Exhibit 99.(a)(1)(A)
PSB HOLDINGS, INC.
OFFER TO PURCHASE
100,000 SHARES
PURCHASE PRICE: $33.75 PER SHARE
MAY 10, 2006
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK TIME, ON THURSDAY, JUNE 15, 2006,
UNLESS THE OFFER IS EXTENDED. EXCEPT AS DESCRIBED IN SECTION 4, YOUR RIGHT TO
WITHDRAW YOUR SHARES WILL ALSO EXPIRE AT THAT TIME.
_________________
PSB Holdings, Inc. is offering to purchase up to 100,000 shares of common
stock in a tender offer at a price of $33.75 per share. You may accept our
offer and tender all or part of your shares by following the instructions in
this Offer to Purchase and the enclosed Letter of Transmittal. Our offer is
subject to the terms and conditions described in this document and related
Letter of Transmittal.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"PSBQ." On May 3, 2006, the bid and ask quotations for our common stock were
$30.60 and $31.00, respectively. There is no active trading market for PSB's
common stock and such prices may not reflect actual trades. See Section 7.
__________________
PSB'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS OFFER. HOWEVER,
NEITHER WE NOR OUR BOARD MAKES ANY RECOMMENDATION TO YOU CONCERNING THIS TENDER
OFFER. OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE ADVISED US THAT THEY DO NOT
INTEND TO TENDER ANY OF THEIR SHARES IN OUR OFFER. SEE SECTION 10.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
AUTHORITY HAS APPROVED OR DISAPPROVED OF THE TRANSACTION OR PASSED UPON THE
MERITS OR FAIRNESS OF OUR OFFER OR UPON THE ADEQUACY OR ACCURACY OF THE
INFORMATION CONTAINED IN THIS OFFER TO PURCHASE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
SUMMARY....................................................................1
FORWARD-LOOKING STATEMENTS.................................................5
INTRODUCTION...............................................................5
THE OFFER..................................................................5
1. Number of Shares; Proration....................................5
2. Purpose of the Offer; Certain Effects of the Offer.............7
3. Procedures for Tendering Shares................................9
4. Withdrawal Rights.............................................11
5. Purchase of Shares and Payment of Purchase Price..............11
6. Conditions of the Offer.......................................12
7. Price Range of Shares; Dividends..............................14
8. Source and Amount of Funds....................................15
9. Certain Additional Information Concerning PSB.................15
10. Interests of Directors and Officers; Transactions and
Arrangements Concerning the Shares............................16
11. Effects of the Offer on the Market for Shares; Registration
Under the Exchange Act........................................18
12. Certain Legal Matters; Regulatory Approvals...................18
13. Material Federal Income Tax Consequences......................18
14. Extension of Offer; Termination; Amendment....................21
15. Fees and Expenses.............................................21
16. Miscellaneous.................................................22
ADDITIONAL COPIES AND ASSISTANCE
You may obtain additional copies of this Offer to Purchase, the Letter of
Transmittal, and other tender offer materials without charge. Please contact
Registrar and Transfer's Investor Relations Department at 1-800-368-5948
between 8:00 a.m. and 7:00 p.m., New York time, or via e-mail at info@rtco.com
to request additional copies or if you have any questions or requests for
assistance.
You may also contact your local broker, dealer, commercial bank, trust
company, or other nominee for assistance concerning our offer.
i
SUMMARY
In this document, PSB Holdings, Inc. is also referred to as "PSB." The
terms "we," "us," and "our," also refer to PSB Holdings, Inc. The terms
"shares" and "stock" refer to shares of common stock of PSB.
This summary highlights certain material information contained in this
Offer to Purchase. It is not intended to be a substitute for the more detailed
information about our offer that begins on page 5. We urge you to read the
entire Offer to Purchase and the Letter of Transmittal carefully in order to
understand the full details of our offer.
Some common questions about our tender offer and our answers follow. The
highlighted references to "Sections" refer to the detailed discussion of our
offer that begins on page 5.
1. Q: IS PSB HOLDINGS OFFERING TO PURCHASE MY SHARES?
A: Yes. We are offering to purchase up to 100,000 shares of our
outstanding common stock from our shareholders. SEE SECTION 1.
2. Q: HAS THE BOARD APPROVED OR RECOMMENDED THIS OFFER?
A: Our Board has approved the offer. However, we neither we nor our Board
makes any recommendation regarding whether you should tender your
shares or retain them. You must decide whether to tender your shares
and, if so, how many shares to tender. We recommend that you discuss
whether to tender your shares with your broker or other financial or
tax advisor. SEE SECTION 2.
3. Q: WHO CAN ANSWER MY QUESTIONS ON THE TENDER OFFER?
A: Please contact Registrar and Transfer's Investor Relations Department
at 1-800-368-5948 between 8:00 a.m. and 7:00 p.m., New York time, or
via e-mail at info@rtco.com if you have any questions or requests for
assistance about the tender offer.
4. Q: WHAT IS THE PURCHASE PRICE?
A: We are offering to purchase your shares for $33.75 per share. SEE
SECTION 1.
5. Q: WHAT IS THE RECENT MARKET PRICE FOR PSB COMMON STOCK?
A: Prices for our common stock are quoted on the OTC Bulletin Board. On
May 3, 2006, the bid was $30.60 and the ask was $31.00. Although the
market for our common stock is not active, we urge you to obtain more
current market quotations for your shares before accepting our offer.
SEE SECTION 7.
6. Q: HOW MUCH TIME DO I HAVE TO DECIDE WHETHER TO TENDER MY SHARES?
A: You may tender your shares until our offer expires. As of the date of
this document, our offer is scheduled to expire on Thursday, June 15,
2006, at 5:00 p.m., New York time, but we may choose to extend it at
any time if we believe it is appropriate to do so. SEE SECTIONS 1 AND
14.
7. Q: HOW WILL I KNOW IF THE OFFER IS EXTENDED BEYOND JUNE 15, 2006?
A: If our offer is extended, we will make a public announcement before
9:00 a.m., New York time, on the first business day after the offer was
scheduled to expire. SEE SECTION 14.
8. Q: DO I HAVE TO TENDER ALL OF MY SHARES?
A: No. Our offer is completely voluntary on your part. You may specify
on the Letter of Transmittal the number of shares you wish to tender.
If your stock certificate represents more
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shares than you wish to tender, we will issue you a new certificate for
the shares you do not tender. SEE SECTION 3.
9. Q: HOW DO I TENDER MY SHARES?
A: To tender all or any part of your shares,
(circle)IF YOU HOLD CERTIFICATES IN YOUR OWN NAME, you must complete and
sign a Letter of Transmittal (or a copy), and either mail or deliver to
Registrar and Transfer Company:
(circle)the Letter of Transmittal with any required signature
guarantee and any other required documents, AND
(circle)the stock certificates for your tendered shares
(circle)IF YOU HAVE SHARES REGISTERED IN THE NAME OF A BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY, OR OTHER NOMINEE, you must contact that
broker, dealer, commercial bank, trust company, or other nominee if you
desire to tender your shares. SEE SECTION 3.
(circle)If you are unable to deliver the certificates for the shares or the
other required documents to Registrar and Transfer Company, you must
comply with the guaranteed delivery procedure described in Section 3.
You may contact Registrar and Transfer's Investor Relations Department
for assistance at 1-800-368-5948 or via e-mail at info@rtco.com.
10. Q: HOW DO I COMPLETE THE LETTER OF TRANSMITTAL?
A: The following points will help you in filling out the Letter of
Transmittal. Be sure to read the instructions included on the reverse
side of the form. If you are not sure how to complete the form, please
call Registrar and Transfer's Investor Relations Department at 1-800-
368-5948.
