<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 14, 2000
SECURITIES ACT FILE NO. 333-93955
INVESTMENT COMPANY ACT FILE NO. 811-9771
=========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
/ / REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/X/ PRE-EFFECTIVE AMENDMENT NO. 1
/ / POST-EFFECTIVE AMENDMENT NO. AND/OR
/ / REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940
/X/ AMENDMENT NO. 1
(CHECK APPROPRIATE BOX OR BOXES)
BROADWAY STREET POOLED TRUST PREFERRED FUND A
(Exact name of registrant as specified in its declaration of trust)
c/o Stifel, Nicolaus & Company, Incorporated
501 N. Broadway
St. Louis, Missouri 63102
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
THE CORPORATION TRUST COMPANY
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
(Name, address, including zip code of agent for service)
Copies to:
DENIS P. MCCUSKER, ESQ. THOMAS S. HARMAN, ESQ.
HAROLD R. BURROUGHS, ESQ.
BRYAN CAVE LLP MORGAN, LEWIS & BOCKIUS LLP
211 NORTH BROADWAY, SUITE 3600 1800 M STREET, N.W.
ST. LOUIS, MISSOURI 63102-2750 WASHINGTON, D.C. 20036
314-259-2000 (202) 467-7662
314-259-2020 (TELECOPIER) (202) 467-7176 (TELECOPIER)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable
after the effective date of this Registration Statement.
If any securities being registered on this form will be offered on
a delayed or continuous basis in reliance on Rule 415 under the
Securities Act of 1933, as amended, other than securities offered in
connection with a dividend reinvestment plan, check the following box. / /
It is proposed that this filing will become effective (check
appropriate box):
/X/ when declared effective pursuant to section 8(c)
If appropriate, check the following box:
/ / this amendment designates a new effective date for a
previously filed registration statement.
/ /This form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act and the
Securities Act registration statement number of the earlier effective
registration statement for the same offering is -_____.
<TABLE>
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
=====================================================================================================
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE OFFERING REGISTRATION FEE
BEING REGISTERED REGISTERED<F1> PER SHARE<F1><F2> PRICE<F1> <F3>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares representing
beneficial interest 2,300,000 $25.00 $57,500,000 $15,986
=====================================================================================================
<FN>
<F1> Includes an aggregate of 300,000 Shares that may be issued in
connection with the exercise of an over-allotment option.
<F2> Estimated solely for the purpose of calculating the registration fee.
<F3> Previously paid.
</TABLE>
--------------------------
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until this
Registration Statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
========================================================================
<PAGE>
<PAGE>
<TABLE>
CROSS-REFERENCE SHEET<F*>
<CAPTION>
ITEM NUMBER IN FORM N-2 CAPTION IN PROSPECTUS
PART A - INFORMATION REQUIRED IN PROSPECTUS
<C> <C>
1. Outside Front Cover Front Cover Page
2. Inside Front and Outside Back Cover Page Front Cover Page; Underwriting
3. Fee Table and Synopsis Prospectus Summary; Fee Table
4. Financial Highlights Not Applicable
5. Plan of Distribution Front Cover Page; Prospectus Summary; Net Asset Value;
Underwriting
6. Selling Shareholders Not Applicable
7. Use of Proceeds Use of Proceeds
Investment Objective and Policies
8. General Description of the Registrant Front Cover Page; Prospectus Summary; The Fund;
Investment Objective and Policies; Investment
Restrictions; Risk Factors; Dividends and
Distributions; Additional Information
9. Management Fund Trustees; Management Arrangements
10. Capital Stock, Long-Term Debt
and Other Securities Description of the Shares
11. Defaults and Arrears on Senior Securities Not Applicable
12. Legal Proceedings Not Applicable
13. Table of Contents of the Statement
of Additional Information Not Applicable
<CAPTION>
PART B - INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<C> <C>
14. Cover Page Not Applicable
15. Table of Contents Not Applicable
16. General Information and History Not Applicable
17. Investment Objective and Policies Prospectus Summary; Investment Objective and Policies;
Investment Restrictions
18. Management Fund Trustees; Management Arrangements
19. Control Persons and Principal
Holders of Securities Management Arrangements; Underwriting
20. Investment Advisory and Other Services Management Arrangements
21. Brokerage Allocation and Other Practices Investment Objective and Policies
22. Tax Status Certain Federal Income Tax Consequences
23. Financial Statements Experts; Independent Auditors' Report; Statement of
Assets and Liabilities
</TABLE>
PART C--OTHER INFORMATION
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
[FN]
<F*> Pursuant to the General Instructions to Form N-2, all information
required to be set forth in Part B--Statement of Additional Information
has been included in Part A--The Prospectus.
<PAGE>
<PAGE>
**************************************************************************
* The information in this prospectus is not complete and may be changed. *
* The Trust may not sell these securities until the Registration *
* Statement filed with the Securities and Exchange Commission is *
* effective. This prospectus is not an offer to sell these securities *
* and we are not soliciting an offer to buy these securities in any *
* state where the offer or sale is not permitted. *
**************************************************************************
SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2000
PROSPECTUS
2,000,000 SHARES
BROADWAY STREET POOLED TRUST
PREFERRED FUND A
OFFERING PRICE $25 PER SHARE
----------------------------
Broadway Street Pooled Trust Preferred Fund A (the "Fund"), is a
Delaware business trust which is registered as a non-diversified closed-
end management investment company. The Fund intends to offer shares of
beneficial interests in the assets of the Fund (the "Shares"). The Fund
will use substantially all of the proceeds from the sale of the Shares
to purchase and hold a portfolio of trust preferred securities (the
"Portfolio Trust Preferred Securities") issued by the financing
subsidiaries of not fewer than ten bank holding companies (the
"Portfolio Issuers").
We will apply to have the Shares listed for trading on the
American Stock Exchange, Inc. The trading or "ticker" symbol of the
Shares is expected to be "PTPA."
INVESTING IN THE SHARES INVOLVES CERTAIN RISKS WHICH ARE DESCRIBED IN
THE "RISK FACTORS" SECTION BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
----------------------------
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS OR DEPOSIT
ACCOUNTS, ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANK OR OTHER
INSURED DEPOSITORY INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
----------------------------
THE SHARES OF CLOSED-END INVESTMENT COMPANIES, SUCH AS THE FUND,
FREQUENTLY TRADE AT A DISCOUNT TO THEIR NET ASSET VALUES. INVESTORS
IN THIS OFFERING SHOULD NOTE THAT THE SHARES MAY LIKEWISE TRADE
AT A DISCOUNT TO NET ASSET VALUE. THIS RISK MAY BE GREATER FOR
INVESTORS WHO SELL THEIR SHARES IN A RELATIVELY SHORT PERIOD
AFTER COMPLETION OF THE PUBLIC OFFERING.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
==========================================================================================
PER SHARE TOTAL
------------------------------------------------------------------------------------------
<S> <C> <C>
Public offering price $25.00 $50,000,000
------------------------------------------------------------------------------------------
Sales load <F1> -- --
------------------------------------------------------------------------------------------
Proceeds to the Fund <F2> $25.00 $50,000,000
==========================================================================================
<FN>
<F1> The Underwriters will receive a fee in the amount of 5% of the
public offering price per Share or an aggregate of $2,500,000, to
be paid by the bank holding companies. We have granted the
Underwriters an option, exercisable for 30 days from the date of
this Prospectus, to purchase up to an additional 300,000 Shares to
cover over-allotments, if any. If such option is exercised in
full, the bank holding companies will pay the Underwriters
$2,875,000.00. See "Underwriting."
<F2> If the over-allotment option is exercised in full, the Total
Proceeds to the Fund will be $57,500,000. See "Underwriting."
</TABLE>
The Fund expects that the Shares will be ready for delivery, in
book-entry form only through the facilities of The Depository Trust
Company, on or about _________, 2000.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
__________, 2000.
<PAGE>
<PAGE>
SUMMARY INFORMATION
This summary highlights selected information from the prospectus
to help you understand the Shares. This summary does not, however,
contain all the information that may be important to you. Certain
capitalized terms used in this section are defined in other places in
this prospectus. You should carefully read this prospectus to fully
understand the terms of the Shares, as well as the tax and other
considerations that are important to you in making a decision about
whether to invest in the Shares. You should pay special attention to the
"Risk Factors" section to determine whether an investment in the Shares
is appropriate for you.
WHAT IS THE FUND?
Broadway Street Pooled Trust Preferred Fund A is a recently
created Delaware business trust. The Fund is registered as a non-
diversified closed-end management investment company under the
Investment Company Act of 1940 and will be treated as a grantor trust
for United States federal income tax purposes. The Fund expires on
________________, 2054, but may be terminated earlier under certain
circumstances. See "The Fund" for more information.
WHAT ARE WE OFFERING?
We are offering, through the Underwriters, 2,000,000 Shares at a
price of $25 per Share. The Underwriters may also purchase up to an
additional 300,000 Shares at the price of $25 per Share, plus accrued
distributions from ___________, 2000, within 30 days of the date of this
prospectus in order to cover over-allotments, if any. See
"Underwriting."
WHAT DOES THE OWNERSHIP OF A SHARE REPRESENT?
Each Share is a security that represents a proportionate share of
the undivided beneficial interests in the assets of the Fund.
HOW WILL WE INVEST THE PROCEEDS OF THIS OFFERING?
We will invest the net proceeds of this offering in the Portfolio
Trust Preferred Securities, which will be issued by the Portfolio
Issuers, which are recently-created Connecticut statutory trusts. The
Portfolio Issuers will indirectly use the net proceeds of this offering
to purchase subordinated debentures (the "Subordinated Debentures")
issued by their parent bank holding companies (not fewer than ten)
referred to in this prospectus (the "Bank Holding Companies"). The
Portfolio Trust Preferred Securities represent undivided beneficial
interests in the assets of the Portfolio Issuers, which will primarily
consist of the Subordinated Debentures and payments received on such
Subordinated Debentures. See "Investment Objective and Policies--Fund
Assets" and "The Bank Holding Companies."
Neither the Portfolio Trust Preferred Securities nor the
Subordinated Debentures will be assigned a credit quality rating by a
nationally recognized securities rating organization such as Standard &
Poor's Corporation or Moody's Investors Service.
WHAT ARE OUR INVESTMENT OBJECTIVES AND POLICIES?
Our investment objective is to provide current income by investing
all of our assets in the Portfolio Trust Preferred Securities issued by
the Portfolio Issuers, representing indirect interests in the
subordinated debentures issued by the Bank Holding Companies. See "The
Trust Preferred Securities."
WHAT DISTRIBUTIONS SHOULD YOU EXPECT TO RECEIVE ON YOUR SHARES?
We will pay distributions on the Shares on a quarterly basis,
which will be equal to your proportionate share of the cash
distributions on the Portfolio Trust Preferred Securities. The weighted
average rate of the quarterly distributions on the Shares are expected
to be [__]% of the liquidation amount of such securities. The
distributions will be made on the last day of each March, June,
September and December in each year, starting ___________, 2000, to the
record holders of the Shares as of the 15th day of that month. The Bank
Holding Companies may delay or default on payments on the Subordinated
Debentures as described below, which would cause a delay or decrease in
distributions on the Shares.
1
<PAGE>
<PAGE>
We will also pay to you your proportionate share of any
distribution of principal in respect of the Portfolio Trust Preferred
Securities in the event of an early redemption of the Portfolio Trust
Preferred Securities.
WHEN WILL YOUR INVESTMENT MATURE?
You will receive a distribution on the Shares you own, in an
amount equal to your proportionate share of the liquidation amount of
the Portfolio Trust Preferred Securities then maturing or redeemed, when
* the Portfolio Trust Preferred Securities mature, which will
be no later than ____________, 2030; or
* one or more of the Bank Holding Companies elects to have the
Portfolio Trust Preferred Securities redeemed, which it may
do at any time starting five years from the date of issuance.
See "Structural Diagram," "Use of Proceeds," and "Investment
Objective and Policies."
If the Portfolio Trust Preferred Securities of one or more of the
Portfolio Issuers or the Subordinated Debentures of one or more of the
Bank Holding Companies are redeemed, the Fund will continue to hold the
remaining securities in its portfolio, but your investment will become
correspondingly less diversified. Additionally, such an early
redemption event will result in a distribution on the Shares you own in
an amount equal to your proportionate share of the liquidation amount
and will also reduce the amount of the quarterly distribution on the
Shares.
CAN PAYMENTS ON THE SHARES BE DEFERRED?
Each Bank Holding Company has the right to defer payments under
its Subordinated Debentures, which would result in a corresponding
deferral of payments on the Shares. It may elect such deferral at any
time, for periods of up to 20 consecutive quarters. Deferred
distributions would accumulate on the related Portfolio Trust Preferred
Securities and the Shares during such deferral periods, and the Bank
Holding Company would be prohibited from paying regular dividends to its
shareholders during deferral periods. See "The Subordinated Debentures
- -- Option to Extend Interest Payment Period."
WILL THERE BE ANY GUARANTEE OR COLLATERAL SECURING THE SHARES?
The Shares will represent only an undivided beneficial interest in
the Portfolio Trust Preferred Securities, which will, in turn, represent
an indirect interest in the Subordinated Debentures issued by the Bank
Holding Companies. Although each Bank Holding Company will issue a
guarantee relating to the Portfolio Trust Preferred Securities of its
Portfolio Issuer (the "Guarantee"), the Guarantee will only require the
Bank Holding Company to guarantee distributions on its Subordinated
Debentures and, as a result, on its Portfolio Issuer's Portfolio Trust
Preferred Securities to the extent that its Portfolio Issuer
has legally available funds on hand at such time. The Subordinated
Debentures will be subordinated to the senior debt, subordinated debt
and other senior obligations issued by the Bank Holding Companies, and
will not be guaranteed by the Federal Deposit Insurance Corporation or
any other governmental agency or other third party. See "The
Subordinated Debentures - Subordination," "The Trust Preferred
Securities Guarantee," and "Relationship Among the Portfolio Trust
Preferred Securities, the Subordinated Debentures and the Guarantee."
WHAT ARE THE TAX EFFECTS OF AN INVESTMENT IN SHARES?
The Fund intends to be classified as a grantor trust for United
States federal income tax purposes. This means that generally you will
be treated as the beneficial owner of a pro rata undivided beneficial
interest in the Portfolio Trust Preferred Securities and in the
underlying Subordinated Debentures. Generally, stated interest payments
on the Subordinated Debentures will be includable in your gross income
at the time that such payments are paid or accrued in accordance with
your regular method of accounting. If payments on the Subordinated
Debentures and the Shares are deferred as referred to above, you will be
required to include in your gross income any original issue discount
accrued with respect to
2
<PAGE>
<PAGE>
your allocable share of the Subordinated Debentures whether or not cash is
actually distributed to you. See "Certain United States Federal Income Tax
Considerations."
WHAT VOTING RIGHTS WILL THE HOLDERS OF THE SHARES HAVE?
You are entitled to one vote for each Share you own. See
"Description of Shares -- Voting Rights."
WILL THE SHARES BE LISTED?
We intend to apply to have the Shares listed for trading on the
American Stock Exchange, Inc. ("Amex") under the symbol "PTPA" You
should be aware that listing the Shares on the Amex will not necessarily
ensure that a liquid trading market will be available for the Shares.
See "Risk Factors--Risk Factors Related to the Shares--The trading
market for the Shares will be uncertain."
WHAT REPORTS WILL THE HOLDERS OF SHARES RECEIVE?
We will send you annual and other reports, as required under the
securities laws, providing information about the performance of the Fund
and the valuation of our assets. We will not be providing you with
detailed financial information about the Bank Holding Companies or other
specific information about any of the Portfolio Trust Preferred
Securities issued by the individual Portfolio Issuers.
WHAT RISKS ARE ASSOCIATED WITH INVESTING IN THE SHARES?
You should carefully consider the risks in connection with this
Offering set forth under "Risk Factors" beginning on page 6, in particular
the risk that the Preferred Securities may be redeemed by one or more of
the Bank Holding Companies five years from the date of issuance and the
risk that one or more of the Bank Holding Companies may, at any time, or
from time to time, defer payment of distributions on their Preferred
Securities for a period of up to 20 consecutive quarters, during which
period you may be required to include your portion of the deferred
payments in your taxable income.
HOW WILL THE FUND BE MANAGED AND WHAT MANAGEMENT FEES WILL THE FUND PAY?
The Fund will be internally managed and will not have an
investment adviser, which means that there will be no outside manager or
adviser to manage the Fund's portfolio. The Fund's portfolio will not be
actively managed; the assets of the Fund will not be traded but will be
held as required by the agreement that governs the Fund. The Fund will
be under the supervision of the Fund Trustees. ______________________
("Administrator") will act as administrator of the Fund and will enter
into service agreements on behalf of the Fund with service providers,
including the custodian for the Fund's assets and paying agent, transfer
agent and registrar for the Shares. The Fund will pay the Administrator
a quarterly fee at an annual rate of [_____]% of the net asset value of
the Fund.
The Bank Holding Companies will reimburse the Fund for the fee
paid to the Administrator. See "Management Arrangements."
3
<PAGE>
<PAGE>
FEE TABLE
Regulations of the Securities and Exchange Commission require the
presentation of trust expenses in the following format in order to
assist you in understanding the costs and expenses that an investor will
bear directly and indirectly. Because the Fund will not bear any
ongoing fees or expenses, you will not bear any direct expenses. The
only expenses that you might be considered to bear indirectly are (a)
the underwriter's compensation payable by the bank holding companies
with respect to such investor's Share(s) and (b) the ongoing expenses of
the Fund (including fees of the Administrator, Custodian, Paying Agent
and Trustees), estimated at $ __ per year in the aggregate, which the
Bank Holding Companies will pay.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load (as a
percentage of offering price) %<Fa>
Reinvestment Plan Fees Not Applicable
ANNUAL EXPENSES (as a percentage of net assets)
Management Fees <Fb> 0%
Other Expenses <Fc> %
Total Annual Expenses <Fc> 0%
Expense Reimbursement <Fc> %
Net Expenses 0.00%
<FN>
- ------------
<Fa> Because the proceeds of the sale of the Shares will be indirectly
invested in the Subordinated Debentures, the Bank Holding
Companies have agreed to pay the Underwriters' compensation of 5%
of the face amount per Share. See the cover page of this
prospectus and "Underwriting." You may pay brokerage charges if
you purchase or sell Shares on the Amex.
