As filed with the Securities and Exchange Commission on July 1, 1998
Registration No. 333-_____
Registration No. 333-_____-01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------------------
UCBH HOLDINGS, INC. UCBH TRUST CO.
- -------------------------------------- --------------------------------------
(exact name of registrant as specified (exact name of registrant as specified
in its certificate of incorporation) in its certificate of incorporation)
DELAWARE DELAWARE
------------------------------- -------------------------------
(state or other jurisdiction of (state or other jurisdiction of
incorporation or organization) incorporation or organization)
Being applied for Being applied for
--------------------------------- --------------------------------
(IRS Employer Identification No.) (IRS Employer Identification No.)
6035 N/A
-------------------------------- -----------------------------
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
711 Van Ness Avenue 711 Van Ness Avenue
San Francisco, California 94102 San Francisco, California 94102
(415) 928-0700 (415) 928-0700
------------------------------- -------------------------------
(Address, including zip code, (Address, including zip code,
and telephone number, including and telephone number, including
area code, of registrants' area code, of registrants'
principal executive offices) principal executive offices)
--------------------------
Tommy S. Wu
President and Chief Executive Officer
United Commercial Bank
711 Van Ness Avenue
San Francisco, California 94102
(415) 928-0700
---------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Joseph G. Passaic, Jr., Esquire
Mary M. Sjoquist, Esquire
Geoffrey W. Ryan, Esquire
Patton Boggs, L.L.P.
2550 M Street, N.W.
Washington, D.C. 20037
(202) 457-6000
--------------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be
offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. / /
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================================
Proposed Proposed
Maximum Maximum
Title of each Class of Amount to Offering Price Aggregate Registration
Securities to be Registered be Registered Per Unit(1) Offering Price(1) Fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series B 9.375% Capital Securities of UCBH Trust
Co.......................................... $30,000,000 100% $30,000,000 $8,850
- -------------------------------------------------------------------------------------------------------------------------------
Series B 9.375% Junior Subordinated Deferrable
Interest Debentures of UCBH
Holdings, Inc.(2)........................... $30,000,000 100% $30,000,000 N/A
- -------------------------------------------------------------------------------------------------------------------------------
UCBH Holdings, Inc. Series B
Guarantee with respect to Series B 9.375%
Capital Securities.......................... N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Total.......................................... $30,000,000(1) 100% $30,000,000(4) $8,850
===============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) No separate consideration will be received for the Series B 9.375% Junior
Subordinated Deferrable Interest Debentures of UCBH Holdings, Inc. (the
"Junior Subordinated Debentures") distributed upon any liquidation of
UCBH Trust Co.
(3) No separate consideration will be received for the UCBH Holdings, Inc.
Series B Guarantee.
(4) Such amount represents the liquidation amount of the UCBH Trust Co.
Series B 9.375% Capital Securities to be exchanged hereunder and the
principal amount of Junior Subordinated Debentures that may be
distributed to holders of such Capital Securities upon any liquidation of
UCBH Trust Co.
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED __________, 1998
UCBH TRUST CO.
OFFER TO EXCHANGE ITS
SERIES B 9.375% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
SERIES A 9.375% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
UCBH HOLDINGS, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON ___________, 1998,
UNLESS EXTENDED.
----------------
UCBH Trust Co., a trust created under the laws of the state of Delaware
(the "Trust"), hereby offers, upon the terms and subject to the conditions set
forth in this prospectus (as the same may be amended or supplemented from time
to time, the "Prospectus") and in the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange up to and including
$30,000,000 aggregate Liquidation Amount of its Series B 9.375% Capital
Securities (the "Exchange Capital Securities"), which have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus constitutes
a part, for a like Liquidation Amount of its outstanding Series A 9.375% Capital
Securities (the "Original Capital Securities"), of which $30,000,000 aggregate
Liquidation Amount is outstanding. Pursuant to the Exchange Offer, UCBH
Holdings, Inc., a Delaware corporation (the "Company" or "Holdings"), is also
offering to exchange (i) its guarantee of payments of cash distributions and
payments on liquidation of the Trust or redemption of the Exchange Capital
Securities (the "Exchange Guarantee") for a like guarantee in respect of the
Original Capital Securities (the "Original Guarantee") and (ii) its Series B
9.375% Junior Subordinated Deferrable Interest Debentures due May 1, 2028 (the
"Exchange Junior Subordinated Debentures") for its Series A 9.375% Junior
Deferrable Interest Debentures due
(Continued on next page)
This Prospectus and the Letter of Transmittal are first mailed to all holders of
Original Capital Securities on or about ____________, 1998.
SEE "RISK FACTORS" BEGINNING ON PAGE ___ FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER ORIGINAL CAPITAL SECURITIES
IN THE EXCHANGE OFFER.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF
A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
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 DATE OF THIS PROSPECTUS IS _________, 1998.
1
<PAGE>
(Continued from the previous page)
May 1, 2028 (the "Original Junior Subordinated Debentures"), in an aggregate
principal amount corresponding to the aggregate Liquidation Amount of Original
Capital Securities accepted for exchange, which Exchange Guarantee and Exchange
Junior Subordinated Debentures also have been registered under the Securities
Act. The Original Capital Securities, the Original Guarantee and the Original
Junior Subordinated Debentures are collectively referred to herein as the
"Original Securities" and the Exchange Capital Securities, the Exchange
Guarantee and the Exchange Junior Subordinated Debentures are collectively
referred to herein as the "Exchange Securities."
The terms of the Exchange Securities are identical in all material
respects to the respective terms of the Original Securities, except that (i) the
Exchange Securities have been registered under the Securities Act and therefore
will not be subject to certain restrictions on transfer applicable to the
Original Securities, (ii) the Exchange Capital Securities will not provide for
any increase in the Distribution rate thereon, and (iii) the Exchange Junior
Subordinated Debentures will not provide for any liquidated damages thereon. See
"Description of Exchange Securities" and "Description of Original Securities."
The Exchange Capital Securities are being offered for exchange in order to
satisfy certain obligations of the Company and the Trust under the Capital
Securities Registration Rights Agreement, dated as of April 13, 1998 (the
"Capital Securities Registration Rights Agreement"), among the Company, the
Trust and each purchaser of the Original Capital Securities (the "Purchasers").
In the event that the Exchange Offer is consummated, any Original Capital
Securities that remain outstanding after consummation of the Exchange Offer and
the Exchange Capital Securities issued in the Exchange Offer will vote together
as a single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Trust Agreement (as defined herein).
The Exchange Capital Securities and the Original Capital Securities
(together, the "Capital Securities") represent undivided beneficial interests in
the assets of the Trust. The Company is the owner of all of the beneficial
interests represented by common securities of the Trust (the "Common
Securities," and together with the Capital Securities, the "Trust Securities").
Wilmington Trust Company is the Property Trustee (the "Property Trustee") of the
Trust. The Trust exists for the sole purpose of issuing the Trust Securities and
investing the proceeds thereof in the Junior Subordinated Debentures (as defined
herein). The Exchange Junior Subordinated Debentures will mature on May 1, 2028
(the "Stated Maturity Date"). The Exchange Capital Securities will have a
preference over the Common Securities under certain circumstances with respect
to cash distributions and amounts payable on liquidation, redemption or
otherwise. See "Description of Exchange Securities--Description of Exchange
Capital Securities--Subordination of Common Securities".
As used herein, (i) the "Indenture" means the Indenture, dated as of
April 17, 1998, as amended and supplemented from time to time, between the
Company and Wilmington Trust Company, as Trustee (the "Debenture Trustee"),
relating to the Junior Subordinated Debentures and (ii) the "Trust Agreement"
means the Amended and Restated Declaration of Trust relating to the Trust, dated
as of April 17, 1998, among the Company, as Sponsor, Wilmington Trust Company,
as Property Trustee, and the Administrative Trustees named therein
(collectively, with the Property Trustee and Delaware Trustee, the "Issuer
Trustees") and the holders, from time to time, or undivided beneficial interests
in the assets or the Trust. In addition, as the context may require, (i)"Junior
Subordinated Debentures" includes the Original Junior Subordinated Debentures
and the Exchange Junior Subordinated Debentures and (ii) "Guarantee" includes
the Original Guarantee and the Exchange Guarantee.
Holders of the Exchange Capital Securities as of October 15, 1998 will
be entitled to receive cumulative cash distributions arising from the payment of
interest on the Exchange Junior Subordinated Debentures, accumulating from April
17, 1998, payable semi-annually in arrears on May 1 and November 1 of each year,
commencing November 1, 1998, at the annual rate of 9.375% of the Liquidation
Amount of $1,000 per Exchange Capital Security ("Distributions"). So long as no
Debenture Event of Default (as defined herein) has occurred and is continuing,
the Company has the right to defer payments of interest on the Exchange Junior
Subordinated Debentures for a period not exceeding 10 consecutive semi-annual
periods to each deferral period (each, an "Extension Period"), provided that an
Extension Period must end on an Interest Payment Date (as defined herein) and
may not extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Company may elect
to begin a new Extension Period, subject to the requirements set forth herein.
If and for so long as interest payments on the Exchange Junior Subordinated
Debentures are so deferred, Distributions on the Exchange Capital Securities
also will be deferred, and the Company will not be permitted, subject to certain
exceptions described
2
<PAGE>
herein, to declare or pay any cash distributions with respect to the
Corporation's capital stock or to make any payment with respect to debt
securities of the Company that rank pari passu with or junior to the Exchange
Junior Subordinated Debentures. During an Extension Period, interest on the
Junior Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Trust Securities are entitled will
continue to accumulate) at the rate of 9.375% per annum, compounded
semi-annually, and holders of the Trust Securities will be required to include
deferred interest income for United States federal income tax purposes prior to
the receipt of the cash attributable to such income on that income. See
"Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Date" and "Certain Federal Income Tax Consequences with Respect to the
Issuance of the Capital Securities--Interest Income and Original Issue
Discount."
Holdings will, through the Guarantee, the Common Guarantee, the Trust
Agreement, the Junior Subordinated Debentures, and the Indenture, taken
together, fully, irrevocably and unconditionally, guarantee or will guarantee,
as the case may be, all of the Trust's obligations under the Trust Securities.
See "Relationship Among the Exchange Capital Securities, the Exchange Junior
Subordinated Debentures and the Exchange Guarantee--Full and Unconditional
Guarantee." The Exchange Guarantee and the Common Guarantee will guarantee
payments of Distributions and payments upon liquidation of the Trust or
redemption of the Trust Securities, but in each case only to the extent that the
Trust has funds legally available therefor and has failed to make such payments,
as described herein. See "Description of Guarantee." If Holdings fails to make a
required payment on the Exchange Junior Subordinated Debentures, the Trust will
not have sufficient funds to make the related payments, including Distributions,
on the Trust Securities. The Exchange Guarantee and the Common Guarantee will
not cover any such payment when the Trust does not have sufficient funds legally
available therefor. In such event, a holder of Exchange Capital Securities may
institute a legal proceeding directly against Holdings to enforce its rights in
respect of such payment. See "Description of Exchange Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Exchange Capital
Securities." The obligations of Holdings under the Exchange Guarantee, the
Common Guarantee and the Exchange Junior Subordinated Debentures will be
unsecured and will rank subordinate and junior in right of payment to all Senior
Indebtedness (as defined in "Description of Exchange Junior Subordinated
Debentures--Subordination"). The ability of Holdings to make required payments
on the Exchange Junior Subordinated Debentures will depend, in large part, on
its receipt of dividends from the Bank, the wholly-owned subsidiary of Holdings.
See "Use of Proceeds" and "Risk Factors--Ranking of Subordinated Obligations
Under the Exchange Guarantee and the Exchange Junior Subordinated Debentures;
Limitations on Sources of Funds."
The Trust Securities will be subject to mandatory redemption in a Like
Amount (as defined herein): (i) in whole but not in part, on the Stated Maturity
Date upon repayment of the Exchange Junior Subordinated Debentures at a
redemption price equal to the principal amount of, plus accrued and unpaid
interest on, the Exchange Junior Subordinated Debentures (the "Maturity
Redemption Price"); (ii) in whole but not in part, at any time prior to May 1,
2005 (the "Initial Optional Prepayment Date"), contemporaneously with the
optional prepayment of the Exchange Junior Subordinated Debentures by Holdings,
upon the occurrence and continuation of a Special Event (as defined herein) at a
redemption price equal to, for each Exchange Capital Security, the Special Event
Prepayment Price (as defined herein) for a corresponding $1,000 principal amount
of Exchange Junior Subordinated Debenture (the "Special Event Redemption
Price"); and (iii) in whole or in part, on or after the Initial Optional
Prepayment Date, contemporaneously with the optional prepayment by Holdings of
all or part of the Exchange Junior Subordinated Debentures, at a redemption
price equal to, for each Exchange Capital Security to be redeemed, the Optional
Prepayment Price (as defined herein) for a corresponding $1,000 principal amount
of Exchange Junior Subordinated Debentures (the "Optional Redemption Price").
Any of the Maturity Redemption Price, the Special Event Redemption Price and the
Optional Redemption Price may be referred to herein as the "Redemption Price."
See "Description of Exchange Capital Securities--Redemption."
Subject to Holdings having received any required regulatory approval,
the Exchange Junior Subordinated Debentures will be prepayable prior to the
Stated Maturity Date at the option of Holdings; (i) on or after the Initial
Optional Prepayment Date, in whole or in part, at 100% of the principal amount
thereof, plus accrued and unpaid interest thereon to the date of prepayment (the
"Optional Prepayment Price"); or (ii) at any time prior to the Initial Optional
Prepayment Date, in whole but not in part, upon the occurrence and continuation
of a Special Event, at a prepayment price (the "Special Event Prepayment Price")
equal to the Make-Whole Amount (as defined below). The "Make-Whole Amount" shall
be equal to the greater of (a) 100% of the principal amount of the Exchange
Junior Subordinated Debentures or (b) the sum, as determined by a Quotation
Agent (as defined herein), of the present values of the remaining scheduled
payments of principal and interest on the Exchange Junior Subordinated
Debentures, discounted
3
<PAGE>
to the prepayment date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined
herein) plus, in the case of each of clauses (a) and (b), accrued and unpaid
interest thereon to the date of prepayment. Either of the Optional Prepayment
Price or the Special Event Prepayment Price may be referred to herein as the
"Prepayment Price." See "Description of Exchange Junior Subordinated
Debentures--Optional Prepayment" and "--Special Event Prepayment."
Holdings has the right at any time, including without limitation upon
the occurrence of a Tax Event (as defined herein) to terminate the Trust and,
after satisfaction of liabilities of creditors of the Trust as required by
applicable law, to cause a Like Amount of the Junior Subordinated Debentures to
be distributed to the holders of the Trust Securities in liquidation of the
Trust, subject to (i) Holdings having received an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of Exchange
Capital Securities and (ii) the receipt of any required regulatory approvals.
Unless the Junior Subordinated Debentures are distributed to the holders of the
Trust Securities, in the event of a liquidation of the Trust as described
herein, after satisfaction of liabilities to creditors of the Trust as required
by applicable law, the holders of the Trust Securities generally will be
entitled to receive $1,000 per Trust Security plus accumulated and unpaid
Distributions thereon to the date of payment. See "Description of Exchange
Capital Securities--Liquidation of the Trust and Distribution of Exchange Junior
Subordinated Debentures."
THE CAPITAL SECURITIES, INCLUDING THE EXCHANGE CAPITAL SECURITIES, MAY
BE TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN
$100,000 (100 CAPITAL SECURITIES), OR ANY INTEGRAL MULTIPLE OF $1,000
LIQUIDATION AMOUNT (1 CAPITAL SECURITY). ANY ATTEMPTED TRANSFER OF EXCHANGE
CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000
SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH EXCHANGE CAPITAL
SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF
DISTRIBUTIONS ON SUCH EXCHANGE CAPITAL SECURITIES, AND SUCH PURPORTED TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH EXCHANGE CAPITAL
SECURITIES.
The Trust is making the Exchange Offer in reliance on the position of
the staff of the Division of Corporation Finance (the "Staff') of the Securities
and Exchange Commission (the "Commission") as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither the
Company nor the Trust has sought its own interpretive letter and there can be no
assurance that the Staff of the Commission would make a similar determination
with respect to the Exchange Offer as it has in such interpretive letters to
third parties. Based on these interpretations by the Staff of the Commission,
and subject to the two immediately following sentences, the Company and the
Trust believe that Exchange Capital Securities issued pursuant to this Exchange
Offer in exchange for Original Capital Securities may be offered for resale,
resold and otherwise transferred by a holder thereof (other than a holder who is
a broker-dealer) without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such Exchange Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. However, any holder of
Original Capital Securities who is an "affiliate" of the Company or the Trust or
who intends to participate in the Exchange Offer for the purpose of distributing
Exchange Capital Securities, or any broker-dealer who purchased Original Capital
Securities from the Trust for resale pursuant to Rule 144A under the Securities
Act ("Rule 144A") or any other available exemption under the Securities Act, (i)
will not be able to rely on the interpretations of the Staff of the Commission
set forth in the above-mentioned interpretive letters, (ii) will not be
permitted or entitled to tender such Original Capital Securities in the Exchange
Offer and (iii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Original Capital Securities unless such sale is made pursuant to an
exemption from such requirements. In addition, as described herein, if any
broker-dealer holds Original Capital Securities acquired for its own account as
a result of market-making or other trading activities and exchanges such
Original Capital Securities for Exchange Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such Exchange Capital
Securities.
Each holder of Original Capital Securities who wishes to exchange
Original Capital Securities for Exchange Capital Securities in the Exchange
Offer will be required to represent that (i) it is not an "affiliate" of the
Company or the Trust, (ii) any Exchange Capital Securities to be received by it
are being acquired in the ordinary course of its
4
<PAGE>
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of such
Exchange Capital Securities, and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such Exchange Capital Securities.
In addition, the Company and the Trust may require such holder, as a condition
to such holder's eligibility to participate in the Exchange Offer, to furnish to
the Company and the Trust (or an agent thereof) in writing information as to the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), on behalf of
whom such holder holds the Original Capital Securities to be exchanged in the
Exchange Offer. Each broker-dealer that receives Exchange Capital Securities for
its own account pursuant to the Exchange Offer must acknowledge that it acquired
the Original Capital Securities for its own account as the result of market
making activities or other trading activities and must agree that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Capital Securities. The Letter of
Transmittal states that, by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the Staff of the
Commission in the interpretive letters referred to above, the Company and the
Trust believe that broker-dealers who acquired Original Capital Securities for
their own accounts, as a result of market-making activities or other trading
activities ("Participating Broker-Dealers"), may fulfill their prospectus
delivery requirements with respect to the Exchange Capital Securities received
upon exchange of such Original Capital Securities (other than Original Capital
Securities which represent an unsold allotment from the initial sale of the
Original Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such Exchange Capital Securities. Each broker-dealer that receives
Exchange Capital Securities for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any resale
of such Exchange Capital Securities. The Letter of Transmittal states that, by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of Exchange Capital
Securities received in exchange for Original Capital Securities acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Trust and the Company have agreed that, ending on the close of
business on the 90th day following the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution." However, a Participating
Broker-Dealer who intends to use this Prospectus in connection with the resale
of Exchange Capital Securities received in exchange for Original Capital
Securities pursuant to the Exchange Offer must notify the Company or the Trust,
or cause the Company or the Trust to be notified, on or prior to the Expiration
Date, that it is a Participating Broker-Dealer. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or may be delivered
to Wilmington Trust Company (the "Exchange Agent") at the address set forth
herein under "The Exchange Offer--Exchange Agent." Any Participating
Broker-Dealer who is an "affiliate" of the Company or the Trust may not rely on
such interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer--Resales of Exchange Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders
Original Capital Securities pursuant to the Exchange Offer will be deemed to
have agreed, by execution of the Letter of Transmittal, that upon receipt of
notice from the Company or the Trust of the occurrence of any event or the
discovery of any fact that (i) makes any statement contained or incorporated by
reference in this Prospectus untrue in any material respect or (ii) causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference herein, in the light of the
circumstances under which they were made, not misleading, or upon the occurrence
of certain other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of Exchange Capital Securities
(or the Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) pursuant to this Prospectus until the Company or the Trust has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer, or the Company or the Trust has given notice that
the sale of the Exchange Capital Securities (or the Exchange Guarantee or the
Exchange Junior Subordinated Debentures, as applicable) may be resumed, as the
case may be. If the Company or the Trust gives such notice to suspend the sale
of the Exchange Capital Securities (or the Exchange Guarantee or the Exchange
Junior Subordinated Debentures, as applicable), it shall extend the 90-day
period referred to above during which Participating Broker-Dealers are entitled
to use this Prospectus in connection with the resale of Exchange Capital
Securities by the number of days during the period from and including the date
of the giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the
5
<PAGE>
amended or supplemented Prospectus necessary to permit resales of the Exchange
Capital Securities or to and including the date on which the Company or the
Trust has given notice that the sale of Exchange Capital Securities (or the
Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Original Capital Securities. The Exchange
Capital Securities will be a new issue of securities for which there currently
is no market. Accordingly, there can be no assurance as to the development or
liquidity of any market for the Exchange Capital Securities. The Company and the
Trust do not intend to apply for listing of the Exchange Capital Securities on
any securities exchange or for inclusion in the NASDAQ Stock Market, the
electronic securities market operated by the National Association of Securities
Dealers, Inc. ("NASDAQ").
Any Original Capital Securities not tendered and accepted in the
Exchange Offer will remain outstanding and will be entitled to all the same
rights and will be subject to the same limitations applicable thereto under the
Trust Agreement (except for those rights which terminate upon consummation of
the Exchange Offer). Following consummation of the Exchange Offer, the holders
of Original Capital Securities will continue to be subject to all of the
existing restrictions upon transfer thereof and neither the Company nor the
Trust will have any further obligation to such holders (other than under certain
limited circumstances) to provide for registration under the Securities Act of
the Original Capital Securities held by them. To the extent that Original
Capital Securities are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Original Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Original
Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER.
Original Capital Securities may be tendered for exchange on or prior to
5:00 p.m., New York City time, on _________, 1998 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Company or the Trust (in which case the term "Expiration Date" shall mean
the latest date and time to which the Exchange Offer is extended). Tenders of
Original Capital Securities may be withdrawn at any time prior to the Expiration
Date. The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Original Capital Securities being tendered for exchange. However, the
Exchange Offer is subject to certain events and conditions which may be waived
by the Company or the Trust and to the terms and provisions of the Capital
Securities Registration Rights Agreement. Original Capital Securities may be
tendered in whole or in part having an aggregate Liquidation Amount of not less
than $100,000 (100 Capital Securities) or any integral multiple of $1,000
Liquidation Amount (one Capital Security) in excess thereof. The Company has
agreed to pay all expenses of the Exchange Offer. See "The Exchange Offer--Fees
and Expenses." Holders of the Original Capital Securities whose Original Capital
Securities are accepted for exchange prior to October 15, 1998 will not receive
Distributions on such Original Capital Securities and will be deemed to have
waived the right to receive any Distributions on such Original Capital
Securities accumulated from and including April 17, 1998. See "The Exchange
Offer--Distributions on the Exchange Capital Securities."
The Original Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed with
the Commission by August 14, 1998 and declared effective by the Commission by
October 16, 1998, the Distribution rate borne by the Original Capital Securities
will increase by 0.25% until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, holders of Original Capital Securities will
not be entitled to any increase in the Distribution rate thereon or any further
registration rights under the Capital Securities Registration Rights Agreement,
except under limited circumstances. See "Description of Original Securities."
Neither the Company nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
6
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information and the Company's Consolidated
Financial Statements, including the Notes thereto, appearing elsewhere in this
Prospectus.
The Company
The Company is a Delaware corporation and conducts business as a
unitary savings and loan holding company, the sole subsidiary of which is the
Bank. The Company's assets consist primarily of all of the issued and
outstanding common stock of the Bank.
Since its founding in 1974, the Company has grown to total assets of
$1.56 billion, total deposits of $1.46 billion and stockholders' equity of $64.6
million at March 31, 1998. The Bank currently has 25 retail banking offices in
the state of California, located in areas with high concentrations of ethnic
Chinese, including the San Francisco Bay area (which includes Oakland), and the
Sacramento/Stockton and Los Angeles metropolitan areas. After giving effect to
the recent consolidation activity in California and based on asset size, the
Bank is the tenth largest thrift institution in California and the third largest
financial institution focused on serving the ethnic Chinese market within
California.
Substantially all of the Bank's loans are secured by real property. At
March 31, 1998, approximately $716.5 million, or 58% of the Bank's gross loan
portfolio were secured by residential properties (1-4 family), approximately
$336.2 million, or 27% of the Bank's gross loans were secured by commercial real
estate-multi-family mortgages, and $112.7 million, or 9% of the Bank's gross
loans were secured by commercial real estate-non-residential. The Bank's
deposits are obtained primarily from ethnic Chinese individuals and small and
medium sized businesses, business executives and professionals. As a result of
its focus on these deposit sources, at March 31, 1998, the Bank was able to
achieve a cost of funds approximately 57 basis points below the Eleventh
District Cost of Funds Index ("COFI"). Based upon June 30, 1997, FDIC deposit
market share data, the Bank believes it has the leading deposit market share in
the principal ethnic Chinese market within Oakland and is among the leaders in
deposit market share in the principal ethnic Chinese markets within the San
Francisco Bay area.
Through its network of banking offices, the Bank provides a wide range
of personal and commercial banking services to small and medium sized
businesses, business executives, professional and other individuals in the
financial services, professional services, real estate construction, computer
and semi-conductor manufacturing, and wholesale and retail trade industries. The
Bank offers a variety of deposit products, from traditional savings and business
accounts to the specialized services designed to serve the personal banking
needs of its customers. The Bank also engages in a full complement of lending
activities, including residential and commercial real estate, construction,
commercial and consumer credit facilities and working capital loans. The Bank
offers Chinese multilingual services to all of its customers.
Historically, the Bank has operated as a traditional thrift engaged
primarily in mortgage banking activities and the origination of residential
mortgages (1-4 family) which were generally pooled and sold in the secondary
market, with loan servicing rights retained. From time to time, the Bank sold
its loan servicing rights and also purchased agency servicing rights in
connection with its mortgage banking activities. Since 1993, the Bank has also
specialized in the origination of limited documentation residential mortgages
(1-4 family). The Bank has historically maintained a heavy concentration of
assets with interest rates based on COFI, which generally lags market interest
rate changes and which can suppress net interest margins during periods of
rapidly escalating interest rates. From 1993 to 1995, the Bank experienced a
decline in earnings primarily as a result of (i) depressed net interest margins
due to COFI-indexed assets and a larger volume of LIBOR-based borrowings; (ii)
an increase in the Bank's allowance for loan losses; and (iii) the competitive
pressures in the mortgage banking business. In addition, in 1996, the Bank's
earnings were reduced by the payment of a onetime $7.7 million Savings
Association Insurance Fund ("SAIF") recapitalization assessment.
From 1995 to March 1998, the Company experienced steady growth in its
net interest income. Notwithstanding this improvement in net interest income,
the Company's net income was adversely impacted by a $7.7 million SAIF
recapitalization assessment in 1996 and an $8.8 million provision for loan
losses during 1995. The $8.8 million provision for loan losses was $4.1 million
greater than the five year average provision for loan losses of $4.7 million and
was recorded to address the continued depressed California economy and real
estate market and to significantly increase the Company's overall level of
allowance for loan losses to over 1.00% of gross loans. Without giving effect
7
<PAGE>
to the SAIF recapitalization assessment, in 1996, the Company's net income would
have amounted to $4.3 million as compared to the $306,000 actual net loss.
Balance Sheet Restructuring
In recent years, the mortgage banking industry became highly
competitive and, combined with the availability of more efficient delivery
systems through brokers and the Internet, the industry has experienced shrinking
profit margins and reduced loan servicing values. Higher levels of prepayment
activity resulting from the lower interest rate environment and the willingness
of lenders to offer mortgage loans with no points and, in many cases, no fees,
have reduced servicing values. To respond to these market factors and to improve
the long-term prospects of the Bank, the Bank since 1995 has taken the following
measures:
COFI Asset Reduction. In the fourth quarter of 1996, the Bank ceased
all COFI-based mortgage lending and began to reduce the Bank's COFI-based
mortgage-backed securities portfolio. From December 31, 1996 to March 31, 1998,
COFI-based loans have been reduced from 60.2% of the Bank's total gross loan
portfolio to 43.0%. From December 31, 1996 to March 31, 1998, total COFI
exposure has been reduced from 64.9% of the Bank's interest-earning assets to
51.3%.
Closure of Mortgage Banking Division. In 1997, the Bank closed its
mortgage banking division and ceased the origination of nonconventional mortgage
loans (i.e., loans insured by the Federal Housing Administration or partially
guaranteed by the Veterans Administration) for sale in the secondary market and
sold its agency loan servicing portfolio. While the Bank no longer engages in
the origination of nonconventional mortgage loans, the Bank continues to
originate conventional residential mortgage loans for portfolio retention and
conforming mortgage loans for resale in the secondary market through its retail
branching networks. See "Business--Lending Activities."
Reduced Non-Performing and Non-Interest Earning Assets. The Bank
reduced its non-performing assets from $22.3 million as of December 31, 1995, to
$9.1 million as of March 31, 1998, and reduced non-interest-earning assets from
$68.0 million as of December 31, 1995, to $49.9 million as of March 31, 1998.
Reduced Mismatched Borrowings. The Bank reduced its predominantly high
cost LIBOR-based borrowings (which were mismatched with COFI-based assets) from
$265.3 million at the beginning of 1995 to zero at December 31, 1996 and 1997
and at March 31, 1998.
Implementation of Strategy
In conjunction with the implementation of the balance sheet
restructuring described above which returned the Bank to profitability in 1996,
excluding the one-time SAIF recapitalization assessment, to further improve the
Bank's long-term prospects and to take advantage of the Bank's significant
deposit market share and the potential cross selling opportunities to the ethnic
Chinese and Asian communities within its market area, the Board of Directors
adopted a business strategy to shift the primary business focus of the Bank from
a traditional thrift to a full service commercial banking operation. To
implement its business strategy, the Bank took the actions and adopted the
initiatives outlined below.
Management. The Bank realigned senior management responsibilities, and
hired commercial banking officers and Small Business Administration ("SBA")
business banking officers with lending experience in the Bank's market area. See
"Management of the Company and the Bank."
Established Commercial Banking Division. In 1996, to take advantage of
the opportunities in the Bank's targeted markets, the Bank established its
commercial banking division to offer an array of commercial bank services and
products to its customers particularly focused on the ethnic Chinese
communities. Since its establishment, the commercial banking division has
originated approximately $101.4 million in commercial loan commitments and has
$70.4 million in outstanding loans as of May 31, 1998. As of June 24, 1998, the
division had a current committed pipeline of approximately $129 million. To
support its commercial banking activities, the Bank acquired a commercial
banking data processing system to replace a system designed for thrift
institutions. The new system provides customer profitability reports, account
analysis and other commercial banking management tracking and reporting
mechanisms. The installation of this new system was completed in February 1998.
The Bank installed software to enhance commercial real estate loan marketing and
development. The PC based system provides key information on substantially all
commercial real estate transactions in the Bank's market area in California. The
software provides information
8
<PAGE>
instrumental to identifying lending and refinancing opportunities, screening
potential credit opportunities and evaluating collateral values to facilitate
efficient solicitation of borrowers and related depository relationships from
commercial and multi-family property owners. The Bank anticipates opening a
commercial, construction and SBA lending office in Pasadena, California during
the second quarter of 1998. In addition to other personnel, the Bank has hired a
team of three experienced SBA business banking officers to staff the Pasadena
office. These officers were previously affiliated with one of the leading
lenders focusing on SBA lending to Asians.