(circle)Enter your certificate numbers, number of shares, and number of
shares being tendered. SEE DESCRIPTION OF CERTIFICATES SURRENDERED.
(circle)Complete the order in which you want your shares purchased if
more than 100,000 shares are tendered. SEE INSTRUCTION 3 OF THE
LETTER OF TRANSMITTAL.
(circle)Complete the "Odd Lot" information only if you own fewer than
100 shares and wish to sell all of your shares. SEE INSTRUCTION 4 OF
THE LETTER OF TRANSMITTAL.
(circle)If you have lost a certificate, complete the box on the first
page and the Affidavit for Lost Stock Certificate(s) on the reverse
side of the form. SEE INSTRUCTION 8. (Also see Q/A 12.)
(circle)Complete the "Special Payment and/or Issuance Instructions" and
"Special Delivery Instructions" portions only if you want someone
else to receive the check, or shares are to be issued in someone
else's name if you are not tendering all of your shares. SEE
INSTRUCTIONS 1, 6, AND 7.
(circle)Sign, date, and include your telephone number on the form.
(Please be sure to sign your name(s) exactly as it/they appear in the
registration on your certificate.)
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(circle)Complete the Substitute Form W-9 on the top of the reverse side
or you may be subject to backup withholding tax. (See Q/A 11
concerning Substitute Form W-9).
11. Q: WHAT IS THE SUBSTITUTE FORM W-9 AND WHY DO I HAVE TO FILL IT OUT?
A: The Substitute Form W-9 is an IRS requirement. If we do not receive
it, the IRS will require that we deduct 28% from whatever monies are
due you. You should fill out the spaces provided for your name,
address, and social security number, and then sign and date this form.
Only one social security number and signature is needed on the
Substitute Form W-9 in the case of joint accounts. The Certificate of
Awaiting Taxpayer Identification Number should be used if you are
awaiting a social security number or other federal tax identification
number. Remember, your Tax Identification (TIN), in most cases, is
your social security number.
12. Q: WHAT HAPPENS IF MY CERTIFICATE(S) IS LOST, STOLEN, DESTROYED, OR NOT
ACCESSIBLE TO ME?
A: If you have lost a certificate, you should indicate under "Description
of Certificates Surrendered" on the Letter of Transmittal that the
certificate is lost, complete the section on the reverse side of the
form called "Affidavit for Lost Stock Certificate(s)" and return it
with the Letter of Transmittal along with a check to cover the lost
stock certificate bond premium of 1.5% of the value of your shares
(minimum $25.00). If your premium exceeds $1,500.00 you must contact
Registrar and Transfer's Investor Relations Department at 1-800-368-
5948.
13. Q: CAN I CHANGE MY MIND AFTER I HAVE TENDERED MY SHARES?
A: Yes. If you tender your shares and change your mind, you may withdraw
your shares at any time before our offer expires. In addition, after
our offer expires, if we have not accepted your shares for payment, you
may withdraw your shares at any time after 5:00 p.m., New York time, on
Thursday, July 6, 2006. SEE SECTION 4.
To withdraw your shares, you must deliver a written notice of your
withdrawal to us before the withdrawal deadlines described in the
preceding paragraph. Your notice of withdrawal must specify your name,
the number of shares to be withdrawn, and the name of the registered
holder of the shares. Some additional requirements apply if the
certificates for shares to be withdrawn have been delivered to us. You
may give notice by mail, courier delivery, personal delivery, or by
facsimile to Registrar and Transfer Company. SEE SECTION 4.
14. Q: WILL I HAVE TO PAY A BROKERAGE COMMISSION OR STOCK TRANSFER TAX IF I
TENDER MY SHARES?
A: If you are a registered shareholder and tender your shares directly to
us, you will not need to pay any brokerage commissions. If you hold
shares through a broker or bank, however, you should ask your broker or
bank to see if you will be charged a fee to tender your shares. SEE
SECTION 3.
If you instruct us in the Letter of Transmittal to make the payment for
the shares to the
registered holder, you will not incur any stock transfer tax. SEE
SECTION 5.
15. Q: WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SELLING
MY SHARES IN THE TENDER OFFER?
A: Generally, you will be subject to United States federal income taxation
when you receive cash from us in exchange for the shares you tender.
The cash you receive will be treated either as:
(circle)a sale or exchange eligible for capital gains treatment; or
(circle)a dividend likely subject to qualified dividend tax rates.
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We believe that most of our shareholders will be able to report the
sale as a capital gains transaction. SEE SECTION 13.
16. Q: WILL YOU PURCHASE ALL OF THE SHARES I TENDER TO YOU?
A: Yes, unless shareholders tender more than 100,000 shares. If more than
100,000 shares are tendered we will purchase shares based on the
following order of priority:
(circle)First, we will purchase shares from all holders of "odd lots" (less
than 100 shares) who properly tender all of their shares.
(circle)Second, we will purchase shares from all other shareholders who
properly tender shares on a pro rata basis. As a result, we will
purchase the same percentage of shares from each tendering shareholder in
this second category. We will announce this proration percentage, if it
is necessary, after our offer expires.
As we noted above, we may also choose to purchase an additional 2% of
the outstanding shares (approximately 34,055 shares), subject to
applicable legal rules. SEE SECTION 1.
17. Q: HOW AND WHEN WILL I BE PAID?
A: You will be paid the purchase price, in cash, as soon as practicable
after the expiration of the offer and the acceptance of the shares for
payment. No interest will be paid on the purchase price. There may be
tax consequences to receiving this payment. SEE SECTIONS 1, 3, 5, AND
13.
18. Q: HOW MANY SHARES WILL PSB PURCHASE?
A: We will purchase up to 100,000 shares of our common stock pursuant to
our offer. We also reserve the right to purchase additional shares up
to 2% of the outstanding shares (approximately 34,055 additional
shares), subject to applicable legal requirements. Our offer is not
conditioned on any minimum number of shares being tendered. SEE
SECTION 1.
19. Q: HOW WILL YOU PAY FOR THE SHARES?
A: We will need approximately $3,400,000 to purchase 100,000 shares and
pay the estimated expenses of our tender offer. We expect to have
sufficient cash to be able to pay for all shares tendered and the
related expenses without borrowing funds. SEE SECTION 8.
20. Q: IS YOUR OFFER SUBJECT TO ANY CONDITIONS?
A: Yes. Our obligation to accept and pay for your tendered shares is
conditioned upon the satisfaction or waiver of the conditions described
in Section 6 of this document. SEE SECTION 6.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION TO OUR
SHAREHOLDERS AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
SHARES PURSUANT TO THE OFFER. WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER ON OUR
BEHALF. DO NOT RELY ON ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR
REPRESENTATIONS, IF GIVEN OR MADE, AS HAVING BEEN AUTHORIZED BY US.
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FORWARD-LOOKING STATEMENTS
This Offer to Purchase and our other filings with the Securities and
Exchange Commission may both contain and incorporate by reference forward-
looking statements that involve risks, uncertainties, and assumptions.
Forward-looking statements are not guarantees of performance. If the risks or
uncertainties ever materialize or the assumptions prove incorrect, the results
of PSB may differ materially from those expressed or implied by such forward-
looking statements and assumptions. All statements other than statements of
historical fact are statements that could be deemed forward-looking statements.
