<PAGE>
As filed with the Securities and Exchange Commission on November 20, 1995
Registration No. 33-58377
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
PRE-EFFECTIVE AMENDMENT
NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
PROGRESS FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 23-2413363
----------------------------- -----------------------------
(State or other jurisdiction (I.R.S. employer
of organization) identification no.)
Plymouth Meeting Executive Campus
600 West Germantown Pike
Plymouth Meeting, Pennsylvania 19462-1003
(610) 825-8800
- --------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code
of Registrant's principal executive offices)
_______________
W. Kirk Wycoff
President and Chief Executive Officer
Progress Financial Corporation
Plymouth Meeting Executive Campus
600 West Germantown Pike
Plymouth Meeting, Pennsylvania 19462-1003
(610) 825-8800
(Name, address, including zip code, and telephone number
including area code, of agent for service)
_______________
Copies to:
Jeffrey D. Haas, Esq.
Philip R. Bevan, Esq.
Elias, Matz, Tiernan & Herrick L.L.P.
734 Fifteenth Street, N.W., Suite 1200
Washington, D.C. 20005
(202) 347-0300
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
<PAGE>
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ].
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Title of Each Maximum Aggregate Amount of
Class of Amount to Offering Offering Registration
Securities to be Price Per Price(2) Fee
be Registered Registered(1) Unit(2)
- ------------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Warrants 300,000 $6.00 $1,800,000 $620.69(3)
</TABLE>
(1) Pursuant to Rule 416 promulgated under the Securities Act of 1933, as
amended, there are also being registered such additional Warrants as may
become issuable pursuant to the anti-dilution provisions of the Warrants.
(2) Estimated solely for the purposes of calculating the Registration Fee
pursuant to the provisions of Rule 457(g).
(3) Previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further Amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
i
<PAGE>
PROGRESS FINANCIAL CORPORATION
CROSS REFERENCE SHEET
Showing the Location in the Prospectus of Information Required
by Items 1 through 13 of Part I of Form S-3
<TABLE>
<CAPTION>
Registration Statement
Item Number and Caption Location or Caption in Prospectus
- --------------------------------------- ---------------------------------
<S> <C>
1. Forepart of Registration Statement Outside Front Cover Page
and Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover Inside Front and Outside
Pages of Prospectus Back Cover Pages; Available
Information; Incorporation of
Certain Documents by Reference
3. Summary Information, Risk Factors Summary; Special Considerations
and Ratio of Earnings to Fixed Changes
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Warrant Holders
8. Plan of Distribution Outside Front Cover Page;
Plan of Distribution
9. Description of Securities to be Description of Securities
Registered
10. Interests of Named Experts and Not Applicable
Counsel
11. Material changes Recent Developments
12. Incorporation of Certain Information Incorporation of Certain
by Reference Documents by Reference
13. Disclosure of Commission Position *
and Indemnification for Securities
Act Liabilities
</TABLE>
* Item is omitted because answer is negative or item is inapplicable.
ii
<PAGE>
Subject to Completion - Dated November __, 1995
PROSPECTUS
PROGRESS FINANCIAL CORPORATION
300,000 Warrants
to Purchase 300,000 shares
of Common Stock
This Prospectus relates to the public offering of up to 300,000 Warrants
(the "Warrants") issued by Progress Financial Corporation (the "Company") by
the holders thereof (the "Selling Warrant Holders"). See "Selling Warrant
Holders" herein. Each Warrant entitles the holder thereof to purchase one
share of the Company's Common Stock, $1.00 par value per share (the "Common
Stock"), at an exercise price of $6.00, subject to adjustment. The Warrants
are not exercisable until the earlier to occur of the effectiveness of a
registration statement related to the Common Stock issuable upon exercise of
the Warrants ("Common Stock Registration statement") or May 31, 1996. The
Warrants are exercisable at anytime thereafter until 5:00 p.m., Eastern Time,
on June 30, 1999. The Selling Warrant Holders directly, through agents
designated from time to time, or through dealers or underwriters also to be
designated, may sell the Warrants from time to time on terms to be determined
at the time of sale. To the extent required, the specific Warrants to be
sold, names of the Selling Warrant Holders, purchase price, public offering
price, the names of any such agent, dealer or underwriter, and any applicable
commission or discount with respect to a particular offer will be set forth
in an accompanying Prospectus Supplement. See "Plan of Distribution."
The Selling Warrant Holders and any broker-dealer, agents or underwriters
that participate with the Selling Warrant Holders in the distribution of the
Warrants may be deemed to be "underwriters" within the meaning of the
Securities Act and any commission received by them and any profit on the
resale of the Warrants purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of
Distribution" herein for indemnification arrangements.
THE SECURITIES OFFERED HEREBY INVOLVE CERTAIN RISKS. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION NOR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November __, 1995
<PAGE>
There has previously been no public market for the Warrants offered
hereby and the Warrants will not be listed on a national securities exchange
or qualified for trading on the automated quotation system of the National
Association of Securities Dealers, Inc. ("NASD"). See "Risk Factors -
Absence of Market." The Common Stock of the Company is traded in the
over-the-counter market and is quoted through the Nasdaq National Market
System under the symbol "PFNC." The last sale price of the Company's Common
Stock as reported by Nasdaq on November 15, 1995 was $5.625 per share.
The Company is paying all the expenses of registering the Warrants under
the Securities Act of 1933, as amended ("Securities Act") (including filing,
legal, and miscellaneous expenses in connection with the registration) which
are estimated to aggregate approximately $36,000. The Company will not
receive any of the proceeds from any sale of the Warrants by the Selling
Warrant Holders. It is anticipated that the Company will maintain a current
prospectus with respect to the Warrants until the earlier to occur of June
30, 1996 or until all the Warrants are sold. Each of the Selling Warrant
Holders will severally pay or assume underwriting discounts, brokerage
commissions or other charges incurred in any respective sale by them of the
Warrants.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied
at the Commission's public reference rooms located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The Common Stock is listed on the Nasdaq National
Market System, and such reports, proxy statements and other information
concerning the Company also may be inspected at the offices of the NASD, 1735
K Street, N.W., Washington, D.C. 20006.
The Company has filed a Registration Statement on Form S-3 (herein
together with all amendments and exhibits thereto, called the "Registration
Statement") under the Securities Act with respect to the Warrants offered
hereby. This Prospectus does not contain all the information set forth in
the Registration Statement. For further information with respect to the
Company and the Warrants offered hereby, reference is made to the
Registration Statement. Statements contained in the Prospectus concerning
provisions of certain documents are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit
to the Registration Statement or attached hereto, each such statement being
qualified in all respects by such references.
2
<PAGE>
So long as any of the Warrants are outstanding, whether or not the
Company is subject to the reporting requirements of Section 13(a) or 15(d) of
the Exchange Act, the Company will provide to all holders of the Warrants
copies of such annual reports, quarterly reports and other documents that the
Company would be required to file with the Commission pursuant to Section
13(a) or 15(d) of the Exchange Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus is summary in nature, does not purport to be a full and
complete statement of the business, affairs and financial condition of the
Company and should be read in conjunction with the following documents of the
Company which have been filed with the Commission and are hereby incorporated
by reference into this Prospectus:
(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 ("Annual Report");
(ii) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995;
(iii) the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995;
(iv) the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995;
(v) the Company's Current Report on Form 8-K dated May 24, 1995; and
(vi) the Company's Current Report on Form 8-K dated November 1, 1995.
All documents filed by the Company pursuant to Sections 13(a) or 15(d) of
the Exchange Act subsequent to the date hereof are hereby incorporated by
reference in this Prospectus and shall be deemed a part hereof from the date
of filing such documents with the Commission. Any statement contained
herein, in any supplement or amendment hereof or in a document all or any
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
supplement or amendment hereof modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or any
supplement or amendment hereof.
3
<PAGE>
Neither the delivery of this Prospectus nor any sale of securities made
hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company or its affiliates since the
date hereof or that the information contained herein is correct as of any
time subsequent to its date.
Copies of the documents incorporated by reference herein are available
from the Company without charge (other than exhibits to such document, unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates) to any person to whom this Prospectus is
delivered, upon written request of such person. Requests for such copies
should be directed to W. Kirk Wycoff, Chairman, President and Chief Executive
Officer of the Company, at the Company's offices located at Plymouth Meeting
Executive Campus, 600 West Germantown Pike, Plymouth Meeting, Pennsylvania
19462-1003. The Company's telephone number is (610) 825-8800.
SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the more detailed information, including the Consolidated
Financial Statements and related Notes, referenced above and available from
the Company.
THE COMPANY
Progress Financial Corporation is a Delaware-chartered, registered thrift
holding company headquartered in Plymouth Meeting, Pennsylvania. The Company
is the sole stockholder of Progress Federal Savings Bank, a federally
chartered savings bank (the "Bank"), which has been engaged in the thrift
business since 1878. The Company was organized in 1986 in connection with
the reorganization of the Bank into a thrift holding company structure. The
Bank conducts its business through six full-service offices located in
Montgomery County, one full-service office in Delaware County and one
full-service office in the Andorra section of Philadelphia in southeastern
Pennsylvania. The Company plans to open one full-service office in Chester
County. Unless the context otherwise requires, references herein to the
Company include the Bank. At September 30, 1995, the Company had total
consolidated assets of $356.7 million, total consolidated liabilities of
$341.8 million, including total consolidated deposits of $288.9 million, and
total consolidated stockholders' equity of $14.9 million.
The principal business of the Company has in the past consisted of
attracting deposits from the general public through its offices and using
such deposits to originate loans secured by first mortgage liens on existing
single-family residential real estate and existing multi-family residential
and commercial real estate, construction loans (which in the past included
land acquisition and development loans), commercial business loans,
consisting primarily of loans to small and medium-sized businesses, and
various consumer loans. The Company originates single-family residential
real estate loans for sale in the secondary market and
4
<PAGE>
secured consumer loans, such as home equity loans and lines of credit. The
Company also originates commercial business loans to small and medium sized
businesses in the communities its branches serve and commercial real estate
(including multi-family residential) and residential construction loans. In
addition, the Company invests in mortgage-backed securities which are insured
or guaranteed by the U.S. Government and agencies thereof and other similar
investments permitted by applicable laws and regulations. The Bank is also
involved in real estate development and related activities, through its
subsidiaries, primarily to facilitate the completion and sale of certain
property held as real estate owned.
The principal sources of funds for the Company's activities are
amortization and repayment of loans, proceeds from sales of assets classified
as available for sale, net savings inflows and advances from the Federal Home
Loan Bank ("FHLB") of Pittsburgh. The Company's principal sources of
revenues are interest and other payments on loans, including origination and
servicing fees, interest on investments and mortgage-backed securities,
service charges on deposits, gains (losses) from mortgage banking activities
and from the sale of loans and mortgage-backed securities classified as
available for sale and loan and other fee income. Its principal expenses are
interest paid on deposits and advances from the FHLB of Pittsburgh,
provisions for possible loan losses and real estate owned, personnel,
occupancy and equipment, and other administrative expenses.
The Company, as a registered savings and loan holding company, is subject
to examination and regulation by the Office of Thrift Supervision ("OTS") and
is subject to various reporting and other requirements of the Commission.
The Bank, as a federally chartered savings bank, is subject to comprehensive
regulation and examination by the OTS, as its chartering authority and
primary regulator, and by the Federal Deposit Insurance Corporation ("FDIC"),
which administers the Savings Association Insurance Fund ("SAIF"), which
insures the Bank's deposits to the maximum extent permitted by law. The Bank
is a member of the FHLB of Pittsburgh, which is one of the 12 regional banks
which comprise the FHLB System. The Bank is further subject to regulations
of the Board of Governors of the Federal Reserve System ("Federal Reserve
Board") governing reserves required to be maintained against deposits and
certain other matters.
The Company's principal executive offices are located at Plymouth Meeting
Executive Campus, 600 West Germantown Pike, Plymouth Meeting, Pennsylvania
19462-1003, and its telephone number is (610) 825-8800.
RISK FACTORS
The Company has experienced financial and operating problems in recent
periods and for these and other reasons an investment in the Warrants and the
underlying Common Stock involves a certain degree of risk. Prospective
purchasers should carefully consider the matters set forth under "Risk
Factors."
5
<PAGE>
SUMMARY OF TERMS OF THE WARRANTS
Warrants Offered Hereby..... Up to 300,000 Warrants are being offered hereby
by the Selling Warrant Holders listed herein.
See "Selling Warrant Holders."
Exercise of Warrants;
Expiration Date............. The Warrants may not be exercised, in whole or in
part, until the earlier to occur of the effective
date of the Common Stock Registration Statement
or May 31, 1996. The Warrants may be exercised
thereafter, in whole, or in part, at any time
prior to 5:00 p.m., Eastern Time, on June 30,
1999.
Exercise Price.............. Each Warrant entitles the holder thereof to
purchase one share of Common Stock at an
exercise price of $6.00 per share, subject to
adjustment in certain situations. See
"Description of the Warrants."
Registration Rights......... The Company has agreed to use its best efforts
to file no later than December 31, 1995, but in
no event earlier than December 1, 1995, the
Common Stock Registration Statement relating to
the shares of Common Stock issuable upon exercise
of the Warrants and to maintain the effectiveness
of such Common Stock Registration Statement until
the earlier to occur of the exercise of all the
Warrants or June 30, 1999. See "Description of
the Warrants."
DIVIDEND POLICY
The Company is currently not paying dividends on the Common Stock. The
Company's ability to pay dividends on the Common Stock depends on the receipt
of dividends from the Bank. Due to its financial condition, its recent
results of operations and regulatory restrictions on the payment of dividends
by the Bank, the Company does not anticipate resuming the payment of
dividends on the Common Stock in the foreseeable future. See "Market Price
for Common Stock and Dividends - Dividends."
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(Dollars in Thousands, Except Per Share Data)
The selected consolidated financial and other data set forth below should
be read in conjunction with, and is qualified in its entirety by, the more
detailed information, including the Consolidated Financial Statements and
related Notes set forth in the Annual Report. See "Available Information."
