<PAGE> 1
FIRST PALM BEACH BANCORP, INC.
OFFER TO EXCHANGE ITS
SERIES B 10.35% SENIOR DEBENTURES DUE 2002
(PRINCIPAL AMOUNT $1,000 PER SENIOR DEBENTURE)
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
SERIES A 10.35% SENIOR DEBENTURES DUE 2002
(PRINCIPAL AMOUNT $1,000 PER SENIOR DEBENTURE)
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON DECEMBER 18, 1997, UNLESS EXTENDED
First Palm Beach Bancorp, Inc., a corporation organized under the laws of
the State of Delaware (the "Company"), hereby offers, upon the terms and subject
to the conditions set forth in this prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal (which together constitute the "Exchange Offer"), to exchange up
to $35,000,000 aggregate principal amount of its Series B 10.35% Senior
Debentures Due 2002 (the "Exchange Senior Debentures") which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for a like principal amount of its outstanding
Series A 10.35% Senior Debentures Due 2002 (the "Original Senior Debentures"),
of which $35,000,000 aggregate principal amount is outstanding.
The terms of the Exchange Senior Debentures are identical in all material
respects to the respective terms of the Original Senior Debentures, except that
(i) the Exchange Senior Debentures have been registered under the Securities Act
and therefore will not be subject to certain restrictions on transfer applicable
to the Original Senior Debentures and (ii) the Exchange Senior Debentures will
not provide for any liquidated damages thereon. See "Description of Exchange
Senior Debentures" and "Description of Original Debentures." The Exchange Senior
Debentures are being offered for exchange in order to satisfy certain
obligations of the Company under the Registration Rights Agreement, dated as of
June 30, 1997 (the "Registration Agreement"), between the Company and the
Initial Purchaser (as defined herein). In the event that the Exchange Offer is
consummated, any Original Senior Debenture which remains outstanding after
consummation of the Exchange Offer and the Exchange Senior Debentures issued in
the Exchange Offer will vote together as a single class for purposes of
determining whether holders of the requisite percentage in outstanding principal
amount thereof have taken certain actions or exercised certain rights under the
Indenture, dated as of June 30, 1997, as amended and supplemented from time to
time (the "Indenture"), between the Company and The Bank of New York as Trustee
(the "Trustee").
(Continued on following page.)
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This Prospectus and the Letter of Transmittal are first being mailed to all
holders of Original Senior Debentures on or about November 17, 1997.
SEE "RISK FACTORS" COMMENCING ON PAGE 13 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER ORIGINAL SENIOR
DEBENTURES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A
BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
The date of this Prospectus is November 14, 1997.
<PAGE> 2
The Original Senior Debentures, and the Exchange Senior Debentures when
issued, may be transferred only in a block having an aggregate principal amount
of not less than $100,000 (100 Senior Debentures). The Original Senior
Debentures and the Exchange Senior Debentures are referred to collectively
herein as the "Senior Debentures."
The Company is making the Exchange Offer of the Exchange Senior Debentures
in reliance on the position of the staff of the Division of Corporation Finance
of the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, the Company has not sought its own interpretive letter and there can be
no assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange
Senior Debentures as it has in such interpretive letters to third parties. Based
on these interpretations by the staff of the Division of Corporation Finance of
the Commission, and subject to the two immediately following sentences, the
Company believes that the Exchange Senior Debentures issued pursuant to this
Exchange Offer in exchange for Original Senior Debentures may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
Exchange Senior Debentures are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such Exchange Senior Debentures. However, any
holder of Original Senior Debentures who is an "affiliate" of the Company or who
intends to participate in the Exchange Offer for the purpose of distributing
Exchange Senior Debentures, or any broker-dealer who purchased Original Senior
Debentures from the Company to resell pursuant to Rule 144A under the Securities
Act ("Rule 144A") or any other available exemption under the Securities Act, (i)
will not be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (ii) will not be permitted or entitled to tender such
Original Senior Debentures in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Original Senior Debentures
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Original Senior
Debentures acquired for its own account as a result of market-making or other
trading activities and exchanges such Original Senior Debentures for Exchange
Senior Debentures, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such
Exchange Senior Debentures.
Each holder of Original Senior Debentures who wishes to exchange Original
Senior Debentures for Exchange Senior Debentures in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Company, (ii) any
Exchange Senior Debentures to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such Exchange Senior Debentures, and (iv) if such holder is
not a broker-dealer, such holder is not engaged in, and does not intend to
engage in, a distribution (within the meaning of the Securities Act) of such
Exchange Senior Debentures. In addition, the Company may require such holder, as
a condition to such holder's eligibility to participate in the Exchange Offer,
to furnish to the Company (or an agent thereof) in writing information as to the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) on behalf of whom such holder holds
the Senior Debentures to be exchanged in the Exchange Offer. Each broker-dealer
that receives Exchange Senior Debentures for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Original Senior Debentures
for its own account as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Senior Debentures. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Company
believes that broker-dealers who acquired Original Senior Debentures for their
own accounts, as a result of market-making activities or other trading
activities ("Participating Broker-Dealers"), may fulfill their prospectus
delivery requirements with respect to the Exchange Senior Debentures received
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upon exchange of such Original Senior Debentures (other than Original Senior
Debentures which represent an unsold allotment from the initial sale of the
Original Senior Debentures) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such Exchange Senior Debentures. Accordingly this Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Senior Debentures received
in exchange for Original Senior Debentures acquired by such broker-dealer as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period ending at the close of business on the 90th day
following the Expiration Date (as described herein), it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution." However, a Participating Broker-Dealer who
intends to use this Prospectus in connection with the resale of Exchange Senior
Debentures received in exchange for Original Senior Debentures pursuant to the
Exchange Offer must notify the Company, or cause the Company to be notified, on
or prior to the Expiration Date, that it is a Participating Broker-Dealer. Such
notice may be given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to The Bank of New York (the "Exchange Agent")
at one of the addresses set forth herein under "The Exchange Offer -- Exchange
Agent." Any Participating Broker-Dealer who is an "affiliate" of the Company may
not rely on the interpretive letters mentioned above and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. See "The Exchange Offer -- Resales of
Exchange Senior Debentures."
In that regard, each Participating Broker-Dealer who surrenders Original
Senior Debentures pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that upon receipt of notice from the
Company of the occurrence of any event or the discovery of any fact which makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Agreement, such Participating Broker-Dealer will suspend the
sale of Exchange Senior Debentures pursuant to this Prospectus until the Company
has amended or supplemented this Prospectus to correct such misstatement or
omission and has furnished copies of the amended or supplemented Prospectus to
such Participating Broker-Dealer, or the Company has given notice that the sale
of the Exchange Senior Debentures may be resumed, as the case may be. If the
Company gives such notice to suspend the sale of the Exchange Senior Debentures,
it shall extend the 90-day period referred to above during which Participating
Broker-Dealers are entitled to use this Prospectus in connection with the resale
of Exchange Senior Debentures by the number of days during the period from and
including the date of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the amended or
supplemented Prospectus necessary to permit resales of the Exchange Senior
Debentures or to and including the date on which the Company has given notice
that the sale of Exchange Senior Debentures may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Original Senior Debentures. The Exchange Senior
Debentures will be a new issue of securities for which there currently is no
market. Although the Initial Purchaser has informed the Company that it
currently intends to make a market in the Exchange Senior Debentures, it is not
obligated to do so, and any such market making may be discontinued at any time
without notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the Exchange Senior Debentures. The Company
currently does not intend to apply for listing of the Exchange Senior Debentures
on any securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System.
Any Original Senior Debentures not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Indenture
(except for those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the holders of Original
Senior Debentures will continue to be subject to all of the existing
restrictions upon transfer thereof and the Company will not have any further
obligation to such holders (other than under certain limited circumstances) to
provide for
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<PAGE> 4
registration under the Securities Act of the Original Senior Debentures held by
them. To the extent that Original Senior Debentures are tendered and accepted in
the Exchange Offer, a holder's ability to sell untendered Original Senior
Debentures could be adversely affected. See "Risk Factors -- Consequences of a
Failure to Exchange Original Senior Debentures."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL SENIOR DEBENTURES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR ORIGINAL SENIOR DEBENTURES PURSUANT TO THE EXCHANGE
OFFER.
Original Senior Debentures may be tendered for exchange on or prior to 5:00
p.m., New York City time, on December 18, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Company (in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended). Tenders of Original
Senior Debentures may be withdrawn at any time on or prior to the Expiration
Date. The Exchange Offer is not conditioned upon any minimum principal amount of
Original Senior Debentures being tendered for exchange. However, the Exchange
Offer is subject to certain events and conditions which may be waived by the
Company and to the terms and provisions of the Registration Agreement. Original
Senior Debentures may be tendered in whole or in part having an aggregate
principal amount of not less than $100,000 (100 Senior Debentures) or any
integral multiple of $1,000 principal amount (one Senior Debenture) in excess
thereof. The Company as Issuer of the Exchange Senior Debentures has agreed to
pay all expenses of the Exchange Offer. See "The Exchange Offer -- Fees and
Expenses." Holders of the Original Senior Debentures whose Original Senior
Debentures are accepted for exchange will not receive interest on such Original
Senior Debentures after the initial payment of interest on December 31, 1997,
and will be deemed to have waived the right to receive any interest on such
Original Senior Debentures accumulated from and after January 1, 1998. See "The
Exchange Offer -- Interest Payments on Exchange Senior Debentures."
The Company will not receive any cash proceeds from the issuance of the
Exchange Senior Debentures offered hereby. No dealer-manager is being used in
connection with this Exchange Offer. See "Use of Proceeds" and "Plan of
Distribution."
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
THE ORIGINAL SENIOR DEBENTURES HAVE BEEN ISSUED AND THE EXCHANGE SENIOR
DEBENTURES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN
AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. ANY TRANSFER OF SENIOR
DEBENTURES IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000
SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SENIOR DEBENTURES FOR
ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF PAYMENTS OF INTEREST ON
SUCH SENIOR DEBENTURES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
WHATSOEVER IN SUCH SENIOR DEBENTURES.
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THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO
THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WHICH
INVOLVE ESTIMATES, ASSUMPTIONS, RISKS AND UNCERTAINTIES. FACTORS THAT MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES:
(i) GENERAL ECONOMIC CONDITIONS, EITHER NATIONAL OR REGIONAL, ARE LESS FAVORABLE
THAN EXPECTED, RESULTING IN, AMONG OTHER THINGS, A DETERIORATION IN CREDIT
QUALITY; (ii) COMPETITIVE PRESSURE IN THE BANKING INDUSTRY INCREASES
SIGNIFICANTLY; (iii) CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE MARGINS;
(iv) CHANGES OCCUR IN THE REGULATORY ENVIRONMENT; (v) CHANGES OCCUR IN BUSINESS
CONDITIONS AND INFLATION; AND (vi) WITH RESPECT TO THE INDIRECT AUTOMOBILE
LENDING PORTFOLIO OF THE COMPANY, (a) UNANTICIPATED CHANGES IN THE NUMBER OF
REPOSSESSIONS AND THE LOAN BALANCES OUTSTANDING AT THE TIME OF REPOSSESSIONS,
(b) UNANTICIPATED CHANGES IN THE RESALE VALUE OF REPOSSESSED AUTOMOBILES, AND
(c) UNANTICIPATED CHANGES IN THE ABILITY OF THE BORROWERS TO MAINTAIN INSURANCE
ON THE COLLATERAL SECURING THE COMPANY'S LOANS, THE COST OF SUCH INSURANCE AND
THE ABILITY TO RECOVER INSURANCE PROCEEDS.
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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
Commission. Such reports, proxy statements and other information may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at 7 World Trade Center,
13th Floor, Suite 1300, New York, New York 10048 and Suite 1400, Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material may also be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Such information may also be accessed electronically by means of the
Commission's home page on the Internet (http://www.sec.gov.). The Company's
common stock is traded on the Nasdaq National Market System. Such reports, proxy
statements and other information concerning the Company may also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington D.C. 20006.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, and reference is
hereby made to the Registration Statement and to the exhibits relating thereto
for further information with respect to the Company and the Exchange Senior
Debentures. Any statements contained herein concerning the provisions of any
document 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 otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to Section 13 of the Exchange Act are incorporated into this Prospectus by
reference (Commission File No.0-21942):
1. The Company's Annual Report on Form 10-K for the year ended September
30, 1996;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1996, March 31, 1997 and June 30, 1997; and
3. The Company's Current Reports on Form 8-K dated October 21, 1996,
December 16, 1996, July 3, 1997 and October 24, 1997.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the Exchange Senior Debentures offered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
part of this Prospectus from the date of filing of such documents. Any statement
contained herein or in a document 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 other
subsequently filed document which also is or is deemed to be incorporated by
reference herein 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.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document. The Company will provide
without charge to any person to whom this Prospectus is delivered, on the
written or oral request of such person, a copy of any or all of the foregoing
documents incorporated by reference herein (other than exhibits not specifically
incorporated by reference into the texts of such documents). Requests for such
documents should be directed to: First Palm Beach Bancorp, Inc., 450 S.
Australian Avenue, West Palm Beach, Florida 33401. Telephone requests may be
directed to R. Randy Guemple, Executive Vice President, at (561) 650-2425.
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<PAGE> 7
SUMMARY
The following is a summary of certain information contained in this
Prospectus and the documents incorporated herein by reference. This summary is
not intended to be a complete description of the matters covered in this
Prospectus and is qualified in its entirety by the more detailed information
appearing elsewhere or incorporated by reference in this Prospectus. As used in
this Prospectus, the term "Company" refers to First Palm Beach Bancorp, Inc. and
where the context requires, its subsidiaries.