Forward-looking statements may be identified by, among other things,
expressions of beliefs or expectations that certain events may occur or are
anticipated, and projections or statements of expectations. Risks,
uncertainties, and assumptions relating to forward-looking statements include
general business and economic conditions, changes in fiscal and monetary
policies, increased competition, changes in customers' preferences for types
and sources of financial services, the timely development and acceptance of new
products and services, increased costs of operation (including increased
funding costs), changes in laws and regulation that govern PSB's operations,
increases in credit risks and losses, loss of key personnel, unforeseen
liabilities arising from current or prospective claims or litigation, the
inability to execute expansion plans, errors in the application of critical
accounting policies, unanticipated adverse decisions by tax authorities, the
inability to pay dividends, lack of marketability of PSB stock, and the effect
of certain organizational anti-takeover provisions. These and other risks,
uncertainties, and assumptions are described under the caption "Risk Factors"
in Item 1A of our Annual Report on Form 10-K for the year ended December 31,
2005 and from time to time in our other filings with the Securities and
Exchange Commission after the date of that report. We assume no obligation,
and do not intend, to update these forward-looking statements.
INTRODUCTION
We invite our shareholders to tender up to 100,000 shares of our common
stock to us at a price of $33.75 per share upon the terms and subject to the
conditions described in this Offer to Purchase and in the related Letter of
Transmittal.
Our Board of Directors believes that the offer is in the best interests
of PSB. See Section 2. If you desire liquidity, our offer provides you with
an opportunity to sell all or a portion of your shares without the usual
transaction costs associated with open market sales. If you do not accept our
offer, your proportionate interest in our equity, and thus in our future
earnings and assets, will increase subject to our right to issue additional
shares and other equity securities in the future. See Section 2.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Subject to the terms and conditions described in this Offer to Purchase,
we will purchase up to 100,000 shares of our common stock at a price of $33.75
per share. To be purchased, shares must be validly tendered and not withdrawn
in accordance with Section 4 prior to the Expiration Time. The term
"Expiration Time" means 5:00 p.m., New York time, on Thursday, June 15, 2006,
or such later date as we determine as the period of time during which our offer
will remain open. If we extend our offer, the term "Expiration Time" will mean
the latest time and date at which our offer, as so extended by us, expires.
See Section 14 for a description of our right to extend, delay, terminate, or
amend our offer.
We reserve the right, in our sole discretion, to purchase more than
100,000 shares pursuant to the offer. In accordance with applicable
regulations of the Securities and Exchange Commission (the
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"Commission"), we may purchase an additional amount of shares not to exceed 2%
of the outstanding shares (a total of 34,055 additional shares) without
amending or extending the offer. See Section 14.
Certificates for all shares tendered and not purchased pursuant to the
offer will be returned to the tendering shareholders at our expense as promptly
as practicable following the Expiration Time. See "Proration" below, in this
Section 1.
PRIORITY OF PURCHASES
If more than 100,000 shares (or any greater number of shares as we may
elect to purchase pursuant to the offer) have been validly tendered and not
withdrawn, we will purchase validly tendered and not withdrawn shares on the
basis set forth below:
(circle)First, we will purchase all shares tendered and not withdrawn prior
to the Expiration Time by any Odd Lot Holder who tenders all shares
beneficially owned or held as record by such Odd Lot Holder; and
(circle)Second, after purchase of all Odd Lot shares, we will purchase all
other shares tendered and not withdrawn prior to the Expiration Time, on
a pro rata basis as described below.
ODD LOTS
For purposes of the offer, the term "Odd Lot shares" means all shares
validly tendered prior to the Expiration Time and not withdrawn by an Odd Lot
Holder. An "Odd Lot Holder" is any person:
(circle)who owns beneficially or of record fewer than 100 shares, and
(circle)who checks the appropriate box on the Letter of Transmittal.
This preference is not available to Odd Lot Holders who do not tender all of
their shares or to beneficial or record holders of an aggregate of 100 or more
shares, even if such holders have separate accounts or certificates
representing fewer than 100 shares.
PRORATION
In the event that more than 100,000 shares are tendered (or more than the
maximum number of shares we will purchase if we decide to purchase more than
100,000 shares), the shares we will purchase from any one shareholder (other
than Odd Lot Holders) will be pro rated. We will determine the proration
factor as soon as practicable following the Expiration Time. We will first
purchase all Odd Lot shares. Proration for each shareholder who is not an Odd
Lot Holder, will be based on the ratio of the number of shares tendered by each
shareholder and not withdrawn to the total number of shares tendered by all
shareholders, other than Odd Lot Holders, and not withdrawn. Any fractional
shares resulting from the proration factor will be rounded up to the next full
share. Because of the difficulty in determining the number of shares properly
tendered and not withdrawn, and because of the Odd Lot procedure, we do not
expect that we will be able to announce the final proration factor or commence
payment for any shares purchased pursuant to the offer until approximately
three business days after the Expiration Time.
As described in Section 13, the number of shares that we will purchase
from a shareholder may affect the federal income tax consequences to the
shareholder of such purchase and therefore may be relevant to a shareholder's
decision whether to tender shares. The Letter of Transmittal affords each
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tendering shareholder the opportunity to designate the order of priority in
which shares tendered are to be purchased in the event of proration.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
PURPOSE
With our sale of trust preferred securities in 2005, we believe that we
have more than adequate capital to fund currently anticipated growth of our
Peoples State Bank subsidiary, whether through internal operations or
appropriate acquisitions. Over the past several years, we have been purchasing
approximately one percent of our outstanding shares in open market
transactions. Given our current level of capital, our Board believes that the
purchase of shares in a tender offer is a more attractive use of our financial
resources.
Our offer also provides some opportunities for benefits to our
shareholders not present with past share purchases. Although prices for the
shares are quoted on the OTC Bulletin Board, quotations may not reflect actual
trades as transactions are sporadic and do not reflect an active trading market
for the shares. Therefore, shareholders may receive a price in the open market
that the Board believes may undervalue our stock. Moreover, shareholders may
not always be able to find a ready buyer for their shares.
Our offer also provides an opportunity for shareholders to sell shares
for cash without the usual transaction costs associated with market sales.
This alternative may be particularly attractive to Odd Lot Holders
(shareholders owning fewer than 100 shares) as they may avoid not only the
payment of brokerage commissions, but any applicable odd lot discounts payable
on a sale of their shares.
CERTAIN EFFECTS OF THE OFFER
Shareholders who do not tender their shares pursuant to our offer and
shareholders who otherwise retain an equity interest as a result of a partial
tender of shares or proration will continue to be shareholders. As a result,
those shareholders will realize a proportionate increase in their relative
equity interest in PSB and will bear the attendant risks associated with owning
PSB stock. We can give no assurance, however, that we will not issue
additional shares or equity interests in the future. Shareholders may be able
to sell non-tendered shares in the future on the OTC Bulletin Board or
otherwise, at a net price significantly higher or lower than the purchase price
in our offer.
Our offer will reduce the number of shares owned by non-affiliate
shareholders and available for trading in the securities markets, and is likely
to reduce the number of our shareholders. These reductions may result in lower
stock prices and/or reduced liquidity in the trading market for our stock
following completion of the offer.
Because our directors and executive officers have advised us that they do
not intend to tender any of their shares in our offer, the offer will increase
the proportional holdings of our directors and executive officers. However,
after termination of the offer, our directors and executive officers may, in
compliance with applicable law, sell their shares in open market transactions,
including through one or more pre-arranged stock trading plans in accordance
with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Any future sales by our directors and officers may be at
prices that are higher or lower than the purchase price to be paid to our
shareholders in our offer.
