<PAGE>
As filed with the Securities and Exchange Commission on June 3, 1997
Registration No. 333-26447
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C>
RIGGS NATIONAL CORPORATION RIGGS CAPITAL II
(Exact name of registrant as specified in its Charter) (Exact name of registrant as specified in its Trust Agreement)
Delaware Delaware
(State or other jurisdiction of incorporation or organization) (State or other jurisdiction of incorporation or organization)
52-1217953 To Be Applied For
(I.R.S. Employer Identification Number) (I.R.S. Employer Identification Number)
1503 Pennsylvania Avenue, N.W. c/o RIGGS NATIONAL CORPORATION
Washington, D.C. 20005 1503 Pennsylvania Avenue, N.W.
(301) 887-6000 Washington, D.C. 20005
(Address, including zip code, and telephone number, including (301) 887-6000
area code, of registrant's principal executive offices) (Address, including zip code,
and telephone number, including area code,
of registrant's principal executive offices)
</TABLE>
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Linda A. Madrid, Esq.
Riggs National Corporation
800 17th Street, N.W.
Washington, D.C. 20006
(301) 887-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
Robert H. Craft, Jr.
Sullivan & Cromwell
1701 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
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Approximate date of commencement of proposed sale of securities to the public:
As soon as practicable after the effective date of this registration statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] ___________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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The registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrants
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 Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
RIGGS CAPITAL II
CROSS REFERENCE SHEET
(Pursuant to Item 501(b) of Regulation S-K)
<TABLE>
<CAPTION>
Form S-3 Item Number and Captions Heading or Location in Prospectus
- ---------------------------------------------------------- ---------------------------------------------------
<S> <C>
1. Forepart of the Registration Statement and Facing Page; Cross Reference Sheet; Outside
Outside Front Cover Page of Prospectus................ Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Inside Front and Outside Back Cover Pages of
Prospectus............................................ Prospectus; Available Information;
Incorporation of Certain Documents by
Reference
3. Summary Information, Risk Factors and Ratio of Prospectus Summary; Risk Factors; Ratio of
Earnings to Fixed Charges............................. Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements
4. Use of Proceeds....................................... Use of Proceeds
5. Determination of Offering Price....................... *
6. Dilution.............................................. *
7. Selling Security Holders.............................. Selling Securityholders
8. Plan of Distribution.................................. Plan of Distribution
9. Description of Securities to be Registered............ Description of Capital Stock
10. Interests of Named Experts and Counsel................ Validity of Securities
11. Material Changes...................................... Description of the Series C Preferred
Securities; Description of the Series C
Subordinated Debentures; Description of the
Series C Guarantee; Relationship Among the
Series C Preferred Securities, the Series C
Subordinated Debentures, the Expense
Agreement and the Series C Guarantee
12. Incorporation of Certain Information by Incorporation of Certain Documents
Reference............................................. by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities........ *
</TABLE>
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* Not applicable.
<PAGE>
$200,000,000
Riggs National Corporation
Junior Subordinated Deferrable
Interest Debentures
Riggs Capital II
8 7/8% Trust Preferred Securities, Series C
(Liquidation Amount $1,000 per Preferred Security)
200,000 Preferred Securities
Fully and Unconditionally Guaranteed by
Riggs National Corporation
The 8 7/8% Trust Preferred Securities, Series C (the "Series C Preferred
Securities"), offered hereby represent beneficial interests in Riggs Capital II,
a trust formed under the laws of the State of Delaware (the "Series C Issuer").
Riggs National Corporation, a Delaware corporation (the "Corporation"), is the
owner of all of the beneficial interests represented by common securities of the
Series C Issuer (the "Series C Common Securities" and, collectively with the
Series C Preferred Securities, the "Series C Securities"). The Bank of New York
is the Property Trustee of the (Continued on the following pages)
See "Risk Factors" beginning on page 15 hereof for certain information
relevant to an investment in the Series C Preferred Securities.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS
OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
----------------
The Series C Preferred Securities offered hereby are being offered for sale
from time to time by the selling securityholders named herein (the "Selling
Securityholders"), and neither the Corporation nor the Series C Issuer will
receive any of the proceeds from such sales. The Series C Preferred Securities
may be sold in the over-the-counter market or on any national securities
exchange or automated quotation system on which the Series C Preferred
Securities may be listed or quoted in the future, in negotiated transactions,
through the writing of options on shares or a combination of such methods of
sale, at market prices prevailing at the time of sale, at prices related thereto
or at negotiated prices. Each Selling Securityholder may sell shares directly to
other purchasers, through agents or through broker-dealers, which may receive
compensation in the form of underwriting discounts, concessions or commissions
(and such compensation may be in excess of customary commissions). See "Plan of
Distribution".
The date of this Prospectus is June 3, 1997.
<PAGE>
(continued from the previous page)
Series C Issuer. The Series C Issuer exists for the sole purpose of issuing the
Series C Securities and investing the proceeds from the sale thereof in
$206,186,000 aggregate principal amount of 8 7/8% Junior Subordinated Deferrable
Interest Debentures, Series C (the "Series C Subordinated Debentures"), to be
issued by the Corporation. The Series C Subordinated Debentures will mature on
March 15, 2027 (which date may be shortened to a date not earlier than March 12,
2012 in certain circumstances as described under "Description of Series C
Subordinated Debentures--Tax Event or Capital Treatment Event Redemption") ( the
"Stated Maturity"). The Series C Preferred Securities have a preference under
certain circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Series C Common Securities. See
"Description of the Series C Preferred Securities--Subordination of the Series C
Common Securities".
The Series C Preferred Securities were originally issued by the Series C
Issuer to Dillon, Read & Co. Inc. (the "Initial Purchaser") and were
subsequently resold by the Initial Purchaser to qualified institutional buyers
in reliance on Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act").
The Series C Preferred Securities are listed on the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") market of the National
Association of Securities Dealers, Inc.
Holders of the Series C Preferred Securities are entitled to receive
preferential cumulative cash distributions accumulating from March 12, 1997 and
payable semi-annually in arrears on June 30 and December 31 of each year,
commencing June 30, 1997, at the annual rate of 8 7/8% of the Liquidation Amount
(as defined herein) of $1,000 per Series C Preferred Security ("Distributions").
Subject to certain exceptions, the Corporation has the right to defer payment of
interest on the Series C Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods with respect
to each deferral period (each, an "Extension Period"), provided that no
Extension Period may extend beyond the Stated Maturity of the Series C
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all interest then accrued and unpaid (together with interest
thereon at the rate of 8 7/8%, compounded semi-annually, to the extent permitted
by applicable law), the Corporation may elect to begin a new Extension Period
subject to the requirements set forth herein. If interest payments on the Series
C Subordinated Debentures are so deferred, Distributions on the Series C
Preferred Securities will also be deferred, and the Corporation will not be
permitted, subject to certain exceptions described herein, to declare or pay any
cash distributions with respect to the capital stock of the Corporation or debt
securities of the Corporation that rank pari passu with or junior to the Series
C Subordinated Debentures. During an Extension Period, interest on the Series C
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Series C Preferred Securities are entitled will
accumulate) at the rate of 8 7/8% per annum, compounded semi-annually, and
holders of the Series C Preferred Securities will be required to accrue interest
income for United States federal income tax purposes. See "Description of the
Series C Subordinated Debentures--Right to Defer Interest Payment Obligation",
"Certain Federal Income Tax Consequences--Original Issue Discount" and "Risk
Factors--Right to Defer Interest Payment Obligation; Tax Consequences; Market
Price Consequences".
The Corporation has, through the Series C Guarantee, the Trust Agreement,
the Series C Subordinated Debentures, the Indenture and the Expense Agreement
(each as defined herein), taken together, fully, irrevocably and unconditionally
guaranteed all of the Series C Issuer's obligations under the Series C Preferred
Securities. See "Relationship Among the Series C Preferred Securities, the
Series C Subordinated Debentures, the Expense Agreement and the Series C
Guarantee--Full and Unconditional Guarantee". The Series C Guarantee of the
Corporation (the "Series C Guarantee") guarantees the payment of Distributions
and payments on liquidation or redemption of the Series C Preferred Securities,
but only in each case to the extent of funds held by the Series C Issuer, as
described herein. See "Description of the Series C Guarantee". If the
Corporation does not make interest payments on the Series C Subordinated
Debentures held by the Series C Issuer, the Series C Issuer will have
insufficient funds to pay Distributions on the Series C Preferred Securities.
The Series C Guarantee does not cover payment of Distributions when the Series C
Issuer does not have sufficient funds to pay such Distributions. In such event,
a holder of the Series C Preferred Securities may institute a legal proceeding
directly against the Corporation to enforce payment of such Distributions to
such holder. See "Description of the Series C Subordinated
Debentures--Enforcement of Certain Rights by Holders of the Series C Preferred
Securities". The obligations of the Corporation under the Series C Guarantee and
the Series C Subordinated Debentures are subordinate and junior in right of
payment to all Senior Debt (as defined in "Description of the Series C
Subordinated Debentures--Subordination") of the Corporation.
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<PAGE>
(continued from the previous page)
The Series C Preferred Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series C Subordinated Debentures at
their Stated Maturity (as defined herein) or their earlier redemption. Subject
to the Corporation having received prior approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve") to do so if then required
under applicable capital guidelines or policies, the Series C Subordinated
Debentures are redeemable prior to their Stated Maturity at the option of the
Corporation (i) on or after March 15, 2007, in whole at any time or in part from
time to time at a redemption price (the "Optional Redemption Price") equal to
104.438% of the principal amount thereof on March 15, 2007, declining ratably on
each March 15 thereafter to 100% on or after March 15, 2017, plus accrued and
unpaid interest thereon to the date of redemption, or (ii) at any time whether
before or after March 15, 2007, in whole (but not in part), within 90 days
following the occurrence and continuation of a Tax Event (as defined herein) at
100% of the principal amount thereof plus accrued and unpaid interest thereon to
the date of Redemption (the "Tax Event Redemption Price"), subject to the
conditions described under "Description of Series C Subordinated Debentures--Tax
Event or Capital Treatment Event Redemption" or (iii) at any time prior to March
15, 2007, in whole but not in part, within 90 days following the occurrence and
continuation of a Capital Treatment Event (as defined herein), at a redemption
price equal to the Make-Whole Amount (as defined herein) plus accrued and unpaid
interest thereon to the date fixed for redemption (the "Capital Event Redemption
Price"). See "Description of the Series C Subordinated Debentures--Optional
Redemption" and "Description of the Series C Subordinated Debentures--Tax Event
or Capital Treatment Event Redemption".
The Corporation has the right at any time to terminate the Series C Issuer
and cause the Series C Subordinated Debentures to be distributed to the holders
of the Series C Preferred Securities in exchange therefor upon liquidation of
the Series C Issuer, subject to the Corporation having received prior approval
of the Federal Reserve to do so if then required under applicable capital
guidelines or policies. See "Description of the Series C Preferred
Securities--Liquidation of the Series C Issuer and Distribution of the Series C
Subordinated Debentures to Holders".
In the event of the termination of the Series C Issuer, after satisfaction
of liabilities to creditors of the Series C Issuer as required by applicable
law, the holders of the Series C Preferred Securities will be entitled to
receive a Liquidation Amount of $1,000 per Series C Preferred Security plus
accumulated and unpaid Distributions thereon to the date of payment, which will
be in the form of a distribution of such amount in Series C Subordinated
Debentures, subject to certain exceptions. See "Description of the Series C
Preferred Securities--Liquidation Distribution upon Termination".
The Series C Subordinated Debentures are unsecured and subordinated to all
Senior Debt of the Corporation. At September 30, 1996, the aggregate outstanding
Senior Debt of the Corporation was approximately $192 million. See "Description
of the Series C Subordinated Debentures--Subordination".
The Series C Preferred Securities will be represented by global
certificates registered in the name of The Depository Trust Company ("DTC") or
its nominee, except as set forth below. Beneficial interests in the Series C
Preferred Securities will be shown on, and transfers thereof will be effected
only through, records maintained by participants in DTC. Series C Preferred
Securities in certificated form will not be issued in exchange for the global
certificates. See "Book-Entry Issuance".
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES C PREFERRED
SECURITIES, INCLUDING OVER-ALLOTMENT , STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN
CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN
OF DISTRIBUTION".
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<PAGE>
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER THIS CHAPTER WITH THE STATE OF NEW HAMPSHIRE NOR
THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN
THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT
ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER
ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY
WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO,
ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite
1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material may also be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov.
Such material can also be inspected and copied at the office of the Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006.
The Corporation and the Series C Issuer have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act with respect to
the securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
For further information with respect to the Corporation and the securities
offered hereby, reference is made to the Registration Statement and the exhibits
and the financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission at the addresses set forth above or
through the Commission's homepage on the Internet. Statements made in this
Prospectus concerning the contents of any documents referred to herein are not
necessarily complete, and in each instance are qualified in all respects by
reference to the copy of such document filed as an exhibit to the Registration
Statement.
No separate financial statements of the Series C Issuer have been included
herein. The Corporation and the Series C Issuer do not consider that such
financial statements would be material to holders of the Series C Preferred
Securities because the Series C Issuer is a newly-formed special purpose entity,
has no operating history or independent operations and is not engaged in and
does not propose to engage in any activity other than holding as trust assets
the Series C Subordinated Debentures and issuing the Series C Securities.
Furthermore, taken together, the Corporation's obligations under the Series C
Junior Subordinated Debentures, the Indenture, the Guarantee, the Expense
Agreement and the Trust Agreement (each as defined herein) provide, in the
aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Series C Preferred Securities. See
"Description of the Series C Preferred Securities", "Description of the Series C
Subordinated Debentures" and "Description of the Series C Guarantee".
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
2. The Corporation's Quarterly Report on Form 10-Q for the first quarter
ended March 31, 1997.
3. The Corporation's Form 8-K, filed on December 13, 1996, March 6, 1997
and March 12, 1997.
4. The Corporation's Proxy Statement filed April 17, 1997.
All reports and proxy statements filed by the Corporation with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of this offering
shall likewise be deemed to be incorporated in this Prospectus and made a
constituent part hereof by reference from the respective dates of filing. Any
statement contained herein, or in a document all or a portion of which is
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
Any statements contained herein or in a document all or a portion of which
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of the Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement.
The Corporation will provide, without charge, to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the text of such
documents). Requests for such documents should be directed to Ms. Linda Madrid
at the corporate headquarters of the Corporation, 1503 Pennsylvania Avenue,
N.W., Washington, D.C. 20005 (telephone no. (301) 887-6000).
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<PAGE>
PROSPECTUS SUMMARY
This summary is qualified by the more detailed information and financial
statements in the Corporation's Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and Amended Quarterly Report on Form 10-QA, which are incorporated by
reference in this Prospectus. As used herein, (i) the "Indenture" means the
Series C Subordinated Indenture, as amended and supplemented from time to time,
between the Corporation and The Bank of New York, as trustee (the "Debenture
Trustee"), and (ii) the "Trust Agreement" means the Amended and Restated Trust
Agreement relating to the Series C Issuer among the Corporation, as depositor,
The Bank of New York, as property trustee (the "Property Trustee"), The Bank of
New York (Delaware), as Delaware trustee (the "Delaware Trustee"), and the
Administrative Trustees named therein (collectively with the Property Trustee
and Delaware Trustee, the "Series C Issuer Trustees").
The Corporation
The Corporation is a Washington, D.C.-based bank holding company registered
under the Bank Holding Company Act of 1956, as amended (the "BHCA"), which
operates throughout the Washington, D.C. metropolitan area. The Corporation also
has banking operations or separate subsidiaries in Miami, Florida; London,
England; Paris, France; and Nassau, Bahamas.
The Corporation's principal subsidiary is Riggs Bank N.A. ("Riggs Bank"), a
national banking association founded in 1836 and incorporated under the national
banking laws of the United States in 1896. In early 1996, the Corporation
consolidated its three separate banking subsidiaries: The Riggs National Bank of
Washington, D.C., The Riggs National Bank of Maryland and The Riggs National
Bank of Virginia under the name Riggs Bank N.A. Riggs Bank operates 57 branches
and an investment advisory subsidiary in the Washington, D.C. metropolitan area,
a commercial bank in London, an Edge Act subsidiary in Miami, a branch office in
London, a bank in Paris, and a bank and trust company in the Bahamas.
Riggs Bank Europe Limited ("Riggs Europe"), formerly Riggs AP Bank Limited,
a merchant bank located in London, is a wholly-owned subsidiary of Riggs Bank
which provides traditional corporate banking services, commercial property
financing, private banking services and trade finance.
The Corporation is a Delaware corporation with its principal office at 1503
Pennsylvania Avenue, N.W., Washington, D.C. 20005. Its telephone number is (301)
887-6000.
The Series C Issuer
The Series C Issuer is a statutory business trust formed under Delaware law
pursuant to (i) the Trust Agreement executed by the Corporation, as depositor,
The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as
Delaware Trustee, and the Administrative Trustees named therein and (ii) the
filing of a certificate of trust with the Delaware Secretary of State on March
4, 1997. Prior to the issuance of the Series C Preferred Securities, the trust
agreement was amended and restated in its entirety as described herein (as so
amended and restated, the "Trust Agreement"). All of the Series C Common
Securities are owned by the Corporation. The Corporation has acquired Series C
Common Securities in an aggregate Liquidation Amount equal to 3% of the total
capital of the Series C Issuer. The Series C Issuer exists for the exclusive
purposes of (i) issuing and selling the Series C Securities, (ii) using the
proceeds from the sale of the Series C Securities to acquire Series C
Subordinated Debentures issued by the Corporation and (iii) engaging in only
those other activities necessary or incidental thereto (such as registering the
transfer of the Series C Securities). Accordingly, the Series C Subordinated
Debentures are the sole assets of the Series C Issuer, and payments under the
Series C Subordinated Debentures are the sole revenues
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<PAGE>
of the Series C Issuer. The principal executive office of the Series C Issuer is
1503 Pennsylvania Avenue, N.W., Washington, D.C. 20005, and its telephone number
is (301) 887-6000.
The Offering
The Series C Issuer................... Riggs Capital II, a Delaware statutory
business trust (the "Series C Issuer").
The sole assets of the Series C Issuer
are the Series C Subordinated
Debentures.
Securities Offered.................... 8 7/8% Trust Preferred Securities,
Series C (the "Series C Preferred
Securities"), evidencing undivided
beneficial interests in the assets of
the Series C Issuer. The Series C
Preferred Securities offered hereby were
originally issued by the Series C Issuer
to the Initial Purchaser and were
subsequently resold by the Initial
Purchaser to qualified institutional
buyers in reliance on Rule 144A under
the Securities Act in March, 1997 (the
"March Securities Sale").
Distributions......................... Holders of the Series C Preferred
Securities are entitled to receive
cumulative cash Distributions at an
annual rate of 8 7/8% of the Liquidation
Amount of $1,000 per Series C Preferred
Security, accumulating from March 12,
1997 and payable semi-annually in
arrears on June 30 and December 31 of
each year, commencing on June 30, 1997.
The distribution rate and the
distribution and other payment dates for
the Series C Preferred Securities will
correspond to the interest rate and
interest and other payment dates on the
Series C Subordinated Debentures. See
"Description of the Series C Preferred
Securities".
Series C Subordinated Debentures...... The Series C Issuer has invested the
proceeds from the issuance of the Series
C Securities in an equivalent amount of
the Series C Subordinated Debentures.
The Series C Subordinated Debentures
will mature on March 15, 2027. The
Series C Subordinated Debentures rank
subordinate and junior in right of
payment to all Senior Debt of the
Corporation, which is generally defined
to include all other current and future
indebtedness of the Corporation (except
the Series A Subordinated Debentures and
trade and other liabilities arising in
the ordinary course of business), unless
such other indebtedness expressly
provides that it is not superior in
right of payment to the Series C
Debentures. On December 13, 1996, the
Corporation issued approximately $154.6
million in aggregate principal amount of
its Series A Subordinated Debentures,
which will rank pari passu with the
Series C Subordinated Debentures. (The
Corporation
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<PAGE>
does not have any Series B Subordinated
Debentures issued or outstanding.) In
addition, because the Corporation is a
holding company, the Corporation's
obligations under the Series C
Subordinated Debentures are effectively
subordinated to all existing and future
liabilities and obligations of its
subsidiaries. See "Risk Factors--Ranking
of Subordinated Obligations Under the
Series C Guarantee and the Series C
Subordinated Debentures" and "--Holding
Company Liquidity" and "Description of
the Series C Subordinated Debentures--
Subordination".
Series C Guarantee.................... Payments of Distributions out of moneys
held by the Series C Issuer, and
payments on liquidation of the Series C
Issuer or the redemption of the Series C
Preferred Securities, are guaranteed by
the Corporation to the extent the Series
C Issuer has funds available therefor.
The Corporation's obligations under the
Series C Guarantee, taken together with
its obligations under the Series C
Subordinated Debentures, the Indenture
and the Expense Agreement, constitute a
full and unconditional guarantee of all
of the Series C Issuer's obligations
under the Series C Preferred Securities.
See "Description of the Series C
Guarantee" and "Relationship Among the
Series C Preferred Securities, the
Series C Subordinated Debentures, the
Expense Agreement and the Series C
Guarantee". The obligations of the
Corporation under the Series C Guarantee
are subordinate and junior in right of
payment to all Senior Debt of the
Corporation. See "Risk Factors--Ranking
of Subordinated Obligations Under the
Series C Guarantee and the Series C
Subordinated Debentures" and
"Description of the Series C Guarantee".