FIRST PALM BEACH BANCORP, INC.
The Company is a Delaware chartered savings and loan holding company,
headquartered in West Palm Beach, Florida. Through its wholly owned subsidiary,
First Bank of Florida, a federally-chartered stock savings and loan association
(the "Bank"), the Company operates 47 banking offices (of which 21 are
supermarket branches and 26 are stand-alone branches) located in Palm Beach,
Broward, Dade, Martin and Lee Counties in Florida, and two mortgage loan
production offices, which are located in Palm Beach County. At June 30, 1997,
the Company had total consolidated assets of approximately $1.7 billion,
deposits of approximately $1.2 billion and stockholders' equity of approximately
$109.5 million. The Company is the largest, based on total deposits, and oldest
independent financial institution based in Palm Beach County.
Of the 47 banking offices currently operated by the Bank, 41 of such
offices are located in Palm Beach, Broward and Dade Counties. Based on deposit
information provided by the Florida Bankers Association, such counties have a
respective share of the state deposit market of 9.16%, 11.76% and 19.38%, for a
total of approximately 40.3% of the Florida deposit market share. In addition,
based on information provided by the Bureau of Economic and Business Research,
University of Florida, such three counties represent, respectively, 6.81%, 9.66%
and 14.18% of the state population for a total of approximately 30.65% of the
Florida population.
The Bank's principal business is attracting retail deposits from the
general public and investing those deposits, together with funds generated from
operations and borrowings, primarily in one- to four-family, owner-occupied,
residential mortgage loans and, to a lesser extent, consumer loans, construction
loans, commercial real estate loans and multi-family residential mortgage loans.
In addition, the Bank invests in mortgage-backed and related securities,
securities issued by the U.S. Government and agencies thereof, and other
investments in which the Bank is permitted to invest under federal laws and
regulations.
The principal executive offices of the Company are located at 450 S.
Australian Avenue, West Palm Beach, Florida 33401 and its telephone number at
such address is (561) 655-8511.
The Company is a legal entity, separate and distinct from its subsidiaries.
The ability of holders of debt and equity securities of the Company to benefit
from the distribution of assets of any subsidiary upon the liquidation or
reorganization of such subsidiary is subordinate to prior claims of creditors of
the subsidiary (including depositors in the case of banking subsidiaries),
except to the extent that a claim of the Company as a creditor may be
recognized.
For additional information with respect to the Company, see "Available
Information," "Incorporation of Certain Documents by Reference," "Risk Factors,"
and "Selected Consolidated Financial Data."
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THE EXCHANGE OFFER
The Exchange Offer............ Up to $35,000,000 aggregate principal amount of
Exchange Senior Debentures are being offered in
exchange for a like aggregate principal amount
of Original Senior Debentures. Original Senior
Debentures may be tendered for exchange in
whole or in part in a principal amount of
$100,000 (100 Senior Debentures) or any
integral multiple of $1,000 (one Senior
Debenture) in excess thereof. The Company is
making the Exchange Offer in order to satisfy
its obligations under the Registration
Agreement relating to the Original Senior
Debentures. For a description of the procedures
for tendering Original Senior Debentures, see
"The Exchange Offer -- Procedures for Tendering
Original Senior Debentures."
Expiration Date............... At 5:00 p.m., New York City time, on December
18, 1997, unless the Exchange Offer is extended
by the Company (in which case the Expiration
Date will be the latest date and time to which
the Exchange Offer is extended). See "The
Exchange Offer -- Expiration Date; Extensions;
Amendments."
Conditions to the Exchange
Offer......................... The Exchange Offer is subject to certain
conditions, which may be waived by the Company
in its sole discretion. The Exchange Offer is
not conditioned upon any minimum principal
amount of Original Senior Debentures being
tendered. See "The Exchange Offer -- Conditions
to the Exchange Offer."
Terms of the Exchange Offer... The Company reserves the right in its sole and
absolute discretion, subject to reasonableness
and subject to applicable law, at any time and
from time to time, (i) to delay the acceptance
of the Original Senior Debentures for exchange,
(ii) to terminate the Exchange Offer if certain
specified conditions have not been satisfied,
(iii) to extend the Expiration Date of the
Exchange Offer and retain all Original Senior
Debentures tendered pursuant to the Exchange
Offer, subject, however, to the right of
holders of Original Senior Debentures to
withdraw their tendered Original Senior
Debentures, or (iv) to waive any condition or
otherwise amend the terms of the Exchange Offer
in any respect. See "The Exchange Offer --
Terms of the Exchange Offer."
Withdrawal of Rights.......... Tenders of Original Senior Debentures may be
withdrawn at any time on or prior to the
Expiration Date by delivering a written notice
of such withdrawal to the Exchange Agent in
conformity with certain procedures set forth
below under "The Exchange Offer -- Withdrawal
Rights."
Procedures for Tendering
Original Senior Debentures.... Certain brokers, dealers, commercial banks,
trust companies and other nominees who hold
Original Senior Debentures through The
Depository Trust Company ("DTC") must effect
tenders by book-entry transfer through DTC's
Automated Tender Offer Program ("ATOP").
Beneficial owners of Original Senior Debentures
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
are urged to contact such person promptly if
they wish to tender Original Senior Debentures
pursuant to the Exchange Offer. Tendering
holders of Original Senior Debentures that do
not use ATOP must complete and sign a Letter
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<PAGE> 9
of Transmittal in accordance with the
instructions contained therein and forward the
same by mail, facsimile or hand delivery,
together with any other required documents, to
the Exchange Agent, either with the
certificates of the Original Senior Debentures
to be tendered or in compliance with the
specified procedures for guaranteed delivery of
Original Senior Debentures. Tendering holders
of Original Senior Debentures that use ATOP
will, by so doing, acknowledge that they are
bound by the terms of the Letter of
Transmittal. See "The Exchange
Offer -- Procedures for Tendering Original
Senior Debentures." Letters of Transmittal and
certificates representing Original Senior
Debentures should not be sent to the Company.
Such documents should only be sent to the
Exchange Agent.
Resales of Exchange Senior
Debentures.................. The Company is making the Exchange Offer in
reliance on the position of the staff of the
Division of Corporation Finance of the
Commission as set forth in certain interpretive
letters addressed to third parties in other
transactions. However, the Company has not
sought its own interpretive letter and there
can be no assurance that the staff of the
Division of Corporation Finance of the
Commission would make a similar determination
with respect to the Exchange Offer as it has in
such interpretive letters to third parties.
Based on these interpretations by the staff of
the Division of Corporation Finance of the
Commission, and subject to the two immediately
following sentences, the Company believes that
Exchange Senior Debentures issued pursuant to
this Exchange Offer in exchange for Original
Senior Debentures may be offered for resale,
resold and otherwise transferred by a holder
thereof (other than a holder who is a
broker-dealer) without further compliance with
the registration and prospectus delivery
requirements of the Securities Act, provided
that such Exchange Senior Debentures are
acquired in the ordinary course of such
holder's business and that such holder is not
participating, and has no arrangement or
understanding with any person to participate,
in a distribution (within the meaning of the
Securities Act) of such Exchange Senior
Debentures. However, any holder of Original
Senior Debentures who is an "affiliate" of the
Company or who intends to participate in the
Exchange Offer for the purpose of distributing
the Exchange Senior Debentures, or any
broker-dealer who purchased the Original Senior
Debentures from the Company to resell pursuant
to Rule 144A or any other available exemption
under the Securities Act, (i) will not be able
to rely on the interpretations of the staff of
the Division of Corporation Finance of the
Commission set forth in the above-mentioned
interpretive letters, (ii) will not be
permitted or entitled to tender such Original
Senior Debentures in the Exchange Offer, and
(iii) must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any sale or
other transfer of such Original Senior
Debentures unless such sale is made pursuant to
an exemption from such requirements. In
addition, as described below, if any
broker-dealer holds Original Senior Debentures
acquired for its
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<PAGE> 10
own account as a result of market-making or
other trading activities and exchanges such
Original Senior Debentures for Exchange Senior
Debentures, then such broker-dealer must
deliver a prospectus meeting the requirements
of the Securities Act in connection with any
resales of such Exchange Senior Debentures.
Each holder of Original Senior Debentures who
wishes to exchange Original Senior Debentures
for Exchange Senior Debentures in the Exchange
Offer will be required to represent that (i) it
is not an "affiliate" of the Company, (ii) any
Exchange Senior Debentures to be received by it
are being acquired in the ordinary course of
its business, (iii) it has no arrangement or
understanding with any person to participate in
a distribution (within the meaning of the
Securities Act) of such Exchange Senior
Debentures, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in,
and does not intend to engage in, a
distribution (within the meaning of the
Securities Act) of such Exchange Senior
Debentures. Each broker-dealer that receives
Exchange Senior Debentures for its own account
in exchange for Original Senior Debentures,
where such Original Senior Debentures were
acquired by such broker-dealer as a result of
market-making activities or other trading
activities, must acknowledge that it will
deliver a prospectus meeting the requirements
of the Securities Act in connection with any
resale of such Exchange Senior Debentures. The
Letter of Transmittal states that, by so
acknowledging and by delivering such a
prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the
position taken by the staff of the Division of
Corporation Finance of the Commission in the
interpretive letters referred to above, the
Company believes that Participating
Broker-Dealers who acquired Original Senior
Debentures for their own accounts as a result
of market-making activities or other trading
activities may fulfill their prospectus
delivery requirements with respect to the
Exchange Senior Debentures received upon
exchange of such Original Senior Debentures
(other than Original Senior Debentures which
represent an unsold allotment from the initial
sale of the Original Senior Debentures) with a
prospectus meeting the requirements of the
Securities Act, which may be the prospectus
prepared for an exchange offer so long as it
contains a description of the plan of
distribution with respect to the resale of such
Exchange Senior Debentures. Accordingly, this
Prospectus, as it may be amended or
supplemented from time to time, may be used by
a Participating Broker-Dealer in connection
with resales of Exchange Senior Debentures
received in exchange for Original Senior
Debentures where such Original Senior
Debentures were acquired by such Participating
Broker-Dealer for its own account as a result
of market-making or other trading activities.
Subject to certain provisions set forth in the
Registration Agreement and to the limitations
described below under "The Exchange
Offer -- Resales of Exchange Senior
Debentures," the Company has agreed that this
Prospectus, as it may be amended or
supplemented from time to time, may be used by
a Participating Broker-Dealer in connection
with resales of such Exchange Senior
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<PAGE> 11
Debentures for a period ending 90 days after
the Expiration Date (subject to extension under
certain limited circumstances) or, if earlier,
when all such Exchange Senior Debentures have
been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any
Participating Broker-Dealer who is an
"affiliate" of the Company may not rely on such
interpretive letters and must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction. See
"The Exchange Offer -- Resales of Exchange
Senior Debentures."
Exchange Agent................ The Exchange Agent with respect to the Exchange
Offer is The Bank of New York. The addresses,
and telephone and facsimile numbers, of the
Exchange Agent are set forth in "The Exchange
Offer -- Exchange Agent" and in the Letter of
Transmittal.
Use of Proceeds............... The Company will not receive any cash proceeds
from the issuance of the Exchange Senior
Debentures offered hereby. The Company received
$34,125,000 in cash proceeds in conjunction
with the issuance of the Original Senior
Debentures. Of these proceeds, $25,000,000 were
contributed to the Bank, $250,000 were used to
satisfy related issuance costs, and the
remaining proceeds were used for general
corporate purposes.
The Exchange Senior Debentures
Offered..................... Up to $35,000,000 aggregate principal amount of
the Company's Exchange Senior Debentures which
have been registered under the Securities Act
(amount $1,000 per Exchange Senior Debenture).
The Exchange Senior Debentures will be issued
and the Original Senior Debentures were issued
under the Indenture. The Exchange Senior
Debentures and any Original Senior Debentures
which remain outstanding after consummation of
the Exchange Offer will vote together as a
single class for purposes of determining
whether holders of the requisite percentage in
outstanding principal amount thereof have taken
certain actions or exercised certain rights
under the Indenture. See "Description of
Exchange Senior Debentures -- Modification of
Indenture." The terms of the Exchange Senior
Debentures are identical in all material
respects to the terms of the Original Senior
Debentures, except that the Exchange Senior
Debentures have been registered under the
Securities Act, and they will not provide for
any increase in the interest thereon, except
under limited circumstances. See "The Exchange
Offer -- Purpose of the Exchange Offer,"
"Description of Exchange Senior Debentures" and
"Description of Original Senior Debentures."
Interest Payment Dates........ June 30 and December 31 of each year,
commencing June 30, 1998.
Ranking....................... The Exchange Senior Debentures will rank pari
passu, and payments thereon will be made pro
rata, with the Original Senior Debentures and
all existing and future unsubordinated
indebtedness of the Company. In addition,
because the Company is a holding company, the
Exchange Senior Debentures are effectively
subordinated to all existing and future
liabilities of the Company's
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<PAGE> 12
subsidiaries, including the Bank's deposit
liabilities. See "Description of Exchange
Senior Debentures."
Rating ....................... The Exchange Senior Debentures are expected to
be rated "BB-" by Fitchs Investors Service,
L.P. A security rating is not a recommendation
to buy, sell or hold securities and may be
subject to revision or withdrawal at any time
by the assigning rating organization.
Transfer Restrictions......... The Exchange Senior Debentures will be issued,
and may be transferred, only in blocks having a
principal amount of not less than $100,000 (100
Senior Debentures). Any transfer of Exchange
Senior Debentures in a block having a principal
amount of less than $100,000 shall be deemed to
be void and of no legal effect whatsoever. See
"Description of Exchange Senior Debentures --
Restrictions on Transfer."
