidated operations, changes in stockholders' equity and cash flows of
PSFC for the respective periods or as of the respective dates set forth therein,
in each case in conformity with GAAP consistently applied, it being understood
that PSFC's interim financial statements are not audited, not prepared with
related notes and are subject to normal year-end adjustments.
3.8 Absence of Certain Changes. Except as disclosed in
Schedule 3.8 or as provided for or contemplated in this Reorganization
Agreement, since June 30, 1997 (the "Balance Sheet Date") there has not been:
(a) any material transaction by PSFC or Peoples
Bank not in the ordinary course of business and in conformity with past
practice;
(b) any material adverse change in the business,
property, assets (including loan portfolios), liabilities (whether absolute,
accrued, contingent or otherwise), operations, liquidity, income, condition or
net worth of PSFC and Peoples Bank taken as a whole;
(c) any damage, destruction or loss, whether or
not covered by insurance, which has had or may have a material adverse effect on
any of the properties or business prospects of PSFC and Peoples Bank taken as a
whole or their future use and operation by PSFC and Peoples Bank taken as a
whole;
(d) any acquisition or disposition by PSFC or
Peoples Bank of any property or asset of PSFC or Peoples Bank, whether real or
personal, having a fair market value, singularly or in the aggregate, in an
amount greater than Ten Thousand Dollars ($10,000) other than acquisitions or
dispositions made in the ordinary course of business;
(e) any mortgage, pledge or subjection to lien,
charge or encumbrance of any kind on any of the respective properties or assets
of PSFC or Peoples Bank, except to secure extensions
- 13 -
of credit in the ordinary course of business and in conformity with past
practice (pledges of and liens on assets to secure Federal Home Loan Bank
advances being deemed both in the ordinary course of business and consistent
with past practice);
(f) any amendment, modification or termination
of any contract or agreement in excess of $10,000, relating to PSFC or Peoples
Bank, to which PSFC or Peoples Bank is a party which would have a material
adverse effect upon the financial condition or operations of PSFC and Peoples
Bank taken as a whole;
(g) any increase in, or commitment to increase,
the compensation payable or to become payable to any officer, director, employee
or agent of PSFC or Peoples Bank, or any bonus payment or similar arrangement
made to or with any of such officers, directors, employees or agents, other than
routine increases made in the ordinary course of business and consistent with
past practice not exceeding the lesser of five percent (5%) per annum or $2,500
for any of them individually;
(h) any incurring of, assumption of, or taking
of, by PSFC or Peoples Bank, any property subject to, any liability in excess of
$10,000, except for liabilities incurred or assumed or property taken subsequent
to the Balance Sheet Date in the ordinary course of business and in conformity
with past practice; or
(i) any material alteration in the manner of
keeping the books, accounts or Records of PSFC or Peoples Bank, or in the
accounting policies or practices therein reflected, except as required by GAAP
and requirements of Regulatory Authorities.
3.9 Deposits. Except as set forth in Schedule 3.9, none
of the Peoples Bank deposits (consisting of certificate of deposit, savings
accounts, NOW accounts and checking account), is a brokered deposit.
3.10 Properties. Except as described in Schedule 3.10
hereto or adequately reserved against in the Audited Financial Statements of
PSFC or disposed of since the Balance Sheet Date, PSFC and each PSFC Subsidiary
has good and, as to real property, marketable title free and clear of all
material liens, encumbrances, charges, defaults, or equities of whatever
character to all of the material properties and assets, reflected in the Audited
Financial Statements of PSFC as being owned by PSFC or any PSFC Subsidiary as of
the dates thereof. All buildings, and all fixtures, equipment, and other
property and assets that are material to the business of PSFC and the PSFC
Subsidiaries on a consolidated basis, held under leases or subleases by PSFC or
any PSFC Subsidiary, are held under valid instruments enforceable in accordance
with their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other laws
affecting the enforcement of creditors' rights generally, or by equitable
principles).
3.11 Condition of Fixed Assets and Equipment. Except as
disclosed in Schedule 3.11 hereto, each item of PSFC's or Peoples Bank's fixed
assets and equipment having a net book value in excess of Ten Thousand Dollars
($10,000) included in the Fixed Assets is in good operating condition and
repair, normal wear and tear excepted.
3.12 Tax Matters. Except as described in Schedule 3.12
hereto:
- 14 -
(a) All federal, state and local tax returns
required to be filed by or on behalf of PSFC and Peoples Bank have been timely
filed or requests for extensions have been timely filed, granted and have not
expired for periods ended on or before the date of this Reorganization
Agreement, and all returns filed are, and the information contained therein is,
complete and accurate. All tax obligations reflected in such returns have been
paid. As of the date of this Reorganization Agreement, there is no audit
examination, deficiency, or refund litigation or matter in controversy with
respect to any taxes that might reasonably be expected to result in a
determination materially adverse to PSFC and Peoples Bank taken as a whole
except as fully reserved for in the Audited Financial Statements of PSFC. All
taxes, interest, additions, and penalties due with respect to completed and
settled examinations or concluded litigation have been paid;
(b) Neither PSFC nor Peoples Bank has executed
an extension or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect;
(c) Adequate provision for any federal, state or
local taxes due or to become due for PSFC and Peoples Bank for all periods
through and including June 30, 1997, has been made and is reflected on the June
30, 1997 financial statements included in the Audited Financial Statements of
PSFC, and have been and will continue to be made with respect to periods ending
after June 30, 1997;
(d) Deferred taxes of PSFC and Peoples Bank have
been and will be provided for in accordance with GAAP; and
(e) To the best knowledge of PSFC and Peoples
Bank, neither the Internal Revenue Service nor any state, local or other taxing
authority is now asserting or threatening to assert against PSFC or Peoples Bank
any deficiency or claim for additional taxes, or interest thereon or penalties
in connection therewith. All material income, payroll, withholding, property,
excise, sales, use, franchise and transfer taxes, and all other taxes, charges,
fees, levies or other assessments, imposed upon PSFC by the United States or by
any state, municipality, subdivision or instrumentality of the United States or
by any other taxing authority, including all interest, penalties or additions
attributable thereto, which are due and payable by PSFC or Peoples Bank, either
have been paid in full or have been properly accrued and reflected in the
Audited Financial Statements of PSFC.
3.13 Litigation. Except as set forth in Schedule 3.13
hereto, there is no action, suit or proceeding pending against PSFC or Peoples
Bank, or to the best knowledge of PSFC or Peoples Bank, threatened against or
affecting PSFC, Peoples Bank or any of their assets, before any court or
arbitrator or any governmental body, agency or official that may, if decided
against PSFC or Peoples Bank, have a material adverse effect on the business,
properties, assets, liabilities, or condition (financial or other) of PSFC and
Peoples Bank taken as a whole and that are not reflected in the Audited
Financial Statements of PSFC.
3.14 Environmental Materials. Except as set forth in
Schedule 3.14 to the knowledge of PSFC and Peoples Bank, the real property owned
by PSFC associated with its two offices as well as other real property held as
an asset and real property held as real estate owned ("Real Properties") are in
material compliance with all Environmental Laws, as hereinafter defined, and
there are no conditions existing currently which would subject PSFC to damages,
penalties, injunctive relief or cleanup costs under any Environmental Laws or
assertions thereof, or which require cleanup, removal, remedial action or other
response pursuant to Environmental Laws by PSFC. Copies of all environmental
studies, reports, notices and the like known to exist with regard to the Real
Properties is contained at Schedule
- 15 -
3.14. PSFC is not a party to any litigation or administrative proceeding, nor
has PSFC (either in its own capacity or as trustee or fiduciary), materially
violated Environmental Laws nor, to its knowledge and except as set forth in
Schedule 3.14, is PSFC (either in its own capacity or as trustee or fiduciary)
required to clean up, remove or take remedial or other responsive action due to
the disposal, depositing, discharge, leaking or other release of any hazardous
substances or materials. To the knowledge of PSFC, none of the Real Properties
are, nor is PSFC, subject to any judgment, decree, order or citation related to
or arising out of any Environmental Laws. To the knowledge of PSFC, no material
permits, licenses or approvals are required under Environmental Laws relative to
the Real Properties; and, except as disclosed in Schedule 3.14, PSFC has not
stored, deposited, treated, recycled, used or disposed of any materials
(including, without limitation, asbestos) on, under or at the Real Properties
(or tanks or other facilities thereon containing such materials), which
materials if known to be present on the Real Properties or present in soils or
ground water, would require cleanup, removal or some other remedial action under
the Environmental Laws. The term "Environmental Laws" shall mean all federal,
state and local laws, including statutes, regulations, ordinances, codes, rules
and other governmental restrictions, standards and requirements relating to the
discharge of air pollutants, water pollutants or process waste water or
substances, as now or at any time hereafter in effect, including, but not
limited to, the Federal Solid Waste Disposal Act, the Federal Hazardous
Materials Transportation Act, the Federal Clean Air Act, the Federal Clean Water
Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal
Comprehensive Environmental Responsibility Cleanup and Liability Act of 1980, as
amended ("CERCLA"), regulations of the Environmental Protection Agency,
regulations of the Nuclear Regulatory Agency, regulations of the Occupational
Safety and Health Administration, and any so-called "Superfund" or "Superlien"
Laws.
3.15 Insurance. PSFC and Peoples Bank have paid all
amounts due and payable under any insurance policies and guaranties applicable
to PSFC and Peoples Bank and PSFC's or Peoples Bank's assets and operations; all
such insurance policies and guaranties are in full force and effect; and PSFC
and Peoples Bank and all of PSFC's and Peoples Bank's Realty and other material
properties are insured against fire, casualty, theft, loss, and such other
events against which it is customary to insure, all such insurance policies
being in amounts that are adequate and are consistent with past practices and
experience.
3.16 Books and Records. The minute books of PSFC and
Peoples Bank contain, in all material respects, accurate records of and fairly
reflect all actions taken at all meetings and accurately reflect all other
corporate action of the shareholders and the boards of directors and each
committee thereof. The books and records of PSFC and Peoples Bank fairly and
accurately reflect the transactions to which PSFC and Peoples Bank is or has
been a party or by which their properties are subject or bound, and such books
and records have been properly kept and maintained.
3.17 Capitalization of PSFC. The authorized capital stock
of PSFC consists of 2,000,000 shares of Common Stock having a par value of $.10
per share, 1,000,000 shares of preferred stock, no par value per share, the
"PSFC Preferred Stock" and no other class of equity security. As of the date of
this Reorganization Agreement, 452,966 shares of PSFC Common Stock were issued,
of which 442,516 were outstanding and 10,450 were held in treasury, and no
shares of PSFC Preferred Stock were issued and outstanding. All of the
outstanding PSFC Common Stock is validly issued, fully-paid and nonassessable
and has not been issued in violation of any preemptive rights of any PSFC
Shareholder. Except as described in Section 1.5 of this Reorganization Agreement
as of the date hereof, there are no outstanding securities or other obligations
which are convertible into PSFC Common Stock or into any other equity or debt
security of PSFC, and there are no outstanding options, warrants, rights,
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scrip, rights to subscribe to, calls or other commitments of any nature which
would entitle the holder, upon exercise thereof, to be issued PSFC Common Stock
or any other equity or debt security of PSFC. Accordingly, immediately prior to
the Effective Time of the Merger, there will be not more than 487,813 shares of
PSFC Common Stock issued and outstanding (442,516) shares currently outstanding
plus 45,297 unexercised options). PSFC owns and is the beneficial record holder
of, and has good and freely transferable title to, all of the 100,000 shares of
Peoples Bank Common Stock issued and outstanding, and recorded on the books and
Records of Peoples Bank as being held in its name, free and clear of all liens,
charges or encumbrances, and such stock is not subject to any voting trusts,
agreements or similar arrangements or other claims which could affect the
ability of PSFC to freely vote such stock in support of the transactions
contemplated herein.
3.18 Sole Agreement. With the exception of this
Reorganization Agreement, neither PSFC, nor Peoples Bank, nor any Subsidiary of
either has been or is a party to: any letter of intent or agreement to merge, to
consolidate, to sell or purchase assets (other than in the normal course of its
business) or to any other agreement which contemplates the involvement of PSFC
or Peoples Bank or any Subsidiary of either (or any of their assets) in any
business combination of any kind; or any agreement obligating PSFC or Peoples
Bank to issue or sell or authorize the sale or transfer of PSFC Common Stock or
the capital stock of Peoples Bank. Except as set forth in Schedule 3.18 hereto,
there are no (nor will there be at the Effective Time of the Merger any) shares
of capital stock or other equity securities of PSFC outstanding, except for
shares of PSFC Common Stock presently issued and outstanding (or issuable upon
the exercise of outstanding stock options), and there are no (nor will there be
at the Effective Time of the Merger any) outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of PSFC or Peoples Bank, or contracts, commitments,
understandings, or arrangements by which PSFC or Peoples Bank is or may be bound
to issue additional shares of their capital stock or options, warrants, or
rights to purchase or acquire any additional shares of their capital stock.
There are no (nor will there be at the Effective Time of the Merger any)
contracts, commitments, understandings, or arrangements by which PSFC or Peoples
Bank is or may be bound to transfer or issue to any third party any shares of
the capital stock of Peoples Bank, and there are no (nor will there be at the
Effective Time of the Merger any) contracts, agreements, understandings or
commitments relating to the right of PSFC to vote or to dispose of any such
shares.
3.19 Disclosure. The information concerning, and
representations and warranties made by, PSFC and Peoples Bank set forth in this
Reorganization Agreement, or in the Schedule of PSFC hereto, or in any document,
statement, certificate or other writing furnished or to be furnished by PSFC or
Peoples Bank to Emclaire and Farmers National, pursuant hereto, do not and will
not contain any untrue statement of a material fact or omit and will not omit to
state a material fact required to be stated herein or therein which is necessary
to make the statements and facts contained herein or therein, in light of the
circumstances in which they were or are made, not false or misleading. Without
limiting the foregoing, at the time the prospectus included in the registration
statement of Emclaire to be filed with the SEC as provided herein is mailed to
PSFC Record Holders and stockholders of Emclaire ("Emclaire Stockholders") and
at all times subsequent to such mailing, up to and including the Effective Time
of the Merger, such registration statement (including any amendments and
supplements thereto), with respect to all information relating to PSFC, Peoples
Bank and this Reorganization Agreement as it relates to PSFC, (i) will comply in
all material respects with the applicable provisions of the Securities Laws and
(ii) will not contain any statement which, at the time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact or omit to state any material fact necessary in order to make the
statements made therein not false or misleading, or required to be stated
therein or
- 17 -
necessary to correct any statement made in an earlier communication with respect
to such matters which have become false or misleading. Copies of all documents
heretofore or hereafter delivered or made available to Emclaire by PSFC or
Peoples Bank pursuant hereto were or will be complete and accurate copies of
such documents.
3.10 Absence of Undisclosed Liabilities. Except as
described in Schedule 3.22 hereto, to their knowledge neither PSFC nor Peoples
Bank has any obligation or liability that is material to the financial condition
or operations of PSFC or Peoples Bank, or that, when combined with all similar
obligations or liabilities, would be material to the financial condition or
operations of PSFC or Peoples Bank (i) except as disclosed in the Audited
Financial Statements of PSFC delivered to Emclaire prior to the date of this
Reorganization Agreement, (ii) except obligations or liabilities incurred in the
ordinary course of its business consistent with past practices or (iii) except
as contemplated under this Reorganization Agreement. Since June 30, 1997,
neither PSFC nor Peoples Bank has incurred or paid any obligation or liability
which would be material to the financial condition or operations of PSFC or
Peoples Bank, except for obligations paid in connection with transactions made
by it in the ordinary course of its business consistent with past practices,
laws and regulations applicable to PSFC or Peoples Bank.
3.21 Allowance for Possible Loan or REO Losses. The
allowance for possible loan losses shown on the Audited Financial Statements of
PSFC is in the opinion of management of PSFC adequate in all material respects
to provide for anticipated losses inherent in loans outstanding. Except as
disclosed in Schedule 3.21 hereto, as of the date thereof, neither PSFC nor
Peoples Bank has any loan which has been criticized, designated or classified by
management of PSFC, or by regulatory examiners representing any Regulatory
Authority or by PSFC's independent auditors as "Special Mention," "Substandard,"
"Doubtful", "Loss" or as a "Potential Problem Loan."
The allowance for possible losses in real estate
owned, if any, shown on the Audited Financial Statements of PSFC in the opinion
of management is or will be adequate in all respects to provide for anticipated
losses inherent in REO owned or held by PSFC or Peoples Bank and the net book
value of real estate owned on the Balance Sheet of the Audited Financial
Statements of PSFC is the fair value of the real estate owned in accordance with
Statement of Position 92-3.
3.22 Loan Portfolio. To the best knowledge of PSFC and
Peoples Bank, with respect to each mortgage loan owned by PSFC or Peoples Bank
in whole or in part (each, a "Mortgage Loan"):
(a) Enforceability. The mortgage note and the
related mortgage are each legal, valid and binding obligations of the maker or
obligor thereof, enforceable against such maker or obligor in accordance with
their terms.
