EXHIBIT 2
CONSOLIDATION AGREEMENT
AMONG
PSB INTERIM BANK, PEOPLES STATE BANK AND
PSB GROUP, INC.
UNDER THE CHARTER OF
PEOPLES STATE BANK
THIS CONSOLIDATION AGREEMENT, dated as of February 28, 2003, among Peoples State
Bank (hereinafter called the "Bank" or, where appropriate, the "Resulting
Bank"), PSB Interim Bank (hereinafter called the "New Bank"), and PSB Group,
Inc. (hereinafter called the "Corporation").
I. RECITALS:
A. The Bank is a Michigan banking corporation and the New Bank is a Michigan
banking corporation in formation and both have their main banking premises
located at 0000 Xxxx 00 Xxxx Xxxx, Xxxxxxx Xxxxxxx, Xxxxxx of Oakland and State
of Michigan.
B. As of December 31, 2002, the Bank had capital stock outstanding of $1,049,397
divided into 1,049,397 shares of common stock, $1 par value per share, surplus
of $22,645,018, undivided profits of $20,860,889 and accumulated other
comprehensive income, including a market value adjustment for available for sale
securities, of $917,935.
C. As of the date of this Agreement, the New Bank had one (1) share of common
stock, $1 par value per share, issued and outstanding.
D. The Corporation is a corporation duly organized and validly existing under
the laws of the State of Michigan, with its registered office in the City of
Madison Heights, County of Oakland, State of Michigan. As of the date hereof,
the Corporation has authorized capital stock consisting of 5,000,000 shares of
common stock, no par value, of which one (1) share is outstanding.
E. The Resulting Bank will have capital stock outstanding of $1,049,397,
consisting of 1,049,397 shares of issued and outstanding common stock, $1 par
value per share, surplus of $22,645,018, and accumulated other comprehensive
income equal to the accumulated other comprehensive income of the Bank
immediately prior to the Effective Time, and the undivided profits and reserves
of the Resulting Bank shall equal the sum of the capital accounts of Bank
immediately prior to the Effective Time, less the sum of the capital, surplus
and accumulated other comprehensive income of the Resulting Bank as of the
Effective Time.
F. A majority of the entire Board of Directors of each of the Bank, the New
Bank, and the Corporation have approved this Consolidation Agreement and
authorized its execution. This Consolidation Agreement is subject to approval by
the shareholders of Bank and the New Bank.
II. AGREEMENTS:
IN CONSIDERATION OF THE PREMISES, the Bank and the New Bank (the "Consolidating
Banks"), and the Corporation, hereby make this Consolidation Agreement, and
prescribe the terms and conditions of the consolidation of the New Bank with and
into the Bank and the method of carrying it into effect as follows:
01.00 CONSOLIDATION
Subject to the terms and conditions hereof, the New Bank shall be consolidated
with and into, and under the charter and articles of incorporation of, the Bank
pursuant to the provisions of, and with the effect provided in, the Banking Code
(the "Banking Code"), and the Bank shall be the Resulting Bank. When reference
is made herein to the Bank as of the Effective Time (as defined below) and
thereafter, it shall hereinafter be called the "Resulting Bank."
02.00 NAME AND GOVERNING DOCUMENT
From and after the time at which the consolidation of the New Bank with and into
the Bank becomes effective (hereinafter called the "Effective Time"):
(a) The name of the Resulting Bank shall be the same as the
name of the Bank, namely, "Peoples State Bank," and the main banking
premises of the Bank at 9252 Xxx. Xxxxxx Avenue, Hamtramck, Michigan,
shall be the main banking premises of the Resulting Bank.
(b) All branches of the Bank in operation immediately prior to
the Effective Time shall continue as branches of the Resulting Bank.
(c) The charter and the articles of incorporation of the
Resulting Bank shall be the charter and articles of incorporation of
the Bank as in effect immediately prior to the Effective Time.