<Fb> See "Management Arrangements." The Fund will be internally
managed; consequently, the Fund will not pay any separate
investment advisory fee. [Name of Fund Administrator] will act as
the Administrator (as defined herein) of the Fund.
<Fc> The Bank Holding Companies will pay, on a pro-rata basis, the
ongoing administrative and other expenses of the Fund, including
expenses associated with the initial public offering of the
Shares. Each Bank Holding Company's contractual obligation to the
Fund to pay such expenses continues so long as its Portfolio Trust
Preferred Securities are held by the Fund. See "Management
Arrangements--Estimated Expenses." Absent such arrangement, the
Fund's "Other Expenses" and "Total Annual Expenses" are estimated
to initially be $_______ in the aggregate or __% of the Fund's net
assets.
</TABLE>
This table is intended to assist you in understanding the costs
and expenses that a holder of Shares will bear directly or indirectly.
The example utilizes a 5% annual rate of return, which is required by
Securities and Exchange Commission regulations. THE EXAMPLE SHOULD NOT
BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES OR ANNUAL RATES OF
RETURN, AND ACTUAL EXPENSES OR ANNUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE ASSUMED FOR PURPOSES OF THE EXAMPLE.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
------ -------
<S> <C> <C>
An investor would pay the following
expenses on a $1,000 investment, including
the maximum sales load of [$0] and assuming
(1) no annual expenses and (2) a 5% annual
return throughout the periods $0 $ 0
</TABLE>
Each of the Bank Holding Companies has agreed to pay its
proportionate share of all of the ongoing operating expenses of the
Fund. However, if one or more of them should be unable to do so or
otherwise fail to do so, the unreimbursed portion of the expenses will
reduce the amounts available for distribution on the Shares. No Bank
Holding Company is responsible for the expense reimbursement obligation
of any other Bank Holding Company.
4
<PAGE>
<PAGE>
STRUCTURAL DIAGRAM
[Diagram or Transaction Structure illustrating parties to transaction
and flow of funds]
5
<PAGE>
<PAGE>
RISK FACTORS
Your investment in the Shares will involve certain risks. You
should carefully consider the following discussion of risks before
deciding whether an investment in the Shares is suitable for you.
RISK FACTORS RELATED TO THE SHARES
- ----------------------------------
The following risk factors relate specifically to the structure of
the Fund, and may therefore have a significant impact upon an investment
in the Shares:
OUR PORTFOLIO WILL NOT BE ACTIVELY MANAGED
The Fund will not be managed like a typical management investment
company. The Fund has a fundamental policy to invest its entire
portfolio in the Portfolio Trust Preferred Securities and any
distributions thereon, and not to dispose of the Portfolio Trust
Preferred Securities during the term of the Fund. As a result, except to
the extent redeemed by the Portfolio Issuers or the Bank Holding
Companies, the Fund will continue to hold the Portfolio Trust Preferred
Securities despite any adverse changes in the financial condition of the
Portfolio Issuers, the related Bank Holding Companies or the market in
general.
WE WILL NOT HAVE A DIVERSIFIED PORTFOLIO
The Fund is classified as a "non-diversified" management
investment company under the Investment Company Act, which means that
the Fund may invest a greater portion of its assets in a limited number
of issuers than would be the case if the Fund were classified as a
"diversified" management investment company. Accordingly, since the
Fund will invest in the trust preferred securities of as few as ten
issuers, the Fund may be subject to greater risk with respect to the
portfolio securities than a management investment company that is
"diversified," because changes in the financial condition or market
assessment of any single Portfolio Issuer may cause significant
fluctuations in the net asset value of the Fund. Similarly, the Fund's
investment exclusively in the trust preferred securities issued by
affiliates of bank holding companies will make the net asset value of
the Fund and the value of the Shares particularly susceptible to changes
affecting the banking industry.
THERE IS NO TRADING HISTORY IN THE SHARES
The Shares have no trading history and it is not possible to
predict how they will trade in the secondary market. The trading price
of the Shares may vary considerably because of complex and interrelated
economic, financial and political factors and other factors that can
affect the capital markets generally. These factors are difficult to
predict and are beyond our control.
WE ARE A CLOSED-END FUND
The Fund is a closed-end investment company. That means that you
will not have the right to require us to redeem your Shares. You will be
able to sell your Shares only in secondary transactions.
THE SHARES MAY TRADE AT A DISCOUNT FROM THEIR NET ASSET VALUE
The Fund is a newly organized closed-end investment company with
no previous operating history. Shares of closed-end investment companies
frequently trade at a price that is lower than their net asset values.
This risk is separate from the risk that the Fund's net asset value will
decrease. We cannot predict whether the Shares will trade at, below or
above their net asset value. The risk of purchasing investments that
might trade at a discount is greater for investors who want to sell
their investments in a relatively short period of time after completion
of this offering. For those investors, realization of a gain or loss on
their investments is likely to be more dependent upon the existence of a
premium or discount than upon portfolio performance determined over
time.
6
<PAGE>
<PAGE>
THE TRADING MARKET FOR THE SHARES WILL BE UNCERTAIN
The Shares are a new issue of securities and, accordingly, have no
established trading market. You cannot assume that a trading market will
develop. If such a trading market does develop, we cannot assure you
that there will be liquidity in the trading market. If the trading
market for the Shares is limited, there may be a limited number of
buyers when you decide to sell your Shares if you do not want to hold
your investment until maturity. This may affect the price you receive.
The Fund will apply for the listing of the Shares on the Amex. If
the Shares are delisted or if trading in the Shares is suspended on the
Amex, we will apply for the listing of the Shares on another national
securities exchange or for quotation on another trading market. If the
Shares are not listed or traded on any securities exchange or trading
market, or if trading of the Shares is suspended, pricing information
for the Shares may be more difficult to obtain. The price and liquidity
of the Shares may also be adversely affected.
EACH BANK HOLDING COMPANY HAS THE OPTION TO DEFER THE INTEREST PAYMENTS
ON ITS SUBORDINATED DEBENTURES
Each Bank Holding Company has the right to defer payment of
interest on its Subordinated Debentures at any time, for periods of up
to 20 consecutive quarters. During such periods of deferral,
distributions on the related Portfolio Trust Preferred Securities, and,
as a result, a portion of the distributions on the Shares, would also be
deferred. Deferred distributions would accumulate, however, on that
portion of the Portfolio Trust Preferred Securities and the Shares
during such deferral periods.
EACH BANK HOLDING COMPANY HAS THE OPTION TO SHORTEN THE STATED MATURITY
OF ITS SUBORDINATED DEBENTURES
Each Bank Holding Company may shorten the maturity date of its
Subordinated Debentures, starting five years after the date of issuance.
YOU WILL NOT RECEIVE FINANCIAL STATEMENTS FROM THE BANK HOLDING
COMPANIES
You will not receive periodic financial statements or other
detailed financial information about the Bank Holding Companies or other
specific information about any of the Portfolio Trust Preferred
Securities issued by the individual Portfolio Issuers. The only periodic
reports we will send you will be the annual and other reports required
under the federal securities laws, providing information about the
performance of the Fund and the valuation of our assets.
RISK FACTORS RELATED TO THE PORTFOLIO TRUST PREFERRED SECURITIES
- ----------------------------------------------------------------
The following risk factors relate specifically to the Portfolio
Trust Preferred Securities and may therefore have a significant impact
on the value of the Shares:
THE SUBORDINATED DEBENTURES AND THE GUARANTEES RANK SUBORDINATE TO OTHER
OBLIGATIONS OF THE BANK HOLDING COMPANIES
The Subordinated Debentures and the Guarantees issued by the Bank
Holding Companies are unsecured and rank subordinate and junior in right
of payment to all senior debt, subordinated debt and additional senior
obligations issued by the Bank Holding Companies. Neither the
Indentures, the Guarantees nor the Trust Agreements to which the Bank
Holding Companies are a party place any limitations on the amount of
secured or unsecured debt, including senior debt, subordinated debt and
additional senior obligations, that may be incurred by any Bank Holding
Company at any time in the future.
7
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EACH BANK HOLDING COMPANY HAS THE OPTION TO DEFER INTEREST PAYMENTS ON
ITS SUBORDINATED DEBENTURES, AND YOU WOULD STILL RECOGNIZE THE
ACCRUED INTEREST FOR TAX PURPOSES
Each of the Bank Holding Companies has the right to defer payment
of interest on its Subordinated Debentures (and consequently cause
deferral in distributions on the related Portfolio Trust Preferred
Securities) at any time, or from time to time, for a period of up to 20
consecutive quarterly periods (an "Extension Period"), except that no
Extension Period may extend beyond the maturity date of the Subordinated
Debentures. There is no limitation on the number of times that a Bank
Holding Company may elect to begin a new Extension Period. During an
Extension Period, a Bank Holding Company will not pay interest on its
Subordinated Debentures and distributions on the related Portfolio Trust
Preferred Securities will not be paid, but the distributions will
continue to accrue, with interest at the rate borne by the Subordinated
Debentures, compounded quarterly. Even if you are a cash basis taxpayer,
during any Extension Period you would still be required to recognize the
accrued but unpaid distributions as taxable income (in the form of
original issue discount) even though no cash would actually be paid
during that year. A deferral would be expected to negatively impact the
market price for the Shares.
During a deferral period of a Bank Holding Company, it is not
permitted to pay any dividends on its capital stock. However, since the
shares of the Bank Holding Companies are not widely held, that limitation
may not be as significant a deterrent to deferral as it would be for more
widely-held holding companies.
A DEFAULT BY ONE OR MORE OF THE BANK HOLDING COMPANIES WOULD ADVERSELY
AFFECT THE VALUE OF YOUR SHARES
The Fund is a non-diversified closed-end investment company which
will invest all of the net proceeds of this offering in the Portfolio
Trust Preferred Securities issued by the Portfolio Issuers, each of
which is affiliated with the one of the Bank Holding Companies. A
default by any of the Bank Holding Companies on its obligations under
the Subordinated Debentures or the Guarantee will have a material
adverse effect on the value of the Shares.
WE HAVE ONLY LIMITED RIGHTS UNDER THE GUARANTEES PROVIDED BY THE BANK
HOLDING COMPANIES
A Guarantee will be issued by each Bank Holding Company relating
to its Subordinated Debentures and its Portfolio Issuer's Portfolio
Trust Preferred Securities. However, the Guarantee only requires the
Bank Holding Company to guarantee distributions on its Portfolio Trust
Preferred Securities to the extent its Portfolio Issuer has legally
available funds on hand at such time. The Portfolio Issuers have no
assets other than the Subordinated Debentures and will not maintain any
regular funds, since all interest payments on the Subordinated Debentures
immediately pass through the Portfolio Issuers to the Fund as distributions
on the Portfolio Trust Preferred Securities.
EACH BANK HOLDING COMPANY HAS THE OPTION TO REDEEM ITS SUBORDINATED
DEBENTURES
Each Bank Holding Company may elect to redeem its Subordinated
Debentures, in whole or in part, on any Distribution Date occurring on
or after the date five years from the date of issuance. Any such redemption
will cause a redemption of a proportionate amount of the Portfolio Trust
Preferred Securities. If this were to occur, it would result in a distribution
of principal to the holders of Shares and a reduction in the amount of each
ongoing quarterly distribution. It would also cause the Fund's investment
portfolio to become even less diversified.
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EACH BANK HOLDING COMPANY HAS THE OPTION TO EXCHANGE ITS SUBORDINATED
DEBENTURES FOR PORTFOLIO TRUST PREFERRED SECURITIES
Each of the Bank Holding Companies will have the right at any time
to terminate its Portfolio Issuer and, after satisfaction of claims of
creditors of that Portfolio Issuer, to cause its Subordinated Debentures
to be distributed to the Fund in exchange for its Portfolio Trust
Preferred Securities.
Under current United States federal income tax law, and assuming,
as anticipated by management of the Bank Holding Companies, that the
Portfolio Issuers will be classified as grantor trusts and not as
associations taxable as corporations, a distribution of Subordinated
Debentures in exchange for Preferred Securities upon the dissolution of
a Portfolio Issuer would not be a taxable event to the Fund or to you,
as a shareholder of the Fund. If, however, the Portfolio Issuers were
classified as associations taxable as corporations, a distribution of
Subordinated Debentures in exchange for Portfolio Trust Preferred
Securities would constitute a taxable event to the Portfolio Issuers, to
the Fund and to you, as a shareholder of the Fund.
THE SUBORDINATED DEBENTURES, THE PORTFOLIO TRUST PREFERRED SECURITIES,
THE GUARANTEES AND THE SHARES ARE NOT INSURED BY THE FDIC OR OTHER
GOVERNMENTAL AGENCY
While the Portfolio Trust Preferred Securities and the
Subordinated Debentures represent a loan to the Bank Holding Companies,
neither the Portfolio Trust Preferred Securities, the Subordinated
Debentures, the Guarantees nor the Shares are insured by the Federal
Deposit Insurance Corporation or any other state or federal governmental
agency.
THERE WILL NOT BE ANY PUBLIC MARKET FOR THE PORTFOLIO TRUST PREFERRED
SECURITIES, THE SUBORDINATED DEBENTURES OR THE GUARANTEES
The Portfolio Trust Preferred Securities, the Subordinated
Debentures and the Guarantees will be issued in private transactions and
will not be registered with the SEC. The Fund will purchase each of the
Portfolio Trust Preferred Securities and the Guarantees from the
Portfolio Issuers and the Bank Holding Companies in separate private
transactions pursuant to separate Trust Preferred Securities Purchase
Agreements. Consequently, the Portfolio Trust Preferred Securities,
Subordinated Debentures and Guarantees will be restricted securities for
which no public market is expected to ever develop.
In the event that a trading market for the Portfolio Trust
Preferred Securities, Subordinated Debentures or Guarantees does ever
develop, there can be no assurance that it can or will be maintained.
Accordingly, there can be no assurance as to the liquidity of the
Portfolio Trust Preferred Securities, the Subordinated Debentures or the
Guarantees.
RISK FACTORS RELATED TO THE BANK HOLDING COMPANIES
- --------------------------------------------------
The following risk factors relate specifically to the Bank Holding
Companies, and may therefore have a significant impact on the value of
the Shares:
EACH BANK HOLDING COMPANY IS GEOGRAPHICALLY CONCENTRATED AND SUBJECT TO
CHANGES IN LOCAL ECONOMIC CONDITIONS
While each of the Bank Holding Companies serves different
geographic markets, they are each geographically concentrated in their
markets and are thus subject to changing economic conditions in such
geographic markets.
9
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THE BANK HOLDING COMPANIES AND THEIR BANK SUBSIDIARIES ARE DEPENDENT ON
THEIR SENIOR MANAGEMENT
Each Bank Holding Company's growth and development to date has
been largely a result of the contributions of certain of their senior
executive officers. Because the Bank Holding Companies are each
relatively small bank holding companies, they do not possess the depth
of senior management found within their larger competitors. The loss of
the services of any one or more of these individuals could have a
material adverse effect on such Bank Holding Company's business and
development. There is no assurance that replacements for any of such
officers could provide the same leadership.
THE RIGHTS OF THE BANK HOLDING COMPANIES TO THE ASSETS OF THEIR BANK
SUBSIDIARIES ARE SUBJECT TO THE PRIOR CLAIMS OF OTHERS
Because the Bank Holding Companies are holding companies, the
right of a Bank Holding Company to participate in any distribution of
assets of any of its subsidiaries is subject to the prior claims of
creditors of that subsidiary (including depositors), except to the
extent that the Bank Holding Company may itself be recognized as a
creditor of that subsidiary. Accordingly, the Portfolio Trust Preferred
Securities will be effectively subordinated to all existing and future
liabilities of the Bank Holding Companies' subsidiaries, and the Fund
will look only to the assets of the Bank Holding Companies for payments
on the Subordinated Debentures. The documents relating to the Portfolio
Trust Preferred Securities do not limit the amount of secured or
unsecured debt that the Bank Holding Companies' subsidiaries may incur
in the future.
THE PROFITABILITY OF THE BANK HOLDING COMPANIES AND THEIR BANK
SUBSIDIARIES MAY FLUCTUATE SUBSTANTIALLY
Each Bank Holding Company's operating results may fluctuate
substantially from period to period as a result of a number of factors
affecting its subsidiaries, including the volume of loan production,
interest rates and risk of credit losses. Further, each Bank Holding
Company's subsidiaries are separate legal entities and have no
obligations to make any funds available to its Bank Holding Company.
There are also regulatory limitations on each subsidiary bank's ability
to make loans or distributions or pay dividends to its Bank Holding
Company. See "The Bank Holding Companies--Supervision and Regulation."
Consequently, there is no assurance that each subsidiary bank will, at
all times, be in a position to make dividends or other distributions to
its Bank Holding Company in an amount sufficient for it to service its
Subordinated Debentures or for its Portfolio Issuer to pay the
distributions due on its Portfolio Trust Preferred Securities.