<TABLE>
<CAPTION>
September December 31,
30, ---------------------------------------------
1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION DATA:
Total assets $356,716 $348,189 $333,209 $291,542 $312,622 $324,708
Loans, net 210,609 205,771 158,268 153,734 193,789 277,490
Loans held for sale(1) 2,139 351 16,744 2,761 -- --
Investment securities:
Available for sale 6,936 4,627 -- -- -- --
Held to maturity 12,918 12,866 4,632 5,260 2,212 1,694
Mortgage-backed securities:
Available for sale(1) 15,530 9,103 8,893 25,072 -- --
Held to maturity 84,476 93,673 117,054 60,939 47,875 315
Deposits 288,883 283,958 273,583 245,015 265,197 292,478
Borrowings 47,950 47,052 40,536 36,071 38,585 12,500
Stockholders' equity 14,874 13,021 14,787 6,877 5,599 15,844
Delinquent loans(2) 1,394 1,001 1,911 9,859 9,072 12,018
Non-performing assets(2) 4,873 9,085 17,628 34,829 50,427 29,239
Allowance for possible loan losses 1,556 1,502 2,113 2,703 5,483 4,123
Book value per share(3) 4.53 3.98 4.52 6.81 5.54 15.69
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
----------------- ----------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA:
Interest income $19,884 16,518 $22,830 $20,824 $21,979 $ 27,122 $34,834
Interest expense 11,493 9,025 12,505 11,465 13,737 18,010 21,775
-------- -------- -------- -------- -------- -------- -------
Net interest income 8,391 7,493 10,325 9,359 8,242 9,112 13,059
Provision for possible loan losses 350 406 521 368 275 10,144 4,696
-------- -------- -------- -------- -------- -------- -------
Net interest income (expense) after provision
for possible loan losses 8,041 7,087 9,804 8,991 7,967 (1,032) 8,363
Gain (loss) from sales of securities (35) (124) (322) 215 1,197 341 --
Gain (loss) from mortgage banking activities 46 (171) (176) 606 1,428 319 --
Income (loss) on properties sold (34) (60) (62) 102 1,218 153 --
Other income 1,863 1,597 2,105 1,303 1,774 1,038 1,518
Provision for real estate owned 455 1,541 1,576 1,733 2,835 2,607 2,015
Other expense 8,292 7,852 10,489 9,835 9,397 10,280 11,610
-------- -------- -------- -------- -------- -------- -------
Income (loss) before income taxes (benefit) 1,134 (1,064) (716) (351) 1,352 (12,068) (3,744)
Income tax expense (benefit) -- -- -- (1,034) 74 (1,823) (755)
-------- -------- -------- -------- -------- -------- -------
Net income (loss) $ 1,134 $(1,064) $ (716) $ 683 $ 1,278 $(10,245) $(2,989)
======== ======== ======== ======== ======== ======== =======
Net income (loss) per share $ .33 $ (.32) $ (.22) $ .29 $ 1.27 $ (10.14) $ (2.96)
======== ======== ======== ======== ======== ======== =======
Cash dividends per share $ -- $ -- $ -- $ -- $ -- $ -- $ .12
======== ======== ======== ======== ======== ======== =======
<CAPTION>
Nine Months Ended
September 30, At or For the Year Ended December 31,
----------------- ----------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA(4):
Return (loss) on average assets .43% (.42)% (.21)% .21% .42% (3.31)% (.92)%
Return (loss) on average equity 10.80 (10.26) (5.24)% 6.25 20.93 (101.81) (16.60)
Average equity to average assets 4.00 4.10 4.01 3.42 1.99 3.24 5.52
Dividend payout ratio -- -- -- -- -- -- (.04)
Net interest margin(5) 3.37 3.17 3.23 3.25 3.13 3.31 4.30
Interest rate spread(5) 3.08 2.99 3.04 3.26 3.47 3.44 3.97
Non-performing loans as a
percent of total loans at end of
period(2) .66 2.92 2.19 3.42 4.37 7.03 4.85
Non-performing assets as a
percent of total assets at end
of period(2) 1.37 2.95 2.61 5.29 11.95 16.13 9.00
Allowance for possible loan
losses as a percent of non-
performing loans at end of
period 111.62 27.18 33.00 34.92 38.83 39.14 30.19
Net charge-offs as a percent of
average loans .14 .51 .60 .64 1.69 3.51 0.65
Capital Ratios(6):
Tangible 4.79 4.14 4.57 4.14 2.36 1.54 4.70
Core 4.79 4.14 4.57 4.14 2.36 1.54 4.70
Risk-based 9.36 8.86 9.47 9.39 5.37 3.33 6.62
Full service banking offices 8 8 8 8 7 8 8
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
7
<PAGE>
_________
(1) Loans classified as held for sale are carried at the lower of aggregate
cost or fair value while mortgage-backed securities and investment
classified as available for sale are carried at fair value.
(2) Delinquent loans consist of loans which are 30 to 89 days overdue. Non-
performing loans consist of non-accrual loans and accruing loans 90 days
or more overdue; and non-performing assets consist of non-performing
loans and real estate owned, which include in-substance foreclosures and
repossessions, in each case net of related reserves.
(3) Book value per share represents stockholders' equity divided by the
number of shares of Common Stock issued and outstanding.
(4) With the exception of end of period ratios, all ratios are based on
average daily balances during the indicated periods.
(5) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost
of interest-bearing liabilities (which do not include non-interest-
bearing accounts), and net interest margin represents net interest
income as a percent of average interest-earning assets.
(6) For additional information concerning the Bank's compliance with its
regulatory capital requirements, see "Regulatory Capital."
RISK FACTORS
An investment in the Warrants and the underlying Common Stock involves
certain investment risks. In determining whether or not to make an
investment in the Warrants, prospective purchasers should carefully consider
the matters set forth below, as well as the other information included or
incorporated by reference in this Prospectus.
HISTORICAL FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company has recognized operating losses in recent years due, to a
large extent, to the prior economic recession and the resulting decline in
real estate values in the Company's market area. These conditions had a
material adverse effect on the quality of the Company's loan portfolio and
contributed in 1990 and 1991 to substantial increases in the Company's
non-performing assets, which consist of non-accrual loans and accruing loans
90 days or more overdue (collectively "non-performing loans"), as well as
real estate acquired by the Company through foreclosure proceedings and real
estate acquired through acceptance of a deed in lieu of foreclosure
(collectively "REO"). The Company's non-
8
<PAGE>
performing assets increased from $17.5 million or 5.2% of total assets at
December 31, 1989 to $50.4 million or 16.1% of total assets at December 31,
1991. In 1991, the Company changed its senior management and began the
process of improving the credit quality of the Company's assets through the
early identification of potential problem assets and the administration,
rehabilitation or liquidation of the Company's non-performing assets. As a
result of management's efforts, the Company's non-performing assets have
since declined and totalled $4.9 million or 1.37% of total assets at
September 30, 1995.
At September 30, 1995, the Company's allowance for loan losses amounted
to $1.6 million or .73% and 111.62% of total loans and total non-performing
loans, respectively, and the net carrying value of the Company's REO amounted
to $3.5 million at such date. The $3.5 million of REO at September 30, 1995
included a $3.1 million property which the Company has recently sold at a
loss approximately $200,000. Future additions to the Company's allowance for
loan losses or reductions in carrying values of REO could become necessary in
the event of a deterioration in the real estate market and economy in the
Company's primary market area, future increases in non-performing assets or
for other reasons, which would adversely affect the Company's results of
operations. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowance for
loan losses and the carrying value of its REO. Such agencies may require the
Company to make additions to the allowance for loan losses and adjustments to
the carrying values of REO based on their judgments about information
available to them at the time of their examination.
INCREASED EMPHASIS ON COMMERCIAL BUSINESS, RESIDENTIAL CONSTRUCTION,
COMMERCIAL REAL ESTATE AND CONSUMER LENDING
At September 30, 1995, the Company's commercial business loans,
construction loans (primarily residential), commercial real estate loans
(including multi-family residential loans) and consumer loans amounted to
$15.3 million or 7.1%, $10.8 million or 5.0%, $76.0 million or 35.5% and
$21.9 million or 10.2% of the Company's total loan portfolio (including loans
classified as held for sale), respectively.
The Company intends to increase its emphasis on commercial business,
residential construction, commercial real estate (primarily multi-family
residential) and consumer lending. Commercial business and commercial real
estate lending entails different and significant risks when compared to
single-family residential lending because such loans often involve large loan
balances to single borrowers and because the payment experience on such loans
is typically dependent on the successful operation of the project or the
borrower's business. Commercial real estate lending can also be
significantly affected by supply and demand conditions in the local market
for apartments, offices, warehouses or other commercial space. Construction
financing is generally considered to involve a higher degree of risk of loss
than long-term financing on improved, owner-occupied real estate. Risk of
loss on a construction loan is dependent largely upon the accuracy of the
initial estimate of the property's value at completion of construction or
development and the estimated cost
9
<PAGE>
(including interest) of construction. During the construction phase, a number
of factors could result in delays and cost overruns. If the estimate of
value proves to be inaccurate, the Company may be confronted, at or prior to
the maturity of the loan, with a project, when completed, having a value
which is insufficient to assure full repayment. Finally, consumer lending is
also generally considered to involve additional credit risk than traditional
mortgage lending because of the type and nature of the collateral and, in
certain cases, the absence of collateral.
POTENTIAL EFFECTS OF CHANGES IN INTEREST RATES AND THE CURRENT INTEREST RATE
ENVIRONMENT
The operations of the Company are substantially dependent on its net
interest income, which consists of the difference between the interest income
earned on their interest-earning assets and the interest expense paid on
their interest-bearing liabilities. Like most financial institutions, the
Company's earnings are affected by changes in market interest rates, which
increased from early 1994 to early 1995, and other economic factors beyond
its control. As a result of borrowers refinancing higher rate mortgage loans
in 1993 and the rise in short-term interest rates from early 1994 to early
1995, the Company's interest rate spread decreased from 3.47% for 1992 to
3.26% for 1993 and 3.04% for 1994. For the nine months ended September 30,
1995, the Company's interest rate spread amounted to 3.08%. Further
increases in short-term interest rates could adversely affect the Company's
interest rate spreads and net interest income in future periods.
In addition to affecting interest income and expense, changes in interest
rates also can affect the market value of the Company's interest-earning
assets, which are comprised of fixed and adjustable-rate instruments.
Generally, the market value of fixed-rate instruments fluctuates inversely
with changes in interest rates. At September 30, 1995, the Company had $12.9
million of investment securities and $84.5 million of mortgage-backed
securities which were classified as held to maturity in accordance with the
terms of Statement of Financial Accounting Standards No. 115 ("SFAS No.
115"). Such designation effectively restricts the Company's ability to sell
such assets in order to meet its liquidity needs or in response to increases
in interest rates. Generally, the reclassification and sale of any of such
assets could result in the remainder of the Company's portfolio of investment
and mortgage-backed securities classified as held to maturity being
reclassified as available for sale. Pursuant to SFAS No. 115, securities
classified as available for sale must be reported at fair value, with
unrealized gains or losses being reported as a separate component of
stockholders' equity. The Company's investment and mortgage-backed
securities (including securities classified as available for sale) had an
aggregate carrying value and market value of $119.9 million and $117.7
million, respectively, at September 30, 1995. At September 30, 1995, the
Company had $2.1 million of loans classified as held for sale.
The OTS has implemented an interest rate risk component into its
risk-based capital rules, which is designed to calculate on a quarterly basis
the extent to which the value of an institution's assets and liabilities
would change if interest rates increase or decrease. If the
10
<PAGE>
net portfolio value of an institution would decline by more than 2% of the
estimated market value of the institution's assets in the event of a 200
basis point increase or decrease in interest rates, then the institution is
deemed to be subject to a greater than "normal" interest rate risk and must
deduct from its capital 50% of the amount by which the decline in net
portfolio value exceeds 2% of the estimated market value of the institution's
assets, effective no earlier than June 30, 1995. As of June 30, 1995, if
interest rates increased by 200 basis points, the Bank's net portfolio value
would decrease by 2.02% of the estimated market value of the Bank's assets,
as calculated by the OTS, which would result in a $37,000 capital deduction
if such deduction was currently required.
Changes in interest rates also can affect the average life of loans and
mortgage-related securities. Decreases in interest rates in recent periods
have resulted in increased prepayments of loans and mortgage-backed
securities, as borrowers refinanced to reduce borrowing costs. Under these
circumstances, the Company is subject to reinvestment risk to the extent that
it is not able to reinvest such prepayments at rates which are comparable to
the rates on the maturing loans or securities. A significant increase in the
level of interest rates may also have an adverse effect on the ability of
certain of the Company's borrowers with adjustable-rate loans to repay their
loans.
REGULATION
The Company, as a savings and loan holding company, and the Bank, as a
federally chartered savings bank, are subject to extensive governmental
supervision and regulation,which is intended primarily for the protection of
depositors. In addition, the Company and the Bank are subject to changes in
federal and state law, as well as changes in regulations, governmental
policies and accounting principles. The effects of any such potential
changes cannot be accurately predicted at this time but could adversely
affect the business and operations of the Company and the Bank.
ECONOMIC CONDITIONS
Prevailing economic conditions, as well as government policies and
regulations concerning, among other things, monetary and fiscal affairs,
significantly affect the operations of financial institutions such as the
Bank and financial institution holding companies such as the Company. In
particular, because the Company's lending activities are conducted primarily
in its market area in southeastern Pennsylvania, economic conditions and the
market for real estate in this area significantly affect the Company's
financial condition and operations. Excess real estate inventory, coupled
with a general economic decline, adversely affected the real estate market in
general and the Company's market area in particular in recent years and
contributed to the increases in the Company's non-performing assets during
such years. These conditions could continue to adversely affect the
financial condition and operations of the Company in future periods.
11
<PAGE>
The Company's net interest income, which is the difference between the
interest income received on its interest-earning assets, including loans,
mortgage-backed securities and investment securities, and the interest
expense incurred in connection with its interest-bearing liabilities,
including deposits and borrowings, can be significantly affected by changes
in market interest rates. The Company actively monitors its assets and
liabilities in an effort to minimize the effects of changes in interest
rates, primarily by altering the mix and maturity of the Company's loans,
investments and funding sources.
DIVIDENDS
The Company suspended dividend payments on the Common Stock after the
second quarter of 1990. Due to its financial condition and its recent
results of operations, management of the Company does not anticipate the
resumption of dividend payments on the Common Stock in the foreseeable
future. For a discussion of the requirements and limitations relating to the
Company's ability to pay dividends to stockholders and the ability of the
Bank to pay dividends to the Company, see "Market Price for Common Stock and
Dividends."
