U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-2
[ X ] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
[ X ] Amendment No. 19
Commission File Number 811-3135
PMD Investment Company
(Exact Name of Registrant as Specified in Charter)
10050 Regency Circle, Suite 315, Omaha, Nebraska 68114
(Address of Principal Executive Offices)
402-392-0608
(Registrant's Telephone Number, including Area Code)
J.G. Sawicki
10050 Regency Circle, Suite 315
Omaha, Nebraska 68114
(Name and Address of Agent for Service)
Copy to:
Kim M. Argo
Abrahams Kaslow & Cassman
8712 West Dodge Road, Suite 300
Omaha, Nebraska 68114
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Items 1, 2, 3.2, 4, 5, 6 and 7. Omitted pursuant to Paragraph 3 of General
Instruction G to Form N-2.
Item 3. Fee Table and Synopsis. Not applicable.
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Item 8. General Description of the Registrant.
1. General.
a. The Registrant was organized as a corporation
under the laws of Nebraska on October 26, 1962.
b. The Registrant is classified as a Closed-end Diversified Management
Company under sections 4 and 5 of the Investment Company Act of 1940.
2. Investment Objectives and Policies.
a. Recital of Investment Objectives: The investment objective of the
Registrant, which may not be changed without the vote of the holders of a
majority of the Registrant's outstanding voting securities, is to obtain as high
a level of interest income as is consistent with prudent investment management
and the preservation of capital of the Registrant; provided, that at all times
at least fifty percent (50%) of the value (as defined in Section 851(c)(4) of
the Internal Revenue Code of 1986 or the comparable provision of any later
internal revenue law of the United States) of the total assets of the Registrant
shall consist of obligations described in Section 103(a) of the Internal Revenue
Code of 1986 or the comparable provision of any later internal revenue law of
the United States. Information concerning the types of securities in which the
Registrant intends to invest and the types of securities which will constitute
the major portfolio emphasis of the Registrant appears below in Item 8.2.c.
b. Recital of Fundamental Policies: The following statements represent
the policy of the Registrant with respect to the indicated activities:
(1) The Registrant will not issue senior
securities.
(2) The Registrant will not purchase securities on margin (except
such short-term credits as are necessary for the clearance of transactions) or
effect a short sale of any security. The Registrant will not write, purchase, or
sell put or call options, or combinations thereof, except that the Registrant
may write a call option for securities it owns at the time of selling the
option, not to exceed securities representing 10% of the Registrant's total
assets, in which case the Registrant will continue to hold the underlying
security during the life of the call option.
(3) The Registrant will not borrow money, except that as a
temporary measure for extraordinary or emergency purposes it may borrow from
banks, so long as the aggregate of any such borrowings does not exceed 5% of the
value of the Registrant's total assets immediately prior to the time of the
loan.
(4) The Registrant will not underwrite securities of other
issuers and will not acquire restricted securities (securities that must be
registered under the Securities Act of 1933 before they may be offered or sold
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to the public) unless the Registrant's investment advisor determines that such
restricted securities are readily marketable pursuant to an exemption from
registration under such Act.
(5) The Registrant will not concentrate its investments in a
particular industry or group of industries.
(6) The Registrant will not purchase or sell real estate or real
estate mortgage loans, but the Registrant may invest in bonds or other debt
securities which are secured by real estate or interests therein, including but
not limited to real estate mortgages.
(7) The Registrant will not purchase or sell commodities or
commodity contracts, including but not limited to futures contracts in a
contract market or other futures market.
(8) The Registrant will not make loans to other persons except
through the purchase of a portion of an issue of publicly distributed debt
securities.
(9) At least 75% of the value of the Registrant's total assets
will consist of (i) cash and cash items (including receivables), (ii) Government
securities (securities issued or guaranteed as to principal or interest by the
United States or by a person controlled or supervised by and acting as an
instrumentality of the Government of the United States pursuant to authority
granted by the Congress of the United States), (iii) securities of other
investment companies, and (iv) other securities limited in respect of any one
issuer to an amount not greater in value than 5% of the value of the total
assets of the Registrant and to not more than 10% of the outstanding voting
securities of such issuer. Except upon complying with the requirements of
Section 12(d) of the Investment Company Act of 1940, the Registrant will not
invest in securities of other investment companies in aggregate amounts in
excess of 10% of the value of the Registrant's total assets, will not invest
more than 5% of the value of the Registrant's total assets in any one investment
company, and will not own more than 3% of the total outstanding voting stock of
any investment company. The Registrant may, however, acquire securities of other
investment companies in connection with a merger or similar combination.
c. Recital of Investment Policies: The significant investment policies
of the Registrant which are not deemed fundamental and which may be changed
without shareholder approval are as follows:
(1) The Registrant does not intend to invest in any issuer's
securities for the purpose of exercising control of such issuer.
(2) The Registrant does not intend to invest in foreign
securities or to engage in arbitrage activities.
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(3) The Registrant will seek to accomplish its investment
objective stated in Item 8.2.a. by:
(a) Investing at least sixty percent (60%) of its assets in:
(i) debt obligations issued by states, territories, and possessions of the
United States, the District of Columbia, the Commonwealth of Puerto Rico, and
their political subdivisions and instrumentalities, the interest on which is, at
the time of the issuance of such debt obligations in the opinion of bond counsel
for the issuers, exempt from federal income tax (such debt obligations generally
being referred to as "Municipal Securities"); and (ii) securities of other
regulated investment companies (subject to applicable restrictions imposed by
the Investment Company Act of 1940) whose investments consist exclusively of
Municipal Securities; and
(b) Investing up to forty percent (40%) of its assets in
fixed-income debt securities, the interest on which is not, at the time of the
issuance of such fixed-income debt securities, exempt from federal income tax
(such fixed-income debt securities generally being referred to as "Fixed-Income
Securities"); and (ii) securities of other regulated investment companies
(subject to applicable restrictions imposed by the Investment Company Act of
1940) whose investments consist exclusively of Fixed-Income Securities.
(4) The Municipal Securities in the which the Registrant may
invest (or, if the Registrant invests in securities of other regulated
investment companies, the Municipal Securities in which such other regulated
investment companies may invest) either will be rated (at the time of purchase
by the Registrant or such other regulated investment company) by Moody's
Investors Service, Inc. ("Moody's") within its three highest rating categories
for municipal obligations (AAA, AA and A) or within Moody's short-term municipal
obligations top rating categories of MIG 1 and MIG 2 or by Standard & Poor's
Company ("S&P") within its three highest rating categories for municipal
obligations (AAA, AA and A) or if unrated will be deemed by the Registrant's
investment advisor to be of comparable quality. The Registrant will not be
required to dispose of a Municipal Security held by it if such Municipal
Security's rating is downgraded by Moody's or by S&P to a rating below the
minimum ratings set forth in this paragraph 4, although the Registrant's
investment adviser shall consider whether continued investment in such Municipal
Security is consistent with the Registrant's investment objectives and shall
promptly after such Municipal Security's rating is downgraded notify the
Registrant of its determination whether the Registrant should sell or otherwise
dispose of such Municipal Security.
(5) The Fixed-Income Securities in which the Registrant may
invest must be of investment grade. A Fixed- Income Security will be deemed to
be of "investment grade" if, at the time of acquisition by the Registrant, the
Fixed-Income Security is rated at least Baa by Moody's or BBB by S & P's, or at
a comparable rating by another nationally recognized rating organization. The
Registrant will not be required to dispose of a Fixed-Income Security held by it
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if such Fixed-Income Security's rating falls below investment grade, although
the Registrant's investment adviser shall consider whether continued investment
in such Fixed-Income Security is consistent with the Registrant's investment
objectives and shall promptly after such Fixed-Income Security's rating is
downgraded notify the Registrant of its determination whether the Registrant
should sell or otherwise dispose of such Fixed-Income Security.