Core Deposit Solicitation. To further develop the Bank's core deposit
base, the Bank is evaluating the establishment of mini-branches in or adjacent
to Asian supermarkets in selected target market areas. By continuing to
emphasize multilingual services at its automated teller machines ("ATMs"),
through its telephone banking system and by its customer service and loan
officers, the Bank expects to continue to further expand its presence in the
Asian, and specifically the ethnic Chinese, markets in California. At March 31,
1998, less than 2% of the Bank's deposits were held by customers located outside
the United States. In addition, as of such date, the 100 depositors with the
largest aggregate average deposit balances comprised less than 10% of the Bank's
total deposits. The Bank also expects to increase its business accounts as the
commercial lending portfolio grows and correspondent account relationships are
established.
Capital Enhancement. On April 17, 1998, the Company completed a $140.0
million placement of its Common Stock and a $30.0 million placement of 9.375%
Capital Securities through UCBH Trust Co. (together the "Private Offerings").
The Private Offerings were consummated pursuant to Rule 506 of Regulation D,
Regulation S and Rule 144A under the Security Act. At March 31, 1998, the
Company's stockholders' equity was $64.6 million, or 4.2% of total assets. Prior
to the Private Offerings, Chief Investments Limited and United Holdings Int'l,
Ltd. (the "Selling Shareholders") owned in the aggregate 100% of the Common
Stock of Holdings and 100% of the Notes (as defined below). In connection with
the Private Offerings, the Company exchanged its Common Stock for $20.6 million
of Holdings' senior debt plus accrued interest (the "Notes") and subsequently
used $120.0 million of the proceeds of the Private Offerings to redeem all
shares of Common Stock outstanding, including those shares of Common Stock
issued to the Selling Shareholders in exchange for the Notes (the "Redemption").
As a result, the Selling Shareholders are no longer affiliated with the Company
or the Bank. Following the Private Offerings and the Redemption, the Company's
stockholders' equity increased to $94.5 million and the Company's consolidated
Tier 1 capital increased from $63.9 million at December 31, 1997 to $125.4
million. See "Supervision and Regulation--Savings Institution Regulations--
Regulatory Capital Requirements."
Charter Conversion. In the first quarter of 1998, the Bank changed its
name to United Commercial Bank to reflect the Bank's new emphasis on providing
commercial banking services to its customers. As part of its strategy to shift
its business focus from mortgage banking to commercial banking, management
submitted amended applications to the California Department of Financial
Institutions and the Federal Reserve Bank of San Francisco in June 1998 to
convert the Bank to a California-chartered commercial bank and the Company to a
bank holding company.
As a result of the measures taken to effect the Bank's shift in its
primary business focus from mortgage banking to commercial banking, and the
implementation of its strategic initiatives, management believes that the Bank
is and will continue to be well positioned to take advantage of the
opportunities in its market area and particularly in the growing ethnic Chinese
market in California.
The Company, as a registered savings and loan holding company, is
subject to examination and regulation by the Office of Thrift Supervision (the
"OTS"). The Bank, as a federally chartered savings bank, is subject to
comprehensive regulation and examination by the OTS, as its chartering authority
and primary regulator, and by the FDIC, which administers the SAIF, which
insures the Bank's deposits to the maximum extent permitted by law. The Bank is
a member of the Federal Home Loan Bank ("FHLB") of San Francisco, which is one
of the 12 regional banks which comprise the FHLB system. The Bank is further
subject to regulations of the Board of Governors of the Federal Reserve System
("Federal Reserve Board") governing reserves required to be maintained against
deposits and certain other matters. See "Supervision and Regulation."
The Company's executive offices are located at 711 Van Ness Avenue, San
Francisco, California 94102 and its main telephone number is (415) 928-0700.
9
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<CAPTION>
<S> <C>
The Exchange Offer........................................ Up to and including $30,000,000 aggregate
Liquidation Amount of Exchange Capital Securities
are being offered in exchange for a like aggregate
Liquidation Amount of Original Capital Securities.
Original Capital Securities may be tendered for
exchange in whole or in part in a Liquidation
Amount of $100,000 (100 Capital Securities) or any
integral multiple of $1,000 (one Capital Security) in
excess thereof. The Company and the Trust are
making the Exchange Offer in order to satisfy their
obligations under the Capital Securities Registration
Rights Agreement relating to the Original Capital
Securities. For a description of the procedures for
tendering Original Capital Securities, see "The
Exchange Offer--Procedures for Tendering Original
Capital Securities."
Expiration Date........................................... 5:00 p.m., New York City time, on ____________,
1998 unless the Exchange Offer is extended by the
Company and the Trust (in which case the
Expiration Date will be the latest date and time to
which the Exchange Offer is extended). See "The
Exchange Offer--Terms of the Exchange Offer."
Conditions to the Exchange Offer.......................... The Exchange Offer is subject to certain conditions,
which may be waived by the Company and the
Trust in their sole discretion. The Exchange Offer
is not conditioned upon any minimum Liquidation
Amount of Original Capital Securities being
tendered. See "The Exchange Offer--Conditions to
the Exchange Offer."
Terms of the Exchange Offer............................... The Company and the Trust reserve the right in their
sole and absolute discretion, subject to applicable
law, at any time and from time to time, (i) to delay
the acceptance of the Original Capital Securities, (ii)
to terminate the Exchange Offer if certain specified
conditions have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain all
Original Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the right of
holders of Original Capital Securities to withdraw
their tendered Original Capital Securities, (iv) to
waive any condition, or (v) amend the terms of the
Exchange Offer, subject to the Capital Securities
Registration Rights Agreement, in any respect. See
"The Exchange Offer--Terms of the Exchange Offer."
Withdrawal Rights......................................... Tenders of Original Capital Securities may be
withdrawn at any time prior to the Expiration Date
by delivering a written notice of such withdrawal to
the Exchange Agent in conformity with certain
procedures as set forth herein under "The Exchange
Offer--Withdrawal Rights."
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Procedures for Tendering
Original Capital Securities............................ Certain brokers, dealers, commercial banks, trust
companies and other nominees (each, a
"Custodian") who hold Original Capital Securities
through The Depository Trust Company ("DTC")
must effect tenders by book entry transfer through
DTC's Automated Tender Offer Program ("ATOP").
Beneficial owners of Original Capital Securities
registered in the name of a Custodian are urged to
contact such Custodian promptly if they wish to
tender Original Capital Securities pursuant to the
Exchange Offer. Tendering holders of Original
Capital Securities that do not use ATOP must
complete and sign a Letter of Transmittal in
accordance with the instructions contained therein
and forward the same by mail, facsimile
transmission or hand delivery, together with any
other required documents, to the Exchange Agent,
either with the certificates of the Original Capital
Securities to be tendered or in compliance with the
specified procedures for guaranteed delivery of
Original Capital Securities. Tendering holders of
Original Capital Securities that use ATOP will, by
so doing, acknowledge that they are bound by the
terms of the Letter of Transmittal. See "The
Exchange Offer--Procedures for Tendering Original
Capital Securities."
Letters of Transmittal and certificates representing
Original Capital Securities should not be sent to
the Company or the Trust. Such documents should only
be sent to the Exchange Agent.
Resales of Exchange Capital Securities.................... The Company and the Trust are making the
Exchange Offer in reliance on the position of the
Staff of the Commission as set forth in certain
interpretive letters addressed to third parties in other
transactions. However, neither the Company nor the
Trust has sought its own interpretive letter and there
can be no assurance that the Staff of the
Commission would make a similar determination
with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these
interpretations by the Staff of the Commission, and
subject to the two immediately following sentences,
the Company and the Trust believe that Exchange
Capital Securities issued pursuant to this Exchange
Offer in exchange for Original Capital Securities
may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder
who is a broker-dealer) without further compliance
with the registration and prospectus delivery
requirements of the Securities Act, provided that
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
such Exchange Capital Securities are acquired in the
ordinary course of such holder's business and that
such holder is not participating, and has no
arrangement or understanding with any person to
participate, in a distribution (within the meaning
of the Securities Act) of such Exchange Capital
Securities. However, any holder of Original Capital
Securities who is an "affiliate" of the Company or
the Trust or who intends to participate in the
Exchange Offer for the purpose of distributing the
Exchange Capital Securities, or any broker-dealer
who purchased the Original Capital Securities from
the Trust for resale pursuant to Rule 144A or any
other available exemption under the Securities Act,
(i) will not be able to rely on the interpretations
of the Staff of the Commission set forth in the
above-mentioned interpretive letters, (ii) will not
be permitted or entitled to tender such Original
Capital Securities in the Exchange Offer and (iii)
must comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any sale or other transfer of such
Original Capital Securities unless such sale is made
pursuant to an exemption from such requirements. In
addition, as described herein, if any broker-dealer
holds Original Capital Securities acquired for its
own account as a result of market-making or other
trading activities and exchanges such Original
Capital Securities for Exchange Capital Securities,
then such broker-dealer must deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resales of such Exchange Capital
Securities.
Each holder of Original Capital Securities who
wishes to exchange Original Capital Securities for
Exchange Capital Securities in the Exchange Offer
will be required to represent that (i) it is not an
"affiliate" of the Company or the Trust, (ii) any
Exchange Capital Securities to be received by it are
being acquired in the ordinary course of its
business, (iii) it has no arrangement or
understanding with any person to participate in a
distribution (within the meaning of the Securities
Act) of such Exchange Capital Securities, and (iv)
if such holder is not a broker-dealer, such holder
is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities
Act) of such Exchange Capital Securities. Each
broker-dealer that receives Exchange Capital
Securities for its own account in exchange for
Original Capital Securities, where such Original
Capital Securities were acquired by such
broker-dealer as a result of market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus
meeting the requirements of the Exchange Act in
connection with any resale of such Exchange Capital
Securities. See "Plan of
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Distribution." The Letter of Transmittal states
that, by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning
of the Securities Act. Based on the position taken
by the Staff of the Commission in the interpretive
letters referred to above, the Company and the Trust
believe that Participating Broker-Dealers who
acquired Original Capital Securities for their own
accounts as a result of market-making activities or
other trading activities may fulfill their
prospectus delivery requirements with respect to the
Exchange Capital Securities received upon exchange
of such Original Capital Securities (other than
Original Capital Securities that represent an unsold
allotment from the initial sale of the Original
Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the
prospectus prepared for an exchange offer so long as
it contains a description of the plan of
distribution with respect to the resale of such
Exchange Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of Exchange
Capital Securities received in exchange for Original
Capital Securities where such Original Capital
Securities were acquired by such Participating
Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject
to certain provisions set forth in the Capital
Securities Registration Rights Agreement and to the
limitations described herein under "The Exchange
Offer-Resales of Exchange Capital Securities," the
Company and the Trust have agreed that this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such
Exchange Capital Securities for a period ending 90
days after the Expiration Date (subject to extension
under certain limited circumstances) or, if earlier,
when all such Exchange Capital Securities have been
disposed of by such Participating Broker- Dealer.
See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of the Company
or the Trust may not rely on such interpretive
letters and must comply with the registration and
prospectus delivery requirements of the Securities
Act in connection with any resale transaction. See
"The Exchange Offer--Resales of Exchange Capital
Securities."
Exchange Agent............................................ The Exchange Agent with respect to the Exchange
Offer is Wilmington Trust Company. The address,
and telephone and facsimile number of the
Exchange Agent are set forth in "The Exchange
Offer--Exchange Agent" and in the Letter of
Transmittal.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Use of Proceeds........................................... Neither the Company nor the Trust will receive any
cash proceeds from the issuance of the Exchange
Capital Securities offered hereby. See "Use of
Proceeds."
Certain U.S. Federal Income
Tax Considerations..................................... The exchange of Original Capital Securities for
Exchange Capital Securities should not be a taxable
exchange for U.S. federal income tax purposes, and
holders should not recognize any taxable gain or
loss or any interest income as a result of such
exchange. See "Certain U.S. Federal Income Tax
Consequences--Exchange of Capital Securities."
ERISA Considerations...................................... Holders of Original Capital Securities should review
the information set forth under "ERISA
Considerations" prior to tendering Original Capital
Securities in the Exchange Offer.
</TABLE>
THE EXCHANGE CAPITAL SECURITIES
<TABLE>
<CAPTION>
<S> <C>
Securities Offered........................................ Up to and including $30,000,000 aggregate
Liquidation Amount of Exchange Capital
Securities (Liquidation Amount $1,000 per
Exchange Capital Security) will have been
registered under the Securities Act. The
Exchange Capital Securities will be issued, and
the Original Capital Securities were issued, under
the Trust Agreement. The Exchange Capital
Securities and any Original Capital Securities that
remain outstanding after consummation of the
Exchange Offer will vote together as a single
class for purposes of determining whether holders
of the requisite percentage in outstanding
Liquidation Amount thereof have taken certain
actions or exercised certain rights under the Trust
Agreement. See "Description of Exchange
Capital Securities--Voting Rights; Amendment
of the Trust Agreement." The terms of the
Exchange Capital Securities are identical in all
material respects to the terms of the Original
Capital Securities, except that the Exchange
Capital Securities have been registered under the
Securities Act, will not be subject to certain
restrictions on transfer applicable to the Original
Capital Securities and will not provide for any
increase in the Distribution Rate thereon. See
"The Exchange Offer--Purpose and Effect of the
Exchange Offer," "Description of Exchange
Securities" and "Description of Original
Securities."
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Distribution Dates........................................ May 1 and November 1 of each year, commencing on
November 1, 1998.
Extension Periods......................................... So long as no Debenture Event of Default (as
defined herein) has occurred and is continuing,
Distributions on Exchange Capital Securities will
be deferred for the duration of any Extension
Period elected by Holdings with respect to the
payment of interest on the Exchange Junior
Subordinated Debentures. No Extension Period
will exceed ten (10) consecutive semi-annual
periods, end on a date other than an Interest
Payment Date or extend beyond the Stated
Maturity Date. During an Extension Period, the
holders of Exchange Capital Securities will be
required to include deferred interest income in
their gross income for United States federal
income tax purposes in advance of any
corresponding cash distributions. See
"Description of Exchange Junior Subordinated
Debentures--Option to Extend Interest Payment
Date" and "Certain Federal Income Tax
Consequences with Respect to the Issuance of the
Exchange Capital Securities--Interest Income and
Original Issue Discount."
Ranking................................................... The Exchange Capital Securities will rank pari
passu, and payments thereon will be made pro
rata, with the Original Capital Securities and the
Common Securities, except as described under
"Description of Exchange Capital Securities--
Subordination of Common Securities." The
Exchange Junior Subordinated Debentures will
rank pari passu with the Original Junior
Subordinated Debentures and all other junior
subordinated debentures (if any) issued by
Holdings (the "Other Debentures"), which are
issued and sold (if at all) to other trusts
established by Holdings (if any), in each case
similar to the Trust ("Other Trusts"), and will
constitute unsecured obligations of Holdings and
will rank subordinate and junior in right of
payment to all Senior Indebtedness (as defined
herein) to the extent and in the manner set forth in
the Indenture. The Exchange Guarantee will rank
pari passu with the Original Guarantee and all
other guarantees (if any) issued by Holdings with
respect to Capital Securities (if any) issued by
Other Trusts ("Other Guarantees") and will
constitute an unsecured obligation of Holdings
and will rank subordinate and junior in right of
payment to all Senior Indebtedness to the extent
and in the manner set forth in the Exchange
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Guarantee, including the Bank's deposit liabilities.
See "Description of Exchange Guarantee." In
addition, because Holdings is a holding company, the
Exchange Junior Subordinated Debentures and the
Exchange Guarantee will be effectively subordinated
to all existing and future liabilities of Holdings'
subsidiaries, including the Bank's deposit
liabilities. See "Description of Exchange Junior
Subordinated Debentures--Subordination."
Redemption................................................ The Trust Securities will be subject to mandatory
redemption in a Like Amount: (i) in whole but not
in part, on the Stated Maturity Date upon
repayment of the Junior Subordinated
Debentures; (ii) in whole but not in part, at any
time prior to May 1, 2005, contemporaneously
with the optional prepayment of the Junior
Subordinated Debentures by Holdings upon the
occurrence and continuation of a Special Event
(as defined herein); and (iii) in whole or in part,
on or after May 1, 2005, contemporaneously with
the optional prepayment by Holdings of all or part
of the Junior Subordinated Debentures, at the
Optional Redemption Price. See "Description of
Exchange Capital Securities--Redemption" and
"Description of Exchange Junior Subordinated
Debentures--Special Event Prepayment."
ERISA Considerations...................................... Prospective purchasers must carefully consider
the restrictions on purchase set forth under
"ERISA Considerations."
Transfer Restrictions..................................... The Exchange Capital Securities will be issued,
and may be transferred, only in blocks having a
Liquidation Amount of not less than $100,000
(100 Capital Securities) or any integral multiple
of $1,000 Liquidation Amount (one Exchange
Capital Security) in excess thereof. See
"Description of Exchange Capital Securities--
Restrictions on Transfer." Any such transfer of
Exchange Capital Securities in a block having a
Liquidation Amount of less than $100,000 shall
be deemed to be void and of no legal effect
whatsoever.
Absence of Market for the Capital
Securities............................................. The Exchange Capital Securities will be a new
issue of securities for which there currently is no
market. Accordingly, there can be no assurance as
to the development or liquidity of any market for
the Exchange Capital Securities. The Trust and
Holdings do not intend to apply for listing of the
Exchange Capital Securities on any securities
exchange or for quotation through the NASDAQ
Stock Market. See "Plan of Distribution."
</TABLE>
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data with respect to the
consolidated financial position of the Company as of December 31, 1997 and 1996,
and operating data for the fiscal years ended December 31, 1997, 1996 and 1995
have been derived from, and should be read in conjunction with, and is qualified
in its entirety by, the audited Consolidated Financial Statements and Notes
thereto of the Company presented elsewhere in this Prospectus. The selected
consolidated financial data with respect to the Company's consolidated financial
position as of December 31, 1995, 1994 and 1993 and operating data for the years
ended December 31, 1994 and 1993 have been derived from the audited Consolidated
Financial Statements of the Company, which are not presented herein. The data
presented at March 31, 1998 and for the three months ended March 31, 1998 and
1997 were derived from unaudited consolidated financial statements and reflect,
in the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to present fairly the results for
such interim periods. The results of operations for the three months ended March
31, 1998 are not necessarily indications of the results of operations that may
be expected for the year ended December 31, 1998.
<TABLE>
<CAPTION>
At March
31, At December 31,
------------- ----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Financial Condition And Other Data:
Total assets................................ $1,557,151 $1,561,650 $1,474,617 $1,521,699 $1,522,412 $1,456,892
Net loans................................... 1,227,698 1,202,095 1,054,686 1,011,909 965,668 878,001
Securities (1).............................. 262,427 270,103 343,739 429,005 467,426 491,278
Deposits.................................... 1,463,323 1,468,987 1,393,125 1,311,604 1,168,031 1,032,868
Borrowings.................................. -- -- -- 128,600 265,341 309,975
Long-term debt to affiliates................ 20,060 20,060 16,736 13,000 13,500 14,000
Stockholders' equity........................ 64,599 62,552 54,344 55,457 59,350 58,440
Non-performing assets....................... 9,139 10,266 21,096 22,287 16,347 29,006
Ratio of equity to assets................... 4.15% 4.01% 3.69% 3.64% 3.90% 4.01%
</TABLE>
<TABLE>
<CAPTION>
For the Three Months
Ended March 31, For the Year Ended
--------------- --------------------------------------------------------
December 31,
--------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Interest income............................. $28,120 $25,865 $107,591 $102,964 $99,034 $87,079 $90,203
Interest expense............................ 16,171 15,112 64,252 63,955 70,196 53,621 48,724
-------- -------- --------- -------- -------- -------- --------
Net interest income......................... 11,949 10,753 43,339 39,009 28,838 33,458 41,479
Provision for loan losses................... 633 17 1,154 1,476 8,777(2) 3,206 8,898
---------- -------- --------- -------- --------- --------- --------
Net interest income after provision
for loan losses..................... 11,316 10,736 42,185 37,533 20,061 30,252 32,581
Noninterest income.......................... 558 862 3,094 3,397 3,767 8,603 17,897
SAIF recapitalization assessment............ -- -- -- 7,716(3) -- -- --
Noninterest expense......................... 9,245 8,136 32,190 33,697 30,142 35,603 38,677
--------- ------- --------- -------- --------- -------- --------
Income (loss) before taxes.............. 2,629 3,462 13,089 (483) (6,314) 3,252 11,801
Income tax expense (benefit)................ 1,078 1,425 5,790 (177) (3,406) 772 5,281
--------- -------- --------- -------- --------- -------- --------
Net income (loss)........................... $ 1,551 $ 2,037 $ 7,299 $ (306)(3) $(2,908)(2) $ 2,480 $ 6,520
======== ======= ========= ======== ======== ======== =======
Operating Ratios And Other Data:
Return (loss) on average assets............. 0.40% 0.54% 0.47% (0.02)% (0.19)% 0.17% 0.45%
Return (loss) on average equity............. 9.78 14.66 12.33 (0.48) (4.89) 3.45 9.50
Interest rate spread........................ 2.93 2.81 2.71 2.58 1.85 2.29 3.17
Net interest margin......................... 3.14 2.95 2.89 2.68 1.96 2.36 2.85
Efficiency ratio(4)(5)...................... 73.92 70.05 69.33 79.46(3) 92.45 84.65 65.14
Noninterest expense to average assets(5).... 2.37 2.16 2.08 2.23 1.98 2.40 2.69
Asset Quality Data:
Non-performing assets to total assets....... 0.59% 0.70% 0.66% 1.43% 1.46% 1.07% 1.99%
Non-performing loans to total gross loans... 0.73 1.20 0.81 1.83 2.00 1.17 1.79
Allowance for loan losses to total gross
loans..................................... 1.01 1.06 1.00 1.10 1.34 0.78 0.90
Allowance for loan losses to non-performing
loans..................................... 138.89 88.31 123.22 59.98 66.88 66.67 54.83
Net charge-offs to average gross loans...... 0.07 0.11 0.06 0.34 0.26 0.41 0.96
Bank Regulatory Capital Ratios:
Tier 1 risk-based capital................... 10.02% 9.81% 9.90% 9.41% 9.21% 9.95% 9.84%
Total risk-based capital.................... 11.27 11.06 11.15 10.67 10.47 10.95 10.93
Core (leverage)............................. 5.52 5.23 5.37 4.90 4.50 4.80 4.72
Tangible.................................... 5.52 5.23 5.37 4.90 4.50 4.77 4.68
</TABLE>
17
<PAGE>
(1) Includes available-for-sale securities and held-to-maturity securities.
(2) During 1995, the Company's net income was adversely affected by
management's decision to make a $8.8 million loan loss provision. This
provision was $4.1 million greater than the five year average provision for
loan losses of $4.7 million and was recorded to address the continued
depressed California economy and real estate market and to significantly
increase the Company's overall level of allowance for loan losses to over
1.00% of gross loans.
(3) During 1996, the Company's net income was adversely affected by the
one-time SAIF recapitalization assessment which was recognized by the Bank
during the third quarter of the year. Without giving effect to the SAIF
recapitalization assessment, the Company's net income would have amounted
to $4.3 million for 1996.
(4) Represents noninterest expense divided by the aggregate of net interest
income before provision for loan losses and noninterest income.
(5) During the year ended December 31, 1996, such ratios exclude the one-time
SAIF recapitalization assessment. Including the SAIF recapitalization
assessment, the Bank's efficiency ratio and noninterest expense to average
assets would amount to 97.66% and 2.74%, respectively.
RISK FACTORS
Prospective investors should carefully review the information contained
elsewhere in this Prospectus and should particularly consider the following
matters. Information contained in this Prospectus contains "forward-looking
statements" which can be identified by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "projected,"
"contemplates" or "anticipates" or the negative thereof or other variations
thereon or comparable terminology. No assurance can be given that the future
results covered by the forward-looking statements will be achieved. The
following matters constitute cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to vary materially from the
future results covered in such forward-looking statements. Other factors, such
as the general state of the economy, could also cause actual results to vary
materially from the future results covered in such forward-looking statements.
Risks Related to the Exchange Capital Securities
Ranking of Subordinated Obligations Under the Exchange Guarantee and
the Exchange Junior Subordinated Debentures; Limitations on Sources of Funds.
The obligations of Holdings under the Exchange Guarantee issued by it for the
benefit of the holders of Exchange Capital Securities, as well as under the
Exchange Junior Subordinated Debentures areunsecured and rank subordinate and
junior in right of payment to all Senior Indebtedness to the extent and in the
manner set forth in the Exchange Guarantee and the Indenture, respectively. No
payment may be made of the principal of or premium, if any, or interest on the
Junior Subordinated Debentures, or in respect of any redemption, retirement,
purchase or other acquisition of any of the Junior Subordinated Debentures, at
any time when (i) there shall have occurred and be continuing a default in any
payment in respect of any Senior Indebtedness, or there has been an acceleration
of the maturity thereof because of a default, or (ii) in the event of the
acceleration of the maturity of the Junior Subordinated Debentures, until
payment has been made on all Senior Indebtedness. Because Holdings is a holding
company, the right of Holdings to participate in any distribution of assets of
any subsidiary upon such subsidiary's liquidation or reorganization or otherwise
(and thus the ability of holders of the Exchange Capital Securities to benefit
indirectly from such distribution) is subject to the prior claims of creditors
of that subsidiary (including depositors, in the case of the Bank), except to
the extent that Holdings may itself be recognized as a creditor of that
subsidiary. At March 31, 1998, the subsidiaries of Holdings had total
liabilities (excluding liabilities owed to Holdings) of $1.47 billion.
Accordingly, the Exchange Junior Subordinated Debentures effectively will be
subordinated to all existing and future liabilities of Holdings' subsidiaries
(including the Bank's deposit liabilities, which aggregated $1.46 billion at
March 31, 1998) and holders of Exchange Junior Subordinated Debentures should
look only to the assets of Holdings for payments on the Exchange Junior
Subordinated Debentures. The Exchange Guarantee will constitute an unsecured
obligation of Holdings and will rank subordinate and junior in right of payment
to all Senior Indebtedness in the same manner as the Exchange Junior
Subordinated Debentures. None of the Indenture, the Exchange Guarantee or the
Trust Agreement places any limitation on the amount of secured or unsecured
debt, including Senior Indebtedness, that may be incurred by Holdings or any of
its subsidiaries. See "Description of Exchange Guarantee--Status of the
Exchange Guarantee" and "Description of Exchange Junior Subordinated
Debentures--General" and "--Subordination."
The ability of the Trust to pay amounts due on the Exchange Capital
Securities is solely dependent upon Holdings making payments on the Exchange
Junior Subordinated Debentures as and when required.
18
<PAGE>
Holdings is a holding company and almost all of the operating assets of
Holdings are owned by Holdings' subsidiaries. Holdings relies primarily on
dividends from the Bank to meet its obligations for payment of principal and
interest on its outstanding debt obligations and corporate expenses. There are
regulatory limitations on the payment of dividends directly or indirectly to
Holdings from the Bank. As of March 31, 1998, under regulations of the OTS, the
total capital available for payment of dividends by the Bank to Holdings was
approximately $5.8 million. However, the OTS has the power to prohibit any act,
including the payment of dividends, if such act would reduce the Bank's capital
to a point that, in its opinion, would render the Bank undercapitalized and thus
constitute an unsafe or unsound banking practice. In addition to restrictions on
the payment of dividends, the Bank is subject to certain restrictions imposed by
federal law on any extensions of credit to, and certain other transactions with,
Holdings and certain other affiliates, and on investments in stock or other
securities thereof. Such restrictions prevent Holdings and such other affiliates
from borrowing from the Bank unless the loans are secured by various types of
collateral. Further, such secured loans, other transactions and investments by
the Bank are generally limited in amount as to Holdings and as to each of such
other affiliates to 10% of the Bank's capital and surplus and as to Holdings and
all of such other affiliates to an aggregate of 20% of the Bank's capital and
surplus.
Option to Extend Interest Payment Period; Tax Consequences; Market
Price Consequences. So long as no Debenture Event of Default (as defined herein)
shall have occurred and be continuing, Holdings has the right under the
Indenture to defer payments of interest on the Junior Subordinated Debentures at
any time or from time to time for a period not exceeding ten (10) consecutive
semi-annual periods with respect to each Extension Period, provided that no
Extension Period shall end on a date other than an Interest Payment Date or
extend beyond the Stated Maturity Date. As a consequence of any such deferral,
semi-annual Distributions on the Trust Securities by the Trust will be deferred
(and the amount of Distributions to which holders of the Trust Securities are
entitled will accumulate Additional Distributions thereon at the rate of 9.375%
per annum, compounded semi-annually, but not exceeding the interest rate then
accruing on the Junior Subordinated Debentures) from the relevant payment date
for such Distributions during any such Extension Period. During the pendency of
any Extension Period, Holdings generally will be prohibited from declaring or
paying dividends on Holdings' capital stock, including the Common Stock. See
"Description of Capital Securities--Distributions."
Prior to the termination of any such Extension Period, Holdings may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed ten (10) consecutive semi-annual periods,
end on a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any Extension Period and the payment of
all interest then accrued and unpaid on the Junior Subordinated Debentures
(together with interest thereon at the annual rate of 9.375%, compounded
semi-annually, to the extent permitted by applicable law), Holdings may elect to
begin a new Extension Period, subject to the above requirements. There is no
limitation on the number of times that Holdings may elect to begin an Extension
Period. See "Description of Exchange Capital Securities--Distributions" and
"Description of Exchange Junior Subordinated Debentures--Option to Extend
Interest Payment Date."
Holdings has no current plan to exercise its right to defer payments of
interest on the Junior Subordinated Debentures. However, should Holdings
exercise its right to defer payments of interest on the Junior Subordinated
Debentures, each holder of Trust Securities will be required to accrue income
(as original issue discount ("OID") in respect of the deferred stated interest
allocable to its Trust Securities for United States federal income tax purposes,
which will be allocated but not distributed to holders of Trust Securities. As a
result, each holder of Capital Securities will recognize 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 Trust if the holder
disposes of the Capital Securities prior to the record date for the payment of
Distributions thereafter. See "Certain Federal Income Tax Consequences with
Respect to the Issuance of the Exchange Capital Securities--Interest Income and
Original Issue Discount" and "--Sales of Exchange Capital Securities."
Should Holdings elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures in the future, the market price
of the Capital Securities is likely to be affected. A holder that disposes of
its Capital Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that
19
<PAGE>
continues to hold its Capital Securities. In addition, Holdings' right to defer
payments of interest on the Junior Subordinated Debentures may cause the market
price of the Capital Securities to be more volatile than the market prices of
other securities on which OID accrues and that are not subject to such
deferrals.
Special Event Redemption. Upon the occurrence and continuation of a
Special Event, including a Tax Event or a Regulatory Capital Event (in each case
as defined under "Description of Exchange Junior Subordinated Debentures-
- -Special Event Prepayment" and when referred to together (the "Special Event")),
prior to the Initial Optional Prepayment Date, Holdings will have the right to
prepay the Junior Subordinated Debentures in whole (but not in part) at the
Special Event Prepayment Price within 90 days following the occurrence of such
Special Event and therefore cause a mandatory redemption of the Trust Securities
at the Special Event Redemption Price. The exercise of such right is subject to
Holdings having received any required regulatory approval. See "Description of
Exchange Capital Securities--Redemption."