RECAPITALIZATION OF SAIF AND EFFECT OF REDUCTION IN BIF PREMIUMS
The deposits of the Bank are currently insured by the SAIF. Both the SAIF
and the Bank Insurance Fund ("BIF"), the federal deposit insurance fund that
covers commercial bank deposits, are required by law to attain and thereafter
maintain a reserve ratio of 1.25% of insured deposits. The BIF has achieved
a fully funded status in contrast to the SAIF and, therefore, the FDIC
recently substantially reduced the average deposit insurance premium paid by
commercial banks to a level approximately 75% below the average premium paid
by savings institutions.
The underfunded status of the SAIF has resulted in the introduction of
federal legislation intended to, among other things, recapitalized the SAIF
and address the resulting premium disparity. If enacted, this legislation
would require savings institutions like the Bank to pay a one-time charge of
$0.85 to $0.90 for every $100 of insured deposits to recapitalize the
depleted SAIF. Based on total insured deposits of $276.0 million at March
31, 1995, which is the anticipated measurement date for deposits, the Bank
would incur a one-time charge of between $2.3 million to $2.5 million on a
pre-tax basis ($1.5 million to $1.6 million after tax). As of September 30,
1995, after giving effect to the payment and deduction of an 85 basis point
special assessment, the Bank's tangible, core and risk-based capital ratios
would have amounted to, on a pro forma basis, approximately 4.13%, 4.13% and
8.18%, respectively.
The proposed legislation also contemplates the merger of the
BIF and the SAIF following the recapitalization of the SAIF.
Thereafter, federal deposit insurance premiums
12
<PAGE>
would be assessed similarly for all FDIC insured institutions. Further, the
legislation proposes the wholesale conversion of savings institutions, like
the Bank, into banks. Questions regarding the federal tax consequences
resulting from such conversions and permissible activities of the converted
institutions are still being debated in Congress. The Bank cannot presently
predict with any degree of certainty what form the legislation will
ultimately take, nor when or whether it may be enacted.
POSSIBLE LIMITATION OF TAX BENEFITS
Acquisitions of Common Stock by persons who are not currently holders of
the Common Stock, or by current holders whose acquisition would increase or
maintain their equity ownership in the Company above 5%, could result in an
"ownership change" for federal income tax purposes. If an "ownership change"
occurs, an annual limitation would be imposed on the Company's ability to
utilize its net operating loss carryforwards and on its ability to deduct, in
the future, losses which have not yet been recognized for tax purposes if
certain threshold limitations on the amount of such losses were exceeded.
There can be no assurance that an "ownership change" will not occur as a
result of the exercise of the Warrants or in the future as a result of the
cumulative effect of the exercise of the Warrants and other acquisitions and
transfers of Common Stock. While management believes that the amount of
losses which have not yet been recognized for tax purposes by the Company and
its subsidiaries is less than the applicable amounts beyond which limitations
would apply to the deduction of such losses in the event of an "ownership
change," no assurance can be given that such limitations will not apply. For
further information, see "Certain Federal Income Tax Consequences Relating to
the Warrants - Possible Limitation of Tax Benefits."
ABSENCE OF MARKET
There has previously been no public market for the Warrants offered
hereby and the Warrants will not be listed on a national securities exchange
or qualified for trading on the automated quotation system of the NASD. As a
result, only a limited trading market is expected to develop for the Warrants
for the foreseeable future, and there can be no assurance that a trading
market will develop or, if one develops, that it will continue. To the extent
that a trading market develops, no assurance can be provided that the market
prices will equal or exceed the issuance prices of the securities offered
hereby. If an effective market for the Warrants does not develop, purchasers
of the Warrants may be unable to dispose of such securities, or may be able
to dispose of them only to a small universe of prospective purchasers by
means of a private sale, which may not result in as high a price as could be
obtained in the event that there was a public market for such securities.
The market price of the Common Stock could also be subject to significant
fluctuations in response to variations in quarterly operating results and
other factors. In addition, the stock market in recent years has experienced
extreme price and volume fluctuations that often have been unrelated or
disproportionate to the operating performance of companies. These broad
fluctuations may adversely affect the market price
13
<PAGE>
of the Common Stock. In light of the foregoing and the market considerations
discussed above, purchasers should therefore consider the potentially
illiquid nature of the Warrants and should only purchase any such securities
with a long-term investment intent.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Certificate of Incorporation and
Bylaws and the Delaware General Corporation Law ("DGCL"), as well as a
shareholder rights plan adopted by the Company, could have the effect of
discouraging non-negotiated takeover attempts which certain stockholders
might deem to be in their interest and making it more difficult for
stockholders of the Company to remove members of its Board of Directors and
management. In addition, various federal laws and regulations could affect
the ability of a person, firm or entity to acquire the Company or shares of
its Common Stock. See "Restrictions on Acquisition of the Company" and
"Description of Capital Stock."
USE OF PROCEEDS
The Warrants offered hereby are offered by the Selling Warrant Holders.
See "Selling Warrant Holders" and "Plan of Distribution." The Company will
not receive any proceeds from the sale of the Warrants by the Selling Warrant
Holders. Each Warrant entitles the holder thereof to purchase one share of
Common Stock at an exercise price of $6.00. The Warrants are not exercisable
until the earlier to occur of May 31, 1996 or the effectiveness of the Common
Stock Registration Statement. The Warrants are exercisable subsequent
thereto, in whole or in part, at any time prior to 5:00 p.m., Eastern Time,
on June 30, 1999. The proceeds from the exercise, if any, of Warrants will be
used by the Company for general corporate purposes.
14
<PAGE>
SELLING WARRANT HOLDERS
The following table sets forth certain information as of the date hereof,
with respect to the Warrants held by each Selling Warrant Holder. Except as
otherwise set forth herein, none of the Warrant Holders has had a material
relationship with the Company within the past three years other than as a
result of the ownership of the Warrants except as noted herein. The Warrants
offered by this Prospectus may be offered from time to time by the Selling
Warrant Holders named below:
<TABLE>
<CAPTION>
Number of Shares of
Percent of Warrants Common Stock Issuable
Warrant Holder Number of Warrants Outstanding Upon Exercise of Warrants
- --------------------------------------- ------------------ ------------------- -------------------------
<S> <C> <C> <C>
Benefit Designs Inc. Pension Plan(1) 12,500 4.17% 12,500
Financial East, L.P. 12,500 4.17 12,500
Firstrust Savings Bank 37,500 12.50 37,500
G.W. Realty Associates(2) 12,500 4.17 12,500
Investors Insurance Corporation(3) 50,000 16.67 50,000
Arthur J. Kania 25,000 8.33 25,000
Kobrovsky Family Trust 7,500 2.50 7,500
William L. Mueller(4) 25,000 8.33 25,000
1993 SOP Partners, L.P. 50,000 16.67 50,000
Lisa Sussman 5,000 1.67 5,000
Deborah Stephens 12,500 4.17 12,500
Charles J. Tornetta(4) 25,000 8.33 25,000
Roxborough-Manayunk Federal Savings Bank 25,000 8.33 25,000
------ ----- ------
Total 300,000 100.0% 300,000
======== ===== ========
_____________
</TABLE>
(1) Mr. Daggett, a director of the Company and the Bank, is trustee of the
Plan and President of Benefit Designs, Inc.
(2) W. Kirk Wycoff, Chairman of the Board, President and Chief Executive
Officer of the Company and the Bank, serves as general partner of G.W.
Realty Associates.
(3) Mr. Donald U. Goebert, a director of the Company and the Bank, is a
director of Investors Insurance Corporation.
(4) Serves as a director of the Company and the Bank.
15
<PAGE>
The Selling Warrant Holders may offer all or some of the Warrants which
they hold pursuant to the offering contemplated by this Prospectus.
Therefore, no estimate can be given as to the amount of Warrants that will be
held by the Selling Warrant Holders upon completion of such offering.
PLAN OF DISTRIBUTION
The Warrants may be sold from time to time to purchasers directly by any
of the Selling Warrant Holders. Alternatively, the Selling Warrant Holders
may from time to time offer the Warrants through underwriters, dealers or
agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Warrant Holders and/or the
purchasers of Warrants for whom they may act as agent. The Selling Warrant
Holders and any underwriters, dealers or agents that participate in the
distribution of Warrants may be deemed to be underwriters, and any profit on
the sale of the Warrants by them and any discounts, commissions or
concessions received by any such underwriters, dealers or agents might be
deemed to be underwriting discounts and commissions under the Securities Act.
At the time a particular offer of Warrants is made, to the extent required,
a Prospectus Supplement will be distributed which will set forth the
aggregate amount of Warrants being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, any
discounts, commissions and other items constituting compensation from the
Selling Warrant Holders and any discounts, commissions or concessions allowed
or reallowed or paid to dealers.
The Warrants may be sold from time to time in one or more transactions at
a fixed offering price, which may be changed, or at varying prices determined
at the time of sale or at negotiated prices.
The Company will pay substantially all of the expenses incident to the
offering and sale of the Warrants to the public other than commissions and
discounts of underwriters, dealers or agents. Under agreements entered into
the Company, the Selling Warrant Holders will be indemnified by the Company
against certain civil liabilities, including liabilities under the Securities
Act.
16
<PAGE>
MARKET PRICE FOR COMMON STOCK AND DIVIDENDS
MARKET PRICE FOR COMMON STOCK
The Common Stock is traded in the over-the-counter market on the Nasdaq
National Market System under the symbol "PFNC." The following table sets
forth the high and low sales prices of the Common Stock as reported by the
Nasdaq National Market System and the cash dividends declared per share of
Common Stock during the periods indicated.
<TABLE>
<CAPTION>
Sales Price
------------- Dividends
High Low Per Share
------ ----- ---------
<S> <C> <C> <C>
1993
-------------------
First Quarter $7.25 $3.00 --
Second Quarter 7.50 3.50 --
Third Quarter 5.50 3.50 --
Fourth Quarter 5.25 4.25 --
1994
-------------------
First Quarter 6.25 4.50 --
Second Quarter 5.625 4.25 --
Third Quarter 5.50 4.25 --
Fourth Quarter 5.50 3.50 --
1995
-------------------
First Quarter 5.00 4.25 --
Second Quarter 6.25 4.50 --
Third Quarter 6.25 5.00 --
Fourth Quarter
(through November 15,
1995) 6.125 5.50 --
</TABLE>
On November __, 1995, the last trading day before the commencement of the
offering of the securities offered hereby, the closing sale price of a share
of Common Stock on the Nasdaq National Market System was $____.
17
<PAGE>
As of September 30, 1995, there were 3,280,000 shares of Common Stock
outstanding, which were held by approximately 1,100 holders of record. The
number of holders of record does not reflect the number of persons or
entities who or which hold their stock in nominee or "street" name through
various brokerage firms or other entities. Although the Common Stock is
traded on the Nasdaq National Market System, historically, the Common Stock
has not been actively traded.
DIVIDENDS
The Company suspended dividend payments on the Common Stock after the
second quarter of 1990. Due to its financial condition, its recent results
of operations and regulatory restrictions on the payment of dividends imposed
on the Bank, the Company does not anticipate the resumption of dividend
payments on the Common Stock in the foreseeable future.
The Company's ability to pay dividends on the Common Stock will depend on
the receipt of dividends from the Bank. In addition, the Company's ability
to pay dividends on the Common Stock will be affected by its obligation to
pay interest on the $3.0 million of 8.25% Subordinated Notes due 2004 (the
"Notes") issued in connection with the initial sale of the Warrants in June
1994. Interest expense on such Notes amounts to approximately $248,000 per
year. Applicable rules and regulations of the OTS impose limitations on
capital distributions by savings institutions. Savings institutions, such as
the Bank, which have capital in excess of all fully phased-in capital
requirements before and after the proposed capital distribution are
permitted, after giving prior notice to the OTS, to make capital
distributions during a calendar year up to the greater of (i) 100% of net
income to date during the calendar year, plus the amount that would reduce by
one-half its "surplus capital" (excess capital over its fully phased-in
capital requirements) at the beginning of the calendar year or (ii) 75% of
its net income over the most recent four-quarter period. However, such
capital distribution may not reduce surplus capital below the fully phased-in
capital requirement at the date of the capital distribution. Institutions
with less capital are more restricted in the payment of dividends and no
institution can pay dividends if such payment would cause the institution to
no longer satisfy its capital requirements. Furthermore, institutions may
not be permitted by the OTS to distribute the full amount of dividends
otherwise permitted under the regulations due to safety and soundness
concerns.
18
<PAGE>
REGULATORY CAPITAL
The following is a reconciliation of the Bank's capital determined in
accordance with generally accepted accounting principles ("GAAP") to
regulatory tangible, core, and risk-based capital at September 30, 1995.
<TABLE>
<CAPTION>
Tangible Core Risk-Based
Capital % Capital % Capital %
-------- ----- ------- ----- ---------- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Adjusted GAAP capital $17,411 $17,411 $17,411
General valuation allowance -- -- 1,556
Unrealized loss on securities
available for sale 337 337 337
Goodwill (150) (150) (150)
Investment in joint venture (8) (8) (8)
Non-qualifying deferred tax asset (520) (520) (520)
------- ---- ------- ---- ------- ----
Total 17,070 4.79% 17,070 4.79% 18,626 9.36%
Minimum capital requirement 5,345 1.50 10,690 3.00 15,914 8.00
------- ---- ------- ---- ------- ----
Regulatory capital -- excess $11,725 3.29% $ 6,380 1.79% $ 2,712 1.36%
======= ==== ======= ==== ======= ====
</TABLE>
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS. The following table sets
forth certain information regarding each director and executive officer of
the Company, including information regarding their age and the number and
percent of shares of Common Stock beneficially owned by such persons as of
September 30, 1995. No director is related to any other director or
executive officer of the Company or the Bank by blood, marriage or adoption,
and there were no arrangements or understandings between a director and any
other person pursuant to which such person was elected as a director. The
Company does not have any executive officers who are not also directors.
<TABLE>
<CAPTION>
Amount and Percentage of
Year of Shares Beneficially Owned
Director Expiration as of
Name Age(1) Since of Term September 30, 1995
- ----------------------- ------ -------- ---------- -------------------------
Amount Percentage
---------- ----------
<S> <C> <C> <C> <C> <C>
John E. F. Corson 54 1991 1996 7000(2) *
William O. Daggett, Jr. 54 1990 1995 62,230(3) 1.9%
Donald F. U. Goebert 58 1987 1996 140,766(4) 4.3
Joseph R. Klinger 52 1992 1995 8,500(2) *
Paul M. LaNoce 35 1991 1996 15,500(2) *
A. John May, III 39 1993 1997 8,193(5) *
William L. Mueller 43 1990 1995 65,726(6) 2.0
Charles J. Tornetta 64 1991 1997 23,158(7) *
W. Kirk Wycoff 37 1991 1997 170,405(8) 5.0
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
19
<PAGE>
_________
* Represents less than 1% of the issued and outstanding Common Stock of the
Company.