Right to Defer Interest............... So long as no event of default under the
Indenture has occurred and is
continuing, the Corporation has the
right under the Indenture at any time
during the term of the Series C
Subordinated Debentures to defer the
payment of interest at any time or from
time to time for a period not exceeding
10 consecutive semi-annual periods with
respect to each Extension Period,
provided that no Extension Period may
extend beyond the Stated Maturity of the
Series C Subordinated Debentures. At the
end of such Extension Period, the
Corporation must pay all interest then
accrued and unpaid (together with
interest thereon at the annual rate of
8 7/8%, compounded semi-annually, to the
extent permitted by applicable law).
During an
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Extension Period, interest will continue
to accrue and holders of the Series C
Subordinated Debentures (or holders of
the Series C Preferred Securities, while
outstanding) will be required to accrue
interest income for United States
federal income tax purposes.
During any such Extension Period, the
Corporation may not, and may not permit
any subsidiary of the Corporation to,
(i) declare or pay any dividends or
distributions on, or redeem, purchase,
acquire or make a liquidation payment
with respect to, any of the
Corporation's capital stock or (ii) make
any payment of principal, interest or
premium, if any, on or repay, repurchase
or redeem any debt securities of the
Corporation (including the Series A
Subordinated Debentures) that rank pari
passu with or junior in right of payment
to the Series C Subordinated Debentures
or make any guarantee payments with
respect to any guarantee by the
Corporation of the debt securities of
any subsidiary of the Corporation if
such guarantee ranks pari passu with or
junior in right of payment to the Series
C Subordinated Debentures (other than
(a) dividends or distributions in common
stock of the Corporation, (b) any
declaration of a dividend in connection
with the implementation of a
stockholders' rights plan, the issuance
of stock under any such plan in the
future or the redemption or repurchase
of any such rights pursuant thereto, (c)
payments under the Series C Guarantee
and (d) purchases of common stock
related to the issuance of common stock
or rights under any of the Corporation's
benefit plans for its directors,
officers or employees). Prior to the
termination of any such Extension
Period, the Corporation may further
defer the payment of interest on the
Series C Subordinated Debentures,
provided that no Extension Period may
exceed 10 consecutive semi-annual
periods or extend beyond the Stated
Maturity of the Series C Subordinated
Debentures. There is no limitation on
the number of times that the Corporation
may elect to begin an Extension Period.
See "Description of the Series C
Subordinated Debentures--Right to Defer
Interest Payment Obligation" and
"Certain Federal Income Tax
Consequences--Original Issue Discount".
Optional and Tax or Capital Treatment
Event Redemption...................... Subject to the Corporation having
received prior approval of the Federal
Reserve to do so if then required under
applicable capital guidelines or
policies, the Series C Subordinated
Debentures are subject to redemption
prior to their Stated Maturity at
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<PAGE>
the option of the Corporation (i) on or
after March 15, 2007, in whole at any
time or in part from time to time at the
Optional Redemption Price equal to
104.438% of the principal amount thereof
on March 15, 2007, declining ratably on
each March 15 thereafter to 100% on or
after March 5, 2017, plus accrued and
unpaid interest thereon to the date of
redemption, or (ii) at any time, whether
occurring before or after March 15,
2007, in whole but not in part,
following the occurrence and
continuation of a Tax Event (as defined
herein) as described under "Description
of Series C Subordinated Debentures--Tax
Event or Capital Treatment Event
Redemption", at a redemption price equal
to 100% of the principal amount thereof
plus accrued and unpaid interest thereon
to the date fixed for redemption or
(iii) at any time prior to March 15,
2007, in whole (but not in part), within
90 days following the occurrence and
continuation of a Capital Treatment
Event (as defined herein) at a
redemption price equal to the Make-Whole
Amount (as defined herein) plus accrued
and unpaid interest thereon to the date
fixed for redemption.
If the Series C Subordinated Debentures
are redeemed prior to their Stated
Maturity, the Series C Issuer must apply
the proceeds of such redemption to
redeem a Like Amount (as defined herein)
of the Series C Preferred Securities and
the Series C Common Securities. The
Series C Preferred Securities will be
redeemed upon repayment of the Series C
Subordinated Debentures at their Stated
Maturity. See "Description of the Series
C Preferred Securities--Redemption".
Distribution of the Series C
Subordinated Debentures upon
Liquidation of the Series C
Issuer................................ The Corporation has the right at any
time, subject to the prior approval of
the Federal Reserve if then required
under applicable capital guidelines or
policies, to terminate the Series C
Issuer and cause the Series C
Subordinated Debentures to be
distributed to the holders of the Series
C Preferred Securities and the Series C
Common Securities in exchange therefor
upon liquidation of the Series C Issuer.
In the event of the liquidation of the
Series C Issuer, after satisfaction of
the claims of creditors of the Series C
Issuer, if any, as provided by
applicable law, the holders of the
Series C Preferred Securities will be
entitled to receive a Liquidation Amount
of $1,000 per Series C Preferred
Security plus accumulated and unpaid
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Distributions thereon to the date of
payment, which may be in the form of a
distribution of a Like Amount (as
defined herein) of the Series C
Subordinated Debentures, subject to
certain exceptions as described herein.
See "Description of the Series C
Preferred Securities--Liquidation of the
Series C Issuer and Distribution of the
Series C Subordinated Debentures to
Holders".
Use of Proceeds....................... The Corporation will not receive any
proceeds from the sale of the Series C
Preferred Securities offered hereby; all
such proceeds will be received by the
Selling Securityholders.
Shelf Registration Statement.......... Pursuant to a registration rights
agreement dated March 12, 1997 (the
"Registration Rights Agreement") between
the Corporation, the Series C Issuer and
the Initial Purchaser, the Corporation
and the Series C Issuer have agreed to
use their reasonable best efforts to
keep a shelf registration statement (the
"Shelf Registration Statement") with
respect to the Series C Preferred
Securities, the Series C Guarantee and
the Series C Subordinated Debentures
(together, the "Registrable Securities")
effective until two years after the date
it is declared effective or such earlier
date as all Registrable Securities shall
have been disposed of or on which all
Registrable Securities held by persons
that are not affiliates of the
Corporation or the Series C Issuer may
be resold without registration pursuant
to Rule 144(k) under the Securities Act
(the "Effectiveness Period"), subject to
certain exceptions. The Shelf
Registration Statement is generally
intended to permit the Selling
Securityholders to resell from time to
time the Registrable Securities that
they purchased in transactions which
were exempted from the registration
requirements of the Securities Act.
Purchasers of the Registrable Securities
offered pursuant to this Prospectus will
not have any rights under the
Registration Rights Agreement (although
all of the Registrable Securities sold
pursuant to this Registration Statement
will be freely tradeable except by
purchasers who are "affiliates" of the
Corporation or the Series C Issuer or
"underwriters" of the Registrable
Securities for purposes of the
Securities Act). The Registration
Statement, of which this Prospectus is a
part, has been filed by the Corporation
and the Series C Issuer with the
Commission in order to meet the
Corporation's and the Series C Issuer's
obligations under the Registration
Rights Agreement. See "Registration
Rights Agreement".
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<PAGE>
Risk Factors
An investment in the Series C Preferred Securities involves
substantial risks that should be considered by prospective purchasers. In
addition, because holders of the Series C Preferred Securities may receive
Series C Subordinated Debentures on termination of the Series C Issuer,
prospective purchasers of the Series C Preferred Securities are also making an
investment decision with regard to the Series C Subordinated Debentures and
should carefully review all of the information regarding the Series C
Subordinated Debentures contained herein. See "Description of the Series C
Subordinated Debentures" and "Risk Factors".
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<PAGE>
RISK FACTORS
Prospective purchasers of the Series C Preferred Securities
should carefully review the information contained elsewhere in this Prospectus
and should particularly consider the following matters. In addition, because
holders of the Series C Preferred Securities may receive Series C Subordinated
Debentures in exchange therefor on termination of the Series C Issuer,
prospective purchasers of the Series C Preferred Securities are also making an
investment decision with regard to the Series C Subordinated Debentures and
should carefully review all of the information regarding the Series C
Subordinated Debentures contained herein. See "Description of the Series C
Subordinated Debentures".
Ranking of Subordinated Obligations Under the Series C Guarantee and the Series
C Subordinated Debentures
The obligations of the Corporation under the Series C Guarantee
issued by the Corporation for the benefit of the holders of the Series C
Preferred Securities are unsecured and rank subordinate and junior in right of
payment to all Senior Debt of the Corporation, which is generally defined to
include all other current and future indebtedness of the Corporation (except the
Series A Subordinated Debentures and trade and other liabilities arising in the
ordinary course of business), unless such other indebtedness expressly provides
that it is not superior in right of payment to the Series C Subordinated
Debentures. The obligations of the Corporation under the Series C Subordinated
Debentures are subordinate and junior in right of payment to all such Senior
Debt of the Corporation. On December 13, 1996, the Corporation issued
approximately $154.6 million of its Series A Subordinated Debentures, which will
rank pari passu with the Series C Subordinated Debentures. Because the
Corporation is a holding company, the right of the Corporation to participate in
any distribution of assets of any subsidiary, including Riggs Bank, upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Series C Preferred Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary,
except to the extent that the Corporation may itself be recognized as a creditor
of that subsidiary. There are various legal limitations on the extent to which
certain of the Corporation's subsidiaries may extend credit, pay dividends or
otherwise supply funds to, or engage in transactions with, the Corporation or
certain of its other subsidiaries. Accordingly, the Series C Subordinated
Debentures and the Series C Guarantee are effectively subordinated to all
existing and future liabilities of the Corporation's subsidiaries, and holders
of the Series C Subordinated Debentures should look only to the assets of the
Corporation for payments on the Series C Subordinated Debentures. See "The
Corporation". None of the Indenture, the Series C Guarantee, the Expense
Agreement or the Trust Agreement places any limitation on the amount of secured
or unsecured debt, including Senior Debt, that may be incurred by the
Corporation. See "Description of the Series C Guarantee--Status of the Series C
Guarantee" and "Description of the Series C Subordinated
Debentures--Subordination".
The ability of the Series C Issuer to pay amounts due on the
Series C Preferred Securities is solely dependent upon the Corporation making
payments on the Series C Subordinated Debentures as and when required.
Holding Company Liquidity
As a holding company, the Corporation conducts its operations
principally through its subsidiaries and, therefore, its principal source of
cash, other than its investing and financing activities, is receipt of dividends
from Riggs Bank and the Corporation's other subsidiary banks. However, there are
legal limitations on the source and amount of dividends that a national bank
such as Riggs Bank is permitted to pay. A national bank may pay dividends only
to the extent that retained net profits (including the portion transferred to
surplus) exceed bad debts (as defined by regulation). Moreover, unless a
national bank's surplus fund equals its common capital, dividends may be paid
only after 10 percent of its net profits (as defined by regulation) for the
specified preceding period have been transferred to the bank's surplus fund.
In addition, prior approval of the Office of Comptroller of the Currency (the
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<PAGE>
"OCC") is required if the total of all dividends declared by a national bank in
any calendar year will exceed the sum of that bank's net profits for that year
and its retained net profits for the preceding two calendar years, less any
required transfers to either surplus or any fund for retirement of any preferred
stock. The payment of dividends by Riggs Bank may also be affected by other
factors, such as requirements for the maintenance of adequate capital. In
addition, the OCC is authorized to determine, under certain circumstances
relating to the financial condition of a national bank, whether the payment of
dividends would be an unsafe or unsound banking practice and to prohibit payment
thereof.
Right to Defer Interest Payment Obligation; Tax Consequences; Market Price
Consequences
So long as no event of default under the Indenture has occurred
or is continuing, the Corporation has the right under the Indenture to defer the
payment of interest on the Series C Subordinated Debentures, at any time or from
time to time, for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series C Subordinated Debentures. As a
consequence of any such deferral, semi-annual Distributions on the Series C
Preferred Securities by the Series C Issuer will also be deferred (and the
amount of Distributions to which holders of the Series C Preferred Securities
are entitled will accumulate additional Distributions thereon at the rate of
8 7/8% per annum, compounded semi-annually from the relevant payment date for
such Distributions) during any such Extension Period. During any such Extension
Period, the Corporation may not, and may not permit any subsidiary of the
Corporation to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Corporation that rank pari passu with or junior in interest to the Series C
Subordinated Debentures (including the Series A Subordinated Debentures) or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation if such
guarantee ranks pari passu with or junior in interest to the Series C
Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' 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, (c) payments under the Series C Guarantee and (d)
purchases of common stock related to the issuance of common stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees that was entered into prior to the commencement of such Extension
Period). Prior to the termination of any such Extension Period, the Corporation
may further defer the payment of interest, provided that no Extension Period may
exceed 10 consecutive semi-annual periods or extend beyond the Stated Maturity
of the Series C Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all interest then accrued and unpaid on the Series C
Subordinated Debentures (together with interest thereon at the annual rate of
8 7/8%, compounded semi-annually from the relevant payment date for such
interest, to the extent permitted by applicable law), the Corporation may elect
to begin a new Extension Period subject to the above requirements. There is no
limitation on the number of times that the Corporation may elect to begin an
Extension Period. See "Description of the Series C Preferred
Securities--Distributions" and "Description of the Series C Subordinated
Debentures--Right to Defer Interest Payment Obligation".
The Corporation has the right under the indenture relating to its
Series A Subordinated Debentures to defer the payment of interest on the Series
A Subordinated Debentures. The Corporation is prohibited under the terms of such
Series A Subordinated Debentures from making payments of interest on the Series
C Subordinated Debentures during the period of any such deferral.
Should an Extension Period occur, a holder of the Series C
Preferred Securities will continue to accrue income (in the form of original
issue discount) for United States federal income tax purposes in respect of its
pro rata share of the Series C Subordinated Debentures held by the Series C
Issuer. As a result, a holder of the Series C Preferred Securities will be
required to include such income in gross income for United States federal income
tax purposes in advance of the receipt of cash and will not receive the cash
related to such income from the Series C Issuer if the holder disposes of the
Series C Preferred Securities prior to the record date for the payment of
Distributions.
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<PAGE>
See "Certain Federal Income Tax Consequences--Original Issue
Discount" and "--Sales or Redemption of the Series C Preferred Securities".
The Corporation has no current intention of exercising its right
to defer payments of interest on the Series C Subordinated Debentures or the
Series A Subordinated Debentures. However, should the Corporation elect to
exercise such right in the future, the market price of the Series C Preferred
Securities is likely to be affected. A holder that disposes of its Series C
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its Series
C Preferred Securities. In addition, as a result of the existence of the
Corporation's right to defer interest payments, the market price of the Series C
Preferred Securities may be more volatile than the market prices of other
securities on which original issue discount accrues that are not subject to such
deferrals.
Tax Event or Capital Treatment Event--Redemption
Upon the occurrence and continuation of a Tax Event (whether
occurring before or after March 15, 2007), the Corporation has the right, if
certain conditions are met, (i) to terminate the Trust and cause the Series C
Subordinated Debentures to be distributed to the holders of the Series C
Preferred Securities in exchange therefor upon liquidation of the Series C
Issuer, (ii) to shorten the maturity of the Series C Subordinated Debentures to
a date not earlier than March 12, 2012 and thereby cause the Series C Preferred
Securities to be redeemed on such earlier date, (iii) if a Tax Event would
continue notwithstanding the taking of such actions, to redeem the Series C
Subordinated Debentures, in whole but not in part, within 90 days following the
occurrence of such Tax Event at 100% of the principal amount thereof plus
accrued and unpaid interest to, the date fixed for redemption. Upon the
occurrence and continuation of a Capital Treatment Event before March 15, 2007,
the Corporation has the right to redeem the Series C Subordinated Debentures, in
whole but not in part, within 90 days following the occurrence of such Capital
Treatment Event at a redemption price equal to the Make-Whole Amount (as defined
herein) plus accrued and unpaid interest thereon to the date fixed for
redemption. The exercise of such right is subject to the Corporation having
received prior approval of the Federal Reserve to do so if then required under
applicable guidelines or policies. See "Description of the Series C
Debentures--Tax Event or Capital Treatment Event Redemption".
A "Tax Event" means the receipt by the Series C 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
such pronouncement or decision is announced on or after the date of issuance of
the Series C Preferred Securities under the Trust Agreement, there is more than
an insubstantial risk that (i) the Series C Issuer is, or will be within 90 days
of the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Series C Subordinated Debentures,
(ii) interest payable by the Corporation on the Series C Subordinated Debentures
is not, or within 90 days of such the date of opinion, will not be, deductible
by the Corporation, in whole or in part, for United States federal income tax
purposes or (iii) the Series C Issuer is, or will be within 90 days of the date
of the opinion, subject to more than a de minimis amount of other taxes, duties
or other governmental charges. See "Description of the Series C Subordinated
Debentures--Tax Event or Capital Treatment Event Redemption". With respect to
Series C Subordinated Debentures that are no longer held by the Series C Issuer
or another issuer, "Tax Event" means the receipt by the Corporation 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 proposed 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 proposed change, pronouncement or decision is announced on or after the
date of issuance, of the Series C Subordinated Debentures under the Indenture,
there is more than an insubstantial risk that interest payable by the
Corporation on the Series C Subordinated Debentures is not, or within 90 days of
the date of such opinion will not be, deductible by the Corporation, in a whole
or in part, for United States federal income tax purposes (each of the
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circumstances referred to in clauses (i), (ii) and (iii) of the preceding
sentence and the circumstances referred to in this sentence being referred to
herein as an "Adverse Tax Consequence").
See "Risk Factors--Possible Tax Law Changes Affecting the Series
C Preferred Securities" for a discussion of certain legislative proposals that,
if adopted, could give rise to a Tax Event, which may permit the Corporation to
shorten the maturity of the Series C Subordinated Debentures to a date not
earlier that March 12, 2012 or cause a redemption of the Series C Preferred
Securities prior to March 15, 2007.
"Capital Treatment Event" means the reasonable determination by
the Corporation that, as a result of the occurrence 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
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the Series C
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that the Corporation will not be entitled, subsequent to the
effectiveness of such amendment or change or the announcement of such
pronouncement, action or decision, to treat as "Tier I Capital" (or the then
equivalent thereof) a portion of the Liquidation Amount of the Series C
Preferred Securities substantially equal to or greater than the portion thereof
it was entitled to treat as "Tier I Capital" (or the then equivalent thereof)
immediately prior to the effectiveness of such amendment or change or the
announcement of such pronouncement, action or decision for purposes of the
capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Corporation.
Liquidation of the Series C Issuer and Distribution of the Series C Subordinated
Debentures to Holders
The Corporation has the right at any time to terminate the Series
C Issuer and, after satisfaction of liabilities to creditors of the Series C
Issuer as required by applicable law, cause the Series C Subordinated Debentures
to be distributed to the holders of the Series C Preferred Securities in
exchange therefor in liquidation of the Series C Issuer. The exercise of such
right is subject to the Corporation having received prior approval of the
Federal Reserve if then required under applicable capital guidelines or
policies. See "Description of the Series C Preferred Securities--Liquidation of
the Series C Issuer and Distribution of the Series C Subordinated Debentures to
Holders".
In the event the Corporation distributes the Series C Subordinated
Debentures to the holders of the Series C Preferred Securities, the holders of
the Series C Subordinated Debentures will have the same registration rights as
they had as holders of the Series C Preferred Securities pursuant to the
Registration Rights Agreement. See "Registration Rights Agreement".
Shortening of Stated Maturity of Series C Subordinated Debentures
Upon the occurrence of a Tax Event, the Corporation in certain
circumstances will have the right to shorten the maturity of the Series C
Subordinated Debentures to a date not earlier than March 12, 2012 and thereby
cause the Series C Preferred Securities to be redeemed on such earlier date. See
"Description of Series C Subordinated Debentures--Tax Event or Capital Treatment
Event."
Rights under the Series C Guarantee
The Series C Guarantee guarantees to the holders of the Series C
Preferred Securities the following payments, to the extent not paid by the
Series C Issuer: (i) any accumulated and unpaid Distributions required to be
paid on the Series C Preferred Securities, to the extent that the Series C
Issuer has funds on hand available therefor at such time, (ii) the redemption
price with respect to any Series C Preferred Securities called for redemption,
to the extent that the Series C Issuer has funds on hand available therefor at
such time and (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Series C Issuer (unless the Series C Subordinated Debentures
are distributed to holders of the Series C Preferred Securities in exchange
therefor), the lesser of (a) the aggregate of the Liquidation
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Amount and all accumulated and unpaid Distributions to the date of payment, to
the extent that the Series C Issuer has funds on hand available therefor at such
time, and (b) the amount of assets of the Series C Issuer remaining available
for distribution to holders of the Series C Preferred Securities after payment
of creditors of the Series C Issuer as required by applicable law.
If the Corporation were to default on its obligation to pay amounts
payable under the Series C Subordinated Debentures, the Series C Issuer would
lack funds for the payment of Distributions or amounts payable on redemption of
the Series C Preferred Securities or otherwise, and, in such event, holders of
the Series C Preferred Securities would not be able to rely upon the Series C
Guarantee for payment of such amounts. The holders of not less than a majority
in aggregate Liquidation Amount of the Series C Preferred Securities 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 the Series C Guarantee
or to direct the exercise of any trust power conferred upon the Guarantee
Trustee under the Series C Guarantee. Any holder of the Series C Preferred
Securities may institute a legal proceeding directly against the Corporation to
enforce its rights under the Series C Guarantee without first instituting a
legal proceeding against the Series C Issuer, the Guarantee Trustee or any other
person or entity. In addition, in the event an event of default under the
Indenture shall have occurred and be continuing and such event is attributable
to the failure of the Corporation to pay interest on or principal (or premium,
if any) of the Series C Subordinated Debentures on the applicable payment date,
a holder of the Series C Preferred Securities may institute a legal proceeding
directly against the Corporation for enforcement of payment to such holder of
the principal (or premium, if any) of or interest on such Series C Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Series C Preferred Securities of such holder (a "Direct Action"). In
connection with such Direct Action, the Corporation has a right of set-off under
the Indenture to the extent of any payment made by the Corporation to such
holder of the Series C Preferred Securities in the Direct Action. Except as
described herein, holders of the Series C Preferred Securities will not be able
to exercise directly any other remedy available to the holders of the Series C
Subordinated Debentures or assert directly any other rights in respect of the
Series C Subordinated Debentures. The Bank of New York acts as the guarantee
trustee under the Series C Guarantee (the "Guarantee Trustee") and holds the
Series C Guarantee for the benefit of the holders of the Series C Preferred
Securities. The Bank of New York also acts as Debenture Trustee for the Series C
Subordinated Debentures and as Property Trustee, and The Bank of New York
(Delaware) acts as Delaware Trustee under the Trust Agreement. See "Description
of the Series C Subordinated Debentures--Enforcement of Certain Rights by
Holders of the Series C Preferred Securities", "Description of the Series C
Subordinated Debentures--Debenture Events of Default" and "Description of the
Series C Guarantee". The Trust Agreement provides that each holder of the Series
C Preferred Securities by acceptance thereof agrees to the provisions of the
Series C Guarantee and the Indenture.