03.00 EFFECT OF THE CONSOLIDATION
03.01 CORPORATE EXISTENCE; RIGHTS AND LIABILITIES OF RESULTING BANK
As of the Effective Time, the corporate existences of each of the Consolidating
Banks shall, with the full effect provided for in the Banking Code, be
consolidated into and continued in the Resulting Bank, and the Resulting Bank
shall be deemed to be the same business and corporate entity as each of the
Consolidating Banks with all the rights, powers, duties and obligations of each
of the Consolidating Banks. The separate existence of New Bank shall cease
except to the extent provided by applicable law. The Resulting Bank shall be
subject to all of the restrictions, disabilities, liabilities and duties of each
of the Consolidating Banks and shall possess all rights, interests, privileges,
powers, and franchises of each of the Consolidating Banks. The title to every
species of property (real, personal and mixed) and chooses in action shall be
deemed to be transferred to and vested in the Resulting Bank without any deed or
other transfer, and the
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Resulting Bank, without any order or other action on the part of any court or
otherwise, shall hold and enjoy the same and all rights of property, franchises
and interests, including appointments, designations and nominations, and all
other rights and interests as trustee, executor, administrator, registrar or
transfer agent of stocks and bonds, guardian, conservator, assignee, receiver,
and in every other fiduciary capacity, in the same manner and to the same extent
as was held or enjoyed by each of the Consolidating Banks at the Effective Time.
Any reference to any of the Consolidating Banks in any writing, whether executed
or taking effect before or after the Consolidation, shall be deemed a reference
to the Resulting Bank if not inconsistent with the other provisions of such
writing.
03.02 BOOKS OF THE RESULTING BANK
The assets, liabilities, reserves and accounts of each of the Consolidating
Banks shall be recorded on the books of the Resulting Bank at the amounts at
which each shall have been carried on the books of the Consolidating Banks at
the Effective Time.
03.03 EFFECTIVENESS OF PRIOR CORPORATE ACTS AND AUTHORIZATIONS
All corporate acts, plans, policies, contracts, approvals and authorizations of
each of the Consolidating Banks, their respective shareholders, boards of
directors, committees elected or appointed by their boards of directors,
officers and agents, which were valid and effective immediately prior to the
Effective Time, shall be taken for all purposes as the acts, plans, policies,
contracts, approvals and authorizations of the Resulting Bank and shall be as
effective and binding thereon as the same were with respect to any of the
Consolidating Banks. The employees of the Consolidating Banks shall become the
employees of the Resulting Bank and shall continue to be entitled to the same
rights and benefits which they enjoyed as employees of the Consolidating Banks.
04.00 CONVERSION OF SHARES
As of the Effective Time:
(a) Each share of capital stock of the Bank which is issued
and outstanding immediately prior to the Effective Time, shall ipso
facto and without any action on the part of the holder thereof, become
and be converted into three (3) shares of common stock of the
Corporation, and outstanding certificate(s) (hereinafter called the
"Old Certificate(s)") representing shares of capital stock of the Bank
shall thereafter represent shares of common stock of the Corporation.
All shares of common stock of the Corporation into which capital stock
of the Bank is converted, as above provided, when issued shall be fully
paid and nonassessable. Shares of the Corporation, if any, that would
have been issued to a shareholder had the shareholder not dissented
from the consolidation shall be held by the Corporation as treasury
shares.
(b) Each holder of shares of capital stock of the Bank which
shall have been so converted into common stock of the Corporation, upon
surrender of such Old Certificate(s) in proper form to the Resulting
Bank for cancellation, shall be entitled to receive, as
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evidence of the shares of capital stock so converted, stock
certificate(s) (hereinafter called "New Certificate(s)") bearing the
name of the Corporation as issuer, for the number of shares of the
Corporation represented by such Old Certificate(s) when surrendered.