Liquidation Distribution of Exchange Junior Subordinated Debentures.
Holdings has the right at any time to terminate the Trust and, after
satisfaction of liabilities to creditors of the Trust as required by applicable
law, to cause the Junior Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust. The exercise of
such right is subject to: (i) Holdings having received an opinion of counsel to
the effect that such distribution will not be a taxable event to the holders of
Exchange Capital Securities; and (ii) receipt of any required regulatory
approval. Under current United States federal income tax law, a distribution of
Exchange Junior Subordinated Debentures upon the dissolution of the Trust would
not be a taxable event to holders of the Exchange Capital Securities. Upon the
occurrence of a Special Event, a dissolution of the Trust in which holders of
the Capital Securities receive cash would be a taxable event to such holders.
See "Certain Federal Income Tax Consequences with Respect to the Issuance of the
Exchange Capital Securities--Receipt of Exchange Junior Subordinated Debentures
or Cash Upon Liquidation of the Trust."
Under current United States federal income tax law and interpretations,
and assuming the Trust is classified as a grantor trust for such purposes, a
distribution of the Junior Subordinated Debentures upon a liquidation of the
Trust should not be a taxable event to holders of the Capital Securities.
However, if a Special Event were to occur which would cause the Trust
to be subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, a distribution of the
Junior Subordinated Debentures by the Trust could be a taxable event to the
Trust and the holders of the Capital Securities. See "Certain Federal Income Tax
Consequences with Respect to the Issuance of the Exchange Capital
Securities--Receipt of Exchange Junior Subordinated Debentures or Cash Upon
Liquidation of the Trust."
Shortening of Stated Maturity of Exchange Junior Subordinated
Debentures. Holdings has the right at any time to shorten the maturity of the
Exchange Junior Subordinated Debentures to a date not earlier than May 1, 2005,
and thereby cause the Exchange Capital Securities to be redeemed on such earlier
date. The exercise of such right is subject to Holdings having received prior
regulatory approval if then required under applicable capital guidelines or
policies. See "Description of Exchange Junior Subordinated
Debentures--Redemption."
Limitations on Direct Actions Against Holdings and on Rights Under the
Guarantee. The Exchange Guarantee will guarantee to the holders of the Exchange
Capital Securities the following payments, to the extent not paid by or on
behalf of the Trust: (i) any accumulated and unpaid Distributions required to be
paid on the Exchange Capital Securities, to the extent that the Trust has funds
legally available therefor at such time, (ii) the applicable Redemption Price
with respect to the Exchange Capital Securities called for redemption, to the
extent that the Trust has funds legally available therefor at any such time, and
(iii) upon a voluntary or involuntary dissolution, winding-up or liquidation of
the Trust (unless the Exchange Junior Subordinated Debentures are distributed to
holders of the Exchange Capital Securities), 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 Trust has funds on hand available therefor at
such time and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Exchange Capital Securities after satisfaction of
liabilities to creditors of the Trust as required by applicable law.
20
<PAGE>
The holders of not less than a majority in aggregate Liquidation Amount
of the Exchange Capital Securities will 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 Exchange Guarantee or to direct the exercise
of any trust power conferred upon the Guarantee Trustee under the Exchange
Guarantee. Any holder of the Exchange Capital Securities may institute a legal
proceeding directly against Holdings to enforce its rights under the Exchange
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity. If Holdings were to default on
its obligation to pay amounts payable under the Exchange Junior Subordinated
Debentures, the Trust would not have sufficient funds for the payment of
Distributions or amounts payable on redemption of the Exchange Capital
Securities or otherwise, and, in such event, holders of the Exchange Capital
Securities would not be able to rely upon the Exchange Guarantee for payment of
such amounts. Instead, in the event a Debenture Event of Default shall have
occurred and be continuing and such event is attributable to the failure of
Holdings to pay principal (or premium, if any) on interest (including Additional
Sums (as defined below) and Compounded Interest (as defined below), if any) , on
the Exchange Junior Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Exchange Capital Securities may
institute a legal proceeding directly against Holdings for enforcement of
payment to such holder of the principal of (or premium, if any) or interest
(including Additional Sums and Compounded Interest, if any) on such Exchange
Junior Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Exchange Capital Securities of such holder (a "Direct
Action"). Notwithstanding any payments made to a holder of Exchange Capital
Securities by Holdings in connection with a Direct Action, Holdings shall remain
obligated to pay the principal of (and premium, if any) and interest (including
Additional Sums and Compounded Interest, if any) on the Exchange Junior
Subordinated Debentures, and Holdings shall be subrogated to the rights of the
holder of such Exchange Capital Securities with respect to payments on the
Exchange Capital Securities to the extent of any payments made by Holdings to
such holder in any Direct Action. Except as described herein, holders of
Exchange Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Exchange Junior Subordinated Debentures
or to assert directly any other rights in respect of the Exchange Junior
Subordinated Debentures. See "Description of Exchange Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Exchange Capital
Securities," "--Debenture Events of Default" and "Description of Exchange
Guarantee." The Trust Agreement provides that each holder of Capital Securities
by acceptance thereof agrees to the provisions of the Indenture. Wilmington
Trust Company is Guarantee Trustee and holds the Guarantee and will hold the
Exchange Guarantee for the benefit of the holders of the Capital Securities.
Wilmington Trust Company is also Property Trustee and Debenture Trustee under
the Indenture. Wilmington Trust Company is Delaware Trustee under the Trust
Agreement.
Limited Voting Rights. Holders of Capital Securities will generally
have limited voting rights relating only to the modification of the Exchange
Capital Securities, the dissolution, winding-up or liquidation of the Trust, and
the exercise of the Trust's rights as holder of Exchange Junior Subordinated
Debentures. Holders of Exchange Capital Securities will not be entitled to vote
to appoint, remove or replace the Property Trustee or the Delaware Trustee, and
such voting rights are vested exclusively in the holder of the Common Securities
except upon the occurrence of certain events described herein. In no event will
the holders of the Exchange Capital 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 Common Securities. The Property Trustee,
the Administrative Trustees and Holdings may amend the Trust Agreement without
the consent of holders of Exchange Capital Securities to ensure that the Trust
will be classified for United States federal income tax purposes as a grantor
trust, even if such action adversely affects the interests of such holders. See
"Description of Exchange Capital Securities-Voting Rights; Amendment of the
Trust Agreement" and "--Removal of Issuer Trustees."
Trading Characteristics of the Exchange Capital Securities. The
Exchange Capital Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Exchange
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debentures are deemed to have been issued with OID) and who
disposes of its Exchange Capital Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest on
the Exchange Junior Subordinated Debentures through the date of disposition in
income as ordinary income (i.e., interest or, possible, OID), and to add such
amount to its adjusted tax basis in its share of the
21
<PAGE>
underlying Exchange Junior Subordinated Debentures deemed disposed of. To the
extent the selling price is less than the holder's adjusted tax basis (which
will include all accrued but unpaid interest), a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"Certain Federal Income Tax Consequences with Respect to the Issuance of the
Capital Securities--Interest Income and Original Issue Discount" and "--Sales of
Capital Securities."
Consequences of a Failure to Exchange Original Capital Securities. The
Original Capital Securities have not been registered under the Securities Act or
any state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Original Capital
Securities that remain outstanding after consummation of the Exchange Offer will
continue to bear a legend reflecting such restrictions on transfer. In addition,
upon consummation of the Exchange Offer, holders of Original Capital Securities
that remain outstanding will not be entitled to any rights to have such Original
Capital Securities registered under the Securities Act or to any similar rights
under the Capital Securities Registration Rights Agreement (subject to certain
limited exceptions). The Company and the Trust do not intend to register under
the Securities Act any Original Capital Securities that remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable). To the extent that Original Capital Securities are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Original
Capital Securities could be adversely affected.
The Exchange Capital Securities and any Original Capital Securities
that remain outstanding after consummation of the Exchange Offer will vote
together as a single class for purposes of determining whether holders of the
requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement. See
"Description of Exchange Securities--Description of Exchange Capital
Securities--Voting Rights; Amendment of the Trust Agreement."
The Original Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed with
the Commission by August 14, 1998 and declared effective by the Commission by
October 16, 1998, the Distribution rate borne by the Original Capital Securities
will increase by 0.25% until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, holders of Original Capital Securities will
not be entitled to any increase in the Distribution rate thereon or any further
registration rights under the Capital Securities Registration Rights Agreement,
except under limited circumstances. See "Description of Original Securities."
Absence of Public Market And Restrictions on Resale. The Original
Capital Securities were issued to, and the Company believes such securities are
currently owned by, a relatively small number of beneficial owners. The Original
Capital Securities have not been registered under the Securities Act and will be
subject to restrictions on transferability if they are not exchanged for the
Exchange Capital Securities. Although the Exchange Capital Securities may be
resold or otherwise transferred by the holders (who are not affiliates of the
Company or the Trust) without compliance with the registration requirements
under the Securities Act, they will constitute a new issue of securities with no
established trading market. Capital Securities may be transferred by the holders
thereof only in blocks having a Liquidation Amount of not less than $100,000
(100 Capital Securities), or any integral multiple of $1,000 Liquidation Amount
(one Capital Security) in excess thereof. In addition, any market-making
activity, should it develop, will be subject to the limits imposed by the
Securities Act and the Exchange Act and may be limited during the Exchange
Offer. Accordingly, no assurance can be given that an active public or other
market will develop for the Capital Securities, or as to the liquidity of, or
the trading market for, the Exchange Capital Securities. If an active public
market does not develop, the market price and liquidity of the Exchange Capital
Securities may be adversely affected.
If a public trading market develops for the Exchange Capital
Securities, future trading prices will depend on many factors, including, among
other things, prevailing interest rates, the financial condition and results of
operations of the Company and the market for similar securities. Depending on
these and other factors, the Exchange Capital Securities may trade at a
discount.
22
<PAGE>
Notwithstanding the registration of the Exchange Capital Securities in
the Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of
the Securities Act) of the Company or the Trust may publicly offer for sale or
resell the Exchange Capital Securities only in compliance with the provisions of
Rule 144 under the Securities Act.
Each broker-dealer that receives Exchange Capital Securities for its
own account in exchange for Original Capital Securities, where such Original
Capital Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Capital
Securities. See "Plan of Distribution."
Exchange Offer Procedures. Subject to conditions set forth under "The
Exchange Offer--Conditions to the Exchange Offer," issuance of the Exchange
Capital Securities in exchange for Original Capital Securities pursuant to the
Exchange Offer will be made only after a timely receipt by the Trust of a
book-entry confirmation evidencing the tender of such Original Capital
Securities through ATOP or certificates representing such Original Capital
Securities, a properly completed and duly executed Letter of Transmittal, with
any required signature guarantees, and all other required documents. See "The
Exchange Offer--Acceptance for Exchange and Issuance of Exchange Capital
Securities" and "--Procedures for Tendering Original Capital Securities."
Therefore, holders of the Original Capital Securities desiring to tender such
Original Capital Securities in exchange for Exchange Capital Securities should
allow sufficient time to ensure timely delivery. Neither the Company nor the
Trust is under any duty to give notification of defects or irregularities with
respect to the tenders of Original Capital Securities for exchange.
Increased Lending Risks Associated with Expansion into Commercial Banking
Activities
At March 31, 1998, $336.2 million, or 27.1% of the Bank's gross loans
consisted of multi-family loans. In addition, with the change in the Bank's
business strategy and focus on commercial banking activities, the Bank's
commercial real estate loans, construction loans and commercial business loans
are expected to increase. Loans secured by apartment buildings and other
multi-family properties and loans secured by commercial real estate properties
are generally larger and involve a greater degree of risk than residential
mortgage (1-4 family) loans. Because payments on loans secured by multi-family
and commercial real estate properties are often dependent on successful
operation or management of the properties, repayment of such loans may be
subject to a greater extent to the then prevailing conditions in the real estate
market or the economy. Moreover, construction financing is generally considered
to involve a higher degree of credit risk than long-term financing on improved,
owner-occupied real estate. Risk of loss on a construction loan is dependent
largely upon the accuracy of the initial estimate of the property's value at
completion of construction or development compared to the estimated cost
(including interest) of construction. If the estimate of value proves to be
inaccurate, the Bank may be confronted with a project, when completed, having a
value which is insufficient to assure full repayment.
Unlike mortgage loans, which generally are made on the basis of the
borrower's ability to make repayment from his or her employment or other income,
and which are secured by real property whose value tends to be more readily
ascertainable, commercial business loans are of higher risk and typically are
made on the basis of the borrower's ability to make repayment from the cash flow
of the borrower's business. As a result, the availability of funds for the
repayment of commercial business loans may be substantially dependent on the
success of the business itself. Furthermore, any collateral securing such loans
may depreciate over time, may be difficult to appraise and may fluctuate in
value based on the success of the business.
Although the Bank seeks to minimize the above risks through its
underwriting and credit administration policies, there can be no assurance that
such risks would not materialize, in which event the Company's result of
operations, financial condition and prospects could be materially adversely
affected.
Interest Rate Risk
The Bank's earnings depend largely on the relationship between its cost
of funds, primarily deposits, and the yield on earning assets. This
relationship, known as the interest spread, is subject to fluctuation and is
affected by
23
<PAGE>
economic and competitive factors which influence market interest rates, the
volume and mix of interest-earning assets and interest-bearing liabilities, and
the level of non-performing assets. Fluctuations in market interest rates affect
the demand of customers for the Bank's products and services. The Bank is
subject to interest rate risk to the degree that its interest-bearing
liabilities reprise or mature more slowly or more rapidly or on a different
basis than its interest-earning assets. Given the Bank's current volume and mix
of interest-bearing liabilities and interest-earning assets, the Bank's interest
rate spread could be expected to decrease during periods of rising and falling
interest rates. Although the Bank believes its current level of interest rate
sensitivity is reasonable, significant fluctuations in interest rates may have
an adverse effect on the Bank's results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Market
Risk and Net Portfolio Value."
Leveraging Strategy
As a result of the proceeds received by the Company and made to be
available to the Bank following the Private Offerings, the Bank implemented a
plan to leverage such proceeds through the purchase of U.S. Government agency
mortgage-backed securities, investment grade securities, investment grade
municipal bonds and investment grade residential mortgage (1-4 family)
securities and to fund such purchases primarily through intermediate and
long-term secured borrowings, advances from the FHLB and from cash made
available from the proceeds. Such plan is consistent with the Bank's asset and
liability management policy and was approved by the Bank's Credit Policy and
Investment Committee. In connection with the strategy, the Bank will remain
classified as a "well capitalized" institution for regulatory capital purposes.
If market rates of interest fluctuate in such a manner that Holdings is unable
to earn a positive spread as a result of its leverage strategy, Holdings' net
interest margin and net earnings will be adversely affected in future periods.
Through June 24, 1998, the Bank purchased approximately $325 million of such
assets and entered into $202 million of long-term borrowings.
Credit Quality
A significant source of risk for the Company arises from the
possibility that losses will be sustained because borrowers, guarantors and
related parties may fail to perform in accordance with the terms of their loan
agreements. The Company has adopted underwriting and credit monitoring
procedures and credit policies, including the establishment and review of the
allowance for loan losses, that management believes are appropriate to minimize
this risk by assessing the likelihood of nonperformance, tracking loan
performance and diversifying the Bank's credit portfolio. Such policies and
procedures, however, may not prevent unexpected losses that could materially
adversely affect the Company's results of operations. Maintenance of a high
credit quality of new commercial loans is also key in achieving its strategic
goals.
The Bank's loan portfolio is predominantly secured by real estate.
Conditions in the real estate markets in which the collateral for the Bank's
mortgage loans are located strongly influence the level of the Bank's non-
performing loans and its results of operations. Real estate values are affected
by, among other things, changes in general or local economic conditions, changes
in governmental rules or policies, the availability of loans to potential
purchasers, and acts of nature. Declines in real estate markets have in the past
and may continue to negatively impact the value of the collateral securing the
loans and the Company's results of operations. See "Business--Lending
Activities--Loan Portfolio." As of March 31, 1998, the Bank had $9.1 million in
non-performing assets.
Limited Documentation Lending
The Bank specializes in a limited documentation mortgage loan product
for loans secured by single family residential properties. This product serves a
particular niche of borrowers willing to pay a premium, in the form of higher
interest rates, and larger down payments in exchange for more expedient loan
processing by virtue of providing less income or less income and less asset
information. These limited documentation mortgage loans, however, involve a
higher degree of risk as there is limited verified knowledge of the borrower's
level of income or ability to service the indebtedness which, in turn, may
result in a higher rate of default. As of March 31, 1998, $492.1 million, or
68.7% of
24
<PAGE>
the residential mortgages (1-4 family) were low documentation loans. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Financial Condition--Loan Portfolio."
No Assurances as to the Adequacy of Allowance for Loan Losses
The Bank's allowance for loan losses is maintained at a level
considered adequate by management to absorb inherent losses in its loan
portfolio. The amount of inherent loan losses which could be ultimately realized
is susceptible to changes in economic, operating and other conditions, including
changes in interest rates, that could be beyond the Bank's control. Such losses
could exceed current estimates. Although management believes that the Bank's
allowance for loan losses is adequate, there can be no assurance that the
allowance will prove sufficient to cover actual loan losses should such losses
be realized. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
External Factors Affecting Asset Quality
The economy in the Bank's primary market area and the real estate
market in particular have suffered from the effects of a recession in the first
half of this decade. Some of the effects of the recession were declines in
property values and decreased demand for goods and services. These conditions
may have had an adverse impact on the ability of certain borrowers to perform
under the original terms of their obligations to the Bank. The Bank's loan
portfolio is predominantly secured by real estate. The Bank's properties and
substantially all of the real and personal property securing loans in the Bank's
portfolio are located in California. The real estate securing loans has been in
the past and may in the future be adversely affected by market conditions in
California. In addition to market fluctuations, California is prone to
earthquakes, flooding and other natural disasters. The Bank faces the risk that
many of its borrowers may experience uninsured property damage, sustained
interruption of their businesses or loss of their jobs from earthquakes, floods
or other disasters. As a result, these borrowers may be unable to repay their
loans in accordance with their original terms and the collateral for such loans
may decline significantly in value. There can be no assurance that the allowance
for loan losses will be adequate to cover losses resulting from such external
factors.
Government Regulation and Monetary Policy
The thrift and banking businesses are subject to extensive federal and
state supervision and regulation. Such regulations limit the manner in which
Holdings and the Bank conduct their respective businesses, undertake new
investments and activities and obtain financing. These regulations are designed
primarily for the protection of the deposit insurance funds and consumers, and
not to benefit holders of the Company's securities. In the future, if Holdings
and the Bank were to convert to a bank holding company and state-chartered bank,
respectively, as part of the strategy to shift the Bank's business focus to
commercial banking, the scope and degree of regulatory oversight will change.
Among other things, there would be statutory and regulatory limitations on the
amount of dividends which could be paid to Holdings by the Bank which are
different from the restrictions currently applicable to the Bank under the OTS
regulations. Bank regulatory agencies also have authority to prohibit banks from
engaging in activities that, in their respective opinions, constitute unsafe or
unsound practices in conducting its business. It is possible, depending upon the
financial condition of the Bank and other factors, that the FDIC or the
California Department of Financial Institutions (the "DFI") could assert that
the payment of dividends or other payments by the Bank might, under some
circumstances, be such an unsafe or unsound practice.
Financial institution regulation has been the subject of significant
legislation in recent years, and may be the subject of further significant
legislation in the future, none of which is in the control of the Company or the
Bank. Significant new laws or changes in, or repeals of, existing laws may cause
the Company's results of operations to differ materially. Further, federal
monetary policy, particularly as implemented through the Federal Reserve Board
significantly affects credit conditions for the Company, primarily through open
market operations in United States government securities, the discount rate for
bank borrowings and reserve requirements. A material change in any of these
conditions would have a material impact on the Bank, and therefore the Company's
results of operations.
25
<PAGE>
Competition
The banking and financial services industry in California generally,
and in the Bank's market areas specifically, is highly competitive. The
increasingly competitive environment results from changes in regulation, changes
in technology and product delivery systems, and the consolidation among
financial services providers. The Bank competes for loans, deposits and
customers for financial services with other commercial banks, savings and loan
associations, securities and brokerage companies, mortgage companies, insurance
companies, finance companies, money market funds, credit unions, and other
nonbank financial service providers. Many of these competitors are much larger
in total assets and capitalization, have greater access to capital markets and
offer a broader array of financial services than the Bank. To compete with the
other financial services providers, the Bank relies on local promotional
activities, personal relationships established by officers, directors and
employees with its customers, and specialized services tailored to meet its
customers' needs.
The Bank competes for deposits from the ethnic Chinese markets with
other banks catering to the Asian community. The Bank believes that it has two
major competitors that are targeting the ethnic Chinese markets. Such
institutions have branch locations in many of the same neighborhoods as the
Bank, provide similar loan, savings and financial services, and market their
services in similar Asian publications and media in California.
Economic Conditions and Geographic Concentration; Real Estate Markets
The Bank's operations are located in Northern and Southern California
and are concentrated primarily in the San Francisco Bay area (including Oakland)
and the Sacramento/Stockton and Los Angeles metropolitan areas, with specific
emphasis on communities with a high concentration of ethnic Chinese individuals
and businesses. As a result of these geographic concentrations, the Bank's
results depend largely upon economic conditions in these areas. A deterioration
in economic conditions in the Bank's market could have a material adverse impact
on the quality of the Bank's loan portfolio and the demand for its products and
services, and accordingly, the Company's results of operations. See
"Business--Market Area."
Accounting Treatment
Based upon the representations of each offeree in the Private Offerings
("Offeree") that such Offeree was not acting in concert with any other Offeree,
it is the Company's understanding that following consummation of the Private
Offerings and the Redemption, generally accepted accounting principles do not
require the Company to revalue the assets and liabilities of the Company in the
Company's Consolidated Financial Statements to reflect consummation of the
Private Offerings and the Redemption. In the event that some or all of the
Offerees were deemed to be acting in concert, there is a substantial likelihood
that generally accepted accounting principles would require a step-up in
accounting basis (analogous to the purchase method of accounting for business
combinations) with respect to the Private Offerings and the Redemption. If a
change in accounting basis were required, the Company's assets and liabilities
would be reflected on the Company's consolidated financial statements based on
their estimated fair values at the consummation date and goodwill would be
recorded to the extent that the consideration paid to the Selling Shareholders
in the Redemption exceeds the aggregate net fair value of the Company's net
assets. In addition, if a step-up in accounting basis were required, it is
likely that generally accepted accounting principles, the Commission's
requirements and the Bank's primary regulator would likely require such
adjustments to be "pushed down" and reflected in the Bank's financial
statements. The requirement for push-down of accounting basis could have a
material adverse effect on the ability of the Bank to pay dividends to the
Company. In addition, the amortization of any goodwill recorded as a result of
such accounting treatment would significantly reduce the earnings of the Bank in
future periods and could adversely impact the ability of the Bank to pay
dividends to the Company. The Company received a report from its independent
accountants, Price Waterhouse LLP, as to the application of accounting
principles which concludes that consummation of the Private Offerings and
Redemption as described herein did not require the Company to revalue the assets
and liabilities of the Company in the Company's Consolidated Financial
Statements and, therefore, did not trigger the recognition of goodwill by the
Company or the Bank.
26
<PAGE>
It is uncertain whether, notwithstanding the Company's understanding of
generally accepted accounting principles and receipt of the report from Price
Waterhouse LLP referenced above, the Bank's primary regulator would require the
push-down of accounting basis with respect to the Bank's financial statements.
The Company has not discussed with the Bank's primary regulator whether it would
require such treatment. If such regulator were to require the push-down of
accounting basis with respect to the Bank's financial statements, such
accounting treatment could have the effects described above. Accordingly, in
considering an investment in the Company, potential purchasers should take into
account the possibility that the push-down of accounting basis with respect to
the Bank's financial statements may be required.
Dependence on Key Management Personnel
The Company's success depends substantially on certain members of its
senior management, in particular the following officers of the Bank: Tommy S.
Wu, President and Chief Executive Officer; Jonathan H. Downing, Senior Vice
President, Chief Financial Officer and Treasurer; Sylvia Loh, Senior Vice
President and Director of Commercial Banking; Louis E. Barbarelli, Senior Vice
President and Director of Systems and Operations; Cecilia Lai, Senior Vice
President and Director of Retail Banking; and William T. Goldrick, Senior Vice
President and Chief Credit Officer. The Company's business and financial
condition could be materially adversely affected by the loss of the services of
any such individuals. Ms. Loh joined the Bank as the head of commercial banking
in February 1996. The success of her department is vital to the success of the
shift in the Bank's business focus to commercial banking. The Company does not
maintain any key man life insurance with respect to any of the foregoing
officers. See "Management of the Company and the Bank."
Ability of the Company to Execute its Business Strategy and Generate Earnings
The Bank's ability to achieve its strategic goal and shift its business
focus to commercial banking largely depends on its ability to: fund a
significant amount of commercial real estate loans and commercial business
loans, including SBA loans; originate intermediate fixed-rate residential
mortgage loans (1-4 family); and significantly increase the Bank's commercial
deposit and demand accounts. During the year ended December 31, 1997, the Bank
originated $23.7 million of commercial real estate loans, $28.7 million of
commercial business loans and $3.3 million of SBA loans and at May 21, 1998 the
Bank had in its pipeline $73.1 million of commercial real estate loans, $28.9
million of commercial business loans and $16.1 million of SBA loans. Given the
competitive environment for loan originations, consumer demand for fixed-rate
30-year loans and the array of alternative cash investments available to
consumers, there are no assurances that the Bank will be able to achieve its
strategic business goals.
The implementation of the Bank's strategic goals places demands on the
Bank's management personnel as well as its systems, other personnel control
systems, asset quality, earnings, policies and procedures. There can be no
assurance that the Bank will be able to make all adjustments necessary or to
employ and retain personnel with adequate training and experience to achieve its
strategic goals or to manage the Bank's growth and expansion. The failure to
achieve its strategic goals could have a material adverse effect on the
Company's results of operations, financial condition and prospects.
Year 2000 Compliance Issues
The Year 2000 issue is a computer programming situation that may affect
many electronic data processing systems. In order to minimize the length of data
fields, most computers programs eliminated the first two digits in the year date
field. This problem could affect date-sensitive calculations that treat "00" as
the year 1900, rather than 2000. Secondly, years that end in "00" are not leap
years, except for the anomaly in the year 2000. This anomaly could result in
miscalculations when processing critical date-sensitive information after
December 31, 1999.
The Bank has adopted a plan to address Year 2000 data processing
issues. The plan includes the assessment of all internal systems, programs and
data processing applications as well as those provided to the Bank by
third-party vendors. The Bank recently converted its core banking system to a
system which is Year 2000 compliant.
27
<PAGE>
The Bank is in the process of selecting accounting and loan processing
systems which are Year 2000 compliant and anticipates that such systems will be
selected and installed by the end of 1998. The Company does not anticipate that
the expenses incurred in conjunction with the Year 2000 issues will have a
material effect on the results of operations of the Company. Management is
currently evaluating the Bank's third party vendors' efforts with respect to
compliance with Year 2000 issues. No assurance can be made that such third party
vendors' efforts will be successful or that the Company's costs associated
therewith will be as estimated. However, the Company does not believe any Year
2000 issues will materially affect the Company's products, services or
competitive conditions. In addition, the Company does not believe that the cost
of addressing the Year 2000 issues is a material event or uncertainty that would
cause reported financial information not to be necessarily indicative of future
operating results or financial condition, and the costs or the consequences of
incomplete or untimely resolution of its Year 2000 issues does not represent a
known material event or uncertainty that is reasonably likely to affect its
future financial results, or cause its reported financial information not to be
necessarily indicative of future operating results or future financial
condition. However, there can be no assurance that the Year 2000 issue will not
have a material adverse effect on the Bank.
Tax Considerations
In 1997, the IRS concluded an examination of the income tax returns of
the Company for the tax years 1993 through 1995. The audit resulted in the
Company making cash payments and writing down the deferred tax assets of the
Company. Such cash payments and write-downs amounted to $500,000 in the
aggregate, which approximated the book allowances provided by the Company for
this eventuality. The IRS audit focused generally on the Company's Notes, which,
until cancelled in the Redemption, were held by the Selling Shareholders (who
were then affiliates of the Company and the Bank) and, more specifically, on the
appropriateness of the Company's interest expense deductions during 1993, 1994
and 1995. Notwithstanding the conclusion of the IRS's audit and the resulting
cash payments and write-downs, no assurance can be made that the IRS will not
reexamine the Company's tax returns and further challenge the validity of the
Notes and the related interest expense deductions which could result in
additional income tax payments and/or write-downs. Although the settlement with
the IRS confirmed the treatment of the Notes as debt rather than equity, there
can be no assurance that the IRS will not reexamine the appropriateness of the
characterization of the Notes as debt with respect to the tax years subsequent
to 1995. The Notes were retired in April 1998 in conjunction with the
consummation of the Redemption. As of March 31, 1998, the Company's consolidated
financial statements reflect deferred tax assets of approximately $2.5 million
which represent interest expense deductions that the Company will take in its
1998 tax return.
USE OF PROCEEDS
Neither the Company nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities. In consideration for issuing
the Exchange Capital Securities in exchange for Original Capital Securities as
described in this Prospectus, the Trust will receive Original Capital Securities
in like Liquidation Amount. The Original Capital Securities surrendered in
exchange for the Exchange Capital Securities will be retired and cancelled.
Net proceeds from the Private Offerings were approximately $157.7
million after deducting the commission of the Placement Agent and estimated
offering and other expenses payable by the Company. Holdings used $120.0 million
on the net proceeds to repurchase all of the then outstanding common stock,
including those shares of Common Stock received by the Selling Shareholders in
exchange for the Notes, and is using the remainder of the net proceeds for other
general corporate purposes. All of the proceeds from the sale of the Capital
Securities were invested by the Trust in the Junior Subordinated Debentures.
28
<PAGE>
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
The following table sets forth the ratios of earnings to combined fixed
charges of Holdings on a consolidated basis for the respective periods
indicated.
<TABLE>
<CAPTION>
For the
Three Months Ended
March 31, For the Year Ended December 31,
----------- ------------------------------------------------------------
1998 1997 1997 1996 1996(1) 1995 1994 1993
------ ------ ------ ------ --------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios of Earnings to Combined Fixed
Charges:
Excluding interest on deposits...... 5.21x 4.55x 6.59x 1.25x 2.90x 0.68x 1.30x 1.97x
Including interest on deposits...... 1.16x 1.23x 1.24x 1.02x 1.14x 0.93x 1.09x 1.28x
</TABLE>
- -------------
(1) Represents the respective fixed charge ratios excluding the SAIF
recapitalization assessment.
For purposes of computing the ratios of earnings to combined fixed
charges, earnings represent net income plus applicable income taxes and fixed
charges. Fixed charges, excluding interest on deposits, include gross interest
expense other than on deposits. Fixed charges, including gross interest on
deposits, include all interest expense.
ACCOUNTING TREATMENT OF CAPITAL SECURITIES
For financial reporting purposes, the Trust is treated as a subsidiary
of Holdings and, accordingly, the accounts of the Trust will be included in the
Consolidated Financial Statements of the Company. The Capital Securities will be
presented as a separate line item in the consolidated balance sheet of the
Company under the caption "Guaranteed preferred beneficial interests in
Holdings' junior subordinated debentures," and appropriate disclosures about the
Capital Securities, the Guarantee and the Junior Subordinated Debentures will be
included in the notes to Consolidated Financial Statements. For financial
reporting purposes, Holdings will record Distributions payable on the Capital
Securities as interest expense in the consolidated statements of operations.