(b) No Modification. Neither PSFC nor Peoples
Bank nor any prior holder of a Mortgage Loan has modified the related documents
in any material respect or satisfied, canceled or subordinated such mortgage or
mortgage note except as otherwise disclosed by documents in the applicable
mortgage file.
(c) Owner. PSFC or Peoples Bank is the sole
holder of legal and beneficial title to each Mortgage Loan (or Peoples Bank's
applicable participation interest), as applicable and there has not been any
assignment or pledge of any Mortgage Loan (other than as security for Federal
Home Loan Bank advances).
- 18 -
(d) Collateral Documents. The mortgage note,
mortgage and any other collateral documents, copies of which are included in the
Mortgage Loan files, are true and correct copies of the documents they purport
to be and have not been superseded, amended, modified, canceled or otherwise
changed except as otherwise disclosed by documents in the applicable mortgage
file.
(e) Litigation. There is no litigation or
proceeding pending or threatened, relating to the mortgaged property which would
have a material adverse effect upon the related Mortgage Loan.
(f) Participation. With respect to each Mortgage
Loan held in the form of a participation, the participation documentation is
legal, valid, binding and enforceable and the interest in such Mortgage Loan of
PSFC or Peoples Bank created by such participation would not be a part of the
insolvency estate of the Mortgage Loan originator or other third party upon the
insolvency thereof.
3.23 Compliance with Laws.
--------------------
(a) PSFC and Peoples Bank are in compliance with
all laws, rules, regulations, reporting and licensing requirements, and orders
applicable to its business or employees conducting its business (including, but
not limited to, those relating to consumer disclosure and currency transaction
reporting) the breach or violation of which would or could reasonably be
expected to have a material adverse effect on the financial condition or
operations of PSFC and Peoples Bank taken as a whole, or which would or could
reasonably be expected to subject PSFC or Peoples Bank or any of its directors
or officers to civil money penalties; and
(b) Neither PSFC nor Peoples Bank has received
notification or communication from any agency or department of federal, state,
or local government or any of the Regulatory Authorities, or the staff thereof
(i) asserting that PSFC or Peoples Bank is not in compliance with any of the
statutes, rules, regulations, or ordinances which such governmental authority or
Regulatory Authority enforces, and which, as a result of such noncompliance,
would or could reasonably be expected to have a material adverse effect on PSFC
and Peoples Bank taken as a whole, (ii) threatening to revoke any license,
franchise, permit, or governmental authorization which is material to the
financial condition or operations of PSFC and the Peoples Bank, taken as a
whole, or (iii) requiring PSFC or Peoples Bank to enter into a cease and desist
order, consent, agreement or memorandum of understanding.
3.24 Employee Benefit Plans. Schedule 3.24 to the PSFC
Disclosure Schedule lists (i) each pension, profit sharing, stock bonus, thrift,
savings, employee stock ownership or other plan, program or arrangement, which
constitutes an "employee pension benefit plan" within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is maintained by PSFC and/or Peoples Bank or to which PSFC
and/or Peoples Bank contribute for the benefit of any current or former
employee, officer, director, consultant or agent; (ii) each plan, program or
arrangement for the provision of medical, surgical, or hospital care or
benefits, benefits in the event of sickness, accident, disability, death,
unemployment, severance, vacation, apprenticeship, day care, scholarship,
prepaid legal services or other benefits which constitute an "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA, which is maintained
by PSFC and/or Peoples Bank or to which PSFC and/or Peoples Bank contribute for
the benefit of any current or former employee, officer, director, consultant or
agent; and (iii) every other retirement or deferred compensation plan, bonus or
incentive compensation plan or arrangement, stock option plan, stock purchase
plan, severance or
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vacation pay arrangement, or other fringe benefit plan, program or arrangement
through which PSFC and/or Peoples Bank provide benefits for or on behalf of any
current or former employee, officer, director, consultant or agent.
(b) All of the plans, programs and arrangements
described in Schedule 3.24 (hereinafter referred to as the "PSFC Benefit Plans")
that are subject to ERISA are in material compliance with all applicable
requirements of ERISA and all other applicable federal and state laws, including
the reporting and disclosure requirements of Part I of Title I of ERISA. Each of
the PSFC Benefit Plans that is intended to be a pension, profit sharing, stock
bonus, thrift, savings or employee stock ownership plan that is qualified under
Section 401(a) of the Code satisfies the applicable requirements of such
provision and there exist no circumstances that would adversely affect the
qualified status of any such Plan under that section, except with respect to any
required retroactive amendment for which the remedial amendment period has not
yet expired. Except as set forth in Schedule 3.24, there is no pending or, to
the best knowledge of PSFC, threatened litigation, governmental proceeding or
investigation against or relating to any PSFC Benefit Plan and there is no
reasonable basis for any material proceedings, claims, actions or proceedings
against any such PSFC Benefit Plan. To the best of PSFC's knowledge, no PSFC
Benefit Plan (or PSFC Benefit Plan fiduciary, in his capacity as such) has
engaged in a non-exempt "Prohibited Transaction" (as defined in Section 406 of
ERISA and Section 4975(c) of the Code) since the date on which said sections
became applicable to such Plan. There have been no acts or omissions by PSFC
that have given rise to any fines, penalties, taxes or related charges under
Sections 502(c), 502(i) or 4071 of ERISA or Chapter 43 of the Code, or that may
give rise to any material fines, penalties, taxes or related damages under such
laws for which PSFC may be liable. All group health plans of PSFC, including any
plans of current and former Affiliates of PSFC that must be taken into account
under Section 4980B of the Code or Section 601 of ERISA or the requirements of
any similar state law regarding insurance continuation, have been operated in
material compliance with the group health plan continuation coverage
requirements of Section 4980B of the Code and Section 601 of ERISA to the extent
such requirements are applicable. All payments due from any PSFC Benefit Plan
(or from PSFC with respect to any PSFC Benefit Plan) have been made, and all
amounts properly accrued to date as liabilities of PSFC that have not yet been
paid have been properly recorded on the books of PSFC.
(c) The Peoples Savings Bank Employee Stock
Ownership Plan ("ESOP") shall be terminated, in accordance with its terms, as of
the closing of the Merger contemplated by the Reorganization Agreement; and
Peoples Bank shall continue to repay the ESOP note on a pro rated basis for the
period from January 1, 1998 through the Closing in accordance with past
contribution rates by Peoples Bank, and further that the Closing shall be
treated as the end of the plan year for purposes of permitting an allocation of
benefits based on such repayments.
3.25 Material Contracts. Except as described in Schedule
3.25 hereto, neither PSFC nor Peoples Bank, nor any of their respective assets,
businesses, or operations, is as of the date of this Reorganization Agreement a
party to, or bound or affected by, or receives benefits under, any contract or
agreement or amendment thereto that require annual payments of over $10,000 per
year, other than loans or commitments to lend in the ordinary course of business
pursuant to which Peoples Bank is a lender.
3.26 Material Contract Defaults. Neither PSFC nor Peoples
Bank is in default in any respect under any material contract, agreement,
commitment, arrangement, lease, insurance policy, or other instrument to which
it is a party or by which its respective assets, business, or operations may be
bound or affected or under which it or its respective assets, business, or
operations receives benefits, and
- 20 -
which default would reasonably be expected to have either individually or in the
aggregate a material adverse effect on PSFC and Peoples Bank taken as a whole,
and there has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a default.
3.27 Reports. Since January 14, 1994, PSFC and Peoples
Bank have filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with (i)
the PADB; (ii) the FDIC, (iii) the SEC, including, but not limited to, Annual
Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current Reports on
Form 8-K and proxy statements; and (iv) any other applicable federal or state
securities or banking authorities (except, in the case of federal or state
securities authorities, filings that are not material). As of their respective
dates, each of such reports and documents, including the financial statements,
exhibits, and schedules thereto, complied in all material respects with all of
the requirements of their respective forms and all of the statutes, rules, and
regulations enforced or promulgated by the Regulatory Authority with which they
were filed. All such reports were true and complete in all material respects and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.28 1934 Act and OTC Bulletin Board
-------------------------------
(a) The PSFC Common Stock is registered with the
SEC pursuant to the 1934 Act and PSFC has filed with the SEC all material forms
and reports required by law to be filed by PSFC with the SEC, which forms and
reports, taken as a whole, are true and correct in all material respects, and do
not misstate a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
(b) The outstanding shares of PSFC Common Stock
are quoted for trading on the OTC Bulletin Board (under the symbol "PSVF")
pursuant to the listing rules of the OTC Bulletin Board and PSFC has filed with
the OTC Bulletin Board all material forms and reports required by law to be
filed by PSFC, which forms and reports, taken as a whole, are true and correct
in all material respects, and do not misstate a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
3.29 Statements True and Correct. None of the information
prepared by, or on behalf of, PSFC or any PSFC Subsidiary regarding PSFC,
Peoples Bank or any other PSFC Subsidiary included or to be included in the
Prospectus/Proxy Statement to be mailed to PSFC's Shareholders in connection
with the PSFC Shareholders' Meeting, and any other documents to be filed with
the SEC, or any other Regulatory Authority in connection with the transactions
contemplated herein, will, at the respective times such documents are filed,
and, with respect to the Prospectus/Proxy Statement, when first mailed to the of
PSFC Shareholders, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Prospectus/Proxy Statement or any amendment thereof or
supplement thereto, at the time of the PSFC Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the PSFC Shareholders' Meeting. All documents
which PSFC or any PSFC Subsidiary is responsible for filing with the SEC or any
other
- 21 -
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable law, including applicable provisions of the Securities Laws and the
rules and regulations promulgated thereunder.
3.30 Investment Securities. Section 1 of Schedule 3.30
sets forth the book and market value as of June 30, 1997 of the investment
securities, mortgage-backed securities and securities held for sale of PSFC and
Peoples Bank as of such date. Section 2 of Schedule 3.30 sets forth an
investment securities report which includes (to the extent known or reasonably
obtainable) security descriptions, CUSIP or Agency Pool numbers, current pool
face values, book values, coupon rates, market values and book yields in each
case as of June 30, 1997.
3.31 Certain Regulatory Matters.
--------------------------
(a) Peoples Bank is a qualified thrift lender
under Section 10(m) of the Home Owners' Loan Act of 1933, as amended and
recodified, and is a member of the Federal Home Loan Bank of Pittsburgh.
(b) Peoples Bank has not paid any dividends to
PSFC or any affiliate thereof that (i) caused the regulatory capital of Peoples
Bank to be less than the amount then required by applicable law or (ii) exceeded
any other limitation on the payment of dividends imposed by law, agreement or
regulatory policy. Other than as reflected on Schedule 3.31 and as required by
applicable law, there are no restrictions on the payment of dividends by PSFC or
Peoples Bank.
(c) PSFC and Peoples Bank have adopted policies
and procedures designed to promote overall compliance with the Bank Secrecy Act
(31 U.S.C. Section 5301), the Truth-in-Lending Act (15 U.S.C. Section 1601 et
seq.), the Expedited Funds Availability Act (12 U.S.C. Section 4001) and the
regulations adopted under each such act and have materially complied with the
reporting requirements under the Bank Secrecy Act and the regulations
thereunder.
3.32 Corporate Approval.
------------------
(a) The affirmative vote of a majority of the
votes cast by shareholders of PSFC entitled to vote at a meeting is required to
adopt this Reorganization Agreement and approve the Merger and the other
transactions contemplated hereby. No other vote of the stockholders of PSFC is
required by law, the Articles of Incorporation or Bylaws of PSFC or otherwise to
adopt this Reorganization Agreement and approve the Merger and the other
transactions contemplated hereby.
(b) At a duly constituted meeting of the Board
of Directors of PSFC directors constituting at least a majority of the Directors
granted their prior approval to the Merger and, accordingly, the provisions of
Articles 12 and 13 of PSFC's Articles of Incorporation do not and will not apply
to this Reorganization Agreement or the consummation of any of the transactions
contemplated hereby or thereby.
(c) The provisions of Subchapters E, F, G and H
of the PBCA will not apply to this Reorganization Agreement, the Merger or the
transactions contemplated hereby and thereby.
- 22 -
3.33 Broker's and Finder's Fees. Except for payments to
Capital Resources Group, Inc. ("Capital Resources Group"), which has been
engaged by PSFC as its financial advisor (pursuant to an agreement, a copy of
which has been separately provided to Emclaire), neither PSFC nor any of its
subsidiaries has any liability to any broker, finder, or similar agent, nor have
any of them agreed to pay any broker's fee, finder's fee or commission, with
respect hereto or to the transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EMCLAIRE AND FARMERS NATIONAL
Except as otherwise disclosed in one or more schedules
(collectively the "Emclaire Schedule") dated as of the date hereof and delivered
concurrently with this Reorganization Agreement, both as of the date hereof and
as of the Effective Time of the Merger, each of Emclaire and Farmers National
represents and warrants to PSFC and Peoples Bank as follows:
4.1 Organization and Corporate Authority. Emclaire is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania and Farmers National is duly organized,
validly existing and in good standing under the laws of the United States.
Emclaire and Farmers National (i) have all requisite corporate power and
authority to own, operate and lease their material properties and carry on their
businesses as is currently being conducted; (ii) are in good standing and are
duly qualified to do business in each jurisdiction where the character of their
properties owned or held under lease or the nature of their business is such
that failure to be so qualified would have a material adverse effect on Emclaire
and Farmers National taken as a whole; and (iii) have in effect all federal,
state, local and foreign governmental authorizations, permits and licenses
necessary for them to own or lease their properties and assets and to carry on
their businesses as they are currently being conducted. The Articles of
Incorporation and Bylaws of Emclaire and the Articles of Association and Bylaws
of Farmers National, each as amended to date, are in full force and effect.
4.2 Authorization, Execution and Delivery; Reorganization
-----------------------------------------------------
Agreement Not in Breach.
-----------------------
(a) Emclaire and Farmers National have all
requisite corporate power and authority to execute and deliver this
Reorganization Agreement and the Plan of Merger and to consummate the
transactions contemplated hereby. The execution and delivery of this
Reorganization Agreement and the Plan of Merger and the consummation of the
proposed transactions have been duly authorized by at least a majority of the
entire Boards of Directors of both Emclaire and Farmers National and no other
corporate proceedings on the part of Emclaire or Farmers National are necessary
to authorize the execution and delivery of this Reorganization Agreement and the
Plan of Merger and the consummation of the transactions contemplated hereby and
thereby. This Reorganization Agreement and all other agreements and instruments
herein contemplated to be executed by Emclaire and Farmers National have been
(or upon execution will have been) duly executed and delivered by Emclaire and
Farmers National and constitute (or upon execution will constitute) legal, valid
and enforceable obligations of Emclaire and Farmers National, subject, as to
enforceability, to applicable bankruptcy, insolvency, receivership,
conservatorship, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and to the application of equitable
principles and judicial discretion.
(b) The execution and delivery of this
Reorganization Agreement and the Plan of Merger, the consummation of the
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof will not result in a material violation or breach of any of
the terms or
- 23 -
provisions of, or constitute a material default under (or an event which, with
the passage of time or the giving of notice or both, would constitute such a
material default under), or conflict with, or permit the acceleration of any
material obligation under, any material mortgage, lease, covenant, agreement,
indenture or other instrument to which Emclaire or Farmers National is a party
or by which it or its property or any of its assets are bound, the Articles of
Incorporation and Bylaws of Emclaire or the articles of association or bylaws of
Farmers National, or any material judgment, decree, order, regulatory letter of
understanding or award of any court, governmental body or arbitrator by which
Emclaire or Farmers National is bound; or any material permit, concession,
grant, franchise, license, law, statute, ordinance, rule or regulation
applicable to Emclaire or Farmers National or their properties, or result in the
creation of any material lien, claim, security interest, encumbrance, charge,
restriction or right of any third party of any kind whatsoever upon the property
or assets of Emclaire or Farmers National, except that the Government Approvals,
as defined below, shall be required in order for Emclaire or Farmers National to
consummate the Merger.
4.3 No Legal Bar. Neither Emclaire nor Farmers National
is a party to, subject to or bound by any material agreement, judgment, order,
regulatory letter of understanding, writ, prohibition, injunction or decree of
any court or other governmental authority or body of competent jurisdiction or
any law which would prevent the execution of this Reorganization Agreement or
the Plan of Merger by Emclaire and Farmers National, the delivery thereof to
PSFC and Peoples Bank or the consummation of the transactions contemplated
hereby and thereby and no action or proceeding is pending against Emclaire or
Farmers National in which the validity of this Reorganization Agreement, any of
the transactions contemplated hereby or any action which has been taken by any
of the Parties in connection herewith or in connection with any of the
transactions contemplated hereby, is at issue.