Absence of Market for the
Exchange Senior Debentures.... The Exchange Senior Debentures will be a new
issue of securities for which there currently
is no market. Although Keefe, Bruyette & Woods,
Inc., the initial purchaser of the Original
Senior Debentures (the "Initial Purchaser"),
has informed the Company that it currently
intends to make a market in the Exchange Senior
Debentures, it is not obligated to do so, and
any such market making may be discontinued at
any time without notice. Accordingly, there can
be no assurance as to the development or
liquidity of any market for the Exchange Senior
Debentures. The Company does not intend to
apply for listing of the Exchange Senior
Debentures on any securities exchange or for
quotation through the National Association of
Securities Dealers Automated Quotation System.
See "Plan of Distribution."
Risk Factors.................. Prospective investors should carefully consider
the matters set forth below under "Risk
Factors."
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<PAGE> 13
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following factors in connection
with the Exchange Offer and the Exchange Senior Debentures offered hereby.
RANKING OF EXCHANGE SENIOR DEBENTURES
The Senior Debentures will represent the only borrowings of the Company
outstanding at the parent level at the completion of the Exchange Offer. The
Indenture permits the Company or its Subsidiaries (as defined below) to incur
additional indebtedness at the parent or subsidiary level in the event the
indebtedness does not exceed certain levels of Consolidated Net Worth (as
defined below). See "Description of Exchange Senior Debentures -- Covenants of
the Company." Because the Company is a holding company, the right of the Company
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Senior Debentures to benefit indirectly from such distribution)
is subject to the prior claims of creditors of that subsidiary (including
depositors in the case of the Bank), except to the extent that the Company may
itself be recognized as a creditor of that subsidiary. At June 30, 1997, the
subsidiaries of the Company had total liabilities (excluding liabilities owed to
the Company) of approximately $1.5 billion, including deposits. Accordingly, the
Senior Debentures will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, and holders of Senior Debentures
should look only to the assets of the Company for payments on the Senior
Debentures.
In addition, as the Company is a non-operating holding company almost all
of the operating assets of the Company are owned by the Company's subsidiaries.
The Company relies primarily on dividends from such subsidiaries to meet its
obligations for payment of principal and interest on its outstanding debt
obligations and corporate expenses. The Bank is subject to certain restrictions
imposed by federal law on any extensions of credit to, and certain other
transactions with, the Company and certain other affiliates, and on investments
in stock or other securities thereof. Such restrictions prevent the Company and
such other affiliates from borrowing from the Bank unless the loans are secured
by various types of collateral. Further, such secured loans, other transactions
and investments by the Bank are generally limited in amount as to the Company
and as to each of such other affiliates to 10% of such Bank's capital and
surplus and as to the Company and all of such other affiliates to an aggregate
of 20% of such Bank's capital and surplus. In addition, payment of dividends to
the Company by the subsidiary bank is subject to ongoing review by banking
regulators and is subject to various statutory limitations and in certain
circumstances requires approval by banking regulatory authorities. At June 30,
1997, the Bank (without regard to limitations set forth in the Indenture and
prior to the contribution of $25 million to the capital of the Bank) could have
declared additional dividends to the Company without prior regulatory approval
of approximately $22 million. Federal and state regulatory agencies also have
the authority to limit further the Bank's payment of dividends based on other
factors, such as the maintenance of adequate capital for the Bank, which could
reduce the amount of dividends otherwise payable.
CONSEQUENCES OF A FAILURE TO EXCHANGE ORIGINAL SENIOR DEBENTURES
The Original Senior Debentures have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and restrictions.
Original Senior Debentures which remain outstanding after consummation of the
Exchange Offer will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer, holders of
Original Senior Debentures which remain outstanding will not be entitled to any
rights to have such Original Senior Debentures registered under the Securities
Act or to any similar rights under the Registration Agreement (subject to
certain limited exceptions). The Company does not intend to register under the
Securities Act any Original Senior Debentures which remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable). To the extent that Original
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<PAGE> 14
Senior Debentures are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Original Senior Debentures could be adversely
affected.
The Exchange Senior Debentures and any Original Senior Debentures which
remain outstanding after consummation of the Exchange Offer will vote and
consent together as a single class for purposes of determining whether holders
of the requisite percentage in outstanding principal amount thereof have taken
certain actions or exercised certain rights under the Indenture. See
"Description of Exchange Senior Debentures -- Modification of Indenture."
Pursuant to the Registration Agreement, holders of the Original Senior
Debentures are entitled to receive liquidated damages in the form of additional
interest under certain circumstances. Upon consummation of the Exchange Offer,
holders of Original Senior Debentures will not be entitled to any such
additional interest or any further registration rights under the Registration
Agreement, except under limited circumstances. See "Description of Original
Senior Debentures."
ABSENCE OF PUBLIC MARKET
The Original Senior Debentures were issued to, and the Company believes
such securities are currently owned by, a relatively small number of beneficial
owners. The Original Senior Debentures have not been registered under the
Securities Act and will be subject to restrictions on transferability if they
are not exchanged for the Exchange Senior Debentures. Although the Exchange
Senior Debentures may be resold or otherwise transferred by the holders (who are
not affiliates of the Company) without compliance with the registration
requirements under the Securities Act, they will constitute a new issue of
securities with no established trading market. Senior Debentures may be
transferred by the holders thereof only in blocks having a principal amount of
not less than $100,000 (100 Senior Debentures). The Company has been informed by
the Initial Purchaser that the Initial Purchaser intends to make a market in the
Exchange Senior Debentures. However, the Initial Purchaser is not obligated to
do so and any such market-making activity may be terminated at any time without
notice to the holders of the Exchange Senior Debentures. In addition, such
market-making activity will be subject to the limits of the Securities Act and
may be limited during the pendency of the Exchange Offer. Accordingly, no
assurance can be given that an active public or other market will develop for
the Exchange Senior Debentures or the Original Senior Debentures, or as to the
liquidity of or the trading market for the Exchange Senior Debentures or the
Original Senior Debentures. If an active public market does not develop, the
market price and liquidity of the Exchange Senior Debentures may be adversely
affected.
If a public trading market develops for the Exchange Senior Debentures,
future trading prices of the Senior Debentures will depend on many factors,
including, among other things, prevailing interest rates, the Company's
operating results, and the market for similar securities. Depending on these and
other factors, the Exchange Senior Debentures may trade at a discount.
Notwithstanding the registration of the Exchange Senior Debentures in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Company may publicly offer for sale or resell the
Exchange Senior Debentures only in compliance with the provisions of Rule 144
under the Securities Act.
Each broker-dealer that receives Exchange Senior Debentures for its own
account in exchange for Original Senior Debentures, where such Original Senior
Debentures were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Senior Debentures. See
"Plan of Distribution."
EXCHANGE OFFER PROCEDURES
Subject to the conditions set forth under "The Exchange Offer -- Conditions
to the Exchange Offer," issuance of the Exchange Senior Debentures in exchange
for Original Senior Debentures pursuant to the Exchange Offer will be made only
after a timely receipt by the Company of (i) a book-entry confirmation (as
defined below) evidencing the tender of such Original Senior Debentures through
ATOP or (ii) certificates
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<PAGE> 15
representing such Original Senior Debentures, a properly completed and duly
executed Letter of Transmittal, with any required signature guarantees, and all
other required documents. See "The Exchange Offer -- Acceptance for Exchange and
Issuance of Senior Debentures" and "-- Procedures for Tendering Original Senior
Debentures." Therefore, holders of the Original Senior Debentures desiring to
tender such Original Senior Debentures in exchange for Exchange Senior
Debentures should allow sufficient time to ensure timely delivery. The Company
is not under any duty to give notification of defects or irregularities with
respect to the tenders of Original Senior Debentures for exchange.
LOSSES IN INDIRECT AUTOMOBILE LENDING PORTFOLIO
During fiscal years 1995 and 1996, the Bank significantly increased its
level of indirect lending through automobile dealers. Indirect lending
represented 66% and 83% of consumer loan production in fiscal years 1995 and
1996, respectively. These types of indirect loans carry more credit risk and
produce higher charge-off and delinquency rates than other consumer loans.
Primarily during the latter part of the fiscal year ended September 30, 1996,
higher than anticipated charge-offs were experienced in the indirect automobile
lending portfolio. As a result of management's analysis of repossession activity
and loss rates on sales of repossessed automobiles, the Bank recorded a
provision of $16.4 million, primarily related to indirect automobile loans,
during the fiscal year ended September 30, 1996. The total allowance for loan
losses related to indirect automobile loans at September 30, 1996 and June 30,
1997 was $9.0 million and $4.0 million, respectively, compared to outstanding
indirect loan balances of $148.2 million and $101.7 million, respectively, at
such dates. No new applications for indirect loans have been accepted since
September 30, 1996. While management believes it has established an adequate
allowance for loan losses, there can be no assurance that the Bank will not have
to increase its level of loan loss allowance or otherwise implement corrective
action or that regulators, in reviewing the Bank's loan portfolio or operations,
will not request that the Bank increase its allowance for loan losses or
otherwise implement corrective action, thereby negatively affecting the Bank's
financial condition and earnings.
FIRST PALM BEACH BANCORP, INC.
GENERAL
The Company is a Delaware chartered savings and loan holding company,
headquartered in West Palm Beach, Florida. Through its wholly owned subsidiary,
the Bank, the Company operates 47 banking offices (of which 21 are supermarket
branches and 26 are stand-alone branches) located in Palm Beach, Broward, Dade,
Martin and Lee Counties in Florida, and two mortgage loan production offices,
which are located in Palm Beach County. At June 30, 1997, the Company had total
consolidated assets of approximately $1.7 billion, deposits of approximately
$1.2 billion and stockholders' equity of approximately $109.5 million. The
Company is the largest, based on total deposits, and oldest independent
financial institution based in Palm Beach County.
Of the 47 banking offices currently operated by the Bank, 41 of such
offices are located in Palm Beach, Broward and Dade Counties. Based on deposit
information provided by the Florida Bankers Association, such counties have a
respective share of the state deposit market of 9.16%, 11.76% and 19.38%, for a
total of approximately 40.3% of the Florida deposit market share. In addition,
based on information provided by the Bureau of Economic and Business Research,
University of Florida, such three counties represent, respectively, 6.81%, 9.66%
and 14.18% of the state population for a total of approximately 30.65% of the
Florida population.
The Bank's principal business is attracting retail deposits from the
general public and investing those deposits, together with funds generated from
operations and borrowings, primarily in one- to four-family, owner-occupied,
residential mortgage loans and, to a lesser extent, consumer loans, construction
loans, commercial real estate loans and multi-family residential mortgage loans.
In addition, the Bank invests in mortgage-backed and related securities,
securities issued by the U.S. Government and agencies thereof, and other
investments in which the Bank is permitted to invest under federal laws and
regulations.
The Company was organized in 1993 to serve as a holding company for the
Bank, originally organized in 1934 as a federally-chartered mutual savings and
loan association, and which converted, effective September 29, 1993, to a
federally-chartered stock savings and loan association in connection with its
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<PAGE> 16
conversion to stock form and concurrent acquisition by the Company (the
"Conversion"). Since the Conversion, management's strategy has been to
capitalize on the growth in its five-county market area through redeploying the
capital raised in the Conversion in a manner enhancing stockholder value by (i)
emphasizing consumer and retail banking services in its five-county market area
and (ii) expanding its branch network by opening 29 new branch offices, of which
19 are supermarket branches and ten are stand-alone branches.
In emphasizing retail banking, the Company has increased its one- to
four-family residential mortgage loan originations from $126.0 million in fiscal
year 1994 to $192.5 million in fiscal year 1996. At June 30, 1997, the Bank had
one- to four-family residential mortgage loans totaling $804.3 million,
constituting approximately 68% of the Bank's total loan portfolio at such date.
As of June 30, 1997, adjustable rate mortgage loans comprised approximately 51%
of outstanding mortgage loans. In addition, the Bank's consumer loan portfolio
increased from $48.6 million at September 30, 1994 to $159.9 million at June 30,
1997.
The Company has also increased the number of branch offices from 16 at
September 30, 1993 to 47 as of the date of this Prospectus, including, during
fiscal year 1996, opening nine new offices and acquiring two additional offices
through the acquisition of an unaffiliated thrift institution, and during fiscal
year 1997, opening 12 new offices. The Company has opened two additional offices
during the current fiscal year. Of the 31 offices opened since the Conversion,
21 have been located in supermarkets (four in Winn Dixie Supermarkets and 17 in
Albertsons Supermarkets). While the branch network expansion has entailed, and
will continue to entail, significant capital investment and start-up operating
expenses, management believes that the branch network expansion ultimately will
lead to profitable growth in the retail operations of the Company and will
provide a source of funding at a lower cost than can be obtained in the
wholesale funding market. By expanding its branch network through the
establishment of supermarket branches, the Company will be able to penetrate
further its market area on an accelerated basis and with much lower levels of
capital investment and ongoing operating expense relative to opening and
operating stand-alone branch offices.
For fiscal years ended September 30, 1994, 1995 and 1996, the Company's net
income was approximately $5.8 million, $5.7 million and $550,000, respectively.
