FORM OF PROXY STATEMENT
OF
PHS BANCORP, INC.
744 SHENANGO ROAD
BEAVER FALLS, PENNSYLVANIA 15010
Dear Stockholder:
You are invited to attend a Special Meeting of stockholders of PHS
Bancorp, Inc., Beaver Falls, Pennsylvania (the "Middle Tier Holding Company") on
______, _______ __, 2001 at __:__ _.m., Eastern Time, at our office located at
744 Shenango Road, Beaver Falls, Pennsylvania (the "Special Meeting"). Only our
stockholders of record as of _______ __, 2001 will be entitled to vote at the
Special Meeting.
At the Special Meeting, you will be asked to approve a plan of
conversion and reorganization and plans of merger (the "Plan") that will allow
us to convert to a full stock holding company. In connection with the Plan, the
proposed new holding company, PHSB Financial Corporation, will issue shares of
common stock to our stockholders of record in exchange for their shares of the
Middle Tier Holding Company and will also offer the percentage of the Middle
Tier Holding Company currently owned by the Mutual Holding Company to the
current depositors of Peoples Home Savings Bank. Any remaining shares may be
offered to the public, with a preference to our existing stockholders. Your
percentage of ownership in PHSB Financial Corporation will be equal to
approximately the same percentage ownership in the Middle Tier Holding Company.
It is very important for your shares to be represented at the Special
Meeting, regardless of whether you plan to attend in person. One of the
conditions to approve the Plan as required by the Pennsylvania Department of
Banking is the affirmative vote of at least two-thirds of the total votes
eligible to be cast by all our stockholders present in person or by proxy
(including those shares held by PHS Bancorp, M.H.C.) and the affirmative vote of
the majority of the votes cast by our stockholders present in person or by proxy
(other than those held by PHS Bancorp, M.H.C.). Consequently, a failure to vote
will have the same effect as a vote against the Plan. Accordingly, it is
important that you take the time to consider and vote upon these matters.
YOUR VOTE IS IMPORTANT. WE URGE YOU TO EXECUTE, DATE AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE TO
ENSURE THAT YOUR SHARES WILL BE VOTED AT THE SPECIAL MEETING.
The enclosed proxy materials and prospectus of PHSB Financial
Corporation contain a more detailed analysis of the Plan. For the reasons set
forth in the Proxy Statement and the Prospectus, the Board of Directors
unanimously recommends a vote FOR the Plan. If you are planning to attend the
Special Meeting, please let us know by marking the appropriate box on the proxy
card. Thank you for taking the time to consider this matter.
Sincerely,
-------------------------------------
James P. Wetzel, Jr.
President and Chief Executive Officer
PHS BANCORP, INC.
744 SHENANGO ROAD
BEAVER FALLS, PENNSYLVANIA 15010
(724) 846-6135
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
Notice is hereby given that a Special Meeting of Stockholders (the
"Special Meeting") of PHS Bancorp, Inc. (the "Middle Tier Holding Company") will
be held at the office of the Middle Tier Holding Company, located at 744
Shenango Road, Beaver Falls, Pennsylvania on ______, _______ __, 2001 at __:__
_.m. Eastern Time. Business to be taken up at said special meeting shall be to
consider and vote upon the approval of:
(1) A plan of conversion and reorganization and plans of merger (the
"Plan") pursuant to which (i) Peoples Home Savings Bank (the "Bank") will
establish PHSB Financial Corporation (the "Holding Company") as a new
Pennsylvania stock holding company; (ii) PHS Bancorp, M.H.C. (the"Mutual Holding
Company") will convert into an interim stock savings bank ("Interim Bank No.
1"); (iii) the Middle Tier Holding Company will adopt an interim stock savings
bank charter ("Interim Bank No. 2"); (iv) Interim Bank No. 2 will merge into the
Bank ("Merger No. 1") with the Bank as the surviving entity; (v) immediately
following Merger No. 1, Interim Bank No. 1, formerly the Mutual Holding Company,
will merge with and into the Bank ("Merger No. 2") with the Bank as the
surviving entity; (vi) the shares of Middle Tier Holding Company common stock
previously held by the Mutual Holding Company will be canceled, and eligible
depositors of the Bank who hold liquidation interests in the Mutual Holding
Company as of certain specified dates will be granted interests in a liquidation
account established by the Bank in exchange for such interests in the Mutual
Holding Company; (vii) the Holding Company will form an interim corporation, a
new, wholly owned first-tier subsidiary with an interim stock savings bank
charter ("Interim Bank No. 3"); (viii) immediately following Merger No. 2,
Interim Bank No. 3 will merge with and into the Bank ("Merger No. 3"); (ix) as a
result of Merger No. 3, Bank stock deemed held by public stockholders
(stockholders other than the Mutual Holding Company) will be converted into
Holding Company common stock based upon the exchange ratio that is designed to
ensure that public stockholders will own approximately the same percentage of
Holding Company common stock as the percentage of Middle Tier Holding Company
stock owned by them prior to the Conversion; and (x) the Holding Company shall
sell the conversion stock in the offerings, as described in the Plan; and
(2) Any other matters that may lawfully come before the Special
Meeting. As of the date of mailing of this Notice, the Board of Directors is not
aware of any other matters that may come before the Special Meeting.