Each subsidiary bank's profitability is dependent to a large
extent on its net interest income, which is the difference between its
income on interest-earning assets and its expense on interest-bearing
liabilities. The subsidiary banks, like most financial institutions,
are affected by changes in general interest rate levels and by other economic
factors beyond their control. Interest rate risk arises in part from the
mismatch (i.e., the interest sensitivity gap) between the dollar amount of
repricing or maturing interest earning assets and interest bearing liabilities,
and is measured in terms of the ratio of the interest rate sensitivity gap to
total assets. If a bank has more interest earning assets than interest
bearing liabilities repricing or maturing over a given time period, it
is considered asset-sensitive and such asset-sensitivity is reflected as
a positive gap. If a bank has more interest bearing liabilities than
interest earning assets repricing or maturing over a given time period,
it is considered liability-sensitive and such liability sensitivity is
reflected as a negative gap. A liabilities-sensitive position (i.e., a
negative gap) may generally enhance net interest income in a falling
interest rate environment (because interest expense will generally
decrease faster than interest income), but will reduce net interest
income in a rising interest rate environment (because interest expense
will generally increase faster than interest income). An asset-
sensitive position (i.e., a positive gap) may generally enhance net
interest income in a rising interest rate environment and will reduce
net interest income in a falling interest rate environment.
Fluctuations in
10
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interest rates are not predictable or controllable, and each bank's asset or
liability sensitive position will vary from time to time. If a subsidiary
bank's interest income and profitability decline due to changes in market
rates of interest, its Bank Holding Company's ability to pay the Subordinated
Debentures may be substantially impaired, which could make a deferral of
interest payments or a default in payment on the Portfolio Trust Preferred
Securities more likely to occur.
THERE ARE REGULATORY RESTRICTIONS ON PAYMENTS OF DIVIDENDS TO THE BANK
HOLDING COMPANIES
Each of the banking subsidiaries of the Bank Holdings Companies is
subject to various regulatory restrictions upon the amount of dividends
that it may pay to its Bank Holding Company. The inability of any
banking subsidiary to pay dividends to its Bank Holding Company due to
such regulatory restrictions may have a material adverse effect on such
Bank Holding Company's ability to pay interest or repay principal with
respect to its Subordinated Debentures. See "The Bank Holding
Companies--Supervision and Regulation."
OUR COMPUTER SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT
Many computer systems and software applications were designed
using only two digits to designate years. These systems may not be able
to distinguish the Year 2000 from the Year 1900 (commonly known as the
"Year 2000 Problem"). Like other investment companies and financial and
business organizations, the Fund could be adversely affected if the
computer systems and software applications used by the Fund, the
Portfolio Issuers, the Bank Holding Companies or the Fund's service
providers do not properly address this problem. The Fund intends to
seek assurances from its service providers that they are taking all
necessary steps to ensure that their computer systems will accurately
reflect the Year 2000, and the Fund will continue to monitor the
situation. At this time, however, the Fund cannot assure you that its
service providers have anticipated every step necessary to avoid any
adverse effect on the Fund caused by the Year 2000 Problem.
11
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THE FUND
Broadway Street Pooled Trust Preferred Fund A (the "Fund"), is a
newly-created Delaware business trust and is registered as a non-
diversified closed-end management investment company under the
Investment Company Act of 1940, as amended (the "Investment Company
Act"). The Fund was formed pursuant to a Certificate of Trust as filed
with the Secretary of State of the State of Delaware on December 9, 1999
and a Declaration of Trust dated as of December 3, 1999, which will be
amended and restated (as amended and restated, the "Declaration of
Trust"). The Fund has a term of 55 years, but may terminate earlier, as
provided in the Declaration of Trust. The Fund will be treated as a
grantor trust for United States Federal income tax purposes. The Fund's
principal office is located at c/o Stifel, Nicolaus & Company,
Incorporated, 501 N. Broadway, St. Louis, Missouri 63102, and its
telephone number is (314) 342-2000.
USE OF PROCEEDS
The proceeds of the offering of the Shares (the "Offering") will
be $50,000,000 (or $57,500,000 if the Underwriters' (as defined herein)
over-allotment option is exercised in full). The net proceeds of the
Offering will be used on the initial date of issuance of the Shares to
purchase $50,000,000 aggregate liquidation amount (or $57,500,000
aggregate liquidation amount if the Underwriters' over-allotment option
is exercised in full) of the trust preferred securities from the
Portfolio Issuers (the "Portfolio Trust Preferred Securities"). The
Fund, as the holder of the Portfolio Trust Preferred Securities, will be
entitled to receive cumulative distributions thereon at the rate per
annum of __%, payable quarterly on each Interest Payment Date for the
quarterly period ending on the Distribution Date immediately following
such Interest Payment Date. Unless redeemed earlier pursuant to the
Portfolio Issuers' right to redeem the Portfolio Trust Preferred Securities
after March 31, 2005, the Portfolio Trust Preferred Securities will be
redeemed on March 31, 2030. See "Investment Objective and
Policies--Fund Assets."
A diagram of the transactions appears on page 5.
The Portfolio Issuers will use the proceeds from the sale of the
Portfolio Trust Preferred Securities to purchase the Subordinated
Debentures from the Bank Holding Companies in an amount equal to such
proceeds. Each Bank Holding Company will pay to the Underwriters its
proportionate share of a fee in the amount of 5% of the public offering
price of the Shares, and will also pay its proportionate share of
certain expenses of the offering of the Shares, and will use its net
proceeds from the sale of its Subordinated Debentures to finance
additional expansion, repay existing debt, repurchase its own securities
or for such other general corporate purposes as it deems appropriate.
DESCRIPTION OF THE SHARES
Each Share represents a proportionate share of the undivided
beneficial interests in the assets of the Fund. A total of 2,000,000
Shares will be issued in the Offering, assuming no exercise of the
Underwriters' over-allotment option. Upon liquidation of the Fund,
holders of Shares are entitled to share pro rata in the net assets of
the Fund available for distribution, based on the number of Shares
outstanding. Holders of Shares have no preemptive, redemption or
conversion rights. The Shares, when issued and outstanding, will be
fully paid and nonassessable.
VOTING RIGHTS
Holders of Shares are entitled to one vote for each Share on all
matters to be voted on by the holders. Holders are not able to cumulate
their votes in the election of Fund Trustees (as defined herein).
Holders have the right, upon the declaration in writing or vote of more
than two-thirds of the outstanding Shares, to remove a Fund Trustee. The
Secretary of the Fund will call a special meeting of holders upon the written
request of the holders of more than 10% of the outstanding Shares.
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Modifications and amendments of the terms of the Shares may be
made with the consent of the holders of not less than a majority of the
Shares; provided that no such modification or amendment may, without the
consent of 100% of the Shares, change the amount or timing of any
distribution on the Shares or otherwise adversely affect the foregoing
terms. Modifications and amendments may be made without the consent of any
holder of the Shares to cure any ambiguity, defect or inconsistency in the
Declaration of Trust or any instrument defining the terms of the Shares,
provided that such action will not adversely affect in any material respect
the rights of the holders of the Shares.
DISTRIBUTIONS
The Fund intends to make quarterly distributions to each
Shareholder equal to the holder's proportionate share of the cash
distributions received by the Fund during the preceding quarter on the
Portfolio Trust Preferred Securities. The distributions will be payable
on March 31, June 30, September 30 and December 31 of each year (the
"Distribution Dates"), starting __________, 2000. We will pay the
distributions to the Shareholders of record as of the 15th day of that
month (the "Record Date"). We will also distribute to Shareholders of
record as of the applicable redemption date (which shall also be a
Distribution Date), a distribution equal to the principal amount of
Subordinated Debentures then being redeemed by a Bank Holding Company.
In the event that any Distribution Date for the Shares or any
Interest Payment Date for the Subordinated Debentures and the related
Portfolio Trust Preferred Securities is not a Business Day, then the
distribution payable on such date need not be made on such Distribution
Date or Interest Payment Date, but instead may be made on the next
succeeding Business Day with the same force and effect as if made on
such Distribution Date or Interest Payment Date. "Business Day" means
each Monday, Tuesday, Wednesday, Thursday or Friday which is not a day
on which banking institutions in New York, New York are authorized or
obliged by law or executive order to be closed.
The Fund will pay distributions on the Shares from the
distributions it receives on the Portfolio Trust Preferred Securities.
The Fund will be entitled to receive quarterly distributions on the
Portfolio Trust Preferred Securities at a rate per annum equal to __% on
the Liquidation Amount of the Portfolio Trust Preferred Securities. The
payment dates for the Portfolio Trust Preferred Securities are the
Interest Payment Dates for the Subordinated Debentures. The Portfolio
Issuers will pay such distributions on the Portfolio Trust Preferred
Securities from the interest they receive on the Subordinated
Debentures. The Subordinated Debentures will accrue interest at a rate
per annum of ___% on the principal amount of the Subordinated
Debentures. In the event of an early redemption of any of the Portfolio
Trust Preferred Securities or upon the maturity of any of the Portfolio
Trust Preferred Securities, in addition to the foregoing quarterly
distribution, the Fund will be entitled to receive distributions in an
amount equal to the Liquidation Amount of the Portfolio Trust Preferred
Securities to be redeemed or then otherwise maturing. The Fund will pay
such distributions to the holders of the Shares on a pro rata basis on the
immediately succeeding Distribution Date.
INVESTMENT OBJECTIVE AND POLICIES
GENERAL
The Fund's investment objective is to provide current income by
investing substantially all of its assets in the Portfolio Trust
Preferred Securities. The Fund seeks to pay distributions on the Shares
at a fixed rate of ___% of the liquidation amount of the Shares.
The Fund has adopted a fundamental policy as required by the
Declaration of Trust to invest 100% of its portfolio in the Portfolio
Trust Preferred Securities, and any distributions thereon, and not to
dispose of the Portfolio Trust Preferred Securities during the term of
the Fund other than in connection with an early redemption thereof.
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FUND ASSETS
Except as discussed below, the Fund's assets will consist of
$50,000,000 aggregate liquidation amount of Portfolio Trust Preferred
Securities ($57,500,000 aggregate liquidation amount of Portfolio Trust
Preferred Securities if the Underwriters' over-allotment option is
exercised in full), and any distributions thereon.
In the event a Bank Holding Company exercises its right to
dissolve, wind-up or terminate the Portfolio Issuer holding its
Subordinated Debentures, the Fund's assets would include the
Subordinated Debentures of such Bank Holding Company, rather than the
Portfolio Trust Preferred Securities. Each Bank Holding Company has the
right at any time to dissolve, wind up or terminate the Portfolio Issuer
holding its Subordinated Debentures, subject to certain conditions.
THE BANK HOLDING COMPANIES
The Bank Holding Companies whose Portfolio Issuers will issue the
Portfolio Trust Preferred Securities are:
<TABLE>
<CAPTION>
LIQUIDATION AMOUNT OF
LOCATION OF PRINCIPAL PORTFOLIO TRUST PREFERRED
NAME OFFICE SECURITIES TOTAL ASSETS
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$
$
$
$
$
$
$
$
$
$
</TABLE>
[None of the Bank Holding Companies is publicly owned, and none of
them files reports with the SEC.]
In selecting the Bank Holding Companies which are participating in the
financing program represented by the Fund, the following selection
criteria have been used:
* We have targeted institutions with assets over $200 million.
* We have set the minimum liquidation amount of each Portfolio
Issuer's Portfolio Trust Preferred Securities at $2.5
million, and the Portfolio Trust Preferred Securities of any
one issuer does not exceed 10% of the total Fund assets.
* We have tried to identify participants which are classified
as "well capitalized" on a pro forma basis by the Bank
Holding Company's regulator, and which have had positive net
income for at least the most recent five full fiscal years.
See "Supervision and Regulation -- Legislation -- The
Federal Deposit Insurance Corporation Improvement Act of
1991."
* Immediately following the issuance of the trust preferred
securities by its Portfolio Issuer, the maximum level of
trust preferred leverage (including senior holding company
debt) for each Bank Holding Company shall not exceed 50% of
its common equity.
* We have also considered characteristics such as ownership
concentration, quality of management, historical financial
performance and asset quality history.
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* All of the Bank Holding Companies have provided financial
statements for at least the most recent three fiscal years,
and at least the most recent fiscal year statements have
been audited by independent accountants.
While we have employed this criteria in selecting the Bank Holding
Companies, we cannot provide assurance that the Bank Holding Companies
will continue to comply with such criteria subsequent to the Fund's
purchase of the Portfolio Trust Preferred Securities. As the Fund will
not be managed like a typical management investment company and will not
dispose of the Portfolio Trust Preferred Securities during the term of
the Fund, the Fund will continue to hold the Portfolio Trust Preferred
Securities despite any adverse changes in the financial condition of the
Bank Holding Companies.
SUPERVISION AND REGULATION
GENERAL
The Bank Holding Companies and their subsidiary banks are
extensively regulated under federal and state law. These laws and
regulations are intended to protect depositors, not stockholders of the
Bank Holding Companies or Shareholders of the Fund. To the extent that
the following information describes statutory or regulatory provisions,
it is qualified in its entirety by reference to the particular statutory
and regulatory provisions. Changes in applicable laws or regulations may
have a material effect on the business and prospects of the Bank Holding
Companies. The operations of the Bank Holding Companies may be affected
by legislative changes and by the policies of various regulatory
authorities. The Bank Holding Companies are unable to predict the nature
or the extent of the effects on its business and earnings that fiscal or
monetary policies, economic controls or new federal or state legislation
may have in the future.
Each of the Bank Holding Companies is a registered bank holding
company under the Bank Holding Company Act of 1956, as amended (the
"BHCA"), and, as such, is subject to regulation, supervision and
examination by the Federal Reserve. Each of the Bank Holding Companies
is required to file annual reports with the Federal Reserve and to
provide the Federal Reserve such additional information as it may
require.
The subsidiary banks are subject to supervision and regulation by
either the United States Office of the Comptroller of the Currency (the
"OCC") or applicable state banking authorities. The subsidiary banks
are also subject to supervision and regulation by the Federal Deposit
Insurance Corporation ("FDIC"), which provides deposit insurance to the
subsidiary banks.
LEGISLATION
The enactment of the legislation described below has significantly
affected the banking industry generally and will have an ongoing effect
on the Bank Holding Companies and the subsidiary banks in the future.
FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF
1989. The Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 ("FIRREA") reorganized and reformed the regulatory structure
applicable to financial institutions generally. Among other things,
FIRREA enhanced the supervisory and enforcement powers for the federal
bank regulatory agencies; required insured financial institutions to
guaranty repayment of losses incurred by the FDIC in connection with the
failure of an affiliated financial institution; required financial
institutions to provide their primary federal regulator with notice,
under certain circumstances, of changes in senior management and
broadened authority for bank holding companies to acquire savings
institutions.
Under FIRREA, federal bank regulators were granted expanded
enforcement authority over "institution-affiliated parties" (i.e.,
officers, directors, controlling stockholders, attorneys, appraisers and
accountants who knowingly or recklessly participate in wrongful action
likely to have an adverse effect
15
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on an insured institution). Federal banking regulators have power to bring
enforcement actions against insured institutions and institution-affiliated
parties, including cease and desist orders, prohibition orders, civil money
penalties, termination of insurance and the imposition of operating restrictions
and capital plan requirements. In general, these enforcement actions may
be initiated for violations of laws and regulations and unsafe or
unsound practices. Since the enactment of FIRREA, the federal bank
regulators have significantly increased the use of written agreements to
correct compliance deficiencies with respect to applicable laws and
regulations and to ensure safe and sound practices. Violations of such
written agreements are grounds for initiation of cease-and-desist
proceedings. FIRREA granted the FDIC back-up enforcement authority to
recommend enforcement action to an appropriate federal banking agency
and to bring such enforcement action against a financial institution or
an institution-affiliated party if such federal banking agency fails to
follow the FDIC's recommendation. In addition, FIRREA generally requires
public disclosure of final enforcement actions by the federal banking
agencies.
FIRREA also established a cross-guarantee provision ("Cross-
Guarantee") pursuant to which the FDIC may recover from a depository
institution losses that the FDIC incurs in providing assistance to, or
paying off the depositors of, any of such depository institution's
affiliated insured banks or thrifts. The Cross-Guarantee thus enables
the FDIC to assess a holding company's healthy Bank Insurance Fund (the
"BIF" ) members and Savings Association Insurance Fund (the "SAIF")
members for the losses of any of such holding company's failed BIF and
SAIF members. Cross-Guarantee liabilities are generally superior in
priority to obligations of the depository institution to its
stockholders due solely to their status as stockholders and obligations
to other affiliates. Cross-Guarantee liabilities are generally
subordinated to deposit liabilities, secured obligations or any other
general or senior liabilities, and any obligations subordinated to
depositors or other general creditors.
THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") was adopted to recapitalize the BIF and impose certain
supervisory and regulatory reforms on insured depository institutions.
FDICIA includes provisions, among others, to: (i) increase the FDIC's
line of credit with the U.S. Treasury in order to provide the FDIC with
additional funds to cover the losses of federally insured banks; (ii)
reform the deposit insurance system, including the implementation of
risk-based deposit insurance premiums; (iii) establish a format for
closer monitoring of financial institutions to enable prompt corrective
action by banking regulators when a financial institution begins to
experience financial difficulty; (iv) establish five capital levels for
financial institutions ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized") that impose more scrutiny and restrictions on less
capitalized institutions; (v) require the banking regulators to set
operational and managerial standards for all insured depository
institutions and holding companies, including limits on excessive
compensation to executive officers, directors, employees and principal
stockholders, and establish standards for loans secured by real estate;
(vi) adopt certain accounting reforms and require annual on-site
examinations of federally insured institutions, including the ability to
require independent audits of banks and thrifts; (vii) revise risk-based
capital standards to ensure that they (a) take adequate account of
interest-rate changes, concentration of credit risk and the risks of
nontraditional activities, and (b) reflect the actual performance and
expected risk of loss of multi-family mortgages; and (viii) restrict
state-chartered banks from engaging in activities not permitted for
national banks unless they are adequately capitalized and have FDIC
approval. Further, FDICIA permits the FDIC to make special assessments
on insured depository institutions, in amounts determined by the FDIC to
be necessary to give it adequate assessment income to repay amounts
borrowed from the U.S. Treasury and other sources or for any other
purpose the FDIC deems necessary. FDICIA also grants authority to the
FDIC to establish semiannual assessment rates on BIF and SAIF member
banks so as to maintain these funds at the designated reserve ratios.