4.4 Government Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by
Emclaire in connection with the execution and delivery of this Reorganization
Agreement or the consummation of the transactions contemplated hereby by
Emclaire except for the prior approval of the Office of the Comptroller of the
Currency ("OCC") under the National Bank Act, as amended and recodified ("NBA"),
the Federal Deposit Insurance Corporation ("FDIC"), the PADB, and any other
government approvals that may be necessary (the "Government Approvals"). Neither
Emclaire nor Farmers National is aware of any facts, circumstances or reasons
why such Government Approvals should not be forthcoming or which would prevent
or hinder such approvals from being obtained.
4.5 Capitalization. The authorized capital stock of
Emclaire consists of 12,000,000 shares of common stock having a par value of
$1.25 per share (the "Emclaire Common Stock") and 3,000,000 shares of serial
preferred stock ("Emclaire Preferred Stock"). As of December 31, 1997, 1,081,453
shares of Emclaire Common Stock were validly issued and outstanding and no
shares of Emclaire Preferred Stock were outstanding. As of the date hereof,
Emclaire is the holder, directly or indirectly, of all of the outstanding
capital stock of its subsidiaries including Farmers National (collectively, the
"Emclaire Subsidiaries"), as reflected on Schedule 4.5.
4.6 Emclaire Financial Statements. Emclaire has delivered
or will deliver to PSFC copies of the consolidated statements of financial
condition of Emclaire as of December 31, for the fiscal years 1996 and 1997, and
the related consolidated statements of operations, changes in stockholders'
equity and cash flows for the fiscal years 1995 through 1997, inclusive, as
incorporated by reference in Emclaire's Annual Report to Stockholders in each
case accompanied by the audit report of S.R. ▇▇▇▇▇▇▇▇▇, ▇.▇., independent public
accountants with respect to Emclaire. The consolidated statements
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of financial condition of Emclaire referred to herein (including the related
notes, where applicable) fairly present the consolidated financial condition of
Emclaire as of the respective dates set forth therein, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows (including the related notes, where applicable) fairly present the results
of the consolidated operations, changes in stockholders' equity and cash flows
of Emclaire for the respective periods or as of the respective dates set forth
therein, in each case in conformity with generally accepted accounting
principles ("GAAP") consistently applied, it being understood that Emclaire's
interim financial statements are not audited, not prepared with related notes
and are subject to normal year-end adjustments.
4.7 1934 Act and OTC Bulletin Board Filings.
---------------------------------------
(a) The Emclaire Common Stock is registered with
the SEC pursuant to the Securities Exchange Act of 1934, as amended, (the "1934
Act") and Emclaire has filed with the SEC all material forms and reports
required by law to be filed by Emclaire with the SEC, which forms and reports,
taken as a whole, are true and correct in all material respects, and do not
misstate a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(b) The Emclaire Common Stock is quoted for
trading on the OTC Bulletin Board (under the symbol "EMCF") pursuant to the
listing rules of the OTC Bulletin Board and Emclaire has filed with the OTC
Bulletin Board all material forms and reports required by law to be filed by
Emclaire with the OTC Bulletin Board, which forms and reports, taken as a whole,
are true and correct in all material respects, and do not misstate a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading.
4.8 The Emclaire Common Stock. All shares of Emclaire
Common Stock to be issued by Emclaire and delivered to the holders of record of
all issued and outstanding shares of PSFC Common Stock immediately prior to the
Effective Time of the Merger (the "PSFC Record Holders") in exchange for all of
the PSFC Common Stock will be duly authorized, validly issued, fully paid and
non-assessable. Such shares of Emclaire Common Stock are not subject to any
preemptive rights of any Emclaire shareholders.
4.9 Licenses, Franchises and Permits. Emclaire and all
Emclaire Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses.
All of such licenses, franchises, permits and authorizations are in full force
and effect. Neither Emclaire nor any Emclaire Subsidiary has received notice of
any proceeding for the suspension or revocation of any such license, franchise,
permit, or authorization and no such proceeding is pending or to the best
knowledge of Emclaire and the Emclaire Subsidiaries has been threatened by any
governmental authority.
4.10 Absence of Certain Changes. Except as disclosed in
Schedule 4.10 or as provided for or contemplated in this Reorganization
Agreement, since December 31, 1997 (the "Balance Sheet Date") there has not been
any material adverse change in the business, property, assets (including loan
portfolios), liabilities (whether absolute, accrued, contingent or otherwise),
operations, liquidity, income, financial condition or net worth of Emclaire on a
consolidated basis. Emclaire will make no special distribution to its
shareholders (other than the payment of cash or stock dividends in the ordinary
course of business) that will result in a material reduction in stockholders'
equity.
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4.11 Tax Matters. Except as described in Schedule 4.11
hereto:
(a) All federal, state and local tax returns
required to be filed by or on behalf of Emclaire and each Emclaire Subsidiary
have been timely filed or requests for extensions have been timely filed,
granted, and have not expired for periods ended on or before the date of this
Reorganization Agreement, and all returns filed are, and the information
contained therein is, complete and accurate. All tax obligations reflected in
such returns have been paid. As of the date of this Reorganization Agreement,
there is no audit examination, deficiency, or refund litigation or matter in
controversy with respect to any taxes that might reasonably be expected to
result in a determination materially adverse to Emclaire and Emclaire
Subsidiaries, taken as a whole, except as fully reserved for in the Emclaire
Financial Statements. All taxes, interest, additions, and penalties due with
respect to completed and settled examinations or concluded litigation have been
paid;
(b) Neither Emclaire nor any Emclaire Subsidiary
has executed an extension or waiver of any statute of limitations on the
assessment or collection of any tax due that is currently in effect;
(c) Adequate provision for any federal, state or
local taxes due or to become due for Emclaire and all Emclaire Subsidiaries for
all periods through and including December 31, 1997, has been made and is
reflected on the December 31, 1997 financial statements included in the Emclaire
Financial Statements, and have been and will continue to be made with respect to
periods ending after December 31, 1997;
(d) Deferred taxes of Emclaire and each Emclaire
Subsidiary have been and will be provided for in accordance with GAAP; and
(e) To the best knowledge of Emclaire, neither
the Internal Revenue Service nor any state, local or other taxing authority is
now asserting or threatening to assert against Emclaire or any Emclaire
Subsidiary any deficiency or claim for additional taxes, or interest thereon or
penalties in connection therewith. All material income, payroll, withholding,
property, excise, sales, use, franchise and transfer taxes, and all other taxes,
charges, fees, levies or other assessments, imposed upon Emclaire by the United
States or by any state, municipality, subdivision or instrumentality of the
United States or by any other taxing authority, including all interest,
penalties or additions attributable thereto, which are due and payable by
Emclaire or any Emclaire Subsidiary, either have been paid in full or have been
properly accrued and reflected in the Emclaire Financial Statements.
4.12 Litigation. Except as set forth in Schedule 4.12
hereto, there is no action, suit or proceeding pending against Emclaire or any
Emclaire Subsidiary, or to the best knowledge of Emclaire, threatened against or
affecting Emclaire, any Emclaire Subsidiary or any of their assets, before any
court or arbitrator or any governmental body, agency or official that would, if
decided against Emclaire or the Emclaire Subsidiary, have a material adverse
impact on the business, properties, assets, liabilities or condition (financial
or other) of Emclaire and that are not reflected in the Emclaire Financial
Statements.
4.13 Absence of Undisclosed Liabilities. Except as
described in Schedule 4.13 hereto, to their knowledge neither Emclaire nor any
Emclaire Subsidiary has any obligation or liability that is material to the
financial condition or
- 26 -
operations of Emclaire or any Emclaire Subsidiary, or that, when combined with
all similar obligations or liabilities, would be material to the financial
condition or operations of Emclaire or any Emclaire Subsidiary (i) except as
disclosed in the Emclaire Financial Statements delivered to PSFC prior to the
date of this Reorganization Agreement, (ii) except obligations or liabilities
incurred in the ordinary course of its business consistent with past practices
or (iii) except as contemplated under this Reorganization Agreement. Except as
disclosed in Schedule 4.13 hereto, since December 31, 1997, neither Emclaire nor
any Emclaire Subsidiary has incurred or paid any obligation or liability which
would be material to the financial condition or operations of Emclaire or such
Emclaire Subsidiary, except for obligations paid in connection with transactions
made by it in the ordinary course of its business consistent with past practices
and the laws and regulations applicable to Emclaire or any Emclaire Subsidiary.
4.14 Books and Records. The minute books of Emclaire and
Farmers National contain, in all material respects, accurate records of and
fairly reflect all actions taken at all meetings and accurately reflect all
other corporate action of the shareholders and the boards of directors and each
committee thereof. The books and records of Emclaire and Farmers National fairly
and accurately reflect the transactions to which Emclaire and Farmers National
is or has been a party or by which their properties are subject or bound, and
such books and records have been properly kept and maintained.
4.15 Compliance with Laws.
--------------------
(a) Emclaire and each Emclaire Subsidiary is in
compliance with all laws, rules, regulations, reporting and licensing
requirements, and orders applicable to its business or employees conducting its
business (including, but not limited to, those relating to consumer disclosure
and currency transaction reporting) the breach or violation of which would
reasonably be expected to have a material adverse effect on the financial
condition or operations of Emclaire and the Emclaire Subsidiaries, taken as
whole, or which would reasonably be expected to subject Emclaire or any Emclaire
Subsidiary or any of its directors or officers to civil money penalties; and
(b) Neither Emclaire nor Farmers National is a
party to any cease and desist order, written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or is subject to any order to directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any board resolutions at
the request of, federal or state governmental authorities (the "Regulatory
Authorities") charged with the supervision or regulation of the operations of
any of them not has it been advised by any such government authority that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, written agreement, memorandum
or understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking.
4.16 Material Contract Defaults. Neither Emclaire nor any
Emclaire Subsidiary is in default in any respect under any material contract,
agreement, commitment, arrangement, lease, insurance policy, or other instrument
to which it is a party or by which its respective assets, business, or
operations may be bound or affected or under which it or its respective assets,
business, or operations receives benefits, and which default would reasonably be
expected to have either individually or in the aggregate a material adverse
effect on Emclaire and the Emclaire Subsidiaries, taken as a whole, and there
has not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
4.17 Disclosure. The information concerning, and the
representations or warranties made by, Emclaire and Farmers National, as set
forth in this Reorganization Agreement, or in any
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document, statement, certificate or other writing furnished or to be furnished
by Emclaire or Farmers National to PSFC and Peoples Bank pursuant hereto, do not
and will not contain any untrue statement of a material fact or omit and will
not omit to state a material fact required to be stated herein or therein which
is necessary to make the statements and facts contained herein or therein, in
light of the circumstances under which they were or are made, not false or
misleading. Without limiting the foregoing, at the time the prospectus included
in the registration statement of Emclaire to be filed with the SEC as provided
herein is mailed to the holders of PSFC Common Stock and Emclaire Stockholders
and at all times subsequent to such mailing, up to and including the Effective
Time of the Merger, such registration statement (including any amendments and
supplements thereto), with respect to all information relating to Emclaire,
Farmers National and this Reorganization Agreement as it relates to Emclaire (i)
will comply in all material respects with the applicable provisions of the
Securities Act of 1933, as amended (the "Securities Act") and the 1934 Act
(collectively, the "Securities Laws") and (ii) will not contain any statement
which, at the time and in the light of the circumstances under which it is made,
is false or misleading with respect to any material fact or omit to state any
material fact necessary in order to make the statements made therein not false
or misleading or required to be stated therein or necessary to correct any
statement made in an earlier communication with respect to such matters which
have become false or misleading. Copies of all documents heretofore or hereafter
delivered or made available to PSFC and Peoples Bank by Emclaire and Farmers
National pursuant hereto were or will be complete and accurate copies of such
documents.
4.18 Certain Regulatory Matters.
--------------------------
(a) Farmers National is member of the Federal
Home Loan Bank of Pittsburgh and a member of the Federal Reserve System.
(b) Farmers National has not paid any dividends
to Emclaire or any affiliate thereof that (i) caused the regulatory capital of
Farmers National to be less than the amount then required by applicable law or
(ii) exceeded any other limitation on the payment of dividends imposed by law,
agreement or regulatory policy. Other than as required by applicable law, there
are no restrictions on the payment of dividends by Emclaire or Farmers National.
4.19 Delays. Neither Emclaire nor Farmers National is
aware of any matter that could cause a delay in receiving the approval required
by this Agreement.
4.20 Corporate Approval. At a duly constituted meeting of
the Board of Directors of Emclaire directors constituting at least a majority of
the Directors granted their prior approval to the Merger and, accordingly, the
provisions of Article XV of Emclaire's Articles of Incorporation do not and will
not apply to this Reorganization Agreement or the consummation of any of the
transactions contemplated hereby or thereby.
4.21 Charter Documents. Included in Schedule 4.21 hereto
are true and correct copies of the Articles of Incorporation and Bylaws of
Emclaire and Farmers National.
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ARTICLE 5
COVENANTS OF PSFC AND PEOPLES BANK
5.1 Preparation of Registration Statement and
Applications for Required Consents. PSFC will cooperate with Emclaire in the
preparation of a Registration Statement to be filed with the SEC under the
Securities Act for the registration of the offering of Emclaire Stock to be
issued in connection with the Merger and the Prospectus/Proxy Statement
constituting part of the Registration Statement that will be used by PSFC to
solicit shareholders of PSFC for approval of the Merger. In connection
therewith, PSFC will furnish all financial or other information, including using
best efforts to obtain customary consents, certificates, opinions of counsel and
other items concerning PSFC reasonably deemed necessary by counsel to Emclaire
for the filing or preparation for filing under the Securities Act and the
Exchange Act of the Registration Statement (including the proxy statement
portion thereof). PSFC will cooperate with Emclaire and provide such information
as may be advisable in obtaining an order of effectiveness for the Registration
Statement, appropriate permits or approvals under state securities and "blue
sky" law, the required approval under the PADB, the required approval under NBA
of the OCC, the listing of the Shares on the OTC Bulletin Board (subject to
official notice of issuance, if necessary) and any other governmental or
regulatory consents or approvals or the taking of any other governmental or
regulatory action necessary to consummate the Merger without a material adverse
effect on the business, results of operations, assets or financial condition of
the Surviving Corporation and its subsidiaries, taken as a whole (the "Required
Consents"). PSFC covenants and agrees that all information furnished by PSFC for
inclusion in the Registration Statement, the Prospectus/Proxy Statement, all
applications to appropriate regulatory agencies for approval of the Merger, and
all information furnished by PSFC to Emclaire pursuant to this Agreement or in
connection with obtaining Required Consents, will comply in all material
respects with the provisions of applicable law, including the Securities Act and
the rules and regulations of the SEC thereunder, and will not contain any untrue
statement of a material fact and will not omit to state any material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. PSFC will furnish to Capital Resources Group and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ such
information as Capital Resources Group and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ may reasonably request
for purposes of the opinions referred to in Sections 7.1 and 7.2, respectively.
5.2 Conduct of Business -- Affirmative Covenants. Unless
the prior written consent of Emclaire shall have been obtained, which consent
shall not be unreasonably withheld:
(a) PSFC and Peoples Bank shall:
(i) Operate its business only in the usual,
regular, and ordinary course;
(ii) Preserve intact its business
organizations and assets and to maintain its rights and franchises;
(iii)Take no action, unless otherwise
required by law, rules or regulation, that would reasonably be considered to (A)
adversely affect the ability of any of them or Emclaire to obtain any necessary
approvals of Regulatory Authorities required to consummate the transactions
contemplated by this Reorganization Agreement, or (B) adversely affect the
ability of such Party to perform its covenants and agreements under this
Reorganization Agreement;
- 29 -
(iv) Except as they may terminate in
accordance with their terms or as may be terminated by PSFC or Peoples Bank as a
result of a material default by a party other than PSFC or Peoples Bank, keep in
full force and effect, and not default in any of their obligations under, all
material contracts;
(v) Keep in full force and effect insurance
coverage with responsible insurance carriers which is reasonably adequate in
coverage and amount for companies the size of PSFC or such PSFC Subsidiary and
for the businesses and properties owned by each and in which each is engaged, to
the extent that such insurance is reasonably available;
(vi) Use its best efforts to retain Peoples
Bank's present customer base and to facilitate the retention of such customers
by Peoples Bank and its branches after the Effective Time of the Merger; and
(vii)Maintain, renew, keep in full force and
effect, and preserve its business organization and material rights and
franchises, permits and licenses, and to use its best efforts to maintain
positive relations with its present employees so that such employees will
continue to perform effectively and will be available to PSFC, Peoples Bank or
Emclaire and Emclaire's Subsidiaries at and after the Effective Time of the
Merger, and to use its best efforts to maintain its existing, or substantially
equivalent, credit arrangements with banks and other financial institutions and
to assure the continuance of Peoples Bank's customer relationships.
(b) PSFC and Peoples Bank agree to use their
best efforts to assist Emclaire in obtaining the Government Approvals necessary
to complete the transactions contemplated hereby and do not know of any reason
that such Government Approvals can not be obtained, and PSFC and Peoples Bank
shall provide to Emclaire or to the appropriate governmental authorities all
information reasonably required to be submitted in connection with obtaining
such approvals.