The decline in net income for fiscal year 1996 relative to fiscal years 1994 and
1995 was primarily attributable to (i) a one-time pre-tax assessment of $6.6
million to recapitalize the SAIF and (ii) an increase in the provision for loan
losses to $15.7 million, as compared to $135,000 and $261,000 for the 1994 and
1995 fiscal years, respectively. The significant increase in the loan loss
provision for fiscal year 1996 was caused by higher than anticipated charge-offs
during such year on the Bank's indirect automobile lending and additional
provisions to cover anticipated future losses related to the indirect lending
program. In connection with making such provision, the Bank discontinued its
indirect lending program as of September 30, 1996.
At September 30, 1996, non-performing assets equaled $16.1 million, an
increase of $13.4 million from non-performing assets of $2.7 million at
September 30, 1995. Repossessed assets increased $1.2 million to $1.6 million at
September 30, 1996 from $371,000 at September 30, 1995. At September 30, 1996,
the ratio of non-performing loans to total loans equaled 1.20% and
non-performing assets to total assets equaled 1.08%. In addition, as of such
date, the allowance for loan losses to non-performing loans equaled 92.40%.
Net income for the nine months ended June 30, 1997 was $6.9 million, as
compared to $7.9 million for the nine months ended June 30, 1996. The reduction
in net income for the first nine months of 1997, as compared to the first nine
months of 1996, was primarily due to an increase in other expenses associated
with the establishment of twelve new branch offices since June 30, 1996. The
provision for loan losses for the nine months ended June 30, 1997 was $2.2
million, as compared to $3.0 million for the nine months ended June 30, 1996. At
June 30, 1997, non-performing assets equaled $12.1 million, as compared to
non-performing assets of $16.1 million at September 30, 1996. Repossessed assets
decreased by $1.1 million to $522,000 at June 30, 1997 from $1.6 million at
September 30, 1996. At June 30, 1997, the ratio of non-performing loans to total
loans equaled 0.94% and non-performing assets to total assets equaled 0.73%. In
addition, as of such date, the allowance for loan losses to non-performing loans
equaled 61.31%.
The total allowance for loan losses related to indirect automobile loans
was $9.0 million and $4.0 million at September 30, 1996 and June 30, 1997,
respectively, compared to outstanding indirect loan balances of $148.2 million
and $101.7 million, respectively, at such dates. While management believes that
it has established an adequate allowance for loan losses, there can be no
assurance that the Bank will not have to
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<PAGE> 17
increase its level of loan loss allowance or otherwise implement corrective
action or that regulators, in reviewing the Bank's loan portfolio or operations,
will not request that the Bank increase its allowance for loan losses or
otherwise implement corrective action, thereby negatively affecting the Bank's
financial condition and earnings. See "Risk Factors -- Losses in Indirect
Automobile Lending Portfolio."
The principal executive offices of the Company are located at 450 S.
Australian Avenue, West Palm Beach, Florida 33401 and its telephone number at
such address is (561) 655-8511.
The Company is a legal entity, separate and distinct from its subsidiaries.
The ability of holders of debt and equity securities of the Company to benefit
from the distribution of assets of any subsidiary upon the liquidation or
reorganization of such subsidiary is subordinate to prior claims of creditors of
the subsidiary (including depositors in the case of banking subsidiaries),
except to the extent that a claim of the Company as a creditor may be
recognized.
There are various statutory and regulatory limitations on the extent to
which present and future banking subsidiaries of the Company can finance or
otherwise transfer funds to the Company or its non-banking subsidiaries, whether
in the form of loans, extensions of credit, investments or asset purchases. In
addition, there are regulatory limitations on the payment of dividends directly
or indirectly to the Company from the Bank. At June 30, 1997, the Bank (without
regard to limitations in the Indenture and prior to the contribution of $25
million to the capital of the Bank) could declare additional dividends to the
Company without regulatory approval of approximately $22 million.
RECENT DEVELOPMENTS
On October 21, 1997, the Company announced its earnings for the fiscal
quarter and year ended September 30, 1997. The following financial information
was extracted from such press release and is unaudited. For the quarter ended
September 30, 1997, the Company reported net income of $2.5 million, as compared
to a loss of $7.3 million for the quarter ended September 30, 1996. Net income
for the fiscal year ended September 30, 1997, was $9.4 million, or $1.86 per
share, as compared to $0.5 million, or $0.11 per share, for the prior year. The
loss for the quarter ended September 30, 1996, included a one-time charge
against earnings of $6.6 million for a SAIF assessment. The after-tax effect of
the assessment was $4.0 million, or $0.78 per share. Also during the September
30, 1996 quarter, the Bank recorded a provision for loan losses of $12.7
million, primarily due to losses on its indirect automobile lending portfolio.
At the beginning of the quarter ended September 30, 1997, the allowance for loan
losses was $6.7 million, the current provision for such period was $1.1 million
with net charge offs of $1.8 million, resulting in an allowance for loan losses
as of September 30, 1997, of $6.0 million. A net gain of $3.5 million on sale of
loans was also reported during the quarter ended September 30, 1996.
The results for the year ended September 30, 1996 included the SAIF
assessment of $6.6 million and a loan loss provision, primarily due to indirect
lending, of $15.7 million. The year ended September 30, 1997 included net gains
on sales of securities, loans, loan servicing, stock and property of $2.9
million, as compared to net gains on such sales of $5.4 million for the year
ended September 30, 1996.
At September 30, 1997, the Company reported total assets of $1.8 billion
and stockholders' equity of $113 million, as compared to $1.5 billion and $105.4
million, respectively, as of September 30, 1996. For more information concerning
the Company's recent earnings, see the Company's Current Report on Form 8-K
dated October 24, 1997.
For additional information with respect to the Company, see "Available
Information," "Incorporation of Certain Documents by Reference," "Risk Factors,"
and "Selected Consolidated Financial Data."
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<PAGE> 18
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Senior Debentures offered hereby. In consideration for issuing the
Exchange Senior Debentures as contemplated in this Prospectus, the Company will
receive in exchange Original Senior Debentures in like principal amount, the
terms of which are identical in all material respects to the Exchange Senior
Debentures, except for certain transfer restrictions and registration rights.
The Original Senior Debentures surrendered in exchange for the Exchange Senior
Debentures will be retired and canceled and cannot be reissued. The Company
received $34,125,000 in cash proceeds in conjunction with the issuance of the
Original Senior Debentures. Of these proceeds, $25,000,000 were contributed to
the Bank, $250,000 were used to satisfy related issuance costs, and the
remaining proceeds were used for general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
the Company for the respective periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED SEPTEMBER 30, ENDED JUNE 30,
----------------------------------------- --------------
1992 1993 1994 1995 1996 1996 1997
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits............ 6.42x 4.97x 2.34x 1.83x 1.08x 2.38x 2.24x
Including interest on deposits............ 1.33x 1.27x 1.31x 1.19x 1.02x 1.29x 1.22x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
represent net income (loss) before extraordinary items and cumulative effect of
changes in accounting principles plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, include gross interest expense
(other than on deposits) and the proportion deemed representative of the
interest factor of rent expense, net of income from subleases. Fixed charges,
including gross interest on deposits, include all interest expense and the
proportion deemed representative of the interest factor of rent expense, net of
income from subleases.
-18-
<PAGE> 19
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 30, 1997 and is adjusted to give effect to the Exchange Offer as
if it had occurred on June 30, 1997, and assuming that all outstanding Original
Senior Debentures are exchanged for Exchange Senior Debentures. The issuance of
the Exchange Senior Debentures in the Exchange Offer will have no effect on the
capitalization of the Company. This table is based on, and is qualified in its
entirety by, the historical consolidated financial statements of the Company,
including the related notes thereto, which are included in documents
incorporated by reference herein, and should be read in conjunction therewith.
See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt......................................................... $ 75,950 $ 75,950
Series A 10.35% Senior Debentures Due 2002, net of issuance costs...... 33,875 --
Series B 10.35% Senior Debentures Due 2002, net of issuance costs...... -- 33,875
Stockholders' equity:
Preferred stock ($.01 par value) authorized 1,000,000 shares; none
outstanding.......................................................... -- --
Common stock ($.01 par value) authorized 10,000,000 shares; issued
5,496,375 shares; outstanding 5,030,846 shares (net of treasury
stock)............................................................... 55 55
Additional paid-in capital............................................. 53,221 53,221
Retained earnings, substantially restricted............................ 69,698 69,698
Treasury stock, at cost, 465,529 shares................................ (10,195) (10,195)
Common stock purchased by:
Employee stock ownership plan........................................ (1,162) (1,162)
Recognition and retention plans...................................... (147) (147)
Unrealized decrease in fair value on available-for-sale securities (net
of applicable income taxes).......................................... (1,975) (1,975)
-------- -----------
Total stockholders' equity............................................. 109,495 109,495
-------- -----------
Total capitalization................................................... $219,320 $ 219,320
======== =========
</TABLE>
-19-
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data below should be read in connection
with the consolidated financial information included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1996, and its
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. See
"Available Information," "Incorporation of Certain Documents by Reference" and
"First Palm Beach Bancorp, Inc." Interim unaudited consolidated financial data
for the nine months ended June 30, 1997 and 1996 reflect, in the opinion of
management of the Company, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such data. Results for the
nine months ended June 30, 1997 are not necessarily indicative of results which
may be expected for any other interim period or for the year as a whole.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
---------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY OF OPERATION:
Interest income....................... $ 61,906 $ 50,580 $ 57,874 $ 80,964 $ 103,532 $ 76,597 $ 84,937
Interest expense...................... 37,764 28,783 30,049 48,900 61,300 45,106 51,841
-------- -------- ---------- ---------- ---------- ---------- ----------
Net interest income................... 24,142 21,797 27,825 32,064 42,232 31,491 33,096
-------- -------- ---------- ---------- ---------- ---------- ----------
Provision for loan losses............. 1,675 149 135 261 15,704 3,013 2,200
Net interest income after provision
for loan losses..................... 22,467 21,648 27,690 31,803 26,528 28,478 30,896
Other income.......................... 9,274 5,775 4,437 4,030 10,069 4,612 5,993
Other expenses........................ 19,150 19,609 22,826 26,609 29,002 19,905 25,351
SAIF recapitalization charge.......... -- -- -- -- 6,600 -- --
Income before income taxes and
cumulative effect of change in
accounting principle................ 12,591 7,814 9,301 9,224 995 13,185 11,538
Provision for income taxes............ 5,066 3,019 3,502 3,578 446 5,296 4,637
-------- -------- ---------- ---------- ---------- ---------- ----------
Cumulative effect of change in
accounting for income taxes......... -- 422 -- -- -- -- --
-------- -------- ---------- ---------- ---------- ---------- ----------
Net income............................ $ 7,525 $ 5,217 $ 5,799 $ 5,646 $ 549 $ 7,889 $ 6,901
======== ======== ========= ========= ========= ========= =========
PER COMMON SHARE DATA:
Cash dividends declared per common
share............................... -- -- -- $ 0.20 $ 0.40 $ 0.30 $ 0.45
Book value per common share at period
end (tangible)...................... -- 18.62 19.03 20.38 20.14 21.37 21.23
Net income............................ $ -- $ -- $ 1.05 $ 1.11 $ 0.11 $ 1.55 $ 1.38
======== ======== ========= ========= ========= ========= =========
CONSOLIDATED BALANCE SHEET DATA AT
PERIOD END:
Securities held-to-maturity,
available-for-sale and trading
securities.......................... $ 82,142 $ 96,768 $ 117,122 $ 80,941 $ 34,532 $ 45,344 $ 49,250
Mortgage-backed and related securities
held-to-maturity and
available-for-sale.................. 194,788 284,012 324,044 238,442 232,273 207,609 369,723
Loans, net............................ 444,965 429,104 576,731 825,024 1,007,881 1,103,033 1,119,559
Allowance for loan losses............. 2,334 1,886 1,956 2,157 11,855 3,397 6,755
Total assets.......................... 815,571 856,307 1,076,583 1,208,845 1,490,020 1,438,024 1,666,396
Deposits.............................. 723,881 698,458 718,282 878,670 1,136,722 1,081,595 1,227,277
Borrowings............................ 17,469 26,325 229,892 189,552 211,025 211,050 260,950
Stockholders' equity.................. 50,983 102,330 100,462 104,611 105,425 113,606 109,495
CONSOLIDATED AVERAGE BALANCE SHEET DATA:
Securities held-to-maturity,
available-for-sale and trading
securities.......................... $ 48,547 $ 65,989 $ 126,320 $ 107,011 $ 58,288 $ 64,276 $ 66,153
Mortgage-backed and related securities
held-to-maturity and
available-for-sale.................. 182,546 260,883 304,948 311,929 221,285 225,120 286,169
Loans, net............................ 495,698 427,621 487,978 688,595 1,020,419 989,952 1,053,274
Total assets.......................... 807,320 820,679 973,017 1,174,179 1,390,279 1,366,555 1,530,992
Deposits.............................. 685,997 689,459 648,600 829,921 995,991 974,047 1,140,403
Borrowings............................ 19,545 22,549 159,052 182,158 212,093 212,279 210,981
Stockholders' equity.................. 46,466 53,633 103,355 102,676 111,987 110,670 105,893
</TABLE>
-20-
<PAGE> 21
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
---------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS:
Return on average total assets(2)..... 0.93% 0.64% 0.60% 0.48% 0.04% 0.77% 0.60%
Return on average stockholders'
equity(2)........................... 16.19 9.73 5.61 5.50 0.49 9.52 8.71
Net interest margin(1)................ 3.17 2.78 2.97 2.83 3.18 3.22 3.03
Operating expenses/average
assets(2)........................... 2.37 2.39 2.35 2.27 2.56 1.95 2.21
Tangible capital ratio(3)............. 6.04 8.86 7.23 7.66 6.17 7.40 7.47
Leverage (core) capital ratio(3)...... 6.04 8.86 7.23 7.66 6.17 7.40 7.47
Risk-based capital ratio(3)........... 14.24 20.35 16.98 14.97 12.28 13.05 14.77
Dividend payout ratio................. -- -- -- 18.02 363.64 19.35 32.61
</TABLE>
- ---------------
(1) Calculation is based upon net interest before provision for loan losses
divided by average interest-earning assets.