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As noted above, FDICIA authorizes and, under certain circumstances,
requires the federal banking agencies to take certain actions against
institutions that fail to meet certain capital-based requirements.
Under FDICIA, the federal banking agencies are required to establish
five levels of insured depository institutions based on leverage
limit and risk-based capital requirements established for institutions
subject to their jurisdiction, plus, in their discretion, individual
additional capital requirements for such institutions. Under the
final rules that have been adopted by each of the federal banking
agencies, an institution is designated: (i) well capitalized if the
institution has a total risk-based capital ratio of 10% or greater, a
Tier 1 risk-based capital ratio of 8% or greater and a leverage ratio of
5% or greater, and the institution is not subject to an order, written
agreement, capital directive or prompt corrective action directive to
meet and maintain a specific capital level for any capital measure; (ii)
adequately capitalized if the institution has a total risk-based capital
ratio of 8% or greater, a Tier 1 risk-based capital ratio of 4% or
greater and a leverage ratio of 4% or greater; (iii) undercapitalized if
the institution has a total risk-based capital ratio that is less than
8%, a Tier 1 risk-based capital ratio that is less than 4% or a leverage
ratio that is less than 4%; (iv) significantly undercapitalized if the
institution has a total risk-based capital ratio that is less than 6%, a
Tier 1 risk-based capital ratio that is less than 3% or a leverage ratio
that is less than 3%; and (v) critically undercapitalized if the
institution has a ratio of tangible equity to total assets that is equal
to or less than 2%.
Undercapitalized, significantly undercapitalized and critically
undercapitalized institutions are required to submit capital restoration
plans to the appropriate federal banking agency and are subject to
certain operational restrictions. Moreover, companies controlling an
undercapitalized institution are required to guarantee the subsidiary
institution's compliance with the capital restoration plan, subject to
an aggregate limitation of the lesser of 5% of the institution's assets
at the time it received notice that it was undercapitalized or the
amount of the capital deficiency when the institution first failed to
meet the plan.
Significantly or critically undercapitalized institutions and
undercapitalized institutions that fail to submit or comply with
acceptable capital restoration plans are subject to regulatory
sanctions. A forced sale of shares or merger, restriction on affiliate
transactions and restrictions on rates paid on deposits are required to
be imposed by the banking agency unless it is determined that they would
not further capital improvement. FDICIA generally requires the
appointment of a conservator or receiver within 90 days after an
institution becomes critically undercapitalized. The federal banking
agencies have adopted uniform procedures for the issuance of directives
by the appropriate federal banking agency. Under these procedures, an
institution is generally provided advance notice when the appropriate
federal banking agency proposes to impose one or more of the sanctions
set forth above. These procedures provide an opportunity for the
institutions to respond to the proposed agency action or, where
circumstances warrant immediate agency action, an opportunity for
administrative review of the agency's action.
Pursuant to FDICIA, the federal banking agencies adopted real
estate lending guidelines pursuant to which each insured depository
institution is required to adopt and maintain written real estate
lending policies in conformity with the prescribed guidelines. Under
these guidelines, each institution is expected to set loan-to-value
ratios not exceeding the supervisory limits set forth in the guidelines.
A loan-to-value ratio is generally defined as the total loan amount
divided by the appraised value of the property at the time the loan is
originated. The guidelines require that the institution's real estate
policy provide for proper loan documentation and prudent underwriting
standards.
FDICIA also contained the Truth in Savings Act, which requires
clear and uniform disclosure of the rates and interest payable on
deposit accounts by depository institutions and the fees assessable
against deposit accounts, so that consumers can make a meaningful comparison
between the competing claims of financial institutions with regard to
deposit accounts and products.
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RIEGLE-NEAL INTERSTATE BANKING AND BRANCHING EFFICIENCY ACT OF
1994. In 1994 Congress enacted the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (the "Interstate Act"). Beginning in
1995, bank holding companies gained the right to expand, by acquiring
existing banks, into all states, even those which had theretofore
restricted entry. The legislation also provides that a holding company
has the right, commencing in 1997, to convert the banks which its owns
in different states to branches of a single bank. The Interstate Act
also establishes limits on acquisitions by large banking organizations,
providing that no acquisition may be undertaken if it would result in
the organization having deposits exceeding either 10% of all bank
deposits in the United States or 30% of the bank deposits in the state
in which the acquisition would occur.
ECONOMIC GROWTH AND REGULATORY PAPERWORK REDUCTION ACT OF 1996.
The Economic Growth and Regulatory Paperwork Reduction Act of 1996
("EGRPRA") streamlined the non-banking activities application process
for well-capitalized and well-managed bank holding companies. Under
EGRPRA, qualified bank holding companies may commence a regulatory
approved non-banking acquisition or share purchase, assuming the size of
the acquisition does not exceed 10% of risk-weighted assets of the
acquiring bank holding company and the consideration does not exceed 15%
of Tier 1 capital. The foregoing prior notice requirement also applies
to commencing a non-banking activity de novo if that activity has been
previously approved by order of the Federal Reserve, but has not yet
been implemented by regulations. EGRPRA also provided for the
recapitalization of the SAIF in order to bring it into parity with the
BIF of the FDIC.
RECENT LEGISLATION. On November 12, 1999, President Clinton
signed into law the Financial Services Modernization Act of 1999. This
legislation is the most wide-sweeping banking and financial institutions
legislation in the past 60 years. The Financial Services Modernization
Act, among other things:
* permits banks to underwrite insurance and securities;
* permits securities firms and insurers to buy banks;
* authorizes the Treasury Department's Office of the
Comptroller of the Currency to regulate bank subsidiaries
that underwrite securities;
* authorizes the Federal Reserve to regulate bank holding
company affiliates that engage in risky activities such as
insurance underwriting and real estate development.
The operations of regulated depository institutions will continue
to be subject to changes in applicable statutes and regulations from
time to time and could adversely affect the Bank Holding Companies and
their subsidiary banks. The effect of the Financial Services
Modernization Act on the Bank Holding Companies and their subsidiary
banks is uncertain at this time.
BANK AND BANK HOLDING COMPANY REGULATION
BHCA. Under the BHCA, the activities of a bank holding company are
limited to businesses so closely related to banking, managing or
controlling banks as to be a proper incident thereto. The Bank Holding
Companies are also subject to capital requirements applied on a
consolidated basis in a form substantially similar to those required of
the subsidiary banks. The BHCA also requires a bank holding company to
obtain approval from the Federal Reserve before: (i) acquiring, directly
or indirectly, ownership or control of any voting shares of another bank
or bank holding company if, after such acquisition, it would own or
control more than 5% of such shares (unless it already owns or controls
the majority of such shares); (ii) acquiring all or substantially all of
the assets of another bank or bank holding company; or (iii) merging or
consolidating with another bank holding company. The Federal Reserve will
not approve any acquisition, merger or consolidation that would have a
substantially anticompetitive result, unless the anticompetitive effects of
the proposed transaction are clearly
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outweighed by a greater public interest in meeting the convenience and
needs of the community to be served. The Federal Reserve also considers
capital adequacy and other financial and managerial factors in reviewing
acquisitions or mergers.
The BHCA also prohibits a bank holding company, with certain
limited exceptions, from: (i) acquiring or retaining direct or indirect
ownership or control of more than 5% of the voting shares of any company
which is not a bank or bank holding company; or (ii) engaging directly
or indirectly in activities other than those of banking, managing or
controlling banks, or providing services for its subsidiaries. The
principal exceptions to these prohibitions involve certain non-bank
activities which, by statute or by Federal Reserve regulation or order,
have been identified as activities closely related to the business of
banking or of managing or controlling banks. In making this
determination, the Federal Reserve considers whether the performance of
such activities by a bank holding company can be expected to produce
benefits to the public such as greater convenience, increased
competition or gains in efficiency in resources, which can be expected
to outweigh the risks of possible adverse effects such as decreased or
unfair competition, conflicts of interest or unsound banking practices.
FIRREA, which is described in more detail above, made a significant
addition to this list of permitted non-bank activities for bank holding
companies by providing that bank holding companies may acquire thrift
institutions.
INSURANCE OF ACCOUNTS. The FDIC provides insurance to deposit
accounts at the subsidiary banks up to a maximum of $100,000 for each
insured depositor. Through December 31, 1992, all FDIC-insured
institutions, whether members of the BIF or the SAIF, paid the same
premium (23 cents per $100 of domestic deposits) under a flat-rate
system mandated by law. FDICIA required the FDIC to raise the reserves
of the BIF and the SAIF, implement a risk-related premium system and
adopt a long-term schedule for recapitalizing the BIF.
Effective January 1, 1993, the FDIC established a risk-based
deposit insurance premium assessment system, with assessment rates
ranging from 0.23% of domestic deposits (the same rate as under the
previous flat-rate assessment system) for those banks deemed to pose the
least risk to the insurance fund to 0.31% for those banks deemed to pose
greater risk. The assessment rate applicable to a bank is subject to
change with each semi-annual assessment period. Effective September 15,
1995, the FDIC lowered the assessment rate schedule for BIF-insured
institutions from a range of 0.23% to 0.31% of domestic deposits to a
range of 0.04% to 0.31% of domestic deposits. This reduction in the
assessment rate schedule was made retroactive to June 1, 1995 because
the FDIC determined that the BIF achieved its statutorily-required
reserve ratio of 1.25% on May 31, 1995. On November 14, 1995, the FDIC
again lowered the assessment rate schedule for BIF-insured institutions,
effective for the semiannual assessment period beginning January 1,
1996, to a range of 0.00% to 0.27% of domestic deposits.
The statutory semiannual minimum assessment of $1,000 per insured
institution was eliminated as part of EGRPRA, which was signed into law
on September 30, 1996. EGRPRA provided for the recapitalization of the
SAIF through a one-time special assessment on SAIF-insured deposits in
order to bring it into parity with the BIF. Since January 1, 1997, BIF
and SAIF premiums are assessed at between 0.00% and 0.27%, depending on
the supervisory rating assigned.
EGRPRA also requires BIF members to pay a portion of the annual
interest on the Financing Corporation ("FICO") bonds issued by a
government instrumentality in 1987 to begin funding the resolution of
the problems of the savings and loan industry. Since January 1, 1997,
BIF members have paid a FICO premium on BIF deposits equal to 0.0129%.
During that same period, SAIF members have paid a FICO premium on SAIF
deposits equal to 0.0644%. Beginning January 1, 2000, BIF members will
share in the payment of the FICO assessment with SAIF members on a pro
rata basis, with the annual assessment expected to equal approximately
0.0243% until retirement of the FICO bond obligation in approximately 2017.
This assessment is not expected to have a material adverse effect on the
subsidiary banks.
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THE PORTFOLIO TRUST PREFERRED SECURITIES AND THE SUBORDINATED
DEBENTURES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS, ARE NOT OBLIGATIONS OF
ANY BANKING OR NONBANKING AFFILIATE OF THE BANK HOLDING COMPANIES
(EXCEPT TO THE EXTENT THAT PREFERRED SECURITIES ARE GUARANTEED BY THE
BANK HOLDING COMPANIES AS DESCRIBED HEREIN), ARE NOT INSURED BY THE FDIC
OR ANY OTHER GOVERNMENT AGENCY AND INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
REGULATIONS GOVERNING CAPITAL ADEQUACY. The federal bank regulatory
agencies use capital adequacy guidelines in their examination and
regulation of bank holding companies and banks. If the capital falls
below the minimum levels established by these guidelines, the bank
holding company or bank may be denied approval to acquire or establish
additional banks or nonbank businesses or to open facilities.
The Federal Reserve, the FDIC and the OCC have adopted risk-based
capital guidelines for banks and bank holding companies, and the OTS
has adopted similar guidelines for thrifts. The risk-based capital
guidelines are designed to make regulatory capital requirements more
sensitive to differences in risk profile among financial institutions
and holding companies, to account for off-balance sheet exposure and to
minimize disincentives for holding liquid assets. Assets and off-balance
sheet items are assigned to broad risk categories, each with appropriate
weights. The resulting capital ratios represent capital as a percentage
of total risk-weighted assets and off-balance sheet items. The Federal
Reserve has noted that bank holding companies contemplating significant
expansion programs should not allow expansion to diminish their capital
ratios and should maintain ratios well in excess of the minimums. Under
these guidelines, all bank holding companies and federally regulated
banks must maintain a minimum risk-based total capital ratio equal to
8%, of which at least 4% must be Tier 1 capital.
The Federal Reserve also has implemented a leverage ratio, which
is the ratio of Tier 1 capital to total assets, to be used as a
supplement to the risk-based guidelines. The principal objective of the
leverage ratio is to place a constraint on the maximum degree to which a
bank holding company may leverage its equity capital base. The Federal
Reserve requires a minimum leverage ratio of 3%. For all but the most
highly-rated bank holding companies and for bank holding companies
seeking to expand, however, the Federal Reserve expects that additional
capital sufficient to increase the ratio by at least 100 to 200 basis
points will be maintained.
COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act of 1977
(the "CRA") requires that, in connection with examinations of financial
institutions within their jurisdiction, the federal banking regulators
must evaluate the record of the financial institutions in meeting the
credit needs of their local communities, including low and moderate
income neighborhoods, consistent with the safe and sound operation of
those banks. These factors are also considered in evaluating mergers,
acquisitions and applications to open a branch or facility.
REGULATIONS GOVERNING EXTENSIONS OF CREDIT. The subsidiary banks
are subject to certain restrictions imposed by the Federal Reserve Act
on extensions of credit to the Bank Holding Companies or its non-bank
subsidiaries and its affiliates, or investments in their securities and
on the use of their securities as collateral for loans to any borrowers.
These regulations and restrictions may limit the Bank Holding Companies'
ability to obtain funds from the subsidiary banks for their cash needs,
including funds for acquisitions and for payment of dividends, interest
(including interest on the Subordinated Debentures) and operating
expenses. Further, under the BHCA and certain regulations of the Federal
Reserve, a bank holding company and its subsidiaries are prohibited from
engaging in certain tying arrangements in connection with any extension
of credit, lease or sale of property or furnishing of services. For
example, each of the subsidiary banks may generally not require a
customer to obtain other services from an affiliated bank or its Bank
Holding Company and may not require the customer to promise not to obtain
other services from a competitor, as a condition to an extension of credit
to the customer.
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The subsidiary banks are also subject to certain restrictions
imposed by the Federal Reserve Act on extensions of credit to executive
officers, directors, principal stockholders or any related interest of
such persons. Extensions of credit (i) must be made on substantially the
same terms, including interest rates and collateral as, and following
credit underwriting procedures that are not less stringent than, those
prevailing at the time for comparable transactions with persons not
covered and who are not employees; and (ii) must not involve more than
the normal risk of repayment or present other unfavorable features. The
subsidiary banks are also subject to certain lending limits and
restrictions on overdrafts to such persons.
RESERVE REQUIREMENTS. The Federal Reserve requires all depository
institutions to maintain reserves against their transaction accounts and
non-personal time deposits. Reserves of 3% must be maintained against
total transaction accounts of $47.8 million or less (subject to
adjustment by the Federal Reserve) and an initial reserve of $1,434,000
plus 10% of any amount over $47.8 million (subject to adjustment by the
Federal Reserve to a level between 8% and 14%) must be maintained
against that portion of total transaction accounts in excess of such
amount. The balances maintained to meet the reserve requirements imposed
by the Federal Reserve may be used to satisfy liquidity requirements.
Institutions are authorized to borrow from the Federal Reserve
Bank "discount window," but Federal Reserve regulations require
institutions to exhaust other reasonable alternative sources of funds,
including advances from Federal Home Loan Banks ("FHLBs"), before
borrowing from the Federal Reserve Bank.
[FEDERAL HOME LOAN BANK SYSTEM. The subsidiary banks are members
of the Federal Home Loan Bank System ("FHLB System"), which consists of
twelve regional FHLBs, each subject to supervision and regulation by the
Federal Housing Finance Board, an independent agency created by FIRREA.
The FHLBs provide a central credit facility primarily for member
institutions. The subsidiary banks are required to acquire and hold
shares of capital stock in an FHLB in an amount at least equal to 1% of
the aggregate principal amount of their unpaid residential mortgage
loans and similar obligations at the beginning of each year, or 1/20th
of advances (borrowings) from the FHLB, whichever is greater.]
RESTRICTIONS ON THRIFT ACQUISITIONS. The Bank Holding Companies
are prohibited from acquiring, without prior approval of the Director of
the Office of Thrift Supervision ("OTS"), (i) control of any savings
institution or savings and loan holding company or substantially all the
assets thereof; or (ii) more than 5% of the voting shares of a savings
institution or holding company which is not a subsidiary. Furthermore,
such an acquisition would require such Bank Holding Company itself to
become registered as a savings and loan holding company subject to all
applicable regulations of the OTS.
DIVIDENDS. The Bank Holding Companies' primary source of funds is
the dividends, if any, paid by their subsidiary banks. The ability of
the subsidiary banks to pay dividends is limited by federal laws, by the
regulations promulgated by the bank regulatory agencies and by
principles of prudent bank management.
MONETARY POLICY AND ECONOMIC CONTROL. The commercial banking
business is affected not only by general economic conditions, but also
by the monetary policies of the Federal Reserve. Changes in the discount
rate on member bank borrowings, availability of borrowing at the
"discount window," open market operations, the imposition of changes in
reserve requirements against member bank deposits and assets of foreign
branches, and the imposition of and changes in reserve requirements
against certain borrowings by banks and their affiliates are some of the
instruments of monetary policy available to the Federal Reserve. These
monetary policies are used in varying combinations to influence overall
growth and distributions of bank loans, investments and deposits, and
this use may affect interest rates charged on loans or paid on deposits.