Shares we acquire pursuant to our offer will be retained as treasury
stock by us (unless and until we determine to retire such shares) and will be
available for us to issue without further shareholder action
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(except as required by applicable law or, if retired, the rules of any
securities exchange or over-the-counter market on which our shares may be
listed in the future). Shares may be reissued for many purposes, including,
but not limited to, the acquisition of other businesses, the raising of
additional capital for use in our business, and the satisfaction of obligations
under existing or future stock option and employee benefit plans. We have no
current plans for issuance of the shares repurchased pursuant to our offer.
OTHER TENDERS OR PURCHASES
We may, in the future, purchase additional shares on the open market or
in private transactions. We may also conduct additional tender offers. Any
such purchases may be on the same terms as, or on terms that are more or less
favorable to shareholders than, the terms of our offer. However, Rule 13e-4
promulgated under the Exchange Act, generally prohibits us and our affiliates
from purchasing any shares, other than pursuant to our offer, until at least
ten business days after the expiration or termination of our offer. Any
possible future purchases by us will depend on several factors including,
without limitation, the market price of our shares, the results of this offer,
our business and financial position, and general economic and market
conditions.
OTHER PLANS
Except as otherwise disclosed in this Offer to Purchase, we currently
have no plans, proposals, or negotiations underway that relate to or would
result in:
(circle)any extraordinary transaction, such as a merger, reorganization,
or liquidation, involving us or any of our subsidiaries;
(circle)any purchase, sale, or transfer of an amount of our assets or any
of our subsidiaries' assets which is material to us and our subsidiaries,
taken as a whole;
(circle)except as previously announced to our shareholders concerning
David K. Kopperud, any change in our present board of directors or
management or any plans or proposals to change the number or the term of
directors or to fill any vacancies on the board (except that we may fill
vacancies arising on the board in the future) or to change any material
terms of employment of any executive officer (See Section 10);
(circle)any material change in our present dividend rate or policy, our
indebtedness or capitalization, our corporate structure or our business;
(circle)any class of our equity securities becoming eligible for
termination of registration under Section 12(g) of the Exchange Act;
(circle)the suspension of our obligation to file reports under Section 13
of the Exchange Act;
(circle)the acquisition or disposition by any person of our securities
(except by us pursuant to this offer); or
(circle)any changes in our articles of incorporation or by-laws that
could impede the acquisition of control of us.
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3. PROCEDURES FOR TENDERING SHARES.
PROPER TENDER OF SHARES
For shares to be validly tendered pursuant to our offer:
(circle)You must comply with the instructions set forth in the Letter of
Transmittal and deliver the properly completed Letter of Transmittal,
the certificates for your shares, and any other documents required by
the Letter of Transmittal to us prior to the Expiration Time; or
(circle)You must comply with the guaranteed delivery procedures
described below.
YOU MAY ELECT THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING
CERTIFICATES FOR STOCK, THE LETTER OF TRANSMITTAL, AND ANY OTHER REQUIRED
DOCUMENTS. YOU ASSUME ALL RISKS ASSOCIATED WITH PROPER DELIVERY. IF DELIVERY
IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES
A signature guarantee IS NOT REQUIRED if the Letter of Transmittal is
signed by the registered holder(s) of the shares being tendered OR the shares
are tendered for the account of a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company (not a savings bank or a
savings and loan association) having an office, branch, or agency in the United
States (each of these entities is referred to as an "Eligible Institution").
A signature guarantee IS REQUIRED if the registered holder has completed
the "Special Delivery Instructions" or the "Special Payment and/or Issuance
Instructions" in the Letter of Transmittal. See Instructions 6 and 7 of the
Letter of Transmittal. For example, if a certificate for stock is registered
in the name of a person other than the person executing the Letter of
Transmittal, or if payment is to be made to a person other than the registered
holder, then the certificate must be endorsed or accompanied by an appropriate
stock power. The stock power must be signed exactly as the name of the
registered holder appears on the certificate or stock power guaranteed by an
Eligible Institution.
GUARANTEED DELIVERY
If you wish to tender shares under the offer and your certificates for
shares are not immediately available or time will not permit all required
documents to reach Registrar and Transfer Company prior to the Expiration Time,
your tender will still be effective if all the following conditions are met:
(circle)your tender is made by or through an Eligible Institution;
(circle)a properly completed and duly executed Notice of Guaranteed
Delivery in the form we have provided, is received by Registrar and
Transfer Company, as provided below, prior to the Expiration Time; and
(circle)Registrar and Transfer Company receives, within the period of three
trading days after the date of execution of that Notice of Guaranteed
Delivery, the certificates representing the shares being tendered, in
the proper form for transfer, together with (1) a Letter of Transmittal,
or a facsimile thereof, relating thereto, which has been properly
completed
-9-
and duly executed and includes all signature guarantees required thereon
and (2) all other required documents.
For purposes of the guaranteed delivery procedure, a "trading day" is any
day on which the New York Stock Exchange is open for business. A Notice of
Guaranteed Delivery must be delivered to Registrar and Transfer Company by
hand, overnight courier, facsimile transmission or mail before the Expiration
Time and must include a guarantee by an Eligible Institution in the form set
forth in the Notice of Guaranteed Delivery.
FEDERAL INCOME TAX BACKUP WITHHOLDING
Under the federal income tax backup withholding rules, unless an
exemption applies under applicable law and regulations, 28% of the gross
proceeds payable to you or another payee pursuant to the offer must be withheld
by us and remitted to the Internal Revenue Service. This withholding is not
required if you or the other payee provides the appropriate taxpayer
identification number (employer identification number or social security
number) and certifies that such number is correct. IF YOU TENDER YOUR SHARES,
YOU SHOULD COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 (INCLUDED AS PART OF THE
LETTER OF TRANSMITTAL) TO AVOID BACKUP WITHHOLDING. See Instruction 10 of the
Letter of Transmittal.
WE RECOMMEND THAT YOU CONSULT YOUR OWN TAX ADVISORS REGARDING THE
APPLICATION OF FEDERAL INCOME TAX WITHHOLDING REQUIREMENTS. For a discussion
of certain federal income tax consequences to tendering shareholders, see
Section 13.
DETERMINATION OF VALID TENDER
All questions as to the number of shares to be accepted and the validity,
form, eligibility (including time of receipt), and acceptance of any tender of
shares (including proper completion of the Letter of Transmittal) will be
determined by us, in our sole discretion. Our determination will be final and
binding on all parties. We reserve the absolute right to reject any or all
tenders of any shares that we determine are not in appropriate form or if we
determine that acceptance of the shares may be unlawful. We also reserve the
absolute right to waive any of the conditions of our offer or any defect or
irregularity in any tender with respect to any particular shares or any
particular shareholder. We will not consider any particular tender of shares
to have been properly made until all defects or irregularities have been cured
by the tendering shareholder or waived by us. We are not obligated to give you
notice of any defects or irregularities in tenders. Neither we nor any of our
directors, officers, employees, or agents will incur any liability for failure
to give any such notice.
YOUR REPRESENTATIONS AND WARRANTIES; OUR ACCEPTANCE CONSTITUTES AN AGREEMENT
You will have accepted the terms of our offer if you tender your shares
and submit a properly completed Letter of Transmittal. Your tender and
completion of the Letter of Transmittal also means that you are making the
following representations and warranties to us:
(circle)you have a "net long position" in the shares being tendered within
the meaning of Exchange Act Rule 14e-4;
(circle)the tender of shares complies with Rule 14e-4;
(circle)you have full power and authority to execute the Letter of
Transmittal and tender the shares; and
-10-
(circle)we will acquire good and marketable title free and clear of all
liens, security interests, charges, encumbrances, or other obligations
and that the shares are not subject to any adverse claims.