(6) The Registrant may invest in short-term Municipal Securities
and Fixed-Income Securities and may engage in short-term trading (selling
securities held for brief periods of time, usually less than three months) if it
believes, upon the advice of its investment adviser, that such transactions, net
of costs including taxes, if any, would improve the overall return on the
Registrant's investment portfolio. However, the Registrant's voluntary
short-term trading will be limited to the extent necessary to enable the
Registrant to qualify as a "regulated investment company" under the Internal
Revenue Code of 1986; accordingly, the Registrant will limit such trading to the
extent necessary to preclude its deriving 30% or more of its gross income in any
taxable year from the sale or other disposition of securities held for less than
three months.
d. During the years ended December 31, 1998 and 1999, the Registrant's
portfolio turnover rates were 16.6% and 0%, respectively. The Registrant
generally expects that its investment objective will be pursued with limited
portfolio turnover (other than as a result of bond maturities), except as
required by prudent investment management and to obtain cash in connection with
the periodic redemptions of shares which the Registrant may make from its
shareholders who wish to have their shares redeemed. See Item 8.2.c. concerning
the Registrant's policy with respect to short-term trading and Item 8.5.d.
concerning such periodic redemptions.
3. Risk Factors.
The principal risk factors associated with an investment in the Registrant
are the following:
a. There is no market for the Registrant's shares other than the
semi-annual redemption program that the Registrant presently makes available to
its shareholders. (See Item 8.5.d below.) There is no requirement that such
program continue to be made available, although the Registrant does not
presently contemplate the termination of such program. The redemption price is
the applicable net asset value of the Registrant's shares, which fluctuates as
the market prices of the securities held in the Registrant's portfolio
fluctuate.
b. The income stream provided by the Registrant's shares is dependent
upon the interest payments that the Registrant receives on its portfolio
investments. As bonds with a particular rate of interest mature or are called
for early redemption by the issuer, there is no assurance that the Registrant
will be able to replace such bonds with other bonds that will have an equivalent
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yield. In recent years, as interest rates in general have declined in the United
States municipal bond market, the overall yield on the Registrant's portfolio
has declined.
c. A default in the payment of principal by an issuer of a bond held
in the Registrant's portfolio could result in a loss of some or all of the
principal value of such bond, with a corresponding reduction in the Registrant's
assets and net asset value per share. A default in the payment of interest by an
issuer of a bond held in the Registrant's portfolio could result in a reduction
in the Registrant's income available for the payment of dividends to its
shareholders.
4. Other Policies.
There are no investments that will be made by Registrant that are not
disclosed elsewhere in this Item 8.
5. Share Price Data.
a. The Registrant's Common Stock (its only security) is not listed on
any stock exchange.
b. Not applicable.
c. The Registrant believes that the market for its Common Stock has
been inactive since April 1981. At December 31, 1999, the net asset value of the
Registrant's Common Stock was $4.17 per share.
d. Not applicable.
e. If a market for the Registrant's Common Stock were to develop, it
is possible that the market price for the Registrant's Common Stock would be
less than the net asset value per share of such Common Stock from time to time
since closed-end investment companies' securities frequently trade for amounts
less than the net asset value.
The Registrant has established an arrangement which permits its
shareholders, at such shareholders' option, to have their shares of the
Registrant's Common Stock redeemed at net asset value on June 30 and December 31
of each year if certain conditions (including but not limited to 90 days'
advance notice from a shareholder who intends to have shares redeemed) are
satisfied by such shareholders. The Registrant is unable to predict the effect,
if any, that such redemption arrangement would have on the market price of the
Registrant's Common Stock if a market for such stock develops. The specific
details of such arrangement appear in Exhibit S to this registration statement.
6. Business Development Companies.
Not applicable.
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Item 9. Management.
1. General.
a. Board of Directors. The responsibilities of the board of directors
with respect to the management of the Registrant consist of (i) periodic
meetings with and reviews of the performance of the Registrant's investment
adviser, (ii) periodic reviews of the Registrant's investment portfolio, (iii)
election of corporate officers of the Registrant, (iv) declaration of dividends,
and (v) in general, the direction of the business and affairs of the Registrant.
b. Investment Advisers.
(1) The following information relates to the Registrant's
investment adviser:
(a) First National Bank of Omaha ("FNBO"), One First
National Center, 1620 Dodge Street, Omaha, Nebraska, 68102.
(b) FNBO has been engaged in the investment advisory
business, as a registered investment adviser under the Investment Advisers Act
of 1940, since 1962. FNBO provides a full range of financial and trust services
to businesses, individuals, and government entities. The FNBO trust division
provides a full range of administrative services including estate settlement,
personal trust administration, employee benefit administration and record
keeping, institutional custody, corporate trust services, and transfer and
paying agent services.
(c) FNBO, the Registrant's investment advisor, is a national
banking association and is a subsidiary of First National of Nebraska, Inc. a
Nebraska corporation. First National of Nebraska, Inc. currently owns 99.66% of
the outstanding voting securities of FNBO.
(d) No affiliated person of the Registrant is also an
affiliated person of FNBO.
(2) The following relates to the services provided by the
Registrant's investment adviser:
(a) Under the investment advisory agreement between the
Registrant and FNBO, FNBO is required to use its staff and other facilities to
perform a continuous review of the Registrant's portfolio of securities and to
determine what securities should be purchased or sold by the Registrant
(including the placing of orders for the purchase and sale of such securities),
what portion of the assets of the Registrant should remain uninvested, and the
extent to which the Registrant should otherwise use its investment powers (all
in a manner consistent with the Registrant's investment policies and
restrictions). At its own expense FNBO may employ, retain, or otherwise avail
itself of the services and facilities of other persons or organizations for the
purpose of obtaining such statistical and other factual information, such advice
regarding economic factors and trends, such advice as to occasional transactions
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in specific securities, and such other information, advice, or assistance as
FNBO may deem necessary, appropriate, or convenient for the discharge of its
obligations under the agreement. FNBO also is required to maintain a continuous
record of all of the Registrant's securities and to furnish to the Registrant's
Board of Directors, upon request, a resume of the Registrant's securities
portfolio. FNBO also must report to the Registrant's Board of Directors on all
matters pertaining to FNBO's services as investment adviser at the regular
meetings of the Board and at such other times as the Board may request. FNBO
must pay all of the costs and expenses of performing the services described
above. The Registrant, however, must pay all brokerage commissions (if any) on
its portfolio transactions.
(b) There is no expense limitation provision in the
agreement between the Registrant and FNBO.
(3) The following sets forth the compensation of the Registrant's
investment adviser:
(a) The investment advisory agreement between the Registrant
and FNBO provides for a monthly fee equal to 1/12 of 0.25% of the first
$10,000,000 of the net asset value of the Registrant on the last day in each
month on which the New York Stock Exchange is open for trading and for a monthly
fee on the Registrant's net asset value in excess of $10,000,000 on such last
trading day equal to 1/12 of 0.15% of such excess net asset value, with a
minimum fee of $10,000 for each successive 12-month period.
(b) The investment advisory fees paid to or accrued for the
year ended December 31, 1999, were $32,565, and for the year ended December 31,
1998, were $31,839. The investment advisory fees paid to or accrued for the
Registrant's prior investment advisor, Mentor Investment Advisors, L.L.C.
(formerly known as Commonwealth Investment Counsel, Inc.) for the year ended
December 31, 1997 were $9,847.
c. Portfolio Management. Following are the names and titles of the
persons employed by or associated with the investment adviser who are primarily
responsible for the day-to- day management of the Registrant's portfolio, the
length of time that each person has been primarily responsible for the
management of the Registrant's portfolio, and each person's business experience
during the past five years:
(1) Richard D. Chapman, Chief Investment Officer and Vice
President. Mr. Chapman has 29 years of investment management experience. Mr.
Chapman has been primarily responsible for the management of the Registrant's
portfolio since June 1997. In 1971, Mr. Chapman received his B.S. degree from
the University of Nebraska at Omaha and joined the investment group of FNBO.
(2) John G. Woolway, CFA, Vice President and Head of Fixed
Income. Mr Woolway has 13 years of investment management experience. Mr. Woolway
has been primarily responsible for the management of the Registrant's portfolio
since June 1997. Prior to joining FNBO in 1993, Mr. Woolway was a Portfolio
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Manager at FirsTier Bank and a Fixed Income Analyst at Chicago Title and Trust
Company in Chicago, Illinois. Mr. Woolway received his B.S. degree from the
University of Iowa in 1985 and his M.B.A. from DePaul University in 1991.