The monetary policies of the Federal Reserve have had a significant effect
on the operating results of commercial banks and are expected to do so in
the future. The monetary policies of the Federal Reserve are influenced by
various factors, including inflation, unemployment,
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short-term and long-term changes in the international trade balance and in
the fiscal policies of the U.S. Government. Future monetary policies and the
effect of such policies on the future business and earnings of the Bank Holding
Companies or the subsidiary banks cannot be predicted.
THE TRUST PREFERRED SECURITIES
DEFINITIONS OF AGREEMENTS
In this Prospectus:
* The "Indentures" means the separate Indentures between each
Bank Holding Company and State Street Bank and Trust
Company, as trustee (the "Debenture Trustee"), under which
the Subordinated Debentures will be issued.
* The "Trust Agreements" means the separate Trust Agreements
under which the Portfolio Trust Preferred Securities will be
issued, among each Bank Holding Company, ____________, as
property trustee ("Property Trustee"), and the
administrative trustees named therein (the "Administrative
Trustees").
* The "Guarantees" means the separate Guarantee agreements
from each of the Bank Holding Companies to ________________,
as trustee ("Guarantee Trustee") for the benefit of the Fund
as holder of the Portfolio Trust Preferred Securities of its
Portfolio Issuer.
The Indentures, the Trust Agreements and the Guarantees will be
qualified as indentures under the Trust Indenture Act of 1939 (the
"Trust Indenture Act"). The forms of each of them have been filed with
the Securities and Exchange Commission as exhibits to the Registration
Statement of which this Prospectus forms a part. The summaries of
these documents which appear below are not complete and are subject to,
and qualified in their entirety by reference to, all of the provisions
of the complete documents. Capitalized terms used with reference to
such documents which are not defined herein have the meanings given in
the documents.
GENERAL
The Portfolio Trust Preferred Securities are trust preferred
securities issued by the Portfolio Issuers. They represent undivided
beneficial interests in the assets of each Portfolio Issuer, which will
consist solely of the Subordinated Debentures issued by its Bank Holding
Company parent and the payments received thereunder. As the holder of
the Portfolio Trust Preferred Securities, the Fund will be entitled to a
preference in certain circumstances with respect to distributions on
such securities and amounts payable on redemption or liquidation over
the common securities issued by the Portfolio Issuer, as well as certain
other rights. No Portfolio Issuer is permitted to issue any securities
other than the Portfolio Trust Preferred Securities issued to the Fund
and the common securities owned by its Bank Holding Company parent.
The Trust Preferred Securities and the Subordinated Debentures are
scheduled to mature on _________________, 2030.
DISTRIBUTIONS
PAYMENT OF DISTRIBUTIONS. Distributions on the Portfolio Trust
Preferred Securities ("Distributions") will be payable to the Fund in an
amount equal to __% of the stated liquidation amount of the securities,
which means the amount that will be paid on redemption or prepayment of
the securities (the "Liquidation Amount"). The term "Distribution" includes
any additional amounts payable in respect of Distributions unless otherwise
stated.
Distributions on the Portfolio Trust Preferred Securities:
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* will accumulate from _______, 2000, the date of original
issuance of the Portfolio Trust Preferred Securities; and
* will be payable quarterly in arrears on each Interest
Payment Date for the quarterly period ending on the
succeeding Distribution Date.
The Distributions will be computed on the basis of a 360-day year
of twelve 30-day months.
EXTENSION PERIOD. Each Bank Holding Company has the right to
defer the payment of interest on its Subordinated Debentures at any time
for one or more Extension Periods. However, a Bank Holding Company may
not defer any payments if it is in default under its Indenture. No
Extension Period may extend beyond the maturity date of the Subordinated
Debentures. If a Bank Holding Company elects to defer the payment of
interest, then Distributions on the related Portfolio Trust Preferred
Securities will also be deferred during the Extension Period, which will
result in a corresponding reduction, during the Extension Period, on the
Distributions on the Shares. The Distributions will continue to
accumulate, with additional interest at an annual rate equal to the rate
of interest applicable to the Subordinated Debentures, compounded
quarterly. After one Extension Period terminates, and all accumulated
Distributions and interest on the Distributions has been paid, a Bank
Holding Company may begin another Extension Period. There is no limit on
the number of times a Bank Holding Company can elect to begin or extend
an Extension Period, except that no single Extension Period may extend
beyond 20 consecutive calendar quarters.
SOURCE OF DISTRIBUTIONS. The funds of each Portfolio Issuer
available for distribution to the Fund, as holder of the Portfolio
Issuer's Portfolio Trust Preferred Securities will be limited to
payments under the Subordinated Debentures of its Bank Holding Company.
See "Description of the Subordinated Debentures." If a Bank Holding
Company does not make interest payments on its Subordinated Debentures,
its Portfolio Issuer subsidiary will not have funds available to pay
Distributions on its Portfolio Trust Preferred Securities. The payment
of Distributions by a Portfolio Issuer is guaranteed by its Bank Holding
Company, but only to the extent such Portfolio Issuer has funds legally
available for the payment of such Distributions and cash sufficient to
make such payments.
REDEMPTION
GENERAL. The Subordinated Debentures will mature on _________,
2030, subject to the right of each Bank Holding Company to accelerate
such date as described below. When a Bank Holding Company repays or
redeems Subordinated Debentures, whether at maturity or upon earlier
redemption, the proceeds will be applied to redeem all or a portion of
the related Portfolio Trust Preferred Securities.
Each Bank Holding Company will have the right, after approval by
the Federal Reserve, if approval is then required, to redeem the
Subordinated Debentures on any Distribution Date occurring on or after
March 31, 2005, in whole at any time or in part from time to time.
If a Bank Holding Company repays or redeems all or any portion of
its Subordinated Debentures after the fifth anniversary of the date of
issuance but on or prior to the tenth anniversary of the date of
issuance, such Bank Holding Company will be required to deposit cash
in escrow to reimburse the Fund for annual operating costs and expenses
payable by the Fund subsequent to the redemption date which would have been
payable by such Bank Holding Company if such redemption had not occurred.
Subsequent to the tenth anniversary of the date of issuance, the Bank Holding
Companies will have the right, after approval by the Federal Reserve, if
approval is then required, to redeem the Subordinated Debentures at par and
its proportionate share of the Fund's operating expenses subsequent to the
date of such redemption shall be allocated among the remaining Bank Holding
Companies.
MANDATORY REDEMPTION. Upon the repayment or redemption of any
Subordinated Debentures, the proceeds will be applied by the Portfolio
Issuer to redeem a corresponding amount of its Portfolio Trust
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Preferred Securities. Such Portfolio Issuer is required to provide no less
than 30 nor more than 60 days' notice of the redemption. The redemption
price will be equal to the Liquidation Amount of the Portfolio Trust
Preferred Securities plus accumulated but unpaid Distributions to the
redemption date. The proceeds shall be distributed to the Shareholders
on such redemption date.
DISTRIBUTION OF SUBORDINATED DEBENTURES. Subject to the approval
of the Federal Reserve, each Bank Holding Company will have the right at
any time to dissolve, wind-up or terminate its Portfolio Issuer
subsidiary. If it does so, it will cause its Subordinated Debentures to
be distributed to the Fund as the holder of the Portfolio Trust
Preferred Securities of such Portfolio Issuer. The Fund would then hold
the Subordinated Debentures and distribute interest payments thereon to
the Shareholders.
CERTAIN DEFINITIONS
"Additional Payments" means such additional amounts as may be
necessary in order that the amount of Distributions then due and payable
by a Portfolio Issuer on the outstanding Portfolio Trust Preferred
Securities will not be reduced as a result of any additional taxes,
duties and other governmental charges to which a Portfolio Issuer has
become subject as a result of a Tax Event.
"Liquidation Amount" means a stated liquidation amount per
Portfolio Trust Preferred Security.
"Tax Event" means the receipt by a Portfolio Issuer of an opinion
of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or
decision is announced on or after the date of issuance of the Portfolio
Trust Preferred Securities, there is more than an insubstantial risk
that (i) interest payable by the Bank Holding Company on its
Subordinated Debentures is not, or within 90 days of the date of such
opinion will not be, deductible by the Bank Holding Company, in whole or
in part, for United States federal income tax purposes, (ii) such
Portfolio Issuer is, or will be within 90 days after the date of such
opinion of counsel, subject to United States federal income tax with
respect to income received or accrued on the related Subordinated
Debentures, or (iii) a Portfolio Issuer is, or will be within 90 days
after the date of such opinion of counsel, subject to more than a de
minimis amount of other taxes, duties, assessments or other governmental
charges. A Bank Holding Company must request and receive an opinion with
regard to such matters within a reasonable period of time after it becomes
aware of the possible occurrence of any of the events described in clauses
(i) through (iii) above.
REDEMPTION PROCEDURES
The redemption of Portfolio Trust Preferred Securities will be
funded with the proceeds from the redemption of the related Subordinated
Debentures. Redemptions of the Portfolio Trust Preferred Securities
will be made on each redemption date only to the extent that the
Portfolio Issuer has funds on hand available for the payment of the
redemption price.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Each Bank Holding Company will have the right to dissolve, wind
up or terminate its Portfolio Issuer subsidiary and cause its
Subordinated Debentures to be distributed to the Fund as the holder of
its Portfolio Trust Preferred Securities. Such right is subject,
however, to the Bank Holding Company having received prior approval of
the Federal Reserve, if then required.
In addition, each Portfolio Issuer will dissolve:
* on the expiration of its term;
* upon the bankruptcy or dissolution of its Bank Holding
Company;
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* upon the distribution of its Subordinated Debentures to the
holders of its Portfolio Trust Preferred Securities;
* upon redemption of all of its Portfolio Trust Preferred
Securities; or
* upon the entry of an order for the dissolution of its
Portfolio Issuer by a court of competent jurisdiction.
In the event of a dissolution, after the Portfolio Issuer pays all
amounts owed to its creditors, the Fund, as holder of Portfolio Trust
Preferred Securities will be entitled to receive:
* the Subordinated Debentures of such Bank Holding Company,
* cash, if the dissolution arises from the redemption of the
Subordinated Debentures, equal to the Liquidation Amount of
the related Portfolio Trust Preferred Securities, plus
accumulated and unpaid Distributions to the date of payment.
Each Bank Holding Company, as the holder of its Portfolio Issuer's
common securities, will be entitled to receive distributions upon any
such liquidation pro rata with the holders of the Portfolio Trust
Preferred Securities. However, if a Debenture Event of Default has
occurred and is continuing under any Indenture, the total amount due on
the Portfolio Trust Preferred Securities will be paid before any
distribution on such common securities. As the sole holder of the
Portfolio Trust Preferred Securities issued by the related Portfolio
Issuers, the Fund will receive and hold such Subordinated Debentures and
make distributions to the Shareholders of the payments received on such
Subordinated Debentures.
LIQUIDATION VALUE
The amount of the liquidation distribution payable on the
Portfolio Trust Preferred Securities is $25 per Portfolio Trust
Preferred Security, plus accrued and unpaid Distributions thereon to the
date of payment, which may be in the form of a distribution of such
amount in Subordinated Debentures, subject to certain exceptions.
THE SUBORDINATED DEBENTURES
GENERAL
The principal amount of the Subordinated Debentures issued by each
Bank Holding Company will be equal to the Liquidation Amount of the
Portfolio Trust Preferred Securities issued by its Portfolio Issuer.
The Subordinated Debentures will bear interest at a fixed annual rate,
payable quarterly on the 15th day of March, June, September, and
December of each year (each, an "Interest Payment Date") beginning _______,
2000. The amount of interest payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months. Interest that is
not paid when due will accrue interest on the amount thereof (to the
extent permitted by law) at the annual rate of ___%, compounded
quarterly. The term "interest" includes quarterly interest payments,
interest on quarterly interest payments not paid on the Interest Payment
Date and Additional Payments.
The Subordinated Debentures will mature on _______, 2030. Such
date may be shortened at any time by the Bank Holding Company to any
date not earlier than March 31, 2005, subject to the Bank Holding
Company having received prior approval of the Federal Reserve, if then
required. No Bank Holding Company will have the right to purchase its
Subordinated Debentures, in whole or in part, from its Portfolio Issuer
until after ___________, 2005.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
A Bank Holding Company has the right, at any time, to defer
payments. as long as it is not in default on the payment of interest on
the Subordinated Debentures. The right to defer payments is limited to a
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period not exceeding 20 consecutive quarters (an "Extension Period"),
and no Extension Period may extend beyond the maturity of the
Subordinated Debentures. At the end of each Extension Period, the Bank
Holding Company must pay all interest then accrued and unpaid, together
with interest thereon at a fixed annual rate of _____%, compounded
quarterly, to the extent permitted by applicable law. During an
Extension Period, interest will continue to accrue and the holders
of the Subordinated Debentures, or the holders of the related
Portfolio Trust Preferred Securities, if such securities are then
outstanding, and the holders of the Shares, will be required to accrue
and recognize income for U.S. federal income tax purposes. See "Certain
Federal Income Tax Consequences--Potential Extension of Interest Payment
Period and Original Issue Discount."
During any such Extension Period, the relevant Bank Holding
Company may not:
* declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect
to, any of its capital stock;
* make any payment of interest, principal or premium on or
repay, repurchase or redeem any debt securities issued by
such Bank Holding Company that rank equal or junior to the
Subordinated Debentures, or guarantee any payments on such
debt securities; or
* redeem, purchase or acquire less than all of its
Subordinated Debentures or the related Portfolio Trust
Preferred Securities.
The Extension Period restrictions do not apply to:
* dividends or distributions in common stock, non-cash
dividends in connection with the implementation of a
shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of
any such rights pursuant thereto; or
* purchases of common stock of such Bank Holding Company
related to the rights under any of its benefit plans for its
directors, officers or employees.
Prior to the termination of any such Extension Period, such Bank
Holding Company may further defer the payment of interest, except that
no Extension Period may exceed 20 consecutive quarters or extend beyond
the maturity date of its Subordinated Debentures. After termination of
any Extension Period and the payment of all amounts then due, the Bank
Holding Company may elect to begin a new Extension Period. No interest
will be due and payable during an Extension Period, except at the end
thereof. The Bank Holding Companies have advised us that they have no
present intention of exercising their rights to defer payments of
interest on the Subordinated Debentures.
A Bank Holding Company must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election
of such Extension Period at least two Business Days prior to the earlier
of:
* the applicable Interest Payment Date on its Subordinated
Debentures; or
* the date the Portfolio Issuer is required to give notice of
the record date, or of the date on which such Distributions
are payable, to the Amex (or other applicable self-
regulatory organization) or to holders of the Portfolio
Trust Preferred Securities, but in any event at least one
Business Day before such record date.
Subject to the foregoing, there is no limitation on the number of
times that a Bank Holding Company may elect to begin an Extension
Period.
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REDEMPTION
Each Bank Holding Company will have the right, after receipt of
prior approval of the Federal Reserve, if approval is then required,
to redeem its Subordinated Debentures prior to maturity on any Distribution
Date occurring on or after March 31, 2005, in whole or in part.
The redemption price will equal 100% of the principal amount to be
redeemed, plus any accrued and unpaid interest to the date of redemption
and any expense reimbursement obligations for the period commencing March 31,
2005 and ending March 31, 2010. See "The Trust Preferred Securities--
Redemption--General."
DISTRIBUTION UPON LIQUIDATION
Under certain circumstances involving the dissolution, winding up
or termination of a Portfolio Issuer, the Subordinated Debentures of its
Bank Holding Company parent may be distributed to the holders of the
Portfolio Trust Preferred Securities in liquidation of such Portfolio
Issuer after satisfaction of liabilities to creditors of such Portfolio
Issuer. Any such distribution will be subject to receipt of prior
approval by the Federal Reserve if then required under applicable
policies or guidelines of the Federal Reserve.
SUBORDINATION
The Subordinated Debentures of each Bank Holding Company are
subordinated and rank junior in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations (each as defined
below) of such Bank Holding Company. Upon any payment or distribution
of assets to creditors upon any liquidation, dissolution, or any
bankruptcy, insolvency, debt restructuring or similar proceedings,
the holders of Senior Debt, Subordinated Debt and Additional Senior
Obligations of the Bank Holding Company will first be entitled to
receive payment in full of principal of, and premium, if any, and
interest, if any, on such Senior Debt, Subordinated Debt and Additional
Senior Obligations before the holders of the Subordinated Debentures
will be entitled to receive or retain any payment in respect of the
principal of or interest on the Subordinated Debentures.
In the event of the acceleration of the maturity of any Subordinated
Debentures, the holders of all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Bank Holding Company outstanding
at the time of such acceleration will first be entitled to receive
payment in full of all amounts due thereon (including any amounts
due upon acceleration) before the holders of the Subordinated Debentures
will be entitled to receive or retain any payment in respect of the
principal of or interest on the Subordinated Debentures.
No payments on account of principal or interest in respect of the
Subordinated Debentures of any Bank Holding Company may be made if:
* there has occurred and is continuing a default in any
payment with respect to Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Bank Holding Company;
* there has occurred and is continuing an event of default
with respect to any Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Bank Holding Company
resulting in the acceleration of the maturity thereof, or
* if any judicial proceeding is pending with respect to any
such default.