Stockholders of the Middle Tier Holding Company, at the close of
business on __________ __, 2001 are entitled to notice of and to vote at the
Special Meeting.
By Order Of The Board of Directors
----------------------------------
John M. Rowse
Secretary
________ __, 2001
Beaver Falls, Pennsylvania
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YOUR VOTE IS VERY IMPORTANT. THE ENCLOSED PROSPECTUS PROVIDES A MORE
DETAILED DESCRIPTION OF THE PROPOSED TRANSACTION AND IS INCORPORATED BY
REFERENCE HERETO. IF YOU HAVE ANY QUESTIONS, PLEASE CALL OUR STOCK INFORMATION
CENTER AT (724) 846-6020.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE PLAN BY COMPLETING THE ENCLOSED PROXY CARD AND PROMPTLY
RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE. YOUR
VOTE IS VERY IMPORTANT. ANY PROXY GIVEN BY A STOCKHOLDER MAY BE REVOKED BY
FILING WITH THE SECRETARY OF THE MIDDLE TIER HOLDING COMPANY A WRITTEN
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER
PRESENT AT THE MEETING MAY REVOKE HIS PROXY AND VOTE IN PERSON ON EACH MATTER
BROUGHT BEFORE THE SPECIAL MEETING. IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE
NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER IN ORDER TO VOTE PERSONALLY AT THE MEETING.
- --------------------------------------------------------------------------------
PHS BANCORP, INC.
744 Shenango Road
Beaver Falls, Pennsylvania 15010
(724) 846-6135
PROXY STATEMENT
________ __, 2001
YOUR PROXY, IN THE FORM ENCLOSED, IS SOLICITED BY THE BOARD OF
DIRECTORS OF THE MIDDLE TIER HOLDING COMPANY, FOR USE AT THE SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON ______, ________ __, 2001, AND AT ANY ADJOURNMENT OF
THAT MEETING, FOR THE PURPOSES SET FORTH IN THE FOREGOING NOTICE OF SPECIAL
MEETING.
VOTING IN FAVOR OF THE PLAN WILL NOT OBLIGATE ANY PERSON TO PURCHASE
CONVERSION STOCK. SHARES OF CONVERSION STOCK ARE BEING OFFERED ONLY BY THE
PROSPECTUS.
THIS PROXY STATEMENT IS A SUMMARY OF INFORMATION ABOUT THE MUTUAL
HOLDING COMPANY, THE MIDDLE TIER HOLDING COMPANY, THE BANK AND THE HOLDING
COMPANY (COLLECTIVELY, THE "PRIMARY PARTIES") AND THE PROPOSED CONVERSION. A
MORE DETAILED DESCRIPTION OF THE PRIMARY PARTIES AND THE CONVERSION IS INCLUDED
IN THE PROSPECTUS WHICH IS INCORPORATED BY REFERENCE HEREIN.
VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL
Only stockholders of record at the close of business on __________ __,
2001 (the "Voting Record Date") are entitled to notice of and to vote at the
Special Meeting. Consummation of the conversion is conditioned upon the approval
of the Plan by the Pennsylvania Department of Banking (the "Department") and the
non-objection of the Federal Deposit Insurance Corporation ("FDIC"), the
approval of the Bank's merger applications filed with the Department and the
FDIC, the approval of the Holding Company's application filed with the Board of
Governors of the Federal Reserve System, as well as (1) the approval of at least
two-thirds of the total number of votes eligible to be cast by the stockholders
of the Middle Tier Holding Company, and a majority of the votes cast at the
Special Meeting by the stockholders of the Middle Tier Holding Company other
than the Mutual Holding Company (the "Public Stockholders"), as of the close of
business on the Voting Record Date, and (2) the ratification of at least a
majority of the votes entitled to be cast by the current depositors of the Bank
as of the voting record date for the special meeting of current depositors
called for the purpose of considering the Plan. The Mutual Holding Company
intends to vote its shares of the Middle Tier Holding Company Common Stock,
which amounts to 60% of the outstanding shares, in favor of the Plan at the
Special Meeting.
This Proxy Statement, including the enclosed prospectus dated ________
__, 2001, which is incorporated by reference, and related materials are first
being mailed to stockholders of the Middle Tier Holding Company on or about
________ __, 2001.
THE BOARD OF DIRECTORS OF THE MIDDLE TIER HOLDING COMPANY URGES YOU TO
VOTE FOR THE PLAN AND TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE, EVEN IF YOU DO NOT INTEND TO
PURCHASE COMMON STOCK. THIS WILL ENSURE THAT YOUR VOTE WILL BE COUNTED.
PROXIES
The Board of Directors of the Middle Tier Holding Company is soliciting
the proxy which accompanies this Proxy Statement for use at the Special Meeting.