Future Consolidated Financial Statements of the Company audited by
Holdings' independent accountants will include a footnote to the financial
statements stating that (i) the Trust is wholly-owned, (ii) the sole assets of
the Trust are the Junior Subordinated Debentures (specifying the principal
amount, interest rate and maturity date of such Junior Subordinated Debentures),
and (iii) the back-up obligations, in the aggregate, constitute a full and
unconditional guarantee by Holdings of the obligations of the Trust under the
Capital Securities. The Trust will not provide separate audited financial
statements.
29
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
The following consolidated statement of operations with respect to the
Company's operations for the years ended December 31, 1997, 1996 and 1995 have
been derived from the audited Consolidated Financial Statements and notes
thereto of the Company appearing elsewhere in this Prospectus. This information
should be read in conjunction with such Consolidated Financial Statements and
the notes thereto. The following consolidated statements of operation with
respect to the Company's operations for the three months ended March 31, 1998
and 1997 have been derived from unaudited financial data, and, in the opinion of
management, reflect all adjustments, consisting of normal recurring adjustments,
which are necessary to present fairly the results for such interim periods. The
results of operations for the three months ended March 31, 1998 are not
necessarily indicative of the results of operations that may be expected for the
year ending December 31, 1998.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31, For the Years Ended December 31,
---------------------- -------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Interest income:
Interest on loans................................. $23,833 $20,467 $86,141 $ 78,711 $72,742
Interest on funds sold and securities purchased
under agreements to resell...................... 166 452 2,760 1,417 398
Interest on securities............................ 4,121 4,946 18,690 22,836 25,894
------- ------- -------- -------- -------
Total interest income........................ 28,120 25,865 107,591 102,964 99,034
------- ------- -------- -------- -------
Interest expense:
Interest on deposits............................. 15,669 14,257 61,513 59,273 56,038
Interest on short-term borrowings ............... -- 206 294 998 6,550
Interest on Federal Home Loan Bank advances...... -- 218 620 2,044 5,867
Interest on long-term debt to affiliates ........ 502 431 1,825 1,640 1,741
------- ------- -------- -------- -------
Total interest expense....................... 16,171 15,112 64,252 63,955 70,196
------- ------- -------- -------- -------
Net interest income......................... 11,949 10,753 43,339 39,009 28,838
Provision for loan losses............................. 633 17 1,154 1,476 8,777
------- --------- ------- ------- -------
Net interest income after provision for
loan losses............................... 11,316 10,736 42,185 37,533 20,061
------- ------- -------- -------- -------
Noninterest income:
Commercial banking fees.......................... 254 208 977 421 92
Service charges on deposit accounts.............. 218 216 888 615 566
Gain on sale of loans, securities and servicing
rights......................................... 35 54 155 1,200 1,137
Loan servicing income............................ 44 294 601 680 272
Miscellaneous income............................. 7 90 473 481 1,700
------- ------- -------- -------- -------
Total noninterest income..................... 558 862 3,094 3,397 3,767
------- ------- -------- -------- -------
Noninterest expenses:
Personnel........................................ 4,308 3,786 14,087 14,875 12,000
Occupancy........................................ 1,246 1,159 4,811 4,754 4,355
Data processing.................................. 749 500 2,059 1,859 1,696
Furniture and equipment.......................... 604 386 1,902 1,814 1,357
Deposit insurance................................ 231 572 1,798 3,519 3,051
SAIF recapitalization assessment................. -- -- -- 7,716 --
Communication.................................... 97 85 400 383 317
Professional fees and contracted services........ 454 385 2,342 1,551 1,303
Foreclosed assets expense........................ (32) 168 671 686 2,785
Miscellaneous expense............................ 1,588 1,095 4,220 4,256 3,278
------- ------- -------- -------- -------
Total noninterest expense................... 9,245 8,136 32,190 41,413 30,142
------- ------- -------- -------- -------
Income (loss) before taxes............................ 2,629 3,462 13,089 (483) (6,314)
Income tax expense (benefit).......................... 1,078 1,425 5,790 (177) (3,406)
------- ------- -------- -------- -------
Net income (loss).......................... $ 1,551 $ 2,037 $ 7,299 $ (306) $(2,908)
======= ======= ======== ======== =======
</TABLE>
(See notes to the consolidated financial statements appearing elsewhere herein)
30
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in the section entitled
"Risk Factors" and elsewhere in this Prospectus.
The following discussion and analysis is intended to provide details of
the results of operations of the Company for the three months ended March 31,
1998 and 1997 and for the years ended December 31, 1997, 1996 and 1995 and
financial condition at March 31, 1998 and at December 31, 1997 and 1996. The
following discussion should be read in conjunction with the information set
forth in the Company's Consolidated Financial Statements and notes thereto and
other financial data included elsewhere in this Prospectus.
Results of Operations
General. Currently, the Company's primary source of income is net
interest income, which is the difference between interest income from
interest-earning assets and interest paid on interest-bearing liabilities such
as deposits and other borrowings used to fund those assets. The Company's net
interest income is affected by changes in the volume of interest-earning assets
and interest-bearing liabilities as well as by changes in yields earned on
interest-earning assets and rates paid on interest-bearing deposits and other
borrowed funds. The Company also generates noninterest income, including
commercial banking fees and other transactional fees and seeks to generate
additional fees in connection with the shift in its business focus to commercial
banking. The Company's noninterest expenses consist primarily of personnel,
occupancy, and furniture and equipment expenses and other operating expenses.
The Company's results of operations are affected by its provision for loan
losses and may also be significantly affected by other factors including general
economic and competitive conditions, changes in market interest rates,
governmental policies and actions of regulatory agencies.
Net Income. For the three months ended March 31, 1998, net income was
$1.6 million, a decrease of $486,000, or 23.9% from the three months ended March
31, 1997. The decrease in earnings during the three months ended March 31, 1998
resulted primarily from the increased provision for loan losses which was made
as a result of the growth in the loan portfolio, the decrease in loan servicing
income which resulted from the sale of the loan servicing portfolio in 1997, the
increased personnel expenses primarily related to the expansion of the
commercial banking division and the recordation of incentive accruals during the
first quarter of 1998 and nonrecurring expenses related to the computer system
conversion. For the year ended December 31, 1997, net income was $7.3 million,
an increase of $7.6 million from net loss of $306,000 for the year ended
December 31, 1996. For the year ended December 31, 1995, the Company's
operations resulted in a loss of $2.9 million. The Company's annualized return
on average assets was 0.40% for the three months ended March 31, 1998, compared
with 0.54% for the three months ended March 31, 1997. Annualized return on
average assets was 0.47% for the year ended December 31, 1997, compared to
(0.02%) and (0.19%) for the years ended December 31, 1996 and 1995,
respectively. The Company's annualized return on average equity was 9.78% and
14.66% for the three months ended March 31, 1998 and 1997 and 12.33%, (0.48%)
and (4.89%) for the years ended December 31, 1997, 1996 and 1995, respectively.
From 1995 to March 31, 1998, the Company experienced steady growth in
its net interest income. Notwithstanding this improvement in net interest
income, the Company's net income was adversely impacted by a $7.7 million SAIF
recapitalization assessment in 1996 and an $8.8 million provision for loan
losses during 1995. The $8.8 million provision for loan losses in 1995 was $4.1
million greater than the five year average provision for loan losses of $4.7
million and was recorded to address the continued depressed California economy
and real estate market and to significantly increase the Company's overall level
of allowance for loan losses to over 1.00% of gross loans. Without giving effect
to the SAIF recapitalization assessment, in 1996, the Company's net income would
have amounted to $4.3 million as compared to the $306,000 actual net loss.
31
<PAGE>
The decrease in net income for the three months ended March 31, 1998
from the three months ended March 31, 1997 was partially due to the increase in
the provision for loan losses from $17,000 in the first quarter of 1997 to
$633,000 in the same period in 1998. The increased provision in 1998 related to
the increased growth in the loan portfolio during the first quarter of 1998. As
of March 31, 1998, the $12.6 million allowance for loan losses represented 1.01%
of gross loans. The decrease in income during this period also resulted from the
decrease in loan servicing income from $294,000 in the first quarter of 1997 to
$44,000 in the first quarter of 1998 due to the sale of the purchased loan
servicing portfolio; an increase in personnel expenses from $3.8 million in the
first quarter of 1997 to $4.3 million in the same period in 1998 primarily due
to the addition of commercial banking personnel during 1997 and the recordation
of incentive accruals during the first quarter of 1998 and $328,000 of
nonrecurring computer conversion related expenses.
The increase in net income for the year ended December 31, 1997 from
the year ended December 31, 1996 was due to an increase in net interest income
to $43.3 million from $39.0 million, as discussed below, and a reduction in
deposit insurance expense to $1.8 million from $11.2 million, which includes the
SAIF assessment discussed below. In 1996, the Company paid a $7.7 million
onetime SAIF recapitalization assessment levied by the FDIC on all savings
institutions to fully capitalize the SAIF. During 1997, the Company's deposit
insurance premium was reduced to 9.4 basis points of deposits as a result of the
Bank reaching the "well capitalized" core capital ratio of 5.0%. Effective
January 1, 1998, the deposit insurance premium was further reduced to 6.4 basis
points of deposit.
The reduction in the net loss for the year ended December 31, 1996 from
the year ended December 31, 1995 was due to the increase in net interest income
to $39.0 million from $28.8 million, as discussed below, and a reduction in the
provision for loan losses. In 1995, management increased the allowance for loan
losses from 0.78% of gross loans to 1.34% of gross loans to address the
continued depressed California economy and real estate market and to
significantly increase the Company's overall allowance for loan losses to over
1.00% of gross loans. The total provision for loan losses of $1.5 million in
1996 compares with a provision of $8.8 million in 1995. As a result of the
increase in net interest income and the reduction in the provision for loan
losses, the net loss of the Company was $306,000 for the year ended December 31,
1996 compared to a loss of $2.9 million for the year ended December 31, 1995,
notwithstanding the $7.7 million SAIF recapitalization assessment recognized in
1996.
Net Interest Income and Net Interest Margin. The net interest margin
improved to 3.14% for the three months ended March 31, 1998 as opposed to 2.95%
for the three months ended March 31, 1997. For the three months ended March 31,
1998, net interest income was $11.9 million, an increase of $1.2 million, or
11.1%, from $10.8 million for the three months ended March 31, 1997.
Net interest income increased in the first quarter of 1998 primarily as
a result of (i) the increase in average loans outstanding to $1.23 billion from
$1.07 billion, (ii) the increase in the average yield on loans to 7.76% in the
first quarter of 1998 from 7.64% for the same period in the preceding year,
(iii) the reduction in the average balance of lower yielding securities to
$280.9 million from $352.0 million and their replacement with higher yielding
loans, and (iv) the reduction of the average balance of non-interest-earning
assets from $49.4 million for the three months ending March 31, 1997 to $41.0
million in the three months ended March 31, 1998.
The net interest margin improved to 2.89% for the year ended December
31, 1997, compared to 2.68% for the year ended December 31, 1996 and 1.96% for
the year ended December 31, 1995. For the year ended December 31, 1997, net
interest income was $43.3 million, an increase of $4.3 million, or 11.0% from
$39.0 million for the year ended December 31, 1996. Net interest income for the
year ended December 31, 1996 increased $10.2 million, or 35.3% from $28.8
million for the year ended December 31, 1995.
Net interest income increased in 1997 primarily as a result of (i) the
increase in average loans outstanding to $1.12 billion from $1.04 billion, (ii)
the reduction in the average balance of lower yielding securities to $326.7
million from $390.4 million and their replacement with higher yielding loans,
(iii) the reduction of average borrowings to $16.6 million from $49.8 million
and their replacement with lower costing deposits, and (iv) a reduction in the
non-interest-earning assets to $45.7 million from $60.0 million partially due to
the sale or reclassification of non-performing assets.
32
<PAGE>
Net interest income increased to $39.0 million in 1996 from $28.8
million in 1995, or 35.3%, primarily as a result of (i) the increase in average
loans outstanding to $1.04 billion from $1.0 billion, (ii) an increase in the
average yield on loans to 7.60% from 7.25% as a result of upward repricing of
the Bank's COFI-based loan portfolio, (iii) the reduction of average borrowings
to $49.8 million from $194.4 million and their replacement with lower costing
deposits, and (iv) a decrease in the average rate paid on deposit accounts from
4.57% to 4.37%.
33
<PAGE>
The following tables present condensed average balance sheet
information for the Company, together with interest rates earned and paid on the
various sources and uses of funds for each of the periods indicated.
<TABLE>
<CAPTION>
At
March 31, For the Three Months Ended March 31,
1998 1998 1997
------ ----------------------------- ------------------------------
Interest Average Interest Average
Average Income or Yield/ Average Income or Yield/
Yield/Cost Balance Expense Cost Balance Expense Cost
---------- ------- ------- ---- ------- ------- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans(1).............................. 7.74% $1,227,891 $23,833 7.76% $1,071,596 $20,467 7.64%
Securities............................ 5.85 280,856 4,121 5.87 352,048 4,946 5.62
Other................................. 5.95 11,795 166 5.62 34,413 452 5.26
---------- ------- ---------- -------
Total interest-earning assets........... 7.40 1,520,542 28,120 7.40 1,458,057 25,865 7.10
Noninterest-earning assets.............. -- 41,043 -- -- 49,449 -- --
----- ---------- -------- ---------- -------
Total assets............................ 7.22 $1,561,585 28,120 7.20 $1,507,506 25,865 6.86
----- ========== -------- ----- ========== ------- -----
Interest-bearing liabilities:
Deposits:
NOW and checking.................... 1.09 $80,331 219 1.09 $78,446 191 0.97
Money market accounts............... 2.48 21,036 127 2.41 22,379 130 2.32
Passbook accounts................... 2.26 209,958 1,179 2.25 213,984 1,243 2.32
Time deposits....................... 5.18 1,116,325 14,144 5.07 1,045,359 12,693 4.86
---------- ------- ---------- -------
Total deposits.......................... 4.47 1,427,650 15,669 4.39 1,360,168 14,257 4.19
---------- ------- ---------- -------
Borrowings.............................. -- 16 -- 5.93 31,585 424 5.37
Long-term debt to affiliates............ 10.00 20,060 502 10.00 17,252 431 10.00
---------- ------- ---------- -------
Total interest-bearing liabilities...... 4.40 1,447,726 16,171 4.47 1,409,005 15,112 4.29
----- ------- ----- ------- -----
Noninterest-bearing deposits............ 36,165 30,060
Other noninterest-bearing liabilities... 14,231 12,866
Stockholders' equity.................... 63,463 55,574
---------- ----------
Total liabilities and stockholders'
equity................................ $1,561,585 $1,507,506
========== ==========
Net interest income/net interest rate
spread(2)............................. 2.99% $11,949 2.93% $10,753 2.81%
===== ======= ===== ======= =====
Net interest-earning assets/net
interest margin(3).................... 3.21% $72,816 3.14% $49,051 2.95%
===== ======= ===== ======= =====
Ratio of interest-earning assets to
interest-bearing liabilities.......... 1.05x 1.05x 1.03x
===== ===== =====
</TABLE>
- -------------------
(1) Non-accrual loans are included in the table for computation purposes, but
the foregone interest on such loans is excluded.
(2) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin represents net interest income divided by average
interest-earning assets.
34
<PAGE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------------------------------------------------------------
1997 1996 1995
------ ------ -----
Interest Average Interest Average Interest Average
Average Income or Yield/ Average Income or Yield/ Average Income or Yield/
Balance Expense Cost Balance Expense Cost Balance Expense Cost
------- ------- ---- ------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans(1)........................ $1,123,356 $ 86,141 7.67% $1,036,025 $ 78,711 7.60% $1,002,662 $72,742 7.25%
Securities...................... 326,728 18,690 5.72 390,381 22,836 5.85 460,165 25,894 5.63
Other........................... 48,944 2,760 5.64 26,516 1,417 5.34 6,864 398 5.80
---------- -------- ---------- -------- ---------- -------
Total interest-earning assets..... 1,499,028 107,591 7.18 1,452,922 102,964 7.09 1,469,691 99,034 6.74
Noninterest-earning assets........ 45,664 -- 60,014 -- 56,164 --
---------- -------- ---------- -------- ----------- -------
Total assets...................... $1,544,692 107,591 6.97 $1,512,936 102,964 6.81 $1,525,855 99,034 6.49
========== -------- ---- ========== -------- ---- ========== ------- ----
Interest-bearing liabilities:
Deposits:
NOW and checking.............. $ 78,737 875 1.11 $77,710 826 1.06 $ 75,285 781 1.04
Money market accounts......... 21,397 517 2.42 23,583 561 2.38 27,732 654 2.36
Passbook accounts............. 212,943 4,834 2.27 207,512 4,772 2.30 215,604 4,797 2.22
Time deposits................. 1,090,320 55,287 5.07 1,047,019 53,114 5.07 908,783 49,806 5.48
---------- -------- ---------- -------- ---------- -------
Total deposits.................... 1,403,397 61,513 4.38 1,355,824 59,273 4.37 1,227,404 56,038 4.57
---------- -------- -------- -------
Borrowings........................ 16,551 914 5.52 49,813 3,042 6.11 194,365 12,417 6.39
Long-term debt to affiliates...... 18,398 1,825 9.92 14,868 1,640 11.03 13,250 1,741 13.14
---------- -------- ---------- -------- ---------- -------
Total interest-bearing liabilities 1,438,346 64,252 4.47 1,420,505 63,955 4.53 1,435,019 70,196 4.89
-------- ---- -------- ----- ---------- ------- -----
Noninterest-bearing deposits...... 33,780 23,981 16,191
Other noninterest-bearing
liabilities..................... 13,358 13,638 15,358
Stockholders' equity.............. 59,208 54,812 59,287
---------- ---------- ----------
Total liabilities and stockholders'
equity.......................... $1,544,692 $1,512,936 $1,525,855
========== ========== ==========
Net interest income/net interest
rate spread(2).................. $ 43,339 2.71% $ 39,009 2.58% $28,838 1.85%
========= ==== ======== ===== ======= =====
Net interest-earning assets/net
interest margin(3).............. $ 60,682 2.89% $ 32,417 2.68 $ 34,672 1.96%
=========== ==== ========== ===== ========== =====
Ratio of interest-earning assets to
interest-bearing liabilities...... 1.04x 1.02x
===== =====
</TABLE>
- -------------------
(1) Non-accrual loans are included in the table for computation purposes, but
the foregone interest on such loans is excluded.
(2) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin represents net interest income divided by average
interest-earning assets.
35
<PAGE>
The following table represents the extent to which changes in interest
rates and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and expense during the
periods indicated. Information is provided for each major component of interest-
earning assets and interest-bearing liabilities with respect to: (i) changes in
volume (changes in volume multiplied by prior rate); (ii) changes attributable
to rate (changes in rate multiplied by prior volume); and (iii) the net change.
The changes attributable to both volume and rate have been allocated
proportionately to the change due to volume and the change due to rate.
<TABLE>
<CAPTION>
For the Three Months Ended For the Year Ended
March 31, 1998 Compared to the December 31, 1997 Compared to the
Three Months Ended March 31, 1997 Year Ended December 31, 1996
----------------------------------- ----------------------------------
Increase Increase
(Decrease) (Decrease)
Due to Due to
-------------------- -------------------
Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- ---
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans....................................... $ 3,029 $ 337 $3,366 $6,690 $ 740 $ 7,430
Securities.................................. (1,057) 232 (825) (3,651) (495) (4,146)
Other....................................... (320) 34 (286) 1,261 82 1,343
------- ----- ------ ------ ------ -------
Total interest income on interest-earning
assets................................... 1,652 603 2,255 4,300 327 4,627
------- ----- ----- ------ ------ -------
Interest expense:
Deposits
NOW and checking accounts................ 5 23 28 11 38 49
Money market accounts.................... (8) 5 (3) (53) 9 (44)
Passbook accounts........................ (23) (40) (63) 122 (60) 62
Time deposits............................ 885 567 1,452 2,196 (23) 2,173
Borrowings.................................. (473) 48 (425) (1,861) (267) (2,128)
Long-term debt to affiliates................ 70 -- 70 264 (79) 185
------- ----- ------- ------- ------- -------
Total interest expense on interest-bearing
liabilities.................................. 456 603 1,059 679 382 297
------- ----- ----- ------- ------- -------
Increase in net interest income................ $ 1,196 $ -- $1,196 $ 3,621 $ 709 $ 4,330
======= ===== ====== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1996 Compared to the
Year Ended December 31, 1995
Increase
(Decrease)
Due to
---------------------
Volume Rate Net
------ ---- ---
(Dollars in Thousands)
<S> <C> <C> <C>
Interest income:
Loans....................................... $2,468 $ 3,501 $ 5,969
Securities.................................. (4,137) 1,079 (3,058)
Other....................................... 1,049 (30) 1,019
------- ------- -------
Total interest income on interest-earning
assets................................... (620) 4,550 3,930
------- ------- -------
Interest expense:
Deposits
NOW and checking accounts................ 26 19 45
Money market accounts.................... (99) 6 (93)
Passbook accounts........................ (249) 224 (25)
Time deposits............................ 6,473 (3,165) 3,308
Borrowings.................................. (8,850) (525) (9,375)
Long-term debt to affiliates................ 126 (227) (101)
------- ------- -------
Total interest expense on interest-bearing
liabilities.................................. (2,573) (3,668) (6,241)
------- ------- -------
Increase in net interest income................ $1,953 $ 8,218 $10,171
======= ======= =======
</TABLE>
36
<PAGE>
Provision For Loan Losses. The provision for loan losses reflects
management's judgment of the current period cost associated with credit risk
inherent in the Company's loan portfolio. Specifically, the provision for loan
losses represents the amount charged against current period earnings to achieve
an allowance for loan losses that in management's judgment is adequate to absorb
losses inherent in the Company's loan portfolio.
For the three months ended March 31, 1998, the provision for loan
losses was $633,000, an increase of $616,000 from the $17,000 provision for the
three months ended March 31, 1997. The allowance for loan losses as of March 31,
1998, as a percentage of total gross loans and as a percentage of non-performing
loans, was 1.01% and 138.9%, respectively, compared to 1.06% and 88.3%,
respectively at March 31, 1997.
For the year ended December 31, 1997, the provision for loan losses was
$1.2 million, a decrease of $303,000, or 20.0% from the $1.5 million provision
for the year ended December 31, 1996. The allowance for loan losses at December
31, 1997, as a percentage of total gross loans and as a percentage of
non-performing loans was 1.00% and 123.2%, respectively, compared to 1.10% and
60.0%, respectively, at December 31, 1996. The provision for loan losses for the
year ended December 31, 1996, was $1.5 million, which represents a decrease of
$7.3 million, or 83.2% from the $8.8 million provision for loan losses for the
year ended December 31, 1995. In 1995, management increased the allowance for
loan losses to address the continued depressed California economy and real
estate market and to significantly increase the Company's overall level of
allowance for loan losses to over 1.00% of gross loans.
Noninterest Income. The following table sets forth the components of
noninterest income for the periods indicated.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31, For the Years Ended December 31,
--------------------- ------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Service charges on deposit accounts.... $ 218 $ 216 $ 888 $ 615 $ 566
Commercial banking fees................ 254 208 977 421 92
Gain on sale of servicing rights....... 61 54 1,165 672 755
Gain (loss) on loan sales.............. (26) -- (204) 528 382
Loss on sale of securities............. -- -- (806) (335) --
Gain on branch sale.................... -- -- -- -- 656
Loan servicing income.................. 44 294 601 680 272
Miscellaneous income................... 7 90 473 816 1,044
----- ----- ------ ------ ------
Total noninterest income............... $ 558 $ 862 $3,094 $3,397 $3,767
===== ===== ====== ====== ======
</TABLE>
For the three months ended March 31, 1998, noninterest income was
$558,000, a decrease of $304,000, or 35.3% from $862,000 for the same period of
the preceding year. For the year ended December 31, 1997, noninterest income was
$3.1 million, a decrease of $303,000, or 8.9% from the year ended December 31,
1996. Noninterest income in 1996 of $3.4 million decreased $370,000, or 9.8%
from the $3.8 million recognized during the year ended December 31, 1995.
The decrease in noninterest income for the first quarter of 1998
reflects primarily the reduction in loan servicing income resulting from the
sale of the loan servicing portfolio during 1997.
The decrease in noninterest income for the year ended December 31,
1997, reflects the $806,000 loss incurred in connection with the sale of
COFI-based securities pursuant to the Company's business strategy to reduce its
assets tied to COFI. The $1.2 million gain on sale of servicing rights is a
non-recurring gain recognized as a result of the disposition of such servicing
rights in conjunction with the Bank's decision to close its mortgage banking
division. Additionally, the $601,000 of loan servicing income is substantially
non-recurring since substantially all of the related servicing portfolio was
sold during 1997. Commercial banking fees increased to $977,000 in 1997, or
132.1% from the $421,000 in 1996 as a result of the Company's business focus
shift to commercial banking.
37
<PAGE>
Noninterest income for the year ended December 31, 1996, of $3.4
million is $370,000, or 9.8% less than the $3.8 million of noninterest income
for the year ended December 31, 1995. The noninterest income for the year ended
December 31, 1996, included $335,000 of losses incurred in conjunction with the
disposal of COFI-based securities. Included in noninterest income for the year
ended December 31, 1995, was a gain of $656,000 recognized in connection with
the sale of a retail branch.
Noninterest Expense. The following table sets forth the components of
noninterest expense for the periods indicated.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31, For the Years Ended December 31,
--------------------- ------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Personnel.............................. $4,308 $3,786 $14,087 $14,875 $12,000
Occupancy.............................. 1,246 1,159 4,811 4,754 4,355
Data processing........................ 749 500 2,059 1,859 1,696
Furniture and equipment................ 604 386 1,902 1,814 1,357
Deposit insurance...................... 231 572 1,798 3,519 3,051
SAIF recapitalization assessment....... -- -- -- 7,716 --
Communication.......................... 97 85 400 383 317
Professional fees and contracted
services............................ 454 385 2,242 1,551 1,303
Foreclosed assets expense.............. (32) 168 671 686 2,785
Miscellaneous expense.................. 1,588 1,095 4,220 4,256 3,278
------- ----- --------- -------- --------
Total noninterest expense.............. $9,245 $8,136 $32,190 $41,413 $30,142
====== ====== ======= ======= =======
Efficiency ratio....................... 73.92% 70.05% 69.33% 97.66% 92.45%
Efficiency ratio excluding SAIF
recapitalization assessment............ N/A N/A N/A 79.46 N/A
Noninterest expenses to average assets(1) 2.37% 2.16% 2.08 2.74 1.98
</TABLE>
- ----------
(1) Annualized for the three months ended March 31, 1998 and 1997.
Noninterest expense increased by $1.1 million, or 13.6% to $9.2 million
for the three months ended March 31, 1998 from $8.1 million for the three months
ended March 31, 1997 primarily as a result of computer conversion expenses and
the cost of increases in the Commercial Banking Division staffing level. During
the first quarter of 1998, the Bank successfully completed a core computer
conversion to a system which is year 2000 compliant. Total conversion expenses
included in the expenses for the three months ended March 31, 1998 are $328,000
of computer conversion related expenses. Personnel expenses of $4.3 million for
the first quarter of 1998 are $522,000, or 13.8%, higher than the $3.8 million
of personnel expenses for the first quarter of 1997. This increase resulted
primarily from the additional staff which was hired to execute the commercial
banking business plan.
Noninterest expense decreased to $32.2 million, or 22.3%, for the year
ended December 31, 1997 from $41.4 million for the year ended December 31, 1996,
primarily as a result of the $7.7 million SAIF recapitalization assessment
recognized in 1996. Deposit insurance premiums of $1.8 million for the year
ended December 31, 1997 compares with $3.5 million for the year ended December
31, 1996, a decrease of 48.9% due to the Bank reaching the "well capitalized"
level. As a result of reaching this capital level, the deposit insurance premium
was reduced from 16.4 basis points to 9.4 basis points on July 1, 1997. The
average deposit insurance premium for 1997 was 12.9 basis points. The deposit
insurance premium was further reduced to 6.4 basis points effective January 1,
1998. During 1997, the Bank began a core computer conversion to a system which
provides the necessary support for the Bank's new commercial banking activities.
Computer conversion related expenses were $390,000 for the year ended December
31, 1997. New equipment purchases for this conversion totaled $1.2 million which
will be amortized over a four year term commencing in 1998. As a result of the
foregoing and the improved net interest margin, the efficiency ratio decreased
to 69.3% in 1997 from 97.7% in 1996.
38
<PAGE>
Noninterest expense increased to $41.4 million for the year ended
December 31, 1996 from $30.1 million for the year ended December 31, 1995 as a
result of (i) the $7.7 million SAIF recapitalization assessment, (ii) a $2.9
million increase in personnel expenses which was primarily the result of the
establishment of the commercial banking division and three new retail branches,
(iii) an increase of $457,000 in furniture and equipment expense and $399,000 in
occupancy expenses, both primarily in conjunction with the establishment of
three new retail branches in 1996, and (iv) a $1.0 million increase of
miscellaneous expense primarily due to additional printing and advertising
expenses relating to the establishment of the commercial banking division and
the establishment of merchant card services. The increase in the foregoing
categories of noninterest expense during 1996 was partially offset by a $2.1
million decline in foreclosed assets expense due, in part, to the reduction in
the Company's non-performing assets.
Provision for Income Taxes. The provision for income taxes of $1.1
million and $1.4 million on the income before taxes of $2.6 million and $3.5
million for the three months ended March 31, 1998 and 1997, respectively,
represents an effective tax rate of 41.0%.
For the year ended December 31, 1997, the provision for income taxes of
$5.8 million on the income before taxes of $13.1 million represents an effective
tax rate of 44.2%. For the year ended December 31, 1996, the Company had a tax
benefit of $177,000 on the loss before taxes of $483,000. For the year ended
December 31, 1995, the Company's tax benefit was $3.4 million on the loss before
taxes of $6.3 million.
In 1997, the IRS concluded an examination of the income tax returns of
the Company for the years 1993 through 1995. The audit resulted in a cash
payment of $500,000, and the partial reversal of previously deferred tax assets
which approximated the allowances provided by the Company for this eventuality.
Financial Condition
General. At March 31, 1998, the Company had total assets of $1.56
billion, consistent with $1.56 billion at December 31, 1997, and total deposits
of $1.46 billion, as compared to $1.47 billion at December 31, 1997. At March
31, 1998, the Company had net loans of $1.23 billion, an increase of $26.0
million, or 2.1%, from December 31, 1997. At March 31, 1998, the Company had
investment securities of $262.4 million compared to $270.1 million at December
31, 1997. At March 31, 1998, the Company continued to have no borrowings,
consistent with December 31, 1997. At March 31, 1998, stockholders' equity
increased $2.0 million, or 3.27%, to $64.6 million from $62.6 million at
December 31, 1997.
At December 31, 1997, the Company had total assets of $1.56 billion and
total deposits of $1.47 billion. Total assets increased from $1.47 billion at
December 31, 1996, and total deposits increased from $1.39 billion at December
31, 1996. At December 31, 1997, the Company had net loans of $1.2 billion, a
14.3% increase from net loans of $1.05 billion at December 31, 1996. At December
31, 1997, the Company had investment securities totaling $270.1 million compared
to $343.7 million at December 31, 1996. At December 31, 1997, the Company had no
borrowings while the stockholders' equity increased to $62.6 million at December
31, 1997 from $54.3 million at December 31, 1996.