SELECTED DEFINITIONS
"Debt" means, with respect to any person, whether recourse is to
all or a portion of the assets of such person and whether or not
contingent:
* every obligation of such person for money borrowed or owed;
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* every obligation of such person evidenced by bonds,
debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of
property, assets or businesses;
* every reimbursement obligation of such person with respect
to letters of credit, bankers' acceptances or similar
facilities issued for the account of such person;
* every obligation of such person issued or assumed as the
deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities
arising in the ordinary course of business);
* every capital lease obligation of such person; and
* every obligation of the type referred to in the foregoing
clauses of another person and all dividends of another
person the payment of which, in either case, such person has
guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
"Senior Debt" means, with respect to a Bank Holding Company, the
principal of (and premium, if any) and interest, if any (including
interest accruing on or after the filing of any petition in bankruptcy
or for reorganization relating to the Bank Holding Company whether or
not such claim for post-petition interest is allowed in such
proceeding), on its Debt, whether incurred on or prior to the date of
its Indenture or thereafter incurred, unless, in the instrument creating
or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligations are not superior in right of payment
to the Subordinated Debentures or to its other Debt which ranks equal
with, or subordinated to, its Subordinated Debentures, except that
Senior Debt does not include
* any Debt of the Bank Holding Company which when incurred and
without respect to any election under section 1111(b) of the
United States Bankruptcy Code of 1978, as amended, was
without recourse to the Bank Holding Company;
* any Debt of the Bank Holding Company to any of its
subsidiaries;
* any Debt to any employee of the Bank Holding Company;
* any Debt which by its terms is subordinated to trade
accounts payable or accrued liabilities arising in the
ordinary course of business to the extent that payments made
to the holders of such Debt by the holders of the
Subordinated Debentures as a result of the subordination
provisions of the Indenture would be greater than they
otherwise would have been as a result of any obligation of
such holders to pay amounts over to the obligees on such
trade accounts payable or accrued liabilities arising in the
ordinary course of business as a result of subordination
provisions to which such Debt is subject; and
* Debt which constitutes Subordinated Debt.
"Subordinated Debt" means, with respect to a Bank Holding Company,
the principal of (and premium, if any) and interest, if any (including
interest accruing on or after the filing of any petition in bankruptcy
or for reorganization relating to the Bank Holding Company whether or
not such claim for post-petition interest is allowed in such
proceeding), on Debt, whenever incurred, which is expressly provided to
be junior and subordinate to other Debt of such Bank Holding Company
(other than the Subordinated Debentures).
"Additional Senior Obligations" means, with respect to a Bank
Holding Company, all of its indebtedness, whenever incurred, for claims
in respect of derivative products such as interest and foreign exchange
contracts, commodity contracts and similar arrangements; except that
Additional Senior Obligations do not include claims in respect of Senior
Debt or Subordinated Debt or obligations which,
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are expressly stated to be not superior in right of payment to the
Subordinated Debentures or to rank equal in right of payment with the
Subordinated Debentures.
"Claim" has the meaning given in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that the occurrence and continuance of the
following events constitutes an event of default (a "Debenture Event of
Default") with respect to the Subordinated Debentures of any Bank
Holding Company:
* failure for 30 days to pay any interest on such Subordinated
Debentures, when due (subject to the deferral of any due
date in the case of an Extension Period); or
* failure to pay any principal on such Subordinated Debentures
when due whether at maturity, upon redemption by declaration
or otherwise; or
* failure to observe or perform in any material respect
certain other covenants contained in the related Indenture
for 90 days after written notice to the applicable Bank
Holding Company from the Debenture Trustee or the holders of
at least 25% in aggregate outstanding principal amount of
such Subordinated Debentures; or
* certain events in bankruptcy, insolvency or reorganization
of the applicable Bank Holding Company.
The holders of a majority in principal amount of the Subordinated
Debentures of any Bank Holding Company have the right to direct the
time, method and place of conducting any proceeding for any remedy
available to the applicable Debenture Trustee. Such Debenture Trustee,
or the holders of not less than 25% in aggregate outstanding principal
amount of such Subordinated Debentures, may declare the principal due
and payable immediately upon a Debenture Event of Default. The holders
of a majority in aggregate outstanding principal amount of such
Subordinated Debentures may annul such declaration and waive the default
if the default, other than the non-payment of the principal of such
Subordinated 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 Debenture Trustee. Should the holders of such
Subordinated Debentures fail to annul such declaration and waive such
default, the holders of a majority in aggregate Liquidation Amount
of the Preferred Securities with respect to the Subordinated Debentures
of any Bank Holding Company will have such right.
If a Debenture Event of Default has occurred and is continuing
with respect to the Subordinated Debentures of any Bank Holding Company,
the Property Trustee will have the right to declare the principal of and
the interest on such Subordinated Debentures, and any other amounts
payable under the related Indenture, to be due and payable and to
enforce its other rights as a creditor with respect to such Subordinated
Debentures.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
No Bank Holding Company may consolidate with or merge into any
other person or convey or transfer its properties and assets
substantially as an entirety to any person, and no person may
consolidate with or merge into a Bank Holding Company or sell, convey,
transfer or otherwise dispose of its properties and assets substantially
as an entirety to a Bank Holding Company, unless:
* 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 by supplemental
indenture the Bank Holding Company's obligations on its
Subordinated Debentures,
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* immediately after giving effect thereto, no Debenture Event
of Default, and no event which, after notice or lapse of
time or both, would become a Debenture Event of Default, has
occurred and is continuing in respect of its Subordinated
Debentures; and
* certain other conditions as prescribed in the Indenture are
met.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under
the Trust Indenture Act. Subject to such provisions, the Debenture
Trustee is under no obligation to exercise any of the powers vested in
it by the Indenture at the request of any holder of Subordinated
Debentures, unless offered reasonable indemnity by such holder against
the costs, expenses and liabilities which might be incurred thereby. The
Debenture 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 Debenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
ADDITIONAL COVENANTS
Each of the Bank Holding Companies has made certain covenants in
the Indenture. Among other things, each Bank Holding Company has
agreed:
* to maintain directly or indirectly 100% ownership of the
common securities of its related Portfolio Issuer (except
that certain successors which are permitted pursuant to the
Indenture may succeed to such Bank Holding Company's
ownership of such common securities);
* not to voluntarily terminate, wind up or liquidate its
Portfolio Issuer, except upon prior approval of the Federal
Reserve, if required, except that it may dissolve its
Portfolio Issuer (a) in connection with a distribution of
its Subordinated Debentures to the Fund as the holder of the
related Portfolio Trust Preferred Securities or (b) in
connection with certain mergers, consolidations or
amalgamations permitted by the Trust Agreement; and
* to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause its Portfolio
Issuer to remain classified as a grantor trust and not as an
association taxable as a corporation for United States
federal income tax purposes.
THE TRUST PREFERRED SECURITIES GUARANTEE
GENERAL
Each Bank Holding Company will execute and deliver a Trust
Preferred Securities Guarantee Agreement (the "Guarantee") for the
benefit of the Fund as holder of the Preferred Securities of its
Portfolio Issuer. In the Guarantee, it will irrevocably agree to pay
in full on a subordinated basis, to the extent set forth therein, the
Guarantee Payments (as defined below) to the holders of the related
Portfolio Trust Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that its related Portfolio
Issuer may have or assert other than the defense of payment.
The following payments with respect to the Portfolio Trust
Preferred Securities, to the extent not paid by or on behalf of its
Portfolio Issuer (the "Guarantee Payments"), will be subject to the
Guarantee by each Bank Holding Company:
* any accrued and unpaid Distributions required to be paid
on the Portfolio Trust Preferred Securities by such Bank
Holding Company, to the extent that its Portfolio Issuer has
funds available therefor at such time;
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* the redemption price with respect to any Preferred
Securities called for redemption by such Bank Holding
Company, to the extent that its Portfolio Issuer has funds
available therefor at such time; and
* upon a voluntary or involuntary dissolution, winding up or
termination of its Portfolio Issuer (other than in
connection with the distribution of Subordinated Debentures
to the holders of Portfolio Trust Preferred Securities or a
redemption of all of the Portfolio Trust Preferred Securities),
the lesser of: (1) the amount of the Liquidation Distribution,
to the extent its Portfolio Issuer has funds available therefor
at such time, and (2) the amount of assets of its Portfolio Issuer
remaining available for distribution to holders of Preferred Securities
in liquidation of its Portfolio Issuer.
The obligation of a Bank Holding Company to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by
the Bank Holding Company to the holders of the Portfolio Trust Preferred
Securities. A Bank Holding Company may also satisfy its obligation by
causing its Portfolio Issuer to pay such amounts to such holders.
The Guarantees will not apply to any payment of Distributions
except to the extent the Portfolio Issuer has funds available therefor.
If a Bank Holding Company does not make interest payments on the
Subordinated Debentures held by its Portfolio Issuer, the Portfolio
Issuer will not pay Distributions on the Portfolio Trust Preferred
Securities and will not have funds legally available therefor.
STATUS OF THE GUARANTEES
The Guarantees will constitute an unsecured obligation of each
Bank Holding Company and will rank subordinate and junior in right of
payment to all Senior Debt, Subordinated Debt and Additional Senior
Obligations of such Bank Holding Company in the same manner as the
Subordinated Debentures. The Guarantees do not place limitations on the
amount of additional Senior Debt, Subordinated Debt or Additional Senior
Obligations that may be incurred by the Bank Holding Companies. The
Bank Holding Companies have advised us that they expect to incur
additional indebtedness from time to time constituting Senior Debt,
Subordinated Debt and Additional Senior Obligations.
Because each Bank Holding Company is a holding company, the right
of each Bank Holding Company to participate in any distribution of
assets of any subsidiary bank upon such bank's liquidation or
reorganization or otherwise is subject to the prior claims of creditors
of that bank, except to the extent the Bank Holding Company may itself
be recognized as a creditor of that bank. Each Bank Holding Company's
obligations under its Guarantee, therefore, will be effectively
subordinated to all existing and future liabilities of the Bank Holding
Company's subsidiaries, and claimants would be required to look only to
the assets of the Bank Holding Company for payments thereunder.
VOTING RIGHTS; AMENDMENTS AND ASSIGNMENT
Pursuant to the Guarantee by each Bank Holding Company, if any
Distributions payable on the Portfolio Trust Preferred Securities of its
Portfolio Issuer are in arrears for six quarterly periods, the Fund, as
the holder of the Portfolio Trust Preferred Securities, voting
separately as a class with any other holders of preferred securities
having similar voting rights, will be entitled at the next regular or
special meeting of shareholders of such Bank Holding Company to elect
two directors to the Board of Directors of the Bank Holding Company.
Such voting rights will continue until such time as the Distribution
arrearage on such Portfolio Trust Preferred Securities has been paid in
full. The affirmative consent of the holders of at least 66-2/3% of the
outstanding Portfolio Trust Preferred Securities of any Portfolio Issuer
will be required for such Portfolio Issuer to adopt amendments to the
related Guarantee that would adversely affect the rights or privileges
of the holders of such Portfolio Trust Preferred Securities. No vote of
the holders of Portfolio Trust Preferred Securities will be required
with respect to any
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amendments to the Guarantee which do not adversely affect the rights or
privileges of such holders. See "Description of the Preferred Securities--
Voting Rights; Amendment of Trust Agreement."
EVENTS OF DEFAULT
An event of default under a Guarantee will occur upon the failure
of the applicable Bank Holding Company to perform any of its payment or
other obligations thereunder. The Fund, as the holder of Portfolio
Trust Preferred Securities, would have the right to direct the time,
method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee in respect of any Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under
the Guarantees.
Each Bank Holding Company is required to file annually with the
Guarantee Trustee a certificate as to whether or not it is in compliance
with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and
continuance of a default by a Bank Holding Company in performance of the
Guarantee, undertakes to perform only such duties as are specifically
set forth in the Guarantee and, following default by a Bank Holding
Company with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct
of his or her own affairs. Subject to such provisions, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in
it by a Guarantee at the request of any holder of any Portfolio Trust
Preferred Securities, unless it is offered reasonable indemnity against
the costs, expenses and liabilities that it might incur.
TERMINATION OF THE GUARANTEES
A Guarantee will terminate and be of no further force and effect
upon:
* full payment of the redemption price of the related
Portfolio Trust Preferred Securities;
* full payment of the amounts payable upon liquidation of the
related Portfolio Issuer; or
* distribution of the related Subordinated Debentures to the
holders of the Portfolio Trust Preferred Securities.
RELATIONSHIP AMONG THE PORTFOLIO TRUST PREFERRED
SECURITIES, THE SUBORDINATED DEBENTURES AND THE
GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Portfolio
Trust Preferred Securities are irrevocably guaranteed by the applicable
Bank Holding Company as and to the extent set forth under "The Trust
Preferred Securities Guarantees." The Fund believes that, taken
together, the obligations of each Bank Holding Company under its
Subordinated Debentures and the related Indenture, Trust Agreement
and Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of
Distributions and other amounts due on the related Portfolio Trust
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that
has the effect of providing a full, irrevocable and unconditional
guarantee of the obligations of the Portfolio Issuers under the
Portfolio Trust Preferred Securities.
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To the extent that a Bank Holding Company does not make payments
on its Subordinated Debentures, its Portfolio Issuer will not pay
Distributions or other amounts due on its Portfolio Trust Preferred
Securities. The Guarantee does not cover payment of Distributions when
a Portfolio Issuer does not have sufficient funds to pay such
Distributions. In that event, the remedy of the Fund, as holder of the
Portfolio Trust Preferred Securities, would be to institute a legal
proceeding directly against the applicable Bank Holding Company for
enforcement of payment of such Distributions to such holder. The
obligations of each of the Bank Holding Companies under its Guarantee
are subordinate and junior in right of payment to all of its Senior
Debt, Subordinated Debt and Additional Senior Obligations.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when
due on the Subordinated Debentures of a Bank Holding Company, such
payments will be sufficient to cover Distributions and other payments
due on the related Portfolio Trust Preferred Securities, primarily
because:
* the aggregate principal amount of such Subordinated
Debentures will be equal to the sum of the aggregate stated
Liquidation Amount of such Portfolio Trust Preferred
Securities;
* the interest rate and interest and other payment dates on
such Subordinated Debentures will match the Distribution
rate and Distribution and other payment dates for the
related Portfolio Trust Preferred Securities;
* the Bank Holding Company will pay for all costs, expenses
and liabilities of its Portfolio Issuer, except its
obligations to the Fund as holder of its Portfolio Trust
Preferred Securities; and
* each Trust Agreement provides that the applicable Portfolio
Issuer will not engage in any activity that is not
consistent with its limited purposes.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
The Fund, as holder of a Portfolio Trust Preferred Security, may
institute a legal proceeding directly against the related Bank Holding
Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the
related Portfolio Issuer or any other person or entity.
A default or event of default under any Senior Debt, Subordinated
Debt or Additional Senior Obligations of a Bank Holding Company would
not constitute a default under its Subordinated Debentures. In the
event, however, of payment defaults under, or acceleration of, Senior
Debt, Subordinated Debt or Additional Senior Obligations of the Bank
Holding Company, the subordination provisions of the Indenture provide
that no payments may be made in respect of its Subordinated Debentures
until such Senior Debt, Subordinated Debt or Additional Senior
Obligations has been paid in full or any payment default thereunder
has been cured or waived. Failure to make required payments on the
Subordinated Debentures would constitute an Event of Default.
LIMITED PURPOSE OF THE PORTFOLIO ISSUERS
The Portfolio Trust Preferred Securities evidence a preferred
undivided beneficial interest in the assets of the Portfolio Issuers.
Each Portfolio Issuer exists for the exclusive purposes of:
* issuing its Portfolio Trust Preferred Securities
representing undivided beneficial interests in its assets;
* investing the gross proceeds of its Portfolio Trust
Preferred Securities in the Subordinated Debentures issued
by its Bank Holding Company, and
* engaging in only those other activities necessary,
advisable, or incidental thereto.
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A principal difference between the rights of a holder of a
Portfolio Trust Preferred Security and the rights of a holder of a
Subordinated Debenture is that a holder of a Subordinated Debenture is
entitled to receive from the related Bank Holding Company the principal
amount of and interest accrued on Subordinated Debentures held, while
the Fund, as holder of Portfolio Trust Preferred Securities, is entitled
to receive Distributions from the Portfolio Issuer (or from the related
Bank Holding Company under the Guarantee) if and to the extent the
Portfolio Issuer has funds available for the payment of such
Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or
liquidation of a Portfolio Issuer involving the liquidation of the
related Subordinated Debentures, the Fund, as holder of the related
Portfolio Trust Preferred Securities, will be entitled to receive, out
of assets held by the Portfolio Issuer, the liquidation distribution in
respect of such Portfolio Trust Preferred Securities in cash. See
"Description of the Preferred Securities--Liquidation Distribution Upon
Termination." Upon any voluntary or involuntary liquidation or
bankruptcy of a Bank Holding Company, the Property Trustee, as holder of
the Subordinated Debentures, would be a subordinated creditor of such
Bank Holding Company, subordinated in right of payment to all of its
Senior Debt, Subordinated Debt and Additional Senior Obligations, but
entitled to receive payment in full of principal and interest before any
shareholders of that Bank Holding Company receive payments or
distributions. Since each Bank Holding Company is the guarantor under
its Guarantee and has agreed to pay for all costs, expenses and
liabilities of its Portfolio Issuer (other than its obligations to the
holders of its Portfolio Trust Preferred Securities), the positions of a
holder of the Portfolio Trust Preferred Securities and a holder of the
Subordinated Debentures relative to other creditors and to shareholders
of a Bank Holding Company in the event of liquidation or bankruptcy of
that Bank Holding Company are expected to be substantially the same.
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INVESTMENT RESTRICTIONS
The Fund has adopted a fundamental policy that the Fund may not:
(a) purchase any securities or instruments other than the Portfolio
Trust Preferred Securities; (b) issue any securities or instruments except
for the Shares; (c) dispose of the Portfolio Trust Preferred Securities
during the term of the Fund, other than in connection with a redemption
thereof by a Portfolio Issuer or Bank Holding Company; (d) sell short,
purchase on margin, or write put and call options; (e) borrow money; (f)
issue senior securities; (g) underwrite securities of other issuers, except
to the extent the Fund may be deemed to be underwriting the Portfolio Trust
Preferred Securities; (h) purchase or sell real estate or commodities; (i)
make loans; or (j) concentrate its investments in any particular industry
or group of industries, except the Fund intends to invest substantially all
of its assets in the Portfolio Trust Preferred Securities. In addition, if the
Fund receives Subordinated Debentures during the term of the Fund, as a result
of an election by a Portfolio Issuer to exchange the related Subordinated
Debentures for Portfolio Trust Preferred Securities, the Fund may not dispose
of such Subordinated Debentures.