Stockholders may vote at the Special Meeting or any adjournment thereof in
person or by proxy. All properly executed proxies received by the Board of
Directors of the Middle Tier Holding Company will be voted in accordance with
the instructions indicated thereon by the stockholders giving such proxies. If
no contrary instructions are given, such proxies will be voted in favor of the
Plan as described herein. If any other matters are properly presented before the
Special Meeting and may properly be voted upon, the proxies solicited hereby
will be voted on such matters in accordance with the best judgment of the proxy
holders named therein. Any stockholder giving a proxy will have the right to
revoke his proxy at any time before it is voted by delivering written notice or
a duly executed proxy bearing a later date to the Secretary of the Middle Tier
Holding Company, provided that such notice or proxy is received by the Secretary
prior to the Special Meeting or any adjournment thereof, or by attending the
Special Meeting and voting in person. If there are not sufficient votes for
approval of the Plan at the time of the Special Meeting, the Special Meeting may
be adjourned to permit further solicitation of proxies.
Proxies may be solicited by officers, directors or other employees of
the Middle Tier Holding Company in person, by telephone or through other forms
of communication. Such persons will be reimbursed by the Middle Tier Holding
Company for their expenses incurred in connection with such solicitation.
_______________________ ("_______") will assist in the solicitation of proxies.
________ will receive a $_______ management fee plus out-of-pocket expenses (up
to $________) for its management and proxy solicitation services in connection
with the Conversion.
The proxies solicited hereby will be used only at the Special Meeting
and at any adjournment thereof; they will not be used at any other meeting.
As of __________ __, 2001, the Mutual Holding Company held 1,518,000
shares or 60% of the outstanding shares of Middle Tier Holding Company Common
Stock and the Mutual Holding Company intends to vote all such shares in favor of
the Plan.
THE APPROVAL OF THE PLAN REQUIRES THE AFFIRMATIVE VOTE OF AT LEAST
TWO-THIRDS OF THE TOTAL VOTES ELIGIBLE TO BE CAST BY ALL STOCKHOLDERS OF THE
MIDDLE TIER HOLDING COMPANY, INCLUDING THE MUTUAL HOLDING COMPANY, AND THE
AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF THE TOTAL VOTES CAST BY THE PUBLIC
STOCKHOLDERS.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP THEREOF
On the Voting Record Date, there were 2,529,600 shares of the Middle
Tier Holding Company Common Stock outstanding, and the Middle Tier Holding
Company had no other class of equity securities outstanding. Each share of the
Middle Tier Holding Company Common Stock outstanding on the Voting
2
Record Date is entitled to one vote at the Special Meeting on all matters
properly presented at the Special Meeting.
As provided in the Articles of Incorporation of the Middle Tier Holding
Company, for a period of five years from the effective date of the conversion of
the Bank from mutual to stock form, no person, except for the Mutual Holding
Company, is permitted to beneficially own in excess of 10% of the outstanding
shares of Common Stock (the "Limit") of the Middle Tier Holding Company, and any
shares of Common Stock acquired in violation of this Limit, are not entitled to
any vote. A person or entity is deemed to beneficially own shares owned by an
affiliate of, as well as persons acting in concert with, such person or entity.
A majority of the outstanding shares of Middle Tier Holding Company
Common Stock entitled to vote, represented in person or by proxy, shall
constitute a quorum at the Special Meeting. Shares as to which the "ABSTAIN" box
has been marked on the proxy and any shares held by brokers in street name for
customers which are not voted in the absence of instructions from the customers
("broker non-votes") will not be counted as present for determining if a quorum
is present. Because the Plan must be approved by the vote of at least two-thirds
of the outstanding Middle Tier Holding Company Common Stock (including those
shares held by the Mutual Holding Company) and the affirmative vote of the
majority of the votes cast by the Public Shareholders, abstentions and broker
non-votes will have the same effect as a vote against such proposal.
INCORPORATION OF INFORMATION BY REFERENCE
The Prospectus of the Holding Company (the "Prospectus") which
accompanies this Proxy Statement is incorporated herein by reference in its
entirety. The Middle Tier Holding Company urges you to carefully read the
Prospectus prior to voting on the proposal to be presented at the Special
Meeting. The information contained in the Prospectus will help you evaluate the
proposal to be presented at the Special Meeting. The Prospectus sets forth a
description of the conversion and the related offering of Holding Company Common
Stock under the section "The Conversion." Such section also describes the
effects of the conversion on the stockholders of the Middle Tier Holding
Company, including any tax consequences of the conversion.
Information regarding the Primary Parties is set forth in the
Prospectus under the captions "Summary -- The Companies -- PHSB Financial
Corporation, -- PHS Bancorp, M.H.C., -- PHS Bancorp, Inc. and -- Peoples Home
Savings Bank" as well as under the captions "Business of PHSB Financial
Corporation" and "Business of Peoples Home Savings Bank." The Prospectus also
describes the business and financial condition of the Middle Tier Holding
Company and the Bank under the captions "Recent Developments" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
Capital Stock of the Holding Company is described in the Prospectus under the
caption "Description of Capital Stock." In addition, the historical consolidated
financial statements of the Middle Tier Holding Company are included in the
Prospectus. Information regarding the use of proceeds from the sale of Holding
Company Common Stock in connection with the conversion, the historical
capitalization and the pro forma capitalization, other pro forma data, as well
as information pertaining to regulation, employees and legal proceedings are set
forth in the Prospectus under the captions "Use of Proceeds," "Capitalization,"
"Pro Forma Data," "Historical and Pro Forma Capital Compliance," "Regulation,"
"Business of Peoples Home Savings Bank - Personnel" and "- Legal Proceedings,"
respectively. The Pro Forma Data shows the effects of the conversion on the
Middle Tier Holding Company's total stockholders' equity and net income, on both
an aggregate and per share basis, based
3
upon the assumptions set forth therein. The consents of certain experts are
discussed in the Prospectus in "Legal and Tax Opinions" and "Experts."