Until so surrendered, each Old Certificate shall be deemed, for all
corporate purposes, to evidence the ownership of the number of shares
of common stock of the Corporation which the holder thereof would be
entitled to receive upon its surrender, except that the Corporation may
withhold, from the holder of shares represented by such Old
Certificate(s), distribution of any or all dividends declared by the
Corporation on such shares until such time as such Old Certificate(s)
shall be surrendered in exchange for New Certificate(s), at which time
dividends so withheld by the Corporation with respect to such shares
shall be delivered, without interest thereon, to the shareholder to
whom such New Certificate(s) are issued.
(c) The one (1) share of common stock of the New Bank which is
issued and outstanding immediately prior to the Effective Time, shall
be redeemed.
(d) All of the shares of common stock of the Resulting Bank
will be issued to the Corporation.
05.00 EMPLOYEE BENEFIT PLANS
The Bank's employee benefit plans shall not be terminated upon consummation of
the consolidation, but shall continue thereafter as plans and agreements of the
Resulting Bank.
06.00 MANAGEMENT
Upon the consolidation becoming effective, the Board of Directors of the
Resulting Bank shall consist of all the persons who are directors of the Bank
immediately before the Effective Time, and the officers of the Resulting Bank
shall be the same persons who are officers of the Bank immediately before the
Effective Time.
07.00 BYLAWS
The Bylaws of the Bank in effect immediately prior to the Effective Time shall
continue in full force and effect after the Effective Time as the Bylaws of the
Resulting Bank until they shall be altered, amended or repealed as provided
therein or as provided by law.
08.00 SUBMISSION TO SHAREHOLDERS
This Consolidation Agreement shall be submitted to the shareholders of the Bank
and the New Bank for approval at a meeting to be called and held in accordance
with the applicable provisions of law and the articles of incorporation and
Bylaws of the Bank and the New Bank, respectively.
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09.00 FURTHER ASSURANCES
The Bank, the New Bank and the Corporation shall proceed expeditiously and
cooperate fully in the procurement of any other consents and approvals and in
the taking of any other action, and the satisfaction of all other requirements,
prescribed by law or otherwise, necessary for consummation of the consolidation
on the terms herein provided, including, without being limited to, the
preparation and submission of applications to the Federal Deposit Insurance
Corporation for the approval of the Consolidation under the provisions of
Section 18(c) of the Federal Deposit Insurance Act, as amended, and to the Board
of Governors of the Federal Reserve System for approval of the Corporation's
acquisition of the shares of capital stock of the Resulting Bank under the
provisions of Section 3(a)(1) of the Bank Company Act of 1956, as amended, and
to the Michigan Office of Financial and Insurance Services ("OFIS") for approval
of the consolidation under the provisions of the Banking Code.
10.00 DISSENTERS' RIGHTS
Any shareholder of the Bank who votes against the consolidation contemplated
hereby, or gives notice in writing to the Bank at or before the meeting of
shareholders of the Bank called for the purpose of considering this
Consolidation Agreement that such shareholder dissents from the consolidation,
shall be entitled to receive in cash from the Resulting Bank the fair value of
all shares of the Bank held by that shareholder, if and when the consolidation
is consummated, upon written request made to the Resulting Bank at any time
within thirty (30) days after the Effective Time, accompanied by the surrender
of shareholder's shares, in accordance with Section 3706 of the Banking Code.
The shares of such a dissenting shareholder which are surrendered to the
Resulting Bank for payment shall nevertheless be deemed to have been converted
into shares of the Corporation as provided in Section 04.00 of this
Consolidation Agreement, and the Resulting Bank shall deliver the certificate or
certificates representing such shares to the Corporation to be held by the
Corporation as treasury shares.
11.00 CONDITIONS PRECEDENT
Effectuation of the consolidation herein provided for is conditioned upon:
(a) approval of this Consolidation Agreement by vote of the
holders of two-thirds of the outstanding capital stock of the Bank and
the New Bank as required by law; and
(b) procurement of all other consents and approvals, and
satisfaction of all other requirements prescribed by law, which are
necessary for consummation of the consolidation.