Limited Voting Rights
Holders of the Series C Preferred Securities generally have limited
voting rights relating only to the modification of the Series C Preferred
Securities and the exercise of the Series C Issuer's rights as holder of the
Series C Subordinated Debentures and the Series C Guarantee. Holders of the
Series C Preferred Securities are not entitled to vote to appoint, remove or
replace the Property Trustee, the Delaware Trustee or the Administrative
Trustees, and such voting rights are vested exclusively in the holder of the
Series C Common Securities except, with respect to the Property Trustee and the
Delaware Trustee, upon the occurrence of certain events described herein. The
Property Trustee, the Administrative Trustees and the Corporation may amend the
Trust Agreement without the consent of holders of the Series C Preferred
Securities to ensure that the Series C Issuer will be classified for United
States federal income tax purposes as other than an association taxable as a
corporation unless such action materially and adversely affects the interests of
such holders. See "Description of the Series C Preferred Securities--Voting
Rights; Amendment of the Trust Agreement" and "--Removal of the Series C Issuer
Trustees".
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No Prior Public Trading Market for Series C Preferred Securities
There currently is no public market for the Series C Preferred
Securities and there can be no assurance as to the liquidity of the market for
the Series C Preferred Securities, the ability of holders of the Series C
Preferred Securities to sell such Securities or the price at which holders would
be able to sell. Although the Corporation will use its reasonable best efforts
to maintain the effectiveness of a Shelf Registration Statement for resales
during the periods described herein, it will be entitled to restrict resales
thereunder for limited periods upon certain events. See "Registration Rights
Agreement". The Initial Purchaser has informed the Corporation that it intends
to make a market in the Series C Preferred Securities, to the extent permitted
by applicable law, but is under no obligation to do so. Any such market making
may be discontinued at any time without notice.
Market Prices
There can be no assurance as to the market prices for the Series C
Preferred Securities or Series C Subordinated Debentures that may be distributed
in exchange for Series C Preferred Securities if a liquidation of the Series C
Issuer occurs. Accordingly, the Series C Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Series C Subordinated Debentures that a holder of the Series C
Preferred Securities may receive on liquidation of the Series C Issuer, may
trade at a discount to the price that the investor paid to purchase the Series C
Preferred Securities offered hereby. In addition, the Series C Preferred
Securities may trade at prices that do not fully reflect the value of accrued
but unpaid interest with respect to the underlying Series C Subordinated
Debentures. A holder of Series C Preferred Securities that disposes of its
Series C Preferred Securities between record dates for payments of Distributions
(and consequently does not receive a Distribution from the Series C Issuer for
the period prior to such disposition) will nevertheless be required to include
accrued but unpaid interest on the Series C Subordinated Debentures through the
date of disposition in income as ordinary income and to add such amount to its
adjusted tax basis in the Series C Preferred Securities disposed of. Such holder
will recognize a capital loss to the extent the selling price (which may not
fully reflect the value of accrued but unpaid interest) is less than its
adjusted tax basis (which will include accrued but unpaid interest). Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes. See "Certain Federal
Income Tax Consequences--Sales or Redemption of the Series C Preferred
Securities".
Possible Tax Law Changes Affecting the Series C Preferred Securities
On February 6, 1997, the revenue portion of President Clinton's
1997 budget proposal (the "Budget Proposal") was released. If enacted, the
Budget Proposal would generally deny interest deductions for interest on an
instrument issued by a corporation that has a maximum term of more than 15 years
and that is not shown as indebtedness on the separate balance sheet of the
issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. The above described provision of the Budget Proposal is proposed
to be effective generally for instruments issued on or after the date of first
Congressional committee action. If this provision were to apply to the Series C
Subordinated Debentures, the Corporation would be unable to deduct interest on
the Series C Subordinated Debentures. Under current law, the Corporation will be
able to deduct interest on the Series C Subordinated Debentures. There can be no
assurance, however, that current or future legislative proposals or final
legislation will not affect the ability of the Corporation to deduct interest on
the Series C Subordinated Debentures. Such a change could give rise to a Tax
Event, which may permit the Corporation, if certain conditions are met, to
shorten the maturity of the Series C Subordinated Debentures to a date not
earlier than March 12, 2012 or to cause a redemption of the Series C Preferred
Securities before March 15, 2007. See "Description of Series C Subordinated
Debentures--Tax Event or Capital Treatment Event Redemption" and "Description of
Series C Preferred Securities--Redemption." See also "Certain Federal Income Tax
Consequences--Possible Tax Law Changes."
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Residential and Commercial Real Estate Markets; Geographic Concentration
The Corporation has developed its lending business with a particular
emphasis on loans secured by residential real estate. The quality of the
Corporation's loan portfolio is dependent on the cash flow of borrowers,
regional economic conditions and residential and commercial real estate values.
Adverse changes affecting any of the above mentioned segments are likely to have
an adverse impact on the Corporation's loan portfolio and, as a result, the
Corporation's financial condition and results of operations may deteriorate.
Geographically, the Corporation's real estate loans are generally
concentrated in the Washington, D.C. metropolitan area. Geographic concentration
of loans may present risks in addition to those present with respect to loans
generally. A substantial deterioration in real estate values in the Washington,
D.C. metropolitan area could result in significant additional provisions to the
Corporation's reserve for loan losses.
Regulatory Capital Requirements
The Corporation and each of its banking subsidiaries are subject to
regulatory capital guidelines. Although the minimum leverage ratio requirement
is 3.00%, most bank holding companies, including the Corporation, are expected
to maintain an additional cushion of at least 100 to 200 basis points above the
minimum. However, the Federal Reserve may assign a specific capital ratio to an
individual bank holding company, including the Corporation, based on its
assessment of asset quality, earnings performance, interest-rate risk and
liquidity. As of the date of this Prospectus, the Federal Reserve has not
advised the Corporation of a specific leverage ratio requirement.
There can be no assurance that the Corporation or Riggs Bank will
continue to meet their respective minimum capital ratios. In the event that the
Corporation or any of its banking subsidiaries falls below the minimum capital
requirements described above, agencies may take regulatory action including, in
the case of subsidiary banks, "prompt corrective action". Such actions could
impair the Corporation's ability to make principal (or premium, if any) and
interest payments on the Series C Subordinated Debentures.
Competition
The Corporation competes with commercial banks, thrift institutions,
mortgage banks, credit unions and other institutions. Such competition is based
primarily on the scope and type of services offered, interest rates paid on
deposits, pricing of loans and the number and locations of branches. In
addition, competition has intensified in the Washington, D.C. metropolitan area.
During the past few years, significant consolidation among financial
institutions in the Washington, D.C. metropolitan area has occurred, including
significant acquisitions in this market by the Corporation's competitors, whose
headquarters are outside the Washington, D.C. metropolitan area. These
competitors also aggressively target many of the same customers as the
Corporation, including high net worth individuals and embassies and foreign
missions. These competitors and certain other competitors of the Corporation
have substantially greater resources than the Corporation. Although management
believes the Corporation has been able to compete effectively in its market
areas, there can be no assurance that it will be able to continue to do so.
THE SERIES C ISSUER
Riggs Capital II
Riggs Capital II is a statutory business trust formed under Delaware
law pursuant to (i) the Trust Agreement executed by the Corporation, as
depositor, The Bank of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the Administrative Trustees named therein
and (ii) the filing of a certificate of trust with the Delaware Secretary of
State on March 4, 1997. Prior to the issuance of the Series C Preferred
Securities, the trust agreement was amended and restated in its entirety as
described herein (as so amended and restated, the "Trust
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Agreement"). The Series C Issuer exists for the exclusive purposes of (i)
issuing and selling the Series C Securities, (ii) using the proceeds from the
sale of the Series C Securities to acquire Series C Subordinated Debentures
issued by the Corporation and (iii) engaging in only those other activities
necessary or incidental thereto (such as registering the transfer of the Series
C Securities). Accordingly, the Series C Subordinated Debentures are the sole
assets of the Series C Issuer, and payments under the Series C Subordinated
Debentures are the sole revenue of the Series C Issuer.
All of the Series C Common Securities are owned by the Corporation. The
Series C Common Securities rank pari passu, and payments will be made thereon
pro rata, with the Series C Preferred Securities, except that upon the
occurrence and continuance of an event of default under the Trust Agreement
resulting from an event of default under the Indenture, the rights of the
Corporation as holder of the Series C Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Series C Preferred Securities.
See "Description of the Series C Preferred Securities--Subordination of the
Series C Common Securities". The Corporation has acquired the Series C Common
Securities in an aggregate Liquidation Amount equal to at least 3% of the total
capital of the Series C Issuer. The Series C Issuer has a term of 55 years, but
may terminate earlier as provided in the Trust Agreement. The Series C Issuer's
business and affairs are conducted by its trustees, each appointed by the
Corporation as holder of the Series C Common Securities. The trustees for the
Series C Issuer are The Bank of New York, as the Property Trustee (the "Property
Trustee"), The Bank of New York (Delaware), as the Delaware Trustee (the
"Delaware Trustee"), and two individual trustees (the "Administrative Trustees")
who are employees or officers of or affiliated with the Corporation
(collectively, the "Series C Issuer Trustees"). The Bank of New York also acts
as guarantee trustee under the Series C Guarantee and the Indenture. See
"Description of the Series C Guarantee" and "Description of the Series C
Subordinated Debentures". The holder of the Series C Common Securities, or the
holders of a majority in Liquidation Amount of the Series C Preferred Securities
if an event of default under the Trust Agreement resulting from an event of
default under the Indenture has occurred and is continuing, will be entitled to
appoint, remove or replace the Property Trustee and/or the Delaware Trustee. In
no event will the holders of the Series C Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees; such voting
rights are vested exclusively in the holder of the Series C Common Securities.
The duties and obligations of the Series C Issuer Trustees are governed by the
Trust Agreement. The Corporation will pay all fees and expenses related to the
Series C Issuer and the offering of the Series C Preferred Securities and will
pay, directly or indirectly, all ongoing costs, expenses and liabilities of the
Series C Issuer pursuant to the Expense Agreement.
THE CORPORATION
Riggs National Corporation
The Corporation is a bank holding company registered under the BHCA.
The Corporation currently engages in a variety of banking-related activities
through its bank and non-bank subsidiaries. The Corporation currently has
banking operations or separate subsidiaries in the Washington, D.C. metropolitan
area; Miami, Florida; London, England; Paris, France; and Nassau, Bahamas.
However, the primary market for the Corporation is the Washington, D.C.
metropolitan area, which it serves through its primary banking subsidiary, Riggs
Bank.
Key elements of the Corporation's business strategy for its
subsidiaries are to continue to focus on growth opportunities through the
additional accumulation of assets under management in Riggs & Company, a
division of Riggs Bank, the orientation of its retail banking branches toward
money management relationships, the development and specialization of products
and services in specific growth industries in its markets and the continued
preeminence in the embassy banking operations coupled with growth in selected
international business lines. Such growth will entail internally developed
programs as well as possible alliances or acquisitions in these areas. The
Corporation will continue to serve the varied financial needs of the Washington,
D.C. metropolitan area and to meet its commitments under the Community
Reinvestment Act.
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<PAGE>
Riggs Bank
The Corporation's principal subsidiary is Riggs Bank, a national
banking association founded in 1836 and incorporated under the national banking
laws of the United States in 1896. In early 1996, the Corporation consolidated
its three separate banking subsidiaries: The Riggs National Bank of Washington,
D.C., The Riggs National Bank of Virginia and The Riggs National Bank of
Maryland under the name of Riggs Bank N.A.
Internally, Riggs Bank is organized into the following business lines:
Retail Banking Group; Corporate and Commercial Banking Group; Riggs & Company
and International Banking Group. Through these business lines Riggs Bank
provides a wide array of financial services to customers in the Washington, D.C.
metropolitan area, throughout the United States and internationally.
Riggs Bank's Retail Banking Group provides a variety of services
including checking, NOW, savings and money market accounts, loans and personal
lines of credit, certificates of deposit and individual retirement accounts.
Additionally, the Retail Banking Group provides 24-hour banking services through
its telebanking operations and a network of Riggs Bank automated teller machines
("ATMs") as well as national and regional ATM networks.
Riggs Bank's Corporate and Commercial Banking Groups provide services
to customers ranging from small regional businesses to major companies. These
services include lines of credit, secured and unsecured term loans, letters of
credit, credit support facilities, foreign currency transactions and cash
management.
Riggs & Company provides domestic trust, investment management
and private banking services. Fiduciary and administrative services provided
include financial management and tax planning for individuals, investment and
accounting services for corporations and non-profit organizations, estate
planning and trust administration, as well as bond trusteeship.
Riggs Bank provides investment advisory services through Riggs
Investment Management Corporation, a wholly owned subsidiary incorporated under
the laws of the State of Delaware and registered under the Investment Advisers
Act of 1940, as amended.
Riggs Bank's International Banking Group furnishes a variety of
financial services, including issuing letters of credit in connection with trade
and other transactions, taking deposits, foreign exchange, private banking, cash
management, letters of credit and credit assistance with U.S. Government
programs. Customers include embassies and foreign missions in Washington, D.C.,
foreign governments, central banks and over 200 correspondent banks around the
world. These services are provided through both domestic and international
offices. Riggs Bank has established an important relationship with the foreign
embassy and mission community operating within the nation's capital. Currently,
Riggs Bank is the primary service provider to this distinguished group of
clientele, banking with 160 of the 170 countries represented by embassies or
missions in Washington, D.C. The embassy and mission business is a natural
complement to the Riggs Bank international private banking, foreign
correspondent banking and international advisory services.
The Riggs Bank and Trust Company (Bahamas) Limited, in Nassau, provides
trust services for international private banking customers. Riggs Bank operates
a branch in the U.S. Embassy in London, which services that embassy, its
employees and official visitors. In 1991, Riggs Bank opened a banking subsidiary
under the laws of France. A full-service commercial bank, The Riggs National
Bank (Europe) S.A. ("Riggs-Paris") has one branch located in the U.S. Embassy in
Paris. In addition to serving that embassy, its employees and official visitors,
the Riggs-Paris office also assists the U.S. Government with disbursement
activities for the Department of Defense and the Department of State for all of
their facilities in Europe.
Riggs Bank Europe Limited
Riggs Bank Europe Limited, a merchant bank located in London, is a
wholly owned subsidiary of Riggs Bank. Riggs Bank Europe Limited provides
traditional corporate banking services, commercial property financing, private
banking services and trade finance.
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<PAGE>
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES (EXCLUDING PREFERRED STOCK
DIVIDENDS) AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The following are the consolidated ratio of earnings to fixed charges
(excluding preferred stock dividends) and ratio of earnings to combined fixed
charges and preferred stock dividend requirements for the Corporation for each
of the years in the five year period ended December 31, 1996:
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges (Excluding
Preferred Stock Dividends):
Including Interest on Deposits 1.52 1.60 1.30 N/A N/A
Excluding Interest on Deposits 3.41 3.61 2.15 N/A N/A
Earnings to Combined Fixed Charges
and Preferred Stock Dividends:
Including Interest on Deposits 1.41 1.49 1.17 N/A N/A
Excluding Interest on Deposits 2.51 2.74 1.52 N/A N/A
</TABLE>
The ratio of earnings to fixed charges (excluding preferred stock
dividends) is computed by dividing (i) income before income taxes and fixed
charges less interest capitalized during such period, net of amortization of
previously capitalized interest, by (ii) fixed charges. The ratio of earnings to
combined fixed charges and preferred stock dividend requirements is computed by
dividing (i) income before income taxes and fixed charges less interest
capitalized during such period, net of amortization of previously capitalized
interest, by (ii) fixed charges and preferred stock dividend requirements. Fixed
charges consist of interest expense on borrowings, including capitalized
interest (including or excluding deposits, as the case may be), and the portion
of rental expense which is deemed representative of interest. The preferred
stock dividend requirements represent the pre-tax earnings which would be
required to cover such dividend requirements on the Corporation's preferred
stock outstanding.
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<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation as of December 31, 1996 and as adjusted to give effect to the
consummation of the offering of the Series A Preferred Securities and Series C
Preferred Securities. The following data should be read in conjunction with the
consolidated financial statements and notes thereto of the Corporation
incorporated by reference herein and deemed to be a part of this Offering
Memorandum.
<TABLE>
<CAPTION>
December 31, 1996
---------------------------
Actual As Adjusted
---------------------------
(in thousands)
<S> <C> <C>
Long-term Debt
9.65% Subordinated Debentures due 2009............................................... $ 66,525 $ 66,525
8.50% Subordinated Debentures due 2006............................................... 125,000 125,000
-------- --------
Total long-term debt......................................................... 191,525 191,525
-------- --------
Guaranteed Preferred Beneficial Interests in 8 5/8% Junior
Subordinated Deferrable Interest Debentures, Series A (a)............................ 150,000 150,000
Guaranteed Preferred Beneficial Interests in 8 7/8% Junior
Subordinated Deferrable Interest Debentures, Series C (b)............................ -- 200,000
-------- --------
Total Guaranteed Preferred Beneficial Interests in Junior
Subordinated Deferrable Interest Debentures.............................. 150,000 350,000
-------- --------
Stockholders' Equity
Preferred Stock
$1.00 Par value, Shares authorized--25,000,000
Shares Issued--4,000,000 10.75% Noncumulative Perpetual Preferred Stock,
Series B (liquidation amount $25 per share)...................................... 4,000 4,000
Class B Common Stock
$2.50 Par value, Shares authorized--20,000,000
Shares Issued--none.................................................................. -- --
Common Stock
$2.50 Par value, Shares authorized--50,000,000
Shares Issued--31,273,344............................................................ 78,183 78,183
Surplus
Preferred Stock...................................................................... 91,192 91,192
Common Stock......................................................................... 157,060 157,060
Foreign Exchange Translation Adjustments..................................................... 1,111 1,111
Undivided Profits............................................................................ 118,682 118,682
Unrealized Gain (Loss) on Securities Available for Sale, Net................................. (729) (729)
Treasury Stock--900,798 Shares............................................................... (23,723) (23,723)
-------- ---------
Total Stockholders' Equity................................................... 425,776 425,776
-------- ---------
Total Long-Term Debt, Guaranteed Preferred Beneficial Interests in Junior Subordinated
Deferrable Interest Debentures and Stockholders' Equity.............................. $767,301 $967,301
======== ========
Certain Capital Ratios:
Tier I Capital-Risk-Weighted......................................................... 20.04% 20.04%
Combined Tier I & II Capital-Risk-Weighted........................................... 28.47% 35.60%
Leverage............................................................................. 11.84% 11.84%
</TABLE>
(a) On December 13, 1996, Riggs Capital issued $150 million of Series A
Preferred Securities. Riggs Capital invested the proceeds of such offering,
together with $4,640,000 paid by the Corporation in $154,640,000 aggregate
principal amount of the Series A Subordinated Debentures. The Series A
Subordinated Debentures
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<PAGE>
mature on December 31, 2026. The Corporation owns all the Common Securities
of Riggs Capital and the sole assets of Riggs Capital are the Series A
Subordinated Debentures. It is anticipated that the Series A Issuer will
not be subject to the reporting requirements under the Exchange Act.
(b) As described herein, the sole assets of the Series C Issuer will be
$206,186,000 aggregate principal amount of the 8 7/8% Junior Subordinated
Deferrable Interest Debentures, Series C, issued by the Corporation to the
Series C Issuer. The Series C Subordinated Debentures mature on March 15,
2027. The Corporation owns all of the Series C Common Securities of the
Series C Issuer. It is anticipated that the Series C Issuer will not be
subject to the reporting requirements under the Exchange Act.
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<PAGE>
USE OF PROCEEDS
Neither the Corporation nor the Series C Issuer will receive any of the
proceeds from the sale of the Series C Preferred Securities offered hereby, all
of which will be received by the Selling Securityholders.
All of the proceeds from the March Securities Sale of the Series C
Preferred Securities were invested, together with the proceeds from the sale of
the Series C Common Securities, by the Series C Issuer in Series C Subordinated
Debentures. The Corporation intends to use the proceeds from the sale of the
Series C Subordinated Debentures for general corporate purposes.
FEDERAL RESERVE BOARD ACTIONS
On October 21, 1996 the Federal Reserve approved the use of certain
cumulative preferred stock instruments in Tier I capital for bank holding
companies. Such instruments are issued out of a special purpose subsidiary that
is wholly owned by the parent company and the proceeds are lent to the parent
company in the form of a very long-term, deeply subordinated note. Such
arrangement, which gives rise to minority interest upon consolidation of the
subsidiary with the parent holding company, normally will be accorded Tier I
capital status by the Federal Reserve. The Corporation believes that raising
capital in this form is the most efficient and cost effective method for it to
do so.