(2) Ratios for fiscal year ended September 30, 1996 include a one-time special
assessment paid by all financial institutions insured by the SAIF. The
Bank's pretax assessment was $6.6 million.
(3) Represents the regulatory capital ratio of the Bank. Under current policy,
the capital adequacy requirements of the Office of Thrift Supervision are
applied only at the Bank level.
-21-
<PAGE> 22
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Original Senior Debentures, the Company
entered into the Registration Agreement with the Initial Purchaser, pursuant to
which the Company agreed to file and to use its reasonable efforts to cause to
become effective with the Commission a registration statement with respect to
the exchange of the Original Senior Debentures for debentures with terms
identical in all material respects to the terms of the Original Senior
Debentures. A copy of the Registration Agreement has been filed as an Exhibit to
the Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Company under the Registration Agreement. The form and terms of the Exchange
Senior Debentures are the same as the form and terms of the Original Senior
Debentures except that the Exchange Senior Debentures have been registered under
the Securities Act and will not provide for any increase in the interest
thereon, except under limited circumstances. See "Risk Factors -- Consequences
of a Failure to Exchange Original Senior Debentures," "Description of Exchange
Senior Debentures," and "Description of Original Senior Debentures."
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Original Senior Debentures in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Original Senior Debentures
are registered on the books of the Company or any other person who has obtained
a properly completed bond power from the registered holder, or any person whose
Original Senior Debentures are held of record by DTC who desires to deliver such
Original Senior Debentures by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Company will exchange as soon as
practicable after the date hereof, the Original Senior Debentures for a like
aggregate principal amount of Exchange Senior Debentures. The Exchange Senior
Debentures have been registered under the Securities Act.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $35,000,000 aggregate principal amount of Exchange Senior
Debentures for a like aggregate principal amount of Original Senior Debentures
properly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with the procedures described below. The Company will issue,
promptly after the Expiration Date, an aggregate principal amount of up to
$35,000,000 of Exchange Senior Debentures in exchange for a like principal
amount of outstanding Original Senior Debentures tendered and accepted in
connection with the Exchange Offer. Holders may tender their Original Senior
Debentures in whole or in part in a principal amount of not less than $100,000
(100 Senior Debentures) or any integral multiple of $1,000 principal amount (one
Senior Debenture) in excess thereof.
The Exchange Offer is not conditioned upon any minimum principal amount of
Original Senior Debentures being tendered. As of the date of this Prospectus,
$35,000,000 aggregate principal amount of the Original Senior Debentures is
outstanding.
Holders of Original Senior Debentures do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Original Senior
Debentures which are not tendered for or are tendered but not accepted in
connection with the Exchange Offer will remain outstanding and be entitled to
the benefits of the Indenture, but will not be entitled to any further
registration rights under the Registration Agreement, except under limited
circumstances. See "Risk Factors -- Consequences of a Failure to Exchange
Original Senior Debentures" and "Description of Original Senior Debentures."
-22-
<PAGE> 23
If any tendered Original Senior Debentures are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Original Senior
Debentures will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Original Senior Debentures in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Original Senior Debentures in connection with the
Exchange Offer. The Company will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
See "-- Fees and Expenses."
NEITHER THE COMPANY NOR THE BOARD OF DIRECTORS OF THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF ORIGINAL SENIOR DEBENTURES AS TO WHETHER TO TENDER
OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR ORIGINAL SENIOR DEBENTURES
PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE
ANY SUCH RECOMMENDATION. HOLDERS OF ORIGINAL SENIOR DEBENTURES MUST MAKE THEIR
OWN DECISIONS WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE
AGGREGATE AMOUNT OF ORIGINAL SENIOR DEBENTURES TO TENDER BASED ON SUCH HOLDERS'
OWN FINANCIAL POSITIONS AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on December
18, 1997 unless the Exchange Offer is extended by the Company (in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended).
The Company expressly reserves the right in its sole and absolute
discretion, subject to reasonableness and subject to applicable law, at any time
and from time to time, (i) to delay the acceptance of the Original Senior
Debentures for exchange, (ii) to terminate the Exchange Offer (whether or not
any Original Senior Debentures have theretofore been accepted for exchange) if
the Company determines, in its sole and absolute discretion, that any of the
events or conditions referred to under "-- Conditions to the Exchange Offer"
have occurred or exist or have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain all Original Senior Debentures
tendered pursuant to the Exchange Offer, subject, however, to the right of
holders of Original Senior Debentures to withdraw their tendered Original Senior
Debentures as described under "-- Withdrawal Rights," and (iv) to waive any
condition or otherwise amend the terms of the Exchange Offer in any respect. If
the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, or if the Company waives a material condition of
the Exchange Offer, the Company will promptly disclose such amendment by means
of a prospectus supplement that will be distributed to the holders of the
Original Senior Debentures, and the Company will extend the Exchange Offer to
the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE SENIOR DEBENTURES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange, and will issue to the Exchange Agent, Exchange Senior
Debentures for Original Senior Debentures validly tendered and not withdrawn
promptly after the Expiration Date.
-23-
<PAGE> 24
In all cases, delivery of Exchange Senior Debentures in exchange for
Original Senior Debentures tendered and accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
(i) the book-entry confirmation described below under "-- Procedures for
Tendering Original Senior Debentures -- Book-Entry Transfer" or (ii)
certificates representing such Original Senior Debentures, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and (iii) any other documents required by the
Letter of Transmittal.
Subject to the terms and conditions of the Exchange Offer, the Company will
be deemed to have accepted for exchange, and thereby exchanged, Original Senior
Debentures validly tendered and not withdrawn as, if and when the Company gives
oral or written notice to the Exchange Agent of the Company's acceptance of such
Original Senior Debentures for exchange pursuant to the Exchange Offer. The
Exchange Agent will act as agent for the Company for the purpose of receiving
tenders of book-entry confirmations or certificates representing Original Senior
Debentures, Letters of Transmittal and related documents, and as agent for
tendering holders for the purpose of receiving book-entry confirmations or
certificates representing Original Senior Debentures, Letters of Transmittal and
related documents and transmitting Exchange Senior Debentures to validly
tendering holders. Such exchange will be made promptly after the Expiration
Date. If for any reason whatsoever, acceptance for exchange or the exchange of
any Original Senior Debentures tendered pursuant to the Exchange Offer is
delayed (whether before or after the Company's acceptance for exchange of
Original Senior Debentures) or the Company extends the Exchange Offer or is
unable to accept for exchange or exchange Original Senior Debentures tendered
pursuant to the Exchange Offer, then, without prejudice to the Company's rights
set forth herein, the Exchange Agent may, nevertheless, on behalf of the Company
and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Original
Senior Debentures and such Original Senior Debentures may not be withdrawn
except to the extent tendering holders are entitled to withdrawal rights as
described under "-- Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Original Senior
Debentures will warrant and agree that it has full power and authority to
tender, exchange, sell, assign and transfer Original Senior Debentures, that the
Company will acquire good, marketable and unencumbered title to the tendered
Original Senior Debentures, free and clear of all liens, restrictions, charges
and encumbrances, and the Original Senior Debentures tendered for exchange are
not subject to any adverse claims or proxies. Such holder also will warrant and
agree that it will, upon request, execute and deliver any additional documents
deemed by the Company or the Exchange Agent to be necessary or desirable to
complete the exchange, sale, assignment, and transfer of the Original Senior
Debentures tendered pursuant to the Exchange Offer. Tendering holders of
Original Senior Debentures that use ATOP will, by so doing, acknowledge that
they are bound by the terms of the Letter of Transmittal.
PROCEDURES FOR TENDERING ORIGINAL SENIOR DEBENTURES
Book-Entry Transfer. For purposes of the Exchange Offer, the Exchange
Agent will establish an account with respect to the Original Senior Debentures
at DTC within two business days after the date of this Prospectus. Any tendering
financial institution that is a participant in DTC's book-entry transfer
facility system must make a book-entry delivery of the Original Senior
Debentures by causing DTC to transfer such Original Senior Debentures into the
Exchange Agent's account at DTC in accordance with DTC's ATOP procedures for
transfers. Such holder of Original Senior Debentures using ATOP should transmit
its acceptance to DTC on or prior to the Expiration Date (or comply with the
guaranteed delivery procedures set forth below). DTC will verify such
acceptance, execute a book-entry transfer of the tendered Original Senior
Debentures into the Exchange Agent's account at DTC and then send to the
Exchange Agent confirmation of such book-entry transfer, including an agent's
message confirming that DTC has received an express acknowledgment from such
holder that such holder has received and agrees to be bound by this Letter of
Transmittal and that the Company may enforce this Letter of Transmittal against
such holder (a "book-entry confirmation").
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
-24-
<PAGE> 25
A beneficial owner of Original Senior Debentures that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial owner wishes to participate in the Exchange Offer.
Certificates. If the tender is not made through ATOP, certificates
representing Original Senior Debentures, as well as the Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by the Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
under "-- Exchange Agent" on or prior to the Expiration Date in order for such
tender to be effective (or the guaranteed delivery procedures set forth below
must be complied with).
If less than all of the Original Senior Debentures are tendered, a
tendering holder should fill in the amount of Original Senior Debentures being
tendered in the appropriate box on the Letter of Transmittal. The entire amount
of Original Senior Debentures delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
Signature Guarantees. Certificates for the Original Senior Debentures need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Original Senior Debentures is
registered in a name other than that of the person surrendering the certificate
or (b) such holder completes the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the Letter of Transmittal. In the case of (a)
or (b) above, such certificates for Original Senior Debentures must be duly
endorsed or accompanied by a properly executed bond power, with the endorsement
or signature on the bond power and on the Letter of Transmittal guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution," including (as such terms are defined therein):
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association (an "Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
Delivery. The method of delivery of the book-entry confirmation or
certificates representing tendered Original Senior Debentures, the Letter of
Transmittal, and all other required documents is at the option and sole risk of
the tendering holder, and "delivery" will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail, return
receipt requested, properly insured, or an overnight delivery service is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
Notwithstanding any other provision hereof, the delivery of Exchange Senior
Debentures in exchange for Original Senior Debentures tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of (i) a book-entry confirmation with
respect to such Original Senior Debentures or (ii) certificates representing
Original Senior Debentures and a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees and any other documents required by the Letter of Transmittal.
Accordingly, the delivery of Exchange Senior Debentures might not be made to all
tendering holders at the same time, and will depend upon when book-entry
confirmations with respect to Original Senior Debentures or certificates
representing Original Senior Debentures and other required documents are
received by the Exchange Agent.
Guaranteed Delivery. If a holder desires to tender Original Senior
Debentures pursuant to the Exchange Offer and the certificates for such Original
Senior Debentures are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, such Original Senior Debentures may nevertheless be tendered, provided
that all of the following guaranteed delivery procedures are complied with:
(1) such tenders are made by or through an Eligible Institution;
(2) a properly completed and duly executed notice to the Exchange
Agent guaranteeing delivery to the Exchange Agent of either certificates
representing the Original Senior Debentures or a book-entry
-25-
<PAGE> 26
confirmation in compliance with the requirements set forth herein (the
"Notice of Guaranteed Delivery"), substantially in the form accompanying
the Letter of Transmittal, is received by the Exchange Agent, as provided
below, on or prior to the Expiration Date;
(3) (a) a book-entry confirmation or (b) the certificates representing
all tendered Original Senior Debentures, in proper form for transfer,
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any
other documents required by the Letter of Transmittal, are, in any case,
received by the Exchange Agent within three New York Stock Exchange trading
days after the date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
The Company's acceptance for exchange of Original Senior Debentures
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering holder and the Company upon the terms
and subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Original Senior Debentures will be determined by the Company, in
its sole discretion, whose determination shall be final and binding on all
parties. The Company reserves the absolute right, in its sole and absolute
discretion, subject to reasonableness, to reject any and all tenders determined
by it not to be in proper form or the acceptance of which, or exchange for, may,
in the opinion of counsel to the Company, be unlawful. The Company also reserves
the absolute right, subject to applicable law, to waive any of the conditions of
the Exchange Offer as set forth under "-- Conditions to the Exchange Offer" or
any condition or irregularity in any tender of Original Senior Debentures of any
particular holder whether or not similar conditions or irregularities are waived
in the case of other holders.
The interpretation by the Company of the terms and conditions of the
Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding. No tender of Original Senior Debentures will
be deemed to have been validly made until all irregularities with respect to
such tender have been cured or waived. Neither the Company, any affiliates or
assigns of the Company, the Exchange Agent nor any other person shall be under
any duty to give any notification of any irregularities in tenders or incur any
liability for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
A beneficial owner of Original Senior Debentures that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
RESALES OF EXCHANGE SENIOR DEBENTURES
The Company is making the Exchange Offer for the Exchange Senior Debentures
in reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, the Company has not sought its own
interpretive letter and there can be no assurance that the staff of the Division
of Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance of the Commission, and subject to the two immediately
following sentences, the Company believes that Exchange Senior Debentures issued
pursuant to this Exchange Offer in exchange for Original Senior Debentures may
be offered for resale, resold and otherwise transferred by a holder thereof
(other than a holder who is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such Exchange Senior Debentures are acquired in the ordinary
course of
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<PAGE> 27
such holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such Exchange Senior Debentures.