(1) As of September 30, 1995.
(2) Includes options to purchase 5,500 shares subject to stock options which
are exercisable within 60 days of September 30, 1995.
(3) Includes 47,230 shares owned by companies of which Mr. Daggett is a
director, officer and 10% stockholder and 5,500 shares subject to stock
options which are exercisable within 60 days of September 30, 1995.
Does not include 12,500 Warrants.
(4) Includes 135,266 shares owned by a company of which Mr. Goebert is a
director, officer and 10% stockholder and 5,500 shares subject to stock
options which are exercisable within 60 days of September 30, 1995.
Does not include 50,000 Warrants.
(5) Includes options to purchase 500 shares subject to stock options which
are exercisable within 60 days of September 30, 1995.
(6) Includes 15,114 shares held jointly by Mr. Mueller with or for the
benefit of certain family members and 5,500 shares subject to stock
options which are exercisable within 60 days of September 30, 1995.
Does not include 25,000 Warrants.
(7) Includes 5,500 shares subject to stock options which are exercisable
within 60 days of September 30, 1995. Does not include 25,000 Warrants.
(8) Includes 7,000 shares held jointly by Mr. Wycoff with or for the benefit
of certain family members and 116,250 shares subject to stock options
which are exercisable within 60 days of September 30, 1995. Does not
include 12,500 Warrants.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information relating to the only
persons known to the Company to be the beneficial owners of 5% or more of the
Company's Common Stock as of September 30, 1995, and the amount of Common
Stock of the Company held by all directors and executive officers of the
Company as a group as of such date. The information below is based upon
filings made pursuant to the Exchange Act and information furnished by the
respective individuals.
20
<PAGE>
<TABLE>
<CAPTION>
Amount of Common
Stock
Name and Address of Beneficially Owned Percent of
Beneficial Owner as of September 30, Common Stock
- ------------------------ ------------------- ------------
1995
----
<S> <C> <C>
SOP Partners, L.P. 200,000(1) 6.1%
Two World Trade Center
104th Floor
New York, New York 10048
Directors and executive 501,478(2) 14.6
officers of the Company
as a group (9 persons)
</TABLE>
- ---------
(1) Does not include 50,000 Warrants.
(2) Includes 7,000 shares which are held jointly by Mr. Wycoff with or for
the benefit of certain family members, 47,230 shares which are owned by
companies of which Mr. Daggett is a director, officer or 10%
stockholder, 135,266 shares owned by companies of which Mr. Goebert is a
director, officer or 10% stockholder and 15,114 shares held jointly by
Mr. Mueller with or for the benefit of certain family members. Also
includes 155,250 shares subject to stock options which are exercisable
within 60 days from September 30, 1995. Does not include 125,000 shares
subject to the Warrants held by the group.
DESCRIPTION OF THE WARRANTS
The terms of the Warrants are set forth in Schedule E to the Subscription
Agreement previously entered into with the Company and each Selling Warrant
Holder in connection with the sale of the Warrants and the Notes in June
1994, which is attached hereto as Appendix A, and the form of Warrant
Certificate. In addition, the terms under which the Company has agreed to
register the shares of Common Stock issuable upon exercise of the Warrants
("Registration Right") are set forth in Schedule C to the Subscription
Agreement which is attached hereto as Appendix B. The following is a summary
of the material provisions of the Warrants and the Registration Rights which
is qualified in its entirety by the provisions of Appendices A and B hereto
and the form of Warrant Certificate (a copy of which is available upon
request to the Company). THE WARRANTS AND THE UNDERLYING COMMON STOCK ARE
NOT SAVINGS ACCOUNTS OR DEPOSITS OF THE COMPANY OR THE BANK AND ARE NOT
INSURED BY THE FDIC, ANY OTHER GOVERNMENTAL AGENCY OR OTHERWISE.
Each Warrant entitles the holder thereof to purchase one share of the
Company's Common Stock at an exercise price (the "Exercise Price") of $6.00.
The Warrants may not
21
<PAGE>
be exercised prior to the earlier to occur of May 31, 1996 or the effective
date of the Common Stock Registration Statement. The Warrants may be
exercised, in whole or in part, any time subsequent thereto until 5:00 p.m.,
Eastern Time, on June 30, 1999.
The Exercise Price is subject to adjustment upon the occurrence of
certain events, including the issuance of Common Stock as a dividend or
distribution on the Common Stock and subdivisions, combinations and certain
reclassifications of Common Stock. No adjustment in the Exercise Price will
be required unless such adjustment would require a change of at least 1% of
the Exercise Price then in effect; PROVIDED, HOWEVER, that any adjustment
that would otherwise be required to be made shall be carried forward and
taken into account in any subsequent adjustment.
The Warrants do not confer upon the holders thereof any of the rights or
privileges of a stockholder. Accordingly, the Warrants do not entitle
holders thereof to receive any dividends, to vote, to call meetings or to
receive any distribution upon a liquidation of the Company. The Company has
authorized and reserved for issuance a number of shares of Common Stock
sufficient to provide for the exercise of the rights represented by the
Warrants. Shares issued upon exercise of the Warrants will be fully paid and
non-assessable. Warrants not exercised prior to 5:00 p.m, Eastern Time, on
June 30, 1999, shall become null and void.
Under the terms of the Registration Rights, the Company has agreed to use
its best efforts to file the Common Stock Registration Statement by December
31, 1995 but not earlier than December 1, 1995. In addition, the Company has
agreed to use its best efforts to maintain the effectiveness of the Common
Stock Registration Statement until the earlier to occur of the exercise of
all the Warrants or June 30, 1999. In the event that the Common Stock
Registration Statement is not effective by May 31, 1996 and shares of Common
Stock are issued upon the exercise of Warrants thereafter (as permitted under
the terms of the Warrants), the Company will take steps to register such
shares ("Registrable Shares") of Common Stock for resale in connection with
obtaining effectiveness of the Common Stock Registration Statement. The
Registration Rights also provide that in the event that the Company plans to
repurchase or bid for shares of Common Stock, whether on the open market or
otherwise, the Company may request that holders of Warrants that have not
previously been sold pursuant to this Prospectus and holders of Registrable
Shares, if any, suspend or postpone the distribution thereof for a period of
45 days or more; provided, however, the aggregate amount of days during which
the Company can delay the offering or distribution of the Warrants and the
Registrable Shares shall not exceed 90 days during any 12 month period.
The Warrants may be exercised during the exercise period stated above by
delivery of the Warrant Certificate, with the subscription form on the
reverse side of the Warrant Certificate fully executed, to the Company's
transfer agent, American Stock Transfer & Trust Company, 40 Wall Street, New
York, New York 10005, together with a check payable to the Company in an
amount equal to the Exercise Price multiplied by the number of shares of
Common Stock being purchased. The Company or its transfer agent will issue a
new Warrant Certificate representing the unexercised but not expired Warrants.
22
<PAGE>
The Company has agreed to use its best efforts to continuously maintain
the effectiveness of the Registration Statement until the earlier to occur of
the second anniversary of the initial issuance of the Warrants (June 30,
1996) or the sale of all of the Warrants.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
RELATING TO THE WARRANTS
The following summary of United States Federal income tax consequences of
ownership and disposition of the Warrants is based on the Internal Revenue
Code of 1986, as amended ("Code"), to the date hereof, existing and proposed
treasury regulations and applicable judicial and administrative
determinations, all of which are subject to change at any time by
legislative, judicial, or administrative action possibly with retroactive
effect. This summary discusses only Warrants held as capital assets within
the meaning of the Code. The tax treatment of the holders of the Warrants
may vary depending upon their particular situations. Certain holders
(including insurance companies, tax exempt organizations, financial
institutions, broker-dealers, foreign entities and individuals who are not
citizens or residents of the United States) may be subject to special rules
not discussed below. Each purchaser should consult his or her own tax
advisor as to the particular tax consequences of purchasing, holding,
converting and disposing of Warrants, including the applicability and effect
of any state, local, or foreign tax laws and any recent changes in applicable
tax laws.
DISPOSITION OF WARRANTS
In general, the holder of Warrants will recognize gain or loss upon the
sale, exchange, retirement or other disposition of the Warrants measured by
the difference between the amount of cash and the fair market value of
property received, and the holder's tax basis in the Warrants. The gain or
loss on the sale or redemption of Warrants will be long-term capital gain or
loss, provided the Warrants were held as a capital asset and had been held
for more than one year.
POSSIBLE LIMITATION OF TAX BENEFITS
At September 30, 1995, the Company and the Bank had a net operating loss
carryforward for federal tax purposes of approximately $7.3 million, $417,000
of which expires in 2006, $4.5 million of which expires in 2007, $654,000 of
which expires in 2008 and $1.7 million of which expires in 2009. In
addition, at such date, the Company and the Bank had an allowance for
possible loan losses of approximately $1.6 million. The majority of the
allowance for possible loan losses is anticipated to give rise to deductible
losses in the current and future years. In addition, approximately $2.0
million of losses on loans and other assets have been recognized in prior
years for financial accounting purposes, and it is anticipated that such
losses will be recognized in future years for tax purposes. Losses which the
Company and the Bank have not yet recognized for tax purposes that may be
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utilized to offset taxable income in the current, or a past or future year
are sometimes referred to as "Built-in Losses."
If an "ownership change," discussed below, occurs with respect to the
Company and the Bank, either in connection with the transactions contemplated
hereby, or in future years as a result of transactions unrelated thereto, the
Company and the Bank may be limited in their ability to use their net
operating loss carryforward. In addition, if the Built-in Losses of the
Company and the Bank (netted against gains which they have not yet recognized
for tax purposes, together, the "Net Unrealized Built-In Losses" of the
Company and the Bank) exceed certain threshold amounts, the Company may be
limited in its ability to use its Built-in Losses to offset otherwise taxable
income in the current or a future year. Accordingly, two factors are
involved in evaluating whether the ability of the Company and the Bank to
deduct their Built-in Losses will be limited in the current, or a past or
future year. The first factor is whether the Company and the Bank have
undergone an "ownership change," as defined. The second factor is whether the
Net Unrealized Built-In Losses of the Company and the Bank exceed the
applicable threshold limitations, discussed below, at the time such an
"ownership change" occurs.
The determination whether an "ownership change" has occurred is made by
(i) determining, in the case of any 5% stockholder, the increase, if any, in
the percentage ownership of such 5% stockholder at the end of any three-year
testing period relative to such stockholder's lowest percentage ownership at
any time during such testing period, and expressing such increase in terms of
percentage points (for example, a stockholder whose percentage ownership
increased from 2% to 9% during the testing period will be considered to have
had an increase of 7 percentage points), and (ii) aggregating such percentage
point increases for all 5% stockholders during the applicable testing period.
For purposes of the preceding sentence, any direct or indirect holder, taking
into account certain attribution rules, of 5% or more of the Company's stock
is a 5% stockholder, and all holders of less that 5% collectively are
generally treated as a single 5% stockholder. An "ownership change" will
occur as of the end of any three-year testing period if the aggregate
percentage point increases for all 5% stockholders for such testing period
exceeds 50 percentage points. Based upon an analysis of its known 5%
stockholders during the past three years, the Company believes that the
initial offering of the Warrants did not cause an "ownership change" to have
occurred.
Section 382 of the Code provides that, if the amount of Net Unrealized
Built-in Losses of a corporation, generally, the cumulative amount by which
its tax basis in its assets exceeds the fair market value of such assets, are
greater than the lesser of: (i) 15 percent of the fair market value of the
corporation's assets or (ii) $10 million, then the corporation's Net
Unrealized Built-In Losses will be subject to limitation under Section 382 of
the Code if the corporation were to experience an "ownership change," as
defined.
Management of the Company believes, based upon a review of its
consolidated assets and liabilities undertaken in connection herewith, that,
its unrealized built-in gains (generally, the amount by which the fair market
value of certain assets of the Company and the Bank exceed the tax basis of
such assets), when netted against its unrealized built-in
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losses (including the reserve for possible loan losses), would result in an
amount of Net Unrealized Built-In Losses that would be less than the
applicable threshold amounts set forth above. Accordingly, management
believes that, in the event of an "ownership change" in conjunction with the
transactions contemplated hereby, the Company and the Bank would be
considered to have no Net unrealized Built-In Losses and that it would
continue to be able to utilize its Built-in Losses without limitation. No
assurance can be given that the IRS would concur with the Company's review of
its assets and liabilities and its conclusion that no limitation would apply
to the deduction of Built-in Losses by the Company.
In addition, if the Net Unrealized Built-In Losses of the Company were
deemed to exceed the above threshold amounts, the Company would be limited to
the Section 382 limitation in the rate at which it could deduct its Built-in
Losses as they are recognized. The Section 382 Limitation is computed by
multiplying the aggregate fair market value of the Company Common Stock
immediately prior to the "ownership change" by the then-applicable interest
rate published by the IRS for this purpose. Based upon the market value of
the outstanding Company Common Stock on September 30, 1995, Section 382 would
limit the Company's ability to utilize in any one year more than $1.2 million
of its net operating loss carryforward and its as yet unrecognized Built-in
Losses. The limitation on the use of Built-in Losses would apply only with
respect to Built-in Losses recognized in the five year period beginning on
the date of the "ownership change." Further, the legislative history
regarding Section 382 of the Code provides that Built-In Losses may only be
carried forward, and may not be carried back.
RESTRICTIONS ON ACQUISITION OF THE COMPANY
GENERAL
The Certificate of Incorporation and Bylaws of the Company, the DGCL and
applicable federal laws and regulations contain certain provisions which may
be deemed to have a potential anti-takeover effect. Such provisions may have
the effect of discouraging a future takeover attempt which is not approved by
the Board of Directors but which the Company's stockholders may deem to be in
their best interest or in which stockholders may receive a substantial
premium for their shares over then current market prices. As a result,
stockholders who might desire to participate in such a transaction may not
have an opportunity to do so. Certain of such provisions also may make it
more difficult for stockholders of the Company to remove members of its Board
of Directors and management. The Company is not aware of any existing or
threatened effort to acquire control of the Company.