The Prospectus also sets forth a description of the current management
of the Mutual Holding Company, the Middle Tier Holding Company, the Bank, as
well as the management of the Holding Company after the conversion, including
current compensation and benefits as well as proposed future stock benefit
plans. See "Management of PHSB Financial Corporation" and "Management of Peoples
Home Savings Bank" in the Prospectus.
PROPOSAL TO APPROVE THE PLAN OF CONVERSION
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE MIDDLE TIER HOLDING COMPANY UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE PLAN. SINCE THE PLAN MUST BE APPROVED BY AT
LEAST THE MAJORITY OF THE VOTES CAST OF THE PUBLIC STOCKHOLDERS, NOT VOTING WILL
HAVE THE SAME EFFECT AS VOTING AGAINST THE PLAN. VOTING FOR THE PLAN WILL NOT
OBLIGATE ANY VOTER TO PURCHASE ANY SHARES OF HOLDING COMPANY COMMON STOCK.
SHARES OF HOLDING COMPANY COMMON STOCK ARE BEING OFFERED ONLY BY THE PROSPECTUS,
WHICH IS INCORPORATED BY REFERENCE HERETO.
THE DEPARTMENT HAS APPROVED THE PLAN AND WE HAVE RECEIVED A NON-
OBJECTION OF THE PLAN FROM THE FDIC. SUCH APPROVAL AND NON-OBJECTION IS SUBJECT
TO THE APPROVAL OF THE STOCKHOLDERS OF THE MIDDLE TIER HOLDING COMPANY AND THE
SATISFACTION OF CERTAIN OTHER CONDITIONS. HOWEVER, SUCH APPROVAL OR
NON-OBJECTION DOES NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE PLAN BY
THE REGULATORS.
DISSENTERS' AND APPRAISAL RIGHTS
To the extent required by Pennsylvania corporate law, the Public
Stockholders will have dissenters' and appraisal rights in connection with the
exchange of publicly held shares of Middle Tier Holding Company common stock for
Holding Company common stock. This means that if you comply with certain
procedures under Pennsylvania law, you have the right to receive payment for
your shares of Middle Tier common stock based upon an independent determination
of their value. In addition to the summary of the dissenters' and appraisal
rights in the Prospectus, a copy of the provisions of Pennsylvania law regarding
dissenters' and appraisal rights is attached to this proxy statement as Appendix
B. Failure to follow these provisions may result in a loss of your dissenters'
and appraisal rights.
ADDITIONAL INFORMATION
The Board of Directors does not know of any other matters that are
likely to be brought before the Special Meeting. If any other matters, not now
known, properly come before the Special Meeting or any adjournments, the persons
named in the enclosed proxy card, or their substitutes, will vote the proxy in
accordance with their judgment on such matters.
4
THE PLAN IS ATTACHED HERETO AS EXHIBIT A. THE ARTICLES OF INCORPORATION
AND BYLAWS OF THE HOLDING COMPANY ARE AVAILABLE AT NO COST BY CONTACTING THE
STOCK INFORMATION CENTER AT (724) 846-6020, OR BY WRITING TO THE CORPORATE
SECRETARY AT 744 SHENANGO ROAD, BEAVER FALLS, PENNSYLVANIA 15010. ADOPTION OF
THE PLAN BY THE STOCKHOLDERS AUTHORIZES THE BOARD OF DIRECTORS AND THE BOARDS OF
TRUSTEES OF THE PRIMARY PARTIES TO AMEND OR TERMINATE THE PLAN INCLUDING THE
ARTICLES OF INCORPORATION OF THE BANK AND THE ARTICLES OF INCORPORATION OF THE
HOLDING COMPANY PRIOR TO THE CLOSING OF THE CONVERSION. ALL STATEMENTS MADE IN
THIS DOCUMENT ARE HEREBY QUALIFIED BY THE CONTENTS OF SUCH DOCUMENTS AS SET
FORTH HEREIN.
ALL PERSONS ELIGIBLE TO VOTE AT THE SPECIAL MEETING SHOULD REVIEW BOTH
THIS PROXY STATEMENT AND THE ACCOMPANYING PROSPECTUS CAREFULLY. HOWEVER, NO
PERSON IS OBLIGATED TO PURCHASE ANY HOLDING COMPANY COMMON STOCK. REGARDLESS OF
HOW YOU VOTE OR WHETHER YOU PURCHASE HOLDING COMPANY COMMON STOCK, YOU WILL
RECEIVE SHARES OF HOLDING COMPANY COMMON STOCK IN EXCHANGE FOR YOUR MIDDLE TIER
HOLDING COMPANY COMMON STOCK SO THAT YOU WILL OWN APPROXIMATELY THE SAME
PERCENTAGE OF HOLDING COMPANY COMMON STOCK AS THE PERCENTAGE OF MIDDLE TIER
HOLDING COMPANY COMMON STOCK THAT YOU OWN IMMEDIATELY PRIOR TO THE CONVERSION.