It is a violation of Rule 14e-4 for you, directly or indirectly, to tender
shares for your own account unless, at the time of tender and at the end of the
proration period or period during which the shares are accepted by lot
(including any extensions thereof),
(circle)you have a "net long position" equal to or greater than the amount
of the shares tendered, and
(circle)you will deliver the shares or cause the shares to be delivered in
accordance with the terms of the offer.
Rule 14e-4 provides a similar restriction applicable to the tender or guarantee
of a tender on behalf of another person. Our acceptance for payment of shares
tendered pursuant to our offer will constitute a binding agreement between you
and us upon the terms and conditions of our offer.
4. WITHDRAWAL RIGHTS.
Shares tendered pursuant to our offer may be withdrawn at any time prior
to the Expiration Time. Unless we have accepted tendered shares for payment
after the Expiration Time, you may also withdraw your shares at any time after
5:00 p.m. New York time, on Thursday, July 6, 2006.
For a withdrawal to be effective, a written notice of withdrawal must be
received by Registrar and Transfer Company before the applicable deadlines
described in the preceding paragraph. You may deliver your withdrawal in
person, by mail, courier delivery, or personal delivery. Any notice of
withdrawal must include your name, the name of the registered holder (if
different from your name), the number of shares tendered, and the number of
shares to be withdrawn. If the certificates for shares to be withdrawn have
been delivered to us, then, prior to the release of such certificates by us,
you must also submit the serial numbers shown on the particular certificates
for the shares to be withdrawn and the signature on the notice of withdrawal
must be guaranteed by an Eligible Institution (except in the case of shares
tendered by an Eligible Institution). We will determine, in our sole
discretion, all questions as to the form and validity (including time of
receipt) of notices of withdrawal. Our determination will be final and
binding. We are not obligated to give notice of any defects or irregularities
in any notice of withdrawal. Neither we, nor any of our directors, officers,
or employees will incur liability for failure to give any such notice.
You may not rescind a withdrawal. If the Expiration Time has not
occurred, withdrawn shares may be validly retendered prior to the Expiration
Time by again following one of the procedures described in Section 3.
If we extend our offer, if we are delayed in the purchase of shares, or
if we are unable to purchase shares pursuant to our offer for any reason, then,
without prejudice to our rights under the offer, we may, subject to applicable
law, retain tendered shares on our behalf, and such shares may not be withdrawn
except to the extent tendering shareholders are entitled to withdrawal rights
as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
As promptly as practicable following the Expiration Time, we will accept
for payment and pay for (and thereby purchase) shares validly tendered and not
withdrawn prior to the Expiration Time. In
-11-
accordance with applicable regulations of the Commission, we may purchase an
additional number of shares not to exceed 2% of our outstanding common stock
pursuant to our offer without amending or extending the offer. If:
(circle)we increase or decrease the price to be paid for the shares in our
offer, or
(circle)we increase the number of shares being sought in our offer by more
than 2% of our outstanding common stock, and
(circle)in either case, our offer is scheduled to expire at any time earlier
than the 10th business day from, and including, the date that notice of
such increase or decrease is first published, sent, or given in the
manner specified in Section 14,
our offer will be extended until the expiration of such period of 10 business
days.
We will pay for all of the shares accepted for payment pursuant to our
offer as soon as practicable after the Expiration Time. In all cases, payment
for shares tendered and accepted for payment pursuant to our offer will be made
promptly (subject to possible delay in the event of proration), but only after
timely receipt by us of certificates representing tendered shares and all
properly completed documents required by this offer.
In the event of proration, we will determine the proration factor and pay
for those tendered shares accepted for payment as soon as practicable after the
Expiration Time. We do not expect to be able to announce the final results of
any proration and commence payment for shares purchased until approximately
five business days after the Expiration Time. Certificates representing all
shares tendered and not purchased due to proration or because the Letter of
Transmittal was not properly completed will be returned to the tendering
shareholder as promptly as practicable after the Expiration Time without
expense to the tendering shareholders. Under no circumstances will interest on
the purchase price be paid by us because of any delay in making payment. In
addition, if certain events occur, we may not be obligated to purchase any
shares pursuant to our offer. See Section 6.
In most cases, we will pay or cause to be paid all stock transfer taxes,
if any, payable on the transfer to us of shares purchased pursuant to our
offer. If, however, payment of the purchase price is to be made to, or (in the
circumstances permitted by our offer) if unpurchased shares are to be
registered in the name of, any person other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than
the person(s) signing the Letter of Transmittal, the amount of all stock
transfer taxes, if any (whether imposed on the registered holder(s) or such
other person or otherwise) payable on account of the transfer to such person
will be deducted from the purchase price unless satisfactory evidence of the
payment of the stock transfer taxes, or exemption therefrom, is submitted.
6. CONDITIONS OF THE OFFER.
Our obligation to accept your shares or to pay for your shares is subject
to the conditions described below. Notwithstanding any other provision of our
offer, we will not be required to accept for payment or pay for any shares
tendered, and may terminate or amend and may postpone (subject to the
requirements of the Exchange Act for prompt payment for or return of shares
tendered) the acceptance for payment of shares tendered, if at any time after
May 10, 2006, and before we have made payment for any of the shares, any of the
following shall have occurred:
(circle)there shall have been threatened, instituted, or pending any action
or proceeding by any government or governmental, regulatory, or
administrative agency or authority or tribunal
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or any other person, domestic or foreign, or before any court, authority,
agency, or tribunal that:
(circle)challenges the acquisition of the shares pursuant to our offer or
otherwise in any manner relates to or affects the offer;
(circle)in our reasonable judgment, could materially and adversely affect
our business, condition (financial or other), income, or operations,
taken as a whole;
(circle)there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order, or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced, or deemed to be applicable to our offer or to us by
any legislative body, court, authority, agency, or tribunal which, in our
reasonable judgment, would or might directly or indirectly:
(circle)make the acceptance for payment of, or payment for, some or all of
the shares illegal or otherwise restrict or prohibit consummation of our
offer;
(circle)delay or restrict us or render us unable, to accept for payment or
pay for some or all of the shares;
(circle)materially affect our business, condition (financial or other),
income, operations, taken as a whole;
(circle)it has been publicly disclosed or we have learned that:
(circle)any person or "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) has acquired or proposes to acquire beneficial ownership of
more than 5% of our outstanding shares whether through the acquisition of
stock, the formation of a group, the grant of any option or right, or
otherwise (other than as disclosed in a Schedule 13D or 13G on file with
the Commission on May 10, 2006 or otherwise known to us on such date); or
(circle)any such person or group that on or prior to May 10, 2006, had filed
such a schedule with the Commission thereafter shall have acquired or
shall propose to acquire, whether through the acquisition of stock, the
formation of a group, the grant of any option or right, or otherwise,
beneficial ownership of additional shares representing 2% or more of the
outstanding shares;
(circle)there has occurred:
(circle)any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the over-the-counter
market;
(circle)a decrease of more than 10% in the market price of our common stock,
the Dow Jones Industrial Average, the Nasdaq Composite Index, or the S&P
500 Composite Index since May 10, 2006;
(circle)any change in the general political, market, economic, or financial
condition in the United States or abroad that could, in our reasonable
judgment, have a material adverse effect on our business, condition
(financial or otherwise),
-13-
income, operations, or ability to obtain financing generally, or the
trading in our common stock;
(circle)the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation on,
or any event which, in our reasonable judgment, might affect the
extension of credit by lending institutions in the United States;
(circle)the commencement of a war, armed hostilities, or other international
or national calamity directly or indirectly involving the United States;
or
(circle)in the case of any of the foregoing existing at the time of the
commencement of our offer, in our reasonable judgment, a material
acceleration or worsening thereof;
(circle)a tender or exchange offer with respect to some or all of our common
stock (other than our offer, or a merger, acquisition, or other business
combination proposal for PSB, shall have been proposed, announced, or
made by another person or group (within the meaning of Section 13(d)(3)
of the Exchange Act);
(circle)there has occurred any other event or events that has resulted, or
may in our reasonable judgment result, directly or indirectly, in an
actual or threatened change in our business, condition (financial or
other), income, operations, or stock ownership; and, in our reasonable
judgment, such event or events make it undesirable or inadvisable to
proceed with the offer or with such acceptance for payment.