Loan Portfolio. In connection with the Bank's balance sheet
restructuring, the Bank closed its mortgage banking division and ceased the
origination of nonconforming mortgages for sale in the secondary market, but
continued to originate conforming residential mortgages (1-4 family) primarily
for portfolio retention. Residential mortgages (1-4 family) originated for sale
in the three months ended March 31, 1998 aggregated $5.0 million as compared to
$4.1 million, $22.4 million, $83.4 million and $87.7 million in the three months
ended March 31, 1997 and the years ended December 31, 1997, 1996 and 1995,
respectively. In addition, with the creation of its commercial banking division
in 1996, new emphasis was placed on the origination of commercial real estate
loans and commercial business loans. Total new commitments for commercial loans
originated in the three months ended March 31, 1998 were $9.3 million as
compared to $4.3 million, $31.9 million and $9.9 million for the three months
ended March 31, 1997 and the years ended December 31, 1997 and 1996,
respectively.
39
<PAGE>
The following table shows the composition of the Bank's loan portfolio
by amount and percentage of total gross loans in each major loan category at the
dates indicated.
<TABLE>
<CAPTION>
At December 31,
At March 31, --------------------------------------------------------------------
1998 1997 1996 1995
----------------- ---------------- ------------------ -------------------
Amount % Amount % Amount % Amount %
------- --- ------ --- ------- --- ------ ---
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consumer
Residential mortgage (1-4
family)(1)............. $ 716,492 57.83% $ 691,167 56.98% $ 541,156 50.79% $ 507,121 49.45%
Home equity.............. 16,405 1.32 16,743 1.38 10,673 1.00 1,193 0.12
Other.................... 2,142 0.17 2,732 0.23 2,642 0.25 2,981 0.29
-------- ------ ---------- ------ ---------- ------ --------- ------
Total consumer...... 735,039 59.33 710,642 58.59 554,471 52.04 511,295 49.86
--------- ----- ---------- ------ ---------- ------ --------- ------
Commercial
Secured by real estate -
multi-family......... 336,166 27.13 339,257 27.97 361,591 33.93 376,398 36.70
Secured by real estate -
nonresidential(2)..... 112,711 9.10 115,366 9.51 123,003 11.54 131,259 12.80
Construction............. 32,568 2.63 26,603 2.19 19,892 1.87 6,612 0.64
Commercial business...... 22,407 1.81 21,146 1.74 6,595 0.62 -- --
---------- ------ ---------- ------ ---------- ------ ---------- ------
Total commercial.... 503,852 40.67 502,372 41.41 511,081 47.96 514,269 50.14
---------- ----- ---------- ------ ---------- ------ ---------- ------
Total gross loans............. 1,238,891 100.00% 1,213,014 100.00% 1,065,552 100.00% 1,025,564 100.00%
====== ====== ====== ======
Net deferred loan origination
costs...................... 1,359 1,223 816 44
Allowance for loan losses..... (12,552) (12,142) (11,682) (13,699)
---------- ---------- ---------- ----------
Net loans..................... $1,227,698 $1,202,095 $1,054,686 $1,011,909
========== ========== ========== ==========
</TABLE>
<PAGE>
At December 31,
--------------------------------------------
1994 1993
------ -----
Amount % Amount %
------ --- ------ --
Consumer
Residential mortgage (1-4
family)(1)............. $432,045 44.33% $380,570 42.85%
Home equity.............. -- -- -- --
Other.................... 1,474 0.15 1,929 0.22
--------- ------ -------- ------
Total consumer...... 433,519 44.48 382,499 43.07
--------- ------ -------- -----
Commercial
Secured by real estate -
family................ 391,509 40.17 329,401 37.09
Secured by real estate -
nonresidential(2)..... 141,995 14.57 151,061 17.01
Construction............. 7,597 0.78 25,115 2.83
Commercial business...... -- -- -- --
--------- ------- -------- ------
Total commercial.... 541,101 55.52 505,577 56.93
------- ------ -------- ------
Total gross loans............. 974,620 100.00% 888,076 100.00%
====== ======
Net deferred loan origination
costs...................... (1,402) (2,075)
Allowance for loan losses..... (7,550) (8,000)
-------- --------
Net loans..................... $965,668 $878,001
======== ========
- ------------
(1) Includes $487.6 million of limited documentation loans at March 31, 1998.
See "Business--Lending Activities--Residential Mortgages (1-4 family).
(2) Includes $73.1 million, $126.0 million, $87.5 million, $123.0
million,$131.3 million, $142.0 million, and $151.0 million of primarily
COFI-based loans at March 31, 1998 and 1997, and at December 31, 1997,
1996, 1995,1994 and 1993, respectively, originated by the Bank during 1988
through 1992.
40
<PAGE>
The following table shows the Bank's loan originations during the periods
indicated.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31, For the Years Ended December 31,
-------------------- --------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Consumer
Residential mortgage (1-4 family)
For sale:
GNMA........................... $ -- $ 759 $ 759 $ 33,066 $ 33,875
FHLMC and FNMA................. 4,978 3,297 21,675 50,319 53,819
For portfolio:
Fully documented loans......... 4,441 1,229 7,867 10,675 8,932
Limited documentation loans.... 71,178 29,345 244,523 131,548 114,251
Home equity loans...................... 1,068 5,000 13,552 24,703 4,748
-------- ------- -------- -------- --------
Total consumer loans........... 81,665 39,630 288,376 250,311 215,625
-------- ------- -------- -------- --------
Commercial
Secured by real estate - multi-family.. 1,401 2,914 7,461 7,318 842
Secured by real estate - non-residential 3,159 3,420 23,743 2,655 864
Construction (1)....................... 11,202 8,025 59,569 42,166 15,737
Commercial business.................... 9,256 4,334 31,933 9,901 --
-------- ------- -------- -------- --------
Total commercial loans......... 25,018 18,693 122,706 62,040 17,443
-------- ------- -------- -------- --------
Total loan originations........ $106,683 $58,323 $411,082 $312,351 $233,068
======== ======= ======== ======== ========
</TABLE>
- -------------
(1) Includes loans in process.
Included in the Bank's residential mortgages (1-4 family) as of March
31, 1998 and December 31, 1997, respectively, were $492.1 million and $450.5
million, or 68.1% and 65.2% of limited documentation loans. Beginning in 1993,
the Bank has specialized in this loan product. Because of the less than full
documentation required for such loans, the Bank has emphasized relatively small
average loan size and low average loan-to-value ratios for these loans, as
evidenced by an average loan balance of $164,100 and average loan-to-value
ratios of 64% as of March 31, 1998.
Since it began originating limited documentation loans, the Bank has
experienced no net charge-offs with respect to such loans. At March 31, 1998,
the Bank had two loans more than three payments delinquent with an aggregate
principal balance of $199,000. Moreover, during the third quarter of 1997, the
Bank sold $17.2 million of the limited documentation loans to test the market
reception for this product. The Bank received a price in excess of par value on
the sale of such loans. Notwithstanding the historical performance of this type
of loan, there can be no assurance that such performance will continue.
Total gross loans increased $25.9 million, or 2.13%, to $1.24 billion
at March 31, 1998 from $1.21 billion at December 31, 1997 and 13.9%, from $1.07
billion at December 31, 1996, which was a 3.9% increase from $1.03 billion at
December 31, 1995. Increases in gross loans were the result of increases in
residential (1-4 family) loan production for portfolio retention and commercial
business loan generation resulting from the creation of the Bank's commercial
banking division in 1996.
41
<PAGE>
The following table sets forth the Bank's mortgage loan originations,
purchases, sales and principal repayments of loans and mortgage-backed
securities for the periods indicated.
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, 1998 For the Year Ended December 31,
---------------- ----------------------------------------------
1998 1997 1997 1996 1995
------ ------ ------ ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Mortgage loans:
Balance at beginning of period................ $1,178,217 $1,045,449 $1,045,449 $1,008,928 $ 964,194
---------- ---------- ---------- ---------- ---------
Mortgage loans originated:
Residential mortgage
(1 to 4 family)....................... 80,597 34,630 274,824 225,608 210,877
Home equity............................. 1,068 5,000 13,552 24,703 4,748
Secured by real estate-multifamily...... 1,401 2,914 7,461 7,318 842
Secured by real estate-nonresidential... 3,159 3,420 23,743 2,655 864
Construction............................ 11,202 8,025 59,569 42,166 15,737
---------- ---------- ---------- ---------- ---------
Total mortgage loans originated....... 97,427 53,989 379,149 302,449 233,068
Mortgage loans purchased.................. 217 361 44,416 7,643 16,677
---------- ---------- ---------- ---------- ---------
Total mortgage loans originated and
purchased............................... 97,644 54,350 423,565 310,092 249,745
Mortgage loans sold....................... (3,509) (940) (43,554) (478) (8,412)
Principal repayments...................... (68,929) (45,869) (242,930) (271,439) (186,523)
Increased premiums/discounts and
deferred loan fees...................... 136 (50) 407 772 1,446
Net (increase) decrease in
allowance for loan losses............... (410) 271 (460) 2,017 (6,149)
Mortgage loans transferred to real
estate owned............................ -- (1,780) (4,260) (4,443) (5,373)
---------- ---------- ---------- ---------- ----------
Balance at end of period...................... $1,203,149 $1,051,431 $1,178,217 $1,045,449 $1,008,928
========== ========== ========== ========== ==========
Other loans:
At beginning of period.................... $ 23,878 $ 9,237 $ 9,237 $ 2,981 $ 1,474
Other loans originated.................... 9,256 4,334 31,933 9,901 --
Other loans sold.......................... -- -- (1,113) -- --
Principal repayments...................... (8,585) (2,504) (16,179) (3,645) 1,507
---------- ---------- ---------- ---------- ----------
At end of period.............................. $ 24,549 $ 11,067 $ 23,878 $ 9,237 $ 2,981
========== ========== ========== ========== ==========
Mortgage-backed securities:
At beginning of period........................ $ 266,103 $ 328,069 $ 328,069 $372,045 $ 410,404
Mortgage-backed securities
purchased.............................. -- 100 200 80 55
Mortgage-backed securities sold........... -- -- (24,301) (9,135) --
Amortization of premiums.................. (154) (350) (1,029) (1,002) (1,165)
Net change in unrealized gain
(loss) on mortgage backed
securities available for sale.......... 842 (950) 1,540 (1,367) (2,258)
Principal repayments...................... (4,364) (11,799) (38,376) (32,552) (34,991)
---------- ---------- ---------- ---------- ---------
At end of period.............................. $ 262,427 $ 315,070 $ 266,103 $ 328,069 $ 372,045
========== ========== ========== ========== =========
</TABLE>
In 1996, management made a strategic decision to reduce its COFI-based
assets and in the fourth quarter of 1996 ceased COFI-based lending. In addition,
the Bank began to reduce its COFI-based loan portfolio through amortization and
sales and replace it with current-index products including adjustable-rate
mortgage loans and loans with an initial rate of interest for a fixed term
(generally 3 to 5 years), the interest rates on which adjust annually thereafter
("intermediate fixed-rate loans"). As a result of this initiative, the Bank's
COFI-based loans declined to $532.3 million at March 31, 1998 from $554.4
million, $641.9 million, and $670.7 million at December 31, 1997, 1996 and 1995,
respectively.
At March 31, 1998, total gross loans included $306.1 million of
intermediate fixed-rate loans compared with $291.5 million at December 31, 1997,
an increase of $14.6 million or 5.0% which was the result of the Bank continuing
to emphasize the origination of intermediate fixed-rate mortgages (1-4 family).
Fixed-rate loans at March 31, 1998 were
42
<PAGE>
$256.3 million compared with $241.5 million at December 31, 1997, an increase of
6.1% which was the result of the origination of primarily fifteen year
mortgages.
As of December 31, 1997, total gross loans included $291.5 million of
intermediate fixed-rate loans compared with $224.3 million as of December 31,
1996, an increase of 30.0% which was the result of the Bank emphasizing the
origination of intermediate fixed-rate residential mortgages (1-4 family) during
1997. Fixed-rate loans as of December 31, 1997 were $241.5 million compared with
$176.8 million as of December 31, 1996, an increase of 36.6% which was the
result of the origination of fifteen and thirty year fixed-rate loans during
1997. To better manage its interest rate risk, the Bank has ceased the
origination of thirty year fixed-rate loans for portfolio retention, except on a
customer accommodation basis.
As of December 31, 1996, total gross loans included $224.3 million of
intermediate fixed-rate loans, compared with $213.4 million as of December 31,
1995, an increase of 5.1%. As of December 31, 1996, total fixed-rate loans were
$176.8 million as compared to $143.9 million as of December 31, 1995. As of
December 31, 1996, the ARM loan portfolio was $664.4 million as compared with
$668.3 million as of December 31, 1995, a decrease of 0.6%.
The following table sets forth the contractual loan maturity of the
Bank's loan portfolio at March 31, 1998. ARM loans are shown in the periods in
which they reprice rather than when they become due. The table does not include
the effect of future principal prepayments. The rate of loan prepayment varies
from time-to-time, depending upon various factors including market interest
rates.
<TABLE>
<CAPTION>
At March 31, 1998
-----------------
After Ten
After After After Years
One Year Three Years Five Years Through After
Within Through Through Through Twenty Twenty Total
One Year Three Years Five Years Ten Years Years Years -----
-------- ----------- ---------- --------- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Consumer:
Residential mortgage (1-4 family)... $216,073 $ 98,107 $181,643 $ 7,290 $171,758 $41,622 $ 716,493
Home equity......................... 16,405 -- -- -- -- -- 16,405
Other............................... 2,142 -- -- -- -- -- 2,142
-------- -------- -------- ------- -------- ------- ---------
Total consumer................. 234,620 98,107 181,643 7,290 171,758 41,622 735,040
Commercial:
Secured by real estate -
multi-family..................... 289,478 13,169 19,011 6,696 7,812 -- 336,166
Secured by real estate -
nonresidential................... 102,392 9 3,736 6,415 159 -- 112,711
Construction....................... 32,568 -- -- -- -- -- 32,568
Commercial business................ 21,841 -- 508 57 -- -- 22,406
-------- -------- -------- ------- -------- ------- ----------
Total commercial............. 446,279 13,178 23,255 13,168 7,971 -- 503,851
Total loans.................. $680,899 $111,285 $204,898 $20,458 $179,729 $41,622 1,238,891
======== ======== ======== ======= ======== ======= ----------
Net deferred loan origination costs.... 1,359
Allowance for loan losses.............. (12,552)
----------
Net loans.............................. $1,227,698
==========
</TABLE>
43
<PAGE>
The following table sets forth at March 31, 1998 the dollar amount of
loans and mortgage-backed securities contractually due or repricing after March
31, 1999 and whether such loans and securities have fixed or adjustable interest
rates.
<TABLE>
<CAPTION>
Due or Repricing After March 31, 1999
-------------------------------------
Fixed Adjustable Total
----- ---------- -----
(Dollars in Thousands)
<S> <C> <C> <C>
Consumer:
Residential mortgage (1-4 family)......... $214,484 $285,936 $500,420
Home equity............................... -- -- --
Other..................................... -- -- --
-------- -------- --------
Total consumer....................... 214,484 285,936 500,420
Commercial:
Secured by real estate - multi-family..... 27,160 19,527 46,687
Secured by real estate - nonresidential... 10,320 -- 10,320
Construction.............................. -- -- --
Commercial business....................... 565 -- 565
-------- -------------- -------------
Total commercial..................... 38,045 19,527 57,572
Total loans......................... 252,529 305,464 557,992
-------- --------- ---------
Mortgage-backed securities..................... 1 262,425 262,427
-------- --------- ---------
Total loans and mortgage-backed securities..... $252,530 $567,889 $820,419
======== ======== ========
</TABLE>
Non-Performing Assets and OREO. Management generally places loans on
non-accrual status when they become 90 days past due, unless they are both well
secured and in the process of collection. When a loan is placed on non-accrual
status, any interest previously accrued but not collected is reversed from
income. Loans are charged off when management determines that collection has
become unlikely. Other real estate owned ("OREO") consists of real property
acquired through foreclosure on the collateral underlying defaulted loans.
The following table sets forth information regarding non-performing
assets at the dates indicated.
<TABLE>
<CAPTION>
At December 31,
At March 31, -----------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans...................... $ 9,038 $ 9,854 $ 19,477 $ 20,484 $ 11,324 $ 14,591
Other real estate owned (OREO)......... 101 412 1,619 1,803 5,023 14,415
---------- ---------- ---------- ---------- ---------- --------
Total non-performing assets............ $ 9,139 $ 10,266 $ 21,096 $ 22,287 $ 16,347 $ 29,006
========== ========== ========== ========== ========== ========
Non-performing assets to total assets.. 0.59% 0.66% 1.43% 1.46% 1.07% 1.99%
Non-accrual loans to total loans....... 0.73 0.81 1.83 2.00 1.16 1.64
Non-performing assets to total loans
and OREO............................. 0.74 0.85 1.98 2.17 1.67 3.21
Total gross loans...................... $1,238,891 $1,213,014 $1,065,552 $1,025,564 $ 974,620 $888,076
========== ========== ========== ========== ========== ========
Gross income not recognized on
nonaccrual loans.................... $53 $65 $172 $489 $224 N/A
=== === ==== ==== ==== ===
</TABLE>
The Bank records OREO at the lower of carrying value or fair value less
estimated costs to sell. Estimated losses that result from the ongoing periodic
valuation of these properties are charged to earnings with a provision for
losses on foreclosed property in the period in which they are identified. During
the three months ended March 31, 1998, the Bank reduced total non-performing
assets to $9.1 million from $10.3 million at December 31, 1997, a decrease of
$1.2 million or 10.9%. During 1997, the Bank reduced total non-performing assets
to $10.3 million as of December 31, 1997 from $21.1 million as of December 31,
1996, a reduction of $10.8 million or 51.3%. The reduction was the result of the
sale of non-performing loans and the reclassification of other loans which
became current and were
44
<PAGE>
reclassified to performing status. During the three months ended March 31, 1998,
the Bank reduced OREO from $412,000 to $101,000, or 75.4%, as a result of the
sale of assets. During the year ended December 31, 1997, OREO decreased from
$1.6 million to $412,000, or 74.5% as a result of the disposition of the assets.
At March 31, 1998, OREO consisted of one property acquired through foreclosure
with a carrying value of $101,000.
The policy of the Bank is to review each loan in the portfolio to
identify problem credits. There are four classifications for problem loans
"special mention," "substandard," "doubtful" and "loss." Special mention loans
do not yet warrant adverse classification, but possess credit deficiencies or
potential weaknesses requiring the Bank's attention. Substandard loans have one
or more well-defined weaknesses and are characterized by the distinct
possibility that the Bank will sustain some loss if the deficiencies are not
corrected. Doubtful loans have the weaknesses of substandard loans with the
additional characteristic that the weaknesses make collection or liquidation in
full on the basis of currently existing facts, conditions and values
questionable, and there is a high possibility of loss. A loan classified "loss"
is considered uncollectible and its continuance as an asset is not warranted.
The following table sets forth criticized loans at the dates indicated.
<TABLE>
<CAPTION>
At December 31,
At March 31, ----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Special mention loans................. $11,199 $ 7,182 $15,902 $ 3,066 $15,226 $11,547
Substandard and doubtful loans........ 16,096 16,822 19,235 28,462 20,248 25,044
-------- -------- -------- -------- -------- ---------
Total criticized loans............. $27,295 $24,004 $35,137 $31,528 $35,474 $36,591
======= ======= ======= ======= ======= =======
Total allowance for loan losses....... $12,552 $12,142 $11,682 $13,699 $ 7,550 $ 8,000
======= ======= ======= ======= ======== ========
Special mention loans to total loans.. 0.90% 0.59% 1.49% 0.30% 1.56% 1.30%
Substandard and doubtful loans to
total loans........................ 1.30 1.39 1.80 2.78 2.08 2.83
Criticized loans to total loans....... 2.20 1.98 3.30 3.07 3.65 4.13
Allowance for loan losses to
substandard and doubtful loans..... 77.98 72.18 60.73 48.13 37.29 31.94
Allowance for loan losses to
criticized loans................... 45.99 50.58 33.25 43.45 21.28 21.86
</TABLE>
With the exception of the criticized loans described above, management
is not aware of any other loans as of March 31, 1998 where the known credit
problems of the borrower would cause management to doubt such borrower's ability
to comply with their present loan repayment terms or that would result in such
loans being included in the non-performing asset table above at some future
date. During the first quarter of 1998, the Bank employed an outside loan review
firm to review the classification of its commercial loan portfolio. There were
no material changes in the classifications as a result of such review.
Management cannot predict the extent to which economic conditions in
the Bank's market area may worsen or the full impact such conditions may have on
the Bank's loan portfolio. Accordingly, there can be no assurance that other
loans will not become 90 days or more past due, be placed on non-accrual status
or become impaired or restructured loans or OREO in the future.
45
<PAGE>
The following table sets forth delinquencies in the Bank's loan
portfolio at the dates indicated:
<TABLE>
<CAPTION>
At March 31, 1998 At December 31, 1997
------------------------------------------ ---------------------------------------
60-89 Days 90 Days or More 60-89 Days 90 Days or More
------------------- ------------------ ------------------ -----------------
Principal Principal Principal Principal
Number Balance Number Balance Number Balance Number Balance
------ ------- ------ ------- ------ ------- ------ -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consumer:
Residential mortgages (1-4 family)....... 7 $1,065 14 $2,696 6 $717 16 $3,547
Home equity.............................. -- -- 1 29 2 49 1 15
Other.................................... 17 37 10 17 27 35 22 44
-- ------ -- ------ -- ---- -- ------
Total consumer...................... 24 1,102 25 2,742 35 801 39 3,606
-- ------ -- ------ -- --- -- ------
Commercial:
Secured by real estate - multi-family.... -- -- -- -- -- -- -- --
Secured by real estate - nonresidential.. -- -- -- -- -- -- 2 2,418
Construction............................. -- -- -- -- -- -- -- --
Commercial business...................... -- -- -- -- -- -- -- --
Total commercial.................... -- -- -- -- -- -- 2 2,418
-- ------ -- ------ -- ---- --- ------
Total.................................... 24 $1,102 25 $2,742 35 $801 41 $6,024
== ====== == ====== == ==== === ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
At December 31, 1996 At December 31, 1995
------------------------------------------ ---------------------------------------
60-89 Days 90 Days or More 60-89 Days 90 Days or More
------------------- ------------------ ------------------ -----------------
Principal Principal Principal Principal
Number Balance Number Balance Number Balance Number Balance
------ ------- ------ ------- ------ ------- ------ -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consumer:
Residential mortgages (1-4 family)....... 9 $1,054 22 $ 4,179 8 $310 32 $ 6,055
Home equity.............................. -- -- -- -- -- -- -- --
Other.................................... 19 29 12 14 9 34 12 8
-- ------ -- ------- -- ---- -- -------
Total consumer...................... 28 1,083 34 4,193 17 344 44 6,063
-- ------ -- ------- -- ---- -- -------
Commercial:
Secured by real estate - multi-family.... -- -- 1 940 -- -- 2 1,872
Secured by real estate - nonresidential.. -- -- 6 6,054 -- -- 6 3,750
Construction............................. -- -- -- -- -- -- -- --
Commercial business...................... -- -- -- -- -- -- -- --
Total commercial.................... -- -- 7 6,994 -- -- 8 5,622
-- ------ -- ------- -- ---- -- -------
Total.................................... 28 $1,083 41 $11,187 17 $344 52 $11,683
== ====== == ======= == ==== == =======
</TABLE>
46
<PAGE>
During the three months ended March 31, 1998, delinquent residential
mortgages (1-4 family) decreased to $3.8 million or 0.52% of gross residential
mortgages (1-4 family) from $4.3 million or 0.62% of gross residential mortgages
(1-4 family) at December 31, 1997. During the year ended December 31, 1997,
delinquent residential mortgages (1-4 family) decreased from $5.2 million, or
0.97% of gross residential mortgages (1-4 family) at December 31, 1996. This
compares with a decrease from $6.4 million as of December 31, 1995, or 1.26% of
gross residential mortgages (1-4 family). Management attributes the reduction in
delinquent loans to a general improvement in the California economy and to the
greater focus by management on the reduction of delinquent loans.
The delinquent mortgage loans secured by nonresidential real estate
decreased to zero at March 31, 1998 from $2.4 million at December 31, 1997 as a
result of the assumption of one of the delinquent nonresidential loans by a
third party. The delinquent mortgage loans secured by nonresidential real estate
decreased to $2.4 million as of December 31, 1997 from $6.1 million as of
December 31, 1996, or by 60.7% as a result of the sale of one delinquent loan
during the period. At March 31, 1998, there were no delinquent mortgage loans
secured by multi-family real estate.
Allowance For Loan Losses. The Bank has established a formalized
process for determining an adequate allowance for loan losses. This process
results in an allowance that consists of two components, allocated and
unallocated. The allocated component includes allowance estimates that result
from analyzing certain individual loans (including impaired loans), and includes
the results of analyzing loans on a pool basis. For loans that are analyzed
individually, third party information such as appraisals may be used to
supplement management's analysis. For loans that are analyzed on a pool basis,
such as residential mortgage loans (1-4 family), management's analysis consists
of reviewing delinquency trends, charge-off experience, economic conditions,
current composition of the loan portfolio, regional collateral value trends, and
other factors. The unallocated component of the allowance for loan losses is
intended to compensate for the subjective nature of estimating an adequate
allowance for loan losses, economic uncertainties, and other factors. In
addition to the assessment performed by management, the Bank's loan portfolio is
subject to an internal asset review function and is examined by its regulators.
The results of these examinations are incorporated into management's assessment
of the allowance for loan losses.
The allowance for loan losses is increased by provisions for loan
losses and reduced by charge-offs, net of recoveries. Loans are charged off to
the extent they are classified as loss either internally or by the Bank's
regulators. For any loan that is past due for more than 90 days, management will
generally charge off the amount by which the recorded loan amount exceeds the
value of the underlying collateral, unless the loan is both well-secured and in
the process of collection. Recoveries of amounts that have previously been
charged off are generally recorded only to the extent that cash is received.
While management uses available evidence in assessing the adequacy of
the allowance for loan losses, future additions to the allowance for loan losses
will be subject to continuing evaluations of the inherent risk in the portfolio.
If the economy declines or asset quality deteriorates, additional provisions for
loan losses could be required. Additionally, the Bank's regulators review the
adequacy of the allowance for loan losses as part of their examination process
and may require the Bank to record additional provisions for loan losses based
on their judgment or information available to them at the time of their
examinations. Management believes that the allowance for loan losses is adequate
to provide for estimated losses inherent in the Bank's loan portfolio.
47
<PAGE>
The following table sets forth information concerning the Bank's
allowance for loan losses for the dates indicated:
<TABLE>
<CAPTION>
For the Three Months
Ended March 31, For the Years Ended December 31,
-------------------- -----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Allowance for loan losses:
Balance beginning of period............................. $12,142 $11,682 11,682 $13,699 $ 7,550 $8,000 $6,979
------- ------- ------- ------- ------- ------ ------
Provision for loan losses............................... 633 17 1,154 1,476 8,777 3,206 8,898
Charge-offs, net of recoveries
Consumer:
Residential mortgage (1-4 family)............. 2 272 564 948 940 3,146 6,747
Other......................................... 51 49 160 194 22 42 52
------- -------- ------- ------- ------- ------ ------
Total consumer........................... 53 321 724 1,142 962 3,188 6,799
------- ------- ------- ------- ------- ------ ------
Commercial:
Secured by real estate - multi-family......... -- (148) 3 416 737 76 208
Secured by real estate - nonresidential....... 170 115 (33) 1,935 930 393 1,087
Construction.................................. -- -- -- -- -- -- (154)
Commercial business........................... -- -- -- -- (1) (1) (63)
-------- -------- ------- ------- ------- ------ ------
Total commercial......................... 170 (33) (30) 2,351 1,666 468 1,078
------- ------- ------- ------- ------- ------ ------
Total charge-offs, net of recoveries.................... 223 288 694 3,493 2,628 3,656 7,877
------- ------- ------- ------- ------- ------ ------
Balance at end of period................................ $12,552 $11,411 $12,142 $11,682 $13,699 $7,550 $8,000
======= ======= ======= ======= ======= ====== ======
Allowance for loan losses to ending loans............... 1.01% 1.06% 1.00% 1.10% 1.34% 0.78% 0.90%
Net charge-offs to average loans outstanding(1)......... 0.07 0.11 0.06 0.34 0.26 0.37 0.85
</TABLE>
- ----------
(1) Annualized for the three months ended March 31, 1998 and 1997.
48
<PAGE>
During the three months ended March 31, 1998, the allowance for loan
losses increased to $12.6 million from $12.1 million at December 31, 1997, or by
3.4%, due to the Bank providing additional loss provisions of $633,000 and
recording net charge-offs of $223,000. During the year ended December 31, 1997,
the allowance for loan losses increased to $12.1 million from $11.7 million as
of December 31, 1996, or by 3.4%, due to the Bank providing additional loan loss
provisions of $1.2 million and recording net charge-offs of $694,000 during the
year as California real estate values rebounded. During the year ended December
31, 1996, the allowance for loan losses decreased to $11.7 million from $13.7
million as of December 31, 1995, or by 14.6%, as a result of net charge-offs of
$3.5 million during the year which was partially offset by an additional
provision of $1.5 million. The $8.8 million provision for loan losses for the
year ended December 31, 1995, reflected management's decision to increase the
allowance for loan losses to address the continued depressed California economy
and real estate market and to significantly increase the Company's overall level
of loan loss allowance to over 1.00% of gross loans.
49
<PAGE>
The following table provides a summary of the allocation of the
allowance for loan losses for individual loan categories at the dates indicated.
The allocations presented should not be interpreted as an indication that
charge- offs will be incurred in these amounts or proportions, or that the
portion of the allowance allocated to each loan category represents the total
amount available for losses that may occur within that loan category. The entire
amount of the allowance for loan losses is available to absorb loan losses,
irrespective of the loan category to which any potential charge-off might
relate.