The following description of certain provisions of the Certificate of
Incorporation and Bylaws of the Company, the DGCL and applicable federal laws
and regulations is
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necessarily general and is qualified by reference to such Certificate of
Incorporation and Bylaws, the DGCL and applicable federal laws and
regulations.
CERTIFICATE OF INCORPORATION AND BYLAWS
AUTHORIZED BUT UNISSUED SHARES OF CAPITAL STOCK. The Company currently
has 1,000,000 authorized but unissued shares of Preferred Stock and 6,000,000
authorized shares of Common Stock, of which 3,280,000 shares were issued and
outstanding as of June 30, 1995. As a general matter, the existence of
unissued and unreserved shares of capital stock provides a board of directors
with the ability to cause the issuance of shares of capital stock under
circumstances that might prevent or render more difficult or costly the
completion of a takeover of a company by diluting the voting or other rights
of any proposed acquiror, by creating a substantial voting block in
institutional or other hands that might undertake to support the position of
a board of directors, by effecting an acquisition that might complicate or
preclude a takeover or otherwise.
The Board of Directors also has the authority to issue shares of
Preferred Stock with such terms as it deems advisable. In the event of a
proposed merger, tender offer or other attempt to gain control of the Company
which the Board of Directors does not approve, the Board of Directors could
authorize the issuance of a series of Preferred Stock with rights and
preferences which could impede the completion of such a transaction. An
effect of the possible issuance of Preferred Stock, therefore, may be to
deter a future takeover attempt. See "Description of Capital Stock -
Preferred Stock."
In addition to the authorized but unissued shares of Common Stock and
Preferred Stock, the Company has adopted a shareholder rights plan which
generally would cause substantial dilution to a person or group that acquires
20% or more of the outstanding shares of Common Stock. See "Description of
Capital Stock - Preferred Stock Purchase Rights."
BOARD OF DIRECTORS. The Certificate of Incorporation provides that the
Board of Directors of the Company shall be divided into three classes as
nearly equal in number as the then total number of directors permits, with
one class to be elected annually for a term of three years and until their
successors are elected and qualified. See "Management and Principal
Stockholders - Board of Directors." Vacancies occurring in the Board of
Directors of the Company by reason of an increase in the number of directors
may be filled by a vote of 67% of the remaining directors, and any directors
so chosen shall hold office until the next election of directors by
stockholders and until their successors are elected and qualified. Any other
vacancy in the Board of Directors, whether by reason of death, resignation,
disqualification, removal or other cause, may be filled by a vote of 67% of
the remaining directors, and any directors so chosen shall hold office until
the next election of the class for which such directors shall have been
chosen and until their successors are elected and qualified.
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Directors of the Company may be removed from office only for cause by the
affirmative vote of the holders of 67% or more of the outstanding shares of
Common Stock entitled to vote generally in the election of directors. Cause
for removal exists only if the director whose removal is proposed either has
been convicted of a felony or has been adjudged by a court of competent
jurisdiction to be liable for gross negligence or misconduct in the
performance of such directors' duty to the Company.
MEETINGS OF STOCKHOLDERS. Special meetings of stockholders of the
Company, for any purpose or purposes, may be called only upon the affirmative
vote of 67% of the Board of Directors and may not be called by the
stockholders of the Company.
STOCKHOLDER NOMINATIONS AND PROPOSALS. The Certificate of Incorporation
of the Company generally provides that stockholders must provide the Company
with written notice of stockholder nominations for election as directors and
stockholder proposals not later than 30 days prior to the date of the
scheduled annual meeting; provided, however, that if fewer than 21 days'
notice of the meeting is given to stockholders, such written notice must be
received not later than the close of the tenth day following the day on which
notice of the meeting was mailed to stockholders. Stockholder proposals
which are proposed to be included in the Company's proxy materials must be
submitted in accordance with the notice and other requirements of Rule 14a-8
under the Exchange Act. In each case the stockholder also is required to
submit specified information regarding such stockholder and the proposed
nominee(s) and/or business to be acted upon at a meeting of stockholders.
SUPERMAJORITY PROVISION. The Certificate of Incorporation of the Company
includes a provision which generally requires the affirmative vote of 67% of
the Company's stockholders to approve a merger or consolidation involving the
Company or the sale, lease, exchange or other disposition of all or
substantially all of the assets of the Company. This voting requirement is
not applicable, however, if the Board of Directors of the Company shall have
approved the transaction by a vote of 67% of the entire Board.
FAIR PRICE PROVISION. The Certificate of Incorporation includes a
provision which governs any proposed "business combination" (defined
generally to include certain sales, purchases, exchanges, leases, transfers,
dispositions or acquisitions of assets, mergers or consolidations, or certain
reclassifications of securities of the Company) between the Company or its
subsidiaries, on the one hand, and a "Related Person," on the other hand. A
"Related Person" is defined generally to include any person, partnership,
corporation, group or other entity (other than the Company and its
subsidiaries) which is the beneficial owner (as defined) of 10% or more of
the shares of the Company entitled to vote generally in an election of
directors ("Voting Shares").
Under the Certificate of Incorporation, if certain specified conditions
are not met, neither the Company nor any of its subsidiaries may become a
party to any business combination with a Related Person without the prior
affirmative vote at a meeting of the Company's stockholders by the holders of
at least 80% of all shares outstanding and entitled
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to vote thereon (the Company's "Voting Shares"), voting separately as a
class, and by an "Independent Majority of Stockholders," which is defined to
mean the holders of a majority of the outstanding Voting Shares that are not
beneficially owned, directly or indirectly, by a Related Person. If such
approval were obtained, the specific conditions would not have to be met.
Such conditions also would not have to be met if the Board of Directors
approved the business combination at times and by votes specified in the
Certificate of Incorporation. The conditions necessary to avoid the vote of
80% of the Company's outstanding Voting Shares and of an Independent Majority
of Stockholders include conditions providing that, upon consummation of the
business combination, the stockholders would receive at least a certain
minimum price per share for their shares.
AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BYLAWS. The affirmative
vote of a majority of the issued and outstanding voting stock of the Company
is required to amend the Certificate of Incorporation, with the exception of
certain sections thereof, including provisions relating to business
combinations, which can only be amended by a vote of 67% of the whole Board
of Directors, a majority of the Continuing Directors, as defined, the vote of
at least 67% of the Voting Shares, and an Independent Majority of
Stockholders entitled to vote thereon.
The Bylaws may be altered, amended or repealed or new bylaws adopted by
the Board of Directors at a regular or special meeting upon the affirmative
vote of both 67% of the whole Board of Directors and a majority of the
Continuing Directors, as defined. The Bylaws may also be altered, amended or
repealed by the stockholders upon the affirmative vote of 67% of the
outstanding Voting Shares of the Company and by an Independent Majority of
Stockholders.
FEDERAL LAWS AND REGULATIONS
Federal laws and regulations generally require any person who intends to
acquire control of a savings and loan holding company or savings institution
to give at least 60 days prior written notice to the OTS. "Control" is
defined as the power, directly or indirectly, to direct the management or
policies of a savings institution or to vote 25% or more of any class of
voting securities of the savings institution. In addition to the foregoing
restrictions, a company must secure the approval of the OTS before it can
acquire control of a savings institution. Under federal regulations, a
person (including business entities) is deemed conclusively to have acquired
control if, among other things, such person acquires: (a) 25% or more of any
class of voting stock of the savings institution; (b) irrevocable proxies
representing 25% or more of any class of voting stock of the savings
institution; (c) any combination of voting stock and irrevocable proxies
representing 25% or more of any class of such institution's voting stock; or
(d) control of the election of a majority of the directors of the savings
institution. In addition, a rebuttable presumption of control arises in the
event a person acquires more than 10% of any class of voting stock (or more
than 25% of any class of non-voting stock) and is subject to one or more of
eight enumerated control factors. Such regulations also set forth rebuttable
presumptions of concerted action and the
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procedures to follow to rebut any such presumptions. The OTS is specifically
empowered to disapprove such an acquisition of control if it finds, among
other reasons, that (i) the acquisition would substantially lessen
competition; (ii) the financial condition of the acquiring person might
jeopardize the institution or its depositors; or (iii) the competency,
experience or integrity of the acquiring person indicates that it would not
be in the interest of the depositors, the institution or the public to permit
the acquisition of control by such person.
DELAWARE GENERAL CORPORATION LAW
Section 203 of the DGCL generally provides that a Delaware corporation
shall not engage in any "business combination" with an "interested
stockholder" for a period of three years following the date that such
stockholder became an interested stockholder unless (1) prior to such date
the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder; or (2) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding for
this purpose, shares owned by persons who are directors and also officers and
shares owned by employee stock ownership plans in which employee participants
do not have the right to determine confidentially whether the shares held
subject to the plan will be tendered in a tender offer or exchange offer; or
(3) on or subsequent to such date, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the outstanding
voting stock which is not owned by the interested stockholder. The
three-year prohibition on business combinations with an interested
stockholder does not apply under certain circumstances, including business
combinations with a corporation which does not have a class of voting stock
that is (i) listed on a national securities exchange, (ii) authorized for
quotation on an inter-dealer quotation system of a registered national
securities association, or (iii) held of record by more than 2,000
stockholders, unless in each case this result was directly or indirectly
caused by the interested stockholder.
An "interested stockholder" generally means any person that (i) is the
owner of 15% or more of the outstanding voting stock of the corporation or
(ii) is an affiliate or associate of the corporation and was the owner of 15%
or more of the outstanding voting stock of the corporation at any time within
the three-year period immediately prior to the date on which it is sought to
be determined whether such person is an interested stockholder; and the
affiliates and associates of such a person. The term "business combination"
is broadly defined to include a wide variety of transactions, including
mergers, consolidations, sales of 10% or more of a corporation's assets and
various other transactions which may benefit an interested stockholder.
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DESCRIPTION OF CAPITAL STOCK
The Company is currently authorized to issue up to 6,000,000 shares of
Common Stock, par value $1.00 per share, and 1,000,000 shares of Preferred
Stock, par value $.01 per share. At September 30, 1995 the Company had
3,280,000 shares of Common Stock issued and outstanding and no shares of
Preferred Stock issued or outstanding. THE CAPITAL STOCK OF THE COMPANY DOES
NOT REPRESENT OR CONSTITUTE A DEPOSIT ACCOUNT AND IS NOT INSURED BY THE FDIC.
COMMON STOCK
GENERAL. Each share of Common Stock has the same relative rights and is
identical in all respects with each other share of Common Stock. The Common
Stock is not subject to call for redemption and, upon receipt by the Company
of the full purchase price therefor, each share of Common Stock offered
hereby will be fully paid and non-assessable.
VOTING RIGHTS. Except as provided in any resolution or resolutions
adopted by the Board of Directors establishing any series of Preferred Stock,
the holders of Common Stock possess exclusive voting rights in the Company.
Each holder of Common Stock is entitled to one vote for each share held on
all matters voted upon by stockholders. Stockholders are not permitted to
cumulate votes in elections of directors.
DIVIDENDS. The holders of the Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors of
the Company out of funds legally available therefor. For a discussion of the
requirements and limitations relating to the Company's ability to pay
dividends to stockholders and the ability of the Bank to pay dividends to the
Company. See "Market Price for Common Stock and Dividends."
PRE-EMPTIVE RIGHTS. Holders of the Common Stock do not have any
pre-emptive rights with respect to any shares which may be issued by the
Company in the future; the Company, therefore, may sell shares of Common
Stock without first offering them to its then-existing stockholders.
LIQUIDATION. In the event of any liquidation, dissolution or winding up
of the Company, the holders of the Common Stock would be entitled to receive,
after payment of all debts and liabilities of the Company, all assets of the
Company available for distribution, subject to the rights of the holders of
any Preferred Stock which may be issued with a priority in liquidation or
dissolution over the holders of the Common Stock.
PREFERRED STOCK
The Board of Directors of the Company is authorized to issue Preferred
Stock and to fix and state voting powers, designations, preferences or other
special rights of such shares and the qualifications, limitations and
restrictions thereof. The Preferred Stock may be
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issued in distinctly designated series, may be convertible into Common Stock
and may rank prior to the Common Stock as to dividend rights, liquidation
preferences, or both.
The authorized but unissued shares of Preferred Stock (as well as the
authorized but unissued and unreserved shares of Common Stock) are available
for issuance in future mergers or acquisitions, in a future public offering
or private placement or for other general corporate purposes. Except as
otherwise required to approve the transaction in which the additional
authorized shares of Preferred Stock would be issued, stockholder approval
generally would not be required for the issuance of these shares. Depending
on the circumstances, however, stockholder approval may be required pursuant
to the requirements for continued listing of the Common Stock on the Nasdaq
National Market System or the requirements of any exchange on which the
Common Stock may then be listed.
PREFERRED STOCK PURCHASE RIGHTS
In April 1990, the Company's Board of Directors declared a dividend
distribution of one preferred stock purchase right ("Right") for each
outstanding share of Common Stock. Each Right entitles each registered
holder, upon the occurrence of certain events, to purchase from the Company a
unit consisting of one one-hundredth of a share (a "Rights Unit") of Series A
Junior Participating Preferred Stock, par value $.01 per share, at a purchase
price of $40.00 per Rights Unit (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and American Stock
Transfer and Trust Company, as Rights Agent.
The Rights will separate from the Common Stock and be distributed on a
date ("Distribution Date") which will occur upon the earlier of (i) ten
business days following a public announcement that a person or group of
affiliated or associated persons, other than employee benefit plans of the
Company (an "Acquiring Person"), has acquired beneficial ownership of 20% or
more of the outstanding shares of Common Stock (the "Stock Acquisition
Date"), or (ii) ten business days (or such later date as may be determined by
action of the Board of Directors of the Company prior to such time as any
person becomes an Acquiring Person) following the commencement of a tender
offer or exchange offer that would result in a person or group beneficially
owning 20% or more of such outstanding shares of Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after
the Rights were declared, including shares to be issued in the Offering, will
contain a notation incorporating by reference the Rights Agreement and (iii)
the surrender for transfer of any certificate for Common Stock outstanding
will also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate. As soon as practicable after the
Distribution Date, separate certificates representing the Rights (the "Rights
Certificates") will be mailed to the holders
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of record of the Common Stock as of the close of business on the Distribution
Date and, thereafter, the separate Rights Certificates alone will represent
the Rights. The Rights will not be exercisable until the Distribution Date
and will cease to be exercisable at the close of business on May 11, 2000,
unless the Rights are earlier redeemed by the Company as described below.