The foregoing conditions are for our sole benefit and may be asserted by
us on or before the Expiration Time regardless of the circumstances giving rise
to any such condition (other than conditions that are proximately caused by our
action or failure to act) and may be waived by us, in whole or in part, at any
time and from time to time in our sole discretion. Our failure at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time or before the Expiration Time. Any
determination by us concerning the events described above will be final and
binding on all parties.
Our obligation to accept your shares or to pay for your shares is also
subject to the condition, which cannot be waived by us, that the purchase of
shares pursuant to the offer will not result in our common stock becoming
eligible for deregulation under the Exchange Act.
7. PRICE RANGE OF SHARES; DIVIDENDS.
Prices for our common stock are quoted on the OTC Bulletin Board. Prices
are also published periodically in the Milwaukee Journal Sentinel. The
following table sets forth, for the periods indicated, the high and low bid
quotations on the OTC Bulletin Board and the dividends per share for the
periods indicated. The quotations reflect bid prices, without retail mark-up,
mark-down, or commissions, and may not necessarily represent actual
transactions. There is no active established trading market for our common
stock.
-14-
2005 2004 2003
Quarter High Low Dividends High Low Dividends High Low Dividends
1st $32.15 $31.85 $ - $35.00 $33.30 $ - $24.86 $21.24 $ -
2nd $31.85 $30.75 $ 0.310 $34.75 $34.10 $ 0.300 $31.52 $24.86 $ 0.285
3rd $31.00 $30.65 $ - $34.50 $32.75 $ - $31.90 $31.43 $ -
4th $30.90 $29.25 $ 0.310 $32.75 $32.10 $ 0.300 $35.24 $31.43 $ 0.285
8. SOURCE AND AMOUNT OF FUNDS.
Assuming that we purchase 100,000 shares pursuant to the offer at a
purchase price of $33.75 per share, we expect the maximum amount required to
purchase shares pursuant to our offer and to pay related taxes, fees, and
expenses will be approximately $3,400,000. We expect the full amount of our
purchase obligation under our offer will be available from our general
corporate funds.
9. CERTAIN ADDITIONAL INFORMATION CONCERNING PSB.
GENERAL
We are a Wisconsin corporation and own all of the stock of our principal
subsidiary, Peoples State Bank. As a registered one-bank holding company under
the Bank Holding Company Act of 1956, we file periodic reports with the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"). Our
office is located at the main office of the bank, 1905 W. Stewart Avenue,
Wausau, Wisconsin 54401
Through our bank subsidiary, we are engaged in general commercial and
retail banking and operate eight full-service locations in the communities of
Wausau, Rib Mountain, Weston, Marathon, Rhinelander, Minocqua, and Eagle River,
Wisconsin.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the informational filing requirements of the Exchange
Act and accordingly, are required to file reports, statements, and other
information with the Commission relating to our business, financial condition,
and other matters, including information concerning our directors and officers
and their remuneration and beneficial ownership of our common stock. You can
inspect and copy our annual, quarterly, and special reports, proxy statements,
and other information filed with the Commission at the Commission's public
reference facilities, Room 1580, 100 F. Street, N.E., Washington, D.C. 20549;
233 Broadway, New York, New York 10279; and Suite 1400, Citicorp Center, 500 W.
Madison Street, Chicago, Illinois 60661-2511. You can also obtain copies of
these materials from the public reference section of the Commission at 100 F.
Street, N.E., Washington, D.C. 20549, at prescribed rates. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. The Commission also maintains a web site that contains reports, proxy
and information statements, and other information regarding registrants that
file electronically with the Commission (http://www.sec.gov).
SCHEDULE TO
Pursuant to Exchange Act Rule 13e-4, we have filed with the Commission an
Issuer Tender Offer Statement on Schedule TO which contains additional
information with respect to our offer. Our Schedule TO, including the exhibits
and any amendments thereto, may be examined, and copies may be obtained, at the
same places and in the same manner as is set forth in the preceding paragraph
with respect to information concerning us.
-15-
INFORMATION INCORPORATED BY REFERENCE.
The rules of the SEC allow us to "incorporate by reference" information
into this document, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. This
Offer to Purchase incorporates by reference the descriptions of our
compensation plans and agreements with our directors and executive officers
contained under the captions "The Board of Directors - The Board - Certain
Relationships and Related Transactions," "The Board - Compensation of
Directors," and "Executive Officer Compensation - Employment and Change of
Control Agreements" in our definitive proxy statement filed with the Commission
on March 10, 2006
WE RECOMMEND THAT YOU REVIEW OUR FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2005, AND OUR PROXY STATEMENT DATED MARCH 10, 2006, AS WELL AS SUBSEQUENT
FILINGS WITH THE COMMISSION IN CONNECTION WITH YOUR EVALUATION OF OUR TENDER
OFFER.
10. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES.
MATERIAL AGREEMENTS
Except for outstanding options to purchase stock granted from time to
time to certain employees (including executive officers) pursuant to our 2001
Stock Option Plan (see "Beneficial Ownership of Shares," below), neither we
nor, to the best of our knowledge, any of our affiliates, directors, or
executive officers is a party to any contract, arrangement, understanding, or
relationship with any other person relating, directly or indirectly, to our
offer with respect to any of our securities including, but not limited to, any
contract, arrangement, understanding, or relationship concerning the transfer
or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss, or
the giving or withholding of proxies, consents, or authorizations. Our
directors and executive officers have advised us that they do not intend to
tender any shares in the offer.
BENEFICIAL OWNERSHIP OF SHARES
As of May 1, 2006, we had 1,702,748 shares of stock issued and
outstanding and options with respect to 19,794 shares were exercisable within
60 days of such date. The 100,000 shares that we are offering to purchase
represent approximately 5.9% of the shares outstanding on May 1, 2006.
The following table sets forth, based on statements filed with the
Securities and Exchange Commission ("SEC") or information otherwise known to
us, the name of each person believed by us to own more than 5% of our common
stock and the number of shares of common stock held by each person.
SHARES OF BANK STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED CLASS
The Banc Fund Company, LLC/ 108,700 6.4%
Charles J. Moore(1)
208 S. LaSalle Street
Chicago, IL 60604
Lawrence Hanz, Jr. 92,893 5.5%
2102 Clarberth
Schofield, WI 54476
-16-
<FN>
(1) Shares held in various funds controlled by The Banc Fund Company, LLC,
over which Mr. Moore exercises sole voting and dispositive power.
The following table sets forth, based on statements filed with the SEC,
the amount of common stock which is deemed beneficially owned on May 1, 2006,
by each of our directors, each of the current executive officers named in the
summary compensation table, and our directors and executive officers as a
group. The amounts indicated include, as applicable, shares held by spouses
and minor children, shares held indirectly in trust for the benefit of the
directors and/or their spouses, children, or parents, shares held by businesses
or trusts over which directors exercise voting control, and shares subject to
exercisable options. The address of each person listed is c/o PSB Holdings,
Inc., 1905 W. Stewart Avenue, Wausau, WI 54401.