<TABLE>
<CAPTION>
At March 31, At December 31,
------------------ --------------------------------------------------------------
1998 1997 1996 1995
------ ------ ------ ------
Amount % Amount % Amount % Amount %
------ --- ------- --- ------- --- ------- ---
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allocated:
Consumer
Residential mortgage (1-4 family)........ $ 1,984 15.81% $ 1,982 16.32% $ 1,697 14.53% $ 2,691 19.64%
Home equity.............................. 250 1.99 255 2.10 222 1.90 13 0.09
Other.................................... 199 1.59 238 1.96 82 0.70 76 0.55
------- ------ ------- ------ -------- ------- ------- -----
Total consumer...................... 2,433 19.38 2,475 20.38 2,001 17.13 2,780 20.25
------- ------ ------- ------ -------- ------ ------- ------
Commercial
Secured by real estate - multi-family.... 2,479 19.75 2,130 17.54 2,533 21.68 2,384 17.40
Secured by real estate - nonresidential.. 1,921 15.30 1,919 15.80 2,811 24.06 3,323 24.26
Construction loans....................... 520 4.14 508 4.18 252 2.16 98 0.72
Commercial business...................... 663 5.28 572 4.71 117 1.00 -- --
------- ------ ------- ------ -------- -------- -------- ------
Total commercial.................... 5,583 44.58 5,129 42.23 5,713 48.90 5,805 42.38
Other......................................... 82 0.65 83 0.68 141 1.21 275 2.01
------- ------ ------- ------ -------- -------- -------- ------
Total allocated............................... 8,098 64.52 7,687 63.31 7,855 67.24 8,860 64.68
Unallocated................................... 4,454 35.48 4,455 36.69 3,827 32.76 4,839 35.32
------- ------ ------- ------ -------- -------- -------- -----
Total allowance for loan losses..... $12,552 100.00% $12,142 100.00% $11,682 100.00% $13,699 100.00%
======= ====== ======= ====== ======= ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------
1994 1993
------ -----
Amount % Amount %
------ --- ------- --
Allocated:
Consumer
<S> <C> <C> <C> <C>
Residential mortgage (1-4 family)........ $1,512 20.03% $1,907 23.84%
Home equity.............................. -- -- -- --
Other.................................... 11 0.15 16 0.20
------ ---- ------ -------
Total consumer...................... 1,523 20.17 1,923 24.04
------ ------ ------ ------
Commercial
Secured by real estate - multi-family.... 2,307 30.56 2,055 25.69
Secured by real estate - nonresidential.. 2,693 35.67 2,753 34.41
Construction loans....................... 259 3.43 447 5.59
Commercial business...................... -- -- -- --
------ ------ ------ ------
Total commercial.................... 5,259 69.66 5,255 65.69
Other......................................... 162 2.15 501 6.26
------ ------ ------ ------
Total allocated............................... 6,944 91.97 7,679 95.99
Unallocated................................... 606 8.03 321 4.01
------ ------ ------ -------
Total allowance for loan losses..... $7,550 100.00% $8,000 100.00%
====== ====== ====== ======
</TABLE>
50
<PAGE>
Securities. The Bank maintains a securities portfolio primarily
consisting of COFI-based multi-family U.S. government agency securities which
reprise on a monthly basis. The following table sets forth the Bank's securities
portfolio at the date indicated.
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------------------------
At March 31, 1998 1997 1996 1995
-------------------- ------ ------ -----
Amortized Market Amortized Market Amortized Market Amortized Market
Cost Value Cost Value Cost Value Cost Value
---------- ------ --------- ------ --------- ------ --------- ------
(Dollars in Thousands)
Investment securities held to maturity:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FHLB Note.................................. $ -- $ -- $ 2,000 $ 1,998 $ 8,670 $ 8,629 $ 12,960 $ 12,873
FHLB Note.................................. -- -- 2,000 2,000 2,000 2,000 2,000 2,000
SLMA Step-Up............................... -- -- -- -- -- -- 25,000 25,000
Other...................................... -- -- -- -- 5,000 4,988 7,000 6,979
-------- -------- -------- -------- -------- -------- -------- --------
Total................................... $ -- $ -- 4,000 $ 3,998 $ 15,670 $ 15,617 $ 46,960 $ 46,852
======== ======== ======== ======== ======== ======== ======== ========
Investment securities available for sale:
SLMA step-up............................... $ -- $ -- $ -- $ -- $ -- $ -- 10,000 $ 10,000
======== ======== ======== ======== ======== ======== ======== ========
Mortgage-backed securities held to maturity:
FHLMC...................................... $ 47,565 $ 45,984 $ 48,536 $ 46,618 $ 61,629 $ 59,014 $ 70,282 $ 68,503
FNMA....................................... 116,198 112,780 117,184 112,788 124,710 119,221 135,432 131,462
Other...................................... 15,099 14,677 16,075 15,566 22,216 21,248 27,817 26,574
-------- -------- -------- -------- -------- -------- -------- --------
Total................................... $178,862 $173,441 $181,795 $174,972 $208,555 $199,483 $233,531 $226,539
======== ======== ======== ======== ======== ======== ======== ========
Mortgage-backed securities available for sale:
FNMA....................................... $ 85,652 $ 83,565 $ 87,237 $ 84,308 $123,982 $119,514 $141,616 $138,514
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
As of March 31, 1998, the aggregate amortized cost of the securities
was $264.5 million and the market value was $257.0 million. Of the total $7.5
million unrealized loss on these securities, $2.1 million relates to securities
which are held as available-for-sale. Such unrealized losses, net of the related
tax benefit of $855,000, is reflected as a reduction of stockholders' equity.
The $5.4 million unrealized loss relating to the $178.9 million of securities
held to maturity has not been recognized in the financial statements of the
Bank.
The following table sets forth the carrying value, weighted average
yields and contractual maturities of the Company's securities as of March 31,
1998.
<TABLE>
<CAPTION>
At March 31, 1998
-------------------------------------------------------------------------------------------------
After One Year After Five Years
Through Through
Within One Year Five Years Ten Years After Ten Years
--------------------- --------------------- -------------------- ---------------------
Book Weighted Book Weighted Book Weighted Book Weighted
Carrying Average Carrying Average Carrying Average Carrying Average
Value Yield Value Yield Value Yield Value Yield
-------- -------- -------- -------- -------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale
securities:
FNMA...................... $ -- --% $ -- --% $ -- --% $ 83,565 5.96%
Held-to-maturity
securities:
FHLMC..................... $1,215 6.00% -- -- -- -- 46,350 5.66
FNMA...................... -- -- -- -- $2,942 5.80 113,256 5.88
Other..................... -- -- -- -- -- 15,099 5.54
------ ---- ------ --------
Total held-to-maturity-
securities........... $1,215 6.00 -- -- 2,942 5.80 174,705 5.79
------ ---- ------ --------
Total securities........ $1,215 6.00 $ -- -- $2,942 5.80 $258,270 5.85
====== ===== ====== ========
</TABLE>
-------------------------
Total
---------------------
Book Weighted
Carrying Average
Value Yield
-------- --------
Available-for-sale
securities:
FNMA...................... $ 83,565 5.96%
Held-to-maturity
securities:
FHLMC..................... 47,565 5.67
FNMA...................... 116,198 5.88
Other..................... 15,099 5.54
-------
Total held-to-maturity-
securities........... 178,862 5.80
--------
Total securities........ $262,427 5.85%
========
51
<PAGE>
Deposits. Deposits are the Bank's primary source of funding. At March
31, 1998, the Bank had a deposit mix of 75.8% in time deposits, 1.4% in money
market accounts, 14.4% in passbook accounts and 8.3% in NOW and checking
accounts. This compares with a deposit mix of 75.2%, 1.6%, 15.5% and 7.6% at
December 31, 1997, respectively.
The Bank obtains deposits primarily from the communities it serves. No
material portion of its deposits have been obtained from or are dependent on any
one person or industry. At March 31, 1998, less than 2% of the Bank's deposits
were held by customers located outside the United States. In addition, as of
such date, the 100 depositors with the largest aggregate average deposit
balances comprised less than 10% of the Bank's total deposits. The Bank's
business is not seasonal in nature. The Bank accepts deposits in excess of
$100,000 from customers. Included in time deposits as of March 31, 1998, is
$282.6 million, or 19.3% of total deposits, of deposits of $100,000 or greater.
At March 31, 1998, the Bank had no brokered deposits.
The following table sets forth the balances and rates paid for the
major categories of deposits for the periods indicated:
<TABLE>
<CAPTION>
At March 31 At December 31,
------------------- -----------------------------------------------------------------------
1998 1997 1996 1995
---- ---- ---- ----
Interest Interest Interest Interest
Amount Rate Amount Rate Amount Rate Amount Rate
------ ------ ------- ------ -------- ------ ------- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NOW and checking accounts.... $ 121,878 0.75% $ 111,984 0.80% $ 106,491 0.79% $ 99,912 0.80%
Money market accounts........ 20,926 2.48 20,986 2.48 22,111 2.39 25,425 2.39
Passbook accounts............ 211,109 2.26 212,013 2.11 216,471 2.20 205,017 2.21
Time deposits............... 1,109,410 5.18 1,124,004 5.20 1,048,052 4.95 981,250 5.50
--------- --------- --------- ----------
Total........................ $1,463,323 4.35 $1,468,987 4.38 $1,393,125 4.17 $1,311,604 4.57
========== ========== ========== ==========
</TABLE>
The average cost of deposits during the three months ended March 31,
1998 was 4.39% as compared to 4.19% for the same period in the previous year.
The average cost of deposits was 4.38%, 4.37% and 4.57% during the years ended
December 31, 1997, 1996 and 1995, respectively. At March 31, 1998, the Bank's
average rate paid on deposits was 57 basis points lower than the COFI index.
The following table presents, by various categories, the amount of time
deposit accounts as of March 31, 1998 and the time to maturity of the time
deposit accounts outstanding at March 31, 1998.
<TABLE>
<CAPTION>
Period to Maturity from March 31, 1998
------------------------------------------------
One Through
Certificate accounts Within One Year Three Years Thereafter At March 31, 1998
--------------- ----------- ---------- -----------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
3.99% or less............... $ 42,528 $ -- $ -- $ 42,528
4.00% to 4.99%.............. 262,925 115 -- 263,040
5.00% to 5.99%.............. 656,116 15,690 1,576 673,382
6.00% to 6.99%.............. 130,055 207 -- 130,262
7.00% to 7.99%.............. -- -- -- --
Over 8.00%.................. 193 -- 5 198
---------- ------- ------ ----------
$1,091,817 $16,012 $1,581 $1,109,410
========== ======= ====== ==========
</TABLE>
52
<PAGE>
At March 31, 1998, the Bank had $282.6 million in certificate accounts
in amounts of $100,000 or more maturing as follows:
Amount
------
Maturity period (Dollars in Thousands)
---------------
Three months or less......................... $143,991
Over 3 through 6 months...................... 56,798
Over 6 through 12 months..................... 77,443
Over 12 months............................... 4,372
--------
$282,604
========
Other Borrowings. The following table sets forth certain information
regarding the short-term borrowings of the Bank at or for the dates indicated.
<TABLE>
<CAPTION>
At or for the Three Months
Ended March 31, At or for the Year Ended December 31,
-------------------- -------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
FHLB of San Francisco advances:
Average balance outstanding........................ $16 $16,190 $11,176 $33,973 $29,278
Maximum amount outstanding at any month-end period. -- -- 24,000 53,935 128,600
Balance outstanding at end of period............... -- -- -- -- 128,600
Weighted average interest rate during the period... -- 5.39% 5.55% 6.02% 6.58%
Weighted average interest rate at end of period.... 5.93% -- -- -- 5.90%
Weighted average remaining term to maturity at end of
period (in years)................................ -- -- -- -- --
Securities sold under agreements to repurchase:
Average balance outstanding........................ -- $15,395 $5,375 $15,819 $165,040
Maximum amount outstanding at any month-end during
the period....................................... -- -- -- 74,400 246,500
Balance outstanding at end of period............... -- -- -- -- --
Weighted average interest rate during the period... -- 5.36% 5.47% 6.31% 6.36%
Weighted average interest rate at end of period.... -- -- -- -- --
Weighted average remaining term to maturity at end of
period (in years)................................ -- -- -- -- --
</TABLE>
The Bank maintains a secured credit facility with the FHLB of San
Francisco against which advances may be made. The terms of this credit facility
require the Bank to maintain in safekeeping with the FHLB of San Francisco
eligible collateral of at least 100% of outstanding advances. There were no
advances outstanding at March 31, 1998, and at December 31, 1997 and 1996. At
March 31, 1998, credit availability under this facility was approximately $283.5
million. Although the Bank eliminated its outside borrowings in 1996, the Bank
has utilized borrowings as a funding source in conjunction with its strategy of
leveraging the proceeds from the Offering, consistent with its asset and
liability objectives and the maintenance of its status as a "well capitalized"
institution for regulatory capital purposes. As of May 25, 1998, the Bank had
borrowed $185.0 million in fixed-rate advances from the FHLB in conjunction with
the leverage strategy. Such advances were for ten years and contained provisions
that the FHLB could, at their option, terminate the advances at quarterly
intervals at specified periods ranging from three to five years beyond the
advance dates.
Liquidity. Maintenance of adequate liquidity requires that sufficient
resources be available at all times to meet the cash flow requirements of the
Company. Liquidity in a financial institution is required primarily to provide
for deposit withdrawals and the credit needs of its customers and to take
advantage of investment opportunities as they arise. A financial institution may
achieve desired liquidity from both assets and liabilities. Cash and deposits
held in other banks, federal funds sold, other short term investments, maturing
loans and investments, payments of principal and interest on loans and
investments and potential loan sales are sources of asset liquidity. Deposit
growth and access to credit lines established with correspondent banks and
market sources of funds are sources of liquidity.
53
<PAGE>
At March 31, 1998, the Bank had outstanding commitments (including
unused lines of credit) to originate and/or purchase mortgage and non-mortgage
loans of $160.1 million. Certificates of deposit which are scheduled to mature
within one year totaled $1.09 billion at March 31, 1998. The Bank anticipates
that it will have sufficient funds available to meet its current loan
commitments.
The Company reviews its liquidity position on a regular basis based
upon its current position and expected trends of loans and deposits. Management
believes that the Company maintains adequate sources of liquidity to meet its
needs. The Bank's level of liquidity exceeded the applicable regulatory
guidelines as of March 31, 1998 and December 31, 1997 and 1996.
Market Risk and Net Portfolio Value. Market risk is the risk of loss
from adverse changes in market prices and rates. The Company's market risk
arises primarily from interest rate risk inherent in its lending, investment and
deposit taking activities. The Company's profitability is affected by
fluctuations in interest rates. A sudden and substantial change in interest
rates may adversely impact the Company's earnings to the extent that the
interest rates borne by assets and liabilities do not change at the same speed,
to the same extent or on the same basis. To that end, management actively
monitors and manages its interest rate risk exposure.
The principal objective of the Company's interest rate risk management
is to evaluate the interest rate risk inherent in certain balance sheet
accounts, determine the level of risk appropriate given the Company's business
strategy, operating environment, capital and liquidity requirements and
performance objectives, and manage the risk consistent with the Board of
Directors' approved guidelines. Through such management, the Company seeks to
minimize the vulnerability of its operations to changes in interest rates. The
Company's Board of Directors reviews the Company's interest rate risk position
quarterly. The Company's Asset/Liability Committee is comprised of the Company's
senior management under the direction of the Board of Directors, with senior
management responsible for reviewing with the Board of Directors its activities
and strategies, the effect of those strategies on the Company's net interest
margin, the market value of the portfolio and the effect that changes in
interest rates will have on the Company's portfolio and the Company's exposure
limits.
The Company utilizes the following strategies to manage interest rate
risk: (i) origination and retention of intermediate fixed-rate and
adjustable-rate mortgage loans; (ii) sale of substantially all fixed-rate
mortgage loans with terms of thirty years without recourse; and (iii)
origination of prime-based commercial loans. The Company currently does not
participate in hedging programs, interest rate swaps or other activities
involving the use of off- balance-sheet derivative financial instruments, but
may do so in the future to mitigate interest rate risk.
The Company's interest sensitivity is monitored by management through
the use of a model which estimates the change in the Company's net portfolio
value ("NPV") over a range of interest rate scenarios. NPV is defined as the
current market value of assets, minus the current market value of liabilities,
plus or minus the current value of off- balance-sheet items. Current market
values are estimated through cash flow-based methodologies. The change in NPV
measures an institution's vulnerability to changes in interest rates by
estimating the change in the market value of an institution's assets,
liabilities and off-balance-sheet contracts in response to an instantaneous
change in the general level of interest rates.
The OTS regulatory capital regulations take into account a savings
institution's exposure to the risk of loss from changing interest rates. Under
the regulations, a savings institution with an above normal level of interest
rate risk exposure will be required to deduct an interest rate risk ("IRR")
component from its total capital when determining its compliance with the
risk-based capital requirements. An "above normal" level of interest rate risk
exposure is a projected decline of 2% in the net present value of an
institution's assets and liabilities resulting from a 2% swing in interest
rates. The IRR component will equal one-half of the difference between the
institution's measured interest rate exposure and 2%. Savings institutions are
required to file data with the OTS that the OTS will use to calculate, on a
quarterly basis, the institutions' measured interest rate risk and IRR
components. The IRR component to be deducted from capital is the lowest of the
IRR components for the preceding three quarters. The OTS may waive or defer an
54
<PAGE>
institution's IRR component on a case-by-case basis. Implementation of the IRR
requirements has been delayed indefinitely.
As market interest rates decrease, the average maturities of the Bank's
loans (and securities) shorten as a result of accelerated prepayment speeds,
causing a relatively moderate increase in the value of such assets. The
relatively minor movements in the repricing of the Bank's deposit accounts in a
downwardly moving interest rate environment result in the value of deposits
decreasing at a more rapid speed than the assets increase in value.
The following table lists the Bank's percentage change in NPV assuming
an immediate change of plus or minus of up to 400 basis points from the level of
interest rates at March 31, 1998. All assets presented in this table are
held-to- maturity or available-for-sale. At March 31, 1998, the Bank had no
trading securities.
<TABLE>
<CAPTION>
Change in Interest Rates in Basis Points
(Rate Shock) Net Portfolio Value
------------ -------------------
Amount $ Change % Change
------ -------- --------
(Dollars in Thousands)
<S> <C> <C> <C>
400.......................................................... $61,285 (52,405) (46)%
300.......................................................... 78,756 (34,934) (31)
200.......................................................... 94,050 (19,640) (17)
100.......................................................... 105,795 (7,895) (7)
0.......................................................... 113,690 -- --
(100)......................................................... 115,548 1,858 2
(200)......................................................... 119,054 5,364 5
(300)......................................................... 126,396 12,706 11
(400)......................................................... 132,869 19,179 17
</TABLE>
As market interest rates rise, the average maturities of the Bank's
loans (and securities) lengthen as a result of decreasing prepayment speeds.
Given the COFI concentration within the Bank's loan and securities portfolios
and the lag effect of movements in the COFI index, the value of these assets
decreases when market rates rise. Decreases in the value of the loans and
securities occur at a more rapid rate in the model than increases in the value
with respect to the Bank's deposits. The value of the increase in the Bank's
deposits increases slowly in an increasing interest rate environment due to the
high concentration of time deposits within the Bank's deposit base for which the
deposit terms are generally one year or less.
Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurements. Modeling changes in NPV require the making of
certain assumptions which may or may not reflect the manner in which actual
yields and costs respond to market interest rates. In this regard, the NPV model
presented assumes that the composition of the Bank's interest sensitive assets
and liabilities existing at the beginning of a period remains constant over the
period being measured. Accordingly, although the NPV measurement and net
interest income models provide an indication of the Bank's interest rate risk
exposure at a particular point in time, such measurements are not intended to
and do not provide a precise forecast of the effect of changes in market
interest rates on the Bank's net interest income and will differ from actual
results. The NPV model presented above does not give effect to the Private
Offerings or to any use of the proceeds therefrom.
BUSINESS
Market Area
The Bank concentrates on marketing its services in the San Francisco
Bay area (which includes Oakland), and the Sacramento/Stockton and Los Angeles
metropolitan areas with a particular focus on areas with a high concentration of
ethnic Chinese. The ethnic Chinese markets within the Bank's primary market area
have experienced rapid growth in recent periods. According to 1990 Census data,
management believes there were an estimated 2.7 million Asian and Pacific
Islanders residing in California, and approximately 70% of this population were
in the middle and upper income
55
<PAGE>
brackets. Based on 1995 and 1996 demographic data, management believes there
were 200,000 Asian and Pacific Islanders living in San Francisco county, which
represented approximately 30% of the total population. In addition, the Bank
anticipates opening a commercial banking office in Pasadena, California to take
advantage of the opportunities in the Los Angeles metropolitan area,
particularly in the ethnic Chinese market. Management has tailored its products
and services to meet the financial needs of these growing Asian and ethnic
Chinese communities within its market area. Management believes that this
approach, combined with the extensive ties of its management and Board of
Directors to the growing Asian and ethnic Chinese communities, provides the Bank
an advantage in competing for customers in its market area. After giving effect
to the recent consolidation activity in California, management believes the Bank
is the tenth largest thrift institution in California and the third largest
financial institution focused on serving the ethnic Chinese market within
California.
Historical Operations
The Bank historically engaged in the origination of residential
mortgages (1-4 family) which were pooled and sold in the secondary market, with
loan servicing rights retained, and the servicing of loans for the Federal Home
Loan Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association
("FNMA"), the Government National Mortgage Association ("GNMA") and private
investors. From time to time, the Bank sold its loan servicing rights and also
purchased agency servicing rights as part of its mortgage banking division
operations. The Bank also originated residential mortgages (1-4 family),
multi-family mortgages and commercial real estate mortgages for portfolio
retention. In addition, since 1993, the Bank has specialized in limited
documentation residential mortgage (1-4 family) lending. Furthermore, because
the Bank does not retain a large volume of fixed-rate mortgages in its permanent
portfolio for interest rate risk considerations, and since the production of
ARMs has been insufficient to provide adequate balance sheet growth, the Bank
has historically relied heavily on loan and securities purchases to complement
its asset base. In 1993, mortgage-backed securities represented approximately
one-third of the Bank's assets.
Historically, the Bank maintained a heavy concentration of ARM assets
whose interest rates were based on COFI. Since adjustments in COFI generally lag
behind market interest rate changes, COFI-based assets can reduce net interest
margins during periods of rapidly increasing deposit and borrowing interest
rates. The Bank experienced such effect in 1994-1995 when its net interest
margin decreased as the COFI adjusted upward more slowly than the cost of the
Bank's deposits and borrowings. During the period from 1990 to 1994, the value
of California real estate collateral declined and the Bank experienced
significant loan losses on a portion of its real estate loans. In 1995, the
Bank's allowance for loan losses was increased from 0.78% of total loans to over
1.00% of total loans. This action was due to a combination of a depressed
California economy and real estate market and to significantly increase the
Company's overall level of allowance for loan losses to over 1.00% of gross
loans. The resulting $8.8 million charge to income, coupled with the diminished
interest income resulting from the 1995 COFI-lag effect resulted in a net loss
of $2.9 million in 1995. During 1996, the Company's net interest income improved
by 35.3% to $39.0 million primarily as a result of the Bank's COFI-based assets
becoming fully indexed and the correction of the COFI-lag impact.
In recent years, the mortgage banking industry has been highly
competitive and, combined with the availability of more efficient delivery
systems through brokers and the Internet, the industry has experienced shrinking
profit margins and reduced loan servicing values. Higher levels of prepayment
activity resulting from a lower interest rate environment and the willingness of
lenders to offer mortgage loans with no points and, in many cases, no fees, have
reduced servicing values. To respond to these market factors and to improve the
long-term prospects of the Bank, the Bank took the following measures:
Responsive Measures
COFI Asset Reduction. In the fourth quarter of 1996, to improve its net
interest margin, the Bank ceased all COFI-based mortgage lending and began to
reduce the Bank's COFI-based mortgage-backed securities portfolio. From December
31, 1996 to March 31, 1998, COFI-based loans have been reduced from 60.2% of the
Bank's total gross loan portfolio to 43.0%. From December 31, 1996 to March 31,
1998, total COFI exposure has been reduced from 64.9% of the Bank's
interest-earning assets to 51.3%.
56
<PAGE>
Closure of Mortgage Banking Division. In 1997, the Bank closed its
mortgage banking division and ceased the origination of non-conventional
mortgages for sale in the secondary market and sold its agency loan servicing
portfolio. While the Bank no longer engages in this activity, the Bank continues
to originate conventional residential mortgage loans for portfolio retention and
conforming mortgages for resale in the secondary market through its retail
branch network. See "Business--Lending Activities--Residential Mortgages (1-4
family)."
Reduced Non-Performing and Non-Interest Earning Assets. The Bank
reduced its non-performing assets from $22.3 million as of December 31, 1995, to
$9.1 million as of March 31, 1998, and reduced non-interest earning assets from
$68.0 million as of December 31, 1995, to $49.9 million as of March 31, 1998.
Reduced Mismatched Borrowings. The Bank reduced its predominantly high
cost LIBOR-based borrowings (which were mismatched with COFI-based assets) from
$265.3 million at the beginning of 1995 to zero at December 31, 1996 and 1997
and March 31, 1998.
Implementation of Strategy
In conjunction with the implementation of the balance sheet
restructuring described above which returned the Bank to profitability in 1996,
excluding the one-time SAIF recapitalization assessment, to further improve the
Bank's long-term prospects and to take advantage of the Bank's significant
deposit market share and the potential cross-selling opportunities to the ethnic
Chinese and Asian communities within its market area. The Board of Directors
adopted a business strategy to shift the primary business focus of the Bank from
a traditional thrift to a full service commercial bank. To implement its
business strategy, the Bank took the actions and adopted the initiatives
described below.
Management. The Bank realigned management responsibilities and hired
commercial banking officers and SBA business banking officers with lending
experience in the Bank's market area. The management changes included the
following:
o President. In January 1998, Tommy S. Wu became the Bank's
President and Chief Executive Officer and was charged
with the responsibility of implementing the shift of the
Bank's focus to commercial banking services and products.
Prior to that appointment Mr. Wu was the Executive Vice
President and Director of the Bank as of September 25,
1997. Mr. Wu was Senior Vice President and Director of
Retail Banking from 1992 to 1996 and also served the Bank
as Vice President, Regional Manager, of its Southern
California Retail Banking Division from 1991 to 1992.
o Head of Commercial Banking Division. In January 1996,
Sylvia Loh was appointed Head of the Bank's commercial
banking division which was formally formed in 1996. Ms.
Loh has over twenty years of commercial banking and trade
finance experience with major financial institutions,
including administrative and managerial experience in
overseeing over 26 branches. She also has experience
working with the United States EXIM Bank and has had
extensive exposure in the ethnic Chinese markets as well
as the Pacific Rim region. She also is a past President
of the Association of Asian American Bankers from 1996 to
1997.
o Chief Credit Officer. In January 1997, William T.
Goldrick was appointed Senior Vice President and Chief
Credit Officer to provide technical expertise to
formulate the Bank's commercial lending policies and
procedures. He has over 41 years of commercial bank
credit experience and is responsible for the Bank's
regulatory compliance.
Established Commercial Banking Division. In 1996, to take advantage of
the opportunities in the Bank's targeted markets, the Bank established its
commercial banking division to offer an array of commercial bank services and
products to its customers particularly focused on the ethnic Chinese
communities. Since its establishment, the commercial banking division has
originated approximately $101.4 million in commercial loan commitments and has
$70.4 million in outstanding loans as of May 31, 1998. As of June 24, 1998, the
division had a current committed
57
<PAGE>
pipeline of approximately $129 million. To support its commercial banking
activities, the Bank acquired a commercial banking data processing system to
replace a system designed for thrift institutions. The new system provides
customer profitability reports, account analysis and other commercial banking
management tracking and reporting mechanisms. The installation of this new
system was completed in February 1998. The Bank installed software to enhance
commercial real estate loan marketing and development. The PC based system
provides key information on substantially all commercial real estate
transactions in the Bank's market area in California. The software provides
information instrumental to identifying lending and refinancing opportunities,
screening potential credit opportunities and evaluating collateral values to
facilitate efficient solicitation of borrowers and related depository
relationships from commercial and multi-family property owners. The Bank
anticipates opening a commercial, construction and SBA lending office in
Pasadena, California during the second quarter of 1998. In addition to other
personnel, the Bank has hired a team of three experienced SBA business banking
officers to staff the Pasadena office. These officers were previously affiliated
with one of the leading lenders focusing on SBA lending to Asians.
Core Deposit Solicitation. To further develop the Bank's core deposit
base, the Bank is evaluating the establishment of mini-branches in or adjacent
to Asian supermarkets in selected target market areas. By continuing to
emphasize multilingual services at its ATMs, through its telephone banking
system and by its customer service and loan officers, the Bank expects to
continue to further its presence in the Asian, and specifically the ethnic
Chinese, markets in California. At March 31, 1998, less than 2% of the Bank's
deposits were held by customers located outside of the United States. In
addition, as of such date, the 100 depositors with the largest aggregate average
deposit balances comprised less than 10% of the Bank's total deposits. The Bank
also expects to increase its business accounts as its commercial lending
portfolio grows and correspondent accounts are established.
Capital Enhancement. At March 31, 1998 the Company's stockholders'
equity was $64.6 million or 4.2% of total assets. In April 1998, the Company
completed the Private Offerings. Following the Private Offering, the Company's
stockholders' equity increased to $94.5 million and the Company's consolidated
Tier I capital increased from $63.9 million at December 31, 1997 to $125.4
million. See "Supervision and Regulation--Savings Institution
Regulations--Regulatory Capital Requirements."
Leverage Strategy. As a result of the proceeds raised by the Private
Offerings, the Bank designed and implemented a plan to leverage such proceeds
through the purchase of U.S. Government agency mortgage-backed securities,
investment grade securities, investment grade municipal bonds and investment
grade residential mortgage (1-4 family) securities. The plan specifies that such
purchases will be funded primarily through intermediate and long-term secured
borrowings, advances from the FHLB and from cash made available from the
proceeds. The plan, which is consistent with the Bank's asset and liability
management policy, further specifies that certain interest rate caps are to be
purchased to reduce the Bank's exposure to increasing market interest rates.
Total assets to be purchased pursuant to the plan are approximately $337
million.
As of June 24, 1998, the Bank purchased approximately $325 million of
such assets and entered into $202 million of long-term borrowings. Additionally,
the Bank had entered into certain interest rate cap agreements in the aggregate
principal amount of $200 million. The average spread on such assets is in the
range of 110 basis points to 120 basis points, including the amortization of the
interest rate caps.
Charter Conversion. In the first quarter of 1998, the Bank changed its
name to United Commercial Bank to reflect the Bank's new emphasis on providing
commercial banking services to its customers. As part of its strategy to shift
its business focus from mortgage banking to commercial banking, management
submitted amended applications to the California Department of Financial
Institutions and the Federal Reserve Bank of San Francisco in June 1998 to
convert the Bank to a California-chartered commercial bank and the Company to a
bank holding company.
As a result of the measures taken to effect the Bank's shift in its
primary business focus from mortgage banking to commercial banking, and the
implementation of its strategic initiatives, management believes that the Bank
is and will continue to be well positioned to take advantage of the
opportunities in its market area and particularly in the growing ethnic Chinese
market in California.
58
<PAGE>
Current Banking Services
Through its network of retail branches, the Bank provides a wide range
of personal and commercial banking services to small-and medium-sized
businesses, business executives, professionals and other individuals. The Bank
offers multilingual services to all of its customers in English, Cantonese and
Mandarin. The Bank offers a variety of deposit products which includes the
traditional range of personal and business checking and savings accounts, time
deposits and individual retirement accounts, as well as a wide range of
specialized services, including international trade services for business
clients, travelers' checks, safe deposit boxes and Master Card and Visa merchant
deposit services.
The Bank engages in a full complement of lending activities, including
residential and commercial real estate, construction, commercial, trade finance,
account receivables, inventory, working capital and SBA loans. In addition to
the origination of residential mortgages, the Bank provides loans to small and
medium-sized developers for the construction of resale housing and interim real
estate loans primarily for construction of single-family residences. The Bank
provides commercial loans for working capital and expansion and account
receivables and inventory financing to small and medium size businesses with
annual revenues that generally range from $500,000 to $20.0 million. The Bank
provides short-term trade finance facilities for terms of less than one year to
U.S. importers, exporters and manufacturers. The Bank also generates loans which
are guaranteed by the SBA, which loans are generally working capital loans
secured by inventories and receivables, and commercial real estate loans secured
by real property. The Bank's commercial borrowers are engaged in a wide variety
of manufacturing, wholesale trade and service businesses.
Lending Activities
Underwriting and Credit Administration. The Bank's lending activities
are guided by the basic lending policies established by the Board of Directors.
The Bank's lending policy requires that loans must meet minimum underwriting
criteria. Lending authority is granted to officers of the Bank on a limited
basis. Loan requests exceeding individual officer approval limits are approved
by the President. All commercial loans are generally ratified by the Credit
Review Committee. Loans in excess of $2.0 million are generally ratified by the
Board of Directors.