However, any holder of Original Senior Debentures who is an "affiliate" of the
Company or who intends to participate in the Exchange Offer for the purpose of
distributing Exchange Senior Debentures, or any broker-dealer who purchased
Original Senior Debentures from the Company to resell pursuant to Rule 144A or
any other available exemption under the Securities Act, (a) will not be able to
rely on the interpretations of the staff of the Division of Corporation Finance
of the Commission set forth in the above-mentioned interpretive letters, (b)
will not be permitted or entitled to tender such Original Senior Debentures in
the Exchange Offer and (c) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or other
transfer of such Original Senior Debentures unless such sale is made pursuant to
an exemption from such requirements. In addition, as described below, if any
broker-dealer holds Original Senior Debentures acquired for its own account as a
result of market-making or other trading activities and exchanges such Original
Senior Debentures for Exchange Senior Debentures, then such broker-dealer must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such Exchange Senior Debentures.
Each holder of Original Senior Debentures who wishes to exchange Original
Senior Debentures for Exchange Senior Debentures in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Company, (ii) any
Exchange Senior Debentures to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such Exchange Senior Debentures, and (iv) if such holder is
not a broker-dealer, such holder is not engaged in, and does not intend to
engage in, a distribution (within the meaning of the Securities Act) of such
Exchange Senior Debentures. In addition, the Company may require such holder, as
a condition to such holder's eligibility to participate in the Exchange Offer,
to furnish to the Company (or an agent thereof) in writing information as to the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Exchange Act) on behalf of whom such holder holds the Senior Debentures to be
exchanged in the Exchange Offer. Each broker-dealer that receives Exchange
Senior Debentures for its own account pursuant to the Exchange Offer must
acknowledge that it acquired the Original Senior Debentures for its own account
as the result of market-making activities or other trading activities and must
agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Senior Debentures.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Company believes that
Participating Broker-Dealers who acquired Original Senior Debentures for their
own accounts as a result of market-making activities or other trading activities
may fulfill their prospectus delivery requirements with respect to the Exchange
Senior Debentures received upon exchange of such Original Senior Debentures
(other than Original Senior Debentures which represent an unsold allotment from
the initial sale of the Original Senior Debentures) with a prospectus meeting
the requirements of the Securities Act, which may be the prospectus prepared for
an exchange offer so long as it contains a description of the plan of
distribution with respect to the resale of such Exchange Senior Debentures.
Accordingly, this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer during the period referred to
below in connection with resales of Exchange Senior Debentures received in
exchange for Original Senior Debentures where such Original Senior Debentures
were acquired by such Participating Broker-Dealer for its own account as a
result of market-making or other trading activities. Subject to certain
provisions set forth in the Registration Agreement, the Company has agreed that
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of such
Exchange Senior Debentures for a period ending 90 days after the Expiration Date
(subject to extension under certain limited circumstances described below) or,
if earlier, when all such Exchange Senior Debentures have been disposed of by
such Participating Broker-Dealer. See "Plan of Distribution." However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Exchange Senior Debentures received in exchange for Original
Senior Debentures pursuant to the Exchange Offer must notify the Company, or
cause the Company to be notified, on or prior to the
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<PAGE> 28
Expiration Date, that it is a Participating Broker-Dealer. Such notice may be
given in the space provided for that purpose in the Letter of Transmittal or may
be delivered to the Exchange Agent at one of the addresses set forth herein
under "-- Exchange Agent." Any Participating Broker-Dealer who is an "affiliate"
of the Company may not rely on such interpretive letters and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Original
Senior Debentures pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that upon receipt of notice from the
Company of the occurrence of any event or the discovery of (i) any fact which
makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or (ii) any fact which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading, or (iii) of the occurrence of
certain other events specified in the Registration Agreement, such Participating
Broker-Dealer will suspend the sale of Exchange Senior Debentures pursuant to
this Prospectus until the Company has amended or supplemented this Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer, or the Company has
given notice that the sale of the Exchange Senior Debentures may be resumed, as
the case may be. If the Company gives such notice to suspend the sale of the
Exchange Senior Debentures, it shall extend the 90-day period referred to above
during which Participating Broker-Dealers are entitled to use this Prospectus in
connection with the resale of Exchange Senior Debentures by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales of
the Exchange Senior Debentures or to and including the date on which the Company
has given notice that the sale of Exchange Senior Debentures may be resumed, as
the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Original Senior Debentures
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth under "-- Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Original Senior Debentures to be withdrawn,
the aggregate principal amount of Original Senior Debentures to be withdrawn,
and, if certificates for such Original Senior Debentures have been tendered, the
name of the registered holder of the Original Senior Debentures as set forth on
such certificates if different from that of the person who tendered such
Original Senior Debentures. If certificates representing Original Senior
Debentures have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such certificates, the tendering holder
must submit the serial numbers shown on the particular certificates to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution, except in the case of Original Senior Debentures tendered
for the account of an Eligible Institution. If Original Senior Debentures have
been tendered pursuant to the procedures for book-entry transfer set forth in
"-- Procedures for Tendering Original Senior Debentures -- Book-Entry Transfer,"
the notice of withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawal of Original Senior Debentures. Withdrawals of
tenders of Original Senior Debentures may not be rescinded. Original Senior
Debentures properly withdrawn will not be deemed validly tendered for purposes
of the Exchange Offer, but may be retendered at any subsequent time on or prior
to the Expiration Date by following any of the procedures described above under
"-- Procedures for Tendering Original Senior Debentures."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Company, any affiliates or assigns of the Company, the Exchange
Agent nor any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur
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<PAGE> 29
any liability for failure to give any such notification. Any Original Senior
Debentures which have been tendered but which are withdrawn will be returned to
the holder thereof promptly after withdrawal.
INTEREST PAYMENTS ON EXCHANGE SENIOR DEBENTURES
Holders of Original Senior Debentures whose Original Senior Debentures are
accepted for exchange will not receive interest on such Original Senior
Debentures after the initial payment of interest on December 31, 1997, and will
be deemed to have waived the right to receive any interest on such Original
Senior Debentures after such date. Holders of Original Senior Debentures as of
December 15, 1997 (the record date for the initial payment of interest on
December 31, 1997), including such holders who tender their Original Senior
Debentures pursuant to the Exchange Offer, will be entitled to receive such
payment of interest. Holders of Original Senior Debentures (if not exchanged
pursuant to the Exchange Offer) and Exchange Senior Debentures as of June 15,
1998 (the record date for the payment of interest on June 30, 1998) will be
entitled to receive interest accumulated from and after January 1, 1998.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to accept for
exchange, or to exchange, any Original Senior Debentures for any Exchange Senior
Debentures, and, as described below, may terminate the Exchange Offer (whether
or not any Original Senior Debentures have theretofore been accepted for
exchange) or may waive any conditions to or amend the Exchange Offer, if any of
the following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the Exchange Senior Debentures issued
pursuant to the Exchange Offer in exchange for Original Senior Debentures
to be offered for resale, resold and otherwise transferred by holders
thereof (other than broker-dealers and any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Exchange
Senior Debentures are acquired in the ordinary course of such holders'
business and such holders have no arrangement or understanding with any
person to participate in the distribution of such Exchange Senior
Debentures; or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Company, would reasonably be expected
to impair its ability to proceed with the Exchange Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement, or proceedings shall have been initiated or, to the knowledge of
the Company, threatened for that purpose, or any governmental approval has
not been obtained, which approval the Company shall, in its sole
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby.
If the Company determines in its sole and absolute discretion, subject to
reasonableness, that any of the foregoing events or conditions has occurred or
exists or has not been satisfied, it may, subject to applicable law, terminate
the Exchange Offer (whether or not any Original Senior Debentures have
theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such waiver
or amendment constitutes a material change to the Exchange Offer, the Company
will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Original
Senior Debentures and will extend the Exchange Offer to the extent required by
Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required documents,
questions, requests for assistance, and requests for
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<PAGE> 30
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent as follows:
<TABLE>
<S> <C>
By Mail: The Bank of New York
101 Barclay Street, 7E
New York, New York 10286
Attention: Reorganization Section
Vincent J. Hingoor
By Overnight Mail The Bank of New York
or Courier: 101 Barclay Street
Corporate Company Services Window
Ground Level
New York, New York 10286
Attention: Reorganization Section
Vincent J. Hingoor
By Hand: The Bank of New York
101 Barclay Street
Corporate Company Services Window
Ground Level
New York, New York 10286
Attention: Reorganization Section
Vincent J. Hingoor
Facsimile Transmission Number: (212) 815-6339
Confirm by Telephone: (212) 815-4146
Information: (212) 815-4146
</TABLE>
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Original Senior Debentures, and in handling or
tendering for their customers.
Holders who tender their Original Senior Debentures for exchange will not
be obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Senior Debentures are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Original Senior
Debentures tendered, or if a transfer tax is imposed for any reason other than
the exchange of Original Senior Debentures in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
The Company will not make any payment to brokers, dealers or other nominees
soliciting acceptances of the Exchange Offer.
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<PAGE> 31
DESCRIPTION OF EXCHANGE SENIOR DEBENTURES
The terms of the Exchange Senior Debentures are identical in all material
respects to the Original Senior Debentures, except that (i) the Original Senior
Debentures have not been registered under the Securities Act, are subject to
certain restrictions on transfer and are entitled to certain rights under the
applicable Registration Agreement (which rights will terminate upon consummation
of the Exchange Offer, except under limited circumstances), and (ii) the
Exchange Senior Debentures will not provide for any increase in the interest
thereon, except under limited circumstances. Specifically, the Registration
Agreement provides that interest will accrue upon the principal amount of the
Original Senior Debentures at a rate of 0.25% in the event that: (i) neither a
registration statement ("Exchange Offer Registration Statement") nor a shelf
registration statement ("Shelf Registration Statement") with respect to the
Senior Debentures is filed with the Commission on or prior to November 28, 1997;
(ii) neither the Exchange Offer Registration Statement nor the Shelf
Registration Statement is declared effective by the Commission on or prior to
December 28, 1997; (iii) the Company has not consummated the Exchange Offer
prior to January 27, 1998; or (iv) a Shelf Registration Statement has been
declared effective and such Shelf Registration Statement ceases to be effective
at any time prior to the expiration of the period referred to in Rule 144(k) of
the Securities Act. The Registration Agreement provides that additional interest
will accrue upon the principal amount of the Exchange Senior Debentures at a
rate of 0.25% after the consummation of the Exchange Offer only if a Shelf
Registration Statement is required to be filed because of changes in the law or
Commission policy and: (i) the Shelf Registration Statement is not filed within
45 days of an event that triggers the obligation to file the Shelf Registration
Statement; (ii) the Shelf Registration Statement is not declared effective by
the Commission on or prior to the 30th day after the date such Shelf
Registration Statement was required to be filed; or (iii) a Shelf Registration
Statement has been declared effective and such Shelf Registration Statement
ceases to be effective at any time prior to the expiration of the period
referred to in Rule 144(k) of the Securities Act. Holders of Original Senior
Debentures should review the information set forth under "Risk Factors --
Consequences of a Failure to Exchange Original Senior Debentures" and
"Description of Original Senior Debentures."
The Senior Debentures are to be issued under an Indenture, as supplemented
from time to time, between the Company and The Bank of New York, as Trustee.
Upon consummation of the Exchange Offer, the Indenture will be qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). This
summary of certain terms and provisions of the Exchange Senior Debentures and
the Indenture does not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, some of which are not otherwise defined herein,
are qualified in their entirety by reference to all of the provisions of the
Indenture and those terms made a part of the Indenture by the Trust Indenture
Act.
GENERAL
The Exchange Senior Debentures will bear interest from January 1, 1998 at
the annual rate of 10.35% of the principal amount thereof, payable semi-annually
in arrears on June 30 and December 31 of each year, commencing June 30, 1998, to
the person in whose name each Exchange Senior Debenture is registered at the
close of business on June 15 or December 15 next preceding such Interest Payment
Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Exchange Senior Debentures is not a Business Day,
then payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that if such next succeeding Business Day
falls in the next succeeding calendar year, then such payment shall be made on
the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
The Exchange Senior Debentures will be issued in denominations of $100,000
and integral multiples of $1,000 above $100,000. The Exchange Senior Debentures
will mature on June 30, 2002 (the "Stated Maturity Date").
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<PAGE> 32
The Exchange Senior Debentures will not be redeemable by the Company, in
whole or in part, prior to the Stated Maturity Date.
The Exchange Senior Debentures will represent the only borrowings of the
Company outstanding at the parent level at the completion of the offering. The
Indenture permits the Company or its Subsidiaries to incur additional
indebtedness at the parent or subsidiary level in the event the indebtedness
does not exceed certain levels of Consolidated Net Worth. See "-- Covenants of
the Company." Because the Company is a holding company, the right of the Company
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Exchange Senior Debentures to benefit indirectly from such
distribution) is subject to the prior claims of creditors of that subsidiary
(including depositors in the case of the Bank), except to the extent that the
Company may itself be recognized as a creditor of that subsidiary. At June 30,
1997, the subsidiaries of the Company had total liabilities (excluding
liabilities owed to the Company) of approximately $1.7 billion, including
deposits. Accordingly, the Exchange Senior Debentures will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of Exchange Senior Debentures should look only to the
assets of the Company for payments on the Exchange Senior Debentures.
In addition, as the Company is a non-operating holding company almost all
of the operating assets of the Company are owned by the Company's subsidiaries.