Unless the Rights are redeemed earlier pursuant to the Rights Agreement,
in the event that, at any time following the Stock Acquisition Date, (i) the
Company is involved in a merger or other business combination in which the
Company is not the surviving corporation or in which the Common Stock of the
Company is changed into or exchanged for other securities of any other person
or cash or any other property, or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right shall thereafter
have the right to receive, upon exercise and payment of the Purchase Price,
common stock of the acquiring company having a value equal to two times the
exercise price of the Right. In addition, unless the Rights are redeemed
pursuant to the Rights Agreement, in the event that any person or group of
affiliated or associated persons becomes an Acquiring Person, the Rights
Agreement provides that proper provision shall be made so that each holder of
a Right will thereafter have the right to receive, upon exercise and payment
of the Purchase Price, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two
times the exercise price of the Right. The events set forth in this
paragraph are referred to in the Rights Agreement as a "Triggering Event."
Following the occurrence of a Triggering Event, any Rights that are, or
(under certain circumstances) were, beneficially owned by any Acquiring
Person shall immediately become null and void.
At any time after a person becomes an Acquiring Person, the Company may
exchange all or part of the Rights (other than Rights which previously have
been voided as set forth above) for shares of Common Stock (an "Exchange") at
an exchange ratio of one share per Right, as such may be appropriately
adjusted to reflect any stock split or similar transaction.
In general, the Company may redeem the Rights in whole, but not in part,
at any time until ten days following the Stock Acquisition Date, at a price
of $.01 per Right ("Redemption Price"). Immediately upon the action of the
Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price. Until a Right is exercised or exchanged, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including the right to vote or to receive dividends.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per share of
Common Stock. In the event of liquidation, the holders of the Preferred
Stock will be entitled to a minimum preferential liquidation payment of $100
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per share but will be entitled to an aggregate payment of 100 times the
payment made per share of Common Stock. Each share of Preferred Stock will
have 100 votes, voting together with the Common Stock. Finally, in the event
of any merger, consolidation or other transaction in which shares of Common
Stock are exchanged, each share of Preferred Stock will be entitled to
receive 100 times the amount received per share of Common Stock.
The Rights may have certain antitakeover effects. The Rights would cause
substantial dilution to a person or group that acquires 20% or more of the
outstanding shares of Common Stock of the Company if a Triggering Event
thereafter occurs without the Rights having been redeemed or in the event of
an Exchange. However, the Rights should not interfere with any merger or
other business combination approved by the Board of Directors because the
Rights are redeemable under certain circumstances.
TRANSFER AGENT
The transfer agent and registrar for the Warrants and the Common Stock is
American Stock Transfer & Trust Company, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1994 and 1993 and for each of the two years in the period ended December 31,
1994 have been audited by Coopers & Lybrand L.L.P., independent certified
public accountants, as stated in their report thereon dated January 18, 1995.
Such consolidated financial statements are incorporated herein by reference
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.
The consolidated financial statements of the Company for the year ended
December 31, 1992 have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, as stated in their report thereon dated January
22, 1993, except for the last paragraph thereof which is as of February 16,
1993. Such report contains an explanatory paragraph that states that (i) at
December 31, 1992, the Bank failed to meet the minimum capital thresholds
under the Federal Deposit Insurance Corporation Improvement Act of 1991 to be
considered "adequately capitalized" and was categorized as "significantly
undercapitalized," (ii) the Bank had filed a capital plan for attaining the
required levels of regulatory capital and that such plan had been accepted by
the OTS, but that on February 16, 1993 the Bank had submitted an amendment to
its plan and the Bank had not received notification as to acceptance or
rejection of its amended capital plan, (iii) because the Bank did not meet
the minimum capital thresholds to be considered "adequately capitalized" it
was subject to certain operating restrictions such as growth limitations on
executive compensation, and restriction on deposit interest rates, (iv)
failure to increase its capital ratios in accordance with its capital plan or
further declines in its capital ratios exposed the
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Bank to additional restrictions and regulatory actions, including
regulatory take-over, (v) there was substantial doubt about the Company's
ability to continue as a going concern, and (vi) the ability of the Company
to continue as a going concern is dependent upon many factors including
regulatory action and the ability of management to achieve its plan. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to the Warrants will be passed upon for
the Company by Elias, Matz, Tiernan & Herrick L.L.P., 734 15th Street, N.W.,
12th Floor, Washington, D.C. 20005.
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APPENDIX A
TERMS OF THE WARRANTS
1. The Warrants which comprise a part of the Units are part of a duly
authorized issue of 300,000 Warrants evidencing the right to purchase an
aggregate of up to 300,000 shares of Common Stock and are issued in connection
with the Company's offering of 12 Units, each Unit consisting of $250,000 in
principal amount of the Company's 8.25% Subordinated Notes due 1999 (the
"Notes") and 25,000 Warrants to purchase 25,000 shares of Common Stock.
2. The shares of Common Stock of the Company subject to purchase
hereunder are the shares of Common Stock of the Company as they may exist on the
date of the exercise of the Warrants, whether or not the rights or interests
represented by such shares are equivalent to the rights or interests represented
by the shares of Common Stock of the Company authorized at the date of initial
issuance of the Warrants.
3. The Warrants are subject to the following terms and conditions:
(a) The Warrants are exercisable, at the option of the holder hereof,
either in whole or from time to time in part (but not as to a fractional
share of Common Stock), at any time commencing on the earlier to occur of
the effectiveness of the Common Stock Registration Statement (as defined in
Schedule C to the Agreement) [APPENDIX B TO THE PROSPECTUS] or the passage
of 12 months from the date of the Amendment Number 1 to the Agreement [MAY
31, 1995] and terminating on the Expiration Date, as defined below. The
Warrants shall expire in their entirety and no longer be exercisable at the
close of business on the Expiration Date. Upon surrender of the Warrant
Certificate and payment of the Purchase Price (as defined below), the
Company shall issue and deliver or instruct its transfer agent to issue and
cause to be delivered with all reasonable dispatch to or upon the written
order of the holder and in such name or names as the holder may designate,
a certificate or certificates for the number of full shares of Common Stock
so purchased upon the exercise of such Warrants. In case of the purchase
of less than all the shares purchasable under the Warrants owned by the
holder, the Company shall cancel the Warrant Certificate upon the surrender
thereof and shall execute and deliver or instruct its transfer agent to
deliver a new Warrant Certificate of like tenor for the balance of the
shares purchasable thereunder.
(b) The term "Expiration Date" shall mean 5:00 p.m., Eastern Time, on
June 30, 1999, or if said Date shall in the Commonwealth of Pennsylvania be
a holiday or a day on which financial institutions are authorized to close,
then the next following
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date which in the Commonwealth of Pennsylvania is not a holiday or a day
on which financial institutions are authorized to close.
(c) The purchase price for each share of Common Stock purchasable
pursuant to the exercise of the Warrants (hereafter referred to as the
"Purchase Price") shall be $6.00 per share subject to adjustment as
provided in subsection (i) below. Payment of the aggregate Purchase Price
shall be paid by check, money order, certified or bank cashier's check or
by wire transfer.
(d) The Company shall not be required to issue certificates
representing fractions of shares of Common Stock.
(e) The Company will, at all times while the Warrants are
exercisable, keep reserved, out of its authorized Common Stock, a number of
shares of Common Stock sufficient to provide for the exercise of the rights
of purchase represented by the outstanding Warrants. Promptly after the
Expiration Date, no shares will be subject to reservation in respect of
such Warrants. The Company will take all such action as may be necessary
to insure that all shares of capital stock issued upon exercise of these
Warrants will be duly and validly authorized and issued and fully paid and
non-assessable.
(f) Subject to compliance with the provisions of Section 7 of the
Agreement, the Warrants and all rights hereunder are transferable in whole
or in part upon the books of the Company by the registered holder thereof
in person or by his duly authorized attorney, upon surrender of the
Warrants duly endorsed, at the principal office of the Company or at such
other office as shall have theretofore been designated by the Company by
notice pursuant hereto; PROVIDED, HOWEVER, the Warrants may not be
transferred prior to the earlier to occur of the date of effectiveness of
the registration statement relating to the registration of the Warrants for
resale or June 30, 1995.
(g) Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, or destruction or mutilation of a Warrant
Certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and
cancellation of such Warrant Certificate, if mutilated, the Company will
make and deliver or instruct its transfer agent to deliver a new Warrant
Certificate of like tenor, in lieu of such Warrant Certificate.
(h) Prior to the exercise of the Warrants, the holder of such
Warrants shall not be entitled to any rights of a stockholder of the
Company, including without limitation the right to vote, to receive
dividends or other distributions.
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(i) The number and kind of securities purchasable upon the exercise
of each Warrant and the Purchase Price shall be subject to adjustment from
time to time upon the happening of certain events as hereinafter set forth:
(1) The number of shares purchasable upon the exercise of each
Warrant and the Purchase Price shall be subject to adjustment as
follows:
(A) In case the Company shall (i) pay a dividend in shares
of Common Stock or make a distribution in shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, or
(iv) issue by reclassification of its shares of Common Stock or
capital reorganization other securities of the Company, the
number of shares purchasable upon exercise of each Warrant
immediately prior thereto shall be adjusted so that the holder of
each Warrant shall be entitled to receive the kind and number of
shares or other securities of the Company which the holder would
have owned or have been entitled to receive after the happening
of any of the events described above, had such Warrant been
exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to
this Section (i)(1)(A) shall become effective immediately after
the effective date of such event retroactive to the record date,
if any, for such event.
(B) No adjustment in the number of shares purchasable
hereunder shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in the
number of shares purchasable upon the exercise of each Warrant;
provided, however, that any adjustments which by reason of this
Section (i)(1)(B) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; and,
provided, further, that all adjustments carried forward by reason
of this Section (i)(1)(B) shall be taken into account and the
number of shares purchased upon the exercise of each Warrant
shall be adjusted as of seven (7) days prior to the Expiration
Date. If any adjustment is carried forward pursuant to this
Section (i)(1)(B), the Company may make the election available
pursuant to Treasury Regulation Section 1.305-3(d)(2)(iii). All
calculations shall be made to the nearest one-hundredth of a
share.
(C) Whenever the number of shares purchasable upon the
exercise of each Warrant is adjusted, as herein provided, the
Purchase Price payable upon exercise of each Warrant shall be
adjusted by multiplying the Purchase Price immediately prior to
the adjustment by
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a fraction, of which the numerator shall be the number of shares
purchasable upon the exercise of each Warrant immediately prior
to the adjustment, and of which the denominator shall be the
number of shares so purchasable immediately thereafter.
(D) For the purpose of this Subsection (i)(1), the term
"shares of Common Stock" shall mean (i) the class of stock
designated as the Common Stock of the Company at the Closing
Date, or (ii) any other class of stock resulting from successive
changes or reclassifications of such shares consisting solely of
changes in par value, or from par value to no par value, or from
no par value to par value. In the event that at any time, as a
result of an adjustment made pursuant to Section (i)(1)(A) above,
the holder shall become entitled to purchase any shares of the
Company other than shares of Common Stock, thereafter the number
of such other shares so purchasable upon exercise of each Warrant
and the Purchase Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
shares contained in Section (i)(1)(A) through (i)(1)(C),
inclusive, above.
(2) Whenever the number of shares purchasable upon the exercise
of each Warrant or the Purchase Price of such shares is adjusted, as
herein provided, the Company shall cause to be mailed by first class
mail, postage prepaid, to each holder, notice of such adjustment or
adjustments setting forth the number of shares purchasable upon the
exercise of each Warrant and the Purchase Price of such shares after
such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which
such adjustment was made. Any failure by the Company to give notice
to the holder or any defect therein shall neither affect the validity
of such adjustment or of the event resulting in the adjustment, nor of
the holder's rights to such adjustment.
(3) Except as provided in Sections (i)(1) and (i)(5) hereof, no
adjustment in respect of any dividends or distributions shall be made
during the term of a Warrant or upon the exercise of a Warrant.
(4) (A) In case of any consolidation of the Company with or
merger of the Company into another corporation or in case of any
sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, such
successor or purchasing corporation may assume the obligations
hereunder, and may execute with the Company an agreement that
each holder shall have the right thereafter upon payment of the
Purchase Price in effect immediately prior to such transaction to
purchase upon exercise of
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each Warrant the kind and amount of shares and other securities
and property (including cash) which he would have owned or have
been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Warrant been
exercised immediately prior to such action. The Company shall
mail by first class mail, postage prepaid, to each Holder, notice
of the execution of any such agreement. Such agreement shall
provide for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in Section
(i). The provisions of this Section (i)(4) shall similarly apply
to successive consolidations, mergers, sales or conveyances.
(B) In the event that such successor corporation does not
execute such an agreement with the Company as provided in Section
(i)(4)(A), then each holder shall be entitled to exercise
outstanding Warrants during a period of at least 30 days, which
period terminates at least seven (7) days prior to consummation
of the consolidation, merger, sale or conveyance, and thereby
receive consideration in the consolidation, merger, sale or
reconveyance on the same basis as other previously outstanding
shares of the same class as the shares acquired upon exercise.
Warrants not exercised in accordance with this Section (i)(4)(B)
before consummation of the transaction will be cancelled and
become null and void. The Company shall mail by first class
mail, postage prepaid, to each holder, at least 10 days prior to
the first date on which the Warrant shall become exercisable
pursuant to the provisions of this Section (i)(4)(B), notice of
the proposed transaction setting forth the first and last date on
which the holder may exercise outstanding Warrants and a
description of the terms of this Warrant providing for
cancellation of the Warrants in the event that Warrants are not
exercised by the prescribed date.
(C) The Company's failure to give any notice required by
this Section (i)(4) or any defect therein shall not affect the
validity of any such agreement, consolidation, merger, sale or
conveyance of property.
(5) In case (a) the Company shall make any distribution of its
assets to holders of its shares of Common Stock as a liquidation or
partial liquidation dividend or (b) the Company shall liquidate,
dissolve or wind up its affairs (other than in connection with a
consolidation, merger or sale of all or substantially all of its
property, assets and business as an entity), then the Company shall
cause to be mailed to each holder, by first class mail, at least 20
days prior to the applicable record date, a notice stating the date on
which such distribution, liquidation, dissolution or winding up is
expected to become effective, and the date on which it is expected
that holders of shares of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
or assets (including cash) deliverable upon such distribution,
liquidation, dissolution or winding up, and
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that each holder may exercise outstanding Warrants during the 20-day
period and, thereby, receive consideration in the liquidation on the
same basis as other previously outstanding shares of the same class as
the shares acquired upon exercise. The Company's failure to provide
the notice required by this Section (i)(5) or any defect therein shall
not affect the validity of such distribution, liquidation, dissolution
or winding up.