YOUR BOARD OF DIRECTORS URGES YOU TO CONSIDER CAREFULLY THIS PROXY
STATEMENT AND THE PROSPECTUS AND URGES YOU TO VOTE. NO PERSON WILL BE OBLIGATED
TO ORDER ANY HOLDING COMPANY COMMON STOCK.
THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY HOLDING COMPANY COMMON STOCK. THE OFFER WILL BE MADE ONLY BY MEANS
OF THE PROSPECTUS MEETING THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES PROMULGATED THEREUNDER AND ACCOMPANIED BY A STOCK ORDER
FORM.
By Order Of The Board Of Directors
----------------------------------
John M. Rowse
Secretary
________ __, 2001
Beaver Falls, Pennsylvania
5
Appendix A
PLAN OF CONVERSION*
*Incorporated by Reference to Exhibit 2 herein.
Appendix B
Pennsylvania Business Corporation Law of 1988, as Amended,
Provisions For Dissenting Shareholders
Subchapter D.--Dissenters Rights.
(ss.) 1571. Application and effect of subchapter.
(a) General rule.--Except as otherwise provided in subsection (b), any
shareholder of a business corporation shall have the right to dissent from, and
to obtain payment of the fair value of his shares in the event of, any corporate
action, or to otherwise obtain fair value for his shares, where this part
expressly provides that a shareholder shall have the rights and remedies
provided in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon special treatment).
Section 1930 (relating to dissenters rights).
Section 1931(d) (relating to dissenters rights in share exchanges).
Section 1932(c) (relating to dissenters rights in asset transfers).
Section 1952(d) (relating to dissenters rights in division).
Section 1962(c) (relating to dissenters rights in conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on
transfer of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement).
Section 2704(c) (relating to dissenters rights upon election).
Section 2705(d) (relating to dissenters rights upon renewal of
election).
Section 2907(a) (relating to proceedings to terminate breach of
qualifying conditions).
Section 7104(b)(3) (relating to procedure).
(b) Exceptions.--(1) Except as otherwise provided in paragraph (2), the
holders of the shares of any class or series of shares that, at the record date
fixed to determine the shareholders entitled to notice of and to vote at the
meeting at which a plan specified in any of section 1930, 1931(d), 1932(c) or
1952(d) is to be voted on, are either:
(i) listed on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders;
shall not have the right to obtain payment of the fair value of any such shares
under this subchapter.
(2) Paragraph (1) shall not apply to and dissenters rights
shall be available without regard to the exception provided in
that paragraph in the case of:
(i) Shares converted by a plan if the shares
are not converted solely into shares of the acquiring,
surviving, new or other corporation or solely into such shares
and money in lieu of fractional shares.
(ii) Shares of any preferred or special
class unless the articles, the plan or the terms of the
transaction entitle all shareholders of the class to vote
thereon and require for the adoption of the plan or the
effectuation of the transaction the affirmative vote of a
majority of the votes cast by all shareholders of the class.
(iii) Shares entitled to dissenters rights
under section 1906(c) (relating to dissenters rights upon
special treatment).
(3) The shareholders of a corporation that acquires by
purchase, lease, exchange or other disposition all or substantially all
of the shares, property or assets of another corporation by the
issuance of shares, obligations or otherwise, with or without assuming
the liabilities of the other corporation and with or without the
intervention of another corporation or other person, shall not be
entitled to the rights and remedies of dissenting shareholders provided
in this subchapter regardless of the fact, if it be the case, that the
acquisition was accomplished by the issuance of voting shares of the
corporation to be outstanding immediately after the acquisition
sufficient to elect a majority or more of the directors of the
corporation.
(c) Grant of optional dissenters rights.--The bylaws or a resolution of
the board of directors may direct that all or a part of the shareholders shall
have dissenters rights in connection with any corporate action or other
transaction that would otherwise not entitle such shareholder to dissenters
rights.
(d) Notice of dissenters rights.--Unless otherwise provided by statute,
if a proposed corporate action that would give rise to dissenters rights under
this subpart is submitted to a vote at a meeting of shareholders, there shall be
included in or enclosed with the notice of meeting:
(1) a statement of the proposed action and a statement that
the shareholders have a right to dissent and obtain payment of the fair
value of their shares by complying with the terms of this subchapter;
and
(2) a copy of this subchapter.
B-2
(e) Other statutes.--The procedures of this subchapter shall also be
applicable to any transaction described in any statute other than this part that
makes reference to this subchapter for the purpose of granting dissenters
rights.
(f) Certain provisions of articles ineffective.--This subchapter may
not be relaxed by any provision of the articles.
(g) Cross references.--See sections 1105 (relating to restriction on
equitable relief), 1904 (relating to de facto transaction doctrine abolished)
and 2512 (relating to dissenters rights procedure).
(ss.) 1572. Definitions.