ACCOUNTING TREATMENT
For financial reporting purposes, the Series C Issuer will be treated
as a subsidiary of the Corporation and, accordingly, the Series C Issuer's
financial statements will be included in the consolidated financial statements
of the Corporation. In all future reports of the Corporation filed under the
Exchange Act, the Series C Preferred Securities will be presented as a separate
line item in the consolidated balance sheets of the Corporation, entitled
"Guaranteed Preferred Beneficial Interests in 8 7/8% Junior Subordinated
Deferrable Interest Debentures" and appropriate disclosures about the Series C
Preferred Securities, the Series C Guarantee, the Expense Agreement and the
Series C Subordinated Debentures will be included in the notes to the
consolidated financial statements. For financial reporting purposes, the
Corporation will record Distributions payable on the Series C Preferred
Securities as a deduction from income before taxes as a minority interest in a
consolidated subsidiary.
DESCRIPTION OF THE SERIES C PREFERRED SECURITIES
General
The following is a summary of certain terms and provisions of the
Series C Preferred Securities. This summary of certain terms and provisions of
the Series C Preferred Securities does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the Trust Agreement,
including the definitions therein of certain terms, and the Trust Indenture Act.
All material terms of the Series C Preferred Securities are set forth in the
Prospectus. Wherever particular defined terms of the Trust Agreement (as amended
or supplemented from time to time) are referred to herein, such defined terms
are incorporated herein by reference. The Trust Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Distributions
The Series C Preferred Securities represent beneficial interests
in the Series C Issuer. Distributions on such Series C Preferred Securities will
be payable at the annual rate of 8 7/8% of the stated Liquidation Amount of
$1,000, payable semi-annually in arrears on June 30 and December 31 of each
year, to the holders of the Series C Preferred Securities on the relevant record
dates. The record dates will be, for so long as the Series C Preferred
Securities
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<PAGE>
remain in book-entry form, one Business Day (as defined below) prior to the
relevant Distribution payment date and, in the event the Series C Preferred
Securities are not in book-entry form, the 15th day of the month in which the
relevant Distribution payment date occurs. Subject to any applicable laws and
regulations and the provisions of the Trust Agreement, each such payment will be
made as described under "Book-Entry Issuance". Distributions will accumulate
from the date of original issuance of the Series C Preferred Securities. The
first Distribution payment date for the Series C Preferred Securities will be
June 30, 1997. The amount of Distributions payable for any period which is less
than a full Distribution Period will be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any date on which Distributions are
payable on the Series C Preferred Securities is not a Business Day, then payment
of the Distributions payable on such date will be made on the next succeeding
day that is a Business Day (and without any additional Distributions or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date such payment was originally payable (each date on which
Distributions are payable in accordance with the foregoing, a "Distribution
Date"). A "Business Day" shall mean any day other than a Saturday or a Sunday,
or a day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or a day on which the
corporate trust office of the Property Trustee or the Debenture Trustee is
closed for business.
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer the
payment of interest on the Series C Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series C Subordinated Debentures. As a
consequence of any such deferral of interest, semi-annual Distributions on the
Series C Preferred Securities by the Series C Issuer will also be deferred
during any such Extension Period. Distributions to which holders of the Series C
Preferred Securities are entitled will accumulate additional Distributions
thereon at the rate per annum of 8 7/8% thereof, compounded semi-annually from
the relevant payment date for such Distributions. The term "Distributions" as
used herein shall include any such additional Distributions. During any such
Extension Period, the Corporation may not, and may not permit any subsidiary of
the Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Corporation (including the Series A Junior Subordinated Debentures) that rank
pari passu with or junior in interest to the Series C Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation if such
guarantee ranks pari passu with or junior in interest to the Series C
Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' 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, (c) payments under the Series C Guarantee and (d)
purchases of common stock related to the issuance of common stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees that was entered into prior to the commencement of such Extension
Period). Prior to the termination of any such Extension Period, the Corporation
may further defer the payment of interest on the Series C Subordinated
Debentures, provided that no Extension Period may exceed 10 consecutive semi-
annual periods or extend beyond the Stated Maturity of the Series C Subordinated
Debentures. Upon the termination of any such Extension Period and the payment of
all interest then accrued and unpaid (together with interest thereon at the rate
of 8 7/8%, compounded semi-annually, to the extent permitted by applicable law),
the Corporation may elect to begin a new Extension Period. There is no
limitation on the number of times that the Corporation may elect to begin an
Extension Period. See "Description of the Series C Subordinated Debentures--
Right to Defer Interest Payment Obligation" and "Certain Federal Income Tax
Consequences--Original Issue Discount".
The revenue of the Series C Issuer available for distribution to
holders of its Series C Preferred Securities is limited to payments under the
Series C Subordinated Debentures in which the Series C Issuer has invested the
proceeds from the issuance and sale of its Series C Securities. See "Description
of the Series C Subordinated Debentures". If the Corporation does not make
interest payments on the Series C Subordinated Debentures, the Property Trustee
will not have funds available to pay Distributions on the Series C Preferred
Securities. The payment of Distributions (if and to the extent the Series C
Issuer has funds legally available for the payment of such
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<PAGE>
Distributions and cash sufficient to make such payments) is guaranteed by the
Corporation on a limited basis as set forth herein under "Description of the
Series C Guarantee".
The Corporation has no current intention of exercising its right to
defer payments of interest on the Series C Subordinated Debentures.
Subordination of the Series C Common Securities
Payment of Distributions on, and the Redemption Price (as defined
herein) of, the Series C Preferred Securities and Series C Common Securities, as
applicable, shall be made pro rata based on the Liquidation Amount of the Series
C Preferred Securities and the Series C Common Securities; provided, however,
that if on any Distribution Date or Redemption Date an event of default under
the Indenture shall have occurred and be continuing, no payment of any
Distribution on, or Redemption Price of, any of the Series C Common Securities,
and no other payment on account of the redemption, liquidation or other
acquisition of such Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions on all of the outstanding
Series C Preferred Securities for all Distribution periods terminating on or
prior thereto, or, in the case of payment of the Redemption Price, the full
amount of such Redemption Price on all of the outstanding Series C Preferred
Securities then called for redemption, shall have been made or provided for, and
all funds available to the Property Trustee shall first be applied to the
payment in full in cash of all Distributions on, or Redemption Price of, the
Series C Preferred Securities then due and payable.
In the case of any event of default under the Trust Agreement
resulting from an event of default under the Indenture, the Corporation as
holder of the Series C Common Securities will be deemed to have waived any right
to act with respect to any such event of default under the Trust Agreement until
the effect of all such events of default with respect to the Series C Preferred
Securities shall have been cured, waived or otherwise eliminated. Until any such
events of default under the Trust Agreement shall have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of the Series C Preferred Securities and not on behalf of the
Corporation as holder of the Series C Common Securities, and only the holders of
the Series C Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
Redemption
The Series C Preferred Securities are subject to mandatory redemption,
in whole or in part, upon repayment of the Series C Subordinated Debentures at
their Stated Maturity (as defined herein) or earlier redemption as provided in
the Indenture. The proceeds from such repayment or redemption shall be applied
by the Property Trustee to redeem a Like Amount (as defined below) of the Series
C Preferred Securities, upon not less than 30 nor more than 60 days notice prior
to the date fixed for repayment or redemption, at a redemption price equal to
the aggregate Liquidation Amount of such Series C Preferred Securities plus
accumulated and unpaid Distributions thereon to the date of redemption (the
"Redemption Date") plus the related amount of the premium, if any, paid by the
Corporation upon the concurrent redemption of such Series C Subordinated
Debentures (the "Redemption Price"). For a description of the Stated Maturity
and redemption provisions of the Series C Subordinated Debentures, see
"Description of the Series C Subordinated Debentures--General", "--Optional
Redemption" and "--Tax Event or Capital Treatment Event Redemption".
Subject to the Corporation having received prior approval of the
Federal Reserve to do so if then required under applicable capital guidelines or
policies, the Corporation has the option to redeem the Series C Subordinated
Debentures prior to maturity on or after March 15, 2007, in whole at any time or
in part from time to time, at the Optional Redemption Price and thereby cause a
mandatory redemption of a Like Amount (as defined below) of the Series C
Preferred Securities. See "Description of the Series C Subordinated
Debentures--Optional Redemption".
If, whether before or after March 15, 2007, a Tax Event shall occur and
be continuing, the Corporation has the right to redeem the Series C Subordinated
Debentures, in certain circumstances as described under "Description
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of Series C Subordinated Debentures--Tax Event or Capital Treatment Event
Redemption," in whole (but not in part) within 90 days following the occurrence
of a Tax Event at a redemption price equal to 100% of the principal amount
thereof plus accrued and unpaid interest to the date fixed for redemption. Upon
the occurrence and continuation of a Capital Treatment Event before March 15,
2007, the Corporation has the right to redeem the Series C Subordinated
Debentures, in whole but not in part, within 90 days following the occurrence of
such Capital Treatment Event at a redemption price equal to the Make-Whole
Amount (as defined herein) plus accrued and unpaid interest thereon to the date
fixed for redemption. The exercise of such rights of redemption upon the
occurrence of a Tax Event or a Capital Treatment Event is subject to the
Corporation having received prior approval of the Federal Reserve to do so if
then required under applicable capital guidelines or policies. See "Description
of the Series C Subordinated Debentures--Tax Event or Capital Treatment Event
Redemption." A redemption of the Series C Subordinated Debentures would cause a
mandatory redemption of Series C Preferred Securities and Series C Common
Securities.
Redemption Procedures
Series C Preferred Securities redeemed on each Redemption Date
shall be redeemed at the applicable Redemption Price with the applicable
proceeds from the contemporaneous redemption of a Like Amount of the Series C
Subordinated Debentures. Redemptions of the Series C Preferred Securities shall
be made and the Redemption Price shall be payable on each Redemption Date only
to the extent that the Series C Issuer has funds on hand available for the
payment of such Redemption Price. See also "--Subordination of the Series C
Common Securities".
If the Series C Issuer gives a notice of redemption in respect of
the Series C Preferred Securities, then, by 12:00 noon, New York City time, on
the Redemption Date, to the extent funds are available, the Property Trustee
will deposit irrevocably with DTC funds sufficient to pay the applicable
Redemption Price and will give DTC irrevocable instructions and authority to pay
the Redemption Price to the holders of such Series C Preferred Securities. See
"Book-Entry Issuance". If any Series C Preferred Securities are held in
certificated form, the Property Trustee, to the extent funds are available, will
irrevocably deposit with the paying agent for the Series C Preferred Securities
funds sufficient to pay the applicable Redemption Price and will give such
paying agent irrevocable instructions and authority to pay the Redemption Price
to the holders thereof upon surrender of their certificates evidencing such
Series C Preferred Securities. Notwithstanding the foregoing, Distributions
payable on or prior to the Redemption Date for the Series C Preferred Securities
called for redemption shall be payable to the holders of the Series C Preferred
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required, then
upon the date of such deposit, all rights of the holders of such Series C
Preferred Securities so called for redemption will cease, except the right of
the holders of such Series C Preferred Securities to receive the Redemption
Price, but without interest on such Redemption Price, and such Series C
Preferred Securities will cease to be outstanding.
In the event that any date fixed for redemption of the Series C
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the event that
payment of the Redemption Price in respect of the Series C Preferred Securities
called for redemption is improperly withheld or refused and not paid either by
the Series C Issuer or by the Corporation pursuant to the Series C Guarantee as
described under "Description of the Series C Guarantee", Distributions on such
Series C Preferred Securities will continue to accrue at the then applicable
rate, from the Redemption Date originally established by the Series C Issuer for
such Series C Preferred Securities to the date such Redemption Price is actually
paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United
States federal securities law), the Corporation or its subsidiaries may at any
time and from time to time purchase outstanding Series C Preferred Securities by
private agreement.
Payment of the Redemption Price on the Series C Preferred
Securities and any distribution of the Series C Subordinated Debentures to
holders of the Series C Preferred Securities shall be made to the applicable
recordholders thereof as they appear on the register for the Series C Preferred
Securities on the relevant record date, which, for so
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long as the Series C Preferred Securities are in book-entry form, shall be one
Business Day prior to the relevant Redemption Date or liquidation date, as
applicable; provided, however, that in the event that any Series C Preferred
Securities are not in book-entry form, the relevant record date for the Series C
Preferred Securities shall be a date at least 15 days prior to the Redemption
Date or liquidation date, as applicable.
If less than all of the Series C Preferred Securities and Series
C Common Securities issued by the Series C Issuer are to be redeemed on a
Redemption Date, then the aggregate Liquidation Amount of the Series C Preferred
Securities and Series C Common Securities to be redeemed shall be allocated pro
rata to the Series C Preferred Securities and the Series C Common Securities
based upon the relative Liquidation Amounts of such classes. The particular
Series C Preferred Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property Trustee
from the outstanding Series C Preferred Securities not previously called for
redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or an integral multiple of $1,000 in excess thereof) of the
Liquidation Amount of the Series C Preferred Securities of a denomination larger
than $1,000. The Property Trustee shall promptly notify the trust registrar in
writing of the Series C Preferred Securities selected for redemption and, in the
case of the Series C Preferred Securities selected for partial redemption, the
Liquidation Amount thereof to be redeemed. For all purposes of the Trust
Agreement, unless the context otherwise requires, all provisions relating to the
redemption of the Series C Preferred Securities shall relate, in the case of the
Series C Preferred Securities redeemed or to be redeemed only in part, to the
portion of the aggregate Liquidation Amount of the Series C Preferred Securities
which has been or is to be redeemed.
Liquidation of the Series C Issuer and Distribution of the Series C Subordinated
Debentures to Holders
Subject to the Corporation having received the prior approval of
the Federal Reserve to do so if then required under applicable capital
guidelines or policies, the Corporation has the right at any time to terminate
the Series C Issuer and, after satisfaction of the liabilities of creditors of
the Series C Issuer as provided by applicable law, cause Series C Subordinated
Debentures to be distributed to the holders of the Series C Preferred Securities
and Series C Common Securities in exchange therefor upon liquidation of the
Series C Issuer.
After the liquidation date fixed for any distribution of the
Series C Subordinated Debentures for Series C Preferred Securities (i) such
Series C Preferred Securities will no longer be deemed to be outstanding, (ii)
DTC or its nominee, as the record holder of the Series C Preferred Securities,
will receive a registered global certificate or certificates representing the
Series C Subordinated Debentures to be delivered upon such distribution and
(iii) any certificates representing such Series C Preferred Securities not held
by DTC or its nominee will be deemed to represent Series C Subordinated
Debentures having a principal amount equal to the stated Liquidation Amount of
such Series C Preferred Securities, and bearing accrued and unpaid interest in
an amount equal to the accumulated and unpaid Distributions on such series of
the Series C Preferred Securities until such certificates are presented to the
Administrative Trustees or their agent for transfer or reissuance.
Under current United States federal income tax law and
interpretations, a distribution of the Series C Subordinated Debentures should
not be a taxable event to holders of the Series C Preferred Securities. Should
there be a change in law, a change in legal interpretation, a Tax Event or other
circumstances, however, the distribution could be a taxable event to holders of
the Series C Preferred Securities. See "Certain Federal Income Tax
Consequences--Distribution of the Series C Subordinated Debentures to Holders of
Series C Preferred Securities".
Liquidation Distribution upon Termination
Pursuant to the Trust Agreement, the Series C Issuer shall
automatically terminate upon expiration of its term and shall terminate on the
first to occur of: (i) certain events of bankruptcy, dissolution or liquidation
of the depositor; (ii) the distribution of a Like Amount of the Series C
Subordinated Debentures to the holders of the Series C Preferred Securities, if
the Corporation, as depositor, has given written direction to the Property
Trustee to terminate the Series C Issuer (which direction is optional and wholly
within the discretion of the Corporation, as depositor); (iii)
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redemption of all of the Series C Preferred Securities as described under
"Description of the Series C Preferred Securities--Redemption"; and (iv) the
entry of an order for the dissolution of the Series C Issuer by a court of
competent jurisdiction.
If an early termination occurs as described in clause (i), (ii)
or (iv) above, the Series C Issuer shall be liquidated by the Series C Issuer
Trustees as expeditiously as the Series C Issuer Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Series C Issuer as provided by applicable law, to the holders of the Series C
Preferred Securities a Like Amount of the Series C Subordinated Debentures,
unless such distribution is determined by the Property Trustee not to be
practical, in which event such holders will be entitled to receive out of the
assets of the Series C Issuer available for distribution to holders, after
satisfaction of liabilities to creditors of the Series C Issuer as provided by
applicable law, an amount equal to the aggregate of the Liquidation Amount plus
accrued and unpaid Distributions on the Series C Preferred Securities, to the
date of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because the Series C Issuer
has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Series C Issuer on Series
C Preferred Securities shall be paid on a pro rata basis. The holder(s) of the
Series C Common Securities will be entitled to receive distributions upon any
such liquidation pro rata with the holders of the Series C Preferred Securities,
except that if an event of default under the Indenture has occurred and is
continuing, the Series C Preferred Securities shall have a priority over the
Series C Common Securities with respect to any such distributions.
If the Corporation elects to liquidate the Series C Issuer and
thereby causes the Series C Subordinated Debentures to be distributed to holders
of the Series C Preferred Securities in exchange therefor upon liquidation of
the Series C Issuer, the Corporation shall continue to have the right to shorten
the maturity of or to redeem the Series C Subordinated Debentures in certain
circumstances upon the occurrence of a Tax Event or a Capital Treatment Event,
as described under "Description of Series C Subordinated Debentures--Tax Event
or Capital Treatment Event Redemption." After March 15, 2007, the Corporation
also may elect to redeem the Series C Subordinated Debentures at its option. See
"Description of Series C Subordinated Debentures--Optional Redemption."
Events of Default; Notice
Any one of the following events constitutes an "Event of Default"
under the Trust Agreement (an "Event of Default") with respect to the Series C
Preferred Securities issued thereunder (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the occurrence of an event of default under the Indenture
(see "Description of the Series C Subordinated Debentures--Debenture Events of
Default"); or
(ii) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such default
for a period of 30 days; or
(iii) default by the Property Trustee in the payment of any
Redemption Price of any Series C Preferred Security when it becomes due and
payable; or
(iv) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Series C Issuer Trustees in the
Trust Agreement (other than a covenant or warranty a default in the performance
of which or the breach of which is dealt with in clause (ii) or (iii) above),
and continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting Series C
Issuer Trustee or Trustees by the holders of at least 25% in aggregate
Liquidation Amount of the outstanding Series C Preferred Securities, a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency
with respect to the Property Trustee and the failure by the Corporation to
appoint a successor Property Trustee within 60 days thereof.
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Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Event of Default to the holders of the Series C
Preferred Securities, the Administrative Trustees and the Corporation, as
depositor, unless such Event of Default shall have been cured or waived. The
Corporation, as depositor, and the Administrative Trustees are required to file
annually with the Property Trustee a certificate as to whether or not they are
in compliance with all the conditions and covenants applicable to them under the
Trust Agreement.
If an event of default under the Indenture has occurred and is
continuing, the Series C Preferred Securities shall have a preference over the
Series C Common Securities as described above. See "--Subordination of the
Series C Common Securities" and "--Liquidation Distribution Upon Termination".
The existence of an event of default does not entitle the holders of the Series
C Preferred Securities to accelerate the maturity thereof.
Removal of the Series C Issuer Trustees
Unless an event of default under the Indenture shall have
occurred and be continuing, any Series C Issuer Trustee may be removed at any
time by the holder of the Series C Common Securities. If an event of default
under the Indenture has occurred and is continuing, the Property Trustee and the
Delaware Trustee may be removed at such time by the holders of a majority in
Liquidation Amount of the outstanding Series C Preferred Securities. In no event
will the holders of the Series C Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees, which voting rights are
vested exclusively in the Corporation as the holder of the Series C Common
Securities. No resignation or removal of any Series C Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Trust Agreement.
Co-trustees and Separate Property Trustee
Unless an Event of Default shall have occurred and be continuing,
at any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act, if applicable, or of any jurisdiction in which any part of
the Trust Property may at the time be located, the Corporation, as the holder of
the Series C Common Securities, and the Administrative Trustees shall have power
to appoint one or more persons either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to act as
separate trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such person or persons
in such capacity any property, title, right or power deemed necessary or
desirable, subject to the provisions of the Trust Agreement. In the event an
event of default under the Indenture has occurred and is continuing, the
Property Trustee alone shall have power to make such appointment.
Merger or Consolidation of the Series C Issuer Trustees
Any corporation into which the Property Trustee, the Delaware
Trustee or any Administrative Trustee that is not a natural person may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Trustee shall be a
party or any corporation succeeding to all or substantially all the corporate
trust business of such Trustee, shall be the successor of such Trustee under the
Trust Agreement, provided such corporation shall be otherwise qualified and
eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Series C Issuer
The Series C Issuer may not merge with or into, consolidate,
amalgamate, be replaced by, convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. The Series C Issuer may, at the request of the Corporation,
with the consent of the Administrative Trustees and without the consent of the
holders of the Series C Preferred Securities or any other trustee merge with or
into,
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consolidate, amalgamate, be replaced by, convey, transfer or lease its
properties and assets substantially as an entirety to, a trust organized as such
under the laws of any State; provided that (i) such successor entity either (a)
expressly assumes all of the obligations of the Series C Issuer with respect to
the Series C Preferred Securities or (b) substitutes for the Series C Preferred
Securities other securities having substantially the same terms as the Series C
Preferred Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Series C Preferred Securities in priority with
respect to Distributions and payments upon liquidation, redemption and
otherwise, (ii) the Corporation expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee as the
holder of the Series C Subordinated Debentures, (iii) the Successor Securities
are registered or listed, or any Successor Securities will be registered or
listed upon notification of issuance, on any national securities exchange or
other organization on which the Series C Preferred Securities are then
registered or listed, if any, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Series C Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Series C Preferred Securities (including any Successor Securities) in any
material respect, (vi) such successor entity has a purpose identical to that of
the Series C Issuer, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Corporation has received an
opinion from independent counsel to the Series C Issuer experienced in such
matters to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Series C Preferred Securities
(including any Successor Securities) in any material respect and (b) following
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, (1) neither the Series C Issuer nor such successor entity will be
required to register as an investment company under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and (2) the Series C Issuer
or the successor entity, as the case may be, will continue to be classified
other than as an association taxable as a corporation for United States federal
income tax purposes; and (viii) the Corporation or any permitted successor or
assignee owns all of the Series C Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Series C Guarantee.