(c) PSFC and Peoples Bank, at their own cost and
expense, shall use their best efforts to secure all necessary consents and all
consents and releases, if any, required of PSFC, Peoples Bank or third parties
and shall comply with all applicable laws, regulations and rulings in connection
with this Reorganization Agreement and the consummation of the transactions
contemplated hereby.
(d) At all times to and including, and as of,
the Closing, PSFC and Peoples Bank shall inform Emclaire of any and all facts
necessary to amend or supplement the representations and warranties made herein
and the PSFC Schedules attached hereto as necessary so that the information
contained herein and therein will accurately reflect the current status of PSFC
and Peoples Bank; provided, however, that any such updates to the PSFC Schedules
shall be required prior to the Closing only with respect to matters which
represent material changes to the PSFC Schedules and the information contained
therein.
(e) Subject to the terms and conditions of this
Reorganization Agreement, PSFC and Peoples Bank agree to use all reasonable
efforts and to take, or to cause to be taken, all actions, and to do, or to
cause to be done, all things necessary, proper, or advisable under applicable
laws and regulations to consummate and make effective, with reasonable
promptness after the date of this Reorganization Agreement, the transactions
contemplated by this Reorganization Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining or
other order
- 30 -
adversely affecting the ability of the Parties to consummate the transaction
contemplated by this Reorganization Agreement. PSFC shall use, and shall cause
each of its Subsidiaries to use, its best efforts to obtain consents of all
third parties and Regulatory Authorities necessary or desirable for the
consummation of each of the transactions contemplated by this Reorganization
Agreement.
(f) PSFC shall notify Emclaire promptly after
becoming aware of the occurrence of, or the impending or threatened occurrence
of, any event that would constitute a material breach on its part of any
obligation under this Agreement or the occurrence of any event that would cause
any representation or warranty made by it herein to be false or misleading in
any material respect, or if it becomes a party or is threatened with becoming a
party to any legal or equitable proceeding or governmental investigation or upon
the occurrence of any event that would result in a material change in the
circumstances described in the representations and warranties contained herein.
(g) On the business day immediately prior to the
Effective Time of the Merger or on such other day after the satisfaction of all
conditions precedent to the Merger as Emclaire may require PSFC shall, at the
request of Emclaire, take all legally permissible action necessary to convert to
the accounting policies and practices of Emclaire, such actions to include,
without limitation, at Emclaire's option, adjustments to loan loss reserves,
reserves for federal income taxes, accounting for post-retirement medical
benefits, and accruals for severance and related costs and accrued vacation and
disability leave. PSFC's and Peoples Bank's representations, warranties and
covenants contained in this Reorganization Agreement shall not be deemed to be
untrue or breached in any respect for any purpose as a consequence of any
modifications or changes undertaken solely on account of this Section 5.2(g).
5.3 Conduct of Business -- Negative Covenants. From the
date of this Reorganization Agreement until the earlier of the Effective Time of
the Merger or the termination of this Reorganization Agreement, except as set
forth in Schedule 5.3, PSFC and Peoples Bank covenant and agree that they will
neither do, nor agree or commit to do, nor permit any PSFC Subsidiary to do or
commit or agree to do, any of the following without requesting Emclaire's
approval and receiving the prior written consent of the president of Emclaire,
which consent will not be unreasonably withheld and shall be deemed given unless
Emclaire disapproves the same within five (5) business days of having received
PSFC's written request for such approval:
(a) Except as expressly contemplated by this
Reorganization Agreement or the Plan of Merger, amend its Articles of
Incorporation or Bylaws; or
(b) Impose on any share of capital stock held by
it or by any of its Subsidiaries of any lien, charge, or encumbrance, or permit
any such lien, charge, or encumbrance to exist; or
(c) (i) Repurchase, redeem, or otherwise acquire
or exchange, directly or indirectly, any shares of its capital stock or other
equity securities or any securities or instruments convertible into any shares
of its capital stock, or any rights or options to acquire any shares of its
capital stock or other equity securities except as expressly permitted by this
Reorganization Agreement or the Plan of Merger; or (ii) split or otherwise
subdivide its capital stock; or (iii) recapitalize in any way; or (iv) declare a
stock dividend on the PSFC Common Stock; or (v) pay or declare a cash dividend
or make or declare any other type of distribution on the PSFC Common Stock
except for any cash dividend already declared prior to this Reorganization
Agreement or regular quarterly cash dividends payable in the same amount and
during the same time periods as past quarterly dividends; or
- 31 -
(d) Except as expressly permitted by this
Reorganization Agreement, acquire direct or indirect control over any
corporation, association, firm, organization or other entity, other than in
connection with (i) mergers, acquisitions, or other transactions approved in
writing by Emclaire, (ii) internal reorganizations or consolidations involving
existing Subsidiaries, (iii) acquisitions of control in its fiduciary capacity,
or (iv) the creation of new subsidiaries organized to conduct or continue
activities otherwise permitted by this Reorganization Agreement;
(e) Except as expressly permitted by this
Reorganization Agreement or the Plan of Merger, to (i) issue, sell, agree to
sell, or otherwise dispose of or otherwise permit to become outstanding any
additional shares of PSFC Common Stock (not including shares issuable upon the
exercise of validly issued and PSFC Stock Options outstanding as of the date of
this Reorganization Agreement), or any other capital stock of PSFC or of any
PSFC Subsidiary, or any stock appreciation rights, or any option, warrant,
conversion, call, scrip, or other right to acquire any such stock, or any
security convertible into any such stock, unless any such shares of such stock
are directly sold or otherwise directly transferred to PSFC or any PSFC
Subsidiary, (ii) sell, agree to sell, or otherwise dispose of any substantial
part of the assets or earning power of PSFC or of any PSFC Subsidiary; (iii)
sell, agree to sell, or otherwise dispose of any asset of PSFC or any PSFC
Subsidiary other than in the ordinary course of business for reasonable and
adequate consideration or (iv) buy, agree to buy or otherwise acquire a
substantial part of the assets or earning power of any other Person or entity
except in the ordinary course of business to realize upon a debt owed to it.
(f) Incur, or permit any PSFC Subsidiary to
incur, any additional debt obligation or other obligation for borrowed money
other than (i) in replacement of existing short-term debt with other short-term
debt of an equal or lesser amount, (ii) financing of banking related activities,
or (iii) indebtedness of PSFC or any PSFC Subsidiary to Peoples Bank or another
PSFC Subsidiary in excess of an aggregate of $10,000 (for PSFC and its
Subsidiaries on a consolidated basis) except in the ordinary course of the
business of PSFC or such PSFC Subsidiary (and such ordinary course of business
shall include, but shall not be limited to, creation of deposit liabilities,
entry into repurchase agreements or reverse repurchase agreements, purchases or
sales of federal funds, Federal Home Loan Bank advances, and sales of
certificates of deposit);
(g) Grant any increase in compensation or
benefits to any of its employees or officers in excess of the lesser of five
percent (5%) per annum or $2,500 for any of them individually, except in
accordance with past practices or as required by law; pay any bonus except in
accordance with past practices or any plan or arrangement; enter into any
severance agreements with any of its officers or employees; grant any material
increase in fees or other increases in new compensation or other benefits to any
director of PSFC or of any PSFC Subsidiary; or effect any change in retirement
benefits for any class of its employees or officers, unless such change is
required by applicable law;
(h) Amend any existing employment contract
between it and any person to increase the compensation or benefits payable
thereunder; or enter into any new employment contract with any person that PSFC
or Peoples Bank do not have the unconditional right to terminate without
liability (other than liability for services already rendered), at any time on
or after the Effective Time of the Merger;
(i) Adopt any new employee benefit plan or
terminate or make any materialchange in or to any existing employee benefit plan
other than any change that is required by law or that, in the opinion of
counsel, is necessary or advisable to maintain the tax-qualified status of any
such plan;
- 32 -
(j) Enter into any new service contracts,
purchase or sale agreements or lease agreements in excess of $5,000 that are
material to PSFC or any PSFC Subsidiary;
(k) Make any capital expenditure exceeding
$10,000;
(l) Knowingly take any action that is intended
or may reasonably be expected to result in any of its representations and
warranties set forth in this Reorganization Agreement being or becoming untrue
in any material respect, or in any of the conditions to the Merger set forth in
Article 7 not being satisfied, or in violation of any provision of this
Reorganization Agreement, except, in every case, as may be required by
applicable law;
(m) Change its methods of accounting in effect
at June 30, 1997, except as required by changes in generally accepted accounting
principles as concurred in, in writing, by PSFC's independent auditors (a copy
of which shall be provided to Emclaire) or regulatory accounting principles;
(n) Except as required by applicable law,
knowingly take or cause to be taken any action that could reasonably be expected
to jeopardize or delay the receipt of any of the required regulatory approvals
or which would reasonably be expected to result in any such required regulatory
approval containing a condition that is determined by Emclaire to be unduly
burdensome;
(o) Fail to use its best efforts to keep in full
force and effect its insurance and bonds in such amounts as are reasonable to
cover such risks customary in relation to the character and location of its
properties and the nature of its business and in any event at least equal in
scope and amount of coverage of insurance and bonds now carried;
(p) Fail to notify Emclaire promptly of its
receipt of any letter, notice or other communication, whether written or oral,
from any governmental entity advising PSFC that it is contemplating issuing,
requiring, or requesting any agreement, memorandum of understanding, or similar
undertaking, order or directive;
(q) Fail promptly to notify Emclaire of (i) the
commencement or threat of any audit, action, or proceeding involving any
material amount of taxes against either PSFC or any PSFC Subsidiary or (ii) the
receipt by PSFC or any PSFC Subsidiary of any deficiency or audit notices or
reports in respect of any material deficiencies asserted by any federal, state,
local or other tax authorities;
(r) Fail to maintain and keep its properties in
good repair and condition, except for depreciation due to ordinary wear and
tear;
(s) Engage in any off-balance sheet hedge
transactions.
5.4 Conduct of Business -- Certain Actions.
--------------------------------------
Except to the extent necessary to consummate the
transactions specifically contemplated by this Reorganization Agreement, PSFC
and Peoples Bank shall not, and shall use their respective best efforts to
ensure that their respective directors, officers, employees, and advisors do
not, directly or indirectly, institute, solicit, or knowingly encourage
(including by way of furnishing any information not legally required to be
furnished) any inquiry, discussion, or proposal, or participate in any
discussions or negotiations with, or provide any confidential or non-public
information to, any
- 33 -
corporation, partnership, person or other entity or group (other than to
Emclaire or any Emclaire Subsidiary) concerning any "Acquisition Proposal" (as
defined below), except for actions reasonably considered by the Board of
Directors of PSFC, based upon the advice of outside legal counsel, to be
required in order to fulfill its fiduciary obligations. PSFC shall notify
Emclaire immediately if any Acquisition Proposal has been or should hereafter be
received by PSFC or Peoples Bank, such notice to contain, at a minimum, the
identity of such persons, and, subject to disclosure being consistent with the
fiduciary obligations of PSFC's Board of Directors, a copy of any written
inquiry, the terms of any proposal or inquiry, any information requested or
discussions sought to be initiated, and the status of any reports, negotiations
or expressions of interest. For purposes of this Section, "Acquisition Proposal"
means any tender offer, agreement, understanding or other proposal of any nature
pursuant to which any corporation, partnership, person or other entity or group,
other than Emclaire or any Emclaire Subsidiary, would directly or indirectly (i)
acquire or participate in a merger, share exchange, consolidation or any other
business combination involving PSFC or Peoples Bank; (ii) acquire the right to
vote ten percent (10%) or more of the PSFC Common Stock or Peoples Bank Common
Stock; (iii) acquire a significant portion of the assets or earning power of
PSFC or of Peoples Bank; or (iv) acquire in excess of ten percent (10%) of the
outstanding PSFC Common Stock or Peoples Bank common stock.
ARTICLE 6
COVENANTS OF EMCLAIRE
6.1 Regulatory and Other Approvals. Within a reasonable time
after execution of this Reorganization Agreement, Emclaire shall file any and
all applications with the appropriate government Regulatory Authorities in order
to obtain the Government Approvals and shall take such other actions as may be
reasonably required to consummate the transactions contemplated in this
Reorganization Agreement and the Plan of Merger with reasonable promptness.
Emclaire shall pay all fees and expenses arising in connection with such
applications for regulatory approval. Emclaire agrees to use its best efforts to
provide the appropriate Regulatory Authorities with the information required by
such authorities in connection with Emclaire's applications for regulatory
approval and to use its best efforts to obtain such regulatory approvals, and
any other approvals and consents as may be required for the Closing, as promptly
as practicable; provided, however, that nothing in this Section shall be
construed to obligate Emclaire to take any action to meet any condition required
to obtain prior regulatory approval if such condition would have a material
adverse effect on the ability of Emclaire to carry on its business, branching or
acquisition programs. Emclaire shall provide PSFC the opportunity to review and
comment on all required applications within a reasonable period prior to the
filing thereof and provide PSFC with copies of all written communications with
Regulatory Authorities regarding the transactions provided for herein and
related applications and proceedings. Subject to the terms and conditions of
this Reorganization Agreement, Emclaire and Farmers National agree to use all
reasonable efforts and to take, or to cause to be taken, all actions, and to do,
or to cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate and make effective, with
reasonable promptness after the date of this Reorganization Agreement, the
transactions contemplated by this Reorganization Agreement, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining or other order adversely affecting the ability of the Parties to
consummate the transaction contemplated by this Reorganization Agreement.
Subject to the provisions of this Section, Emclaire shall use, and shall cause
each of its Subsidiaries to use, its best efforts to obtain consents of all
third parties and Regulatory Authorities necessary or desirable for the
consummation of each of the transactions contemplated by this Reorganization
Agreement.
- 34 -
6.2 Approvals and Registrations. Emclaire will use its best
efforts to prepare and file (a) with the SEC, the Registration Statement on Form
S-4 (the "Registration Statement"), (b) with the FDIC, an application for
approval of the Merger, if applicable, (c) with the PADB, an application for
approval of the Merger, (d) with the OCC, an application for approval of the
Merger, and (e) with the OTC Bulletin Board, if necessary, an application for
the listing of the Shares of Emclaire Stock issuable upon the Merger, subject to
official notice of issuance, except that Emclaire shall have no obligations to
file a new registration statement or a post-effective amendment to the
Registration Statement covering any reoffering of Emclaire Stock by PSFC
Affiliates. Emclaire, reasonably in advance of making such filings, will provide
PSFC and its counsel a reasonable opportunity to comment on such filings and
regulatory applications and will give due consideration to any comments of PSFC
and its counsel before making any such filing or application; and Emclaire will
provide PSFC and its counsel with copies of all such filings and applications at
the time filed if such filings and applications are made at any time before the
Effective Time of the Merger. Emclaire covenants and agrees that all information
furnished by Emclaire for inclusion in the Registration Statement, the
Prospectus/Proxy Statement, and all applications and submissions for the
Required Consents (as defined in Section 6.1 herein) will comply in all material
respects with the provisions of applicable law, including the Securities Act and
the Exchange Act and the rules and regulations of the SEC, the FDIC, the PADB,
and OCC, and will not contain any untrue statement of a material fact and will
not omit to state any material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading, Emclaire will furnish to Capital Resources
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., investment bankers advising PSFC and Emclaire,
respectively, such information as they may reasonably request for purposes of
the opinions referred to in Sections 7.2(h) and 7.1(j), respectively.
6.3 Employee Benefits. Following the consummation of the
transactions contemplated herein, Emclaire shall not be obligated to make
further contributions to any of the Employee Plans or Benefit Arrangements of
PSFC or Peoples Bank and all employees of PSFC and Peoples Bank immediately
prior to the Effective Time of the Merger who shall continue as employees of
Emclaire as the Surviving Corporation or as employees of any other Emclaire
Subsidiary will be afforded the opportunity to participate in any employee
benefit plans maintained by Emclaire or Emclaire's Subsidiaries, including but
not limited to any "employee benefit plan," as that term is defined in ERISA, on
an equal basis with employees of Emclaire or any Emclaire Subsidiary with
comparable positions, compensation, and tenure, subject to the provisions of
this Section. Service with PSFC or with any PSFC Subsidiary prior to the
Effective Time of the Merger by such former PSFC employees will be deemed
service with Emclaire for purposes of determining eligibility for participation
and for crediting of service for vesting purposes in such employee benefit plans
of Emclaire and Emclaire's Subsidiaries; provided, however, that in no event
shall any former PSFC or Peoples employee be entitled to or be given credit for
past service with such former PSFC for purposes of the accrual, calculation, or
determination of benefit amounts under any pension plan maintained by Emclaire
or any Emclaire subsidiaries. Peoples shall take all steps necessary to cause
the 401(k) plan maintained by PSFC to be terminated, and distributions made
thereunder in accordance with the provisions of Code Section 401(k)(10)(A)(i),
as soon as practicable after the Effective Time of the Merger. Following the
transfer of the former PSFC employees to Emclaire's health plan, there shall be
no exclusion from coverage for any pre-existing medical condition of any such
employee to the extent such condition was covered under a health plan of
Peoples.