The following words and phrases when used in this subchapter shall have
the meanings given to them in this section unless the context clearly indicates
otherwise:
"Corporation." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation, division,
conversion or otherwise of that issuer. A plan of division may designate which
of the resulting corporations is the successor corporation for the purposes of
this subchapter. The successor corporation in a division shall have sole
responsibility for payments to dissenters and other liabilities under this
subchapter except as otherwise provided in the plan of division.
"Dissenter." A shareholder or beneficial owner who is entitled to and
does assert dissenters rights under this subchapter and who has performed every
act required up to the time involved for the assertion of those rights.
"Fair value." The fair value of shares immediately before the
effectuation of the corporate action to which the dissenter objects taking into
account all relevant factors, but excluding any appreciation or depreciation in
anticipation of the corporate action.
"Interest." Interest from the effective date of the corporate action
until the date of payment at such rate as is fair and equitable under all the
circumstances, taking into account all relevant factors including the average
rate currently paid by the corporation on its principal bank loans.
(ss.) 1573. Record and beneficial holders and owners.
(a) Record holders of shares.--A record holder of shares of a business
corporation may assert dissenters rights as to fewer than all of the shares
registered in his name only if he dissents with respect to all the shares of the
same class or series beneficially owned by any one person and discloses the name
and address of the person or persons on whose behalf he dissents. In that event,
his rights shall be determined as if the shares as to which he has dissented and
his other shares were registered in the names of different shareholders.
B-3
(b) Beneficial owners of shares.--A beneficial owner of shares of a
business corporation who is not the record holder may assert dissenters rights
with respect to shares held on his behalf and shall be treated as a dissenting
shareholder under the terms of this subchapter if he submits to the corporation
not later than the time of the assertion of dissenters rights a written consent
of the record holder. A beneficial owner may not dissent with respect to some
but less than all shares of the same class or series owned by the owner, whether
or not the shares so owned by him are registered in his name.
(ss.) 1574. Notice of intention to dissent.
If the proposed corporate action is submitted to a vote at a meeting of
shareholders of a business corporation, any person who wishes to dissent and
obtain payment of the fair value of his shares must file with the corporation,
prior to the vote, a written notice of intention to demand that he be paid the
fair value for his shares if the proposed action is effectuated, must effect no
change in the beneficial ownership of his shares from the date of such filing
continuously through the effective date of the proposed action and must refrain
from voting his shares in approval of such action. A dissenter who fails in any
respect shall not acquire any right to payment of the fair value of his shares
under this subchapter. Neither a proxy nor a vote against the proposed corporate
action shall constitute the written notice required by this section.
(ss.) 1575. Notice to demand payment.
(a) General rule.--If the proposed corporate action is approved by the
required vote at a meeting of shareholders of a business corporation, the
corporation shall mail a further notice to all dissenters who gave due notice of
intention to demand payment of the fair value of their shares and who refrained
from voting in favor of the proposed action. If the proposed corporate action is
to be taken without a vote of shareholders, the corporation shall send to all
shareholders who are entitled to dissent and demand payment of the fair value of
their shares a notice of the adoption of the plan or other corporate action. In
either case, the notice shall:
(1) State where and when a demand for payment must be sent and
certificates for certificated shares must be deposited in order to
obtain payment.
(2) Inform holders of uncertificated shares to what extent
transfer of shares will be restricted from the time that demand for
payment is received.
(3) Supply a form for demanding payment that includes a
request for certification of the date on which the shareholder, or the
person on whose behalf the shareholder dissents, acquired beneficial
ownership of the shares.
(4) Be accompanied by a copy of this subchapter. (b) Time for
receipt of demand for payment.--The time set for receipt of the demand
and deposit of certificated shares shall be not less than 30 days from
the mailing of the notice.
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(ss.) 1576. Failure to comply with notice to demand payment, etc.
(a) Effect of failure of shareholder to act.--A shareholder who fails
to timely demand payment, or fails (in the case of certificated shares) to
timely deposit certificates, as required by a notice pursuant to section 1575
(relating to notice to demand payment) shall not have any right under this
subchapter to receive payment of the fair value of his shares.
(b) Restriction on uncertificated shares.--If the shares are not
represented by certificates, the business corporation may restrict their
transfer from the time of receipt of demand for payment until effectuation of
the proposed corporate action or the release of restrictions under the terms of
section 1577(a) (relating to failure to effectuate corporate action).
(c) Rights retained by shareholder.--The dissenter shall retain all
other rights of a shareholder until those rights are modified by effectuation of
the proposed corporate action.
(ss.) 1577. Release of restrictions or payment for shares.
(a) Failure to effectuate corporate action.--Within 60 days after the
date set for demanding payment and depositing certificates, if the business
corporation has not effectuated the proposed corporate action, it shall return
any certificates that have been deposited and release uncertificated shares from
any transfer restrictions imposed by reason of the demand for payment.
(b) Renewal of notice to demand payment.--When uncertificated shares
have been released from transfer restrictions and deposited certificates have
been returned, the corporation may at any later time send a new notice
conforming to the requirements of section 1575 (relating to notice to demand
payment), with like effect.