Notwithstanding the foregoing, the Series C Issuer shall not, except with the
consent of holders of 100% in Liquidation Amount of the Series C Preferred
Securities, consolidate, amalgamate, merge with or into or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Series C Issuer or
the successor entity to be classified as an association taxable as a corporation
or as other than a grantor trust for United States federal income tax purposes.
Voting Rights; Amendment of the Trust Agreement
Except as provided below and under "Description of the Series C
Guarantee--Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Series C Preferred Securities have no voting
rights.
The Trust Agreement may be amended from time to time by the
Corporation, the Property Trustee and the Administrative Trustees, without the
consent of the holders of the Series C Preferred Securities, to (i) cure any
ambiguity, correct or supplement any provisions in the Trust Agreement that may
be inconsistent with any other provision or to make any other provisions with
respect to matters or questions arising under the Trust Agreement, which shall
not be inconsistent with the other provisions of the Trust Agreement or (ii)
modify, eliminate or add to any provisions of the Trust Agreement to such extent
as shall be necessary to ensure that the Series C Issuer will be classified for
United States federal income tax purposes as other than an association taxable
as a corporation at all times that the Series C Preferred Securities are
outstanding or to ensure that the Series C Issuer will not be required to
register as an "investment company" under the Investment Company Act; provided
that such action shall not adversely affect in any material respect the
interests of any holder of the Series C Preferred Securities, and any amendments
of the Trust Agreement shall become effective when notice thereof is given to
the holders of the Series C Preferred Securities. The Trust Agreement may be
amended by the Administrative Trustees and the Corporation with (i) the consent
of holders representing not less than a majority (based upon Liquidation
Amounts) of the
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outstanding Series C Preferred Securities and (ii) receipt by the Series C
Issuer Trustees of an opinion of counsel to the effect that such amendment or
the exercise of any power granted to the Series C Issuer Trustees in accordance
with such amendment will not affect the Series C Issuer's status as a grantor
trust for United States federal income tax purposes or the Series C Issuer's
exemption from status as an "investment company" under the Investment Company
Act, provided that without the consent of each holder of the Series C Preferred
Securities, the Trust Agreement may not be amended to (a) change the amount or
timing of any Distribution on the Series C Preferred Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Series C Preferred Securities as of a specified date or (b) restrict the
right of a holder of the Series C Preferred Securities to institute suit for the
enforcement of any such payment on or after such date.
So long as the Series C Subordinated Debentures are held by the
Property Trustee, the Series C Issuer Trustees shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee or executing any trust or power conferred on the Property
Trustee with respect to the Series C Subordinated Debentures, (ii) waive any
past default that is available under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Series C
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Series C
Subordinated Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Series C Preferred Securities; provided,
however, that where a consent under the Indenture would require the consent of
each holder of the Series A Subordinated Debentures affected thereby, no such
consent shall be given by the Property Trustee without the prior consent of each
holder of the Series A Preferred Securities. The Series C Issuer Trustees shall
not revoke any action previously authorized or approved by a vote of the holders
of the Series C Preferred Securities except by subsequent vote of the holders of
the Series C Preferred Securities. The Property Trustee shall notify each holder
of the Series C Preferred Securities of any notice of default which it receives
with respect to the Series C Subordinated Debentures. In addition to obtaining
the foregoing approvals of the holders of the Series C Preferred Securities,
prior to taking any of the foregoing actions, the Series C Issuer Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that the
Series C Issuer will not be classified as an association taxable as a
corporation or as other than a grantor trust for United States federal income
tax purposes on account of such action.
Any required approval of holders of the Series C Preferred
Securities may be given at a meeting of holders of the Series C Preferred
Securities convened for such purpose or pursuant to written consent. The
Property Trustee will cause a notice of any meeting at which holders of the
Series C Preferred Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be given to each
holder of record of the Series C Preferred Securities in the manner as set forth
in the Trust Agreement.
No vote or consent of the holders of the Series C Preferred
Securities will be required for the Series C Issuer to redeem and cancel the
Series C Preferred Securities in accordance with the Trust Agreement.
Notwithstanding that holders of the Series C Preferred Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Series C Preferred Securities that are owned by the Corporation, the
Series C Issuer Trustees or any affiliate of the Corporation or the Series C
Issuer Trustees shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
Liquidation Value
The amount payable on the Series C Preferred Securities in the
event of any liquidation of the Series C Issuer is $1,000 per Series C Preferred
Security plus accumulated and unpaid Distributions, which may be in the form of
a distribution of such amount in Series C Subordinated Debentures, subject to
certain exceptions. See "--Liquidation Distribution Upon Termination".
Payment and Paying Agency
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Payments in respect of the Global Series C Preferred Securities
(as defined herein) shall be made to DTC, which shall credit the relevant
accounts at the Depositary on the applicable Distribution Dates. Payments in
respect of Series C Preferred Securities which are not held by DTC shall be made
by check mailed to the address of the holder entitled thereto as such address
shall appear on the register maintained by the Property Trustee. The paying
agent (the "Paying Agent") is the Property Trustee and any co-paying agent
chosen by the Property Trustee and acceptable to the Administrative Trustees and
the Corporation. The Paying Agent is permitted to resign as Paying Agent upon 30
days' written notice to the Property Trustee and the Corporation. In the event
that the Property Trustee shall no longer be the Paying Agent, the
Administrative Trustees shall appoint a successor (which shall be a bank or
trust company acceptable to the Administrative Trustees and the Corporation) to
act as Paying Agent.
Registrar and Transfer Agent
The Property Trustee acts as registrar and transfer agent for the
Series C Preferred Securities.
Registration of transfers of the Series C Preferred Securities
will be effected without charge by or on behalf of the Series C Issuer, but upon
payment of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. The Series C Issuer will not be
required (i) to register or cause to be registered the transfer or exchange of
the Series C Preferred Securities during a period beginning at the opening of
business 15 days before the day of the mailing of the relevant notice of
redemption and ending at the close of business on the day of mailing of such
notice of redemption or (ii) to register or cause to be registered the transfer
or exchange of any Series C Preferred Securities so selected for redemption,
except, in the case of any Series C Preferred Securities being redeemed in part,
any portion thereof not to be redeemed.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, after such Event of
Default, 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 this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of the
Series C Preferred Securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that might be incurred thereby. If no Event
of Default has occurred and is continuing and the Property Trustee is required
to decide between alternative causes of action, construe ambiguous provisions in
the Trust Agreement or is unsure of the application of any provision of the
Trust Agreement, and the matter is not one on which holders of the Series C
Preferred Securities are entitled under the Trust Agreement to vote, then the
Property Trustee shall take such action as is directed by the Corporation and if
not so directed, shall take such action as it deems advisable and in the best
interests of the holders of the Series C Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to
conduct the affairs of and to operate the Series C Issuer in such a way that the
Series C Issuer will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or classified as an association
taxable as a corporation for United States federal income tax purposes and so
that the Series C Subordinated Debentures are treated as indebtedness of the
Corporation for United States federal income tax purposes. In this connection,
the Corporation and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust or the
Trust Agreement, that the Corporation and the Administrative Trustees determine
in their discretion to be necessary or desirable for such purposes, as long as
such action does not materially adversely affect the interests of the holders of
the Series C Preferred Securities.
Holders of the Series C Preferred Securities have no preemptive
or similar rights.
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<PAGE>
The Series C Issuer may not borrow money or issue debt or
mortgage or pledge any of its assets.
DESCRIPTION OF THE SERIES C SUBORDINATED DEBENTURES
The Series C Subordinated Debentures have been issued under an
Indenture (the "Indenture") between the Corporation and The Bank of New York, as
trustee (the "Debenture Trustee"). This summary of certain terms and provisions
of the Series C Subordinated Debentures and the Indenture does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Indenture, the form of which is available from the Corporation. All material
terms of the Series C Subordinated Debentures are set forth in this Prospectus.
General
Concurrently with the issuance of the Series C Preferred
Securities in the December Securities Sale, the Series C Issuer invested the
proceeds thereof, together with the consideration paid by the Corporation for
the Series C Common Securities, in the Series C Subordinated Debentures issued
by the Corporation. The Series C Subordinated Debentures bear interest at the
annual rate of 8 7/8% of the principal amount thereof, payable semi-annually in
arrears on June 30 and December 31 of each year (each, an "Interest Payment
Date"), commencing June 30, 1997, to the person in whose name each Series C
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment Date.
It is anticipated that, until the liquidation, if any, of the Series C Issuer,
the Series C Subordinated Debentures will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Series C Preferred
Securities. The amount of interest payable for any period less than a full
interest period will be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on the Series C
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of 8 7/8% thereof, compounded
semi-annually from the relevant Interest Payment Date. The term "interest" as
used herein shall include semi-annual interest payments, interest on semi-annual
interest payments not paid on the applicable Interest Payment Date and
Additional Sums, as applicable. See "--Additional Sums" below.
The Series C Subordinated Debentures will mature on March 15,
2027 (such date, as it may be shortened as hereinafter described, the "Stated
Maturity"). Such date may be shortened by the Corporation in certain
circumstances upon the occurrence of a Tax Event or a Capital Treatment Event as
described under "Tax Event or Capital Treatment Event Redemption" to any date
not earlier than March 12, 2012. The Corporation may not shorten the Stated
Maturity without having received the prior approval of the Federal Reserve to
do so, if then required under applicable capital guidelines or policies. In
the event that the Corporation elects to shorten the maturity of the Series C
Subordinated Debentures, it shall give notice to the Debenture Trustee, and the
Debenture Trustee shall give notice of such shortening to the holders of the
Series C Subordinated Debentures no less than 30 and no more than 60 days prior
to the effectiveness thereof.
The Series C Subordinated Debentures are unsecured and rank
junior and are subordinate in right of payment to all Senior Debt of the
Corporation. Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary,
including Riggs Bank, upon such subsidiary's liquidation or reorganization or
otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent that the Corporation may itself be recognized as a creditor
of that subsidiary. Accordingly, the Series C Subordinated Debentures are
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of the Series C Subordinated Debentures
should look only to the assets of the Corporation for payments on the Series C
Subordinated Debentures. The Indenture does not limit the incurrence or issuance
of other secured or
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unsecured debt of the Corporation, including Senior Debt, whether under the
Indenture or any existing or other indenture that the Corporation may enter into
in the future or otherwise.
The Corporation is a legal entity separate and distinct from its
banking and other subsidiaries. A major portion of the Corporation's revenues
results from amounts paid as dividends to the Corporation by its national bank
subsidiary, Riggs Bank. The prior approval of the OCC is required if the total
of all dividends declared by a national bank in any calendar year will exceed
the sum of such bank's net profits for that year and its retained net profits
for the preceding two calendar years, less any required transfers to surplus.
Federal law also prohibits any national bank from paying dividends which would
be greater than such bank's undivided profits after deducting statutory bad
debts in excess of such bank's allowance for loan losses.
In addition, the Corporation and its national bank subsidiary are
subject to various general regulatory policies and requirements relating to the
payment of dividends, including requirements to maintain adequate capital above
regulatory minimums. The appropriate federal regulatory authority is authorized
to determine under certain circumstances relating to the financial condition of
a national bank or bank holding company that the payment of dividends would be
an unsafe or unsound practice and to prohibit payment thereof. The OCC and the
Federal Deposit Insurance Corporation (the "FDIC") have indicated that paying
dividends that deplete a bank's capital base to an inadequate level would be an
unsound and unsafe banking practice. The OCC, the FDIC and the Federal Reserve
have each indicated that banking organizations should generally pay dividends
only out of current operating earnings.
Right to Defer Interest Payment Obligation
So long as no event of default under the Indenture has occurred
and is continuing, the Corporation has the right under the Indenture at any time
during the term of the Series C Subordinated Debentures to defer the payment of
interest on the Series C Subordinate Debentures for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period, provided
that no Extension Period may extend beyond the Stated Maturity of the Series C
Subordinated Debentures. At the end of such Extension Period, the Corporation
must pay all interest then accrued and unpaid on the Series C Subordinate
Debentures (together with interest on such unpaid interest at the annual rate of
8 7/8%, compounded semi-annually from the relevant Interest Payment Date, to the
extent permitted by applicable law). During an Extension Period, interest will
continue to accrue and holders of the Series C Subordinated Debentures (or
holders of the Series C Preferred Securities while outstanding) will be required
to accrue interest income for United States federal income tax purposes. See
"Certain Federal Income Tax Consequences--Original Issue Discount".
During any such Extension Period, the Corporation may not, and
may not permit any subsidiary of the Corporation to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including the
Series A Subordinated Debentures) that rank pari passu with or junior in
interest to the Series C Subordinated Debentures or make any guarantee payments
with respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation if such guarantee ranks pari passu with or junior
in interest to the Series C Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
the issuance of stock under any such plan in the future or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Series C
Guarantee and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Corporation's benefit plans for its directors,
officers or employees that was entered into prior to the commencement of such
Extension Period). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest, provided that no
Extension Period may exceed 10 consecutive semi-annual periods or extend beyond
the Stated Maturity of the Series C Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all interest then
accrued and unpaid (together with interest thereon at the annual rate of 8 7/8%,
compounded semi-annually, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during
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an Extension Period, except at the end thereof. The Corporation must give the
Property Trustee, the Administrative Trustees and the Debenture Trustee notice
of its election of such Extension Period at least one Business Day prior to the
earlier of (i) the date interest on the Series C Subordinated Debentures would
have been payable except for the election to begin such Extension Period or
(ii) the date the Administrative Trustees are required to give notice to DTC or
to holders of the Series C Preferred Securities of the record date for such
Distribution or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date. The Debenture Trustee
shall give notice of the Corporation's election to begin a new Extension Period
to the holders of the Series C Subordinated Debentures. There is no limitation
on the number of times that the Corporation may elect to begin an Extension
Period.
Additional Sums
If the Series C Issuer is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event, the Corporation
will pay as additional amounts on the Series C Subordinated Debentures such
amounts ("Additional Sums") as shall be required so that the Distributions
payable by the Series C Issuer shall not be reduced as a result of any such
additional taxes, duties or other governmental charges.
Optional Redemption
The Series C Subordinated Debentures are redeemable, in whole at
any time or in part from time to time, at the option of the Corporation on or
after December 31, 2006, subject to the Corporation having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies, at a redemption price (the "Optional Redemption Price")
equal to the percentage of the outstanding principal amount of the Series C
Subordinated Debentures specified below, plus, in each case, accrued interest
thereon to the date of redemption, if redeemed during the 12-month period
beginning December 31, in the year indicated:
<TABLE>
<CAPTION>
Optional
--------
Date Redemption Price
---- ----------------
<S> <C>
2007................................. 104.438%
2008................................. 103.994%
2009................................. 103.550%
2010................................. 103.106%
2011................................. 102.663%
2012................................. 102.219%
2013................................. 101.775%
2014................................. 101.331%
2015................................. 100.888%
2016................................. 100.444%
2017 and thereafter.................. 100.000%
</TABLE>
Tax Event or Capital Treatment Event Redemption
If a Tax Event occurs and:
(i) in the opinion of counsel to the Corporation
experienced in such matters, there would in all cases, after
effecting the termination of the Series C Issuer and the
distribution of the Series C Subordinated Debentures to the
holders of the Series C Preferred Securities in exchange therefor
upon liquidation of the
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<PAGE>
Series C Issuer, be more than an insubstantial risk that an
Adverse Tax Consequence (as defined in "Risk Factors--Tax Event
or Capital Treatment Event") would continue to exist, or
(ii) the Series C Subordinated Debentures are not
held by the Property Trustee,
then the Corporation shall have the right (a) to shorten the Stated Maturity of
the Series C Subordinated Debentures to the minimum extent required, but in any
event to a date not earlier than March 12, 2012 (the action referred to in this
clause (a) being referred to herein as a "Maturity Advancement"), such that, in
the opinion of counsel to the Corporation experienced in such matters, after
advancing the Stated Maturity, interest paid on the Series C Subordinated
Debentures would be deductible for United States federal income tax purposes, or
(b) if in the opinion of counsel to the Corporation experienced in such matters,
there would in all cases, after effecting a Maturity Advancement be more than an
insubstantial risk that an Adverse Tax Consequence would continue to exist, to
redeem the Series C Subordinated Debentures, in whole but not in part, at any
time within 90 days following the occurrence of the Tax Event at a redemption
price equal to 100% of the principal amount thereof plus accrued and unpaid
interest thereon to the Redemption Date. See "Description of Series C Preferred
Securities--Liquidation of the Series C Issuer and Distribution of Series C
Subordinated Debentures."
If a Capital Treatment Event occurs and is continuing, then the
Corporation shall have the right to redeem the Series C Subordinated Debentures,
in whole but not in part, at any time within 90 days following the occurrence of
the Capital Treatment Event at a redemption price equal to the "Make-Whole
Amount" plus accrued and unpaid interest on the Series C Subordinated Debentures
to the date fixed for redemption.
"Tax Event" means the receipt by the Series C 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 such Series C Preferred Securities under the Trust Agreement, there is more
than an insubstantial risk that (i) the Series C Issuer is, or will be within 90
days of the date of such opinion, subject to United States federal income tax
with respect to income received or accrued on the Series C Subordinated
Debentures, (ii) interest payable by the Corporation on the Series C
Subordinated Debentures is not, or within 90 days of such the date of opinion,
will not be, deductible by the Corporation, in whole or in part, for United
States federal income tax purposes or (iii) the Series C Issuer is, or will be
within 90 days of the date of the opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges. With respect to
Series C Subordinated Debentures that are no longer held by the Series C Issuer
or another issuer, "Tax Event" means the receipt by the Corporation 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 proposed 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 proposed change, pronouncement or decision is announced on or after the
date of issuance of the Series C Subordinated Debentures under the Indenture,
there is more than an insubstantial risk that interest payable by the
Corporation on the Series C Subordinated Debentures is not, or within 90 days of
the date of such opinion will not be, deductible by the Corporation, in a whole
or in part, for United States federal income tax purposes (each of the
circumstances referred to in clauses (i), (ii) and (iii) of the preceding
sentence and the circumstances referred to in this sentence being referred to
herein as an "Adverse Tax Consequence").
"Capital Treatment Event" means the reasonable determination by
the Corporation that, as a result of the occurrence 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
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the Series C
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that the Corporation will not be entitled, subsequent to the
effectiveness of such amendment or change or the announcement of such
pronouncement, action or decision to treat as "Tier I Capital" (or the then
equivalent thereof)
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a portion of the Liquidation Amount of the Series C Preferred Securities
substantially equal to or greater than the portion thereof it was entitled to
treat as "Tier I Capital" (or the then equivalent thereof) immediately prior to
the effectiveness of such amendment or change or the announcement of such
pronouncement, action or decision for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Corporation.
"Adjusted Treasury Rate" means, with respect to any redemption
date, the Treasury Rate plus (i) 1.60% if such Redemption Date occurs on or
before March 15, 1998 or (ii) 0.80% if such Redemption Date occurs after March
15, 1997.
"Treasury Rate" means (i) the yield, under the heading which
represents the average for the immediately prior week, appearing in the most
recently published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities", for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Redemption Date.
"Comparable Treasury Issue" means with respect to any Redemption
Date the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the Remaining Life that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
Remaining Life. If no United States Treasury security has a maturity which
is within a period from three months before to three months after March 15,
2007, the two most closely corresponding United States Treasury securities shall
be used as the Comparable Treasury Issue, and the Treasury Rate shall be
interpolated or extrapolated on a straight-line basis, rounding to the nearest
month using such securities.
"Quotation Agent" means Dillon, Read & Co. Inc. and its
respective successors; provided, however, that if the foregoing shall cease to
be a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Corporation shall substitute therefor another Primary
Treasury Dealer. "Reference Treasury Dealer" means (i) the Quotation Agent and
(ii) any other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Corporation.
"Comparable Treasury Price" means (A) the average of five
Reference Treasury Dealer Quotations for such Redemption Date, after excluding
the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Debenture Trustee obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Debenture Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Debenture Trustee by such Reference
Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day
preceding such Redemption Date.
"Like Amount" means (i) with respect to a redemption of the
Series C Preferred Securities, Series C Preferred Securities having a
Liquidation Amount equal to that portion of the principal amount of the Series C
Subordinated Debentures to be contemporaneously redeemed in accordance with the
Indenture, allocated to the Series C Common Securities and to the Series C
Preferred Securities pro rata based upon the relative Liquidation Amounts of
such Securities and the proceeds of which will be used to pay the Redemption
Price of such Series C Preferred Securities and (ii) with respect to a
distribution of the Series C Subordinated Debentures to holders of the Series C
Preferred Securities in exchange therefor in connection with a dissolution or
liquidation of the Series C Issuer, Series C
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Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Series C Preferred Securities of the holder to whom such Series C
Subordinated Debentures would be distributed.
The "Make-Whole Amount" shall be equal to the greater of (i) 100%
of the principal amount of the Series C Subordinated Debentures or (ii) as
determined by a Quotation Agent (as defined below), the sum of the present
values of the principal amount and premium payable as part of the Optional
Redemption Price with respect to an optional redemption of such Series C
Subordinated Debentures on March 15, 2007, together with scheduled payments of
interest from the Redemption Date to March 15, 2007 (the "Remaining Life"), in
each case discounted to the Redemption Date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate.