6.4 Notification. Emclaire shall notify PSFC promptly after
becoming aware of the occurrence of, or the impending or threatened occurrence
of, any event that would constitute a breach on its part of any obligation under
this Reorganization Agreement or the occurrence of any event that
- 35 -
would cause any representation or warranty made by it herein to be false or
misleading, or if it becomes a party or is threatened with becoming a party to
any legal or equitable proceeding or governmental investigation or upon the
occurrence of any event that would result in a change in the circumstances
described in the representations and warranties contained herein. At all times
up to and including, and as of, the Closing, Emclaire and Farmers National shall
inform PSFC in writing of any and all facts necessary to amend or supplement the
representations and warranties made herein and the Emclaire Schedules attached
hereto as necessary so that the information contained herein and therein will
accurately reflect the current status of Emclaire and Farmers National;
provided, however, that any such updates to the Emclaire Schedules shall be
required prior to the Closing only with respect to matters which represent
material changes to the Emclaire Schedules and the information contained
therein.
6.5 Tax Representations. Neither Emclaire nor any of its
Subsidiaries has taken, agreed to take, or will take any action or has any
knowledge of any fact or circumstance that would prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
6.6 Directors and Officers Indemnification and Insurance
-----------------------------------------------------
Coverage.
--------
(a) Emclaire will continue to indemnify
officers, directors, and employees of PSFC and Peoples Bank to the full extent
required under the provisions of Article 24 of Emclaire's Bylaws from the
Effective Time of the Merger.
(b) For a period of six (6) years after the
Effective Time, Emclaire will provide to the persons who served as directors or
officers of PSFC or any subsidiary of PSFC on or before the Effective Time of
the Merger insurance against liabilities and claims (and related expenses) made
against them resulting from their service as such prior to the Effective Time
substantially similar in all material respects to the insurance coverage
provided to them in such capacities at the date hereof; provided, however, that
if Emclaire is unable to maintain or obtain the insurance called for by this
Section on commercially reasonable terms, Emclaire shall use its best efforts to
obtain as much comparable insurance as available. In no event shall the cost of
such coverage exceed 125% of the amount of the current premiums being paid by
PSFC. In lieu of the foregoing, PSFC shall renew any existing insurance or
purchase any "discovery period" insurance provided for thereunder at Emclaire's
request and expense.
6.7 Conduct of Emclaire and Farmers National Prior to the
Effective Time. Except as expressly provided in this Agreement, as agreed to by
PSFC or as required by applicable law, rules or regulations, during the period
from the date of this Agreement to the Effective Time, Emclaire and Farmers
National shall, and shall cause its subsidiaries to, (i) take no action which
would adversely affect or delay the ability of PSFC, Emclaire or Farmers
National to obtain any necessary approvals, consents or waivers of any
governmental authority required for the transactions contemplated hereby or to
perform its covenants and agreements on a timely basis under this Agreement,
(ii) take no action that could reasonably be expected to have a material adverse
effect on Emclaire and Farmers National; (iii) continue to conduct its business
consistent with past practices; and (iv) take no action during or before the
Pricing Period that ▇▇▇▇ materially alter Emclaire's or Farmers National's
historic practices regarding cash dividends or stock repurchases.
- 36 -
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of Emclaire. Unless waived
in writing by Emclaire, the obligation of Emclaire to consummate the
transactions contemplated by this Reorganization Agreement is subject to the
satisfaction at or prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and
undertakings of PSFC and Peoples Bank to be performed at or before the Closing
Date pursuant to this Reorganization Agreement shall have been duly performed;
(b) Representations and Warranties. The
representations and warranties of PSFC and Peoples Bank contained in this
Reorganization Agreement shall be true and correct, in all material respects, on
and as of the Closing Date with the same effect as though made on and as of the
Closing Date;
(c) Documents. In addition to the documents
described elsewhere in this Reorganization Agreement, Emclaire shall have
received the following documents and instruments:
(i) a certificate signed by the Secretary
or an assistant secretary of PSFC and Peoples Bank dated as
of the Closing Date certifying that:
(A) PSFC's and Peoples Bank's
respective Boards of Directors and shareholders
have duly adopted resolutions (copies of which
shall be attached to such certificate) approving
the substantive terms of this Reorganization
Agreement (including the Plan of Merger) and
authorizing the consummation of the transactions
contemplated by this Reorganization Agreement and
certifying that such resolutions have not been
amended or modified and remain in full force and
effect;
(B) each person executing this
Reorganization Agreement on behalf of PSFC and
Peoples Bank is an officer of PSFC or Peoples
Bank, as the case may be, holding the office or
offices specified therein, with full power and
authority to execute this Reorganization Agreement
and any and all other documents in connection with
the Merger, and that the signature of each person
set forth on such certificate is his or her
genuine signature;
(C) the charter documents of
PSFC and Peoples Bank attached to such certificate
remain in full force and effect; and
(ii) a certificate signed by the respective
Chairman of the Board, President and Chief Financial Officer
of each of PSFC and Peoples Bank stating that the conditions
set forth in Sections 7.1(a), 7.1(b) and 7.1(e) this
Reorganization Agreement have been satisfied.
(d) Inspections Permitted. Between the date of
this Reorganization Agreement and the Closing Date, PSFC and Peoples Bank shall
have afforded Emclaire and its authorized agents and representatives reasonable
access during normal business hours to the properties, operations, books,
- 37 -
records, contracts, documents, loan files and other information of or relating
to PSFC and Peoples Bank. Emclaire will provide PSFC and Peoples Bank at least
48 hours notice of any inspection and conduct any inspection in a reasonable
manner that will not interfere with business operations. PSFC and Peoples Bank
shall have caused all PSFC or Peoples Bank personnel to provide reasonable
assistance to Emclaire in its investigation of matters relating to PSFC and
Peoples Bank.
(e) No Material Adverse Change. No material
adverse change in the business, property, assets (including loan portfolios),
liabilities (whether absolute, contingent or otherwise), operations, liquidity,
income, or financial condition of PSFC and Peoples Bank taken as a whole shall
have occurred since the date of this Reorganization Agreement.
(f) Opinion of PSFC's Counsel. Emclaire shall
have been furnished with an opinion of legal counsel to PSFC and Peoples Bank,
dated the Closing Date, addressed to Emclaire, substantially to the effect that:
(i) PSFC is a corporation validly existing
and in good standing under the laws of the Commonwealth of
Pennsylvania;
(ii) Peoples Bank is a state stock savings
bank, validly existing, and in good standing under the laws
of the Commonwealth of Pennsylvania;
(iii)PSFC and Peoples Bank have full
corporate power and authority to enter into the
Reorganization Agreement; the Reorganization Agreement has
been duly and validly authorized by all necessary corporate
action by PSFC and Peoples Bank and has been duly and
validly executed and delivered by and on behalf of PSFC and
Peoples Bank; and no approval, authorization, order,
consent, registration, filing, qualification, license or
permit of or with any court, regulatory, administrative or
other governmental body is required under any federal or
Pennsylvania statute or regulation for the execution and
delivery of the Reorganization Agreement by PSFC and Peoples
Bank or the consummation of the transactions contemplated by
the Reorganization Agreement, except such as have been
obtained and are in full force and effect; and
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of PSFC or Peoples Bank or appropriate
government officials; (ii) in the case of matters of law governed by the laws of
the states in which they are not licensed, reasonably rely upon the opinions of
legal counsel duly licensed in such states and may be limited, in any event, to
federal law and the PBCA and (iii) incorporate, be guided by, and be interpreted
in accordance with, the Legal Opinion Accord of the ABA Section of Business Law
(1991);
(g) Other Business Combinations, Etc.
Neither PSFC nor Peoples Bank shall have entered into any agreement, letter of
intent, understanding or other arrangement pursuant to which PSFC or Peoples
Bank would merge, consolidate with; effect a business combination with, sell any
substantial part of PSFC's or Peoples Bank's assets to, or; acquire a
significant part of the shares or assets of, any other Person or entity
(financial or otherwise); adopt any "poison pill" or other type of anti-takeover
arrangement, any shareholder rights provision, any "golden parachute" or similar
program which would have the effect of materially decreasing the value of PSFC
or Peoples Bank or the benefits of acquiring the PSFC Common Stock;
- 38 -
(h) Regulatory Approvals. Except for the filing
of the Certificate of Merger with the Secretary of State of the Commonwealth of
Pennsylvania, all Regulatory Approvals for the transactions contemplated by this
Reorganization Agreement shall have been obtained without the imposition of any
conditions not typically imposed in similar transactions which Emclaire
determines in its sole judgment to be materially burdensome upon the conduct of
the business of Emclaire or which would so adversely impact the economic and
business benefits of the Merger to Emclaire as to render it inadvisable in the
sole judgment of Emclaire to proceed with the Merger; such approvals shall be in
effect and no proceedings shall have been instituted or threatened with respect
thereto; all applicable waiting periods with respect to such approvals shall
have expired; and all conditions and requirements prescribed by law or otherwise
imposed in connection with the Regulatory Approvals shall have been satisfied;
(i) PSFC Stockholder Approval. PSFC shall have
furnished Emclaire with a certified copy of resolutions duly adopted by the
holders of a vote of the outstanding shares of PSFC Common Stock entitled to
vote thereon approving this Reorganization Agreement, the Merger, and the
transactions contemplated hereby; such resolutions shall be in full force and
effect and shall not have been modified, rescinded or annulled; and
(j) Fairness Opinion. Emclaire shall have
received a "fairness opinion" letter from its independent financial adviser,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated the date hereof and to the effect that, in the opinion of
such adviser the Consideration to be received by the PSFC Record Holders is fair
to the stockholders of Emclaire from a financial point of view, and Emclaire
shall have received an updated "fairness opinion" letter from such advisers at
the time of the mailing of the proxy statement for the Emclaire Shareholders'
Meeting and at the Closing Date confirming the opinions provided in the initial
"fairness opinion" letter.
7.2 Conditions to the Obligations of PSFC. Unless waived in
writing by PSFC, the obligation of PSFC to consummate the transaction
contemplated by this Reorganization Agreement is subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and
undertakings of Emclaire to be performed at or prior to the Closing Date
pursuant to this Reorganization Agreement shall have been duly performed in all
material respects;
(b) No Material Adverse Change. No material
adverse change in the business, property, assets (including loan portfolios),
liabilities (whether absolute, contingent or otherwise), operations, liquidity,
income, or financial condition of Emclaire and Farmers National taken as a whole
shall have occurred since the date of this Reorganization Agreement;
(c) Representations and Warranties. The
representations and warranties of Emclaire and Farmers National contained in
this Reorganization Agreement shall be true and correct, in all material
respects, on and as of the Closing Date with the same effect as though made on
and as of the Effective Time of the Merger;
(d) Documents. In addition to the other
deliveries of Emclaire described elsewhere in this Reorganization Agreement,
PSFC shall have received the following documents and instruments:
- 39 -
(i) a certificate signed by the Secretary
or an assistant secretary of Emclaire and Farmers National
dated as of the Closing Date certifying that:
(A) Emclaire's and Farmers
National's respective Boards of Directors have
duly adopted resolutions (copies of which shall be
attached to such certificate) approving the
substantive terms of this Reorganization Agreement
(including the Plan of Merger) and authorizing the
consummation of the transactions contemplated by
this Reorganization Agreement and certifying that
such resolutions have not been amended or modified
and remain in full force and effect;
(B) the persons executing this
Reorganization Agreement on behalf of Emclaire and
Farmers National are officers of Emclaire and
Farmers National, respectively, holding the
offices so specified with full power and authority
to execute this Reorganization Agreement and any
and all other documents in connection with the
Merger, and that the signature of such person set
forth on such certificate is his genuine
signature;
(C) the organization documents
of Emclaire and Farmers National attached to such
certificate remain in full force and effect; and
(ii) a certificate signed respectively by
duly authorized officers of Emclaire and Farmers National
stating that the conditions set forth in Sections 7.2(a),
7.2(b) and 7.2(c) of this Reorganization Agreement have been
satisfied;
(e) Consideration. PSFC shall have received a
certificate executed by an authorized officer of the Exchange Agent to the
effect that the Exchange Agent has received and holds in its possession proper
authorization to issue certificates evidencing shares of Emclaire Common Stock
and cash or other good funds sufficient to meet the obligations of Emclaire to
the PSFC Record Holders to deliver the Consideration under this Reorganization
Agreement and the Plan of Merger; and
(f) Opinion of Emclaire's Counsel. PSFC shall
have been furnished with an opinion of counsel to Emclaire, dated as of the
Closing Date, addressed to PSFC, substantially to the effect that:
(i) Emclaire is incorporated and validly
existing as a corporation in good standing under the laws of the Commonwealth of
Pennsylvania; Farmers National is a wholly-owned subsidiary of Emclaire
organized and validly existing and in good standing as a state stock savings
bank chartered under the laws of the Commonwealth of Pennsylvania;
(ii) The authorized capital stock of
Emclaire consists of 12,000,000 shares of Emclaire Common Stock, par value $1.25
per share, of which 1,081,453 shares of Emclaire Common Stock are validly issued
and outstanding; all necessary corporate proceedings have been taken in order to
validly authorize such Emclaire Common Stock; and to the best of their
knowledge, all outstanding shares of Emclaire Common Stock have been duly and
validly issued, are fully paid and nonassessable, were not issued in violation
of or subject to any statutory preemptive rights;
(iii)The certificates evidencing the
Emclaire Common Stock to be delivered pursuant to the Reorganization Agreement
are in all material respects in due and proper form
- 40 -
under Pennsylvania Law, and when fully countersigned by Emclaire's transfer
agent and register and issued in accordance with the provisions of the
Reorganization Agreement, the Emclaire Common Stock represented thereby will be
duly authorized and validly issued, fully paid and nonassessable, and will not
have been issued in violation of or subject to any statutory preemptive rights;
(iv) Emclaire and Farmers National have full
corporate power and authority to enter into the Reorganization Agreement and
Emclaire has full corporate power and authority to issue the Emclaire Common
Stock pursuant to the Reorganization Agreement, the Reorganization Agreement has
been duly and validly authorized by all necessary corporate action by Emclaire
and Farmers National and has been duly and validly executed and delivered by and
on behalf of Emclaire and Farmers National and no approval, authorization, order
consent, registration, filing, qualification, license or permit of or with any
court, regulatory, administrative or other governmental body is required under
any federal or Pennsylvania statute or regulation for the execution and delivery
of the Reorganization Agreement by Emclaire and Farmers National or the
consummation of the transactions contemplated by the Reorganization Agreement,
except such as have been obtained and are in full force and effect;
(v) Neither the execution and delivery by
Emclaire of this Reorganization Agreement nor any of the documents to be
executed and delivered by Emclaire in connection herewith violates or conflicts
with Emclaire's Articles of Incorporation or Bylaws.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of Emclaire or appropriate government
officials; (ii) in the case of matters of law governed by the laws of the states
in which they are not licensed, reasonably rely upon the opinions of legal
counsel duly licensed in such states and may be limited, in any event, to
Federal Law and the Commonwealth of Pennsylvania; and (iii) incorporate, be
guided by, and be interpreted in accordance with, the Legal Opinion Accord of
the ABA Section of Business Law (1991);
(g) Emclaire Stockholder Approval. Emclaire
shall have furnished PSFC with a certified copy of resolutions duly adopted by
the holders of a vote of the outstanding shares of Emclaire Common Stock
entitled to vote thereon approving this Reorganization Agreement, the Merger,
and the transactions contemplated hereby; such resolutions shall be in full
force and effect and shall not have been modified, rescinded or annulled; and
(h) Fairness Opinion. PSFC shall have received a
"fairness opinion" letter from its independent financial adviser, Capital
Resources, or such other qualified third party, dated the date hereof and to the
effect that, in the opinion of such adviser the Consideration to be received by
the PSFC Record Holders is fair to the PSFC Record Holders from a financial
point of view, and PSFC shall have received an updated "fairness opinion" letter
from such advisers at the time of the mailing of the proxy statement for the
PSFC Shareholders' Meeting Date confirming the opinions provided in the initial
"fairness opinion" letter.
7.3 Conditions to Obligations of All Parties. The obligations
of each party to effect the transactions contemplated hereby shall be subject to
the fulfillment, at or prior to the Closing, of the following conditions:
(a) No Pending or Threatened Claims. No claim,
action, suit, investigation or other proceeding shall be pending or threatened
before any court or governmental agency which
- 41 -
presents a substantial risk of the restraint or prohibition of the transactions
contemplated by this Reorganization Agreement or the obtaining of material
damages or other relief in connection therewith;
(b) Governmental Approvals and Acquiescence
Obtained. The Parties hereto shall have received all applicable Governmental
Approvals for the consummation of the transactions contemplated herein and all
waiting periods incidental to such approvals or notices given shall have
expired; and
(c) Approval of Stockholders. Approval of this
Agreement and the transactions contemplated hereby by the stockholders of PSFC
and Emclaire, as required by applicable law, the rules of the OTC Bulletin Board
or applicable provisions of PSFC's or Emclaire's Articles of Incorporated and
Bylaws.