The Company relies primarily on dividends from such subsidiaries to meet its
obligations for payment of principal and interest on its outstanding debt
obligations and corporate expenses. The Bank is subject to certain restrictions
imposed by federal law on any extensions of credit to, and certain other
transactions with, the Company and certain other affiliates, and on investments
in stock or other securities thereof. Such restrictions prevent the Company and
such other affiliates from borrowing from the Bank unless the loans are secured
by various types of collateral. Further, such secured loans, other transactions
and investments by the Bank are generally limited in amount as to the Company
and as to each of such other affiliates to 10% of such Bank's capital and
surplus and as to the Company and all of such other affiliates to an aggregate
of 20% of such Bank's capital and surplus. In addition, payment of dividends to
the Company by the subsidiary banks is subject to ongoing review by banking
regulators and is subject to various statutory limitations and in certain
circumstances requires approval by banking regulatory authorities. At June 30,
1997, the Bank (without regard to limitations set forth in the Indenture and
prior to the contribution of $25 million to the capital of the Bank) could have
declared additional dividends to the Company without prior regulatory approval
of approximately $22 million. Federal and state regulatory agencies also have
the authority to limit further the Bank's payment of dividends based on other
factors, such as the maintenance of adequate capital for the Bank which could
reduce the amount of dividends otherwise payable.
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Exchange Senior Debentures constitutes an Event of
Default (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) failure for 30 days to pay any interest on the Exchange Senior
Debentures, when due; or
(ii) failure to pay any principal or premium, if any, on the Exchange
Senior Debentures when due whether at maturity, upon redemption, by
declaration of acceleration of maturity or otherwise; or
(iii) failure to observe or perform, in any material respect, certain
other covenants contained in the Indenture for 90 days after written notice
to the Company from the Trustee or the holders of at least 25% in aggregate
outstanding principal amount of Exchange Senior Debentures; or
(iv) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or any Principal Subsidiary
Bank (as defined below) having an aggregate principal amount outstanding in
excess of $2,000,000, or under any mortgage, indenture or instrument
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<PAGE> 33
(including the Indenture) under which there may be issued or by which there
may be secured or evidenced any indebtedness for money borrowed by the
Company or any Principal Subsidiary Bank having an aggregate principal
amount outstanding in excess of $2,000,000, which default (a) shall
constitute a failure to pay any portion of the principal of such
indebtedness when due and payable after the expiration of any applicable
grace period with respect thereto or (b) shall have resulted in such
indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable, without, in the
case of clause (a), such indebtedness having been discharged or without, in
the case of clause (b), such indebtedness having been discharged or such
acceleration having been rescinded or annulled, in each such case within a
period of 30 days after there shall have been given written notice to the
Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in aggregate principal amount of the Exchange Senior
Debentures specifying such default and stating that such notice is a
"Notice of Default" under the Indenture, unless in either case (a) or (b)
such default is contested in good faith by appropriate proceedings; or
(v) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of the
Exchange Senior Debentures have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee. If an
Event of Default (other than an Event of Default described in clause (v) above)
occurs, the Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Exchange Senior Debentures may declare the principal due
and payable immediately upon an Event of Default. The holders of a majority in
aggregate outstanding principal amount of the Exchange Senior Debentures may
annul such declaration and waive the default if the default (other than the
non-payment of the principal of the Exchange Senior Debentures which has become
due solely by such acceleration) has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Trustee. If an Event of Default
described in clause (v) above occurs, the principal amount of the Exchange
Senior Debentures shall automatically become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any holder.
The holders of a majority in aggregate outstanding principal amount of the
Exchange Senior Debentures affected thereby may, on behalf of the holders of all
the Exchange Senior Debentures, waive any past default, except a default in the
payment of principal (or premium, if any) on or interest (unless such default
has been cured and a sum sufficient to pay all matured installments of interest
(and premium, if any) and principal due otherwise than by acceleration has been
deposited with the Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Exchange Senior Debenture.
COVENANTS OF THE COMPANY
In addition to various other covenants of the Company, the Indenture
provides for the following provisions relating to the Company's business:
Limitation Upon Disposition of the Voting Stock of a Principal Subsidiary
Bank. The Indenture contains a covenant by the Company that it will not sell,
assign, transfer, grant a security interest in or otherwise dispose of any
shares of, securities convertible into or options, warrants or rights to
subscribe for or purchase shares of Voting Stock (as defined below) (other than
directors' qualifying shares) of any Principal Subsidiary Bank and that it will
not permit any Principal Subsidiary Bank to issue (except to the Company) shares
of, securities convertible into, or options, warrants or rights to subscribe for
or purchase, shares of Voting Stock of any Principal Subsidiary Bank, except for
sales, assignments, transfers, grants of security interests or other
dispositions which: (i) are for fair market value (as determined by the Board of
Directors of the Company) and, after giving effect to such dispositions and to
any potential dilution, the Company will own not less than 80% of the shares of
Voting Stock of such Principal Subsidiary Bank then issued and outstanding free
and clear of any security interest; (ii) are made in compliance with an order of
a court or regulatory authority of competent jurisdiction, a condition imposed
by any such court or authority permitting the acquisition by the Company,
directly or indirectly, of any other bank or entity the activities of which are
legally
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<PAGE> 34
permissible for a bank holding company or a subsidiary thereof to engage in, or
an undertaking made to such authority in connection with such an acquisition;
(iii) are made where such Principal Subsidiary Bank, having obtained any
necessary regulatory approvals, unconditionally guarantees payment when due of
the principal of and interest on the Exchange Senior Debentures; or (iv) are
made to the Company or any wholly-owned Subsidiary if such wholly-owned
Subsidiary agrees to be bound by the covenant as if it were the Company and the
Company agrees to maintain such wholly-owned Subsidiary as a wholly-owned
Subsidiary. Notwithstanding the foregoing, any Principal Subsidiary Bank may be
merged into or consolidated with another banking institution organized under the
laws of the United States, any State thereof or the District of Columbia, if
after giving effect to such merger or consolidation, the Company or any
wholly-owned Subsidiary owns at least 80% of the Voting Stock of such other
banking institution then issued and outstanding free and clear of any security
interest and if, immediately after giving effect thereto and treating any such
resulting banking institution thereafter as such Principal Subsidiary Bank and a
Subsidiary, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing. A "Principal Subsidiary Bank" is defined in the Indenture to mean
any Subsidiary which is a bank or a savings association and has total assets
equal to 30% or more of the consolidated assets of the Company determined as of
the date of the most recent audited financial statements of such entities. At
present, the only Principal Subsidiary Bank is the Bank.
Limitation on Funded Indebtedness and Indebtedness. The Indenture further
provides that the Company will not, and will not cause or permit any Subsidiary
to, create, assume, guarantee, incur or in any manner become, directly or
indirectly, liable in respect of any (i) Funded Indebtedness (as defined below)
unless, after giving effect thereto, Funded Indebtedness shall not exceed 50% of
Consolidated Net Worth and (ii) Indebtedness (as defined below) unless, after
giving effect thereto, Indebtedness shall not exceed 55% of Consolidated Net
Worth.
In addition, any Indebtedness incurred by any Subsidiary subsequent to the
issuance of the Senior Debentures shall not include any covenant which would
restrict the payment of dividends to the Company.
Consolidated Tangible Equity Capital. The Indenture further provides that
the Company will not at any time permit Consolidated Tangible Equity Capital (as
defined below) to be less than $90,000,000.
Capital Adequacy. The Company shall not allow the Bank to be classified as
other than "well capitalized" as defined by 12 C.F.R. Section 565.4 (or its
equivalent as such regulation may be amended from time to time).
Restrictions as to Dividends and Certain Other Payments. The Indenture
further provides that the Company will not, and will not permit any Subsidiary
to, declare or pay any dividend or make any other distribution on its capital
stock (other than on account of capital stock of a Subsidiary owned legally and
beneficially by the Company or a Subsidiary) or to its prospective stockholders
(other than dividends or distributions payable on its capital stock) or
purchase, redeem or otherwise acquire for value (except pursuant to a bona fide
pledge or employee benefit plan) any of its capital stock (other than on account
of capital stock of a Subsidiary owned legally and beneficially by the Company
or a Subsidiary) (each, a "Restricted Payment") unless: (i) immediately before
and after giving effect to such Restricted Payment, the aggregate amount of all
Restricted Payments declared or made after March 31, 1997 would not exceed the
sum of (a) $10,000,000 plus (b) 75% (or 100% in the case of a deficit) of
Consolidated Net Income (as defined below) for the period commencing March 31,
1997 and ending on and including the date such Restricted Payment is declared or
made (plus 100% of the proceeds of issuances of equity securities after March
31, 1997); (ii) at the time of and immediately before such declaration is made
and after giving effect to, such Restricted Payment, no Default or Event of
Default exists or would exist as a result of such Restricted Payment; and (iii)
no Default or Event of Default shall have occurred within 365 days of the
declaration of such Restricted Payment.
With respect to the description of the terms of the Indenture, as set forth
in this Prospectus, the following terms shall have the following meanings:
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<PAGE> 35
"Capitalized Lease" shall mean any rental obligation which, under generally
accepted accounting principles, is or will be required to be capitalized on the
books of the Company or any Subsidiary, taken at the amount thereof accounted
for as indebtedness (net of interest expense) in accordance with such
principles.
"Consolidated Net Worth" shall mean Stockholders' Equity (as defined below)
plus the Allowance for Loan Losses (as defined below) plus Deferred Loan Fees
(as defined below).
"Consolidated Tangible Equity Capital" shall mean Consolidated Net Worth
minus Goodwill (as defined below).
"Funded Indebtedness" shall mean all Indebtedness that matures more than
one year from the date of creation thereof, or that is extendible or renewable
at the option of any party thereto to a date more than one year from the date of
creation thereof (whether or not renewed or extended).
"Indebtedness" shall mean all indebtedness, liabilities and other
obligations direct or contingent (other than deferred income taxes and other
credits, outside minority interests and items of Stockholders' Equity (as
defined below) which would, in accordance with generally accepted accounting
principles, be classified upon the consolidated balance sheet of the Company as
liabilities, but in any event including without limitation: (i) all guarantees,
other than (a) guarantees on secured indebtedness and (b) guarantees of
obligations of Subsidiaries under employment and change in control agreements;
(ii) all indebtedness, liabilities and other obligations arising under any
conditional sale or other title retention agreement, whether or not the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property; provided, however,
that the terms "Funded Indebtedness" and "Indebtedness" shall not include any
obligation of the Company or of any Subsidiary incurred in the ordinary course
of its business, with respect to: (a) any deposits with it or funds collected by
it; (b) any banker's acceptance or letter of credit issued by it; (c) any check,
note, certificate of deposit, money order, traveler's check, draft or bill of
exchange issued, accepted or endorsed by it; (d) any discount with, borrowing
from, or other obligation to any Federal Reserve Bank, the Federal Deposit
Insurance Corporation or any Federal Home Loan Bank (or successor organization)
which discount or borrowing is in the ordinary course of its banking business
and not incurred in connection with any unusual or extraordinary "rescue loan"
or substantially similar investment by such Federal Reserve Bank, the Federal
Deposit Insurance Corporation or the Federal Home Loan Bank (or successor
organization); (e) any agreement, made by it in the ordinary course of its
banking business, to purchase or repurchase securities, loans or federal funds,
or to participate in any such purchase or repurchase; (f) any transaction made
by it in the ordinary course of its banking business in the nature of any
extension of credit, whether in the form of a commitment, guarantee or
otherwise, undertaken by it for the account of a third party with the
application by it of the same banking considerations and legal lending limits
that would be applicable if the transaction were a loan to such party; (g) any
transaction in which it acts solely in a fiduciary or agency capacity; (h) other
obligations incurred by it in the ordinary course of its banking, mortgage
banking or trust business to its customers solely in their capacities as such;
(i) any other liability or obligation of such Subsidiary incurred in the
ordinary course of its banking business not involving any obligation for
borrowed money; (j) Capitalized Leases; (k) any borrowings under mortgage
warehousing lines of credit; (l) any borrowings under the Company's revolving
line of credit with a maturity date of less than one year up to an aggregate
amount at any time outstanding equal to 30% of Consolidated Net Worth; and (m)
drafts outstanding or official bank checks outstanding used to fund mortgage
loan volume; provided, however, that notwithstanding the foregoing, Indebtedness
shall not be deemed to include the guaranty by the Company of any secured
Indebtedness of any Subsidiary which is permitted to be incurred under the
Indenture.
"Stockholders' Equity," "Allowance for Loan Losses," "Deferred Loan Fees,"
"Consolidated Assets," "Consolidated Net Income," "Consolidated Net Loss," and
"Goodwill" shall be defined according to generally accepted accounting
principles applicable to the Company and in effect on the Issue Date.
"Subsidiary" shall mean with respect to any Person, (i) any corporation at
least a majority of the outstanding Voting Stock of which is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of whose outstanding partnership
or similar interests shall at the time be owned by such Person, or by one or
more of its Subsidiaries, or by such Person and one or more of its
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<PAGE> 36
Subsidiaries, and (iii) any limited partnership of which such Person or any of
its Subsidiaries is a general partner.
"Voting Stock" shall mean the stock of the class or classes having general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such corporation (irrespective of
whether or not at the time stock of any other class or classes shall have
contingent voting rights).
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to the
Company, unless: (i) the Company is the surviving Person in the transaction in
case the Company consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
State or the District of Columbia, and such successor Person expressly assumes
the Company's obligations on the Exchange Senior Debentures; (ii) immediately
after giving effect thereto, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing; and (iii) certain other conditions as prescribed in
the Indenture are met.