Because of these limitations, the Fund's investments will be
concentrated in the financial services industry, which is the industry
in which the Bank Holding Companies currently operate.
The foregoing fundamental policies may not be changed without the
vote of a majority of the outstanding Shares. A majority of the
outstanding Shares means: (i) 67% or more of the Shares present at a
Shareholder meeting, if the holders of more than 50% of the Shares are
present or represented by proxy; or (ii) more than 50% of the Shares,
whichever is less. Unless expressly designated as fundamental, all
other policies of the Fund may be changed by the Fund Trustees without
your approval.
BOOK-ENTRY SYSTEM
The Shares will be issued in the form of one or more global
securities (the "Global Securities") deposited with The Depository Trust
Company (the "Depository") and registered in the name of a nominee of
the Depository.
The Depository has advised the Fund and the Underwriters as
follows: The Depository is a limited-purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to
Section 17A of the Securities Exchange Act of 1934, as amended. The
Depository was created to hold securities of persons who have accounts
with the Depository ("Participants") and to facilitate the clearance and
settlement of securities transactions among its Participants in such
securities through electronic book-entry changes in accounts of the
Participants, thereby eliminating the need for physical movement of
certificates. Such Participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly.
According to the Depository, the foregoing information with
respect to the Depository has been provided to the Industry for
informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
Upon the issuance of a Global Security, the Depository or its
nominee will credit the Shares represented by such Global Security to
the accounts of Participants. The accounts to be credited shall be
designated by the Underwriters. Ownership of beneficial interests in
such Global Securities will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial
interests by Participants in such Global Securities will be shown on,
and the transfer of those ownership interests will be effected only
through, records maintained by the Depository or its nominee for such
Global Securities. Ownership of beneficial interests in such Global
Securities by persons that hold
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through Participants will be shown on, and the transfer of that ownership
interest within such Participant will be effected only through, records
maintained by such Participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and such laws may impair the ability to
transfer beneficial interests in a Global Security.
So long as the Depository for a Global Security, or its nominee,
is the registered owner of such Global Security, such Depository or such
nominee, as the case may be, will be considered the sole owner or holder
of the Shares. Except as set forth below, owners of beneficial interests
in such Global Securities will not be entitled to have the Shares
registered in their names and will not receive or be entitled to receive
physical delivery of the Shares in definitive form and will not be
considered the owners or holders thereof.
Quarterly distributions on Shares registered in the name of or
held by the Depository or its nominee will be made to the Depository or
its nominee, as the case may be, as the registered owner or the holder
of the Global Security. None of the Fund, any Fund Trustee, the
Administrator, the Fund's paying agent or the Custodian (each as defined
herein) for the Shares will have any responsibility or liability for any
aspect of the records relating to, or payments made on account of,
beneficial ownership interests in a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests.
The Fund expects that the Depository, upon receipt of any payment
in respect of a Global Security, will immediately credit Participants'
accounts with payments in amounts proportionate to their beneficial
interests in such Global Security as shown on the records of the
Depository. The Fund also expects that payments by Participants to
owners of beneficial interests in such Global Security held through such
Participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of
such Participants.
A Global Security may not be transferred except as a whole by the
Depository to a nominee or a successor of the Depository. If the
Depository is at any time unwilling or unable to continue as depository
and a successor depository is not appointed by the Fund within ninety
days, the Fund will issue Shares in definitive registered form in
exchange for the Global Security representing such Shares. In addition,
the Fund may at any time and in its sole discretion determine not to
have any Shares represented by one or more Global Securities and, in
such event, will issue Shares in definitive form in exchange for all of
the Global Securities representing the Shares. Further, if the Fund so
specifies with respect to the Shares, an owner of a beneficial interest
in a Global Security representing Shares may, on terms acceptable to the
Fund and the Depository for such Global Security, receive Shares in
definitive form. In any such instance, an owner of a beneficial interest
in a Global Security will be entitled to physical delivery in definitive
form of Shares represented by such Global Security equal in number to that
represented by such beneficial interest and to have such Shares registered
in its name.
TRUSTEES
The trustees of the Fund (the "Fund Trustees") will consist of
three individuals, none of whom will be an "interested person" of the
Fund as defined in the Investment Company Act. The Fund Trustees are
responsible for the overall supervision of the operations of the Fund
and perform the various duties imposed on the trustees of management
investment companies by the Investment Company Act.
The Fund Trustees and officers are:
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<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING PAST
NAME, AGE AND ADDRESS TITLE FIVE YEARS
- ------------------------- -------------------------------- -------------------------------------
<S> <C> <C>
Patrick R. Koster Initial Trustee, interim Chief First Vice President of Stifel,
Executive Officer and interim Nicolaus & Company,
Chief Financial Officer (to Incorporated since 199__;
resign prior to distribution of Vice President of Stifel,
the Shares) Nicolaus & Company,
Incorporated since 199__.
Managing Trustee
Fund Trustee
Fund Trustee
Secretary
</TABLE>
COMPENSATION OF FUND TRUSTEES
The Fund will pay the annual fees and anticipated out-of-pocket
expenses of each unaffiliated Fund Trustee and any additional fees of
the Fund's Managing Trustee. The Fund will pay each such unaffiliated
Fund Trustee $___ for each Fund Trustees' meeting attended in-person or
by telephone. None of the Fund Trustees receives any compensation for
serving as a trustee or director of any other affiliated investment
company.
MANAGEMENT ARRANGEMENTS
PORTFOLIO MANAGEMENT AND ADMINISTRATION
The Fund will be internally managed and will not have an
investment adviser. The Fund's portfolio will consist only of the
Portfolio Trust Preferred Securities. The Fund's portfolio will not be
actively managed. The Fund Trustees will authorize the purchase of the
Portfolio Trust Preferred Securities as directed by the Declaration of
Trust. It is a fundamental policy of the Fund that the Portfolio Trust
Preferred Securities may not be disposed of during the term of the Fund
other than in connection with a redemption thereof.
All expenses incurred in the Fund's formation and other initial
expenses and expenses relating to the Offering shall be paid by the Bank
Holding Companies in connection with the investment by the Fund in the
Portfolio Trust Preferred Securities. The Fund will pay the
Administrator a quarterly fee at an annual rate of [____]% of the net
asset value of the Fund. The Administrator will also be reimbursed for
the ongoing administrative and other expenses of the Fund, such as
accounting services, expenses for legal and auditing services, taxes,
costs of printing proxies, listing fees, if any, stock certificates and
shareholder reports, charges of the Administrator, the Custodian (as
defined herein) and the paying agent, fees and expenses of Fund
Trustees, accounting costs, brokerage costs, litigation, mailing and
other expenses properly payable by the Fund, by the Bank Holding
Companies. The Administrator will reimburse the Custodian, the Fund's
paying agent and the Fund Trustees for expenses incurred in the execution
of their duties.
ADMINISTRATOR
The day-to-day affairs of the Fund will be managed by
_______________ as the administrator (the "Administrator") pursuant to
an administration agreement (the "Administration Agreement"). Under the
Administration Agreement, the Fund Trustees have delegated most of their
operational duties to the Administrator, including the duties to: (i)
pay, or cause to be paid, all expenses incurred by the Fund; (ii) with
the approval of the Fund Trustees, engage legal and other professional
advisors (other than the independent public accountants for the Fund);
(iii) instruct the Fund's paying agent to pay distributions on Shares as
described herein; (iv) cause the legal and other professional advisors
engaged by it to
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prepare and mail, file or publish all notices, proxies, reports, tax returns
and other communications and documents for the Fund, and keep all books and
records for the Fund; (v) at the direction of the Fund Trustees, and upon
being furnished with reasonable security and indemnity as the Administrator
may require, institute and prosecute legal and other appropriate proceedings
to enforce the rights and remedies of the Fund; and (vi) make, or cause to be
made, all necessary arrangements with respect to meetings of Fund Trustees and
any meetings of holders of Shares. The Administrator will not, however, select
the independent public accountants for the Fund or sell or otherwise dispose
of the Fund assets (except in connection with the early redemption thereof).
The address of the Administrator is ________________________.
CUSTODIAN AND TRANSFER AGENT
The Fund's custodian (the "Custodian") is ____________________.
The Custodian will perform the Fund's custodial and portfolio accounting
services, as well as serve as the Fund's dividend paying agent.
______________, whose address is ______________, will serve as the
transfer agent to the Fund.
INDEMNIFICATION
The Fund will, to the fullest extent permitted by applicable law,
indemnify each Fund Trustee, the Administrator, the transfer agent and
the Custodian with respect to any claim, liability or loss which it may
incur in acting as such, and any reasonable expense incurred in
connection with any such claim, liability or loss (including the
reasonable costs and expenses of the defense against any claim or
liability) except in the case of willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.
ESTIMATED EXPENSES
Organization costs of the Fund in the amount of $_____________ and
estimated costs of the Fund in connection with the initial registration
of the Shares and the Offering in the amount of approximately
$____________ will be paid to the Fund by the Bank Holding Companies in
connection with the investment by the Fund in the Portfolio Trust
Preferred Securities. The Administrator will be reimbursed for ongoing
administrative and other expenses of the Fund by the Bank Holding
Companies. The Administrator will reimburse the Custodian, the transfer
agent and the Fund Trustees for expenses incurred in the execution of
their duties.
NET ASSET VALUE
The net asset value of the Fund will be calculated on the last
business day of each calendar quarter and at such other times as may be
determined by the Fund Trustees. The net asset value is the value of our
net assets, that is, our assets less our liabilities, excluding our
capital stock and surplus. So long as there is no active trading market
for the Portfolio Trust Preferred Securities, they will be valued as
determined in good faith by the Fund Trustees.
The value of our assets as determined by the Fund Trustees must
approximate market value, or the value that the Fund Trustees reasonably
believe could be received in the short term upon the sale of the
securities we hold. The Fund Trustees have established and will
regularly monitor procedures to value the Portfolio Trust Preferred
Securities. Initially, they will be valued at cost. In determining the
fair value of such securities, the Fund Trustees ordinarily will
consider the following factors:
* publicly available information regarding the Bank Holding
Companies,
* market conditions and values ascribed to comparable
securities issued by comparable companies,
* the existence of restrictions on the sale of the securities,
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* the public trading values of comparable debt securities of
comparable companies and the current yield to call on
comparable securities, and
* changes in the financial condition and prospects of the Bank
Holding Companies.
Although the Fund Trustees will have responsibility for the
valuation process, the actual valuation may be done by one or more
agents selected by the Fund Trustees.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of the material United States federal
income tax considerations that may be relevant to the purchasers of the
Shares. This summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations
issued thereunder and current administrative rulings and court decisions,
all of which are subject to change at any time, with possible retroactive
effect. Subsequent changes may cause the tax consequences to vary
substantially from the consequences described below. As part of its
fiscal year 2001 budget proposal, the Clinton Administration recently made
certain proposals (the "Proposals") aimed at curbing what have become known
as "corporate tax shelters." Although we believe these Proposals, if enacted
into law in their current form, are not likely to apply to the purchase,
ownership, and disposition of the Shares (based on both their substance and
the proposed effective date), because no specific statutory language has
been proposed and because the proposed effective date is subject to change,
the effect of the Proposals is uncertain.
The authorities on which the following summary is based are subject to
various interpretations, and it is therefore possible that the United States
federal income tax treatment of the purchase, ownership, and disposition
of the Shares may differ from the treatment described below.
No attempt has been made in the following discussion to comment on
all United States federal income tax matters which may affect purchasers
of the Shares. Moreover, this summary generally focuses only on a
United States noncorporate holder of the Shares who is an individual
citizen or resident of the United States, an estate, the income of which
is includable in its gross income for United States federal income tax
purposes without regard to its source, or a trust if a court within the
United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have
the authority to control all substantial decisions of the trust ("U.S.
Holders"), and who acquires the Shares on their original issue at their
offering price and who holds the Shares as a capital asset. This
summary has only limited application to dealers in securities,
corporations, partnerships or nonresident aliens, and does not address
all the tax consequences that may be relevant to holders who may be
subject to special tax treatment, such as, for example, banks, thrifts,
real estate investment trusts, regulated investment companies, insurance
companies, dealers in securities or currencies, tax-exempt investors, or
persons that will hold the Shares as a position in a "straddle," as part
of a "synthetic security" or "hedge," as part of a "conversion
transaction" or other integrated investment, or as other than a capital
asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or
the tax consequences to Shareholders, partners or beneficiaries of a
holder of the Shares. Further, it does not include any description of
any alternative minimum tax consequences or the tax laws of any state or
local government or of any foreign government that may be applicable to
the Shares. Accordingly, each prospective investor should consult, and
should rely exclusively on, such investor's own tax advisors in analyzing the
federal, state, local and foreign tax consequences of the purchase,
ownership or disposition of the Shares.
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CLASSIFICATION OF THE SUBORDINATED DEBENTURES
Each Bank Holding Company intends to take the position that its
Subordinated Debentures will be classified for United States federal
income tax purposes as indebtedness of the Bank Holding Company under
current law, and, by acceptance of a Share, each holder covenants to
treat the underlying Subordinated Debentures as indebtedness and the
Shares as evidence of an indirect beneficial ownership interest in the
Subordinated Debentures. No assurance can be given, however, that such
position of a Bank Holding Company will not be challenged by the
Internal Revenue Service or, if challenged, that such a challenge will
not be successful. The remainder of this discussion assumes that the
Subordinated Debentures will be classified for United States federal
income tax purposes as indebtedness of the Bank Holding Companies.
CLASSIFICATION OF THE FUND AND OF THE PORTFOLIO ISSUERS
Under current law and assuming full compliance with the terms of
the Declaration of Trust (and certain other documents described herein),
the Fund will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a
corporation. Under current law and assuming full compliance with the
terms of the Trust Agreement of each Portfolio Issuer, each Portfolio
Issuer will be classified for United States federal income tax purposes
as a grantor trust and not as an association taxable as a corporation.
Accordingly, for United States federal income tax purposes, each holder
of the Shares generally will be treated as owning an undivided
beneficial interest in the Portfolio Trust Preferred Securities and in
the underlying Subordinated Debentures, and upon the occurrence of an
Extension Period each holder will be required to include in its gross
income any original issue discount ("OID") accrued with respect to its
allocable share of the Subordinated Debentures (see OID discussion
below) whether or not cash is actually distributed to such holder.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
Under existing Treasury regulations (the "Regulations"), a debt
instrument will be deemed to be issued with OID if there is more than a
"remote" contingency that periodic stated interest payments due on the
instrument will not be timely paid. Because the exercise by a Bank
Holding Company of its option to defer the payment of stated interest on
the Subordinated Debentures would prevent the Bank Holding Company from
declaring dividends on any class of capital stock or making payments on
any debt securities that rank equal to or junior in interest to the
Subordinated Debentures, each Bank Holding Company believes that the
likelihood of its exercising the option is "remote" within the meaning
of the Regulations. As a result, each Bank Holding Company intends to
take the position that the Subordinated Debentures will not be deemed to
be issued with OID. Accordingly, based on this position, stated interest
payments on the Subordinated Debentures will be includable in the
ordinary income of a holder only at the time that such payments are paid
or accrued in accordance with the holder's regular method of accounting.
Because the Regulations have not yet been addressed in any published
rulings or other published interpretations issued by the Internal
Revenue Service, it is possible that the Internal Revenue Service could
take a position contrary to the position taken by the Bank Holding
Companies.
If a Bank Holding Company were to exercise its option to defer the
payment of stated interest on the Subordinated Debentures, the
Subordinated Debentures would be treated, solely for purposes of the OID
rules, as being "reissued" at such time with OID. The amount of interest
income includable in the taxable income of a holder of the Subordinated
Debentures would be determined on the basis of a constant yield method
over the remaining term of the instrument regardless of the holder's
method of tax accounting and the actual receipt of future payments of
stated interest on the Subordinated Debentures would no longer be separately
reported as taxable income. Consequently, a holder of the Shares would be
required to include OID in ordinary income, on a current basis, over the
period that the instrument is held even though a Bank Holding Company would
not be making any actual cash payments during the Extension
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Period. The amount of OID that would accrue, in the aggregate, during
the Extension Period would be approximately equal to the amount of the
cash payment due at the end of such period. Moreover, under the
Regulations, if the option to defer the payment of interest income with
respect to the Subordinated Debentures was determined not to be "remote,"
the Subordinated Debentures would be treated as having been originally
issued with OID. In such event, all of a holder's taxable interest income
would be accounted for as OID and any OID included in income would increase
the holder's adjusted tax basis in the Subordinated Debentures and the
holder's actual receipt of interest payments would reduce such basis.
MARKET DISCOUNT AND ACQUISITION PREMIUM
A holder of the Shares other than a holder who purchased the
Shares upon original issuance may be considered to have acquired its
undivided indirect interest in the underlying Subordinated Debentures
with "market discount" or "acquisition premium," as such phrases are
defined for United States federal income tax purposes. Such a holder
should be aware that the Proposals issued as part of the Clinton
Administration's proposed fiscal year 2001 budget would require debt
holders using the accrual method of accounting to include "market
discount" in income as it accrues (see Proposals discussion above) and
is advised to consult his or her own tax advisors as to the income tax
consequences of the acquisition, ownership and disposition of the
Shares.