(3) Michael D. Hansen, CFA, Portfolio Manager and Fixed Income
Analyst. Mr. Hansen has 10 years of investment management experience. Mr. Hansen
has been primarily responsible for the management of the Registrant's portfolio
since June 1997. Mr. Hansen joined FNBO in 1997 after seven years with the
Nebraska Investment Council where he served as the Fixed Income Portfolio
Manager. Mr. Hansen received his B.S. degree from the University of Nebraska at
Lincoln in 1988.
(4) Greg Ritchey, Money Market Portfolio Manager and Fixed Income
Analyst. Mr. Ritchey has 6 years of investment management experience. Mr.
Ritchey has been primarily responsible for the management of the Registrant's
portfolio since February 1999. Mr. Ritchey received his B.S. degree from the
University of Kansas in 1989 and his M.B.A. from the University of Kansas in
1994. Mr. Ritchey joined FNBO in 1994.
(5) Sharon Chu, Fixed Income Analyst. Ms. Chu has 3 years of
investment management experience. Ms. Chu has been primarily responsible for the
management of the Registrant's portfolio since July 1999. Prior to joining FNBO
in 1998, Ms. Chu was the Assistant Security Analyst for the Overseas Investment
Division of Shin Kong Life Insurance Co., Taipei, Taiwan. Ms. Chu received her
B.B.A. from the National Taiwan University in 1990 and her M.B.A. from the
National Taiwan University in 1996, and her Masters of Accountancy from the
University of Iowa in 1998.
d. Administrators. The Registrant is not a party to any "management
related service contracts" not discussed elsewhere in this registration
statement.
e. Custodians.
(1) The custodian of the Registrant's portfolio securities is
First National Bank of Omaha ("FNBO"), One First National Center, Omaha,
Nebraska 68103. FNBO is a national banking association which acts as custodian
through its trust department. Under the Custodian Agreement between the
Registrant and FNBO, FNBO is required to hold and dispose of, on behalf of the
Registrant, certain cash, securities and other property of the Registrant (the
"Property") pursuant to instructions from the Registrant. FNBO is also required
to collect and receive, for the account of the Registrant, all income and other
payments and distributions included or to be included in the Property and to
provide other services as described in the Custodian Agreement.
(2) The Registrant's transfer agent and dividend- paying agent is
First National Bank of Omaha, One First National Center, Omaha, Nebraska 68103.
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f. Expenses. The Registrant must pay all of its own expenses for its
custodian, transfer agent and registrar, accountants, and attorneys and for
other expenses not covered by the investment advisory agreement with FNBO. There
are no fees, expenses, or costs relating to the Registrant's business as an
investment company which are to be paid by anyone other than the Registrant or
FNBO. In connection with the sale of the assets of the Registrant's previous
retail business, the purchaser assumed substantially all of the liabilities and
obligations of such previous business and is required to pay or otherwise
discharge such liabilities and obligations, although the Registrant remains
contingently liable for such liabilities and obligations to the extent they have
not been paid or otherwise discharged.
g. Affiliated Brokerage. During the years ended December 31, 1997,
1998 and 1999, the Registrant paid no brokerage commissions since all of its
portfolio transactions were handled on a principal (net) basis.
2. Non-resident Managers.
Not applicable.
3. Control Persons.
The controlling shareholder of the Registrant is the personal
representative of the Estate of D. J. Witherspoon, First National Bank of Omaha,
One First National Center, 1620 Dodge Street, Omaha, Nebraska 68102. The Estate
of D. J. Witherspoon owned 2,989,969 shares of the Registrant's Common Stock,
$0.50 par value, on March 2, 2000, which represented 89.479% of the outstanding
Common Stock of the Registrant on such date. The Estate's shares presently are
held of record by First National Bank of Omaha, as personal representative; such
personal representative, in its fiduciary capacity, has sole voting and
dispositive power with respect to such shares. The Registrant's Common Stock is
its only outstanding voting security. The Estate's control has no effect on the
voting rights of other shareholders of the Registrant, each of whom is entitled
to vote all of his or her shares on all matters submitted to a vote of the
Registrant's shareholders.
Item 10. Capital Stock, Long-Term Debt, and Other Securities
1. Capital Stock.
a. The Registrant's only class of common stock is its Common Stock,
par value $0.50 per share. The holders of Common Stock are entitled to receive
dividends, out of funds legally available for the payment of dividends, when and
as they are declared by the Registrant's Board of Directors. The holders of
Common Stock have one vote per share on all matters submitted to a vote of
shareholders and are entitled to cumulate their votes in all elections for
directors of the Registrant. Upon the liquidation or dissolution of the
Registrant, the holders of Common Stock are entitled to share pro rata in the
assets, if any, legally available for distribution to shareholders. The holders
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of Common Stock are not liable to further calls or to assessments by the
Registrant in respect of their shares. The holders of Common Stock have no
pre-emptive or conversion rights. There are no redemption or sinking fund
provisions applicable to the Common Stock; however, as discussed in Item 8.5.d,
the Registrant has established a voluntary redemption arrangement for those
shareholders who wish to avail themselves of such redemption opportunities. The
details of the redemption arrangement are set forth in Exhibit S to this
registration statement.
b. Not applicable.
c. Not applicable.
d. Not applicable.
e. Not applicable.
f. Not applicable.
2. Long-Term Debt.
All of the long-term debt of the Registrant was assumed by the
purchaser in the asset sale transaction described in Part B, Item 16 and has
been or is required to be paid by such purchaser, although the Registrant
remains contingently liable for such debt until it is paid.
3. General.
Registrant does not have any other classes of authorized securities.
4. Taxes.
a. The Registrant believes that it is eligible to elect and has
elected the tax status of a "regulated investment company" under the Internal
Revenue Code of 1986 (the "Code") and intends, for the foreseeable future, to
maintain that status.
b. A "regulated investment company" which distributes to its
shareholders at least 90% of its investment company taxable income, as defined
in the Code, and meets certain other conditions is not taxed on the amount of
such income so distributed. Dividends so distributed are taxed to the
shareholders at ordinary income rates and, subject to certain limitations,
qualify, in the case of eligible corporate shareholders, for the 70% dividends
received deduction available under the Code (80% in the case of any dividend
received after 1987 from a 20-percent owned corporation as defined in the Code).
A "regulated investment company" which fails to distribute at least 90% of such
investment company taxable income is taxed in the same manner as any other
corporation not qualifying as a "regulated investment company", but a "regulated
investment company" is not required to distribute its realized net long-term
capital gain, if any.
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A non-deductible excise tax is imposed by the Code on certain undistributed
income of a "regulated investment company", effective for calendar years after
1986. The tax is equal to 4% of the excess of (1) the "required distribution"
(as defined in the Code) for a calendar year over (2) the "distributed amount"
(as defined in the Code) for such calendar year. Subject to certain adjustments
prescribed by the Code, a "required distribution" is the sum of 98% of the
"regulated investment company's" ordinary income for a calendar year (as
determined under the Code) plus 98% of the "regulated investment company's"
capital gain net income for the one-year period ending on October 31 of such
calendar year.
A "regulated investment company" which invests at least 50% of the value of
its total assets, determined at the close of each quarter of its taxable year,
in certain obligations described in Section 103(a) of the Code, the interest on
which is exempt from federal income taxes, may distribute, as federal income tax
exempt dividends to its shareholders, the interest earned on such obligations if
it designates such dividends as tax-exempt interest dividends in a written
notice mailed to its shareholders and distributes annually at least 90% of such
net tax-exempt interest to its shareholders. The Registrant has invested and
presently intends to invest at least 50% of the value of its total assets in
such tax-exempt obligations and to distribute substantially all of its net
income to its shareholders so as to avail itself of the Code provisions
described in this paragraph.
Subject to certain exceptions in the Code, any loss on the sale or exchange
of stock in a "regulated investment company" is disallowed to the extent the
taxpayer received exempt-interest dividends and held the stock for six months or
less; this provision is applicable to shares of stock whose holding period began
after March 28, 1985.