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12.00 TERMINATION OF CONSOLIDATION
At any time before the Effective Time, if any of the following circumstances
occur, this Consolidation Agreement may be terminated, at the election of the
Bank or the New Bank, by written notice from the party so electing to the other
thereof, pursuant to a resolution authorized and approved by the Board of
Directors of such party:
(a) The number of shares of capital stock of the Bank voted
against the consolidation, or in respect of which written notice of
dissent to the consolidation is filed with the Bank at or prior to the
meeting of shareholders held to vote on the consolidation, shall make
consummation of the consolidation unwise in the opinion of the Board of
Directors of either the Bank or the New Bank; or
(b) Any action, suit, proceeding or claim has been instituted,
made or threatened relating to the proposed consolidation which shall
make consummation of the consolidation inadvisable in the opinion of
the Board of Directors of either the Bank or the New Bank; or
(c) Any action, consent or approval, governmental or
otherwise, which, in the opinion of counsel for the Bank, is necessary
or advisable to permit or enable the Resulting Bank, upon and after the
consummation of the consolidation, to conduct all or any part of the
business and activities theretofore conducted by the Bank, in
substantially the manner so conducted, shall not have been obtained; or
(d) For any other reason consummation of the consolidation is
deemed inadvisable in the opinion of the Board of Directors of either
the Bank or the New Bank.
Upon termination by written notice as provided in this Section 12.00, this
Consolidation Agreement shall be void and of no further effect, and there shall
be no liability by reason of this Consolidation Agreement or the termination
thereof on the part of either the Bank, the New Bank, the Corporation, or the
directors, officers, employees, agents or shareholders of any of them.
13.00 EFFECTIVENESS OF CONSOLIDATION
Subject to and upon satisfaction of all requirements of law and other conditions
specified in this Consolidation Agreement, the vote of the shareholders of the
Bank and the New Bank shall be certified on this Consolidation Agreement by an
officer of each of the Bank and the New Bank and the certified Consolidation
Agreement shall be filed with OFIS pursuant to and in the manner required by the
Banking Code, and the consolidation shall become effective at the close of
business on the date certified by OFIS on such Consolidation Agreement, such
time and day being hereby declared to be the Effective Time as that term is used
herein, all on the terms and with the effect provided for in this Consolidation
Agreement.
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14.00 AMENDMENT
This Consolidation Agreement may be amended before the Effective Time by an
instrument in writing signed on behalf of each of the Consolidating Banks and
the Corporation; provided, however, that, after this Consolidation Agreement has
been approved by the shareholders of the Bank, no such amendment shall affect
the rights of such shareholders of the Bank in a manner which is materially
adverse to such shareholders subsequent to approval of the shareholders.
15.00 FEES
Whether or not the consolidation herein provided for is approved by OFIS, the
Bank will pay the fees to OFIS associated with this transaction.
16.00 CAPTIONS
The captions in this Agreement have been inserted for convenience only and shall
not be considered a part of or affect the construction or interpretation of any
provision of this Agreement.
17.00 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which when
so executed shall constitute an original, but all of which together shall
constitute one and the same instrument.
III. EXECUTION:
IN WITNESS WHEREOF, the parties hereto have caused this Consolidation Agreement
to be executed by their duly authorized officers as of the date first above
written.
PEOPLES STATE BANK
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Xxxxxx X. Xxxx
President and CEO
ATTEST:
/s/ Xxxxx X. Xxxxxx
--------------------------------------------
Xxxxx X. Xxxxxx, Senior Vice President, CFO
and Cashier
PSB INTERIM BANK
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Xxxxxx X. Xxxx
President and CEO
ATTEST:
/s/ Xxxxx X. Xxxxxx
--------------------------------------------
Xxxxx X. Xxxxxx, Senior Vice President, CFO
and Cashier
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PSB GROUP, INC.
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Xxxxxx X. Xxxx
President and CEO
ATTEST:
/s/ Xxxxx X. Xxxxxx
--------------------------------------------
Xxxxx X. Xxxxxx, Senior Vice President, CFO,
Secretary and Treasurer
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