The Bank's credit administration function includes an internal asset
credit quality review. The President, Chief Credit Officer and Chief Financial
Officer meet biweekly to review delinquencies, non-performing assets, classified
assets and other pertinent information to evaluate credit risk within the Bank's
loan portfolio. The information reviewed by this group is submitted to the Board
of Directors bimonthly.
Loan Portfolio. At March 31, 1998, approximately $716.5 million, or
57.8% of the Bank's gross loan portfolio was in residential mortgages (1-4
family), $336.2 million or 27.1% of gross loans was in multi-family mortgages,
$112.7 million or 9.1% of gross loans was in commercial real estate loans, $32.6
million or 2.6% of gross loans was in construction loans,$16.4 million or 1.3%
of gross loans was in home equity loans and $22.4 million or 1.8% of gross loans
was in commercial business loans.
Residential Mortgages (1-4 family). The Bank offers fixed-rate and
adjustable rate mortgage loans which include intermediate fixed-rate loans
secured by residential mortgages. Substantially all such loans are secured by
properties located in the Bank's primary market area. Residential mortgage loan
originations are obtained through the Bank's two delivery networks: the retail
branches and the wholesale lending department. In 1997 and the first quarter of
1998, approximately 46% and 41% of all residential mortgage loans were
originated by the Bank's retail branches. The retail branches originate loans by
salaried personnel through customer contact, referral and solicitation. The
wholesale lending department originates loans with commissioned loan officers
through loan brokers. The Bank originates both fully documented loans for which
income and assets are verified with third parties, as well as loans for which
the borrower's stated income and assets are relied upon without independent
verification. The Bank specializes in a limited documentation mortgage loan
product which serves a particular niche of borrowers willing to pay a
59
<PAGE>
premium, in the form of higher interest rates, and provide larger down payments
in exchange for more expedient loan processing by virtue of providing less
documentation.
The Bank's underwriting guidelines for loan origination require: (i)
for fully documented loans, up to 80% loan to value ("LTV ") for loan amounts up
to $700,000 and up to 70% LTV for loan amounts up to $800,000; (ii) for limited
documentation loans with no income verification, up to 80% LTV for loan amounts
up to $600,000 and up to 65% LTV for loan amounts up to $800,000; (iii) for low
documentation loans with no income or asset verification, up to 80% LTV for loan
amounts up to $450,000 and up to 60% LTV for loan amounts up to $800,000. A
borrower's employment and financial information are verified through third
parties and examination of paycheck stubs, bank statements and tax returns. The
Bank obtains appraisals from licensed appraisers approved by the credit review
committee.
At March 31, 1998, the Bank had approximately 4,309 loans secured by
residential mortgages (1-4 family), which totaled $716.5 million in the
aggregate; as of such date, the Bank's average loan balance with respect to
residential mortgages (1-4 family) amounted to approximately $166,300. Of the
Bank's residential mortgages (1-4 family) at March 31, 1998: $215.3 million, or
30.0% consisted of fixed-rate loans; $216.4 million, or 30.2% consisted of ARMs
with an adjustment date in one year or less; and $284.8 million, or 39.8%
consisted of intermediate fixed-rate loans. The Bank's fixed-rate mortgage loans
are made for terms of 15 years or 30 years. The 30 year, fixed-rate loans are
generally sold in the secondary market on a servicing released basis. Fixed-rate
mortgage loans are originated with due on sale clauses which provide the Bank
with the contractual right to deem the loan immediately due and payable in the
event the borrower transfers ownership of the property without the Bank's
consent. The Bank currently originates 30 year, fixed-rate loans for portfolio
retention only on a customer accommodation basis. The Bank currently offers a
variety of ARM loan programs with interest rates fixed for six months and which
adjust semi-annually thereafter. Intermediate fixed-rate loans have interest
rates fixed for three or five years and adjust annually thereafter. The Bank's
ARM loans generally provide for periodic (not more than 2%) and lifetime (not
more than 6%) caps on the increase or decrease in interest rates over the life
of the loan. The interest rate adjustment on ARM loans currently made by the
Bank is indexed to the one-year U.S. Treasury CMT Index.
Beginning in 1993, the Bank has specialized in the origination of
limited documentation residential mortgages (1-4 family). As of March 31, 1998,
$492.1 million, or 68.7% of the Bank's residential mortgages (1-4 family) were
comprised of limited documentation loans. Because of the less than full
documentation required for such loans, the Bank has emphasized relatively small
average loan size and low average loan-to-value ratios for these loans, as
evidenced by an average loan balance of $163,600 and average loan-to-value
ratios of 64% as of March 31, 1998. Approximately 40% of such loans in 1997 were
originated through the Bank's retail branches.
Since it began originating limited documentation loans in 1993 the Bank
has experienced no net charge-offs with respect to such loans. At March 31,
1998, the Bank had two loans more than three payments delinquent with an
aggregate principal balance of $199,000. Moreover, during the third quarter of
1997, the Bank sold $17.2 million of the limited documentation loans to test the
market reception for this product. The Bank received a price in excess of par
value on the sale of such loans. Notwithstanding the historical performance of
this type of loan, there can be no assurance that such performance will
continue.
The Bank previously offered a variety of adjustable-rate programs,
which provided for interest rates which adjusted periodically based on COFI. In
the fourth quarter of 1996, the Bank ceased all COFI-based mortgage lending.
Nevertheless, at March 31, 1998, $158.5 million or 22.1% of the Bank's
residential mortgage (1-4 family) loan portfolio consisted of COFI-based loans.
Commercial Lending-Generally. The Bank has recently established a
commercial banking division and has hired experienced commercial lending
officers. The Bank also has installed software to identify, market and develop
potential commercial real estate lending opportunities in its market area. The
Bank also offers an array of commercial loan products catering primarily to the
needs of its Chinese ethnic community. Set forth below is a description of the
types of commercial loans offered by the Bank.
60
<PAGE>
Multi-family Mortgages. The Bank originates multi-family mortgages
which are generally secured by five to 36 unit residential buildings. Loans
secured by residential buildings in excess of 36 units are underwritten pursuant
to the Bank's underwriting standards with respect to commercial real estate
loans. Substantially all of the Bank's multi-family loan originations are
secured by properties located in the Bank's primary market area. The Bank
underwrites multi-family mortgages by obtaining full credit information on the
borrower and through independent verification of the borrower's income and
assets. The borrower's ability to effectively manage the multi-family property
and ability to assume the financial responsibility of the debt service
obligation in the event of unforeseen expenses or increased vacancy are also
taken into consideration in the underwriting process. In making its assessment
of the creditworthiness of the borrower, the Bank generally reviews the
financial statements, employment and credit history of the borrower, as well as
other related documentation. The Bank's current program criteria for
multi-family originations generally provide for debt service coverages of 1.15x
or greater and LTV's of 75% or less. The Bank currently offers fixed-rate and
ARM multi-family mortgages. The Bank's ARM multi-family loans are fixed for six
months and thereafter adjust semi-annually based upon the LIBOR index.
Multi-family loans are generally amortized over 30 years with balloon payments
in 10 or 15 years.
As of March 31, 1998, the Bank had approximately 811 multi-family
mortgages with an aggregate outstanding principal balance of $336.2 million. As
of such date, the Bank's average loan balance with respect to multi-family
mortgages amounted to approximately $414,500. As of March 31, 1998, $300.7
million, or 89.4% of these loans consisted of adjustable-rate loans with
COFI-based interest rates. In order to avoid an over concentration in
multi-family mortgages, the Bank limits its total multi-family mortgage exposure
to not more than 35% of total loans. As of March 31, 1998, the Bank had a 27.1%
concentration in multi-family mortgages. As a result of the Bank's limitations,
market competition and alternative investment opportunities, the Bank has not
originated a significant volume of multi-family mortgages during the past three
years. During 1997, multi-family originations totaled $7.2 million and were made
primarily on a customer accommodation basis.
Commercial Real Estate Construction. The Bank originates construction
loans for the development of single-family residences, multi-family and
commercial properties. Such loans are made primarily to experienced builders and
developers known to the Bank in its primary market area. As of March 31, 1998,
the Bank had approximately 79 outstanding construction loans with an aggregate
outstanding principal balance of $32.6 million. As of such date, the Bank's
average loan balance with respect to construction loans amounted to $412,300.
Construction loans are originated in amounts up to 80% of the lesser of
the appraised value of the property, as improved, or the sales price. Proceeds
for construction loans are disbursed on a percentage of completion basis or as
construction thresholds are met. Generally, if the borrower is a corporation or
partnership, guarantees by the principals are required. Construction loans are
adjustable and tied to the prime rate. Generally, the term of construction loans
is for one year, with a one year renewal option, if necessary.
Construction financing generally involves a higher degree of credit
risk than long-term financing on improved, owner-occupied real estate. The risk
of loss on a construction loan is dependent largely upon the property's value at
completion of the construction compared to the estimated cost, including
interest, of construction. If the estimate of value proves to be inaccurate, the
Bank may be confronted with a completed project, having a value which is
insufficient to assure full repayment.
Commercial Real Estate Non-Residential Mortgages. The Bank originates
medium-term commercial real estate loans secured by commercial or industrial
buildings where the properties are either used by the owner for business
purposes ("owner-user properties") or have income derived from tenants
("investment properties"). The Bank solicits potential borrowers through: (i)
its new database software system, which provides key information on
substantially all commercial real estate loans in its primary market in
California, (ii) referrals from its branches, (iii) direct solicitation of
borrowers and real estate brokers by the commercial banking lending officers,
and (iv) referrals from existing borrowing customers. Upon identification of a
prospective borrower, the Bank then makes a preliminary estimate of the value of
the property based upon the location, age, type of property and market rent. For
owner-user properties, the Bank may use market rent information from such
borrowers for its cash flow analysis. A proposal letter summarizing
61
<PAGE>
the tentative terms of the prospective loan is then submitted to the borrower
for acceptance, at which time the non-refundable fee is paid to the Bank. This
pre-screening process helps the Bank control appraisal costs by reducing the
number of appraisals ordered for loans that ultimately are not approved. Upon
acceptance of the proposal, the Bank then performs property appraisal and
environmental surveys. The Bank's underwriting practices generally require the
principal balance of the loan to be no more than 65% of the stabilized appraised
value of the underlying real estate collateral. Commercial real estate loans are
typically secured by first deeds of trust, generally have terms of no more than
seven to ten years and are amortized up to 25 years. Although substantially all
of the commercial real estate loans currently being originated have interest
rates that adjust with changes in the prime rate or have fixed-rate terms of up
to five years, the Bank previously offered commercial real estate loans with
interest rates which adjusted periodically based on COFI.
At March 31, 1998, the Bank had approximately 150 commercial real
estate loans with an aggregate principal balance of $112.7 million. As of such
date, the average balance with respect to the Bank's commercial real estate
loans amounted to $751,400. As of March 31, 1998, of the Bank's $112.7 million
of commercial real estate loans, $73.2 million, or 64.9% consisted of COFI-based
loans. The Bank's underwriting practice also generally requires that the
properties securing commercial real estate loans have debt service coverage
ratios (the ratio of earnings before debt service to debt service) of at least
1.35. The Bank's loan documentation usually provides the Bank the right to call
the loan in the event that the debt service coverage ratio falls below 1.35x.
The Bank generally requires that all commercial real estate loans made to
corporations, partnerships and other business entities be personally guaranteed
by the principals. The Bank utilizes tax returns to review and verify the income
stream of the borrower. Loan documentation is reviewed by the Bank's in-house
legal department. Such documentation typically requires annual financial
statements and rent rolls of a borrower, to determine covenant compliance.
During the three months ended March 31, 1998, the Bank originated $3.2
million of commercial real estate loans. During the years ended December 31,
1997, 1996 and 1995, the Bank originated $23.7 million, $2.7 million and
$864,000 of commercial real estate loans, respectively. Management believes it
will originate $125.0 million of commercial real estate loans during 1998.
Through May 22, 1998, the Bank had in its pipeline $73.1 million of commercial
real estate loans. Notwithstanding the foregoing, no assurance can be made that
the Bank will achieve its year-end projections or that all of the commercial
real estate loans in the Bank's pipeline as of May 22, 1998, will close.
Loans secured by commercial real estate properties are generally larger
and involve a greater degree of risk than residential mortgages (1-4 family).
Because payments on loans secured by commercial real estate properties are
generally dependent on successful operation or management of the properties,
repayment of such loans is subject to a greater extent than the repayment of
residential mortgages on the then prevailing conditions in the real estate
market or the economy. The Bank seeks to minimize these risks through its
underwriting standards and in the first quarter of 1998, the Bank employed an
outside loan review firm to assist management with respect to internal asset
review of the Bank's commercial loans, including its commercial real estate
loans.
Commercial Business Loans. The Bank provides commercial business loans
to customers for working capital purposes and to finance equipment, account
receivables and inventory. Working capital loans are generally subject to annual
review, and equipment loans have terms up to five years. Interest rates on these
loans are generally based on the prime rate. Working capital loan advances are
generally made against security interests in inventory and account receivables,
and equipment loans are secured by the underlying equipment. When appropriate,
the Bank may require additional collateral on such loans and may further secure
the indebtedness with a lien on real estate. In many cases, personal guarantees
are obtained as additional security.
During the three months ended March 31, 1998, the Bank originated $9.3
million of commercial loans. During the years ended December 31, 1997, 1996 and
1995, the Bank originated $31.9 million, $9.9 million and $0 of commercial
business loans, respectively. Management believes it will originate $55.0
million of commercial business loans during 1998 (not including SBA loans).
Through May 22, 1998, the Bank had in its pipeline $28.9 million of commercial
business loans (not including SBA loans). Notwithstanding the foregoing, no
assurance can be made that
62
<PAGE>
the Bank will achieve its year-end projections or that all of the commercial
business loans in the Bank's pipeline as of May 22, 1998, will close.
Unlike consumer residential mortgage loans, which generally are made on
the basis of the borrower's ability to make repayment from his or her employment
or other income and which are secured by real property whose value tends to be
more easily ascertainable, commercial business loans are of higher risk and
typically are made on the basis of the borrower's ability to make repayment from
the cash flow of the borrower's business. As a result, the availability of funds
for the repayment of commercial loans may be substantially dependent on the
success of the business itself. Further, any collateral securing such loans may
depreciate over time, may be difficult to appraise and may fluctuate in value
based on the success of the business. The Bank currently utilizes the
unaffiliated firm referenced above to assist management with respect to internal
asset review of the Bank's commercial business loans.
The Bank provides commercial lines of credit to small- and medium-sized
companies to finance their accounts receivable and inventory on a short term
basis (less than one year) and/or to finance their equipment and working capital
on a long term basis (over one year).
Short term financing is structured to enable the borrower to complete
its trade cycle from purchase of inventory to collection of receivables. As
such, the credit line may also include an option for the issuance of letters of
credit to overseas suppliers/sellers in order for the borrower to obtain
inventory. Pursuant to such letters of credit, the Bank extends credit to the
borrower by providing assurance, to the borrower's foreign suppliers, that
payments will be made upon shipment of goods. Upon shipment of goods and when
the letters of credit are negotiated by the foreign suppliers, the borrower's
inventory is financed by the Bank under the pre-approved line of credit
facility.
The underwriting criteria of such short term trade financings often
depends on the quality of the borrowers' inventory and their accounts
receivables. As a general rule, inventory should not be held for more than 60
days, and accounts receivables should not extend beyond 90 days. Total credit
exposure (outstanding loans plus letters of credit) under the line of credit are
monitored monthly by using a borrowing base formula of up to 80% against
eligible receivables aged up to 90 days, and up to 50% against eligible
inventory with or without limits. Aside from the established base formula, the
borrower's overall financial condition is considered, such as consistency in
revenue streams, gross margins, expense ratios, and net income. Another
important underwriting criteria is the adequacy of the borrower's capital in
relation to the financial growth it seeks to achieve. A company with a leverage
ratio below 2.5:1 is acceptable to the Bank.
Fixed assets, such as machinery and equipment, provide long term
financial benefits to the borrowers. Accordingly, loans for these types of
financings are structured for a term longer than one year. Repayment of the
loans are structured to match the income generated over the life expectancy of
the assets. As such, the underwriting criteria is dependent upon the amount of
cash flow (income plus depreciation) the borrower has available to service debt
based on a full amortization schedule, usually between five to seven years. The
maximum amount financed on capital assets is approximately 70% of its value.
Similar to trade finance credits, financial evaluation of revenue,
profitability, expense ratios and capital adequacy are made in considering this
type of credit for approval.
The Bank originates and funds loans qualifying for guarantees issued by
the SBA. The SBA currently guarantees from 75% to 80% of the principal and
accrued interest of such loans. Loans are provided to eligible applicants or
small businesses to finance working capital, the purchase of equipment or real
estate. Depending upon the use of loan proceeds, the loan term may range from
seven to twenty-five years. The Bank typically requires that SBA loans be
secured by inventories and receivables or if commercial real estate is being
financed, secured by real property. Primary underwriting criteria are historical
cash flow to demonstrate repayment capability, experienced business management
and adequate collateral to secure the requested credit. Typically, the SBA
prefers that the applicant inject at least 30%- 33% cash (equity) into the
transaction. The Bank's benefits in originating loans under this program include
limited credit exposure for the Bank as a result of the SBA guaranty, increased
Bank revenues by selling the guaranteed portion of the loan through the
secondary market at a premium, and gaining "Preferred Lender
63
<PAGE>
Program" status with the SBA by producing volume and quality credits while
serving the financial needs of small business communities.
Management believes it will originate approximately $20.0 million of
SBA loans during 1998. Through May 22, 1998, the Bank had in its pipeline $16.1
million of SBA loans. Notwithstanding the foregoing, no assurance can be made
that the Bank will achieve its year-end projections or that all of the SBA loans
in the Bank's pipeline as of May 22, 1998 will close.
Consumer Loans. The Bank's consumer loan portfolio is substantially
comprised of home equity lines of credit which are secured by residential real
estate. These lines of credit generally consist of floating rate loans, tied to
the prime rate.
Deposits
The Bank's deposits are obtained primarily from ethnic Chinese
households, small and medium-sized businesses owned by ethnic Chinese, and
ethnic Chinese business executives, professionals and other individuals. The
Bank offers the traditional range of depository products provided by commercial
banks. Rates paid on deposits vary depending on the deposit size, the term of
deposit, and the type of deposit. The Bank sets its deposit rates based on
deposit needs and market competition. As of March 31, 1998, less than 2% of the
Bank's deposits were held by customers located outside the United States. In
addition, as of such date, the 100 depositors with the largest aggregate average
deposit balances comprised less than 10% of the Bank's total deposits. As of
March 31, 1998, the Bank's weighted average cost of deposits was 4.35%, which
was 57 basis points less than the COFI. The Bank does not solicit brokered
deposits.
Competition
The banking and financial services business in California generally,
and in the Bank's market area specifically, is highly competitive. The
increasingly competitive environment results from changes in regulation, changes
in technology and product delivery systems, and the consolidation among
financial services providers. The Bank competes for loans, deposits and
customers for financial services with other commercial banks, savings and loan
associations, securities and brokerage companies, mortgage companies, insurance
companies, finance companies, money market funds, credit unions, and other
nonbank financial service providers. Many of these competitors are much larger
in total assets and capitalization, have greater access to capital markets and
offer a broader array of financial services than the Bank. To compete with the
other financial services providers, the Bank relies on local promotional
activities, personal relationships established by officers, directors and
employees with its customers, and specialized services tailored to meet its
customers' needs.
The Bank competes for deposits from the ethnic Chinese markets with
other banks serving the Asian community in California. The Bank believes that it
has two major competitors that are targeting the ethnic Chinese market. Such
institutions have branch locations in many of the same neighborhoods as the
Bank, provide similar loan, savings and financial services, and market their
services in similar Asian publications and media in California.
Employees
At March 31, 1998, the Bank had 339 full-time equivalent employees.
None of the employees are covered by a collective bargaining agreement. The Bank
considers its employee relations to be satisfactory.
64
<PAGE>
Properties
The Bank owns the facility that is located at 711 Van Ness Avenue, San
Francisco, California and that serves as the Company's and the Bank's
headquarters. The Bank leases all of its remaining branch facilities under
noncancelable operating leases, many of which contain renewal options and some
of which have escalation clauses.
The Bank's branch offices are set forth below:
<TABLE>
<CAPTION>
Total Deposits
Office Location Lease Expiration Date at March 31, 1998
- --------------- --------------------- ------------------
(Dollars in Thousands)
<S> <C> <C>
Alhambra:
1211 East Valley Blvd.
Alhambra, CA 91801...................................... October 2001 $43,542
Artesia:
11809 Artesia Blvd.
Artesia, CA 90701....................................... June 1998 51,264
Balboa:
3555 Balboa Street
San Francisco, CA 94121................................. March 1999 37,852
Citrus Heights:
7803 Madison Ave #650
Citrus Heights, CA 95610................................ February 1999 (1)
Clement:
498 Clement Street
San Francisco, CA 94118................................. March 2004 123,656
Cupertino:
20510 Stevens Creek Blvd.
Cupertino, CA 95014..................................... March 2001 31,900
Daly City:
246 Skyline Plaza
Daly City, CA 94015..................................... November 2002 (2)
Freeport:
4790 Freeport Blvd.
Sacramento, CA 95822.................................... April 2009 57,138
Fremont:
34420 Fremont Blvd., Suite F
Fremont, CA 94555....................................... January 1999 29,903
Fresno:
1320 East Shaw Avenue, Suite 160
Fresno, CA 93710....................................... December 1998 (3)
</TABLE>
- ----------
(1) Facility is a spot construction lending center that does not take deposits.
(2) Facility is a retail branch opened April 17, 1998.
(3) Facility is a construction lending center that does not take deposits.
65
<PAGE>
<TABLE>
<CAPTION>
Total Deposits
Office Location Lease Expiration Date at March 31, 1998
- --------------- --------------------- ------------------
<S> <C> <C>
Geary:
6001 Geary Blvd.
San Francisco, CA 94121................................. June 1999 $ 19,918
Irvine:
15333 Culver Dr., #670
Irvine, CA 92604........................................ January 2001 20,397
Irving:
2219 Irving Street
San Francisco, CA 94122................................. October 1999 24,002
Kearny:
900 Kearny Street
San Francisco, CA 94133................................. November 2011 43,911
Los Angeles Chinatown:
951 No. Broadway
Los Angeles, CA 90012................................... February 2001 47,884
Montebello:
863 N. Wilcox Avenue
Montebello, CA 90640.................................... April 2002 (4)
Monterey Park:
419 No. Atlantic Blvd., #101
Monterey Park, CA 91754................................. November 1998 89,773
Noriega:
1301 Noriega Street
San Francisco, CA 94122................................. August 2005 80,374
Oakland:
367 Eighth Street
Oakland, CA 94607....................................... February 1999 142,535
Oakland-MacArthur:
4148 MacArthur Blvd.
Oakland, CA 94619....................................... August 1998 (4)
Oakland-Webster:
800 Webster Street
Oakland, CA 94607....................................... September 2007 62,754
Pasadena:
199 South Los Robles, Suite 780
Pasadena, CA 91101...................................... June 2003 (5)
</TABLE>
- ----------
(4) Facility is a homeowners center that does not take deposits.
(5) Facility is a commercial loan center that does not take deposits.
66
<PAGE>
<TABLE>
<S> <C> <C>
Paso Robles:
825 Riverside Ave., Suite #2
Paso Robles, CA 93446................................... January 1999 (6)
Rowland Heights:
1015 S. Nogales St., #102
Rowland Heights, CA 91748............................... June 1999 $ 44,509
San Francisco Chinatown:
1066 Grant Avenue
San Francisco, CA 94133................................. September 1998 197,019
San Francisco Van Ness:
711 Van Ness Avenue
San Francisco, CA 94102................................. Company-owned 56,293
San Francisco Stockton:
1318 Stockton Street
San Francisco, CA 94133................................. July 2017 61,096
San Jose:
1663 Lundy Avenue, Suite D
San Jose, CA 95131...................................... January 2001 35,361
San Mateo:
27 East Fourth Avenue
San Mateo, CA 94401..................................... November 2000 14,917
Stockton:
146 E. Market Street
Stockton, CA 95202...................................... December 1998 26,013
Temple City:
5607 N. Rosemead Blvd.
Temple City, CA 91780................................... September 2001 121,312
</TABLE>
- ----------
(6) Facility is a SBA Loan office that does not take deposits.
The Bank believes its present facilities are adequate for its present
needs. However, the Bank may acquire additional properties if needed due to
business expansion. The Bank believes that, if necessary, it could secure
suitable alternative facilities without adversely affecting operations.
67
<PAGE>
Legal Proceedings
The Bank is subject to pending or threatened actions and proceedings
arising in the normal course of business. In the opinion of management, the
ultimate disposition of all pending or threatened actions and proceedings will
not have a material adverse effect on the Bank's operations or financial
condition.
SUPERVISION AND REGULATION
Introduction
Savings and loan holding companies such as Holdings, federal savings
banks such as the Bank, as well as bank holding companies and commercial banks
engaged in the commercial banking business which Holdings and the Bank seek to
engage in are extensively regulated under both federal and state law. Set forth
below is a summary description of certain laws which relate to the present and
possible future regulation of Holdings and the Bank and their successor
institutions in the event that Holdings and the Bank become a bank holding
company and a state chartered bank, respectively. The description below does not
purport to be complete and is qualified in its entirety by reference to
applicable laws and regulations.
Recent Legislative Developments Affecting the Savings and Loan Business
In recent years, measures have been taken to reform the thrift and
banking industries and to strengthen the insurance funds for depository
institutions. The most significant of these measures for savings institutions
was the Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(the "FIRREA"), which has had a major impact on the operation and regulation of
savings associations generally. In 1991, the Federal Deposit Insurance
Corporation Improvement Act of 1991 (the "FDICIA"), became law. Although the
FDICIA's primary purpose was to recapitalize the Bank Insurance Fund (the "BIF")
of the FDIC, which insures the deposits of commercial banks, the FDICIA also
affected the supervision and regulation of all federally insured depository
institutions, including federal savings banks such as the Bank. More recent
legislation has attempted to resolve the problems of SAIF in meeting its minimum
required reserve ratio and the related concern facing SAIF-insured institutions,
such as the Bank, of paying significantly higher deposit insurance premiums than
BIF-insured institutions. Furthermore, proposed legislation would eliminate
federal savings associations and convert to commercial banks. The following
discussion is a summary of the significant provisions of the recent legislation
affecting the savings and loan business.
Rechartering Legislation. The Deposit Insurance Funds Act of 1996 (the
"Funds Act"), enacted in September 1996, provides that the BIF, the fund which
insures most commercial bank deposits, and the SAIF will merge on January 1,
1999, if there are no savings associations, as defined, in existence on that
date. Pursuant to that legislation, the Department of Treasury in May 1997
recommended in a report to Congress that the separate charters for thrifts and
banks be abolished. Various proposals to eliminate the federal thrift charter,
create a uniform financial institutions charter, conform holding company
regulation and abolish the OTS have been introduced in Congress. The House
Committee on Banking and Financial Services has reported a bill that will
require federal savings associations to convert to national banks or some type
of state charter within two years of enactment or they would automatically
become national banks. The bill would also merge the BIF and the SAIF, repeal
the HOLA, abolish the OTS and transfer the regulation of savings associations to
the federal bank regulators and the Federal Reserve Board. Federal thrifts
converted to national banks generally will be permitted to continue to engage in
any activity, including the holding of any asset, lawfully conducted on the date
prior to the enactment. A federal savings association converted to a national
bank may retain all branches established or proposed in a pending application as
of enactment and establish new branches in any state in which it has a branch.
Otherwise it may establish new branches only under national bank rules. In
addition, beginning two years after enactment, national banks will be authorized
to exercise all powers formerly authorized for federal savings associations.
Under the proposal, holding companies for savings associations
converted to national banks generally will become subject to the same regulation
as holding companies that control commercial banks, with a grandfather provision
68
<PAGE>
for former unitary savings and loan holding companies. Such grandfathered
companies will be permitted to maintain and establish affiliations with any type
of company and to acquire additional depository institutions, as long as any
acquired depository institution is merged into its converted savings association
and such institution continues to comply with both the qualified thrift lender
test and certain asset and investment limitations to which it was subject as a
federal savings association.
The Financial Services Act of 1998, introduced in March 1998, would
allow securities firms, insurance companies and commercial banks to merge under
a holding company structure. Among other things, the bill would expand the
Federal Reserve's regulatory authority over these financial institutions.
Holdings is unable to predict whether this bill or any other such legislation
will be enacted, what the provisions of such final legislation may be, or the
extent to which the legislation would restrict, disrupt or otherwise have a
material effect on its operations.
Savings and Loan Holding Company Regulation
Transactions with Affiliates. Holdings is a unitary savings and loan
holding company and as such is subject to the OTS regulations, examination,
supervision and reporting requirements pursuant to certain provisions of HOLA
and the Federal Deposit Insurance Act ("FDIA"). As an insured institution and a
subsidiary of a savings and loan holding company, the Bank is subject to
restrictions in its dealings with companies that are "affiliates" of Holdings
under the HOLA, certain provisions of the Federal Reserve Act that were made
applicable to savings institutions by the FIRREA, and the OTS regulations.
Savings institutions' transactions with its affiliates are subject to
the limitations set forth in the HOLA and the OTS regulations, which incorporate
Sections 23A, 23B, 22(g) and 22(h) of the Federal Reserve Act and Regulation O
adopted by the Federal Reserve Board. Affiliates are defined as any company that
controls or is under common control with an institution. Under Section 23A,
Holdings is an "affiliate" of the Bank. The OTS regulations and Sections 23A and
23B require that covered transactions and certain other transactions with
affiliates be on terms and conditions consistent with safe and sound banking
practices or on terms comparable to similar transactions with non-affiliated
parties, and impose quantitative restrictions on the amount of and
collateralization requirements on covered transactions. "Covered transactions"
generally include loans or extensions of credit to an affiliate, purchases of
securities issued by an affiliate, purchases of assets from an affiliate (except
as may be exempted by order or regulation), and certain other transactions. In
addition, a savings institution is prohibited from extending credit to an
affiliate (other than a subsidiary of the institution), unless the affiliate is
engaged only in activities that the Federal Reserve Board has determined, by
regulation, to be permissible for bank holding companies. Sections 22(g) and
22(h) of the Federal Reserve Act impose limitations on loans and extensions of
credit from an institution to its executive officers, directors and principal
stockholders and each of their related interests.
As a condition of approving the holding company application filed by
Chief Investments Limited ("CIL"), one of the two Selling Shareholders, CIL,
Holdings and the Director of OTS executed the Foreign Holding Company Agreement,
which, among other matters, prohibits CIL from selling, pledging, hypothecating,
or otherwise encumbering or disposing of any shares of the outstanding capital
stock of the Bank or any subsidiary companies thereof, owned by Holdings without
the prior written approval of the Director of OTS. In addition, Holdings, an
affiliate of a Selling Shareholder, and the OTS were among the various parties
to a Capital Maintenance/Dividend Agreement, pursuant to which no signatories to
such agreement would accept from the Bank or cause the Bank to pay any dividend
if the Bank's capital is or falls below its fully phased-in capital requirement
under section 5(t) of the HOLA and regulations of the OTS promulgated thereunder
and that such signatories may be required to infuse sufficient capital to bring
the Bank's capital at a level equal to its current capital requirements under
the HOLA and such regulations. Holdings requested and received confirmation from
the OTS that the Redemption did not require any approvals under the Foreign
Holding Company Agreement and provided notice to the OTS of the extinguishment
of the Selling Shareholders' interest, which terminated the Capital
Maintenance/Dividend Agreement.