(d) Effectiveness of Registration Statement. The
Registration Statement has become effective under the 1933 Act, and no stop
order suspending the effectiveness of the Registration Statement or preventing
the use of the Proxy Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated by the SEC or any
state securities or other regulatory authority.
(e) Tax Opinion. Emclaire and PSFC shall receive
an opinion of Emclaire's counsel to the effect that the transaction will
constitute a tax free reorganization within the meaning of Section 368 of the
Internal Revenue Code and that no gain or loss will be recognized by PSFC
shareholders who receive solely shares of Emclaire Common Stock in exchange for
their shares of PSFC Common Stock.
ARTICLE 8
TERMINATION
8.1 Termination. This Reorganization Agreement and the Plan of
Merger may be terminated at any time prior to the Closing, as follows:
(a) By mutual consent in writing of the Parties;
(b) By Emclaire or PSFC in the event the Closing
shall not have occurred by December 31, 1998 (the "Target Date"), unless the
failure of the Closing to occur shall be due to the failure of the Party seeking
to terminate this Agreement to perform its obligations hereunder in a timely
manner;
(c) By either Emclaire or PSFC upon written
notice to the other Party, upon (i) denial of any Governmental Approval
necessary for the consummation of the Merger (or should such approval be
conditioned upon a substantial deviation from the transactions contemplated);
provided, however, that either Emclaire or PSFC may, upon written notice to the
other, extend the term of this Reorganization Agreement for only one or more
sixty (60) day periods to prosecute diligently and overturn such denial,
provided that such denial has been appealed within twenty (20) business days of
the receipt thereof or (ii) upon the failure to obtain the approval of the PSFC
shareholders at the PSFC shareholders meeting;
- 42 -
(d) By Emclaire or PSFC in the event that there
shall have been a material breach of any obligation or covenant of the other
Party hereunder and such breach shall not have been remedied within sixty (60)
days after receipt by the breaching Party of written notice from the other Party
specifying the nature of such breach and requesting that it be remedied;
(e) By Emclaire or PSFC should PSFC or any PSFC
Subsidiary enter into any letter of intent or agreement with a view to being
acquired by or effecting a business combination with any other Person; or any
agreement to merge, to consolidate, to combine or to sell a material portion of
its assets or to be acquired in any other manner by any other Person or to
acquire a material amount of assets or a material equity position in any other
Person, whether financial or otherwise;
(f) By Emclaire should either PSFC or Peoples
Bank enter into any formal agreement, letter of understanding, memorandum or
other similar arrangement with any bank regulatory authority establishing a
formal capital plan requiring PSFC or Peoples Bank to raise additional capital
or to sell a substantial portion of its assets.
(g) By PSFC should either Emclaire or Farmers
National enter into any formal agreement, letter of understanding, memorandum or
other similar arrangement with any bank regulatory authority establishing a
formal capital plan requiring Emclaire or Framers National to raise additional
capital or to sell a substantial portion of its assets.
If a Party should elect to terminate this Reorganization Agreement pursuant to
subsections (b), (c), (d), (e), (f) or (g) of this Section, it shall give notice
to the other Party, in writing, of its election in the manner prescribed in
Section 9 ("Notices") of this Reorganization Agreement.
8.2 Effect of Termination. In the event that this
Reorganization Agreement should be terminated pursuant to this Section, all
further obligations of the Parties under this Reorganization Agreement shall
terminate without further liability of any Party to another; provided, however,
that a termination under this Section shall not relieve any Party of any
liability for breach of this Reorganization Agreement or for any misstatement or
misrepresentation made hereunder prior to such termination, or be deemed to
constitute a waiver of any available remedy for any such breach, misstatement or
misrepresentation.
8.3 Fees.
(a) Notwithstanding anything to the contrary
herein, PSFC hereby agrees to pay Emclaire and Emclaire shall be entitled to
receipt of a fee (the "Fee") of $600,000 following the occurrence of a Purchase
Event (as defined below). Such payment shall be made immediately available funds
within five business days after delivery of notice of entitlement by Emclaire.
Notwithstanding the foregoing, payments pursuant to this Section shall not be
required in the event of termination of this Reorganization Agreement pursuant
to Section 8.1(a), (b), (c)(i), (d) (in the event terminated by PSFC due to a
material breach by Emclaire) or (f) prior to the occurrence of a Purchase Event.
(b) The term "Purchase Event" shall mean any of
the following events, or the PSFC or its Subsidiary agreeing to, orally or in
writing, to enter into an agreement relating to any of the following events,
occurring after the date hereof and before the Effective Time or occurring
within nine months of the date of termination of this Agreement pursuant to this
Article:
- 43 -
(i) the acquisition by any person, other
than Emclaire or any of its
subsidiaries, alone or together with
such person's affiliates and
associates or any group, of
beneficial ownership of 25% or more
of the PSFC Common Stock (for
purposes of this Subsection (b)(i),
the terms "group" and "beneficial
ownership" shall be as defined in
Section 13(d) of the Exchange Act
and regulations promulgated
thereunder and as interpreted
thereunder);
(ii) a merger, consolidation, share
exchange, business combination or
any other similar transaction
involving PSFC or Peoples Bank;
(iii) any sale, lease, exchange, mortgage,
pledge, transfer or other
disposition of 50% or more of the
assets of the PSFC or Peoples Bank,
in a single transaction or series of
transactions; or
(iv) the Board of Directors of PSFC does
not recommend approval of the
Reorganization to their shareholders
and the transaction contemplated
thereby unless PSFC has not received
a fairness opinion from an
investment banker similar to the one
described in Section 7.2(g) of this
Agreement.
(c) PSFC shall notify Emclaire promptly in
writing of its knowledge of the occurrence of any Purchase Event; provided,
however, that the giving of such notice by PSFC shall not be a condition to the
right of Emclaire to the Fee.
8.4 Expenses.
(a) PSFC hereby agrees that if this Agreement or
the transactions contemplated hereby are terminated pursuant to Sections 8.1(b)
or 8.1(d) as a result of a willful breach by PSFC, PSFC shall promptly (and in
any event within ten (10) business days after such termination) pay all Expenses
of Emclaire. "Expenses of Emclaire" as used in this Section 8.4(a) shall include
all reasonable in amount and reasonably incurred out-of-pocket expenses of
Emclaire (including all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to Emclaire and its Affiliates) incurred by it
or on its behalf in connection with the consummation of the transactions
contemplated by this Agreement.
(b) Emclaire hereby agrees that if this
Agreement or the transactions contemplated hereby are terminated pursuant to
Sections 8.1(b) or 8.1(d) as a result of a willful breach by Emclaire, Emclaire
shall promptly (and in any event within ten (10) business days after such
termination) pay all Expenses of PSFC. "Expenses of PSFC" as used in this
Section 8.4(b) shall include all reasonable in amount and reasonably incurred
out-of-pocket expenses of PSFC (including all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to PSFC and its
Affiliates) incurred by it or on its behalf in connection with the consummation
of the transactions contemplated by this Agreement.
- 44 -
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. Any notice, request, demand and other
communication which either Party hereto may desire or may be required hereunder
to give shall be in writing and shall be deemed to be duly given if delivered
personally or mailed by certified or registered mail (postage prepaid, return
receipt requested), air courier or facsimile transmission, addressed or
transmitted to such other Party as follows:
If to Emclaire: Emclaire Financial Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇
President and Chief Executive Officer
With a copy to: ▇▇▇▇▇▇▇, Spidi, Sloane & ▇▇▇▇▇, P.C.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to PSFC: Peoples Savings Financial Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer, Treasurer and
Secretary
With a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
or to such other address as any Party hereto may hereafter designate to the
other Parties in writing. Notice shall be deemed to have been given on the date
reflected in the proof or evidence of delivery, or if none, on the date actually
received.
9.2 Governing Law. This Reorganization Agreement shall be
governed by, and construed and enforced in accordance with, the internal laws,
and not the laws pertaining to choice or conflicts of laws, of the Commonwealth
of Pennsylvania, unless and to the extent that federal law controls. Any dispute
arising between the Parties in connection with the transactions which are the
subject of this Reorganization Agreement shall be heard in a court of competent
jurisdiction located in Pennsylvania.
- 45 -
9.3 Counterparts. This Reorganization Agreement may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which shall constitute but one and the same
instrument.
9.4 Publicity. The Parties hereto will consult with each other
with regard to the terms and substance of any press releases, announcements or
other public statements with respect to the transactions contemplated hereby. To
the extent practicable, each Party shall provide the proposed text of any such
press release, announcement or public statement to the other Party prior to its
publication and shall permit such other Party a reasonable period to provide
comments thereon.
9.5 Entire Agreement. This Reorganization Agreement, together
with the Plan of Merger which is Exhibit A hereto, the Schedules, Annexes,
Exhibits and certificates required to be delivered hereunder and any amendments
or addenda hereafter executed and delivered in accordance with this Section
constitute the entire agreement of the Parties hereto pertaining to the
transactions contemplated hereby and supersede all prior written and oral (and
all contemporaneous oral) agreements and understandings of the Parties hereto
concerning the subject matter hereof. The Schedules, Annexes, Exhibits and
certificates attached hereto or furnished pursuant to this Reorganization
Agreement are hereby incorporated as integral parts of this Reorganization
Agreement. Except to the extent otherwise, provided herein, by specific language
and not by mere implication, this Reorganization Agreement is not intended to
confer upon any other person not a Party to this Reorganization Agreement any
rights or remedies hereunder.
9.6 Severability. If any portion or provision of this
Reorganization Agreement should be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any jurisdiction, such
portion or provision shall be ineffective as to that jurisdiction to the extent
of such invalidity, illegality or unenforceability, without affecting in any way
the validity or enforceability of the remaining portions or provisions hereof in
such jurisdiction or rendering that or any other portions or provisions of this
Reorganization Agreement invalid, illegal or unenforceable in any other
jurisdiction.
9.7 Modifications, Amendments and Waivers. At any time prior
to the Closing or termination of this Reorganization Agreement, the Parties may,
solely by written agreement executed by their duly authorized officers:
(a) extend the time for the performance of any
of the obligations or other acts of the other Party hereto;
(b) waive any inaccuracies in the
representations and warranties made by the other Party contained in this
Reorganization Agreement or in the Schedules or Exhibits hereto or any other
document delivered pursuant to this Reorganization Agreement;
(c) waive compliance with any of the covenants
or agreements of the other Party contained in this Reorganization Agreement to
the extent permitted by applicable law; and
(e) amend or add to any provision of this
Reorganization Agreement or the Plan of Merger; provided, however, that no
provision of this Reorganization Agreement may be amended or added to except by
an agreement in writing signed by the Parties hereto or their respective
successors in interest and expressly stating that it is an amendment to this
Reorganization Agreement.
- 46 -
9.8 Interpretation. The headings contained in this
Reorganization Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Reorganization Agreement.
9.9 Payment of Expenses. Except as set forth herein, Emclaire
and PSFC shall each pay its own fees and expenses (including, without
limitation, legal fees and expenses) incurred by it in connection with the
transactions contemplated hereunder.
9.10 Attorneys' Fees. If any Party hereto shall bring an
action at law or in equity to enforce its rights under this Reorganization
Agreement (including an action based upon a misrepresentation or the breach of
any warranty, covenant, agreement or obligation contained herein), the
prevailing Party in such action shall be entitled to recover from the other
Party its reasonable costs and expenses necessarily incurred in connection with
such action (including fees, disbursements and expenses of attorneys and costs
of investigation).
9.11 No Survival of Representations and Warranties. Except for
the agreements of the parties in Sections 1.2(d), 1.6, 1.7, 2.5, 6.3, 6.6, 8.3,
8.4 and 9.14, which shall survive the Closing, none of the representations,
warranties and conditions of the Parties contained in this Reorganization
Agreement or in any instrument of transfer or other document delivered in
connection with the transactions contemplated by this Reorganization Agreement
shall survive the Closing or other termination of this Reorganization Agreement.
The agreements of the parties in Sections 1.2(d), 1.6, 1.7, 2.5, 6.3 and 6.6
shall be enforceable directly by each person benefitted or intended to be
benefitted by such sections.
9.12 No Waiver. No failure, delay or omission of or by any
Party in exercising any right, power or remedy upon any breach or default of any
other Party shall impair any such rights, powers or remedies of the Party not in
breach or default, nor shall it be construed to be a waiver of any such right,
power or remedy, or an acquiescence in any similar breach or default; nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Reorganization Agreement must be in writing and must be
executed by the Parties to this Reorganization Agreement and shall be effective
only to the extent specifically set forth in such writing.
9.13 Remedies Cumulative. All remedies provided in this
Reorganization Agreement, by law or equity, shall be cumulative and not
alternative.
9.14 Confidentiality. Any non-public or confidential
information disclosed by either PSFC (including any PSFC Subsidiaries) or
Emclaire (including any Emclaire Subsidiary) to the other Parties pursuant to
this Agreement or as a result of the discussions and negotiations leading to
this Agreement, or otherwise disclosed, or to which any other party has acquired
or may acquire access, and indicated (either expressly, in writing or orally, or
by the context of the disclosure or access) by the disclosing Party to be
non-public or confidential, or which by the content thereof reasonably appears
to be non-public or confidential, shall be kept strictly confidential and shall
not be used in any manner by the recipient except in connection with the
transactions contemplated by this Reorganization Agreement. To that end, the
Parties hereto will each, to the maximum extent practicable, restrict knowledge
of and access to non-public or confidential information of the other Party to
its officers, directors, employees and professional advisors who are directly
involved in the transactions contemplated hereby and
- 47 -
reasonably need to know such information. Further to that end, all non-public or
confidential documents (including all copies thereof) obtained hereunder by any
Party shall be returned as soon as practicable after any termination of this
Reorganization Agreement.
- 48 -
I WITNESS WHEREOF, each of the Parties hereto has duly executed and
delivered this Reorganization Agreement or has caused this Reorganization
Agreement to be executed and delivered in its name and on its behalf by its
representative thereunto duly authorized, all as of the date first written
above.
PEOPLES SAVINGS FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Chairman of the Board and President
ATTEST:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Secretary
PEOPLES SAVINGS BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board and President
ATTEST:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Secretary
- 49 -
EMCLAIRE FINANCIAL CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇
President and Chief Executive Officer
ATTEST:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
THE FARMERS NATIONAL BANK OF EMLENTON
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇
President Chief Executive Officer
ATTEST:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President and
Chief Financial Officer
- 50 -
EXHIBIT A
---------
PLAN OF MERGER
Setting Forth the Plan of Merger
of
PEOPLES SAVINGS FINANCIAL CORPORATION
(a Pennsylvania corporation)
with and into
EMCLAIRE FINANCIAL CORP.
(a Pennsylvania Corporation)
THIS PLAN OF MERGER ("Plan of Merger") is made and entered into as of
the ____ day of April, 1998, by and between PEOPLES SAVINGS FINANCIAL
CORPORATION ("PSFC"), a corporation chartered and existing under the laws of the
Commonwealth of Pennsylvania which is a registered bank holding company and
whose principal offices are located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇; and EMCLAIRE FINANCIAL CORP. ("Emclaire" or "Surviving Corporation"), a
corporation organized and existing under the laws of the Commonwealth of
Pennsylvania having its executive office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and which is registered as a bank holding company.
PREAMBLE
WHEREAS, Emclaire and PSFC have entered into an Agreement and Plan of
Reorganization dated as of the ____ day of April, 1998 ("Reorganization
Agreement") to which this Plan of Merger is Exhibit A and is incorporated by
reference as an integral part thereof providing for the merger of PSFC with and
into Emclaire (which would be the Surviving Corporation) and the acquisition of
all of the PSFC Common Stock outstanding immediately prior to the Effective Time
of the Merger by Emclaire for the Consideration set forth in the Reorganization
Agreement and this Plan of Merger; and
WHEREAS, The Boards of Directors of Emclaire and PSFC are each of the
opinion that the interests of their respective corporations and their
corporations' respective shareholders would best be served if PSFC were to be
merged with and into Emclaire, which would survive the Merger, on the terms and
conditions provided in the Reorganization Agreement and in this Plan of Merger,
and as a result of such Merger becoming effective, the Surviving Corporation
would be Emclaire.
A-1
NOW, THEREFORE, in consideration of the covenants and agreements of the
Parties contained herein, PSFC and Emclaire hereby make, adopt and approve this
Plan of Merger in order to set forth the terms and conditions for the merger of
PSFC with and into Emclaire (the "Merger").
ARTICLE I.