SHARES OF STOCK PERCENT OF
NAME BENEFICIALLY OWNED CLASS
Gordon P. Connor 20,106(1) 1.2%
Patrick L. Crooks 16,788 *
William J. Fish 18,665 1.1%
Charles A. Ghidorzi 613 *
Gordon P. Gullickson 6,044 *
David K. Kopperud 20,502(2) 1.2%
Thomas R. Polzer 20,012 1.2%
William M. Reif 3,532 *
Thomas A. Riiser 17,556 1.0%
John H. Sonnentag 6,102 *
David A. Svacina 10,988(2) *
Scott M. Cattanach 820(2) *
All directors and officers as a group (12 persons) 141,728(2) 8.3%
<FN>
* Less than 1%
(1) Includes 6,331 shares held by two trusts for which beneficial ownership is
disclaimed.
(2) Includes shares which may be acquired through the exercise of options on or
before 60 days from the record date, March 1, 2006, for Mr. Kopperud, 8,973
shares; Mr. Svacina, 3,263; and Mr. Cattanach, 560 shares.
RECENT TRANSACTIONS IN OUR STOCK
Except as described herein, neither we, nor, to the best of our
knowledge, any of our directors or executive officers, nor any affiliates of
any of the foregoing, had any transactions in the stock during the 60 business
days prior to the date hereof.
The following open market transactions occurred during the 60 days prior
to the date hereof:
Name Date Transactions No. of Shares Purchase Price
Gordon P. Connor 3/15/06 Sale 350 shares $30.75
David K. Kopperud 3/15/06 Purchase 500 shares $30.75
PSB 3/17/06 Purchase 4,000 shares $30.75
-17-
11. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
Our purchase of shares pursuant to our offer will reduce the number of
shares that might otherwise be traded publicly and may reduce the number of
shareholders. One of the conditions of our offer to purchase, which cannot be
waived by us, is that our purchase of shares pursuant to the offer will not
result in our common stock becoming eligible for deregistration under the
Exchange Act.
Our common stock is not currently a "margin security" under the rules of
the Federal Reserve Board.
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
We are required, under certain circumstances, to provide prior notice to
the Federal Reserve Board if the gross consideration to be paid for our common
stock, when added to the amount paid for other purchases of common stock,
during the preceding twelve-month period is equal to 10% or more of our
consolidated net worth. We do not believe that such prior notice requirement
is applicable to our offer and no other regulatory approval is required to
purchase the shares pursuant to the offer.
13. MATERIAL FEDERAL INCOME TAX CONSEQUENCES.
The following paragraphs describe the material United States federal
income tax consequences of the sale of shares pursuant to our offer under the
Internal Revenue Code of 1986, as amended (the "Code"). We recommend that you
consult your own tax advisor as to the particular United States federal income
tax consequences to you of tendering shares pursuant to our offer and the
applicability and effect of any state, local, or foreign tax laws and recent
changes in applicable tax laws.
GENERAL
The following is a discussion of the material United States federal
income tax consequences to shareholders with respect to a sale of shares
pursuant to our offer. The discussion is based upon the provisions of the
Code, Treasury regulations, Internal Revenue Service ("IRS") rulings, and
judicial decisions, all in effect as of the date hereof and all of which are
subject to change (possibly with retroactive effect) by subsequent legislative,
judicial, or administrative action. The discussion does not address all
aspects of United States federal income taxation that may be relevant to a
particular shareholder in light of the shareholder's particular circumstances
or to certain types of holders subject to special treatment under the United
States federal income tax laws (such as certain financial institutions, tax
exempt organizations, life insurance companies, dealers in securities or
currencies, employee benefit plans, or shareholders holding the shares as part
of a conversion transaction, as part of a hedge or hedging transaction, or as a
position in a straddle for tax purposes). In addition, the discussion below
does not consider the effect of any foreign, state, local, or other tax laws
that may be applicable to particular shareholders. The discussion assumes that
the shares are held as "capital assets" within the meaning of Section 1221 of
the Code. We have neither requested nor obtained a written opinion of counsel
or a ruling from the IRS with respect to the tax matters discussed below.
CHARACTERIZATION OF THE SURRENDER OF SHARES PURSUANT TO THE OFFER TO PURCHASE
If you surrender shares to us pursuant to our offer, it will be a taxable
transaction for United States federal income tax purposes and may also be a
taxable transaction under applicable state, local, and foreign tax laws. The
United States federal income tax consequences may vary depending upon your
particular facts and circumstances. Under Section 302 of the Code, the
surrender of shares by you pursuant to our offer will be treated as a "sale or
exchange" of such shares for United States federal income tax purposes if the
receipt of cash upon surrender (1) is "substantially disproportionate" with
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respect to you, (2) results in a "complete redemption" of your interest in PSB,
or (3) is "not essentially equivalent to a dividend" with respect to you (each
as described below).
If any of the above three tests is satisfied, and the surrender of the
shares is therefore treated as a "sale or exchange" of such shares for United
States federal income tax purposes, you will recognize gain or loss equal to
the difference between the amount of cash received by you and your tax basis in
the shares surrendered pursuant to our offer. Any such gain or loss will be
capital gain or loss, and will be long term capital gain or loss if the shares
have been held for more than one year.
If none of the above three tests is satisfied, you will be treated as
having received a distribution by us with respect to your shares in an amount
equal to the cash received by you pursuant to our offer. The distribution will
be treated as dividend income to the extent of our current or accumulated
earnings and profits for tax purposes. The amount of the distribution in
excess of our current or accumulated earnings and profits will be treated as a
return of your tax basis in the shares, and then as gain from the sale or
exchange of the shares. If you are treated as having received a distribution
by us with respect to your shares, your basis in your remaining shares will
generally be adjusted to take into account the return of your basis in the
shares tendered.
To the extent your distribution is dividend income from our current or
accumulated earnings and profits, you may be eligible for the 15% (or possibly
lower) tax rate for qualified dividend income. The determination of whether
you are eligible for this lower tax rate will depend in large part on how long
you have owned your shares. Although reduced tax rates apply to both capital
gain and qualified dividend income, it may be more advantageous for you to
qualify for the lower capital gain rate because doing so would ensure that you
recover the entire basis of your shares tax free. We recommend that you
consult your own tax advisers with respect to the tax rate and classification
applicable to your distribution.
CONSTRUCTIVE OWNERSHIP
In determining whether any of the three tests under Section 302 of the
Code is satisfied, you must take into account not only the shares that are
actually owned by you, but also shares that are constructively owned by you
within the meaning of Section 318 of the Code. Under Section 318 of the Code,
you may constructively own shares actually owned, and in some cases
constructively owned, by certain related individuals or entities and shares
that you have the right to acquire by exercise of an option or by conversion.
PRORATION
Contemporaneous dispositions or acquisitions of shares by a shareholder
or related individuals or entities may be deemed to be part of a single
integrated transaction and may be taken into account in determining whether any
of the three tests under Section 302 of the Code has been satisfied. You
should be aware that because proration may occur in the offer, even if all the
shares actually and constructively owned by you are tendered pursuant to our
offer, fewer than all of these shares may be purchased by us. Thus, proration
may affect whether the surrender by you will meet any of the three tests under
Section 302 of the Code.