Net realized long-term capital gain (i) is excluded from the taxable income
of a "regulated investment company" to the extent distributed to its
shareholders and (ii) is taxed to a "regulated investment company" at the
corporate capital gain rate applicable to ordinary corporations to the extent
not distributed to its shareholders. Moreover, long-term capital gain dividends
distributed to shareholders retain that character in the hands of the
shareholders, regardless of how long any shareholder has owned his or her
shares. Each shareholder is taxable at long- term capital gain rates applicable
to individuals on such long- term capital gain dividends which are distributed
to him or her. Each shareholder also is required to report as taxable long-term
capital gain his or her proportionate share of any undistributed capital gains
which are designated for such purpose by the "regulated investment company" but
is allowed a tax credit in an amount equal to the tax paid by the "regulated
investment company" on such proportionate share and also is allowed to increase
the tax basis of his or her shares of the "regulated investment company" by an
amount equal to 66% of such proportionate share.
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Any loss on the sale or exchange of stock in a "regulated investment
company" will be treated as a long-term capital loss to the extent the taxpayer
received distributions from the "regulated investment company" which are treated
as long-term capital gain and held the stock for six months or less.
The foregoing discussion relates only to federal income tax matters; state
and local income tax treatment of the Registrant and its shareholders will not
necessarily be the same as the federal income tax treatment.
c. The Registrant presently intends to continue its policy of
distributing substantially all of its net income to its shareholders on a
quarterly basis. If the Registrant sustains any capital losses as a result of
its investment activities, then the Registrant may retain rather than distribute
any subsequent capital gains, at least to the extent of such capital losses, so
as to take advantage of capital loss carryovers available for federal income tax
purposes. The Registrant presently does not intend to permit reinvestment of
dividends paid to its shareholders.
d. There are no special or unusual tax aspects of the Registrant not
disclosed or referred to above in this Item 10.4.
5. Outstanding Securities.
The following information relates to the Registrant's Common Stock, $0.50
par value, which is the sole authorized class of capital stock of the
Registrant, and is given as of March 2, 2000:
(1) (2) (3) (4)
Amount Outstand-
Amount Held ing Exclusive
Title of Amount by Registrant or of Amount Shown
Class Authorized for its Account Under (3)
Common 20,000,000 None 3,341,524
Stock, shares shares
$0.50
par value
6. Securities Ratings. Not applicable.
Item 11. Defaults and Arrears on Senior Securities.
1. None. All long-term debt of the Registrant which was outstanding on
January 15, 1981, was assumed and is required to be paid by the purchaser of the
Registrant's previous retail business (see Part B, Item 16), although the
Registrant remains contingently liable for such debt until it is paid.
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2. None.
Item 12. Legal Proceedings.
Neither the Registrant nor the Registrant's investment adviser is a party
to any material pending legal proceedings.
Item 13. Table of Contents of the Statement of Additional Information.
(1) Item 14. Cover Page.
(2) Item 15. Table of Contents.
(3) Item 16. General Information and History.
(4) Item 17. Investment Objectives and Policies.
(5) Item 18. Management.
(6) Item 19. Control Persons and Principal Holders of
Securities.
(7) Item 20. Investment Advisory and Other Services.
(8) Item 21. Brokerage Allocation and Other Services.
(9) Item 22. Tax Status.
(10) Item 23. Financial Statements.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
March 24, 2000
(Date of Statement of Additional Information)
PMD INVESTMENT COMPANY
(Name of Registrant)
This Statement of Additional Information is not a prospectus and should be
read with Part A of Amendment No. 19 to the Registrant's Registration Statement
on Form N-2 under the Investment Company Act of 1940 dated March 24, 2000. A
copy of such Amendment No. 19 may be obtained by a written request sent to the
Registrant at 10050 Regency Circle, Suite 315, Omaha, Nebraska 68114.
PART B - INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
Item 15. Table of Contents.
(1) Item 16. General Information and History.
(2) Item 17. Investment Objectives and Policies.
(3) Item 18. Management.
(4) Item 19. Control Persons and Principal Holders of
Securities.
(5) Item 20. Investment Advisory and Other Services.
(6) Item 21. Brokerage Allocation and Other Services.
(7) Item 22. Tax Status.
(8) Item 23. Financial Statements.
Item 16. General Information and History.
Until January 15, 1981, for more than five years, the Registrant was
engaged, under the name "Pamida, Inc.", in the operation of general merchandise
discount department stores in thirteen Midwestern, North Central, and Rocky
Mountain states. On January 15, 1981, the Registrant consummated the sale of its
discount store business and related operating assets to New Pamida, Inc. and
thereafter, on the same day, changed its corporate name to "PMD Investment
Company". On January 16, 1981, the Registrant registered as an investment
company under the Investment Company Act of 1940 by filing a Notification of
Registration on Form N8-A with the Securities and Exchange Commission, and since
that time the Registrant has been engaged in the business of an investment
company. The Registrant has not been a party to any bankruptcy, receivership, or
similar proceedings or any other material reorganization, readjustment, or
succession during the past five years.
<PAGE>
Item 17. Investment Objectives and Policies.
All required information is contained in Part A, Item 8.
Item 18. Management.
1. The following information relates to the directors and officers of the
Registrant as of March 24, 2000; the Registrant has no advisory board:
(1) (2) (3)
Principal
Positions Occupations
Name, Address Held with during Past
and Age Registrant 5 Years
J. G. Sawicki Director, Since 1979, retired;
10340 Fieldcrest Court President, and previously, for more
Apt. 502 Treasurer than 5 years, vice
Omaha, NE 68114 president of
Age 86 Mid-Continent Bottlers,
Inc. (soft drink
bottler)
Herbert B. Underwood Director, Vice Since 1991, retired;
4966 South 150th Plaza President, and previously, for
Omaha, NE 68137 Secretary more than 5 years, an
Age 73 executive officer of
Pamida, Inc. (owner
and operator of
general merchandise
discount stores)
John Patrick Director, For more than 5
Witherspoon* Vice President years, engaged in the
611 Shorewood Lane business of real
Waterloo, NE 68069 estate management
Age 39 and development
There is no family relationship between any of such persons.
The Registrant has no executive or investment committee.
* John Patrick Witherspoon is the son of D. J. Witherspoon and is an
interested person as defined in Section 2(a) 19 of the Investment Company Act of
1940 by reason of such relationship.
2. None of the persons named in Item 18.1 above has any position with any
affiliated person of the Registrant. The Registrant has no underwriter.
3. Not applicable.
4. During the year ended December 31, 1998, each director of the Registrant
was entitled to receive an annual director's fee of $5,000 and an additional
$500 for each meeting of the Board of Directors of the Registrant in excess of
four which such director attended during such fiscal year. The aggregate
remuneration paid to or accrued for the Registrant's officers and directors for
1999 was $15,000. The Registrant does not expect to pay any other or additional
compensation or benefits to any of its officers or directors.
<PAGE>
5. The Registrant and its investment advisor have adopted codes of ethics.
The codes of ethics do not permit unaffiliated directors and officers of the
Registrant and employees, officers and directors of the Registrant's investment
advisor to invest in securities including securities that may be purchased or
held by the Registrant about which such person has material non-public
information or other conflict of interest. The details of the codes of ethics
are set forth in Exhibit R to this registration statement. These codes of ethics
can be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C., and information on the operation of the Public Reference Room
may be obtained by calling the Commission at 1-202-942-8090. These codes of
ethics are also available on the EDGAR Database on the Commission's Internet
site at http://www.sec.gov, and copies of these codes of ethics may be obtained,
after paying a duplicating fee, by electronic request, at the following E-mail
address: [email protected], or by writing the Commission's Public Reference
Section, Washington, D.C. 20549-0102.
Item 19. Control Persons and Principal Holders of Securities.
1. The controlling shareholder of the Registrant is the personal
representative of the Estate of D. J. Witherspoon, First National Bank of Omaha,
One First National Center, 1620 Dodge Street, Omaha, Nebraska 68102. The Estate
of D. J. Witherspoon owned 2,989,969 shares of the Registrant's Common Stock,
$0.50 par value, on March 2, 2000, which represented 89.479% of the outstanding
Common Stock of the Registrant on such date. The Estate's shares presently are
held of record by First National Bank of Omaha, as personal representative for
the Estate of D. J. Witherspoon. The Registrant's Common Stock is its only
outstanding voting security. The Estate's control has no effect on the voting
rights of other shareholders of the Registrant, each of whom is entitled to vote
all of his or her shares on all matters submitted to a vote of the Registrant's
shareholders.