(6) Irrespective of any adjustments in the Purchase Price or the
number or kind of shares purchasable upon the exercise of the
Warrants, Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in
the Warrants initially issued.
(j) the Company may deem and treat the registered holder of the
Warrants as the absolute owner of such Warrants (notwithstanding any
notations of ownership or writing on the Warrant Certificate evidencing
such Warrants made by anyone other than the Company) for all purposes and
shall not be affected by any notice to the contrary.
(k) All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed first class postage prepaid or delivered to a telegraph
office for transmission:
(i) if to the registered holder of the Warrants, at the address
of such holder as shown on the books of the Company; or
(ii) if to the Company, Plymouth Meeting Executive Campus, 600
West Germantown Pike, Plymouth Meeting, Pennsylvania 19462-1003, or at
such other address as may have been furnished to the holder of the
Warrants in writing by the Company.
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APPENDIX B
REGISTRATION RIGHTS PROVISIONS
1. DEFINITIONS. For purposes of this Schedule C, the following terms
shall have the following meanings:
(a) "Closing Date" shall mean the date of initial issuance of the
Units, each Unit consisting of $250,000 principal amount of the Company's 8.25%
Subordinated Notes and 25,000 Warrants to purchase shares of Common Stock.
(b) "Common Stock" shall mean the common stock of the Company, par
value $1.00 per share.
(c) "Prospectus" shall mean the prospectus included in the
Registration Statement or the Common Stock Registration Statement, as amended or
supplemented by any prospectus supplement filed in any post-effective amendment
to either the Registration Statement or the Common Stock Registration Statement
and all documents incorporated by reference therein.
(d) "Registrable Shares" shall mean the shares of Common Stock
purchased upon the exercise of Warrants prior to the date of the filing of the
Common Stock Registration Statement. Registrable Shares shall only be possible
in the event the Company fails to file and have declared effective the Common
Stock Registration Statement by the one year anniversary of the effective date
of Amendment Number 1 to the Agreement (May 31, 1996).
(f) "Registrable Warrants" shall mean the Warrants issued by the
Company to the Purchaser and designated on Schedule D to the Subscription
Agreement; PROVIDED, HOWEVER, that any such Warrants shall cease to be
Registrable Warrants upon the sale or transfer thereof (other than as permitted
in Section 7 hereof).
(g) "Registration Date" shall mean shall mean the initial date of
effectiveness of the Registration Statement.
(h) "Registration Period" shall mean with respect to the Registrable
Warrants the period from and including the Registration Date to and including
the date that is the second anniversary of the Closing Date and with respect to
the Registrable Shares, if any, shall mean the period from and including the
date of initial effectiveness of the Common Stock Registration Statement to and
including the date that is the third anniversary of the Closing Date (or, in
each case, such shorter period as shall be required for all Purchasers to sell
or otherwise dispose of the Registrable Warrants and the
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Registrable Shares covered by the Registration Statement and the Common Stock
Registration Statement, respectively; PROVIDED, HOWEVER, that with respect to
the shares of Common Stock issuable upon the exercise of the Warrants, the
Company shall use its best efforts to (i) file the Common Stock Registration
Statement within seven (7) months of the effective date of Amendment Number 1 to
the Agreement [MAY 31, 1995], PROVIDED, FURTHER that the Common Stock
Registration Statement shall not be filed prior to the expiration of six (6)
months from the effective date of Amendment Number 1 to the Agreement and (ii)
cause the Common Stock Registration Statement to become effective and remain
effective until the earlier to occur of June 30, 1999 or the sale of all the
Registrable Shares, if any, and the exercise of all the Warrants.
(i) "Registration Statement" shall mean the Registration Statement
filed by the Company with the SEC under the Securities Act with respect to the
offering and resale of the Registrable Warrants by the Purchaser after the
Closing Date, including the Prospectus, any amendments (including post-effective
amendments) to the Registration Statement, and all exhibits to, and documents
incorporated by reference into, the Registration Statement.
(j) "SEC" shall mean the Securities and Exchange Commission or any
successor agency thereto.
(k) "Securities Act" shall mean the Securities Act of 1933, as
amended, and shall include any rules, regulations and forms promulgated by the
Securities and Exchange Commission thereunder.
(l) "Warrants" shall mean the Warrants to purchase shares of Common
Stock.
(m) "Common Stock Registration Statement" shall mean the registration
statement filed by the Company with the SEC under the Securities Act with
respect to the offering and sale of that number of shares of the Common Stock to
be issued pursuant to exercise of Warrants which remain unexercised as of the
date of the filing of the Common Stock Registration Statement and the offering
and the resale of the Registrable Shares after May 31, 1996, including the
Prospectus, any amendments (including post-effective amendments) to the Common
Stock Registration Statement, and all exhibits to, and documents incorporated by
reference into, the Common Stock Registration Statement.
2. REGISTRATION RIGHTS. By March 31, 1995, the Company shall use its
best efforts to prepare and file with the SEC a Registration Statement with
respect to the Registrable Warrants. By the end of the seventh month after the
effective date of Amendment Number 1 to the Agreement [MAY 31, 1995] but not
earlier than the end of the sixth month after such date, the Company will use
its best efforts to file the Common Stock Registration Statement with respect to
the Common Stock issuable upon the exercise of the Warrants and with respect to
the Registrable Shares, if any.
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3. REGISTRATION PROCEDURES.
(a) Upon the filing of the Registration Statement and/or Common Stock
Registration Statement, the Company shall:
(i) use its best efforts to cause the Registration Statement
and/or Common Stock Registration Statement to become and remain effective during
the Registration Period and, in connection therewith, to prepare and file with
the SEC any amendments to the Registration Statement and/or Common Stock
Registration Statement and supplements to the Prospectus as may be required to
keep the Registration Statement and/or Common Stock Registration Statement
continuously effective during the Registration Period pursuant to the Securities
Act and other applicable law;
(ii) use its best efforts to cause the Registrable Warrants
and/or the Registrable Shares to be registered or qualified under the securities
or "Blue Sky" laws of each jurisdiction designated from time to time in writing
by the Purchaser; PROVIDED, HOWEVER, that the Company shall not be obligated (A)
to take any action to qualify as a foreign corporation in any jurisdiction; (B)
to subject itself to taxation in any jurisdiction, (C) to file any general
consent to service of process in any jurisdiction, (D) to register as a
securities broker or dealer in any jurisdiction, or (E) to modify in any
material respect any business policy or practice of the Company or any of its
Subsidiaries;
(iii) otherwise use its best efforts to comply with the Securities
Act;
(iv) use every reasonable effort to prevent the issuance of any
stop order suspending the effectiveness of the Registration Statement and/or the
Common Stock Registration Statement and/or the Common Stock Registration
Statement or of any order preventing or suspending the use of the Prospectus or
suspending the qualification (or exemption from qualification) of any of the
Registrable Warrants and/or Registrable Shares for sale in any jurisdiction and,
if any such order is issued, to obtain the lifting thereof at the earliest
reasonable time;
(v) furnish to the Purchaser, without charge, as many copies of
the Registration Statement and/or the Common Stock Registration Statement and
the Prospectus (and any amendments or supplements thereto) as the Purchaser
shall reasonably request for the purposes contemplated by the Securities Act and
applicable state securities or "Blue Sky" laws (the Company hereby consenting to
the use of such copies for such purposes); and
(vi) if, at any time when a Prospectus is required to be
delivered in connection with sales of the Registrable Warrants and/or
Registrable Shares under the Securities Act, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of the Company
after consultation with its counsel, to amend the Registration Statement and/or
the Common Stock Registration Statement or amend or
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supplement the Prospectus, in order that the Prospectus will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading or if it shall be necessary, in the
opinion of the Company after consultation with its counsel, at any such time to
amend the Registration Statement and/or the Common Stock Registration Statement
or amend or supplement the Prospectus in order to comply with the Securities
Act, promptly prepare and file with the SEC such amendment or supplement as may
be necessary to correct such untrue statement or omission or to cause the
Registration Statement and/or the Common Stock Registration Statement or the
Prospectus to comply with such requirements.
(b) The Company shall give the Purchaser written notice of the filing
of the Registration Statement and/or the Common Stock Registration Statement
with the SEC and the declaration of effectiveness of the Registration Statement
and/or the Common Stock Registration Statement by the SEC within five (5)
business days after the occurrence of each such event.
(c) During the Registration Period, the Company shall promptly (and,
in any event, within five (5) business days) give the Purchaser written notice
of the following:
(i) the filing of any amendment or supplement to the Prospectus
or any post-effective amendment to the Registration Statement and/or the Common
Stock Registration Statement;
(ii) the receipt by the Company of any request by the SEC or by
any securities or "Blue Sky" administrator in any jurisdiction in which the
Registrable Warrants and/or Registrable Shares shall have been qualified or
registered, or in which an exemption therefrom shall have been claimed, to amend
or supplement the Prospectus or to amend the Registration Statement and/or the
Common Stock Registration Statement;
(iii) the receipt by the Company of any stop order issued by the
SEC suspending the effectiveness of the Registration Statement and/or the Common
Stock Registration Statement, or of any order preventing or suspending the use
of the Prospectus, or the initiation of any proceeding for such purposes;
(iv) the receipt by the Company of any notification with respect
to the suspension of the registration or qualification, or exemption therefrom,
of the Registration Statement and/or the Common Stock Registration Statement,
the Prospectus or any of the Registrable Warrants and/or Registrable Shares for
offer or sale in any jurisdiction, or the initiation of any proceeding for such
purposes;
(v) any event that requires the Registration Statement and/or
the Common Stock Registration Statement or the Prospectus or documents
referenced therein to be amended or supplemented so that such document will not
contain any untrue
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statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; and
(vi) the receipt by the Company of any notice from the SEC, or
any other regulatory body or agency to which the Company is subject, requiring
suspension of offers and sales of the Registrable Warrants and/or the
Registrable Shares.
(d) During the Registration Period, following any notice given
pursuant to Section 3(c), the Company shall promptly (and, in any event, within
five (5) business days) give to the Purchaser written notice of the lifting of
any stop order, or the curing of any such other action or event set forth in
Section 3(c) requiring the suspension of offers and sales of the Registrable
Warrants and/or the Registrable Shares pursuant to the Prospectus, so as to
permit offers and sales of the Registrable Warrants and/or the Registrable
Shares to take place. Such notice shall state the date upon which offers and
sales of the Registrable Warrants and/or Registrable Shares pursuant to the
Prospectus may be resumed and shall be accompanied by a current copy of the
Prospectus, including any supplement or amendment thereto required as a result
of such action or event.
(e) Except as set forth in this Schedule C [APPENDIX B], the Company
shall have no obligation to register any Registrable Warrants and/or Registrable
Shares or other securities. Upon the expiration of the Registration Period, the
Company shall terminate distribution of the Prospectus for the purposes set
forth herein and shall have no further obligation to the Purchaser under the
terms of this Schedule C [APPENDIX B] or otherwise to amend or maintain the
effectiveness of the Registration Statement and/or the Common Stock Registration
Statement or to supplement, amend or update the Prospectus.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
(a) The Purchaser represents and warrants to the Company that the
Purchaser Registration Information set forth on Schedule D to the Subscription
Agreement is true and correct as of the date hereof and agrees to notify the
Company promptly in writing (and in any event within five (5) business days) of
any change in any such Purchaser Registration Information during the
Registration Period.
(b) As a condition to the Company's obligation under Sections 2 and 3
hereof to cause a Registration Statement and/or the Common Stock Registration
Statement or any amendment thereto to be filed, the Purchaser agrees promptly
(and in any event within five (5) business days) after receipt of a written
request from the Company to furnish the Company with all such information about
or pertaining to the Purchaser as is deemed necessary or appropriate by the
Company and its counsel with respect to the preparation of the Registration
Statement and/or the Common Stock Registration Statement or the Prospectus, and
the Purchaser shall execute all affidavits, and shall provide all letters,
documents and undertakings, relating thereto as are deemed necessary or
appropriate by the
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Company and its counsel or are required by the SEC or other
regulatory or self-regulatory body or agency in connection with the Registration
Statement or the Prospectus and any related filings.
(c) Upon receipt of any notice by the Company given pursuant to
Section 3(c), the Purchaser shall, immediately and without any further action on
the part of the Company, cease making any offers or sales of any of the
Registrable Warrants and/or the Registrable Shares pursuant to the Prospectus
until the Purchaser receives notice from the Company pursuant to Section 3(d)
that offers and sales of the Registrable Warrants and/or the Registrable Shares
pursuant to the Prospectus are permissible under applicable law.
5. EXPENSES OF REGISTRATION.
(a) Except as provided in Section 5(b), or as required by the
securities or "Blue Sky" laws of any jurisdiction in which the Registrable
Warrants or Registrable Shares are qualified or registered for sale, or in which
an exemption therefrom shall have been claimed, the Company shall pay all costs
and expenses incident to the registration of the Registrable Warrants and the
Registrable Shares including, without limitation:
(i) all registration and filing fees related to the Registration
Statement and/or the Common Stock Registration Statement;
(ii) all costs and expenses relating to the preparation and
duplication or printing of the Registration Statement and/or the Common Stock
Registration Statement and the Prospectus (including all amendments or
supplements thereto);
(iii) the fees and expenses of any legal counsel for the Company
(but not of legal counsel for the Purchaser);
(iv) the expenses associated with the qualification or the
registration of the Registrable Warrants and/or the Registrable Shares under the
securities or "Blue Sky" laws of any applicable jurisdiction or any claim for an
exemption therefrom.
(b) The Purchaser shall pay the following fees, costs and expenses:
(i) the fees and expenses of any legal counsel or other adviser
retained by the Purchaser;
(ii) all costs and expenses incident to the delivery of the
Registrable Warrants and the Registrable Shares to be sold by the Purchaser,
including any stock transfer taxes, if any, payable upon the sale of the
Registrable Warrants or Registrable Shares to the purchaser thereof;
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(iii) all fees and expenses of any underwriter or placement agent
retained by the Purchaser in connection with any sale of the Registrable
Warrants or Registrable Shares after the Closing Date, including any
underwriting commissions or discounts; and
(iv) all broker's fees or commissions incurred by the Purchaser
in connection with any sale of the Registrable Warrants or Registrable Shares
after the Closing Date.
6. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless the Purchaser and
each person, if any, who controls the Purchaser within the meaning of either the
Securities Act or the Securities Exchange Act of 1934 (the "Exchange Act") as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus, or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in settlement of
any litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
if such settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever reasonably incurred
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under clause (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense (i) to the extent such loss, liability,
claim, damage or expense arises out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with the Purchaser Registration Information, which is furnished to the Company
by the Purchaser in writing expressly for use in the Prospectus; (ii) if the
person asserting any such loss, liability, claim, damage or expense purchased
Registrable Warrants and/or Registrable Shares but was not delivered a copy of
the Prospectus (as amended or supplemented) in any case where such delivery of
the Prospectus (as amended or supplemented) is required by the Securities Act,
unless such failure to
B -7
<PAGE>
deliver the Prospectus was the result of noncompliance by the Company with
Section 3(a); or (iii) if any such loss, liability, claim, damage or expense
arises out of any offer or sale of any of the Registrable Warrants and/or
Registrable Shares by the Purchaser during any period in which such offers and
sales have been suspended or terminated pursuant to Section 3(c), if the Company
shall have provided such Purchaser before such offer or sale with the notice
required pursuant to Section 3(c), and the Company shall not have thereafter
notified the Purchaser pursuant to Section 3(d) that offers and sales of the
Registrable Warrants and the Registrable Shares may be resumed.
(b) The Purchaser shall indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement and/or the
Common Stock Registration Statement and each person, if any, who controls the
Company within the meaning of either the Securities Act or the Exchange Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus, or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in settlement of
any litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
if such settlement is effected with the written consent of the Purchaser; and
(iii) against any and all expense whatsoever reasonably incurred
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under clause (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall only apply to any loss,
liability, claim, damage or expense (i) to the extent such loss, liability,
claim, damage or expense arises out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with the Purchaser Registration Information, which is furnished to the Company
by the Purchaser in writing expressly for use in the Prospectus; (ii) if the
person asserting any such loss, liability, claim, damage or expense purchased
Registrable Warrants and/or Registrable Shares but was not delivered a copy of
the Prospectus (as amended or supplemented) in any case where such delivery of
the Prospectus (as amended or supplemented) is required by the Securities Act,
unless such failure to deliver the Prospectus was the result of noncompliance by
the Company with Section 3(a);
B - 8
<PAGE>
or (iii) if any such loss, liability, claim, damage or expense arises out of any
offer or sale of any of the Registrable Warrants and/or Registrable Shares by
the Purchaser during any period in which such offers and sales have been
suspended or terminated pursuant to Section 3(c), if the Company shall have
provided such Purchaser before such offer or sale with the notice required
pursuant to Section 3(c), and the Company shall not have thereafter notified the
Purchaser pursuant to Section 3(d) that offers and sales of the Registrable
Warrants and the Registrable Shares may be resumed.
(c) Each indemnified party shall give prompt notice to the indemnifying
party of any action commenced against it with respect to which indemnity may be
sought under this Section 6, but failure so to notify the indemnifying party
shall not relieve it from any liability which it may have on account of this
indemnity agreement other than to the extent that the indemnifying party is
materially prejudiced by the indemnified party's failure to provide such notice.
The indemnifying party may participate at its own expense in the defense of such
action. If it so elects within a reasonable time after receipt of such notice,
the indemnifying party, jointly with any other indemnifying parties under other
Subscription Agreements receiving such notice, may assume the defense of such
action with counsel chosen by it and reasonably satisfactory to the indemnified
parties defendant in such action, unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal defenses
available to them that are different from or in addition to those available to
such indemnifying party. Except as set forth herein, if an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action, proceeding or claim, other than
reasonable costs of investigation. The fees, expenses and other charges of
counsel for the indemnified parties will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party.
7. TRANSFER OF REGISTRATION RIGHTS. The rights granted to the Purchaser
in this Schedule C [APPENDIX B] relating to the registration of the Registrable
Warrants and the Registrable Shares are personal to the Purchaser and shall
terminate and expire, with respect to any Registrable Warrant or Registrable
Share, upon the sale or transfer thereof, other than (i) a transfer thereof upon
the death of the Purchaser in accordance with the Purchaser's will or, if the
Purchaser dies intestate, the laws of descent and distribution applicable in the
jurisdiction in which the Purchaser resides at the time of the Purchaser's
B - 9
<PAGE>
death, (ii) a transfer thereof by an individual to the Purchaser's spouse or any
of the Purchaser's children or to a trust for the principal benefit of the
Purchaser, or the Purchaser's spouse, or any of the Purchaser's children; or
(iii) with respect only to registration rights related to Registrable Shares, if
any, a transfer of Warrants by a Purchaser prior to the effectiveness of the
Common Stock Registration Statement in the event the Company fails to file the
Common Stock Registration Statement prior to the expiration of one year after
the date of the amendment of the Agreement.
8. NOTICES. All notices and requests required or permitted by this
Schedule C [APPENDIX B] shall be given in writing and shall be effective for all
purposes if hand-delivered or sent by (i) certified or registered United States
mail, postage prepaid, (ii) expedited prepaid delivery service, either
commercial or United States Postal Service, with proof of delivery or (iii)
telecopier (with answerback acknowledged), addressed as provided below (or to
such other address as the applicable party shall specify in writing to the other
party hereto): (i) if to the Purchaser, to the Purchaser's address as it is set
forth in the Subscription Agreement, and (ii) if to the Company, to Plymouth
Meeting Executive Campus, 600 West Germantown Pike, Plymouth Meeting,
Pennsylvania 19462, Attention Gerald P. Plush, Senior Vice President. A notice
shall be deemed to have been given, in the case of hand delivery, at the time of
delivery; in the case of registered or certified mail, when delivered or upon
the first attempted delivery on a business day; or in the case of expedited
prepaid delivery and telecopy, upon the first attempted delivery on a business
day. A party receiving a notice which does not comply with the technical
requirements for notice under this Section 8 may elect to waive any deficiencies
and treat the notice as having been properly given.
9. CONDITIONS RELATING TO REGISTRATION AND OFFER OF REGISTRABLE WARRANTS
AND REGISTRABLE SHARES.
(a) Subject to the provisions of Section 9(b), the registration
rights of the holders of Registrable Warrants or Registrable Shares, if
any, provided for hereunder and the ability to offer and sell Registrable
Warrants or Registrable Shares pursuant to the Registration Statement
and/or the Common Stock Registration Statement are subject to the following
conditions and limitations, and the Purchaser agrees with the Company that
in the event that the Company plans to repurchase or bid for Common Stock
of the Company in the open market, on a private solicited basis or
otherwise, and the Board of Directors of the Company determines, in its
reasonable good faith judgment and based upon the advice of counsel to the
Company, that any such repurchase or bid may not, under Rule 10b-6 under
the Securities Exchange Act of 1934 ("Exchange Act"), or any successor or
similar rule ("Rule 10b-6"), be commenced or consummated due to the
existence or the possible commencement of a "distribution" (within the
meaning of Rule 10b-6) as a result of any offers or sales by holders of
Registrable Warrants or Registrable Shares under the Registration Statement
and/or the Common Stock Registration Statement filed pursuant hereto, the
Company shall be entitled, for a period of forty-five (45) days or more, to
request
B - 10
<PAGE>
that holders of Registrable Warrants or Registrable Shares suspend or
postpone such distribution plans pursuant to the Registration Statement
and/or the Common Stock Registration Statement ( a "10b-6 Election"). The
Company shall, as promptly as practicable, give such holders of Registrable
Warrants or Registrable Shares written notice of such 10b-6 Election,
stating the basis for the Board's determination. As promptly as
practicable following the determination by the Board of Directors that the
holders of Registrable Warrants or Registrable Shares may commence or
recommence their distribution pursuant to the Registration Statement and/or
the Common Stock Registration Statement without causing the Company to be
in violation of Rule 10b-6, the Company shall give such holder of
Registrable Warrants or Registrable Shares written notice of such
determination.
(b) Notwithstanding the provisions of Section 9(a) above, the
aggregate number of days (whether or not consecutive) during which the
Company may delay the effectiveness of the Registration Statement and/or
the Common Stock Registration Statement or prevent offerings, sales or
distributions by the holders of Registrable Warrants or Registrable Shares
thereunder pursuant to Section 9(a) shall in no event exceed ninety (90)
days during any twelve (12) month period.
B - 11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS AND ANY INFORMATION OR REPRESENTATION NOT
INCLUDED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
-------------------------
TABLE OF CONTENTS
-------------------------
PAGE
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Selected Consolidated Financial
and Other Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Selling Warrant Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Market Price for Common Stock
and Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Regulatory Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Management and Principal
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Description of the Warrants. . . . . . . . . . . . . . . . . . . . . . . . . 21
Certain Federal Income Tax
Consequences Relating to
the Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Restrictions on Acquisition
of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . 30
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
PROGRESS
FINANCIAL
CORPORATION
300,000 WARRANTS
--------------------
PROSPECTUS
--------------------
November __, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the securities being registered, all of which
are being borne by the Registrant:
<TABLE>
<S> <C>
Securities and Exchange Commission ("Commission") registration fee. $ 620.69
Accounting fees and expenses . . . . . . . . . . . . . . . . . 8,000.00
Legal fees and expenses. . . . . . . . . . . . . . . . . . . . 25,000.00
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000.00
Blue Sky qualification fees and expenses . . . . . . . . . . . 1,000.00
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 379.31
---------
$36,000.00
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") sets forth
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their capacity
as such. The Certificate of Incorporation and Bylaws of the Company provide
that the directors, officers, employees and agents of the Company shall be
indemnified to the full extent permitted by law. Such indemnity shall extend to
expenses, including attorney's fees, judgments, fines and amounts paid in the
settlement, prosecution or defense of the foregoing actions. Section 102(b)(7)
of the DGCL sets forth circumstances which a director's personal liability to a
corporation or its stockholders for money damages for breach of fiduciary duty
as a director may be eliminated or limited. The Certificate of Incorporation
provides for the limitation of personal liability of directors to stockholders
for monetary damages to the Company or its stockholders for such director's
breach of fiduciary duty as a director of the Company to the full extent
permitted by law.
The Company carries a liability insurance policy for its officers and
directors.
II - 1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
(a) List of Exhibits:
Exhibit No. Exhibit Location
----------- ------- --------
3(a) Certificate of Incorporation (1)
3(b) Bylaws (2)
4(a) Specimen Common Stock certificate (3)
4(b) Specimen Preferred Stock Purchase
Rights certificate (4)
4(c) Terms of Warrants (5)
4(d) Registration Rights (5)
5 Opinion of Elias, Matz, Tiernan &
Herrick L.L.P. regarding legality of
securities being registered *
10(a) Key Employee Stock Compensation Plan (3)
10(b) Amendment, dated December 15, 1987,
to Key Employee Stock Compensation
Plan (6)
10(c) 1993 Stock Incentive Plan (7)
10(d) 1993 Directors' Stock Option Plan (7)
10(e) Stockholders Rights Agreement, dated
April 25, 1990, between the
Registrant and American Stock
Transfer and Trust Company, as
Rights Agent (4)
13 Annual Report to Stockholders for the
year ended December 31, 1994 (8)
II - 2
<PAGE>
22 Subsidiaries of the Company (8)
24(a) Consent of Elias, Matz, Tiernan &
Herrick L.L.P. (contained in the
opinion included as Exhibit 5)
24(b) Consents of Independent Public Accountants *
25 Power of Attorney (included in the
signature page to this Registration
Statement)
- --------------
(1) Exhibit is incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1987 filed by the Registrant
with the Commission.
(2) Exhibit is incorporated by reference to the Registrant's Registration
Statement on Form S-4 (File No. 33-3685) filed with the Commission on
March 3, 1986.
(3) Exhibit is incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-10160) filed with the Commission on
November 13, 1986.
(4) Exhibit is incorporated by reference to the Registrant's Registration
Statement on Form 8-A filed with the Commission on April 30, 1990.
(5) Appended to Prospectus.
(6) Exhibit is incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-19570) filed with the Commission on
January 19, 1988.
(7) Exhibit is incorporated by reference to the Registrant; Registration
Statement on Form S-1 (File No. 33-59218) filed with the Commission on
March 8, 1993.
(8) Incorporated by reference to the Registrant's Annual Report on Form
10-KSB for the year ended December 31, 1994 filed with the Commission
on March 24, 1995.
* Previously filed.
(b) Financial Statement Schedules.
No financial statement schedules are filed because the required
information is not applicable or is included in the Consolidated Financial
Statements or related Notes.
II - 3
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy and expressed in the Act, and is
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
II - 4
<PAGE>
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II - 5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Plymouth Meeting, Commonwealth of Pennsylvania on the 17th day of November 1995.
PROGRESS FINANCIAL CORPORATION
By: /s/ W. Kirk Wycoff Date: November 17, 1995
--------------------------
W. Kirk Wycoff
Director, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby makes, constitutes and appoints W. Kirk Wycoff his true and lawful
attorney, with full power to sign for such person and in such person's name and
capacity indicated below any and all amendments to this Registration Statement,
hereby ratifying and confirming such person's signature as it may be signed by
said attorney to any and all amendments.
/s/ W. Kirk Wycoff Date: November 17, 1995
- ------------------------------
W. Kirk Wycoff
Director, President and
Chief Executive Officer
(principal executive officer)
/s/ Peter J. Meier Date: November 17, 1995
- ------------------------------
Peter J. Meier
Vice President and Corporate
Controller (principal accounting
officer)
/s/ William O. Daggett, Jr.* Date: November 17, 1995
- ------------------------------
William O. Daggett, Jr.
Director
<PAGE>
Joseph R. Klinger* Date: November 17, 1995
- ------------------------------
Joseph R. Klinger
Director
/s/ John E. F. Corson * Date: November 17, 1995
- ------------------------------
John E. F. Corson
Director
/s/ Donald F. U. Goebert * Date: November 17, 1995
- ------------------------------
Donald F. U. Goebert
Director
/s/ Joseph R. Klinger * Date: November 17, 1995
- ------------------------------
Joseph R. Klinger
/s/ Paul M. LaNoce * Date: November 17, 1995
- ------------------------------
Paul M. LaNoce
Director
/s/ A. John May, III * Date: November 17, 1995
- ------------------------------
A. John May, III
Director
/s/ William L. Mueller * Date: November 17, 1995
- ------------------------------
William L. Mueller
Director
/s/ Charles J. Tornetta * Date: November 17, 1995
- ------------------------------
Charles J. Tornetta
Director