RECEIPT OF SUBORDINATED DEBENTURES UPON LIQUIDATION OF PORTFOLIO ISSUER
Each Bank Holding Company will have the right at any time to
liquidate its Portfolio Issuer and cause its Subordinated Debentures
to be distributed pro rata to the Fund in exchange for the related
Portfolio Trust Preferred Securities. Under current United States
federal income tax law, and assuming that the Portfolio Issuers will
be classified as grantor trusts and not as associations taxable as
corporations, a distribution of Subordinated Debentures from a Portfolio
Issuer to the Fund in exchange for Portfolio Trust Preferred Securities
would not be treated as a taxable event to the Shareholders. If,
however, the Portfolio Issuers were classified for United States federal
income tax purposes as associations taxable as corporations at the time
of the distribution, the distribution of the Subordinated Debentures
would constitute a taxable event to the Portfolio Issuers and to the
Shareholders and a Shareholder's holding period in the holder's
proportionate share of the Subordinated Debentures would begin on
the date such Subordinated Debentures were received.
Under certain circumstances the Subordinated Debentures may be
redeemed for cash and the proceeds of such redemption distributed to the
Shareholders. Under current law, such a redemption would for United
States federal income tax purposes constitute a taxable disposition of
a Shareholder's proportionate share of the redeemed Subordinated
Debentures as if the Shareholder had sold its Shares for cash.
DISPOSITION OF SHARES
Upon the sale of the Shares, a holder will recognize gain or loss
in an amount equal to the difference between its adjusted tax basis in
the Shares and the amount realized in the sale (except to the extent of
any amount received in respect of accrued but unpaid interest not
previously included in income). A holder's adjusted tax basis in the
Shares generally will be such holder's initial purchase price with
respect to the Shares increased by OID (if any) previously includable in
the holder's gross income to the date of disposition and decreased by
payments (if any) received on the Shares in respect of OID to the date
of disposition. In general, any gain or loss will be a capital gain or
loss and will be a long-term capital gain or loss if, at the time of
disposition, the Shares have been held for more than twelve months.
The Shares may trade at a price that does not accurately reflect
the value of accrued but unpaid interest (or OID if the Subordinated
Debentures are treated as having been issued, or reissued, with OID)
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with respect to the underlying Subordinated Debentures. A holder who
disposes of his or her Shares between record dates for payments of
distributions thereon will be required to include in ordinary income
(i) any portion of the amount realized that is attributable to such accrued
but unpaid interest to the extent not previously included in income, or
(ii) any amount of OID, in either case, that has accrued on its pro rata
share of the underlying Subordinated Debentures during the taxable year
of sale through the date of disposition. Any OID included in income will
increase the holder's adjusted tax basis in his or her Shares
transferred (see discussion above). To the extent that the amount
realized in the sale is less than the holder's adjusted tax basis,
a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
PAYMENT OF FEES AND EXPENSES BY THE BANK HOLDING COMPANIES
If and to the extent that it is determined that any fees and
expenses borne or incurred by the Bank Holding Companies, including, the
fees paid to the Fund Trustees, were properly allocable to, and payable
by, the Fund, then each Shareholder may be treated as having received a
distribution of, and may be required to include in ordinary income, his
or her pro rata share of such fees and expenses properly allocable to
the Fund. Such deemed distribution and income inclusion will generally
result in a corresponding deduction so that each Shareholder will be
entitled to deduct, consistent with his or her method of accounting, his
or her pro rata share of such fees and expenses. If a Shareholder is an
individual, estate or trust, the deduction for such holder's share of
such fees and expenses will be allowed only to the extent that all such
holder's miscellaneous itemized deductions, including such holder's
share of such fees and expenses, exceed two percent (2%) of such
holder's adjusted gross income for the taxable year. In addition, in the
case of a Shareholder who is an individual, certain otherwise allowable
itemized deductions will be subject generally to additional limitations
on itemized deductions under applicable provisions of the Code. A
Shareholder is advised to consult with his or her own tax advisors
regarding limitations on the deductibility of fees and expenses
determined to be properly allocable to, and payable by, the Fund.
POSSIBLE TAX LAW CHANGES
You should be aware that legislation has been proposed by the
Clinton Administration in the past that, if enacted, could have
adversely affected the ability of a Bank Holding Company to deduct
interest paid on the Subordinated Debentures. No such legislation is
currently pending. There can be no assurance, however, that similar
legislation will not ultimately be enacted into law, or that other
developments will not occur on or after the date hereof that would
adversely affect the ability of a Bank Holding Company to deduct the
interest payable on the Subordinated Debentures. Consequently, there
can be no assurance that a Tax Event will not occur.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Interest paid on the Subordinated Debentures, or the amount of OID
accrued on the Subordinated Debentures, if applicable, held of record by
individual citizens or residents of the United States, or certain
trusts, estates, and partnerships, will be reported to the Internal
Revenue Service on Forms 1099, which forms should be mailed to such
holders of the Shares by January 31 following each calendar year.
Payments made on, and proceeds from the sale of, the Shares may be
subject to a "backup" withholding tax (currently at 31%) unless the
holder complies with certain identification and other requirements. Any
amounts withheld under the backup withholding rules will be allowed as a
credit against the holder's United States federal income tax liability,
provided the required information is provided to the Internal Revenue
Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE
IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE
DEPENDING UPON THE PARTICULAR SITUATION OF A HOLDER OF THE SHARES.
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HOLDERS OF THE SHARES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE SHARES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement,
the several Underwriters named below, acting through Stifel, Nicolaus
& Company, Inc., as representative of the several Underwriters (the
"Representative"), have agreed, severally, to purchase from the Fund the
number of Shares set forth opposite their names:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES PERCENTAGE
------------------------------------------- ------------------ ------------
<S> <C> <C>
Stifel, Nicolaus & Company, Incorporated %
501 N. Broadway
St. Louis, Missouri 63102
Total 100%
================= ============
</TABLE>
The several Underwriters have agreed in the underwriting agreement,
subject to certain terms and conditions set forth therein, to purchase
all of the Shares offered hereby, if any of such Shares are purchased.
In the event of default by an Underwriter, the underwriting agreement
provides that, in certain circumstances, purchase commitments of the
non-defaulting Underwriters may be increased or the underwriting
agreement may be terminated.
The Offering price and distribution rate have been determined by
negotiations among the Bank Holding Companies, the Fund and the
Underwriters, and the Offering price of the Shares may not be
indicative of the market price following this Offering.
In view of the fact that the net proceeds of the sale of the
Shares will be indirectly used to purchase the Subordinated Debentures
of the Bank Holding Companies, the Bank Holding Companies have agreed to
pay as compensation to the Representative, for the accounts of the
several Underwriters, for arranging the investment of such proceeds
therein, an aggregate amount equal to 5% of the price to the public of
the Shares, or $1.25 per Share ($2,500,000 in total, or $2,875,000 if
the Underwriters' over-allotment option is exercised in full).
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The Fund will incur various expenses in registering the Shares,
all of which will be reimbursed by the Bank Holding Companies. The
Fund's estimated expenses of this Offering, excluding underwriting
discount, are as follows:
Registration fee $15,986
Printing costs $
Accounting Fee $
Legal fees and expenses $
NASD fees $ 6,250
Amex fees $
Miscellaneous $
-------
Total $
=======
This Offering of the Shares is made for delivery when, as and
if accepted by the Underwriters and subject to prior sale and to
withdrawal, cancellation or modification of the Offering without notice.
The Underwriters reserve the right to reject any order for the purchase
of Shares.
The Fund has granted the Underwriters an option, exercisable not
later than 30 days from the date of the effectiveness of this Offering
(the date of this Prospectus), to purchase up to an aggregate of 300,000
additional Shares at the Offering price to cover over-allotments. To
the extent the Underwriters exercise this option, each of the Underwriters
will have a firm commitment to purchase approximately the same percentage
of the additional Shares that the number of Shares to be purchased initially
by the Underwriter is of the 2,000,000 shares initially purchased by the
Underwriters. The Fund will be obligated, pursuant to the option, to sell
such Shares to the Underwriters. The Underwriters may exercise such option
only to cover over-allotments, if any, incurred in connection with the sale
of the 2,000,000 Shares offered in this Offering. If purchased, the
Underwriters will sell these additional Shares on the same terms as those on
which the initial 2,000,000 Shares are being offered. Interest will start
accruing on the date of the closing of the sale of the initial 2,000,000 Shares.
The Underwriters have advised the Fund that they propose initially
to offer the Shares to the public at the public offering price set forth
on the cover of this Prospectus, and to certain dealers at such price
less a concession not in excess of $____ per Share. The Underwriters
may allow, and such dealers may re-allow, discounts not in excess of
$____ per Share on sales to certain other dealers. The Representative
has informed the Fund that the Underwriters do not intend to confirm
sales to accounts over which they exercise discretionary authority.
There currently is no market for the Shares. Consequently, the
initial Offering price has been determined by negotiation among the
Fund, the Representative and the Bank Holding Companies. The Fund plans
to apply to list the Shares on the Amex under the symbol "PTPA". The
Representative has advised the Fund that it presently intends to make a
market in the Shares after the commencement of trading on the Amex, but
no assurance can be made as to the liquidity of such Shares or that an
active and liquid trading market will develop or, if developed, that it
will continue. The Representative will have no obligation to make a
market in the Shares, however, and may cease market-making activities,
if commenced, at any time.
In connection with and during this Offering, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the
market price of the Shares. These transactions may include
stabilization transactions under which persons may bid for or purchase
Shares to stabilize the market price of the Shares. The Underwriters
may also create a "short position" for their own account by selling more
Shares in this Offering than they are committed to purchase, and in that
case they may purchase Shares in the open market after this Offering is
completed to cover all or a part of their short position. The
Underwriters may also cover all or a portion of their short position, up
to 300,000 Shares, by exercising their over-allotment option described
above and on the cover of this Prospectus. Also, the
44
<PAGE>
<PAGE>
Representative, on behalf of the Underwriters, may impose "penalty bids,"
under contractual arrangements with the Underwriters, that allow it to
reclaim from an Underwriter (or dealer participating in this Offering),
for the account of the other Underwriters, the selling concession on the
Shares that the Underwriters distribute in this Offering but later
purchase for their account in the open market. Any of these transactions
may maintain the price of the Shares at a higher level than the level
which the Shares might otherwise bear in the open market. None of these
transactions is required, and if the Underwriters, selling agents or others
engage in these transactions, they may also stop at any time.
The underwriting agreement provides that the Fund will indemnify
the Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended. The Bank
Holding Companies have made similar indemnifications to the Underwriters
and the Fund with respect to certain information contained in this
Prospectus regarding the Bank Holding Companies, the Portfolio Issuers
and agreements relating to this Offering.
The foregoing is a summary of certain principal terms of the
underwriting agreement. However, this summary is subject to the
definitive terms and conditions of the underwriting agreement, a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
The Underwriters do not intend to confirm sales to accounts over
which they exercise discretionary authority.
LEGAL MATTERS
Certain legal matters will be passed upon for the Fund by its
counsel, Morgan, Lewis & Bockius LLP, Washington, D.C. Certain legal
matters will be passed upon for the Underwriters by their counsel, Bryan
Cave LLP, St. Louis, Missouri. Certain matters of Delaware law will be
passed upon for the Fund by Richards, Layton & Finger, PA, special
Delaware counsel to the Fund. See also "Taxation."
EXPERTS
The statement of assets and liabilities included in this
Prospectus has been audited by KPMG LLP, independent auditors, as stated
in their opinion appearing herein, and has been included in reliance
upon such opinion given on the authority of said firm as experts in
auditing and accounting.
ADDITIONAL INFORMATION
The Fund has filed with the SEC, a Registration Statement on Form
N-2 under the Securities Act of 1933, as amended, and under the
Investment Company Act of 1940, as amended, with respect to the Shares
offered hereby. Further information concerning the Shares and the Fund
may be found in the Registration Statement, of which this Prospectus
constitutes a part. The Registration Statement may be inspected without
charge at the public reference facilities maintained by the SEC at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all
or any part thereof may be obtained from such office after payment of
the fees prescribed by the SEC. The SEC maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements
and other information regarding registrants, such as the Fund, that file
electronically with the Commission.
INDEPENDENT AUDITORS' REPORT
[to be provided by auditors]
45
<PAGE>
<PAGE>
<TABLE>
BROADWAY STREET POOLED TRUST PREFERRED FUND A
STATEMENT OF ASSETS AND LIABILITIES
______________, 2000
<CAPTION>
ASSETS
<S> <C>
Cash $
---------------------------------------
Total Assets $
=======================================
<CAPTION>
LIABILITIES
<S> <C>
Total Liabilities $
=======================================
NET ASSETS $
=======================================
<CAPTION>
NET ASSET VALUE PER UNIT
<S> <C>
_____ Shares issued and outstanding $
=======================================
<FN>
- ---------------
<F1> The Fund was created as a Delaware business trust on December 9,
1999 and has had no operations other than matters relating to its
organization and registration as a non-diversified, closed-end
management investment company under the Investment Company Act of
1940, as amended.
</TABLE>
46
<PAGE>
<PAGE>
==================================================================
TABLE OF CONTENTS
Summary Information 1
Fee Table 4
Structual Diagram 5
Risk Factors 6
The Fund 12
Use of Proceeds 12
Description of the Shares 12
Investment Objective and Policies 13
The Bank Holding Companies 14
The Trust Preferred Securities. 22
The Subordinated Debentures 25
The Trust Preferred Securities Guarantee 30
Relationship Among the Portfolio Trust Preferred
Securities, the Subordinated Debentures and the
Guarantee 32
Investment Restrictions 35
Book-Entry System 35
Fund Trustees 36
Management Arrangements 37
Net Asset Value 38
Certain Federal Income Tax Consequences 39
Underwriting 43
Legal Matters 45
Experts 45
Additional Information 45
Independent Auditors' Report 45
-----------------------
THROUGH AND INCLUDING ______________, 2000 (THE 25TH DAY AFTER
THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS
IN THE SHARES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY
BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE
DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
==================================================================
==================================================================
2,000,000 SHARES
BROADWAY STREET
POOLED TRUST
PREFERRED FUND A
OFFERING PRICE $25 PER SHARE
------------------
PROSPECTUS
[_________], 2000
------------------
STIFEL, NICOLAUS & COMPANY
INCORPORATED
==================================================================
<PAGE>
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
1. FINANCIAL STATEMENTS
Independent Auditors' Report
Statement of Assets and Liabilities as of ___________, 2000
2. EXHIBITS
(a) (1) Declaration of Trust<F*>
(2) Certificate of Trust as filed with the State of
Delaware on December 9, 1999<F*>
(3) Amended and Restated Declaration of Trust<F**>
(b) Bylaws<F**>
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) Not applicable
(g) Form of Administration Agreement<F**>
(h) Form of Underwriting Agreement<F**>
(i) Not applicable
(j) Form of Custodian Agreement<F**>
(k) Material Contracts to be performed after filing
(1) Form of Forward Purchase Agreement<F**>
(2) Form of Specimen for Portfolio Trust Preferred
Securities<F**>
(3) Form of Amended and Restated Trust Agreement<F**>
(4) Form of Indenture<F**>
(5) Form of Preferred Securities Guarantee Agreement<F**>
(l) Opinion and Consent of Morgan, Lewis & Bockius LLP, counsel
to the Fund<F**>
(m) Not applicable
(n) (1) Tax Opinion and Consent of Bryan Cave LLP, special tax
counsel to the Fund<F**>
(2) Consent of KPMG LLP, independent auditors for the
Fund<F**>
(o) Not applicable
(p) Form of Initial Capital Agreement<F**>
(q) Not applicable
(r) Code of Ethics<F**>
[FN]
- --------------
<F*> Previously filed
<F**> To be filed by amendment
<PAGE>
<PAGE>
ITEM 25. MARKETING ARRANGEMENTS
See Exhibit (h) to this Registration Statement.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration fee $15,986
Printing costs $
-------------
Legal fees and expenses $
-------------
NASD fees $ 6,250
Amex fees $
-------------
Miscellaneous $
-------------
Total $
=============
ITEM 27. PERSON CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Fund will be internally managed and will not have an
investment adviser. The information in the Prospectus under the caption
"Management Arrangements" is incorporated herein by reference.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
Not applicable
ITEM 29. INDEMNIFICATION
To be included by amendment.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Not applicable.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940, as amended, and
the rules promulgated thereunder are maintained at the offices of the
Registrant ([address]), its Custodian ([address]) and its transfer agent
([address]).
ITEM 32. MANAGEMENT SERVICES
Not applicable.
ITEM 33. UNDERTAKINGS
1. The Registrant hereby undertakes to suspend the offering of
the Shares covered hereby until it amends its prospectuses contained
herein if (1) subsequent to the effective date of this Registration
Statement, its net asset value per Share declines more than 10 percent
from its net asset value per Share as of the effective date of the
Registration Statement or (2) the net asset value per Share increases to
an amount greater than its net proceeds as stated in the prospectus
contained herein.
2. Not Applicable.
<PAGE>
<PAGE>
3. Not Applicable.
4. Not Applicable.
5. The Registrant hereby undertakes that (a) for purpose of
determining any liability under the 1933 Act, the information omitted
from the form of prospectuses filed as part of this Registration
Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant under Rule 497(h) under the 1933 Act
shall be deemed to be part of this Registration Statement as of the time
it was declared effective; and (b) for the purpose of determining any
liability under the 1933 Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering
of the securities at that time shall be deemed to be the initial bona
fide offering thereof.
6. Not Applicable.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis, State of
Missouri, on the 14th day of February, 2000.
BROADWAY STREET POOLED TRUST
PREFERRED FUND A
By: /s/ Patrick R. Koster
-------------------------------------
Patrick R. Koster
Initial Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed by the following
persons in the capacities indicated and on the 14th day of February, 2000.
By: /s/ Patrick R. Koster
-------------------------------------
Patrick R. Koster
Initial Trustee, Chief Executive
Officer and Chief Financial Officer