2. The following table sets forth the name, address, and percentage of
ownership of each person who owned of record on March 2, 2000, or is known by
the Registrant to have owned of record or beneficially on such date, 5% or more
of the Registrant's outstanding Common Stock (its only outstanding voting
security):
Percent of
Name and Number of Outstanding
Address Shares Shares
First National Bank of 2,989,969 (a) 89.479%
Omaha, Personal
Representative for the
Estate of D. J. Witherspoon
One First National Center
1620 Dodge Street
Omaha, Nebraska 68102
John Patrick Witherspoon 274,071 (b) 8.202%
1211 Howard Street
Omaha, Nebraska 68102
<PAGE>
a. These shares are owned of record by First National Bank of Omaha,
solely in its capacity as conservator for D. J. Witherspoon; such conservator
has sole voting and investment power with respect to such shares.
b. 245,183 of these shares (7.337% of the outstanding shares) are owned
both of record and beneficially by John Patrick Witherspoon. 28,888 of these
shares (0.8646% of the outstanding shares) are owned of record only by Iris J.
Norman, as trustee, and beneficially only by John Patrick Witherspoon; such
trustee, in her fiduciary capacity, has sole voting and dispositive power with
respect to such shares.
3. No director or officer of the Registrant other than John Patrick
Witherspoon owned any shares of the Registrant's Common Stock as of March 2,
2000. The Registrant has no advisory board.
Item 20. Investment Advisory and Other Services.
1. All information required by paragraphs 1-6 and 8 of this Item 20 is
contained in Part A, Item 9.
2. The Registrant's independent public accountant is Deloitte & Touche LLP,
2000 First National Center, Omaha, Nebraska 68102-1578. Deloitte & Touche LLP
conducts an annual audit of the Registrant's financial statements; conducts a
semi-annual review of the Registrant's financial statements; prepares the
Registrant's tax returns; assists the Registrant in calculating dividend
amounts; assists the Registrant in preparing reports which must be filed with
the Commission; and prepares an annual report on internal control structure for
the Registrant.
Item 21. Brokerage Allocation and Other Services.
1. Purchases and sales of Fixed-Income Securities, the type of securities
in which the Registrant's assets presently are invested and in which the
Registrant intends to invest, usually are effected by the Registrant with the
issuer or with the underwriter or primary market maker acting as principal on a
net basis, with no brokerage commissions being paid by the Registrant.
Transactions effected through dealers serving as primary market makers reflect
the spread between the bid and asked prices for the Securities. First National
Bank of Omaha ("FNBO"), the Registrant's investment adviser, places all orders
for purchases and sales of portfolio securities. The market for any particular
issue of Fixed-Income Securities from time to time may be inactive. Such
inactivity generally results in fewer dealer bid and asked prices. Moreover, the
market for Fixed-Income Securities yielding a sufficient rate of return and
having the quality, character, and maturity to satisfy the investment objective
and policies of the Registrant may be limited from time to time. Accordingly, at
any particular time there may be only one dealer or a limited number of dealers
with whom FNBO may effect transactions for the purchase or sale of particular
Fixed Income Securities for the Registrant. During the years ended December 31,
1997, 1998, and 1999, the Registrant paid no brokerage commissions since all of
its portfolio transactions were handled on a principal (net) basis.
<PAGE>
2. None.
3. Subject to the foregoing, FNBO's policy in purchasing and selling
portfolio securities is to seek favorable net prices and reliable execution in
connection with the purchase and sale of all portfolio securities. After these
primary considerations have been met, additional consideration may be given by
FNBO to other factors, such as the furnishing of supplemental research and other
services, which FNBO deems to be of value to the Registrant or to FNBO in terms
of the particular transaction or FNBO's overall responsibilities with respect to
the Registrant. Although the Registrant's securities transactions generally do
not involve the payment of any brokerage commissions, where brokerage
commissions are payable FNBO may be authorized, subject to the foregoing primary
considerations and to review by the Registrant's Board of Directors, to execute
orders with brokers in return for brokerage and research services which are of
use to the Registrant, even though the commission rates at which such orders are
executed may be higher than those charged by other brokers. Such research
services also may be useful to FNBO in connection with its services to other
advisory clients, and FNBO may not use all of such research services in
connection with the performance of its responsibilities to the Registrant.
4. Not applicable.
5. Not applicable.
Item 22. Tax Status. All relevant information is contained
in Part A, Item 10.4.
Item 23. Financial Statements.
The following financial statements of the Registrant are contained in the
Annual Report of the Registrant to its shareholders which was filed with the
Securities and Exchange Commission on February 28, 2000; such financial
statements (but no other portion of such Annual Report) hereby are incorporated
herein by reference:
Independent Auditors' Report dated February 2, 2000
Statement of Assets and Liabilities - December 31, 1999
Statement of Operations - Year Ended December 31, 1999
Statement of Investments - December 31, 1999
Statements of Changes in Net Assets - Years Ended
December 31, 1999 and 1998
Notes to Financial Statements - Year Ended December 31, 1999
<PAGE>
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
1. Financial statements included in Part B of the
registration statement:
Independent Auditors' Report dated February 2, 2000
Statement of Assets and Liabilities - December 31, 1999
Statement of Operations - Year Ended December 31, 1999
Statement of Investments - December 31, 1999
Statements of Changes in Net Assets - Years Ended
December 31, 1999 and 1998
Notes to Financial Statements - Year Ended December 31, 1999
2. Exhibits:
*A. Restated Articles of Incorporation of the Registrant, as amended
to date.
*B. Second Restated By-Laws of the Registrant.
C. None.
*D. (1) Specimen certificates for shares of Common Stock, $0.50 par
value, of the Registrant used prior to May 1, 1981.
(2) Specimen certificate for shares of Common Stock, $0.50 par
value, of the Registrant used after April 30, 1981.
E. Not applicable.
F. Not applicable.
** G. Investment Advisory Agreement dated June 16, 1997, between the
Registrant and First National Bank of Omaha.
H. Omitted pursuant to Paragraph 3 of General Instruction G to Form
N-2.
I. Not applicable.
*J. (1) Custodian Agreement dated January 15, 1981, between the
Registrant and First National Bank of Omaha.
(2) Letter agreement dated February 18, 1981, between the
Registrant and First National Bank of Omaha relating to custodian's
compensation.
K. None.
L. Omitted pursuant to Paragraph 3 of General Instruction G to Form
N-2.
M. Not applicable.
<PAGE>
N. Omitted pursuant to Paragraph 3 of General Instruction G to Form
N-2.
O. Omitted pursuant to Paragraph 3 of General Instruction G to Form
N-2.
P. Not applicable.
Q. Not applicable.
R. (1) PMD Investment Company Code of Ethics.
(2) First National Bank of Omaha Code of Ethics.
***S. PMD Investment Company Periodic Stock Redemption Arrangement,
January 1, 1983.
* Filed with the Registrant's original Registration Statement on Form
N-2 and unchanged as of the date of this amendment.
** Filed with Registrant's Semi-Annual Report for Registered
Investment Companies on Form N-SAR for the six month period ended June 30, 1997,
and unchanged as of the date of this amendment.
*** Filed with Amendment No. 2 to the Registrant's Registration
Statement on Form N-2 and unchanged as of the date of this amendment.
Item 25. Marketing Arrangements. None.
Item 26. Other Expenses of Issuance and Distribution. Not applicable.
Item 27. Persons Controlled by or Under Common Control. None.
Item 28. Number of Holders of Securities. The following table shows, as of March
2, 2000, the number of record holders of the Registrant's Common Stock, $0.50
par value, which is its only class of securities:
(1) (2)
Number of Record
Title of Class Holders
Common Stock, 411
$0.50 par value
Item 29. Indemnification. Section 21-20,103 of the Business Corporation Act of
Nebraska gives the Registrant power to indemnify its directors, officers,
employees, and agents against certain expenses incurred by them in certain
threatened, pending,
<PAGE>
or completed civil and criminal actions, suits, or proceedings by reason of
their service in such capacity, subject to certain specified conditions. To the
extent that a director or officer of the Registrant is successful on the merits
or otherwise in the defense of any such action, suit, or proceeding, he is
entitled under Sections 21-20,104 and 21-20,108 of the Business Corporation Act
of Nebraska to be indemnified by the Registrant against reasonable expenses
incurred by him or her in connection with the proceeding. The foregoing is
merely a statement of the general effect of such statutes, to which reference
hereby is made for the exact provisions thereof.
