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FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NOS. 333-26447
333-26447-01
$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 Series C
Issuer. The Series C Issuer exists for the sole purpose of issuing
(Continued on the following pages)
SEE "RISK FACTORS" BEGINNING ON PAGE 12 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 August 29, 1997.
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(continued from the previous page)
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
2
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(continued from the previous page)
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.
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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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".
4
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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).
5
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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 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.
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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 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".
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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 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
8
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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 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
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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
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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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
"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
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<PAGE>
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. See "Certain Federal Income Tax Consequences--Original Issue
Discount" and "--Sales or Redemption of the Series C Preferred Securities".
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<PAGE>
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 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").
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<PAGE>
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 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.
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<PAGE>
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".
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
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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."
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.
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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 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
18
<PAGE>
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.
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
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<PAGE>
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 mature on December 31, 2026. The
Corporation owns all the Common Securities of Riggs
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<PAGE>
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
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<PAGE>
Securities 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
25
<PAGE>
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 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".
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<PAGE>
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 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.
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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 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".
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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) 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
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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.
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.
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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,
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
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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 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.
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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
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
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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.
The Series C Issuer may not borrow money or issue debt or mortgage or pledge
any of its assets.
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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 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.
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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 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
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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 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
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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) 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.
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"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 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.
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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 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.
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<PAGE>
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 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
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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, 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.
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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.
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
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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.
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.
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(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.
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.
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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
book-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 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
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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.
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.
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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.
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.
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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
51
<PAGE>
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
"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
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<PAGE>
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 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
53
<PAGE>
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 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.
54
<PAGE>
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 NUMBER OF SERIES C
BENEFICIALLY OWNED NUMBER OF SERIES C PREFERRED SECURITIES
NAME OF SELLING AS OF MAY 27, PREFERRED SECURITIES BENEFICIALLY OWNED
SECURITYHOLDER 1997(1) OFFERED 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
Armco Inc. Fixed
Portfolio.............. 800(2) 800 0
Banner Life Insurance... 2,000 2,000 0
Calvert Asset Management
Company--
D808 Income Portfolio.. 1,000(2) 1,000 0
Calvert Asset Management
Company--
D816 Social Investment
Bond................... 2,000(2) 2,000 0
Calvert Asset Management
Company--
D835 CRI Balanced...... 2,000(2) 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
DW Strategist Fund...... 7,000(2) 7,000 0
DW Variable Strategist
Fund................... 3,000(2) 3,000 0
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SERIES C
PREFERRED SECURITIES NUMBER OF SERIES C
BENEFICIALLY OWNED NUMBER OF SERIES C PREFERRED SECURITIES
NAME OF SELLING AS OF MAY 27, PREFERRED SECURITIES BENEFICIALLY OWNED
SECURITYHOLDER 1997(1) OFFERED HEREBY AFTER THE OFFERING
--------------- -------------------- -------------------- --------------------
<S> <C> <C> <C>
Forethought Life
Insurance Company...... 845(2) 845 0
LB Series Fund, Inc.,
High Yield Portfolio... 5,400(2) 5,400 0
LB Series Fund, Inc.,
Income Portfolio....... 5,000(2) 5,000 0
Legends Worldwide Fund.. 50(2) 50 0
Lutheran Brotherhood
Family of Funds--
Lutheran Brotherhood
High Yield Fund........ 3,600(2) 3,600 0
Lutheran Brotherhood
Family of Funds--
Lutheran Brotherhood
Income Fund............ 5,000(2) 5,000 0
MAS High Yield Fund..... 4,370(2) 4,370 0
MAS MAC Fund............ 70(2) 70 0
Merrill Lynch Pierce
Fenner & Smith......... 28,500(2) 28,500 0
MS Global Opportunity
Fund................... 140(2) 140 0
MSIF HY Fund............ 1,000(2) 1,000 0
MSRF Worldwide High
Income Fund............ 750(2) 750 0
NA Securities Life High
Yield Portfolio........ 200(2) 200 0
Orange County Employee's
Retirement Trust Fund.. 1,000 1,000 0
SICAV US High Yield Bond
Fund................... 290(2) 290 0
Smith Barney, Inc....... 7,935(3) 7,935 0
Sunamerica Series Trust
WF..................... 350(2) 350 0
Teachers Retirement
System of the State of
Illinois............... 13,000 13,000 0
University of
Pennsylvania HY
Portfolio.............. 1,200(2) 1,200 0
Warburg, Pincus Fixed
Income Fund............ 1,000 1,000 0
William Penn Life
Insurance Company of
New York............... 3,000 3,000 0
------ ------- ---
Total................. 140,500 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.
(2) The shares of Series C Preferred Securities owned beneficially by this
Selling Securityholder as of August 21, 1997.
(3) The shares of Series C Preferred Securities owned beneficially by this
Selling Securityholder as of August 20, 1997. In addition, this Selling
Securityholder maintains security brokerage accounts for various officers
and directors of Riggs, and from time to time provides margin loans to
such individuals based upon the value of Riggs Common Stock.
56
<PAGE>
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
57
<PAGE>
Statement. Accordingly, there can be no assurance that an active market will
develop for the Series C Preferred Securities.
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.
58
<PAGE>
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.
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.
59
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION 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 PRO-
SPECTUS 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 UN-
DER 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.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Notice to New Hampshire Residents........................................ 4
Available Information.................................................... 4
Incorporation of Certain Documents By Reference.......................... 5
Prospectus Summary....................................................... 6
Risk Factors............................................................. 12
The Series C Issuer...................................................... 18
The Corporation.......................................................... 19
Consolidated Ratio of Earnings to Fixed Charges (Excluding Preferred
Stock Dividends) and Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements................................... 21
Capitalization........................................................... 22
Use of Proceeds.......................................................... 24
Federal Reserve Board Actions............................................ 24
Accounting Treatment..................................................... 24
Description of the Series C Preferred Securities......................... 24
Description of the Series C Subordinated Debentures...................... 35
Book-Entry Issuance...................................................... 44
Description of the Series C Guarantee.................................... 46
Relationship Among the Series C Preferred Securities, the Series C
Subordinated Debentures, the Expense Agreement and the Series C
Guarantee............................................................... 49
Certain Federal Income Tax Consequences.................................. 51
ERISA Considerations..................................................... 53
Selling Securityholders.................................................. 55
Plan of Distribution..................................................... 57
Registration Rights Agreement............................................ 58
Validity of Securities................................................... 59
Independent Public Accountants........................................... 59
</TABLE>
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[LOGO OF RIGGS APPEARS HERE]
RIGGS CAPITAL II
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$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
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P R O S P E C T U S
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