Notice of any redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of the Series C
Subordinated Debentures to be redeemed at its registered address. Unless the
Corporation defaults in payment of the Redemption Price, on and after the
redemption date, interest shall cease to accrue on the Series C Subordinated
Debentures or portions thereof called for redemption.
Restrictions on Certain Payments
The Corporation has also covenanted, as to the Series C
Subordinated Debentures, that it will not, and will not permit any subsidiary of
the Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of the
Corporation (including the Series A Subordinated Debentures) that rank pari
passu with or junior in interest to the Series C Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation if such
guarantee ranks pari passu with or junior in interest to the Series C
Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, the issuance of stock under
any such plan in the future or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Series C Guarantee and (d) purchases of
common stock related to the issuance of common stock or rights under any of the
Corporation's benefit plans for its directors, officers or employees that was
entered into prior to the commencement of such Extension Period), if at such
time (i) there shall have occurred any event of which the Corporation has actual
knowledge (a) that with the giving of notice or the lapse of time, or both,
would constitute an event of default under the Indenture with respect to the
Series C Subordinated Debentures and (b) in respect of which the Corporation
shall not have taken reasonable steps to cure, (ii) if the Series C Subordinated
Debentures are held by the Series C Issuer, the Corporation shall be in default
with respect to its payment of any obligations under the Series C Guarantee
relating to the Series C Preferred Securities or (iii) the Corporation shall
have given notice of its election of an Extension Period as provided in the
Indenture and shall not have rescinded such notice, or such Extension Period, or
any extension thereof, shall be continuing.
Modification of Indenture
From time to time the Corporation and the Debenture Trustee may,
without the consent of the holders of the Series C Subordinated Debentures,
amend, waive or supplement the Indenture for specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies, provided
that any such action does not materially adversely affect the interest of the
holders of the Series C Subordinated Debentures, and qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act, if
applicable. The Indenture contains provisions permitting the Corporation and the
Debenture Trustee, with the consent of the holders of not less than a majority
in principal amount of the Series C Subordinated Debentures affected, to modify
the Indenture in a manner affecting the rights of the holders of the Series C
Subordinated Debentures; provided that no such modification may, without the
consent of the holder of each outstanding Series C Subordinated Debenture so
affected, (i) change the Stated Maturity of the Series C Subordinated
Debentures, (ii) reduce the principal amount thereof or reduce the rate or
extend the time
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of payment of interest thereon or (iii) reduce the percentage of principal
amount of the Series C Subordinated Debentures, the holders of which are
required to consent to any such modification of the Indenture.
Debenture Events of Default
The Indenture provides that any one or more of the following
described events with respect to the Series C Subordinated Debentures that has
occurred and is continuing constitutes a "Debenture Event of Default":
(i) failure for 30 days to pay interest on the Series C
Subordinated Debentures when due (subject to the deferral of any due date in the
case of an Extension Period); or
(ii) failure to pay any principal on the Series C Subordinated
Debentures when due, whether at maturity, upon redemption by declaration or
otherwise; or
(iii) failure to observe or perform in any material respect
certain other covenants contained in the Indenture for 90 days after written
notice to the Corporation from the Debenture Trustee or the holders of at least
25% in aggregate outstanding principal amount of the outstanding Series C
Subordinated Debentures; or
(iv) certain events of bankruptcy, insolvency or reorganization
of the Corporation.
The holders of a majority in aggregate outstanding principal
amount of the Series C Subordinated Debentures have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Debenture Trustee. The Debenture Trustee or the holders of not less than 25%
in aggregate outstanding principal amount of the Series C Subordinated
Debentures may declare the principal due and payable immediately upon a
Debenture Event of Default, and, should the Debenture Trustee or such holders of
the Series C Subordinated Debentures fail to make such declaration, the holders
of at least 25% in aggregate Liquidation Amount of the Series C Preferred
Securities shall have such right. The holders of a majority in aggregate
outstanding principal amount of the Series C Subordinated Debentures may annul
such declaration and waive the default if the default (other than the
non-payment of the principal of the Series C 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, and should the
holders of the Series C Subordinated Debentures fail to waive such default, the
holders of a majority in aggregate Liquidation Amount of the Series C Preferred
Securities shall have such right.
The holders of a majority in aggregate outstanding principal
amount of the Series C Subordinated Debentures affected thereby may, on behalf
of the holders of all the Series C Subordinated Debentures, waive any past
default, except a default in the payment of principal or interest (unless such
default 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) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Series C Subordinated Debenture and should the
holders of the Series C Subordinated Debentures fail to waive such default, the
holders of a majority in aggregate Liquidation Amount of the Series C Preferred
Securities shall have such right. The Corporation is required to file annually
with the Debenture Trustee a certificate as to whether or not the Corporation is
in compliance with all the conditions and covenants applicable to it under the
Indenture.
Enforcement of Certain Rights by Holders of the Series C Preferred Securities
If a Debenture Event of Default has occurred and is continuing
and such event is attributable to the failure of the Corporation to pay interest
or principal on the Series C Subordinated Debentures on the date such interest
or principal is otherwise payable, a holder of the Series C Preferred Securities
may institute a legal proceeding directly against the Corporation for
enforcement of payment to such holder of the principal of or interest on the
Series C Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Series C
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Preferred Securities of such holder (a "Direct Action"). The Corporation may not
amend the Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of the holders of all of the Series C
Preferred Securities. If the right to bring a Direct Action is removed, the
Series C Issuer may become subject to the reporting obligations under the
Exchange Act. The Corporation shall have the right under the Indenture to set
off any payment made to such holder of the Series C Preferred Securities by the
Corporation in connection with a Direct Action. For a description of
circumstances in which a holder of beneficial interests through DTC can become a
registered holder see "Book-Entry Issuance".
The holders of the Series C Preferred Securities will not be able
to exercise directly any remedies other than those set forth in the preceding
paragraph available to the holders of the Series C Subordinated Debentures. See
"Description of the Series C Preferred Securities--Events of Default; Notice".
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Corporation shall not consolidate
with or merge into any other Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Corporation or convey, transfer or lease its
properties and assets substantially as an entirety to the Corporation, unless:
(i) in the event the Corporation consolidates with or merges into another
Person, or conveys or transfers its properties and assets substantially as an
entirety to any Person, the successor Person is organized under the laws of the
United States or any state or the District of Columbia, and such successor
Person expressly assumes the Corporation's obligations on the Series C
Subordinated Debentures issued under the Indenture; (ii) 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,
shall have occurred and be continuing; (iii) if at the time any Series C
Preferred Securities are outstanding, such transaction is permitted under the
Trust Agreement and Guarantee and does not give rise to any breach or violation
of the Trust Agreement or Guarantee; and (iv) certain other conditions as
prescribed by the Indenture are met.
The general provisions of the Indenture do not afford holders of
the Series C Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving the Corporation that may adversely
affect holders of the Series C Subordinated Debentures.
Satisfaction and Discharge
The Indenture provides that when, among other things, all of the
Series C Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation (i) have become due and payable or (ii) will become due
and payable at their Stated Maturity within one year, and the Corporation
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount in the currency or currencies in which the
Series C Subordinated Debentures are payable sufficient to pay and discharge the
entire indebtedness on the Series C Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation, for the principal and
interest to the date of the deposit or to the Stated Maturity, as the case may
be, then the Indenture will cease to be of further effect (except as to the
Corporation's obligations to pay all other sums due pursuant to the Indenture
and to provide the officers' certificates and opinions of counsel described
therein), and the Corporation will be deemed to have satisfied and discharged
the Indenture.
Subordination
In the Indenture, the Corporation has covenanted and agreed that
the Series C Subordinated Debentures issued thereunder are subordinate and
junior in right of payment to all Senior Debt (as defined below) to the extent
provided in the Indenture. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any bankruptcy,
insolvency, debt restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceeding of the Corporation,
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the holders of Senior Debt will first be entitled to receive payment in full of
principal of (or premium, if any) and interest, if any, on such Senior Debt
before the holders of the Series C Subordinated Debentures, or the Property
Trustee on behalf of the holders, will be entitled to receive or retain any
payment in respect of the principal of (or premium, if any) or interest, if any,
on the Series C Subordinated Debentures.
In the event of the acceleration of the maturity of any of the
Series C Subordinated Debentures, the holders of all Senior Debt 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 Series C Subordinated Debentures will be entitled to receive
or retain any payment in respect of the principal of (or premium, if any) or
interest, if any, on the Series C Subordinated Debentures.
No payments on account of principal (or premium, if any) or
interest, if any, in respect of the Series C Subordinated Debentures may be made
if there shall have occurred and be continuing a default in any payment with
respect to Senior Debt or an event of default with respect to any Senior Debt
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"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: (i)
every obligation of such Person for money borrowed; (ii) every obligation of
such Person evidenced by bonds, debentures, notes or other similar instruments
(including the Series A Subordinated Debentures), including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person; (iv) 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); (v) every
capital lease obligation of such Person; (vi) all obligations of such Person for
claims in respect of derivative products, including interest rate, foreign
exchange rate and commodity forward contracts, options and swaps and similar
arrangements; and (vii) every obligation of the type referred to in clauses (i)
through (vi) 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 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 Corporation whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of the 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 Series C Subordinated Debentures or to other
Debt which is pari passu with, or subordinated to, the Series C Subordinated
Debentures; provided, however, that Senior Debt shall not be deemed to include:
(i) any Debt of the Corporation 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 Corporation, (ii) any Debt of the
Corporation to any of its subsidiaries, (iii) Debt to any employee of the
Corporation and (iv) the Series A Subordinated Debentures.
The Indenture places no limitation on the amount of Senior Debt
or subordinated debt which is pari passu with the Series C Subordinated
Debentures, that may be incurred by the Corporation. The Corporation expects
from time to time to incur additional indebtedness constituting Senior Debt.
Governing Law
The Indenture and the Series C Subordinated Debentures are
governed by and construed in accordance with the laws of the State of New York.
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Information Concerning the Debenture Trustee
The Debenture Trustee 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 the Series C 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.
Distribution of the Series C Subordinated Debentures
As described under "Description of the Series C Preferred
Securities--Liquidation of the Series C Issuer and Distribution of the Series C
Subordinated Debentures to Holders", under certain circumstances involving the
termination of the Series C Issuer, Series C Subordinated Debentures may be
distributed to the holders of the Series C Preferred Securities in exchange
therefor upon liquidation of the Series C Issuer, after satisfaction of
liabilities to creditors of the Series C Issuer as provided by applicable law.
If distributed to holders of the Series C Preferred Securities in liquidation,
the Series C Subordinated Debentures will initially be issued in the form of
global securities and, in the case of Series C Subordinated Debentures in
respect of Other Series C Preferred Securities, certificated securities. DTC, or
any successor depositary for the Series C Preferred Securities, will act as
depositary for the Series C Subordinated Debentures in global form. It is
anticipated that the depositary arrangements for the Series C Subordinated
Debentures in global form would be substantially identical to those in effect
for the Series C Preferred Securities. For a description of global securities
and certificated securities, see "Book-Entry Issuance."
There can be no assurance as to the market price of any Series C
Subordinated Debentures that may be distributed to the holders of the Series C
Preferred Securities.
Payment and Paying Agents
Payment of principal (premium, if any) of any interest on the
Series C Subordinated Debentures will be made, the transfer of the Series C
Subordinated Debentures will be registrable, and Series C Subordinated
Debentures will be exchangeable for Series C Subordinated Debentures of other
denominations of a like aggregate principal amount, at the offices of the
Debenture Trustee in The City of New York or at the offices of such Paying Agent
or Paying Agents as the Corporation may designate from time to time, except that
at the option of the Corporation payment of any interest may be made (i) except
in the case of Series C Subordinated Debentures held in the name of the Property
Trustee, by check mailed to the address of the Person entitled thereto as such
address shall appear in the Securities Register or (ii) by transfer to an
account maintained by the Person entitled thereto as specified in the Securities
Register, provided that proper transfer instructions have been received by June
15th or December 15th preceding the date for the payment of interest (the
"Regular Record Date"). Payment of any interest on the Series C Subordinated
Debentures will be made to the Person in whose name the Series C Subordinated
Debenture is registered at the close of business on the Regular Record Date for
such interest, except in the case of Defaulted Interest. The Corporation may at
any time designate additional Paying Agents or rescind the designation of any
Paying Agent; however, the Corporation will at all times be required to maintain
a Paying Agent in each Place of Payment for the Series C Subordinated
Debentures. See "Book-Entry Issuance."
Any moneys deposited with the Debenture Trustee or any Paying
Agent, or then held by the Corporation in trust, for the payment of the
principal (or premium, if any) of or interest on the Series C Subordinated
Debentures and remaining unclaimed for two years after such principal (or
premium, if any) or interest has become due and payable shall, at the request of
the Corporation, be repaid to the Corporation and the holders of the Series C
Subordinated Debentures shall thereafter look, as general unsecured creditors,
only to the Corporation for payment thereof.
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BOOK-ENTRY ISSUANCE
DTC acts as securities depositary for all of the Series C
Preferred Securities and the Series C Subordinated Debentures, except for Series
C Preferred Securities issued to certain institutional investors described
below. The Series C Preferred Securities and the Series C Subordinated
Debentures which were sold in the March Securities Sale in reliance on Rule 144A
have been issued in registered, global form registered in the name of Cede & Co.
(DTC's nominee). One or more global certificates have been issued for the Series
C Preferred Securities and the Series C Subordinated Debentures and have been
deposited with the Property Trustee as custodian for DTC.
DTC is a limited purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, 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 the provisions of Section 17A of the Exchange
Act. DTC holds securities that its Participants deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. "Direct Participants"
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its participants are on file
with the Commission.
Purchases of Series C Preferred Securities or Series C
Subordinated Debentures within the DTC system must be made by or through Direct
Participants, which will receive a credit for the Series C Preferred Securities
or Series C Subordinated Debentures on DTC's records. The ownership interest of
each actual purchaser of each Series C Preferred Security and each Series C
Subordinated Debenture ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial owners will not receive
written confirmation from DTC of their purchases, but Beneficial owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Series C Preferred
Securities or Series C Subordinated Debentures. Transfers of ownership interests
in the Series C Preferred Securities or Series C Subordinated Debentures are to
be accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Series C Preferred Securities or Series C
Subordinated Debentures held through DTC, except in the event that use of the
book-entry system for the Series A Preferred Securities or Series C Subordinated
Debentures is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the
Series C Preferred Securities or Series C Subordinated Debentures; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Series C Preferred Securities or Series C Subordinated Debentures are credited,
which may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices with respect to Series C Preferred Securities
or Series C Subordinated Debentures will be sent to Cede & Co. as the registered
holder of the Series C Preferred Securities or Series C Subordinated Debentures.
If less than all of the Series C Preferred Securities or the Series C
Subordinated Debentures are being redeemed, DTC's current practice is to
determine by lot the amount of the interest of each Direct Participant to be
redeemed.
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Although voting with respect to the Series C Preferred Securities
or the Series C Subordinated Debentures is limited to the holders of record of
the Series C Preferred Securities or Series C Subordinated Debentures, in those
instances in which a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Series C Preferred Securities or Series C
Subordinated Debentures. Under its usual procedures, DTC would mail an omnibus
proxy (the "Omnibus Proxy") to the relevant Trustee as soon as possible after
the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts such Series C Preferred
Securities or Series C Subordinated Debentures are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Distribution payments on the Series C Preferred Securities or the
Series C Subordinated Debentures will be made by the relevant Trustee to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices and will be the responsibility of
such statutory or regulatory requirements as may be in effect from time to time.
Payment of Distributions to DTC is the responsibility of the relevant Trustee,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursements of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities
depositary with respect to any of the Series C Preferred Securities or the
Series C Subordinated Debentures at any time by giving reasonable notice to the
relevant Trustee and the Corporation. In the event that a successor securities
depositary is not obtained, definitive Series C Preferred Securities or Series C
Subordinated Debentures certificates representing such Series C Preferred
Securities or Series C Subordinated Debentures are required to be printed and
delivered. The Corporation, at its option, may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary). After a
Debenture Event of Default, the holders of a majority in liquidation preference
of Series C Preferred Securities or aggregate principal amount of Series C
Subordinated Debentures may determine to discontinue the system of boon-entry
transfers through DTC. In any such event, definitive certificates for such
Series C Preferred Securities or Series C Subordinated Debentures will be
printed and delivered.
The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Series C Issuer and
the Corporation believe to be accurate, but the Series C Issuer and the
Corporation assume no responsibility for the accuracy thereof. Neither the
Series C Issuer nor the Corporation has any responsibility for the performance
by DTC or its Participants of their respective obligations as described herein
or under the rules and procedures governing their respective operations.
DESCRIPTION OF THE SERIES C GUARANTEE
A Guarantee was executed and delivered by the Corporation
concurrently with the issuance of the Series C Preferred Securities for the
benefit of the holders from time to time of such Series C Preferred Securities
(the "Series C Guarantee"). The Bank of New York acts as indenture trustee
("Guarantee Trustee") under the Series C Guarantee, and the Series C Guarantee
has been qualified as an indenture under the Trust Indenture Act. This summary
of certain provisions of the Series C Guarantee does not purport to be complete
and is subject to, and qualified in its entirety by reference to, all of the
provisions of the Series C Guarantee, including the definitions therein of
certain terms, and the Trust Indenture Act. All material terms of the Series C
Guarantee are set forth in this Prospectus. A copy of the Series C Guarantee may
be obtained from the Corporation. The Guarantee Trustee holds the Series C
Guarantee for the benefit of the holders of the Series C Preferred Securities.
General
The Corporation has irrevocably agreed to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined below) to the holders of the Series C Preferred Securities, as and when
due, regardless of any defense, right of set-off or counterclaim that the Issuer
may have or assert other than the defense
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of payment. The following payments with respect to the Series C Preferred
Securities, to the extent not paid by or on behalf of the Series C Issuer (the
"Guarantee Payments"), are subject to the Series C Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Series C
Preferred Securities, to the extent that the Series C Issuer has funds on hand
available therefor at such time, (ii) the Redemption Price with respect to the
Series C Preferred Securities called for redemption, to the extent that the
Series C Issuer has funds on hand available therefor at such time and (iii) upon
a voluntary or involuntary dissolution, winding up or liquidation of the Series
C Issuer (unless the Series C Subordinated Debentures are distributed to holders
of the Series C Preferred Securities), the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of the Series C Issuer remaining
available for distribution to holders of the Series C Preferred Securities after
satisfaction of liabilities to creditors of the Series A Issuer as required by
applicable law. The Corporation's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Corporation to the
holders of the Series C Preferred Securities or by causing the Series C Issuer
to pay such amounts to such holders.
The Series C Guarantee is an irrevocable guarantee on a
subordinated basis of the Series C Issuer's obligations under the Series C
Preferred Securities, but applies only to the extent that the Series C Issuer
has funds sufficient to make such payments, and is not a guarantee of
collection.
If the Corporation does not make interest payments on the Series
C Subordinated Debentures held by the Series C Issuer, the Series C Issuer will
not be able to pay Distributions on the Series C Preferred Securities and will
not have funds legally available therefor. The Series C Guarantee ranks
subordinate and junior in right of payment to all Senior Debt of the
Corporation. See "--Status of the Series C Guarantee". Because the Corporation
is a holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Corporation may itself be recognized as a
creditor of that subsidiary. Accordingly, the Corporation's obligations under
the Guarantee are effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and claimants should look only to
the assets of the Corporation for payments thereunder. See "The Corporation".
The Series C Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Debt, whether
under the Indenture, any other indenture that the Corporation may enter into in
the future, or otherwise.
The Corporation has, through the Series C Guarantee, the Trust
Agreement, the Series C Subordinated Debentures, the Indenture and the Expense
Agreement, taken together, fully, irrevocably and unconditionally guaranteed all
of the Series C Issuer's obligations under the Series C 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 Series C Issuer's obligations
under the Series C Preferred Securities. See "Relationship Among the Series C
Preferred Securities, the Series C Subordinated Debentures, the Expense
Agreement and the Series C Guarantee".
Status of the Series C Guarantee
The Series C Guarantee constitutes an unsecured obligation of the
Corporation and ranks subordinate and junior in right of payment to all Senior
Debt of the Corporation in the same manner as the Series C Subordinated
Debentures.
The Series C Guarantee constitutes a guarantee of payment and not
of collection (i.e., the guaranteed party may institute a legal proceeding
directly against the Guarantor to enforce its rights under the Series C
Guarantee without first instituting a legal proceeding against any other person
or entity). The Series C Guarantee is held for the benefit of the holders of the
Series C Preferred Securities. The Series C Guarantee will not be discharged
except by payment of the Guarantee Payments in full to the extent not paid by
the Series C Issuer or upon distribution to the holders of the Series C
Preferred Securities of the Series C Subordinated Debentures. The Series C
Guarantee does not place a limitation on the amount of additional Senior Debt
that may be incurred by the Corporation. The Corporation expects from time to
time to incur additional indebtedness constituting Senior Debt.
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Amendments and Assignment
Except with respect to any changes that do not materially
adversely affect the rights of holders of the Series C Preferred Securities (in
which case no vote will be required), the Series C Guarantee may not be amended
without the prior approval of the holders of not less than a majority of the
aggregate Liquidation Amount of such outstanding Series C Preferred Securities.
The manner of obtaining any such approval will be as set forth under
"Description of the Series C Preferred Securities--Voting Rights; Amendment of
the Trust Agreement". All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Corporation and shall inure to the benefit of the holders of the Series C
Preferred Securities then outstanding.