(c) Payment of fair value of shares.--Promptly after effectuation of
the proposed corporation action, or upon timely receipt of demand for payment if
the corporate action has already been effectuated, the corporation shall either
remit to dissenters who have made demand and (if their shares are certificated)
have deposited their certificates the amount that the corporation estimates to
be the fair value of the shares, or give written notice that no remittance under
this section will be made. The remittance or notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the
issuer of the shares held or owned by the dissenter for a fiscal year
ending not more than 16 months before the date of remittance or notice
together with the latest available interim financial statements.
(2) A statement of the corporation's estimate of the fair
value of the shares.
(3) A notice of the right of the dissenter to demand payment
or supplemental payment, as the case may be, accompanied by a copy of
this subchapter.
(d) Failure to make payment.--If the corporation does not remit the
amount of its estimate of the fair value of the shares as provided by subsection
(c), it shall return any certificates
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that have been deposited and release uncertificated shares from any transfer
restrictions imposed by reason of the demand for payment. The corporation may
make a notation on any such certificate or on the records of the corporation
relating to any such uncertificated shares that such demand has been made. If
shares with respect to which notation has been so made shall be transferred,
each new certificate issued therefor or the records relating to any transferred
uncertificated shares shall bear a similar notation, together with the name of
the original dissenting holder or owner of such shares. A transferee of such
shares shall not acquire by such transfer any rights in the corporation other
than those that the original dissenters had after making demand for payment of
their fair value.
(ss.) 1578. Estimate by dissenter of fair value of shares.
(a) General rule.--If the business corporation gives notice of its
estimate of the fair value of the shares, without remitting such amount, or
remits payment of its estimate of the fair value of a dissenter's shares as
permitted by section 1577(c) (relating to payment of fair value of shares) and
the dissenter believes that the amount stated or remitted is less than the fair
value of his shares, he may send to the corporation his own estimate of the fair
value of the shares, which shall be deemed a demand for payment of the amount or
the deficiency.
(b) Effect of failure to file estimate.--Where the dissenter does not
file his own estimate under subsection (a) within 30 days after the mailing by
the corporation of its remittance or notice, the dissenter shall be entitled to
no more than the amount stated in the notice or remitted to him by the
corporation.
(ss.) 1579. Valuation proceedings generally.
(a) General rule.--Within 60 days after the latest of:
(1) Effectuation of the proposed corporate action;
(2) Timely receipt of any demands for payment under section
1575 (relating to notice to demand payment); or
(3) Timely receipt of any estimates pursuant to section 1578
(relating to estimate by dissenter of fair value of shares);
If any demands for payment remain unsettled, the business corporation may file
in court an application for relief requesting that the fair value of the shares
be determined by the court.
(b) Mandatory joinder of dissenters.--All dissenters, wherever
residing, whose demands have not been settled shall be made parties to the
proceeding as in an action against their shares. A copy of the application shall
be served on each such dissenter. If a dissenter is a nonresident, the copy may
be served on him in the manner provided or prescribed by or pursuant to 42
Pa.C.S. Ch. 53 (relating to bases of jurisdiction and interstate and
international procedure).
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(c) Jurisdiction of the court.--The jurisdiction of the court shall be
plenary and exclusive. The court may appoint an appraiser to receive evidence
and recommend a decision on the issue of fair value. The appraiser shall have
such power and authority as may be specified in the order of appointment or in
any amendment thereof.
(d) Measure of recovery.--Each dissenter who is made a party shall be
entitled to recover the amount by which the fair value of his shares is found to
exceed the amount, if any, previously remitted, plus interest.
(e) Effect of corporation's failure to file application.--If the
corporation fails to file an application as provided in subsection (a), any
dissenter who made a demand and who has not already settled his claim against
the corporation may do so in the name of the corporation at any time within 30
days after the expiration of the 60-day period. If a dissenter does not file an
application within the 30-day period, each dissenter entitled to file an
application shall be paid the corporation's estimate of the fair value of the
shares and no more, and may bring an action to recover any amount not previously
remitted.
(ss.) 1580. Costs and expenses of valuation proceedings.
(a) General rule.-- The costs and expenses of any proceeding under
section 1579 (relating to valuation proceedings generally), including the
reasonable compensation and expenses of the appraiser appointed by the court,
shall be determined by the court and assessed against the business corporation
except that any part of the costs and expenses may be apportioned and assessed
as the court deems appropriate against all or some of the dissenters who are
parties and whose action in demanding supplemental payment under section 1578
(relating to estimate by dissenter of fair value of shares) the court finds to
be dilatory, obdurate, arbitrary, vexatious or in bad faith.
(b) Assessment of counsel fees and expert fees where lack of good faith
appears.--Fees and expenses of counsel and of experts for the respective parties
may be assessed as the court deems appropriate against the corporation and in
favor of any or all dissenters if the corporation failed to comply substantially
with the requirements of this subchapter and may be assessed against either the
corporation or a dissenter, in favor of any other party, if the court finds that
the party against whom the fees and expenses are assessed acted in bad faith or
in a dilatory, obdurate, arbitrary or vexatious manner in respect to the rights
provided by this subchapter.
(c) Award of fees for benefits to other dissenters.--If the court finds
that the services of counsel for any dissenter were of substantial benefit to
other dissenters similarly situated and should not be assessed against the
corporation, it may award to those counsel reasonable fees to be paid out of the
amounts awarded to the dissenters who were benefited.