SECTION 302 TESTS
Generally, the receipt of cash by you will be "substantially
disproportionate" if the percentage of our outstanding shares actually and
constructively owned by you immediately following the surrender of shares
pursuant to our offer is less than 80% of the percentage of the outstanding
shares actually and constructively owned by you immediately before the sale of
shares pursuant to our offer. There are
-19-
additional tests which must be satisfied in order to qualify as a substantially
disproportionate transaction. We recommend that you consult your tax advisors
with respect to the application of the "substantially disproportionate" test to
your particular situation.
The receipt of cash by you will be a "complete redemption" if either (1)
you own no shares either actually or constructively immediately after the
shares are surrendered pursuant to our offer, or (2) you actually own no shares
immediately after the surrender of shares pursuant to our offer and, with
respect to shares of family members constructively owned by you immediately
after our offer, you are eligible to waive (and effectively waive) constructive
ownership of all such shares under procedures described in Section 302(c) of
the Code. A director, officer, or employee of PSB is not eligible to waive
constructive ownership under the procedures described in Section 302(c) of the
Code.
Even if the receipt of cash by you fails to satisfy the "substantially
disproportionate" test or the "complete redemption" test, you may nevertheless
satisfy the "not essentially equivalent to a dividend" test if your surrender
of shares pursuant to our offer results in a "meaningful reduction" in your
interest in PSB. Whether the receipt of cash by you will be "not essentially
equivalent to a dividend" will depend upon your individual facts and
circumstances. The IRS has indicated in published rulings that even a small
reduction in the proportionate interest of a small minority shareholder in a
publicly held corporation who exercises no control over corporate affairs may
constitute such a "meaningful reduction." If you are expecting to rely upon
the "not essentially equivalent to a dividend" test, We recommend that you
consult your own tax advisors as to its application in your particular
situation.
CORPORATE SHAREHOLDER DIVIDEND TREATMENT
If a sale of shares by a corporate shareholder is treated as a dividend,
the corporate shareholder may be entitled to claim a deduction equal to 70% or
more of the dividend under Section 243 of the Code, subject to other applicable
limitations. Corporate shareholders should, however, consider the effect of
Section 246(c) of the Code, which disallows a dividends received deduction with
respect to stock that is held for 45 days or less. For this purpose, the
length of time a taxpayer is deemed to have held stock may be reduced by
periods during which the taxpayer's risk of loss with respect to the stock is
diminished by reason of the existence of certain options or other transactions.
Moreover, under Section 246A of the Code, if a corporate shareholder has
incurred indebtedness directly attributable to an investment in shares, the
dividends received deduction may be reduced.
In addition, amounts received by a corporate shareholder pursuant to our
offer that are treated as a dividend may constitute an "extraordinary dividend"
under Section 1059 of the Code. The "extraordinary dividend" rules of the Code
are highly complicated. Accordingly, any corporate shareholder that might have
a dividend as a result of the sale of shares pursuant to our offer should
review the "extraordinary dividend" rules to determine the applicability and
impact of such rules to it.
WE RECOMMEND THAT SHAREHOLDERS CONSULT THEIR OWN TAX ADVISORS REGARDING
ANY POSSIBLE IMPACT ON THEIR OBLIGATION TO MAKE ESTIMATED TAX PAYMENTS AS A
RESULT OF THE RECOGNITION OF ANY CAPITAL GAIN (OR THE RECEIPT OF ANY ORDINARY
INCOME) CAUSED BY THE SURRENDER OF ANY SHARES TO US PURSUANT TO OUR OFFER TO
PURCHASE.
BACKUP WITHHOLDING
See Section 3 with respect to the application of the United States
federal income tax backup withholding.
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14. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
We expressly reserve the right, in our sole discretion, at any time and
from time to time and for any reason, to extend the period of time during which
our offer is open. If we extend our offer, it will also delay acceptance for
payment of, and payment for, any shares. We may extend our offer by giving
oral or written notice of extension to you and making a public announcement.
We also expressly reserve the right, in our sole discretion, to terminate
our offer and not accept for payment or pay for any shares not theretofore
accepted for payment or paid for. We may also, subject to applicable law,
postpone payment for the shares upon the occurrence of any of the conditions
specified in Section 6. We must give oral or written notice of such
termination or postponement to you and make a public announcement. Our
reservation of the right to delay payment for the shares which have been
accepted for payment is limited by Exchange Act Rule 13e-4(f)(5) which requires
that we must pay the consideration offered or return the shares tendered
promptly after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, we further reserve the right,
in our sole discretion, and for any reason, to amend our offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered to holders of shares or by decreasing or increasing the number of
shares being sought in our offer). Amendments to our offer may be made at any
time and from time to time and will be effective upon public announcement by
us. Public announcement, in the case of an extension, must be issued no later
than 9:00 a.m., New York time, on the next business day after the last
previously scheduled or announced Expiration Time. Any public announcement
made pursuant to our offer will be disseminated promptly to shareholders in a
manner reasonably designed to inform shareholders of such change.
If we materially change the terms of our offer or the information
concerning the offer, or if we waive a material condition of our offer, we will
extend the offer to the extent required by Exchange Act Rules 13e-4(d)(2) and
13e-4(e)(2). These rules require that the minimum period during which an offer
must remain open following material changes in the terms of the offer or
information concerning the offer (other than a change in price or a change in
percentage of securities sought) will depend on the facts and circumstances,
including the relative materiality of such terms or information. If (1) we
increase or decrease the price to be paid for our shares or the number of
shares being sought in our offer and, in the event of an increase in the number
of shares being sought, such increase exceeds 2% of the outstanding shares, and
(2) our offer is scheduled to expire at any time earlier than the 10th business
day from, and including, the date that notice of an increase or decrease is
first published, sent or given in the manner specified in this Section 14, the
offer will then be extended until the expiration of such 10 business days.
15. FEES AND EXPENSES.
We have retained our stock transfer agent, Registrar and Transfer
Company, to act on our behalf with respect to the distribution of this Offer to
Purchase and Letter of Transmittal to our shareholders. Registrar and Transfer
Company will receive reasonable and customary compensation for its services,
will be reimbursed for its reasonable out-of-pocket expenses, and will be
indemnified against certain liabilities in connection with our offer, including
certain liabilities under federal securities laws. We will not pay fees or
commissions to any broker, dealer, or other person for soliciting tenders
pursuant to our offer. We will, however, upon request, reimburse brokers,
dealers, and commercial banks for customary mailing and handling expenses
incurred by such persons in forwarding our offer and related materials to the
beneficial owners of shares held by any such person as a nominee or in a
fiduciary capacity. No broker, dealer, commercial bank, or trust company has
been authorized to act as our agent for purposes of our offer.
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We will pay or cause to be paid all stock transfer taxes, if any, on our
purchase of shares unless payment of the purchase price is to be made to, or
shares not tendered or not purchased is to be registered in the name of, any
person other than the registered holder; or if tendered shares are registered
in the name of any person other than the person who executes the Letter of
Transmittal.
16. MISCELLANEOUS.
We are not aware of any jurisdiction where the making of our offer is not
in compliance with applicable law. If we become aware of any jurisdiction
where the making of our offer is not in compliance with any valid applicable
law, we will make a good faith effort to comply with such law. If, after such
good faith effort, we cannot comply with such law, our offer will not be made
to (nor will tenders be accepted from or on behalf of) the holders of shares
residing in such jurisdiction. In any jurisdiction the securities or blue sky
laws of which require our offer to be made by a licensed broker or dealer, the
offer shall be deemed to be made on our behalf by one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Facsimile copies of the Letter of Transmittal will be accepted from
Eligible Institutions. The Letter of Transmittal and certificates for shares
and any other required documents should be sent or delivered by each
shareholder or his or her broker, dealer, commercial bank, trust company, or
other nominee to us.
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