Events of Default
An event of default under the Series C Guarantee will occur upon
the failure of the Corporation to perform any of its payments or other
obligations thereunder. The holders of not less than a majority in aggregate
Liquidation Amount of the Series C Preferred Securities 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 such Guarantee or to direct the exercise
of any trust or power conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the Series C Preferred Securities may institute a
legal proceeding directly against the Corporation to enforce its rights under
the Series C Guarantee without first instituting a legal proceeding against the
Series C Issuer, the Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with
the Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Series C Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and
continuance of a default by the Corporation in the performance of the Series C
Guarantee, undertakes to perform only such duties as are specifically set forth
in the Series C Guarantee and, after default with respect to the Series C
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 this
provision, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by the Series C Guarantee at the request of any holder of
the Series C Preferred Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby.
Termination of the Series C Guarantee
The Series C Guarantee will terminate and be of no further force
and effect upon full payment of the Redemption Price of the Series C Preferred
Securities, upon full payment of the amounts payable upon liquidation of the
Series C Issuer or upon distribution of the Series C Subordinated Debentures to
the holders of the Series C Preferred Securities in exchange therefor. The
Series C Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of the Series C Preferred Securities must
restore payment of any sums paid under the Series C Preferred Securities or the
Series C Guarantee.
Governing Law
The Series C Guarantee is governed by and construed in accordance
with the laws of the State of New York.
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The Expense Agreement
Pursuant to the Expense Agreement entered into by the
Corporation, as holder of the Common Securities under the Trust Agreement (the
"Expense Agreement"), the Corporation has irrevocably and unconditionally
guaranteed to each person or entity to whom the Series C Issuer becomes indebted
or liable, the full payment of any costs, expenses or liabilities of the Series
C Issuer, other than obligations of the Series C Issuer to pay to the holders of
the Series C Securities the amounts due such holders pursuant to the terms of
the Series C Securities.
RELATIONSHIP AMONG THE SERIES C PREFERRED SECURITIES,
THE SERIES C SUBORDINATED DEBENTURES, THE EXPENSE
AGREEMENT AND THE SERIES C GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Series C
Preferred Securities (to the extent the Series C Issuer has funds available for
the payment of such Distributions) are irrevocably guaranteed by the Corporation
as and to the extent set forth under "Description of the Series C Guarantee".
Taken together, the Corporation's obligations under the Series C Subordinated
Debentures, the Indenture, the Trust Agreement, the Expense Agreement and the
Series C Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the Series C 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
Series C Issuer's obligations under the Series C Preferred Securities. If and to
the extent that the Corporation does not make payments on the Series C
Subordinated Debentures, the Series C Issuer will not pay Distributions or other
amounts due on its Series C Preferred Securities. The Series C Guarantee does
not cover payment of Distributions when the Series C Issuer does not have
sufficient funds to pay such Distributions. In such event, the remedy of a
holder of the Series C Preferred Securities is to institute a Direct Action
against the Corporation pursuant to the Indenture for enforcement of payment of
such Distributions to such holder. The obligations of the Corporation under the
Series C Guarantee are subordinate and junior in right of payment to all Senior
Debt.
Sufficiency of Payments
As long as payments of interest and other payments are made when
due on the Series C Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the Series C Preferred Securities,
primarily because: (i) the aggregate principal amount of the Series C
Subordinated Debentures is equal to the sum of the aggregate stated Liquidation
Amount of the Series C Preferred Securities and Series C Common Securities; (ii)
the interest rate and interest and other payment dates on the Series C
Subordinated Debentures match the Distribution rate and Distribution and other
payment dates for the Series C Securities; (iii) the Corporation shall pay for
all and any costs, expenses and liabilities of the Series C Issuer except the
Series C Issuer's obligations to holders of its Series C Securities; and (iv)
the Trust Agreement further provides that the Series C Issuer will not engage in
any activity that is not consistent with the limited purposes of the Series C
Issuer.
Notwithstanding anything to the contrary in the Indenture, the
Corporation has the right to set off any payment it is otherwise required to
make thereunder with and to the extent the Corporation has theretofore made, or
is concurrently on the date of such payment making, a payment under the Series C
Guarantee.
Enforcement Rights of Holders of the Series C Preferred Securities
A holder of a Series C Preferred Security may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Series C Guarantee without first instituting a legal proceeding against the
Guarantee Trustee, the Series C Issuer or any other person or entity.
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A default or event of default under any Senior Debt of the
Corporation would not constitute a default or Event of Default under the
Indenture. However, in the event of payment defaults under, or acceleration of,
Senior Debt of the Corporation, the subordination provisions of the Indenture
provide that no payments may be made in respect of the Series C Subordinated
Debentures until such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on the
Series C Subordinated Debentures would constitute an event of default under the
Indenture.
Limited Purpose of the Series C Issuer
The Series C Preferred Securities evidence a beneficial interest
in the Series C Issuer, and the Series C Issuer exists for the sole purpose of
issuing its Series C Preferred Securities and Series C Common Securities and
investing the proceeds thereof in Series C Subordinated Debentures. A principal
difference between the rights of a holder of a Series C Preferred Security and a
holder of a Series C Subordinated Debenture is that a holder of a Series C
Subordinated Debenture is entitled to receive from the Corporation the principal
amount (or premium, if any) of and interest accrued on Series C Subordinated
Debentures held, while a holder of the Series C Preferred Securities is
entitled to receive Distributions from the Series C Issuer (or from the
Corporation under the Series C Guarantee) if, and to the extent, the Series C
Issuer has funds available for the payment of such Distributions.
Rights Upon Termination
Upon any voluntary or involuntary termination, winding-up or
liquidation of the Series C Issuer involving the liquidation of the Series C
Subordinated Debentures, the holders of the Series C Preferred Securities will
be entitled to receive, out of assets held by the Series C Issuer, the
Liquidation Distribution in cash. See "Description of the Series C Preferred
Securities--Liquidation Distribution upon Termination". Upon any voluntary or
involuntary liquidation or bankruptcy of the Corporation, the Property Trustee,
as holder of the Series C Subordinated Debentures, would be a subordinated
creditor of the Corporation, subordinated in right of payment to all Senior Debt
as set forth in the Indenture, but entitled to receive payment in full of
principal, (or premium, if any) and interest, before any stockholders of the
Corporation receive payments or distributions. Since the Corporation is the
guarantor under the Series C Guarantee and has agreed to pay for all costs,
expenses and liabilities of the Series C Issuer (other than the Series C
Issuer's obligations to the holders of its Series C Preferred Securities), the
positions of a holder of such Preferred Securities and a holder of the Series C
Subordinated Debentures relative to other creditors and to stockholders of the
Corporation in the event of liquidation or bankruptcy of the Corporation are
expected to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal
income tax consequences of the purchase, ownership and disposition of the Series
C Preferred Securities. This summary addresses only the tax consequences to a
person that acquires Series C Preferred Securities on their original issue at
their original offering price and that is (i) an individual citizen or resident
of the United States, (ii) a corporation or partnership organized in or under
the laws of the United States or any state thereof or the District of Columbia
or (iii) an estate or trust the income of which subject to United States federal
income tax regardless of source (a "United States Person") and does not address
the tax consequences to persons that may be subject to special treatment under
United States federal income tax law, such as banks, insurance companies, thrift
institutions, regulated investment companies, real estate investment trusts,
tax-exempt organizations, dealers in securities or currencies, persons that will
hold Series C Preferred Securities as part of a position in a "straddle" or as
part of a "hedging", "conversion" or other integrated investment transaction for
federal income tax purposes, persons whose functional currency is not the United
States dollar or persons that do not hold Series C Preferred Securities as
capital assets.
The statements of law or legal conclusions set forth in this
summary constitute the opinion of Sullivan & Cromwell, counsel to the
Corporation and the Series C Issuer. This summary is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, Internal
Revenue Service rulings and pronouncements and judicial decisions now in effect,
all of which are subject to change at any time. Such changes may be applied
retroactively in a manner that could cause the tax consequences to vary
substantially from the consequences described below, possibly adversely
affecting a beneficial owner of the Series C Preferred Securities. In
particular, legislation has been proposed that could adversely affect the
Corporation's ability to deduct interest on the Series C Subordinated
Debentures, which may in turn permit the Corporation to cause a redemption of
the Series C Preferred Securities. See "--Possible Tax Law Changes". The
authorities on which this summary is based are subject to various
interpretations, and it is therefore possible that the federal income tax
treatment of the purchase, ownership and disposition of the Series C Preferred
Securities may differ from the treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX
ADVISORS IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SERIES C
PREFERRED SECURITIES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX
LAWS.
Classification of the Series C Issuer
Under current law and assuming compliance with the terms of the
Trust Agreement, the Series C Issuer will not be classified as an association
taxable as a corporation for United States federal income tax purposes. As a
result, each beneficial owner of Series C Preferred Securities (a
"Securityholder") will be required to include in its gross income its pro rata
share of the original issue discount accrued with respect to the Series C
Subordinated Debentures whether or not cash is actually distributed to the
Securityholders. See "--Original Issue Discount". No amount included in income
with respect to the Series C Preferred Securities is eligible for the
dividends-received deduction.
Original Issue Discount
Under the Indenture, the Corporation has the right to defer the
payment of interest on the Series C Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series C Subordinated Debentures. Because of
this option, all interest payable on the Series C Subordinated Debentures will
be treated as "original issue discount" ("OID") for federal income tax purposes.
Accordingly, a Securityholder will recognize income (in the form of OID) on a
daily basis under a constant yield method over the term of the Series C
Subordinated Debentures (including during any Extension Period), regardless
of the receipt of cash with respect to the period to which such income is
attributable. (Subsequent uses of the term
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"interest" in this summary shall include income in the form of OID.) The amount
of OID that accrues in any semi-annual period (other than during an Extension
Period) will equal approximately the amount of the interest that accrues on the
Series C Subordinated Debentures in that semi-annual period at the stated
interest rate.
In the event that the interest payment period is extended,
Securityholders will include interest in gross income in advance of the receipt
of cash, and any Securityholders who dispose of the Series C Preferred
Securities prior to the record date for the payment of Distributions following
such Extension Period will include interest in gross income but will not receive
any cash related thereto from the Series C Issuer. Any amount of OID included in
a Securityholder's gross income (whether or not during an Extension Period) will
increase such Securityholder's tax basis in its Series C Preferred Securities,
and the amount of Distributions received by a Securityholder will reduce such
Securityholder's tax basis in its Series C Preferred Securities.
Distribution of the Series C Subordinated Debentures to Holders of Series C
Preferred Securities
Under current law, a distribution by the Series C Issuer of the
Series C Subordinated Debentures as described under the caption "Description of
the Series C Preferred Securities--Liquidation of the Series C Issuer and
Distribution of Series C Subordinated Debentures to Holders" will be non-taxable
and will result in the Securityholder receiving directly its pro rata share of
the Series C Subordinated Debentures previously held indirectly through the
Series C Issuer, with a holding period and aggregate tax basis equal to the
holding period and aggregate tax basis such Securityholder had in its Series C
Preferred Securities before such distribution. A Securityholder will accrue
interest in respect of the Series C Subordinated Debentures received from the
Series C Issuer in the manner described above under "--Original Issue Discount".
Sales or Redemption of the Series C Preferred Securities
Gain or loss will be recognized by a Securityholder on a sale of
the Series C Preferred Securities (including a redemption for cash) in an amount
equal to the difference between the amount realized and the Securityholder's
adjusted tax basis in the Series C Preferred Securities sold or so redeemed.
Gain or loss recognized by a Securityholder on the Series C Preferred Securities
held for more than one year will generally be taxable as long-term capital gain
or loss.
The Series C Preferred Securities may trade at a price that does
not fully reflect the value of accrued but unpaid interest with respect to the
underlying Series C Subordinated Debentures. A Securityholder that disposes of
its Series C Preferred Securities between record dates for payments of
Distributions (and consequently does not receive a Distribution from the Series
C Issuer for the period prior to such disposition) will nevertheless be required
to include in income as ordinary income accrued but unpaid interest on the
Series C Subordinated Debentures through the date of disposition and to add such
amount to its adjusted tax basis in its Series C Preferred Securities disposed
of. Such Securityholder will recognize a capital loss on the disposition of its
Series C Preferred Securities to the extent the selling price (which may not
fully reflect the value of accrued but unpaid interest) is less than the
Securityholder's adjusted tax basis in the Series C Preferred Securities (which
will include accrued but unpaid interest). Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
federal income tax purposes.
Possible Tax Law Changes
On February 6, 1997, the Budget Proposal was released. If
enacted, the Budget Proposal would generally deny interest deductions for
interest on an instrument issued by a corporation that has a maximum term of
more than 15 years and that is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. The above-described provision of the Budget Proposal
is proposed to be effective generally for instruments issued on or after the
date of first Congressional committee action. If this provision were to apply to
the Series C Subordinated Debentures, the
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Corporation would be unable to deduct interest on the Series C Subordinated
Debentures. Under current law, the Corporation will be able to deduct interest
on the Series C Subordinated Debentures. There can be no assurance, however,
that current or future legislative proposals or final legislation will not
affect the ability of the Corporation to deduct interest on the Series C
Subordinated Debentures. Such a change could give rise to a Tax Event, which may
permit the Corporation, if certain conditions are met, to shorten the maturity
of the Series C Subordinated Debentures to a date not earlier than March 12,
2012 or to cause a redemption of the Series C Preferred Securities before March
15, 2007. See "Description of the Series C Subordinated Debentures--Tax Event or
Capital Treatment Event Redemption" and "Description of the Series C Preferred
Securities--Redemption".
It is unclear whether an exercise by the Corporation of its right
to shorten the maturity of the Series C Subordinated Debentures following a Tax
Event would be a taxable event to holders of the Series C Preferred Securities.
Information Reporting to Securityholders
Generally, income on the Series C Preferred Securities will be
reported to Securityholders on Forms 1099, which forms should be mailed to
Securityholders by January 31 following each calendar year.
Backup Withholding
Payments made on, and proceeds from the sale of, the Series C
Preferred Securities may be subject to a "backup" withholding tax of 31% unless
the Securityholder complies with certain certification requirements. Any
withheld amounts will be allowed as a credit against the Securityholder's United
States federal income tax, provided the required information is provided to the
Internal Revenue Service on a timely basis.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain requirements on those employee benefit plans to which
it applies ("Plans") and on those persons who are fiduciaries with respect to
such Plans. In accordance with ERISA's general fiduciary standards, before
purchasing the Series C Preferred Securities a Plan fiduciary should determine
whether such an investment is permitted under the governing Plan instruments and
is appropriate for the Plan in view of its overall investment policy and the
composition and diversification of its portfolio. Other provisions of ERISA and
the Code require that certain reporting and disclosure be made with respect to
plan assets and investments, and still other provisions of ERISA and the Code
prohibit certain transactions involving the assets of a Plan and persons who
have certain specified relationships to the Plan ("parties in interest" within
the meaning of ERISA or "disqualified persons" within the meaning of the Code).
Thus, a Plan fiduciary considering an investment in the Series C Preferred
Securities should consult with its legal counsel concerning the legal
implications of investing in the Series C Preferred Securities, especially in
light of the issues discussed in the immediately succeeding paragraphs.
An investment in Series C Preferred Securities by a Plan might
result in the Series C Subordinated Debentures and any other assets of the
Series C Issuer being deemed to constitute in whole or in part Plan assets,
which in turn would mean that such assets would be subject to the reporting and
disclosure rules of ERISA and the Code, might mean that the Plan fiduciary who
decided to invest in the Series C Preferred Securities had delegated asset
management responsibility and might mean that the purchase and certain
underlying aspects of such investment, including the operation of the Series C
Issuer, might be deemed prohibited transactions under ERISA and the Code.
Neither ERISA nor the Code defines "plan assets". The U.S. Department of Labor
has published regulations (the "Plan Asset Regulations") concerning whether or
not a Plan's assets would be deemed to include an interest in the underlying
assets of an entity (such as a trust) for purposes of ERISA and the Code, if the
Plan acquires an "equity interest" in such entity (such as by acquiring the
Series C Preferred Securities). Under the Plan Asset Regulations, the underlying
assets of an entity will not be considered "plan assets" if, immediately after
the most recent acquisition of any equity interest in the entity, whether or not
from the issuer or an underwriter, less than 25% of the value of each class of
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equity interest is held by "benefit plan investors", which are defined as Plans,
individual retirement accounts and certain employee benefit plans not subject to
ERISA (for example, non-U.S. or governmental plans). Neither the initial sales
of the Series C Preferred Securities nor any subsequent transfers thereof will
be monitored to ensure that the investment by "benefit plan investors" is below
the 25% limit described above and, accordingly, an investing Plan's assets may
be deemed to include the assets of the Trust.
In light of the possibility of prohibited transactions, Plans
cannot purchase the Series C Preferred Securities unless (i) they are
represented in this regard by a "qualified professional asset manager" ("QPAM")
as that term is defined in U.S. Department of Labor Prohibited Transaction
Exemption ("PTE") 84-14, and other conditions to the applicability of PTE 84-14
to the purchase and holding of the Series C Preferred Securities are satisfied,
(ii) PTE 90-1 (for insurance company pooled separate accounts), (iii) PTE 91-38
(for bank collective funds), (iv) PTE 95-60 (for insurance company general
accounts) or (v) PTE 96-23 (for in-house asset managers) applies. By purchasing
the Series C Preferred Securities, the investing Plan is deemed to represent and
agree that it is so represented and that such conditions are satisfied. In
addition, if the Corporation was considered to be a fiduciary with respect to
the Series C Issuer as a result of certain powers it holds (such as the power to
remove and replace the property trustee and the administrative trustees), the
optional redemption or acceleration of the Series C Subordinated Debentures
could be considered prohibited transactions under Section 406(b) of ERISA and
Section 4975(c) (1)(E) of the Code. In order to avoid such prohibited
transactions, each investing Plan, by purchasing the Series C Preferred
Securities, will be deemed to have directed the Series C Issuer to invest in the
Subordinated Debentures and to have appointed the Property Trustee.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) are not subject to ERISA requirements but may be subject
to somewhat similar provisions of other applicable federal or state law or legal
restrictions on their ability to invest in the Series C Preferred Securities.
Accordingly, governmental plans should consult with legal counsel prior to
making an investment.
THE SALE OF INVESTMENTS TO PLANS IS IN NO RESPECT A
REPRESENTATION BY THE SERIES C ISSUER, THE CORPORATION, THE PROPERTY TRUSTEE OR
ANY OTHER PERSON ASSOCIATED WITH THE SALE OF THE SERIES C PREFERRED SECURITIES
THAT SUCH INVESTMENTS MEET ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO
INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN, OR THAT SUCH INVESTMENTS
ARE OTHERWISE APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN.
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SELLING SECURITYHOLDERS
The Registration Statement has been filed pursuant to Rule 415
under the Securities Act to afford the holders of the Series C Preferred
Securities the opportunity to sell such securities in a public transaction
rather than pursuant to an exemption from the registration and prospectus
delivery requirements of the Securities Act. In order to avail itself of that
opportunity, a holder must notify the Corporation in writing of its intention to
sell Series C Preferred Securities and request the Corporation to file a
supplement to this Prospectus or an amendment to the Registration Statement
identifying such holder as a Selling Securityholder and disclosing such other
information concerning the Selling Securityholder and the Series C Preferred
Securities to be sold as may then be required by the Securities Act and the
rules and regulations thereunder, as applicable. No offer or sale pursuant to
this Prospectus may be made by any holder until such a request has been made and
until any such supplement has been filed or any such amendment has become
effective. The holders of Series C Preferred Securities who have made such a
request and as to whom any such supplement has been filed or any such amendment
has been filed or becomes effective are referred to herein as "Selling
Securityholders". Since the Series C Preferred Securities are currently listed
on PORTAL, the holder of the Series C Preferred Securities at the time such
request has been made may differ from the holders as of the date hereof.
The Corporation will from time to time supplement or amend this
Prospectus to reflect the required information concerning any new or
additional Selling Securityholders.
The Corporation has agreed to bear all expenses (other than
expenses incurred by any holder of Series C Preferred Securities, including fees
and expenses of counsel and other advisors retained by such holder), in
connection with the registration and sale of the Series C Preferred Securities
covered by this Prospectus.
The following table show the names of the Selling
Securityholders, the shares of Series C Preferred Securities owned beneficially
by each of them, as of May 27, 1997 (unless otherwise noted), the number of
Series C Preferred Securities that may be offered by each of them pursuant to
this Prospectus and the number of Series C Preferred Securities to be
beneficially owned by each of them after completion of the offering pursuant to
this Prospectus, assuming all of the shares of Series C Preferred Securities
being offered hereby are sold in the offering.
<TABLE>
<CAPTION>
Number of Series
C Preferred
Securities
Beneficially Owned Number of Series Number of Series C
as of C Preferred Preferred Securities
Name of Selling May 27, Securities Offered Beneficially Owned
Securityholder 1997(1) Hereby After the Offering
- ------------------------------------------------- ----------------- ------------------- ----------------------
<S> <C> <C> <C>
Aetna Life Insurance Company Separate Account 76 4,000 4,000 0
Aetna Life Insurance Company Separate Account 252 1,000 1,000 0
Banner Life Insurance 2,000 2,000 0
City of New York 3,000 3,000 0
City of New York 7,900 7,900 0
City of New York 11,600 11,600 0
City of New York 12,500 12,500 0
Orange County Employee's Retirement Trust Fund 1,000 1,000 0
Salomon Brothers Inc 17,500 17,500 0
</TABLE>
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<TABLE>
<S> <C> <C>
Teachers Retirement System of the State of Illinois 13,000 13,000 0
Warburg, Pincus Fixed Income Fund 1,000 1,000
William Penn Life Insurance Company of New York 3,000 3,000 0
------------------
Total............................... 77,500 0
==================
</TABLE>
- ---------------
(1) For the purposes of this table, a person is deemed to have "beneficial
ownership" of securities over which such person, directly or indirectly
through any contract, arrangement, understanding, relationship or
otherwise, has or shares (x) voting power (which includes the power to vote
or to direct the voting of such securities) or (y) investment power (which
includes the power to dispose or direct the disposition of such
securities). A person is also deemed to be the beneficial owner of
securities: (i) the beneficial ownership of which such person has the
right, at any time within 60 days from May 27, 1997 (or such later date as
noted in the above table), to acquire, including but not limited to any
right to acquire through the exercise of options, warrants or rights, the
conversion of a convertible security or the revocation or automatic
termination of a trust or discretionary account or similar arrangement;
(ii) the beneficial ownership of which such person has the right to acquire
(as specified in (i)) at any time, where such right is acquired for the
purpose, or with the effect, of changing or influencing control of the
Corporation, or in connection with or as a participant in any transaction
having such purpose or effect; or (iii) with respect to which such person,
directly or indirectly, through the creation or use of a trust, a proxy,
power of attorney, pooling arrangement or any other contract, arrangement
or device purports to have divested himself of beneficial ownership or to
have prevented the vesting of beneficial ownership as part of a scheme to
evade the reporting requirements of Section 13(d) or (g) of the Securities
Exchange Act of 1934. Beneficial ownership is given as of May 27, 1997
unless noted otherwise.