(ss.) 1930. Dissenters rights.
(a) General rule.--If any shareholder of a domestic business
corporation that is to be a party to a merger or consolidation pursuant to a
plan of merger or consolidation objects to the
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plan of merger or consolidation and complies with the provisions of Subchapter D
of Chapter 15 (relating to dissenters rights), the shareholder shall be entitled
to the rights and remedies of dissenting shareholders therein provided, if any.
See also section 1906(c) (relating to dissenters rights upon special treatment).
(b) Plans adopted by directors only.--Except as otherwise provided
pursuant to section 1571(c) (relating to grant of optional dissenters rights),
Subchapter D of Chapter 15 shall not apply to any of the shares of a corporation
that is a party to a merger or consolidation pursuant to section 1924(b)(1)(i)
(relating to adoption by board of directors).
(c) Cross references.--See sections 1571(b) (relating to exceptions)
and 1904 (relating to de facto transaction doctrine abolished).
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APPENDIX C
REVOCABLE PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PHS BANCORP, INC.
FOR A SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON _____________ __, 2001
The undersigned stockholder of PHS Bancorp, Inc. (the "Middle Tier
Holding Company") hereby appoints the full Board of Directors, with full powers
of substitution, as attorneys-in-fact and agents for and in the name of the
undersigned, to cast such votes as the undersigned may be entitled to vote at
the special meeting of stockholders of the Middle Tier Holding Company to be
held at the main office of the Middle Tier Holding Company located at 744
Shenango Road, Beaver Falls, Pennsylvania on __________, __________ __, 2001, at
__:___ _.m., eastern time, and at any and all adjournments thereof ("Special
Meeting"). They are authorized to cast all votes to which the undersigned is
entitled as follows:
1. Approval of the Plan of Conversion and Reorganization and Plans of Merger
(the "Plan") and transactions incident to the Plan, pursuant to which (i)
Peoples Home Savings Bank (the "Bank") will establish PHSB Financial
Corporation (the "Holding Company") as a new Pennsylvania stock holding
company; (ii) PHS Bancorp, M.H.C. (the "Mutual Holding Company") will
convert into an interim stock savings bank ("Interim Bank No. 1"); (iii)
PHS Bancorp, Inc. (the "Middle Tier Holding Company") will adopt an interim
stock savings bank charter ("Interim Bank No. 2"); Interim Bank No. 2 will
then merge with and into the Bank (Merger No. 1") with the Bank as the
surviving entity; (iv) immediately following Merger No. 1, Interim Bank No.
1, formerly the Mutual Holding Company, will merge with and into the Bank
with the Bank as the surviving entity ("Merger No. 2"). The shares of
Middle Tier Holding Company Common Stock previously held by the Mutual
Holding Company (now Interim Bank No. 1) will be canceled. Eligible
depositors of the Bank who hold liquidation interests in the Mutual Holding
Company as of certain specified dates will be granted interests in a
liquidation account to be established by the Bank in exchange for such
interests in the Mutual Holding Company; (v) the Holding Company will form
an interim corporation ("Interim Bank No. 3"), a new, wholly-owned
first-tier subsidiary with an interim stock savings bank charter; (vi)
immediately following Merger No. 2, Interim Bank No. 3 will merge with and
into the Bank as the surviving entity ("Merger No. 3"). As a result of
Merger No. 3, Bank stock deemed held by public stockholders (other than the
mutual holding company) will be converted into Holding Company common stock
based upon the exchange ratio which is designed to ensure that the same
public stockholders will own, approximately the same percentage of Holding
Company common stock as the percentage of Middle Tier Holding Company
common stock owned by them immediately prior to the conversion and
reorganization before giving effect to (a) cash paid in lieu of fractional
shares and (b) any shares of Holding Company stock purchased by public
stockholders in the offering; (vii) the Holding Company shall sell the
conversion stock in the offerings, as described in the Plan.
FOR AGAINST ABSTAIN
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Execution of this proxy also permits the proxy holders to vote this
proxy in their discretion, upon such other matters that may come before the
Special Meeting. The Special Meeting may be adjourned to enable the Middle Tier
Holding Company to solicit additional proxies. The board of directors is not
aware of any other matters that may come before the Special Meeting.
THIS PROXY WILL BE VOTED FOR THE PROPOSITION
STATED IF NO CHOICE IS MADE HEREON
All votes will be cast in accordance with this Proxy. Should the
undersigned be present and elect to vote at the Special Meeting or at any
adjournment thereof and after notification to the Secretary of the Middle Tier
Holding Company at said meeting of the stockholder's decision to terminate this
Proxy, then the power of said attorney-in-fact or agents shall be deemed
terminated and of no further force and effect.
The undersigned acknowledges receipt of a Notice of Special Meeting of
Stockholders, a Proxy Statement dated __________ ____, 2001, and a Prospectus
dated __________ ____, 2001, prior to the execution of this Proxy.
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Date
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Signature
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Signature
NOTE: Please sign your name exactly as it appears hereon. If shares are
held jointly, each stockholder should sign. When signing as an
attorney, administrator, agent, corporation, officer, executor,
trustee, guardian or similar position, please add your full title to
your signature.