DEFINITIONS
1.1 As used in this Plan of Merger and in any amendments hereto, all
capitalized terms herein shall have the meanings assigned to such terms in the
Reorganization Agreement unless otherwise defined herein.
ARTICLE 2
CAPITALIZATION
2.1 PEOPLES SAVINGS FINANCIAL CORPORATION The authorized capital stock
of PSFC consists of 2,000,000 shares of common stock having a par value of $.10
per share (the "PSFC Common Stock") and 1,000,000 shares of Serial Preferred
Stock having no par value (the "PSFC Preferred Stock). As of the date hereof,
442,516 shares of PSFC Common Stock were issued and outstanding, and no shares
of PSFC Preferred Stock were issued and outstanding.
ARTICLE 3
PLAN OF MERGER
3.1 Constituent Corporations. The name of each constituent corporation
to the Merger is:
PEOPLES SAVINGS FINANCIAL CORPORATION
and
EMCLAIRE FINANCIAL CORP.
3.2 Surviving Corporation. The Surviving Corporation shall be:
EMCLAIRE FINANCIAL CORP.
which as of the Effective Time of the Merger shall continue to be named:
EMCLAIRE FINANCIAL CORP.
3.3 Terms and Conditions of Merger. The Merger shall be consummated
only pursuant to, and in accordance with this Plan of Merger and the
Reorganization Agreement. Conditioned upon the satisfaction or lawful waiver (by
the Party or Parties entitled to the benefit thereof) of all conditions
precedent to consummation of the Merger, the Merger will become effective on the
date and at the time (the "Effective Time of the Merger") of the filing of a
Articles of Merger with the Secretary of State of the Commonwealth of
Pennsylvania, or at such later time and/or date as may be agreed upon by the
parties and set forth in the Articles of Merger. At the Effective Time of the
Merger, PSFC shall be
A-2
merged with and into Emclaire, which will survive the Merger, and the separate
existence of PSFC shall cease thereupon, and without further action, Emclaire
shall thereafter possess all of the assets, rights, privileges, appointments,
powers, licenses, permits and franchises of both Emclaire and PSFC, whether of a
public or private nature, and shall be subject to all of the liabilities,
restrictions, disabilities, and duties of both PSFC and Emclaire.
3.4 Articles of Incorporation. At the Effective Time of the Merger, the
Articles of Incorporation of Emclaire, as in effect immediately prior to the
Effective Time of the Merger, shall constitute the Articles of Incorporation of
Emclaire as the Surviving Corporation, unless and until the same shall be
amended as provided by law and the terms of such Articles of Incorporation.
3.5 Bylaws. At the Effective Time of the Merger, the Bylaws of
Emclaire, as in effect immediately prior to the Effective Time of the Merger,
shall continue to be its Bylaws as the Surviving Corporation, unless and until
amended or repealed as provided by law, its Articles of Incorporation and such
Bylaws.
3.6 Directors and Officers. The directors and officers of Emclaire in
office immediately prior to the Effective Time of the Merger shall continue to
be the directors and officers of the Surviving Corporation, to hold office as
provided in the Articles of Incorporation and Bylaws of the Surviving
Corporation, unless and until their successors shall have been elected or
appointed and shall have qualified or they shall be removed as provided therein.
3.7 Name. The name of Emclaire as the Surviving Corporation following
the Merger, shall remain:
EMCLAIRE FINANCIAL CORP.
ARTICLE 4
DESCRIPTION OF THE TRANSACTION
4.1 Terms of the Merger.
-------------------
(a) Satisfaction of Conditions to Closing. After the
transactions contemplated herein have been approved by the shareholders of PSFC
and each other condition to the obligations of the Parties hereto, other than
those conditions which are to be satisfied by delivery of documents by any Party
to any other Party, has been satisfied or, if lawfully permitted, waived by the
Party or Parties entitled to the benefits thereof, a closing (the "Closing")
will be held on the date and at the time of day and place referred to in this
Reorganization Agreement. At the Closing the Parties shall use their respective
best efforts to deliver the certificates, letters and opinions which constitute
conditions to effecting the Merger and the Subsidiary Merger and each Party will
provide the other Parties with such proof or indication of satisfaction of the
conditions to the obligations of such other Parties to consummate the Merger as
such other Parties may reasonably require. If all conditions to the obligations
of each of the Parties shall have been satisfied or lawfully waived by the Party
entitled to the benefits thereof, the Parties shall, at the Closing, duly
execute Articles of Merger for filing with the Secretary of State of the
Commonwealth of Pennsylvania and promptly thereafter PSFC and Emclaire shall
take all steps necessary or desirable to consummate the Merger in accordance
with all applicable laws, rules and regulations and the Plan of Merger. The
Parties shall thereupon take such other and further actions as Emclaire shall
direct or as
A-3
may be required by law or this Reorganization Agreement to consummate the
transactions contemplated herein.
(b) Effective Time of the Merger. Upon the satisfaction of
all conditions to Closing, the Merger shall become effective on the date and at
the time of filing of the Articles of Merger with the Secretary of State of the
Commonwealth of Pennsylvania or at such later date and/or time as may be agreed
upon by the Parties and set forth in the Articles of Merger so filed (the
"Effective Time of the Merger").
4.2 Conversion of Stock.
--------------------
(a) Consideration. At the Effective Time of the Merger, each
share of common stock of PSFC, par value $0.10 per share (the "PSFC Common
Stock") then issued and outstanding (other than shares held directly or
indirectly by Emclaire, excluding shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
represent the right to receive the cash and/or shares of stock of Emclaire
constituting the Per Share Merger Consideration (as defined in paragraph (b)
below). As of the Effective Time of the Merger, each share of the PSFC Common
Stock held directly or indirectly by Emclaire, excluding shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted, shall be
canceled, retired and cease to exist, and no exchange or payment shall be made
with respect thereto.
(b) Cash or Stock Merger Consideration. As used herein, the
term "Per Share Merger Consideration" shall mean either the amount of cash set
forth in clause (i) below (the "Cash Merger Consideration") or that number of
shares of common stock of Emclaire, par value $1.25 per share ("Emclaire Common
Stock") as set forth in clause (ii) below (the "Stock Merger Consideration"), at
the election of the holder of each share of PSFC Common Stock, subject however
to proration as set forth below.
(i) If Cash Merger Consideration is to be paid
with respect to a share of PSFC Common
Stock, the Per Share Merger Consideration
with respect to such share of PSFC Common
Stock shall be in the amount of Twenty- six
dollars ($26.00).
(ii) If Stock Merger Consideration is to be paid
with respect to a share of PSFC Common
Stock, the Per Share Merger Consideration
with respect to such share of PSFC Common
Stock shall be that number of shares of
Emclaire Stock (the "Conversion Number")
equal to:
(A) If the Final Market Price (as
defined below) shall be equal or
greater than $15.00 but equal to or
less than $21.00, then the Stock
Merger Consideration shall be
Twenty-six dollars ($26.00) divided
by the Final Market Price.
(B) If the Final Market Price (as
defined below) shall be greater than
$21.00, then the Stock Merger
Consideration shall be 1.24 shares
of Emclaire Common Stock.
A-4
(C) If the Final Market Price (as
defined below) shall be less than
$15.00, either Emclaire or Peoples
can terminate this Agreement.
(c) Final Market Price. The "Final Market Price"
shall be the average closing price per share of the "last" real time trades
(i.e., closing price) of the Emclaire Common Stock as reported on the OTC
Bulletin Board for each of the thirty (30) OTC Bulletin Board general market
trading days preceding one week prior to the Closing Date on which the OTC
Bulletin Board was open for business (the "Pricing Period"), provided, however,
that if there are less than 10 business days during such period when Emclaire
Common Stock trades and on which there is a closing price, then the Pricing
Period shall be extended backwards for such period as is necessary until there
are ten days on which Emclaire Common Stock trades and on which there is a
closing price if such extension backwards will result in a lower calculated
Final Market Price. In the event the Emclaire Common Stock does not trade on one
or more of the trading days during the Pricing Period (a "No Trade Date"), any
such No Trade Date shall be disregarded in computing the average closing price
per share of Emclaire Common Stock and the average shall be based upon the
"last" real time trades and number of days on which the Emclaire Common Stock
actually traded during the Pricing Period.
(d) Fractional Shares. Fractional shares of
Emclaire Common Stock shall not be issued and each holder of PSFC Common Stock
who would otherwise be entitled to receive any such fractional shares (taking
into account all share amounts to which such holder is otherwise entitled
hereunder) shall receive cash (without interest) in lieu thereof in an amount
equal to the fraction of the share of Emclaire Common Stock to which such holder
would otherwise be entitled multiplied by the Final Market Price. No such holder
will be entitled to dividends, voting rights or any other rights of a
stockholder of Emclaire or PSFC in respect of any such fractional share.
(e) Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, shares of PSFC Common Stock which are issued
and outstanding immediately prior to the Effective Time of the Merger and which
are held by a shareholder who has the right (to the extent such right is
available by law) to demand and receive payment of the fair value of his shares
of PSFC Common Stock (the "Dissenting Shares") pursuant to Section 1571 of the
PBCA, shall not be converted into or be exchangeable for the right to receive
the consideration provided in this Section 2.2 unless and until such holder
shall fail to perfect his or her right to an appraisal or shall have effectively
withdrawn or lost such right under the PBCA, as the case may be. If such holder
shall have so failed to perfect his right to dissent or shall have effectively
withdrawn or lost such right, each of his shares of PSFC Common Stock shall
thereupon be deemed to be Cash Election Shares as defined in Section 2.3 of this
Agreement.
(f) Treatment of Options. At the Effective Time
of the Merger, each unexercised PSFC Stock Option shall be deemed canceled and
as consideration therefor each holder of a PSFC Stock Option (the "Option
Holders") shall have the right to receive a cash payment amount (the "Cash Out")
equal to the excess of (A) $26.00 over the exercise price per share of PSFC
Common Stock covered by that Option Holder's PSFC Stock Option(s), multiplied by
(B) the total number of shares of PSFC Common Stock covered by such PSFC Stock
Option(s).
(g) Calculation Schedule. The calculations of
the respective amounts of cash and Emclaire Common Stock payable and issuable
pursuant to the terms of this Reorganization Agreement shall be jointly prepared
and agreed to by Emclaire and PSFC and set forth in reasonable detail in a
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schedule that shall be delivered to Farmers National (the "Exchange Agent") no
later than two business days after the end of the Election Period.
4.3 Election and Allocation Procedures.
----------------------------------
(a) Subject to and in accordance with the
allocation and election procedures set forth herein, each record holder of a
share of PSFC Common Stock (the "PSFC Shareholders") shall, prior to the
Election Deadline (as hereinafter defined) specify (i) the number of whole
shares of PSFC Common Stock held by such Shareholder as to which such
Shareholder shall desire to receive the Cash Merger Consideration, and (ii) the
number of whole shares of PSFC Common Stock held by such Shareholder as to which
such Shareholder shall desire to receive the Stock Merger Consideration..
(b) An election as described in clause (i) of
Paragraph (a) of this Section and all Dissenting Shares are herein referred to
as a "Cash Election," and shares of PSFC Common Stock as to which a Cash
Election has been made are herein referred to as "Cash Election Shares." An
election as described in clause (ii) of Paragraph (a) is herein referred to as a
"Stock Election," and shares as to which a Stock Election has been made are
herein referred to as "Stock Election Shares." A failure to indicate a
preference in accordance herewith is herein referred to as a "Non-Election," and
shares as to which there is a Non-Election are herein referred to as
"Non-Electing Shares."
(c) Notwithstanding anything herein to the
contrary, and after taking into consideration Dissenting Shares and the Cash
Out, 55.0% of the outstanding PSFC Common Stock shall be exchanged for Emclaire
Common Stock. Payment of cash pursuant to the Cash Merger Consideration, the
Cash Out and Dissenting Shares, if any, and issuance of Emclaire Common Stock
pursuant to the Stock Merger Consideration, shall be allocated to holders of
PSFC Stock such that the number of shares of PSFC Common Stock as to which cash
is paid shall equal 45.0% of the aggregate number of shares of PSFC Common Stock
outstanding plus those subject to PSFC Stock Options (the "Aggregate Shares"),
and the number of shares of PSFC Common Stock (outstanding or subject to PSFC
Stock Options) as to which PSFC Stock are issued shall equal 55.0% of the
Aggregate Shares, as follows:
(1) If the number of Cash Election
Shares is in excess of 45.0% of the
Aggregate Shares, then (i)
Non-Electing Shares shall be deemed
to be Stock Election Shares, (ii)
Option Holders shall be treated as
Cash Election Shares without
adjustment, (iii) Dissenting Shares
shall be treated as Cash Election
Shares without adjustment, and
(iv)(A) Cash Election Shares of each
Shareholder who made the Cash
Election shall be reduced pro rata
by multiplying the number of Cash
Election Shares of such Shareholder
by a fraction, the numerator of
which is the number of shares of
PSFC Common Stock equal to 45.0% of
the Aggregate Shares minus the Cash
Out and Dissenting Shares and the
denominator of which is the
aggregate number of Cash Election
Shares of all Shareholders, and (B)
the shares of such Shareholder
representing the difference between
such Shareholder's initial Cash
Election and such Shareholder's
reduced Cash Election pursuant to
clause (A) shall be converted into
and be deemed to be Stock Election
Shares.
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(2) If the number of Stock Election
Shares is in excess of 55.0% of the
Aggregate Shares, then (i)
Non-Electing Shares shall be deemed
to be Cash Election Shares and (ii)
(A) Stock Election Shares of each
Holder shall be reduced pro rata by
multiplying the number of Stock
Election Shares of such Holder by a
fraction, the numerator of which is
the number of shares of PSFC Common
Stock equal to 55.0% of the
Aggregate Shares and the denominator
of which is the aggregate number of
Stock Election Shares of all
Holders, and (B) the shares of such
Holder representing the difference
between such Holder's initial Stock
Election and such Holder's reduced
Stock Election pursuant to clause
(A) shall be converted into to and
be deemed to be Cash Election
Shares.
(3) If the number of Cash Election
Shares is less than 45.0% of the
Aggregate Shares and the number of
Stock Election Shares is less than
55.0% of the Aggregate Shares, then
(i) there shall be no adjustment to
the elections made by electing
Holders, (ii) there shall be no
adjustment to the Cash Out or
Dissenting Shares, if any, and (iii)
Non-Electing Shares of each Holder
shall be treated as Stock Elections
Shares and/or as Cash Election
Shares in proportion to the
respective amounts by which the Cash
Election Shares and the Stock
Election Shares are less than the
45.0% and 55.0% limits,
respectively.
(d) After taking into account the foregoing
adjustment provisions, each Cash Election Share (including those deemed to be
Cash Election Shares) shall receive in the Merger the Cash Merger Consideration
pursuant to Section 4.2(b) and each Stock Election Share (including those deemed
to be Stock Election Shares) shall receive in the Merger the Stock Merger
Consideration (and cash in lieu of fractional shares) pursuant to Section
4.2(b).
(e) Satisfaction of Conditions to Closing.
Notwithstanding any other provision of this Agreement, if the application of the
provisions of this Section would result in Holders receiving a number of shares
of Emclaire Common Stock that would prevent the Per Share Merger Consideration
from consisting in the aggregate of 45.0% Cash Merger Consideration and 55.0%
Stock Merger Consideration or otherwise prevent the satisfaction of any of the
conditions set forth in Article 7 hereof, the number of shares otherwise
allocable to Holders pursuant to this section shall be adjusted in an equitable
manner as shall be necessary to enable the satisfaction of all conditions.
4.4 Election Procedures.
-------------------
(a) PSFC and Emclaire shall prepare a form for
purposes of making elections and containing instructions with respect thereto
(the "Election Form"). The Election Form shall be distributed to each Holder at
such time as PSFC and Emclaire shall determine and shall specify the date by
which all such elections must be made (the "Election Deadline") which date shall
be the date of the meeting of PSFC Stockholders to approve the Merger or such
other date determined by PSFC and Emclaire.
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(b) Elections shall be made by Holders by
mailing to the Exchange Agent, a duly completed Election Form. To be effective,
an Election Form must be properly completed, signed and submitted to the
Exchange Agent accompanied by certificates representing the shares of PSFC
Common Stock or by the Outstanding Option as to which the election is being made
(or by an appropriate guaranty of delivery by a commercial bank or trust company
in the United States or a member of a registered national security exchange or
the National Association of Security Dealers, Inc.), or by evidence that such
certificates have been lost, stolen or destroyed accompanied by such security or
indemnity as shall be reasonably requested by Emclaire. An Election Form and
accompanying share certificates or Outstanding Options, as the case may be, must
be received by the Exchange Agent by the close of business on the Election
Deadline. An election may be changed or revoked but only by written notice
received by the Exchange Agent prior to the Election Deadline including, in the
case of a change, a properly completed revised Election Form.