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PLAN OF DISTRIBUTION
The Series C Preferred Securities are outstanding securities and are being
offered for sale from time to time pursuant to this Prospectus by the Selling
Securityholders. The Series C Preferred Securities also may be sold pursuant to
Rule 144 under the Securities Act.
The distribution of the Series C Preferred Securities pursuant to this
Prospectus may be effected from time to time in one or more transactions (which
may involve block transactions) in transactions on PORTAL or in the over-the-
counter market or on any national securities exchange or automated quotation
system on which Series C Preferred Securities may be listed or quoted in the
future, in negotiated transactions, through the writing of options on shares
(whether such options are listed on an options exchange or otherwise) or through
a combination of such methods of sale, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices, in each case as determined by the relevant Selling Securityholder. Each
Selling Securityholder may effect such transactions by selling shares directly
to their purchasers, through agents or to or through broker-dealers, and any
such agents or broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from such Selling
Securityholder, from purchasers of shares for whom they may act as agents or
from both sources (and such compensation may be in excess of customary
commissions). The Selling Securityholders and any broker-dealers that
participate in the distribution may be deemed to be "underwriters" within the
meaning of Section 2(1) of the Securities Act, and any commissions, and any
profit on the resale of shares, received by the Selling Securityholders and any
such broker-dealers may be deemed to be underwriting compensation.
To the extent required at the time a particular sale of Series C
Preferred Securities is made hereunder, the Corporation will make available to
the relevant Selling Securityholder for delivery to the purchaser a supplement
to this Prospectus that will include certain information about the sale, for
example, with respect to the number of shares sold, the sale price, any
participating broker-dealers and any discounts or commissions received thereby.
The Corporation will bear all costs and expenses incurred by it
in connection with the offering and sale of the Series C Preferred Securities
pursuant to this Prospectus, but will not be responsible for any commissions,
underwriting discounts or similar amounts payable in respect of any such sale,
or for any other expenses incurred by the Selling Securityholders or any
purchasers. Notwithstanding the foregoing, the Corporation and each Selling
Securityholder have agreed to indemnify each other from certain liabilities
relating to the offering made hereby, including liabilities under the Securities
Act.
In connection with a particular offering of Series C Preferred
Securities pursuant to this Prospectus, participating underwriters or
broker-dealers (if any), or their respective affiliates, may engage in passive
market-making transactions in the Series C Issuer's Series C Preferred
Securities on PORTAL in accordance with Rule 10b- 6A under the Exchange Act
during the two business day period before commencement of such offering. Passive
market-making transactions must comply with applicable volume and price limits
and must be identified as such. In general, a passive market-maker may display
its bid at a price not in excess of the highest independent bid for the
security; if all independent bids are lowered below the passive market-maker's
bid, however, such bid must then be lowered when certain purchase limits are
exceeded.
The Corporation has agreed with the Selling Securityholders to
keep a Shelf Registration Statement, under which the Selling Securityholders may
resell Series C Preferred Securities from time to time, effective until
June 30, 1999 (or such earlier time as all Series C Preferred Securities
have been sold thereunder or pursuant to Rule 144 under the Securities Act),
except during certain limited circumstances. See "Registration Rights
Agreement".
Prior to the offering contemplated hereby, there has been no
public market for the Series C Preferred Securities. The Initial Purchasers have
advised the Corporation that they intend to make a market in the Series C
Preferred Securities, but they are not obligated to do so and may discontinue
any such market making at any time without notice. In addition, the market
making may be limited during the pendency of the Shelf Registration Statement.
Accordingly, there can be no assurance that an active market will develop for
the Series C Preferred Securities.
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Dillon, Read & Co. Inc. serves as Quotation Agent with respect to the
Series C Preferred Securities and in certain instances will calculate the
Redemption Price thereof.
REGISTRATION RIGHTS AGREEMENT
On March 12, 1997, the Corporation and the Series C Issuer
entered into a registration rights agreement with the Initial Purchasers (the
"Registration Rights Agreement") pursuant to which the Corporation and the
Series C Issuer agreed, at the Corporation's expense, for the benefit of the
Initial Purchasers and the holders of the Series C Preferred Securities, the
Series C Guarantee and the Series C Subordinated Debentures (together, the
"Registrable Securities"), to file a registration statement (the "Shelf
Registration Statement") with respect to the Registrable Securities.
The Registration Rights Agreement provides that the Corporation
and the Series C Issuer will (i) file with the Commission within 60 days after
the date of issuance of the Registrable Securities the Shelf Registration
Statement covering resales of the Registrable Securities, (ii) use their
reasonable best efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act within 120 days after the date of the
issuance of the Registrable Securities and (iii) use their reasonable best
efforts to keep effective the Shelf Registration Statement until three years
after the date it is declared effective or such earlier date as all Registrable
Securities shall have been disposed of or on which all Registrable Securities
held by persons that are not affiliates of the Corporation or the Series C
Issuer may be resold without registration pursuant to Rule 144(k) under the
Securities Act (the "Effectiveness Period"). The Corporation will provide to
each holder of Registrable Securities copies of the Prospectus, which is a part
of the Shelf Registration Statement, notify each holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit unrestricted resales of the Registrable Securities. A
holder of Registrable Securities that sells such Registrable Securities pursuant
to the Shelf Registration Statement has been required to be named as a selling
security holder in the related Prospectus and to deliver a Prospectus to
purchasers, is subject to certain of the civil liability provisions under the
Securities Act in connection with such sales and is bound by the provisions of
the Registration Rights Agreement, including certain indemnification
obligations.
In the event that the Shelf Registration Statement has not been
filed with the Commission within 60 days or, if so filed, has not been declared
effective within 120 days following the Issue Date (each a "Registration
Default"), a Registration Penalty (as defined herein) of 0.25% per annum of the
principal amount of the Series C Subordinated Debentures will accrue until such
Shelf Registration Statement is (i) filed with the Commission or (ii) declared
effective by the Commission. In the event that the Shelf Registration Statement
is not declared effective by the Commission 60 days following a Registration
Default, an additional Registration Penalty of 0.25% (together with the initial
Registration Penalty, not to exceed in the aggregate 0.50%) will accrue until
such Registration Statement is declared effective.
Also, in the event that the Shelf Registration Statement ceases
to be effective during the Effectiveness Period for more than 60 days, whether
or not consecutive, during any 12-month period, then a Registration Penalty will
accrue at a rate per annum equal to one-half of one percent (0.50%) of the
principal amount or Liquidation Amount, as applicable, from such 61st day until
such time as the Shelf Registration Statement again becomes effective. At no
time will a Registration Penalty in excess of 0.50% be payable pursuant to the
provisions of the Registration Rights Agreement.
The Corporation and the Series C Issuer have agreed in the
Registration Rights Agreement to use their reasonable best efforts to cause the
Series C Preferred Securities to be listed on the Nasdaq National Market or
other national securities exchange upon effectiveness of the Shelf Registration
Statement.
The summary herein of certain provisions of the Registration
Rights Agreement is subject to, and is qualified in its entirety by reference
to, all of the provisions of the Registration Rights Agreement, a copy of which
is available upon request from the Corporation.
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VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the
Series C Preferred Securities, the enforceability of the Trust Agreement and the
formation of the Series C Issuer have been passed upon by Richards, Layton &
Finger, special Delaware Counsel to the Corporation and the Series C Issuer. The
validity of the Series C Guarantee and the Series C Subordinated Debentures have
been passed upon for the Corporation by Sullivan & Cromwell and for the
Underwriters by Simpson Thacher & Bartlett, (a partnership which includes
professional corporations). Sullivan & Cromwell and Simpson Thacher & Bartlett
have relied on the opinion of Richards, Layton & Finger as to certain matters of
Delaware law. Certain matters relating to United States federal income tax
considerations have been passed upon for the Corporation and the Series C
Issuers by Sullivan & Cromwell.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements and schedules of the
Corporation and subsidiaries appearing in the Corporation's Annual Report (Form
10-K) for the year ended December 31, 1996 have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included therein and have been incorporated by reference into
this Prospectus. Such consolidated financial statements are incorporated herein
by reference in reliance upon such report given upon the authority of such firm
as experts in giving said reports.
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<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Corporation or the Series C Issuer.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create any implication that the
information herein is correct as of any time subsequent to the date hereof
or that there has not been a change in the affairs of the Corporation or the
Series C Issuer since the date hereof.
-62-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Notice to New Hampshire Residents................. 6
Available Information............................. 6
Incorporation of Certain Documents By
Reference....................................... 7
Prospectus Summary................................ 8
Risk Factors...................................... 15
The Series C Issuer............................... 21
The Corporation................................... 22
Consolidated Ratio of Earnings to Fixed
Charges (Excluding Preferred Stock
Dividends) and Ratio of Earnings to
Combined Fixed Charges and Preferred
Stock Dividend Requirements..................... 24
Capitalization.................................... 25
Use of Proceeds................................... 27
Federal Reserve Board Actions..................... 27
Accounting Treatment.............................. 27
Description of the Series C Preferred
Securities...................................... 27
Description of the Series C Subordinated
Debentures...................................... 37
Book-Entry Issuance............................... 47
Description of the Series C Guarantee............. 48
Relationship Among the Series C Preferred
Securities, the Series C Subordinated
Debentures, the Expense Agreement and
the Series C Guarantee.......................... 51
Certain Federal Income Tax Consequences........... 53
ERISA Considerations.............................. 55
Selling Securityholders........................... 57
Plan of Distribution.............................. 59
Registration Rights Agreement..................... 60
Validity of Securities............................ 61
Independent Public Accountants.................... 61
</TABLE>
63
<PAGE>
LOGO
Riggs Capital II
------------
$200,000,000
8 7/8% Trust Preferred Securities, Series C
200,000
Preferred Securities
(Liquidation Amount $1,000 per
Preferred Security)
Fully and Unconditionally
Guaranteed by
Riggs National Corporation
--------------------------
PROSPECTUS
--------------------------
64
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with the issuance and distribution
of the securities being registered are:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee......................$60,610
Trustee's fee and expenses...............................................$46,000
Printing and engraving expenses.........................................$150,000
Legal fees and expenses of Registrant's Counsel.........................$250,000
Accounting fees and expenses.............................................$40,000
Blue Sky fees and expenses (including counsel fees).......................$4,000
Fees of rating agencies.................................................$130,000
Miscellaneous expenses...................................................$19,390
Total.................................................................$700,000
</TABLE>
Item 15. Indemnification of Directors and Officers
Section 15 of the General Corporation Law of the State of Delaware,
Article Eleventh of the Corporation's Certificate of Incorporation and Section
14.1 of the Corporation's Bylaws provide for indemnification of the
Corporation's directors and officers in a variety of circumstances which may
include liabilities under the Securities Act.
The general effect of the provisions in the Corporation's Certificate
of Incorporation and Delaware General Corporation Law is to provide that the
Corporation shall indemnify its directors and officers against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by them in connection with the defense or
settlement of any judicial or administrative proceedings in which they become
involved by reason of their status as directors or officers of the Corporation,
if they acted in good faith and in the reasonable belief that their conduct was
neither unlawful (in the case of criminal proceedings) nor inconsistent with the
best interests of the Corporation. With respect to legal proceedings by or in
the right of the Corporation in which a director or officer is adjudged liable
for improper performance of his duty to the Corporation or another enterprise
which he served in a similar capacity at the request of the Corporation,
indemnification is limited by such provisions to that amount which is permitted
by the court. In addition, the Corporation has purchased insurance as permitted
by Delaware law on behalf of directors, officers, employees or agents, which may
cover liabilities under the Securities Act.
In addition, Article Eleventh of the Corporation's Certificate of
Incorporation provides that no director of the Corporation will be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. This provision does not eliminate or limit the
liability of a director for: (i) breach of the director's duty of loyalty to the
Corporation or its stockholders; (ii) acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law; (iii) willful
or negligent conduct in paying illegal dividends or improperly purchasing or
redeeming the Corporation's own stock; or (iv) any transaction in which the
director obtains an improper personal benefit.
65
<PAGE>
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C> <C>
1 * -- Purchase Agreement
4(a)* -- Certificate of Incorporation of the Corporation, as
amended
4(b)* -- By-laws of the Corporation, as amended
4(c)* -- Junior Subordinated Indenture between Riggs National
Corporation and The Bank of New
York, as Debenture Trustee
4(d)* -- Certificate of Trust of Riggs Capital II
4(e)* -- Trust Agreement of Riggs Capital II
4(f)* -- Amended and Restated Trust Agreement of Riggs Capital II
4(g)* -- Form of Series C Preferred Security Certificate for
Riggs Capital II (included in Exhibit 4(f))
4(h)* -- Guarantee Agreement for Riggs Capital II
4(i)* -- Form of Series C Subordinated Debenture
5(a)* -- Opinion of Sullivan & Cromwell as to validity of the
Series C Subordinated Debentures and the Guarantee to be
issued by Riggs National Corporation
5(b)* -- Opinion of Richards, Layton & Finger, special Delaware
counsel, as to validity of the Series C Preferred
Securities to be issued by Riggs Capital II
8 * -- Opinion of Sullivan & Cromwell as to certain federal
income tax matters
12 * -- Statement re: Computation of Consolidated Ratio of
Earnings to Fixed Charges (Excluding Preferred Stock
Dividends) and Ratio of Consolidated Earnings to Fixed
Charges and Preferred Stock Dividends
23(a) -- Consent of Arthur Andersen LLP
23(b)* -- Consent of Richards, Layton & Finger
23(c)* -- Consent of Sullivan & Cromwell
24 * -- Powers of Attorney (included in signature page)
25(a)* -- Form T-1 Statement of Eligibility of The Bank of New
York to act as trustee under the Junior Subordinated
Indenture
25(b)* -- Form T-1 Statement of Eligibility of The Bank of New
York to act as trustee under the Amended and Restated
Trust Agreement of Riggs Capital II
25(c)* -- Form T-1 Statement of Eligibility of The Bank of New
York to act as trustee under the Guarantee for the
benefit of the holders of Series C Capital
*Previously filed
</TABLE>
Item 17. Undertakings
Each of the undersigned Registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereto) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424 (b)
if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate
66
<PAGE>
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (1) (i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by each of the Registrants pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, as amended, each filing of a Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at this time shall be deemed to be
the initial bona fide offering hereof.
(5) That, for purposes of determining any liability under the
Securities Act of 1933:
(i) The information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrants pursuant to Rule 424 (b) (1) or (4)
or 487 (h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(ii) 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 such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
each Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by each
Registrant of expenses incurred or paid by a director, officer or controlling
person of each Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, each Registrant will, unless in
the opinion of its counsel the matter has been settled by the controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
67
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Washington, D.C. on June 3, 1997.
RIGGS NATIONAL CORPORATION
/s/ LINDA A. MADRID
---------------------------------
Name: Linda A. Madrid
Title: Managing Director of Legal Affairs
and Corporate Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Title Date
<S> <C> <C>
* CHAIRMAN OF THE BOARD June 3, 1997
- -------------------------------------- AND CHIEF EXECUTIVE
(Joe L. Allbritton) OFFICER
* PRESIDENT June 3, 1997
- --------------------------------------
(Timothy C. Coughlin)
/s/ JOHN L. DAVIS CHIEF FINANCIAL OFFICER June 3, 1997
- -------------------------------------- (PRINCIPAL FINANCIAL AND
(John L. Davis) ACCOUNTING OFFICER)
* DIRECTOR June 3, 1997
- --------------------------------------
(Barbara B. Allbritton)
* DIRECTOR June 3, 1997
- --------------------------------------
(Robert L. Allbritton)
* DIRECTOR June 3, 1997
- --------------------------------------
(Frederick L. Bollerer)
* DIRECTOR June 3, 1997
- --------------------------------------
(Calvin Cafritz)
* DIRECTOR June 3, 1997
- --------------------------------------
(Charles A. Camalier, III)
* DIRECTOR June 3, 1997
- --------------------------------------
(Ronald E. Cuneo)
* DIRECTOR June 3, 1997
- --------------------------------------
(Floyd E. Davis, III)
</TABLE>
-68-
<PAGE>
<TABLE>
<CAPTION>
Title Date
<S> <C> <C>
* DIRECTOR June 3, 1997
- --------------------------------------
(Jacqueline C. Duchange)
* DIRECTOR June 3, 1997
- --------------------------------------
(Michela A. English)
* DIRECTOR June 3, 1997
- --------------------------------------
(James E. Fitzgerald)
* DIRECTOR June 3, 1997
- --------------------------------------
(Heather S. Foley)
* DIRECTOR June 3, 1997
- --------------------------------------
(David J. Gladstone)
* DIRECTOR June 3, 1997
- --------------------------------------
(Lawrence I. Hebert)
DIRECTOR
- --------------------------------------
(Michael J. Jackson)
* DIRECTOR June 3, 1997
- --------------------------------------
(Timothy A. Lex)
* DIRECTOR June 3, 1997
- --------------------------------------
(Leo J. O'Donovan, S.J.)
* DIRECTOR June 3, 1997
- --------------------------------------
(Steven B. Pfeiffer)
* DIRECTOR June 3, 1997
- --------------------------------------
(John A. Sargent)
* DIRECTOR June 3, 1997
- --------------------------------------
(Robert L. Sloan)
* DIRECTOR June 3, 1997
- --------------------------------------
(James W. Symington)
* DIRECTOR June 3, 1997
- --------------------------------------
(Jack Valenti)
* DIRECTOR June 3, 1997
- --------------------------------------
(Eddie N. Williams)
</TABLE>
*Linda A. Madrid, by signing her name hereto, signs this document on behalf of
each of the persons indicated by an asterisk above pursuant to powers of
attorney duly executed by such persons and filed herewith with the Securities
and Exchange Commission.
By: /s/ LINDA A. MADRID
-------------------------------
Linda A. Madrid, Attorney-in-fact
-69-
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, Riggs
Capital II, certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Washington, D.C. on June 3, 1997.
RIGGS CAPITAL II
By: RIGGS NATIONAL CORPORATION,
as Depositor
/s/ LINDA A. MADRID
-----------------------------------
Name: Linda A. Madrid
Title: Managing Director of Legal Affairs
and Corporate Secretary
-70-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C> <C>
1* -- Purchase Agreement
4(a)* -- Certificate of Incorporation of the Corporation, as
amended
4(b)* -- By-laws of the Corporation, as amended
4(c)* -- Junior Subordinated Indenture between Riggs National
Corporation and The Bank of New York, as Debenture
Trustee
4(d)* -- Certificate of Trust of Riggs Capital II
4(e)* -- Trust Agreement of Riggs Capital II
4(f)* -- Amended and Restated Trust Agreement of Riggs Capital II
4(g)* -- Form of Series C Preferred Security Certificate for
Riggs Capital II (included in Exhibit 4(f))
4(h)* -- Guarantee Agreement for Riggs Capital II
4(i)* -- Form of Series C Subordinated Debenture
5(a)* -- Opinion of Sullivan & Cromwell as to validity of the
Series C Subordinated Debentures and the Guarantee to be
issued by Riggs National Corporation
5(b)* -- Opinion of Richards, Layton & Finger, special Delaware
counsel, as to validity of the Series C Preferred
Securities to be issued by Riggs Capital II
8* -- Opinion of Sullivan & Cromwell as to certain federal
income tax matters
12* -- Statement re: Computation of Consolidated Ratio of
Earnings to Fixed Charges (Excluding Preferred Stock
Dividends) and Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends
23(a) -- Consent of Arthur Andersen LLP
23(b)* -- Consent of Richards, Layton & Finger
23(c)* -- Consent of Sullivan & Cromwell
24* -- Powers of Attorney (included in signature page)
25(a)* -- Form T-1 Statement of Eligibility of The Bank of New
York to act as trustee under the Junior Subordinated
Indenture
25(b)* -- Form T-1 Statement of Eligibility of The Bank of New
York to act as trustee under the Amended and Restated
Trust Agreement of Riggs Capital II
25(c)* -- Form T-1 Statement of Eligibility of The Bank of New
York to act as trustee under the Guarantee for the
benefit of the holders of Series C Capital
* Previously Filed
</TABLE>
-71-
<PAGE>
Exhibit 23(a)
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the reference to our
firm under the caption "Independent Public Accountants" in the Registration
Statement Form S-3 and related Prospectus of Riggs National Corporation and
Riggs Capital II for the registration of Junior Subordinated Deferrable Interest
Debentures and Preferred Securities and to the incorporation by reference
therein of our report dated January 14, 1997 (except with respect to the matter
discussed in Note 17, as to which the date is March 12, 1997) with respect to
the consolidated financial statements of Riggs National Corporation in its
Annual Report (Form 10-K) for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
/s/ ARTHUR ANDERSEN LLP
Washington, D.C.
June 3, 1997