Article X of the Second Restated By-Laws of the Registrant provides, in
part, that the Registrant shall indemnify its directors, officers, and certain
other persons against certain costs and expenses actually and reasonably
incurred by them in connection with the defense, settlement, or other
disposition of various types of threatened, pending, or completed civil and
criminal actions, suits, or proceedings in which they may be involved by reason
of their service in such capacity, except in relation to matters as to which
they have been adjudged liable for negligence or misconduct in the performance
of their duties to the Registrant in such capacity or when other "disabling
conduct" has been alleged, in which cases certain conditions must be met before
indemnification is required or permitted. The foregoing is merely a statement of
the general effect of such by- law provision, to which reference hereby is made
for the exact provisions thereof.
Item 30. Business and Other Connections of Investment Adviser. The principal
occupation of all managing directors and officers of FNBO is either with such
corporation or its parent, First National of Nebraska, Inc. See also Part A,
Item 9.1.b., above.
Item 31. Location of Accounts and Records. The accounts, books, or other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are being maintained by First
National Bank of Omaha ("FNBO"), as custodian, investment advisor or transfer
agent, by the Registrant, or by Abrahams Kaslow & Cassman ("AKC"), as the
Registrant's investment adviser, and as the Registrant's legal counsel, as
indicated in the following table, which refers to the various items listed in
Regulation 31a-1(b):
Item Responsible Person
(b)(1) FNBO
(b)(2)(A) FNBO
(b)(2)(B) FNBO
(b)(2)(C) FNBO
(b)(2)(D) FNBO
(b)(2)(E) FNBO
(b)(2)(F) FNBO
(b)(3) Not applicable
(b)(4) AKC
(b)(5) FNBO
(b)(6) FNBO
<PAGE>
(b)(7) Not applicable
(b)(8) FNBO
(b)(9) FNBO
(b)(10) Registrant
(b)(11) Registrant
(b)(12) FNBO
The address of First National Bank of Omaha appears in Part A, Item 9.1.b,
above; the address of the Registrant appears on the cover of this registration
statement; the address of Abrahams Kaslow & Cassman is 8712 West Dodge Road,
Suite 300, Omaha, Nebraska 68114.
Item 32. Management Services. None.
Item 33. Undertakings. Not applicable.
Signature follows on next page.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement (Amendment No. 19) to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Omaha and State of Nebraska, on the 24th day of March, 2000.
PMD Investment Company
(Registrant)
By: /s/ J.G. Sawicki
J.G. Sawicki, President
EXHIBIT R(1)
PMD INVESTMENT COMPANY
CODE OF ETHICS
I. Introduction.
While affirming its confidence in the integrity and good faith of all of
its officers and directors, PMD Investment Company (the "Company") recognizes
that the knowledge of present or future portfolio transactions of the Company
and, in certain instances, the power to influence portfolio transactions of the
Company which may be possessed by certain of the Company's officers and
directors could place such individuals, if they engage in personal securities
transactions, in a position where their personal interest may conflict with that
of the Company. In view of the foregoing and of the provisions of Rule
17j-l(b)(l) under the Investment Company Act of 1940, the Company has determined
to adopt this Code of Ethics to specify and prohibit certain types of personal
securities transactions deemed to create conflicts of interest and to establish
reporting requirements and enforcement procedures. In adopting this Code of
Ethics, the Company has taken into account the fact that none of its directors
and officers is affiliated with the Company's investment adviser.
II. Rules Applicable to Unaffiliated Directors and Officers.
A. Definitions.
(1) "Beneficial ownership" shall be interpreted in the same manner as it
would be interpreted in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and
the rules and regulations thereunder, except that the determination of
direct or indirect beneficial ownership shall apply to all securities
which an unaffiliated director or officer has or acquires.
(2) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act. Section 2(a)(9) basically
provides that "control" means the power to exercise a controlling
influence over the management or policies of a company, unless such
power is solely the result of an official position with such company.
(3) "Disinterested director or officer" means a director or officer of the
Company who is not an "interested person" of the Company within the
meaning of Section 2(a)(19) of the Investment Company Act.
(4) "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
(5) "Security" shall have the same meaning as that set forth in Section
2(a)(36) of the Investment Company Act (in effect, all securities),
except that it shall not include securities issued by the Government
of the United States or an agency thereof, bankers' acceptances, bank
certificates of deposit, commercial paper, and shares of registered
open-end investment companies.
(6) "Unaffiliated director or officer" means, for purposes of this Code, a
director or officer of the Company who is not a director, officer or
employee of the Company's investment adviser.
B. Prohibited Purchases and Sales. No unaffiliated director or officer of
the Company shall purchase or sell, directly or indirectly, any security in
which he has, or by reason of such transaction acquires, any direct or indirect
beneficial owner-ship and which to his actual knowledge at the time of such
purchase or sale:
(1) is being considered for purchase or sale by the Company;
(2) is being purchased or sold by the Company; or
(3) was purchased or sold by the Company within the most recent 15 days if
such person participated in the recommendation to, or the decision by,
the Company to purchase or sell such security.
<PAGE>
C. Exempted Transactions. The prohibitions of Section IIB of this Code
shall not apply to:
(1) purchases or sales effected in any account over which the unaffiliated
director or officer has no direct or indirect influence or control;
(2) purchases or sales which are non-volitional on the part of either the
unaffiliated director or officer or the Company;
(3) purchases which are part of an automatic dividend reinvestment plan;
(4) purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent that
such rights were acquired from such issuer, and sales of such rights
so acquired; and
(5) purchases or sales other than those exempted in (1) through (4) above
which do not cause the unaffiliated director or officer to gain
improperly a personal benefit through his relationship with the
Company and are only remotely potentially harmful to the Company
because they would be very unlikely to affect a highly institutional
market.
D. Reporting.
(1) Every unaffiliated director of the Company who is not a disinterested
director and every unaffiliated officer of the Company shall file with
the Company a report containing the information described below in
Section IID(3) of this Code with respect to transactions in any
security in which such person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership in such
security, whether or not one of the exemptions listed in TIC applies;
provided, however, that no person shall be required to make a report
with respect to transactions effected for any account over which such
person does not have any direct or indirect influence or control.
(2) Every unaffiliated director of the Company who is a disinterested
director shall file with the Company a report containing the
information described below in Section IID(3) of this Code with
respect to transactions in any security in which such disinterested
director has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership in such security, whether or not one of
the exemptions listed in TIC applies, if such director, at the time of
the transaction, knew or, in the ordinary course of fulfilling his
official duties as a director of the Company, should have known that,
during the 15-day period immediately preceding or after the date of
the transaction by the director:
(a) such security is or was purchased or sold by the Company or
(b) such security was being considered for purchase or sale by the
Company or by the Company's investment adviser for the portfolio
of the Company;
<PAGE>
provided, however, that a disinterested director shall not be required to
make a report with respect to transactions effected for any account over
which such person does not have any direct or indirect influence or
control. Notwithstanding the preceding sentence, any disinterested director
may, at his option, report the information described below in Section
IID(3) with respect to any one or more transactions in any security in
which such person has, or by reason of the transaction acquires, any direct
or indirect beneficial ownership.
(3) Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates
was effected and shall contain the following information:
(a) The date of the transaction, the title and the number of shares,
and the principal amount of each security involved;
(b) The nature of the transaction (i.e., purchase, sale, or any other
type of acquisition or disposition);
(c) The price at which the transaction was effected; and
(d) The name of the broker, dealer, or bank with or through whom the
transaction was effected.
(4) Every report concerning a purchase or sale prohibited under Section
IIB hereof with respect to which the reporting person relies upon one
of the exemptions provided in Section IIC shall contain a brief
statement of the exemption relied upon and the circumstances of the
transaction.
(5) Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he has
any direct or indirect beneficial ownership in the security to which
the report relates.