(c) Emclaire will have the discretion, which it
may delegate in whole or in part to the Exchange Agent, to determine whether the
Election Forms have been properly completed, signed and submitted or changed or
revoked and to disregard immaterial defects in Election Forms. The decision of
Emclaire (or the Exchange Agent) in such matters shall be conclusive and
binding. Neither Emclaire nor the Exchange Agent will be under any obligation to
notify any person of any defect in an Election Form submitted to the Exchange
Agent.
(d) For the purposes hereof, a Holder who does
not submit an effective Election Form to the Exchange Agent prior to the
Election Deadline shall be deemed to have made a Non-Election.
(e) In the event that this Agreement is
terminated pursuant to the provisions hereof and any shares or Outstanding
Options have been transmitted to the Exchange Agent pursuant to the provisions
hereof, Emclaire and PSFC shall cause the Exchange Agent to promptly return such
shares to the person submitting the same.
4.5 Mechanics of Payment of Consideration.
-------------------------------------
(a) Surrender of Certificates pursuant to
Section 2.2(b). Within five business days after the Effective Time of the
Merger, the Exchange Agent shall deliver to each of the PSFC Record Holders who
have not previously submitted properly completed Election Forms, accompanied by
all certificates (or other appropriate documentation) in respect of all shares
of PSFC Common Stock held of record by such PSFC Record Holders, such materials
and information deemed necessary by the Exchange Agent to advise the PSFC Record
Holders of the procedures required for proper surrender of their certificates
evidencing and representing shares of the PSFC Common Stock in order for the
PSFC Record Holders to receive the Consideration to which they are entitled as
provided herein. Such materials shall include, without limitation, a Letter of
Transmittal, an Instruction Sheet, and a return mailing envelope addressed to
the Exchange Agent (collectively the "Shareholder Materials"). All Shareholder
Materials shall be sent by United States mail to the PSFC Record Holders at the
addresses set forth on a certified shareholder list to be delivered by PSFC to
Emclaire at the Closing (the "Shareholder List"). Emclaire shall also make
appropriate provisions with the Exchange Agent to enable PSFC Record Holders to
obtain the Shareholder Materials from, and to deliver the certificates formerly
representing shares of PSFC Common Stock to, the Exchange Agent in person,
commencing on or not later than the second business day following the Closing
Date. Upon receipt of the appropriate Shareholder Materials, together with the
certificates formerly evidencing and representing all of the shares
A-8
of PSFC Common Stock which were validly held of record by such holder, the
Exchange Agent shall take prompt action to process such certificates formerly
evidencing and representing shares of PSFC Common Stock received by it
(including the prompt return of any defective submissions with instructions as
to those actions which may be necessary to remedy any defects) and to mail to
the former PSFC Record Holders in exchange for the certificate(s) surrendered by
them, the Consideration to be issued or paid for each such PSFC Record Holder's
shares pursuant to the terms hereof. After the Effective Time of the Merger and
until properly surrendered to the Exchange Agent, each outstanding certificate
or certificates which formerly evidenced and represented the shares of PSFC
Common Stock of a PSFC Record Holder, subject to the provisions of this Section,
shall be deemed for all corporate purposes to represent and evidence only the
right to receive the Consideration into which such PSFC Record Holder's shares
of PSFC Common Stock were converted and aggregated at the Effective Time of the
Merger. Unless and until the outstanding certificate or certificates, which
immediately prior to the Effective Time of the Merger evidenced and represented
the PSFC Record Holder's PSFC Common Stock shall have been properly surrendered
as provided above, the Consideration issued or payable to the PSFC Record
Holder(s) of the canceled shares as of any time after the Effective Date of the
Merger shall not be paid to the PSFC Record Holder(s) of such certificate(s)
until such certificates shall have been surrendered in the manner required. Each
PSFC Record Holder will be responsible for all federal, state and local taxes
which may be incurred by him on account of his receipt of the Consideration to
be paid in the Merger. The PSFC Record Holder(s) of any certificate(s) which
shall have been lost or destroyed may nevertheless, subject to the provisions of
this Article, receive the Consideration to which each such PSFC Record Holder is
entitled, provided that each such PSFC Record Holder shall deliver to Emclaire
and to the Exchange Agent: (i) a sworn statement certifying such loss or
destruction and specifying the circumstances thereof and (ii) a lost instrument
bond in form satisfactory to Emclaire and the Exchange Agent which has been duly
executed by a corporate surety satisfactory to Emclaire and the Exchange Agent,
indemnifying the Surviving Corporation, Emclaire, the Exchange Agent (and their
respective successors) to their satisfaction against any loss or expense which
any of them may incur as a result of such lost or destroyed certificates being
thereafter presented. Any costs or expenses which may arise from such
replacement procedure, including the premium on the lost instrument bond, shall
be paid by the PSFC Record Holder.
4.6 Stock Transfer Books. At the Effective Time of the Merger, the
stock transfer books of PSFC shall be closed and no transfer of shares of PSFC
Common Stock shall be made thereafter.
4.7 Effects of the Merger. At the Effective Time of the Merger, the
separate existence of PSFC shall cease, and PSFC shall be merged with and into
Emclaire which, as the Surviving Corporation, shall thereupon and thereafter
possess all of the assets, rights, privileges, appointments, powers, licenses,
permits and franchises of the two merged corporations, whether of a public or a
private nature, and shall be subject to all of the liabilities, restrictions,
disabilities and duties of PSFC and Emclaire.
4.8 Transfer of Assets. At the Effective Time of the Merger, all
rights, assets, licenses, permits, franchises and interests of PSFC and Emclaire
in and to every type of property, whether real, personal, or mixed, whether
tangible or intangible, and to chose in action shall be deemed to be vested in
Emclaire as the Surviving Corporation by virtue of the Merger and without any
deed or other instrument or act of transfer whatsoever.
4.9 Assumption of Liabilities. At the Effective Time of the Merger, the
Surviving Corporation shall become and be liable for all debts, liabilities,
obligations and contracts of PSFC as well as those of the Surviving Corporation,
whether the same shall be matured or unmatured; whether accrued,
A-9
absolute, contingent or otherwise; and whether or not reflected or reserved
against in the balance sheets, other financial statements, books of account or
records of PSFC or the Surviving Corporation.
4.10 Appraisal Rights of PSFC Shareholders. Pursuant to the provisions
of the PBCA, PSFC Shareholders shall be entitled to assert appraisal rights in
connection with the Merger.
4.11 Approvals of Shareholders of PSFC and Emclaire. In order to become
effective, the Merger must be approved by the shareholders of PSFC and Emclaire
at meetings to be called for that purpose by the respective Boards of Directors
and PSFC and Emclaire, or by their unanimous action by written consent complying
fully with the laws of Pennsylvania.
PSFC shall be liable for and, prior to Closing, shall pay all
taxes on PSFC Stock Options, including, but not limited to, payroll and
withholding taxes.
ARTICLE 5
AMENDMENTS AND WAIVERS
5.1 Amendments. To the extent permitted by law, this Plan of Merger may
be amended unilaterally by Emclaire and PSFC as set forth in Section 9.8(d) of
this Reorganization Agreement; provided, however, that the provisions of Section
4.2 herein relating to the manner or basis upon which shares of PSFC Common
Stock will be converted into the exclusive right to receive the Consideration
from Emclaire shall not be amended in such a manner as to reduce the amount of
the Consideration payable to the PSFC Record Holders determined as provided
herein of this Plan of Merger nor shall this Plan of Merger be amended to permit
Emclaire to utilize assets other than cash or good funds to make payment of the
Consideration as provided in the Reorganization Agreement at any time after the
Shareholders' Meeting without the requisite approval (except as provided for in
the Reorganization Agreement) of the PSFC Record Holders of the shares of PSFC
Common Stock outstanding, and that no amendment to this Plan of Merger shall
modify the requirements of regulatory approval as set forth in this
Reorganization Agreement.
5.2 Authority for Amendments and Waivers. Prior to the Effective Time
of the Merger, Emclaire, acting through its Board of Directors or chief
executive officers and presidents or other authorized officers, shall have the
right to amend this Plan of Merger to postpone the Effective Time of the Merger
to a date and time subsequent to the time of filing of the Plan of Merger with
the Pennsylvania Secretary of State, to waive any default in the performance of
any term of this Plan of Merger by PSFC, to waive or extend the time for the
compliance or fulfillment by PSFC of any and all of its obligations under this
Plan of Merger, and to waive any or all of the conditions precedent to the
obligations of Emclaire and PSFC under this Plan of Merger, except any condition
that, if not satisfied, would result in the violation of any law or applicable
governmental regulation. Prior to the Effective Time of the Merger, PSFC, acting
through its Board of Directors or chief executive officer or president or other
authorized officer, shall have the right to amend this Plan of Merger to
postpone the Effective Time of the Merger to a date and time subsequent to the
time of filing of the Plan of Merger with the Pennsylvania Secretary of State,
to waive any default in the performance of any term of this Plan of Merger by
Emclaire or PSFC, to waive or extend the time for the compliance or fulfillment
by Emclaire or PSFC of any and all of their obligations under this Plan of
Merger, and to waive any or all of the conditions precedent to the obligations
of PSFC under this Plan of Merger except any condition that, if not satisfied,
would result in the violation of any law or applicable governmental regulation.
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ARTICLE 6
MISCELLANEOUS
6.1 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, or by registered or certified mail, postage pre-paid to
the persons at the addresses set forth below (or at such other addresses or
facsimile numbers as may hereafter be designated as provided below), and shall
be deemed to have been delivered as of the date received by the Party to which,
or to whom it is addressed:
If to Emclaire: Emclaire Financial Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇
President and Chief Executive Officer
With a copy to: ▇▇▇▇▇▇▇, Spidi, Sloane & ▇▇▇▇▇, P.C.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to PSFC: Peoples Savings Financial Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer, Treasurer
and Secretary
With a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
or at such other address as shall be furnished in writing by any of the Parties
to the others by notice given as provided in this section 6.1.
6.2 Governing Law. Except to the extent federal law shall be
controlling, this Plan of Merger shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Pennsylvania with respect to
those provisions of this Plan of Merger expressly required by Pennsylvania law
to be included in this Plan of Merger, disregarding, however, the Pennsylvania
conflicts of laws rules. In all other instances, this Plan of Merger shall be
governed by and construed and enforced in
A-11
accordance with the laws of the Commonwealth of Pennsylvania disregarding,
however, the Pennsylvania conflicts of laws rules.
6.3 Captions. The Captions heading the Sections in this Plan of Merger
are for convenience only and shall not affect the construction or interpretation
of this Plan of Merger.
6.4 Counterparts. This Plan of Merger may be executed in two or more
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute one and the same instrument.
A-12
IN WITNESS WHEREOF, each of the Parties has caused this Plan of Merger
to be duly executed and delivered by its duly authorized officers as of the date
first above written.
ATTEST: PEOPLES SAVINGS FINANCIAL CORPORATION
By:
----------------------------- -----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary Chairman of the Board and President
ATTEST: EMCLAIRE FINANCIAL CORP.
By:
------------------------------ --------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇. ▇▇▇
President and Chief Executive Officer
A-13
EXHIBIT B
---------
MERGER AGREEMENT
----------------
(The Farmers National Bank of Emlenton and Peoples Savings Bank)
This Plan of Merger is made by and between The Farmers National Bank of
Emlenton, a national association ("Farmers National") and Peoples Savings Bank,
a state stock savings bank ("Peoples Bank") in connection with the transactions
described in an Agreement and Plan of Reorganization dated April __, 1998 (the
"Reorganization Agreement") among Emclaire Financial Corp. ("Emclaire"), Farmers
National, Peoples Savings Financial Corporation ("PSFC") and Peoples Bank. Terms
not otherwise defined herein shall have the meaning given them in the
Reorganization Agreement.
As of the date hereof, Peoples Bank has authorized capital stock of
2,000 shares of common stock, par value $0.10 per share (the "Peoples Bank
Common Stock"). As of the date hereof, 1,000 shares of Peoples Bank Common Stock
are issued and outstanding and no shares of preferred stock are issued and
outstanding. As of the date hereof, Farmers National has authorized capital
stock of 3,000,000 shares of common stock, par value $1.25 per share (the
"Farmers National Common Stock"), of which 200,000 shares of Farmers National
Common Stock are issued and outstanding. After the Merger, Farmers National will
have authorized capital stock of 3,000,000 shares of common stock, par value
$5.00 per share, of which approximately 200,000 shares of Farmers National
Common Stock will be issued and outstanding. The regulatory capital of Farmers
National after the Merger will exceed all regulatory requirements.
As of the date hereof, PSFC owns all of the issued and outstanding
stock of Peoples Bank, and Emclaire owns all of the issued and outstanding stock
of Farmers National. Immediately prior to the Effective Time of this Merger,
PSFC shall be merged with and into Emclaire, with Emclaire being the resulting
corporation, so that as of the Effective Time of this Merger, Emclaire shall own
all of the outstanding stock of both Peoples Bank and Farmers National.
Farmers National and Peoples Bank hereby agree as follows:
1. Merger. At and on the Effective Time of the Merger, Peoples Bank
shall be merged with and into Farmers National in accordance with the terms
hereof. Farmers National shall be the resulting association.
2. Effective Time. The effective time ("Effective Time") of this Merger
shall be the date the articles of combination are endorsed by the Pennsylvania
Department of Banking and the Office of the Comptroller of the Company or such
later date specified in such articles.
3. Name. The name of the resulting association shall continue to be
"The Farmers National Bank of Emlenton".
4. Directors and Principal Officers. The directors and the principal
officers of Farmers National immediately prior to the Effective Time shall
continue to serve as directors and principal executive officers of Farmers
National after the Effective Time. Farmers National, as the resulting
institution, shall also have ten directors. The name each director is as
follows: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, J. ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇.
B-1
5. (a) Offices. Peoples Bank operates three offices. The main office is
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ and its branch offices are
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇.
(b) Farmers National operates eight offices. The main office is located
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇. The seven branch offices are located
in Pennsylvania at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, Sixth &
Wood Streets, Clarion, Pennsylvania, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇-▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, and Main & State
Streets, Knox, Pennsylvania.
(c) The location of the main office of the resulting institution shall
continue to be ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇. The branches of the
resulting institution shall be as set forth in Sections 5(a) and 5(b) above be,
subject to any regulatory conditions, at the addresses described above.
6. Terms and Conditions of Merger.
------------------------------
At the Effective Time of the Merger:
(a) Each share of Peoples Bank Common Stock immediately prior
to the Effective Time shall at the Effective Time be converted into the right to
receive one share of Farmers National Common Stock and Farmers National shall
deliver to Emclaire a stock certificate evidencing such shares.
(b) Each share of Farmers National Common Stock issued and
outstanding immediately prior to the Effective Time shall remain outstanding and
unchanged and shall continue to be owned by Emclaire.
At and after the Effective Time, Emclaire shall be the owner of all of
the issued and outstanding shares of Farmers National.
7. Articles of Incorporation and Bylaws.
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At and after the Effective Time, the Articles of Incorporation and
Bylaws of Farmers National as in effect immediately prior to the Effective Time
shall continue to be the Articles of Incorporation and Bylaws of the resulting
association until amended in accordance with law.
8. Rights and Duties of the Resulting Association.
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At the Effective Time, Peoples Bank shall be merged with and into
Farmers National, which, as the resulting association, shall be the same
association as Farmers National. The business of the resulting association shall
be that of a state stock savings bank chartered under the laws of the
Commonwealth of Pennsylvania and as provided for in the Articles of
Incorporation of Farmers National as now existing, the business of which shall
be continued at its head office and at its legally established branches and
other offices. All assets, rights, privileges, powers, franchises and property
(real, personal and mixed) shall be automatically transferred to and vested in
the resulting association by virtue of the Merger without any deed or other
document of transfer. The resulting association, without any order or action on
the part of any court or otherwise and without any documents of assumption or
assignment, shall hold and enjoy all of the properties, franchises and
interests, including appointments, powers, designations, nominations
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and all other rights and interest as agent or other fiduciary in the same manner
and to the same extent as such rights, franchises and interest and powers were
held or enjoyed by Farmers National and Peoples Bank, respectively. The
resulting association shall be responsible for all the liabilities of every kind
and description of both Farmers National and Peoples Bank immediately prior to
the Effective Time, including liabilities for all debts, savings accounts,
deposits, obligations and contracts of Farmers National and Peoples Bank,
respectively, matured or unmatured, whether accrued, absolute, contingent or
otherwise and whether or not reflected or reserved against on balance sheets,
books or accounts or records of either Farmers National or Peoples Bank. All
rights of creditors and other obligees and all liens on property of either
Farmers National or Peoples Bank shall be preserved and shall not be released or
impaired.
9. Execution This Plan of Merger may be executed in any number of counterparts
each of which shall be deemed an original and all of such counterparts shall
constitute one and the same instrument.
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THE FARMERS NATIONAL BANK OF EMLENTON
By:
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▇▇▇▇▇ ▇. ▇▇▇
President and Chief Executive Officer
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President and
Chief Financial Officer
PEOPLES SAVINGS BANK
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board and President
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Secretary
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