MODIFICATION OF INDENTURE
From time to time the Company and the Trustee may, without the consent of
the holders of Exchange Senior Debentures, amend, waive or supplement the
Indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies (provided that any such action does not
materially adversely affect the interest of the holders of Exchange Senior
Debentures) and qualifying, or maintaining the qualification of, the Indenture
under the Trust Indenture Act. The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of a 66 2/3% in
principal amount of Exchange Senior Debentures, to modify the Indenture in a
manner affecting the rights of the holders of Exchange Senior Debentures;
provided, that no such modification may, without the consent of the holders of
each outstanding Senior Debenture so affected, (i) change the Stated Maturity,
or reduce the principal amount of the Exchange Senior Debentures or reduce the
rate or extend the time of payment of interest thereon or (ii) reduce the
percentage of principal amount of Exchange Senior Debentures, the holders of
which are required to consent to any such modification of the Indenture.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Exchange Senior
Debentures not previously delivered to the Trustee for cancellation (i) have
become due and payable or (ii) will become due and payable at maturity within
one year, and the Company deposits or causes to be deposited with the Trustee
funds, in trust, for the purpose and in an amount sufficient to pay and
discharge the entire indebtedness on the Exchange Senior Debentures not
previously delivered to the Trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit or to the Stated
Maturity Date, as the case may be, then the Indenture will cease to be of
further effect (except for certain obligations of the Company, including as to
the Company's obligations to pay all other sums due pursuant to the Indenture
and to provide the officers' certificates and opinions of counsel described
therein), and the Company will be deemed to have satisfied and discharged the
Indenture.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
The Exchange Senior Debentures will be in blocks having an aggregate
principal amount of not less than $100,000 and may be transferred or exchanged
only in such blocks in the manner and at the offices described below.
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<PAGE> 37
The Exchange Senior Debentures initially will be represented by one or more
Exchange Senior Debentures in registered, global form (collectively, the "Global
Senior Debentures"). The Global Senior Debentures will be deposited upon
issuance with, or on behalf of, DTC, in New York, New York, and registered in
the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
Except as set forth below, the Global Senior Debentures may be transferred,
in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee. Beneficial interests in the Global Senior Debentures may not
be exchanged for Senior Debentures in certificated form except in the limited
circumstances described below. See "-- Exchange of Book-Entry Senior Debentures
for Certificated Senior Debentures."
Exchange Senior Debentures will be subject to certain restrictions on
transfer and will bear a restrictive legend as described under "Notice to
Investors." In addition, transfer of beneficial interests in the Global Senior
Debentures will be subject to the applicable rules and procedures of DTC and its
direct or indirect participants, which may change from time to time.
DEPOSITARY PROCEDURES
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established
by it, (i) upon deposit of the Global Senior Debentures, DTC will credit the
accounts of Participants participating in the exchange with the respective
principal amounts of the Senior Debentures represented by such Global Senior
Debenture and (ii) ownership of such interests in the Global Senior Debentures
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Senior Debentures).
Investors in the Global Senior Debentures may hold their interests therein
directly through DTC if they are participants in such system, or indirectly
through organizations which are participants in such system. All interests in a
Global Senior Debenture may be subject to the procedures and requirements of
DTC. The laws of some states require that certain persons take physical delivery
in certificated form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Senior Debenture to such persons will
be limited to that extent. Because DTC can act only on behalf of Participants,
which in turn act on behalf of Indirect Participants and certain banks, the
ability of a person having beneficial interests in a Global Senior Debenture to
pledge such interests to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interests, may be affected
by the lack of a physical certificate evidencing such interests. For certain
other restrictions on the transferability of the Senior Debentures, see
"-- Exchange of Book-Entry Senior Debentures for Certificated Senior Debentures"
and "-- Exchange of Certificated Senior Debentures for Book-Entry Senior
Debentures."
Except as described below, owners of interests in the Global Senior
Debentures will not have Senior Debentures registered in their name, will not
receive physical delivery of Senior Debentures in certificated form and will not
be considered the registered owners or holders thereof for any purpose.
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<PAGE> 38
Payments in respect of the Global Senior Debentures registered in the name
of DTC or its nominee will be made to DTC or its nominee, as the case may be, as
the registered owner of the Global Senior Debenture representing such Senior
Debentures. None of the Company, the Trustee, any paying agent or any other
agent of the Company or the Trustee will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Senior Debentures, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Senior Debentures or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Company that its current practice, upon receipt of any payment in
respect of securities such as the Senior Debentures, is to credit the accounts
of the relevant Participants with the payment on the payment date, in amounts
proportionate to their beneficial interests in the principal amount of the
Global Senior Debenture as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of Senior
Debentures will be governed by standing instructions and customary practices and
will be the responsibility of the Participants or the Indirect Participants and
will not be the responsibility of DTC, the Trustee or the Company. Neither the
Company nor the Trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the Senior Debentures, and
the Company and the Trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee for all purposes.
Secondary market trading activity in interests in the Global Senior
Debentures will settle in immediately available funds, subject in all cases to
the rules and procedures of DTC and its participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will settle in same-day funds.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Senior Debentures only at the direction of one or
more Participants to whose account with DTC interests in the Global Senior
Debentures are credited and only in respect of such portion of the aggregate
principal amount of the Senior Debentures as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default, DTC reserves the right to exchange the Global Senior Debentures for
legended Exchange Senior Debentures in certificated form and to distribute such
Exchange Senior Debentures to its Participants.
The information in this section concerning DTC and their book-entry systems
has been obtained from sources that the Company believe to be reliable, but the
Company takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Senior Debentures among participants in DTC, it is
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trustee will have any responsibility for the performance by DTC or its
Participants or Indirect Participants of its obligations under the rules and
procedures governing its operations.
EXCHANGE OF BOOK-ENTRY SENIOR DEBENTURES FOR CERTIFICATED SENIOR DEBENTURES
A Global Senior Debenture is exchangeable for Exchange Senior Debentures in
registered certificated form if (i) DTC (x) notifies the Company that it is
unwilling or unable to continue as Depositary for the Global Senior Debenture
and the Company thereupon fails to appoint a successor Depositary within 90 days
or (y) has ceased to be a clearing agency registered under the Exchange Act,
(ii) the Company in its sole discretion elects to cause the issuance of the
Exchange Senior Debentures in certificated form or (iii) there shall have
occurred and be continuing an Event of Default. In all cases, certificated
Exchange Senior Debentures delivered in exchange for any Global Senior Debenture
or beneficial interests therein will be registered in the names, and issued in
any approved denominations, requested by or on behalf of the Depositary (in
accordance with its customary procedures) and will bear the legend referred to
in "Notice to Investors," unless the Trustee determines otherwise in compliance
with applicable law.
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<PAGE> 39
EXCHANGE OF CERTIFICATED SENIOR DEBENTURES FOR BOOK-ENTRY SENIOR DEBENTURES
Other Exchange Senior Debentures issued in certificated form may not be
exchanged for beneficial interests in any Global Senior Debenture unless such
exchange occurs in connection with a transfer of such Exchange Senior Debentures
and the transferor first delivers to the Trustee a written certificate (in the
form provided in the Indenture) to the effect that such transfer will comply
with the appropriate transfer restrictions applicable to such Senior Debentures.
PAYMENT AND PAYING AGENT
Payments in respect of the Exchange Senior Debentures held in global form
shall be made to the Depositary, which shall credit the relevant accounts at the
Depositary on the applicable Interest Payment Dates or in respect of the
Exchange Senior Debentures that are not held by the Depositary, such payments
shall be made by check mailed to the address of the holder entitled thereto as
such address shall appear on the register. The paying agent (the "Paying Agent")
shall initially be the Trustee and any co-paying agent chosen by the Trustee and
acceptable to the Company.
REGISTRAR AND TRANSFER AGENT
The Trustee will act as registrar and transfer agent for the Exchange
Senior Debentures.
Registration of transfers of the Exchange Senior Debentures will be
effected without charge by or on behalf of the Company, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange.
RESTRICTIONS ON TRANSFER
The Exchange Senior Debentures will be issued, and the Senior Debentures
may be transferred only, in blocks having an aggregate principal amount of not
less than $100,000. Any such transfer of Senior Debentures in a block having an
aggregate principal amount of less than $100,000 shall be deemed to be void and
of no legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such Senior Debentures for any purpose, including but not limited to
the receipt of payments on such Senior Debentures, and such transferee shall be
deemed to have no interest whatsoever in such Senior Debentures.
GOVERNING LAW
The Indenture and the Exchange Senior Debentures will be governed by and
construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE TRUSTEE
The Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Trustee is under no obligation to
exercise any of the powers vested in it by the Indenture at the request of any
holder of Exchange Senior Debentures, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties if
the Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
DESCRIPTION OF ORIGINAL SENIOR DEBENTURES
The terms of the Original Senior Debentures are identical in all material
respects to the Exchange Senior Debentures, except that (i) the Original Senior
Debentures have not been registered under the Senior Debentures Act, are subject
to certain restrictions on transfer and are entitled to certain rights under the
Registration Agreement (which rights will terminate upon consummation of the
Exchange Offer, except under limited circumstances), and (ii) the Exchange
Senior Debentures will not provide for any liquidated
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<PAGE> 40
damages thereon, except under limited circumstances. Specifically, the
Registration Agreement provides that additional interest will accrue upon the
principal amount of the Original Senior Debentures at a rate of 0.25% in the
event that: (i) neither an Exchange Offer Registration Statement nor a Shelf
Registration Statement with respect to the Senior Debentures is filed with the
Commission on or prior to November 28, 1997; (ii) if neither the Exchange Offer
Registration Statement nor the Shelf Registration Statement is declared
effective by the Commission on or prior to December 28, 1997; (iii) the Company
has not consummated the Exchange Offer prior to January 27, 1998; or (iv) a
Shelf Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time prior to the
expiration of the period referred to in Rule 144(k) of the Securities Act. The
Registration Agreement provides that additional interest will accrue upon the
principal amount of the Exchange Senior Debentures at a rate of 0.25% after the
consummation of the Exchange Offer only if a Shelf Registration Statement is
required to be filed because of changes in the law or Commission policy and: (i)
the Shelf Registration Statement is not filed within 45 days of an event that
triggers the obligation to file the Shelf Registration Statement; (ii) the Shelf
Registration Statement is not declared effective by the Commission on or prior
to the 30th day after the date such Shelf Registration Statement was required to
be filed; or (iii) a Shelf Registration Statement has been declared effective
and such Shelf Registration Statement ceases to be effective at any time prior
to the expiration of the period referred to in Rule 144(k) of the Securities
Act. Holders of Original Senior Debentures should review the information set
forth under "Risk Factors -- Consequences of a Failure to Exchange Original
Senior Debentures" and "Description of Exchange Senior Debentures."
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Senior Debentures for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Senior Debentures.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Senior Debentures
received in exchange for Original Senior Debentures if such Original Senior
Debentures were acquired by such broker-dealer as a result of market-making
activities or other trading activities.
The Company has agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such Exchange Senior Debentures for a period ending
90 days after the Expiration Date (subject to extension under certain limited
circumstances described herein) or, if earlier, when all such Exchange Senior
Debentures have been disposed of by such Participating Broker-Dealer. However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Exchange Senior Debentures received in exchange for Original
Senior Debentures pursuant to the Exchange Offer must notify the Company, or
cause the Company to be notified, on or prior to the Expiration Date, that it is
a Participating Broker-Dealer. Such notice may be given in the space provided
for that purpose in the Letter of Transmittal or may be delivered to the
Exchange Agent at one of the addresses set forth herein under "The Exchange
Offer -- Exchange Agent." See "The Exchange Offer -- Resales of Exchange Senior
Debentures."
The Company will not receive any proceeds from any sale of Exchange Senior
Debentures by broker-dealers. Exchange Senior Debentures received by
broker-dealers for their own accounts pursuant to the Exchange Offer may be sold
from time to time in one or more transactions, in the over-the-counter market,
in negotiated transactions, through the writing of options on the Exchange
Senior Debentures or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such Exchange Senior Debentures.
Any broker-dealer that resells Exchange Senior Debentures that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Senior Debentures
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit of any such resale of Exchange Senior Debentures and any
commissions or concessions received by any
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<PAGE> 41
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Senior Debentures) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Senior Debentures
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Senior Debentures and certain matters related
thereto, will be passed upon for the Company by Alston & Bird LLP, Washington,
D.C. and Brown & Wood LLP, New York, New York.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
September 30, 1996, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated by reference, and
have been so incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
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<PAGE> 42
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 6
Incorporation of Certain Documents by
Reference............................ 6
Summary................................ 7
Risk Factors........................... 13
First Palm Beach Bancorp, Inc.......... 15
Use of Proceeds........................ 18
Ratio of Earnings to Fixed Charges..... 18
Capitalization......................... 19
Selected Consolidated Financial Data... 20
The Exchange Offer..................... 22
Description of Exchange Senior
Debentures........................... 31
Description of Original Senior
Debentures........................... 39
Plan of Distribution................... 40
Legal Matters.......................... 41
Experts................................ 41
</TABLE>
$35,000,000
FIRST PALM BEACH
BANCORP, INC.
OFFER TO EXCHANGE ITS
SERIES B 10.35% SENIOR DEBENTURES
DUE 2002
(PRINCIPAL AMOUNT $1,000
PER SENIOR DEBENTURE)
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933,
AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
SERIES A 10.35% SENIOR DEBENTURES
DUE 2002
(PRINCIPAL AMOUNT $1,000
PER SENIOR DEBENTURE)
--------------------
PROSPECTUS
--------------------
November 14, 1997
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