E. Review.
(1) The Board of Directors of the Company shall compare the reported
personal securities transactions with completed and contemplated
portfolio transactions of the Company to determine whether any
transactions ("Reviewable Transactions") listed in Section IIB
(disregarding exemptions provided by Section IIC(1) through (5)) may
have occurred.
(2) If the Board of Directors of the Company determines that a Reviewable
Transaction may have occurred, it shall submit the report and
pertinent information concerning completed or contemplated portfolio
transactions of the Company to counsel for the Company. Such counsel
shall determine whether a violation of this Code may have occurred,
taking into account all the exemptions provided under Section TIC.
Before making any determination that a violation has been committed by
an unaffiliated director or officer, such counsel shall give such
person an opportunity to supply additional information regarding the
transaction in question.
F. Sanctions. If such counsel determines that a violation of this Code has
occurred, such counsel shall so advise the Board of Directors of the Company and
<PAGE>
shall provide the Board of Directors of the Company with the report, the record
of pertinent actual or contemplated portfolio transactions of the Company, and
any additional material supplied by such person. The Board of Directors of the
Company shall impose such sanctions as the Board deems appropriate.
III. Miscellaneous.
A. Records. The Company shall maintain records in the manner and to the
extent set forth below, which records shall be available for examination by
representatives of the Securities and Exchange Commission:
(1) A copy of this Code and any other code which is, or at any time within
the past five years has been, in effect shall be preserved in an
easily accessible place;
(2) A record of any violation of this Code and of any action taken as a
result of such violation shall be preserved in an easily accessible
place for a period of not less than five years following the end of
the fiscal year in which the violation occurs;
(3) A copy of each report made by an officer or director of the Company
pursuant to this Code shall be preserved for a period of not less than
five years from the end of the fiscal year in which it is made, the
first two years in an easily accessible place; and
(4) A list of all persons who are, or within the past five years have
been, required to make reports pursuant to this Code shall be
maintained in an easily accessible place.
B. Confidentiality. All reports of securities transactions and any other
information filed with the Company pursuant to this Code shall be treated as
confidential.
C. Interpretation of Provisions. The Board of Directors of the Company may
from time to time adopt such interpretations of this Code as the Board deems
appropriate.
EXHIBIT R(2)
FIRST NATIONAL BANK OF OMAHA
CODE OF ETHICS
STATEMENT OF PURPOSE
The employees of First National of Nebraska, its affiliates and
subsidiaries (the "Company") occupy a unique position of trust in relation to
their customers, suppliers and federal and state regulatory authorities.
Therefore, it is mandatory that employees conduct themselves in an ethical
manner. This Code of Ethics has been prepared so that the employees of the
Company will be well informed of their responsibilities. This Code of Ethics
applies to all employees, officers and directors of the Company, and all such
persons are requested to read the contents of this Code of Ethics carefully and
abide by the guidelines it establishes. This policy also covers Principal
Shareholders, however the Company feels that since the potential for conflicts
is so remote, the Company will monitor Principal Shareholder activities under
the requirements of Regulation O only. All references to the Company in this
Code of Ethics should be read to include the Company and its affiliates and
subsidiaries.
PROTECTION OF INFORMATION
Confidential Information
Information pertaining to the Company and its customers or suppliers should
be maintained in confidence and employees of the Company should never use such
information for personal gain. Confidential information should not be released
unless it has been officially made available to the public or disclosure of the
information is required for the official performance of the Company's business.
Any doubts concerning disclosure or nondisclosure of information should be
resolved in favor of nondisclosure.
Files, compilations such as customer lists or other business records, and
any other documents containing information about transactions or solicitation
for business, whether prepared by you or provided to you, are the property of
the Company. Therefore, these materials may be used only in connection with your
employment by Company and they, and any copies or transcriptions thereof, must
be returned at the time of termination of your employment with the Company.
Material Non-public Information
The federal securities laws provide that you may not buy or sell any
company's securities if you have material nonpublic information about the
company. These laws further set forth civil and criminal penalties, including
fines and jail terms, for violations. Examples of material nonpublic information
are set forth in Attachment A. As an employee of the Company you may come into
possession of material nonpublic information concerning the Company and its
customers or its suppliers. The Company's policy regarding the use of material
nonpublic information is set forth below.
Employees and their family members and others living in the same household
("Covered Persons") are subject to the following restrictions with regard to
buying and selling the common stock of the Company or any of the Company's
customers or suppliers:
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1. When an employee has any material nonpublic information about the
Company or any of its customers, neither the employee nor any Covered Person may
buy or sell common stock of the Company, disclose the information to others or
recommend the purchase or sale of the common stock of the Company;
2. Neither employees nor Covered Persons may engage in any short sale of
the Company's common stock or engage in any transaction involving options on the
Company's common stock (except for options, warrants and rights issued by the
Company); and
3. Employees and Covered Persons will notify the Corporate Secretary's
Office at (402) 341-0500 if they borrow money to purchase the Company's common
Stock.
It is strongly recommended that you contact the Corporate Secretary's
Office at (402) 341-0500 if you have any specific questions regarding this
policy.
Responses to Request for Information
Inquiries concerning credit history of customers or past customers should
be referred to the respective loan department head of a banking subsidiary loan
department. Inquiries at non-bank subsidiaries should be referred to the credit
manager.
Inquiries made by the press, investment analysts or others in the financial
community must be responded to only by an appropriately designated official of
the Company. Unless expressly authorized to respond, all employees receiving an
inquiry relating to First National of Nebraska, First National Bank of Omaha or
non-bank affiliates must decline comment and refer it to the President or an
Executive Vice President of First National Bank of Omaha. Banking affiliate
employees will refer inquiries to their Affiliate Bank President.
Requests, written or oral, for references on former or present employees
should be referred to the Human Resources Department/Personnel Manager.
Inquiries from local, state, and federal agencies or attorneys and
correspondence regarding a claim or suit should be referred to the respective
subsidiary President. In the case of First National Bank of Omaha, inquiries
should be referred to the Corporate Secretary's Office. For unusual or
exceptionally large matters relating to legal affairs, please refer to First
National of Nebraska's Legal Policy. Subpoenas delivered to First National of
Nebraska, First National Bank of Omaha, and non-bank affiliates should also be
directed to the Corporate Secretary's Office. Subpoenas delivered to the bank
affiliates should be directed to the Affiliate Bank President.
CONFLICTS OF INTEREST
The Company prohibits employees from engaging in transactions that involve,
or appear to involve, a conflict of interest between the employee and either the
Company or one of its customers or suppliers.
Employees shall not give the Company's vendors or suppliers preferential
treatment in transactions involving the Company, and all transactions between
the Company and its customers or suppliers shall be consummated at arm's length.
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What is a Potential Conflict of Interest
A conflict of interest is any situation in which an employee's individual
interests are opposed to the Company's or one of its customer's interests.
A conflict of interest may arise any time an employee of the Company has an
interest in or a relationship (unrelated to the business of the Company) with a
borrower, customer, supplier or competitor of the Company ("Third Parties").
A conflict of interest may also exist if an employee is in a position to
receive a benefit, financial or otherwise, in connection with a transaction
involving the Company.
Certain relationships create a conflict of interest while others do not.
Consider the following examples:
Example 1: An employee is a shareholder of Corporation X, and Corporation X
is a customer of the Company.
A conflict of interest exists if the employee is a loan officer and will
make or influence decisions about Corporation X's loan account.
A conflict of interest does not exist if the employee is a deposit account
representative and does not make or influence decisions about any of Corporation
X's accounts at the Company.
Example 2: An employee is married to the President of Supplier A, a major
supplier to the Company.
A conflict of interest exists if the employee makes or influences
purchasing decisions regarding Supplier A.
A conflict of interest does not exist if the employee is not involved in
any purchasing decisions.
What to do if a Conflict of Interest Exists
The keys to effectively dealing with conflicts of interest are timely
disclosure and objective evaluation. Accordingly, all employees shall report
relationships that could create conflicts of interest to an Affiliate President
and in the case of First National Bank of Omaha to the Corporate Secretary's
Office. Reports should be made on the form set forth as Attachment B. The
existence of a potential conflict of interest does not reflect adversely on an
employee, and prompt disclosure of these situations reflects positively on an
employee. Management will advise employees how to handle specific conflict of
interest situations as they arise.
Bank employees in the position of Assistant or Second Vice-President and
senior shall file an annual Potential Conflict of Interest Report with their
Affiliate President and in the case of First National Bank of Omaha the
Corporate Secretary's Office. Non-bank affiliate employees holding an officer
position shall file with their Affiliate President. The annual reporting should
be made on the form set forth as Attachment B. These conflict of interest
reports will be summarized and provided to the appropriate committee.
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Once a conflict of interest has been identified, employees with a conflict
of interest should abstain from the approval process of any transaction
involving persons creating the conflict of interest.
GIFTS AND OTHER THINGS OF VALUE RECEIVED BY COMPANY EMPLOYEES
Prohibition on Soliciting and Accepting Gifts from Company Customers
The Company prohibits any employee from soliciting for himself or herself
or for a third party (other than the Company itself) anything of value from
anyone in return for any business service of the Company or for information
about the Company.
With certain exceptions, the Company further prohibits all employees from
accepting anything of value from anyone in connection with the business of the
Company, either before or after a transaction is discussed or consummated. This
includes the receipt of any unauthorized fees or commissions in connection with
a transaction involving the Company. The exceptions to this rule include
acceptance of:
1. gifts based on obvious personal relationships such as those with
parents, children or spouses where it is clear that the relationship is the
motivating factor;
2. meals, travel, or accommodations in the course of a meeting for bona
fide business discussions (provided that the expense would be paid for by the
Company as a reasonable business expense if not paid by another party) ( A
report of such events must be provided to the Affiliate President or First
National Bank of Omaha's Corporate Secretary's Office, whichever party is
applicable, if the value received is greater than $50.00. The reporting form is
set forth as Attachment C.);
3. loans from other financial institutions on customary terms to finance
proper activities of the employee;
4. promotional materials of a reasonable value ($50.00 or less);
5. discounts or rebates available to other customers;
6. gifts of reasonable value ($50.00 or less) related to commonly
recognized events such as a promotion, wedding, holiday, etc.; or
7. organizational awards for recognition of service and/or accomplishment.
The aggregate value of the items received under the exceptions listed above
shall not exceed the value of $300.00 per vendor in a calendar year.
An employee has received an improper benefit if he or she has accepted or
solicited from someone doing business or seeking to do business with the
Company, either a business opportunity not available to others or a business
opportunity that is made available because of the employee's position with the
Company.
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Reporting the Receipt of Gifts and Other Things of Value
If an employee is offered or receives something of value that violates the
guidelines outlined above (an item valued at $50 or more), or if an employee
becomes aware of another employee receiving something of value that violates
those guidelines, the employee must disclose that fact to the Affiliate
President or First National Bank of Omaha's Corporate Secretary's Office,
whichever party is applicable, on the form set forth in Attachment C. At that
time, a determination will be made as to the acceptance of the item of value.
The Company has no intent to invade the privacy of its employees or to examine
their personal affairs beyond the extent necessary to determine whether any
improper benefit has been received.
ACTIVITIES UNRELATED TO THE COMPANY'S BUSINESS
Outside Employment
The Company does not object to an employee accepting off-duty employment or
self-employment for salary or commission, provided that: (1) there is not a
conflict of interest with the Company; (2) the off-duty employment does not
interfere with the satisfactory performance of the employee's duties; and (3)
the occupation is of the type that would not bring discredit upon the employee
or the Company. Employees are required to discuss any outside employment with
their immediate supervisor prior to accepting an outside position or job.
Generally, an employee may not be a supplier of goods or services to the
Company, represent a supplier to the Company, or work for a supplier to the
Company, while employed at the Company.
An employee of the Company may not perform outside work for another
business or solicit business for another entity on the Company's premises or
while conducting Company work.
Outside Boards of Directors
Acceptance of membership on outside boards of for-profit corporations may
also involve the possibility of a conflict of interest. No employee should
accept a directorship in any profit-making corporation without prior approval
from a member of the Executive Committee.
Employees are encouraged to serve in civic, charitable, or religious
organizations. However, they are required to report in writing, to the Director
of Human Resources/Personnel Manager, any outside not-for-profit board on which
they serve.
Political Activity
The Company encourages employees to take an active interest in political
affairs for the same reason it encourages activity in community affairs. All
employees engaging in political activities must make it clear to all concerned
that they are acting as private individuals and not as representatives of the
Company. Use of the Company's facilities, real or personal property or personnel
for political purposes is not permitted without prior approval of First National
of Nebraska Executive Management. There are federal and state laws strictly
limiting the political activities of banks and corporations. Questions about the
permissibility of an activity should be referred to the Corporate Secretary's
Office at (402) 341-0500.
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Use of Company Resources
Company employees shall not use the Company's facilities, real or personal
property or personnel for purposes unrelated to the Company's business without
authorization from management or in accordance with a policy established and
approved by management. Further, usage of personal computers will adhere to each
subsidiary's end user computing requirements. Usage of electronic mail systems
will also adhere to each subsidiary's electronic mail system requirements. For
further information Company employees should contact their immediate managers.
CONCLUSION
It is important that all of the Company's employees observe good morals and
proper ethics while conducting the Company's business.
If an employee has any doubt as to his or her responsibilities under these
guidelines, he or she should seek clarification and guidance from management
before action is taken.
The Company expects the strictest compliance with these guidelines and
procedures by all personnel at every level. The failure to comply with the
guidelines established in this Code of Ethics could result in an employee's
termination.
ATTACHMENT A
Material information is any information that a reasonable investor would
consider important in a decision to buy, hold or sell stock: In short, any
information which could reasonably affect the price of the stock. If you are
considering buying or selling a security because of information you possess, you
should assume such information is material. As can be expected, there is no
clear-cut line for determining what information is material. The following
factors may influence whether or not certain information is deemed to be
material:
1. the size of the event or transaction relative to total company
activity;
2. specificity of the information;
3. reliability of the information, in light of its nature and source and
circumstances under which it was received;
4. whether the information is novel or surprising in terms of previous
company experience or performance; and
5. current SEC attitudes towards appropriate subjects for disclosure.
Certain types of information may be classified as almost always material or
sometimes material, depending on the circumstances.
Information that is almost always material:
1. company financial results;
2. dividend changes;
3. public offerings or private sales of debt or equity securities;
4. calls, redemption's or repurchases of the company's securities;
5. top management or control changes; and
6. bankruptcy or Chapter 10 or 11 proceedings.
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Information that may be material:
1. total or partial acquisitions;
2. new programs or services;
3. marketing plans;
4. joint ventures;
5. exclusive licenses and other patent or franchise agreements;
6. adoption of stock option plans, grants of options and adoption of
other compensation plans;
7. capital investment plans and changes in such plans;
8. contract awards or cancellations;
9. defaults on debts or contracts;
10. write-offs;
11. changes in accounting methods;
12. labor negotiations, contracts or disputes;
13. disputes with clients;
14. litigation or government investigations;
15. significant borrowing; and
16. any other event requiring the filing of a report with the SEC.
This list is not all-inclusive but merely illustrates types of information
that should be considered material. Generally, if information has influenced a
decision to trade, it can be claimed that the information was material.
Twenty-Twenty Hindsight. If your securities transactions become the subject
of scrutiny, they will be viewed after-the-fact with the benefit of hindsight.
As a result, before engaging in any transaction you should carefully consider
how regulators and others might view your transaction in hindsight.
Transactions by Family Members. The very same restrictions apply to your
family members and others living in your household. Employees are expected to be
responsible for the compliance of their immediate family and personal household.
Such family members and others living in the same household are referred to as
"Covered Persons."
Tipping Information to Others. Whether the information is proprietary
information about the Company, the Company or its customers or suppliers or
information that could have an impact on the stock price of such an entity,
employees must not pass the information on to others. Legal penalties apply,
whether or not you derive any benefit from another's actions.
When Information Is Public. Information is "non-public" until it has been
disseminated in a manner making it available to investors generally. This is
typically satisfied by distribution of such information by means of a press
release. However, even after such information is released to the press, you
should wait a period of time (at least one business day and often two or three
business days) before trading or disclosing such information to others. Again,
it is a good idea to exercise caution and wait a longer period of time following
the release of material information than you might first consider warranted.