Activities Limitations. A unitary savings and loan holding company,
such as Holdings, whose sole insured institution subsidiary qualifies as a
qualified thrift lender ("QTL") (described below) generally has the broadest
authority
69
<PAGE>
to engage in various types of business activities. A holding company that
acquires another institution and maintains it as a separate subsidiary or whose
sole subsidiary fails to meet the QTL test will become subject to the activities
limitations applicable to multiple savings and loan holding companies, which are
generally comparable to the activities limitations applicable to bank holding
companies.
Savings Institutions Regulations
Federal savings institutions such as the Bank are chartered by the OTS,
are members of the FHLB system, and have their deposits insured by the SAIF.
They are subject to comprehensive OTS and FDIC regulations that are intended
primarily to protect depositors. SAIF-insured, federally chartered institutions
may not enter into certain transactions unless applicable regulatory tests are
met or they obtain necessary approvals. They are also required to file reports
with the OTS describing their activities and financial condition, and periodic
examinations by the OTS test compliance by institutions with various regulatory
requirements, some of which are described below.
Insurance of Accounts. The FDIC has adopted a risk-based insurance
assessment system. The FDIC assigns an institution to one of three capital
categories based on the institution's financial information, as of the reporting
period ending seven months before the assessment period. The capital categories
are (1) well capitalized, (2) adequately capitalized or (3) undercapitalized. An
institution is also placed in one of three supervisory subcategories within each
capital group. The supervisory subgroup to which an institution is assigned is
based on a supervisory evaluation provided to the FDIC by the institution's
primary federal regulator and information that the FDIC determines to be
relevant to the institution's financial condition and the risk posed to the
deposit insurance funds. An institution's assessment rate depends on the capital
category and supervisory category to which it is assigned with the most well
capitalized, healthy institutions receiving the lowest rates.
Deposits of the Bank are presently insured by the SAIF. Both the SAIF
and the BIF are statutorily required to achieve and maintain a ratio of
insurance reserves to total insured deposits equal to 1.25%. Until recently,
members of the SAIF and BIF were paying average deposit insurance assessments of
between 24 and 25 basis points. The BIF met the required reserve level in 1995,
whereas the SAIF was not expected to meet or exceed the required level until
2002 at the earliest. This situation was primarily due to the statutory
requirement that SAIF members make payments on bonds issued in the late 1980s by
the Financing Corporation ("FICO") to recapitalize the predecessor to the SAIF.
In view of the BIF's achieving the 1.25% ratio, the FDIC ultimately
adopted a new assessment rate schedule ranging from 0-27 basis points under
which 92% of BIF members paid an annual premium of only $2,000. With respect to
SAIF member institutions, the FDIC adopted a final rule retaining the previously
existing assessment rate schedule applicable to SAIF member institutions of 23
to 31 basis points. As long as the premium differential continued, it may have
had adverse consequences for SAIF members, including reduced earnings and an
impaired ability to raise funds in the capital markets. In addition, SAIF
members, such as the Bank, could have been placed at a substantial competitive
disadvantage to BIF members with respect to pricing of loans and deposits and
the ability to achieve lower operating costs.
On September 30, 1996, the President of the United States signed into
law the Funds Act which, among other things, imposed a special one-time
assessment on SAIF member institutions, including the Bank, to recapitalize the
SAIF. As required by the Funds Act, the FDIC imposed a special assessment of
65.7 basis points on SAIF assessable deposits held as of March 31, 1995, payable
November 27, 1996 (the "SAIF Special Assessment"). The SAIF Special Assessment
was recognized by the Bank as an expense in the quarter ended September 30,
1996, and is generally tax deductible. The SAIF Special Assessment recorded by
the Bank amounted to $7.7 million on a pre-tax basis and $4.5 million on an
after-tax basis.
The Funds Act also spread the obligations for payment of the FICO bonds
across all SAIF and BIF members. Beginning on January 1, 1997, BIF deposits were
assessed for a FICO payment of 1.3 basis points, while SAIF deposits
70
<PAGE>
pay 6.48 basis points. Full pro rata sharing of the FICO payments between BIF
and SAIF members will occur on the earlier of January 1, 2000, or the date the
BIF and SAIF are merged.
As a result of the Funds Act, the FDIC voted to effectively lower SAIF
assessments to 0-27 basis points as of January 1, 1997, a range comparable to
that of BIF members. SAIF members will also continue to make the FICO payments
described above. The FDIC also lowered the SAIF assessment schedule for the
fourth quarter of 1996 to 18-27 basis points. Management cannot predict the
level of FDIC insurance assessments on an on-going basis, whether the federal
thrift charter will be eliminated or whether the BIF and SAIF will eventually be
merged.
The Bank's assessment rate, effective as of January 1, 1997, was
reduced to 0.164% based upon its current risk classification, and the regular
premium paid for 1997 was $1.8 million. As discussed in further detail under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations--Noninterest Expenses," the Bank's deposit
insurance premium has been reduced to 6.4 basis points, effective as of January
1, 1998.
The FDIC is authorized to raise the assessment rates in certain
circumstances. The FDIC has exercised this authority several times in the past
and may raise insurance premiums in the future. If such action is taken by the
FDIC, it could have an adverse effect on the earnings of the Bank.
Under the FDIA, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe or unsound practices,
is in an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC or the
OTS. The management of the Bank does not know of any practice, condition or
violation that might lead to termination of deposit insurance.
Regulatory Capital Requirements. The OTS has adopted capital standards
under which savings institutions must currently maintain at least the following
minimum capital ratios (i) a tangible capital requirement of 1.5% of adjusted
total assets, (ii) a leverage (or core capital) ratio of 3.0% of adjusted total
assets, and (iii) a risk-based capital requirement of 8.0% of risk-weighted
assets. These requirements (which cannot be less stringent than those applicable
to national banks) apply to the Bank. The OTS has broad discretion to impose
capital requirements in excess of the minimum applicable ratios. Under current
law and regulations, there are no capital requirements directly applicable to
Holdings. However, if Holdings were to become a bank holding company, it would
become subject to the capital adequacy rules of the Federal Reserve Board. The
Private Offerings facilitated Holdings' compliance with the Federal Reserve
Board capital requirements.
Under the current regulations, "tangible capital" includes common
stockholders' equity, certain non-cumulative perpetual preferred stock and
related paid-in capital, certain qualifying non-withdrawable accounts and
pledged deposits, and minority interests in fully consolidated subsidiaries,
less intangible assets (except certain purchased mortgage servicing rights) and
specified percentages of debt and equity investments in certain subsidiaries.
"Core capital" is tangible capital plus limited amounts of intangible assets
meeting designated marketability criteria. The "risk-based capital" requirement
provides that an institution's total capital must equal at least 8% of
risk-weighted assets. Certain institutions will be required to deduct an
interest rate risk component from their total capital, as described below.
"Total capital" equals core capital plus "supplementary capital" (which includes
specified amounts of cumulative preferred stock, certain limited-life preferred
stock, subordinated debt, other capital instruments, and general valuation loan
and lease loss allowances up to a maximum of 1.25% of risk-weighted assets). The
amount of supplementary capital included as part of total capital cannot exceed
100% of core capital. "Risk-weighted assets" are determined by assigning
designated risk weights based on the credit risk associated with the particular
asset. Representative risk weights include: 0% for cash and assets that are
backed by the full faith and credit of the United States; 20% for cash items in
the process of collection, FHLB stock, agency securities not backed by the full
faith and credit of the United States and certain high-quality mortgage-related
securities; 50% for certain revenue bonds, qualifying mortgage loans, certain
non-high-quality mortgage-related securities and certain qualifying residential
construction loans; and 100% for consumer, commercial and other loans,
repossessed assets, assets that are 90 or more days past due, and all other
assets.
71
<PAGE>
As of March 31, 1998, the Bank's tangible and core capital ratios were
5.52% and the risk-based capital ratio was 11.27%.
The OTS regulatory capital regulations take into account a savings
institution's exposure to the risk of loss from changing interest rates. Under
the regulations, a savings institution with an above normal level of interest
rate risk exposure will be required to deduct an IRR component from its total
capital when determining its compliance with the risk-based capital
requirements. An "above normal" level of interest rate risk exposure is a
projected decline of 2% in the net present value of an institution's assets and
liabilities resulting from a 2% swing in interest rates. The IRR component will
equal one-half of the difference between the institution's measured interest
rate exposure and 2%. Savings institutions are required to file data with the
OTS that the OTS will use to calculate, on a quarterly basis, the institutions'
measured interest rate risk and IRR components. The IRR component to be deducted
from capital is the lowest of the IRR components for the preceding three
quarters. The OTS may waive or defer an institution's IRR component on a
case-by-case basis. Implementation of the IRR requirements has been delayed
indefinitely.
If an institution becomes categorized as "undercapitalized" under the
definitions established by the "prompt corrective action" provisions of the
FDICIA, it will become subject to certain restrictions imposed by the FDICIA.
See "--Prompt Corrective Action."
Prompt Corrective Action. The OTS and other federal banking regulators
have established capital levels for institutions to implement the "prompt
corrective action" provisions of the FDICIA which require certain supervisory
actions against undercapitalized institutions. Based on these capital levels,
insured institutions will be categorized as well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized or critically
undercapitalized. The FDICIA requires federal banking regulators, including the
OTS, to take prompt corrective action to solve the problems of those
institutions that fail to satisfy their applicable minimum capital requirements.
The level of regulatory scrutiny and restrictions imposed become increasingly
severe as an institution's capital level falls.
A "well capitalized" institution must have risk-based capital of 10% or
more, core capital ratio of 5% or more and Tier 1 risk-based capital (based on
the ratio of core capital to risk-weighted assets) of 6% or more and may not be
subject to any written agreement, order, capital directive, or prompt corrective
action directive issued by the OTS. As of December 31, 1997 and thereafter, the
Bank was a well capitalized institution under the definitions. An institution
will be categorized as "adequately capitalized" if it has total risk-based
capital of 8% or more, Tier 1 risk-based capital of 4% or more, and core capital
of 4% or more and does not meet the definition of "well capitalized;"
"undercapitalized" if it has total risk-based capital of less than 8%, or Tier 1
risk-based capital of less than 4%, or core capital of less than 4%;
"significantly undercapitalized" if it has total risk-based capital of less than
6%, or Tier 1 risk-based capital of less than 3%, or core capital of less than
3%; and "critically undercapitalized" if it has a ratio of tangible equity to
total assets that is equal to less than 2%.
In the case of an institution that is categorized as
"undercapitalized," such an institution must submit a capital restoration plan
to the OTS. An undercapitalized depository institution generally will not be
able to acquire other banks or thrifts, establish additional branches, pay
dividends, or engage in any new lines of business unless consistent with its
capital plan. A "significantly undercapitalized" institution will be subject to
additional restrictions on its affiliate transactions, the interest rates paid
by the institution on its deposits, the institution's asset growth, compensation
of senior executive officers, and activities deemed to pose excessive risk to
the institution. Regulators may also order a significantly undercapitalized
institution to hold elections for new directors, terminate any director or
senior executive officer employed for more than 180 days prior to the time the
institution became significantly undercapitalized, or hire qualified senior
executive officers approved by the regulators. The FDICIA provides that an
institution that is "critically undercapitalized" must be placed in
conservatorship or receivership within 90 days of becoming categorized as such
unless the institution's regulator and the FDIC jointly determine that some
other course of action would result in a lower resolution cost to the
institution's insurance fund.
Restrictions on Dividends and Other Capital Distributions. The current
OTS regulation applicable to the payment of dividends or other capital
distributions by savings institutions imposes limits on capital distributions
based
72
<PAGE>
on an institution's regulatory capital levels and net income. An institution
that meets or exceeds all of its capital requirements (both before and after
giving effect to the distribution) and is not in need of more than normal
supervision would be a "Tier 1 association." A Tier 1 association may make
capital distributions during a calendar year of up to the greater of (i) 100% of
net income for the current calendar year plus 50% of its capital surplus or (ii)
the amount permitted for a "Tier 2 association" which is 75% of its net income
over the most recent four quarters. Any additional capital distributions would
require prior regulatory approval. The Bank currently exceeds its fully
phased-in capital requirements and qualifies as a Tier 1 association under the
regulation. A "Tier 3 association" is defined as an institution that does not
meet all of the minimum regulatory capital requirements and therefore may not
make any capital distributions without the prior approval of the OTS.
The OTS has proposed regulations that would revise the current capital
distribution restrictions. Under the proposal a savings association may make a
capital distribution without notice to the OTS (unless it is a subsidiary of a
holding company) provided that it has a CAMELS 1 or 2 rating, is not of
supervisory concern, and would remain adequately capitalized (as defined in the
OTS prompt corrective action regulations) following the proposed distribution.
Savings associations that would remain adequately capitalized following the
proposed distribution but do not meet the other noted requirements must notify
the OTS 30 days prior to declaring a capital distribution. The OTS stated it
will generally regard as permissible that amount of capital distributions that
do not exceed 50% of the institution's excess regulatory capital plus net income
to date during the calendar year. As under the current rule, the OTS may object
to a capital distribution if it would constitute an unsafe or unsound practice.
No assurance may be given as to whether or in what form the regulations may be
adopted.
If the Bank became a California state-chartered bank, the deposits of
the Bank would continue to be insured by the FDIC in the manner and to the
extent provided by law, and various requirements and restrictions under the laws
of the State of California and the United States would continue to affect the
operations of the Bank. State and federal statutes and regulations would relate
to many aspects of the Bank's operations, including levels of capital, reserves
against deposits, interest rates payable on deposits, loans, investments,
mergers and acquisitions, borrowings, dividends, locations of branch offices and
capital requirements.
Bank regulatory agencies also have authority to prohibit banks from
engaging in activities that, in their respective opinions, constitute unsafe or
unsound practices in conducting its business. It is possible, depending upon the
financial condition of the Bank and other factors, that the FDIC or the DFI
could assert that the payment of dividends or other payments by the Bank might,
under some circumstances, be such an unsafe or unsound practice. Further, the
bank regulatory agencies have established guidelines with respect to the
maintenance of appropriate levels of capital by banks or bank holding companies
under their jurisdiction. Compliance with the standards set forth in such
guidelines and the restrictions that are or may be imposed under the prompt
corrective action provisions of federal law could limit the amount of dividends
which the Bank or Holdings may pay.
Qualified Thrift Lender Test. A savings institution such as the Bank
will be a QTL if its qualified thrift investments equal or exceed 65% of its
portfolio assets on a monthly average basis in nine of every 12 months.
Qualified thrift investments include primarily residential mortgages and related
investments, including certain mortgage-backed and related securities. Portfolio
assets consist of total assets minus (a) goodwill and other intangible assets,
(b) the value of properties used by the savings institution to conduct its
business, and (c) certain liquid assets in an amount not exceeding 20% of total
assets. Recent legislation has amended the QTL requirements to allow educational
loans, small business loans and credit card loans to count as qualified thrift
assets without limit and to allow loans for personal, family or household
purposes to count as qualified thrift assets in the category limited to 20% of
portfolio assets. Prior to the Budget Act, small business loans were included in
qualified thrift assets only if made in a credit-needy area, and educational and
credit card loans were included subject to a 10% of portfolio assets limit. The
previous limit for loans for personal, family or household purposes was also 10%
of portfolio assets.
Any savings institution that fails to become or remain a QTL must
either convert to a national bank charter or be subject to restrictions
specified in the OTS regulations. At March 31, 1998, the Bank exceeded the QTL
requirements. Any such savings institution that does not become a bank will be:
(i) prohibited from making any new
73
<PAGE>
investment or engaging in activities that would not be permissible for national
banks; (ii) prohibited from establishing any new branch office in a location
that would not be permissible for a national bank in the institution's home
state; (iii) ineligible to obtain new advances from any FHLB; and (iv) subject
to limitations on the payment of dividends comparable to the statutory and
regulatory dividend restrictions applicable to national banks. Also, beginning
three years after the date on which the savings association ceases to be a QTL,
the savings association would be prohibited from retaining any investment or
engaging in any activity not permissible or a national bank and would be
required to repay any outstanding advances to any FHLB. A savings institution
may requalify as a QTL if it thereafter complies with the QTL test.
Federal Home Loan Bank System. The Bank is a member of the FHLB system,
which consists of 12 regional Federal Home Loan Banks governed and regulated by
the Federal Housing Finance Board. The Federal Home Loan Banks provide a central
credit facility for member institutions. The Bank, as a member of the FHLB of
San Francisco, is required to acquire and hold shares of capital stock in the
FHLB of San Francisco in an amount at least equal to the greater of 1% of the
aggregate principal amount of its unpaid residential mortgage loans, home
purchase contracts and similar obligations as of the close of each calendar
year, or 5% of its borrowings from the FHLB of San Francisco (including advances
and letters of credit issued by the FHLB on the Bank's behalf). The Bank is
currently in compliance with this requirement, with a $14.1 million investment
in stock of the FHLB of San Francisco as of March 31, 1998.
The FHLB of San Francisco makes advances to members in accordance with
policies and procedures periodically established by the Federal Housing Finance
Board and the Board of Directors of the FHLB of San Francisco. Currently
outstanding advances from the FHLB of San Francisco are required to be secured
by a member's shares of stock in the FHLB of San Francisco and by certain types
of mortgages and other assets. The FIRREA further limited the eligible
collateral in certain respects. Interest rates charged for advances vary
depending on maturity, the cost of funds to the FHLB of San Francisco and the
purpose of the borrowing. As of March 31, 1998, there were no outstanding
advances from the FHLB of San Francisco to the Bank. The FIRREA restricted the
amount of FHLB advances that a member institution may obtain, and in some
circumstances requires repayment of outstanding advances, if the institution
does not meet the QTL test. See "--Qualified Thrift Lender Test."
Federal Reserve System. The Federal Reserve Board regulations require
savings institutions to maintain non-interest-earning reserves against their
transaction accounts. The Federal Reserve Board regulations generally required
that reserves be maintained against aggregate transaction accounts as follows:
for accounts aggregating $47.8 million or less (subject to adjustment by the
Federal Reserve Board) the reserve requirement is 3%; and for accounts greater
than $47.8 million, the reserve requirement is $1.4 million plus 10% (subject to
adjustment by the Federal Reserve Board between 8% and 14%) against that portion
of total transaction accounts in excess of $47.8 million. The first $4.7 million
of otherwise reservable balances (subject to adjustment by the Federal Reserve
Board) are exempted from the reserve requirements. The Bank is in compliance
with the foregoing requirements. Because required reserves must be maintained in
the form of either vault cash, a non-interest-bearing account at a Federal
Reserve Bank or a pass-through account as defined by the Federal Reserve Board,
the effect of this reserve requirement is to reduce the Bank's interest-earning
assets. FHLB System members are also authorized to borrow from the Federal
Reserve "discount window," but Federal Reserve Board regulations require
institutions to exhaust all FHLB sources before borrowing from a Federal Reserve
Bank.
Liquidity. OTS regulations currently require member savings
institutions to maintain for each calendar month an average daily balance of
liquid assets (cash and certain time deposits, securities of certain mutual
funds, bankers' acceptances, corporate debt securities and commercial paper, and
specified U.S. government, state government and federal agency obligations)
equal to at least 4% of its average daily balance during the preceding calendar
month of net withdrawable deposits and short-term borrowings (generally
borrowings having maturities of one year or less). The Director of the OTS may
vary this liquidity requirement from time to time within a range of 4% to 10%.
Monetary penalties may be imposed for failure to meet liquidity requirements. At
March 31, 1998, the Bank's liquidity ratio was 18.96%.
74
<PAGE>
Community Reinvestment Act. Under the Community Reinvestment Act (the
"CRA"), as implemented by the OTS regulations, a savings institution has a
continuing and affirmative obligation consistent with its safe and sound
operation, to help meet the credit needs of its entire community, including low
and moderate income neighborhoods. The CRA does not establish specific lending
requirements or programs for financial institutions nor does it limit an
institution's discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with the CRA.
The CRA requires the OTS and the other federal bank regulators, in connection
with its examination of a financial institution, to assess the institution's
record of meeting the credit needs of its community and to take such records
into account in its evaluation of certain applications. The conversion of
Holdings to a bank holding company and the bank to a state chartered bank would
involve such applications. If the Bank became a state chartered bank, it would
continue to be subject to the fair lending requirements and reporting
obligations involving home mortgage lending operations of the CRA. The FIRREA
amended the CRA to require public disclosure of an institution's CRA rating and
to require that the OTS provide a written evaluation of an institution's CRA
performance utilizing a four-tiered descriptive rating system in lieu of the
existing five-tiered numerical rating system. Based upon OTS examinations in
1996 and 1998, the Bank's CRA ratings were "outstanding."
Loans-to-One-Borrower Limitations. The FIRREA provided that
loans-to-one-borrower limits applicable to national banks apply to savings
institutions. Generally, under current limits, loans and extensions of credit
outstanding at one time to a single borrower shall not exceed 15% of the savings
institution's unimpaired capital and unimpaired surplus. Loans and extensions of
credit fully secured by certain readily marketable collateral may represent an
additional 10% of unimpaired capital and unimpaired surplus. As of March 31,
1998, the Bank was in compliance with the loans- to-one-borrower limitations.
Bank Holding Company and Bank Regulation
Holdings. If Holdings were to become a bank holding company, its
regulatory status would change from that of a unitary savings and loan holding
company to that of a bank holding company. As a registered bank holding company,
Holdings would be subject to regulation under the Bank Holding Company Act of
1956, as amended (the "BHCA") and the regulations promulgated by the Federal
Reserve Board pursuant thereto. Holdings would then be required to file with the
Federal Reserve Board quarterly and annual reports and such additional
information as the Federal Reserve Board may require pursuant to the BHCA. The
Federal Reserve Board may conduct examinations of Holdings and its non-bank
subsidiaries. Holdings would also become a bank holding company within the
meaning of Section 3700 of the California Financial Code. As such, Holdings and
its subsidiaries would become subject to examination by, and may be required to
file reports with, the DFI.
The Federal Reserve Board could require that Holdings terminate an
activity or terminate control of or liquidate or divest certain subsidiaries or
affiliates when the Federal Reserve Board believes the activity or the control
of the subsidiary or affiliate constitutes a significant risk to the financial
safety, soundness or stability of a banking subsidiary such as the Bank. The
Federal Reserve Board also has the authority to regulate provisions of certain
bank holding company debt, including authority to impose interest ceilings and
reserve requirements on such debt. Under certain circumstances, Holdings would
be required to file written notice and obtain approval from the Federal Reserve
Board prior to purchasing or redeeming its equity securities. Further, Holdings
would be required by the Federal Reserve Board to maintain certain levels of
capital.
Holdings would be required to obtain the prior approval of the Federal
Reserve Board for the acquisition of more than 5% of the outstanding shares of
any class of voting securities or substantially all of the assets of any bank
(other than the Bank) or bank holding company. Prior approval of the Federal
Reserve Board would also be required for the merger or consolidation of Holdings
and another bank holding company.
Holdings would be prohibited by the BHCA, except in certain statutorily
prescribed instances, from acquiring direct or indirect ownership or control of
more than 5% of the outstanding voting shares of any company that is not a bank
or bank holding company and from engaging directly or indirectly in activities
other than those of banking, managing or controlling banks or furnishing
services to its subsidiaries. However, Holdings, subject to the prior
75
<PAGE>
approval of the Federal Reserve Board, could engage in any, or acquire shares of
companies engaged in, activities that are deemed by the Federal Reserve Board to
be so closely related to banking or managing or controlling banks as to be a
proper incident thereto. In making any such determination, the Federal Reserve
Board would be required to consider whether the performance of such activities
by Holdings or an affiliate could reasonably be expected to produce benefits to
the public, such as greater convenience, increased competition or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest or unsound
banking practices. The Federal Reserve Board is also empowered to differentiate
between activities commenced de novo and activities commenced by acquisition, in
whole or in part, of a going concern. In 1996, the Budget Act of 1996 (the
"Budget Act") eliminated the requirement that bank holding companies seek
Federal Reserve Board approval before engaging de novo in permissible nonbanking
activities listed in Federal Reserve Board Regulation Y, which governs bank
holding companies, if the holding company and its lead depository institution
are well managed and well capitalized and certain other criteria specified in
the statute are met. For purposes of determining the capital levels at which a
bank holding company shall be considered well capitalized under this section of
the Budget Act and Regulation Y, the Federal Reserve Board adopted, as a rule,
risk-based capital ratios (on a consolidated basis) that are the same as the
level set for determining that a state member bank is well capitalized under the
provisions established under the prompt corrective action provisions of federal
law. See "--Savings Institution Regulations--Prompt Corrective Action."
Under Federal Reserve Board regulations, a bank holding company is
required to serve as a source of financial and managerial strength to its
subsidiary bank(s) and may not conduct its operations in an unsafe or unsound
manner. In addition, it is the Federal Reserve Board policy that in serving as a
source of strength to its subsidiary bank(s), a bank holding company should
stand ready to use available resources to provide adequate capital funds to its
subsidiary bank(s) during periods of financial stress or adversity and should
maintain the financial flexibility and capital-raising capacity to obtain
additional resources for assisting its subsidiary bank(s). A bank holding
company's failure to meet its obligations to serve as a source of strength to
its subsidiary bank(s) will generally be considered by the Federal Reserve Board
to be an unsafe and unsound banking practice or a violation of the Federal
Reserve Board's regulations or both.
The Bank. If the Bank became a California state-chartered bank, it
would be subject to primary supervision, periodic examination and regulation by
the Commissioner of the California DFI (the "Commissioner") and the FDIC. If, as
a result of an examination of a Bank, either of these Bank regulatory agencies
should determine that the financial condition, capital resources, asset quality,
earnings prospects, management, liquidity or other aspects of the Bank's
operations are unsatisfactory or that the Bank or its management is violating or
has violated any law or regulation, various remedies are available to the bank
regulatory agency. Such remedies include the power to enjoin "unsafe or unsound"
practices, to require affirmative action to correct any conditions resulting
from any violation or practice, to issue an administrative order that can be
judicially enforced, to direct an increase in capital, to restrict the growth of
the bank, to assess civil monetary penalties, to remove officers and directors
and ultimately to terminate a bank's deposit insurance, which would result in a
revocation of the Bank's charter. The Bank has not been the subject of any such
actions by the OTS in the past.
Safety and Soundness Standards. The FDIC and the Federal Reserve Board
have adopted final guidelines establishing standards for safety and soundness,
as required by FDICIA. These standards are designed to identify potential safety
and soundness concerns and ensure that action is taken to address those concerns
before they pose a risk to the deposit insurance funds. The standards relate to:
(i) internal controls, information systems and internal audit systems; (ii) loan
documentation; (iii) credit underwriting; (iv) asset growth; (v) earnings; and
(vi) compensation, fee and benefits. If the FDIC or the Federal Reserve Board
determine that an institution fails to meet any of these standards, the agency
may require the institution to submit to the agency an acceptable plan to
achieve compliance with the standard. In the event the institution fails to
submit an acceptable plan within the time allowed by the agency or fails in any
material respect to implement an accepted plan, the agency must, by order,
require the institution to correct the deficiency. The FDIC or the Federal
Reserve Board agencies have promulgated safety and soundness regulations and
accompanying interagency compliance guidelines on asset quality and earnings
standards. These new guidelines provide six standards for establishing and
maintaining a system to identify problem assets and prevent those assets from
deteriorating. The institution should: (i) conduct periodic asset quality
reviews to identify problem assets; (ii) estimate
76
<PAGE>
the inherent losses in those assets and establish reserves that are sufficient
to absorb estimated losses; (iii) compare problem asset totals to capital; (iv)
take appropriate corrective action to resolve problem assets; (v) consider the
size and potential risks of material asset concentrations; and (vi) provide
periodic asset reports with adequate information for management and the board of
directors to assess the level of asset risk. These new guidelines also set forth
standards for evaluating and monitoring earnings and for ensuring that earnings
are sufficient for the maintenance of adequate capital and reserves. If an
institution fails to comply with a safety and soundness standard, the
appropriate federal banking agency may require the institution to submit a
compliance plan. Failure to submit a compliance plan or to implement an accepted
plan may result in enforcement action.
Potential Enforcement Actions. Commercial banking organizations, such
as Holdings and the Bank, and their institution-affiliated parties, may be
subject to potential enforcement actions by the Federal Reserve Board, the FDIC
and/or the Commissioner for violations of any law, rule, regulation or any
condition imposed in writing by the agency or any written agreement with the
agency for unsafe or unsound practices in conducting their businesses.
Enforcement actions may include the imposition of a conservator or receiver, the
issuance of a cease-and-desist order that can be judicially enforced, the
termination of insurance of deposits (in the case of the Bank), the imposition
of civil money penalties, the issuance of directives to increase capital, the
issuance of formal and informal agreements, the issuance of removal and
prohibition orders against institution affiliated parties, and the imposition of
restrictions and sanctions under the prompt corrective action provisions of the
FDICIA. Additionally, a holding company's inability to serve as a source of
strength to its subsidiary banking organizations could serve as an additional
basis for a regulatory action against the holding company. Neither Holdings nor
the Bank has been subject to any such enforcement actions.
Interstate Banking and Branching. Under the Interstate Branching Act, a
bank holding company that is adequately capitalized and managed may obtain
approval under the BHCA (via merger) to acquire (via merger) an existing bank
located in another state without regard to state law. A bank holding company is
not permitted to make such an acquisition if, upon consummation, it would
control (a) more than 10% of the total amount of deposits of insured depository
institutions in the United States or (b) 30% or more of the deposits in the
state in which the bank is located. A state may limit the percentage of total
deposits that may be held in that state by any one bank or bank holding company
if application of such limitation does not discriminate against out-of-state
banks or bank holding companies. An out-of-state bank holding company may not
acquire a state bank in existence for less than a minimum length of time that
may be prescribed by state law, except that a state may not impose more than a
five-year age requirement.
The Interstate Branching Act also permits mergers of insured banks
located in different states and conversion of the branches of the acquired bank
into branches of the resulting bank. Each state may adopt legislation to
prohibit interstate mergers after that date in that state or in other states by
that state's banks. The same concentration limits discussed in the preceding
paragraph apply. The Interstate Branching Act also permits a national or state
bank to establish branches in a state other than its home state if permitted by
the laws of that state, subject to the same requirements and conditions as for a
merger transaction.
Under the Interstate Branching Act, the extent of a commercial bank's
ability to branch into a new state will depend on the law of the state.
California has adopted an early "opt in" statute under the Interstate Branching
Act that permits out-of-state banks to acquire California banks that satisfy a
five-year minimum age requirement (subject to exceptions for supervisory
transactions) by means of merger or purchases of assets; although entry through
acquisition of individual branches of California institutions and de novo
branching into California are not permitted. The Interstate Branching Act and
the California branching statute allows out-of-state banks to enter and compete
in the markets in which the Bank operates.
77
<PAGE>
MANAGEMENT OF THE COMPANY AND THE BANK
In accordance with the Company's bylaws, the Boards of Directors of the
Company consists of five members. In accordance with the Bank's bylaws, the
Board of Directors of the Bank consists of seven members. The directors of the
Company have been elected to the following classes: one class of directors,
consisting of Mr. Fell, has a term expiring at the first annual meeting of
stockholders; the second class, consisting of Messrs. Downing and Lam, has a
term of office expiring at the second annual meeting of stockholders; and the
third class, consisting of Messrs. Wong and Wu, has a term of office expiring at
the third annual meeting of stockholders. The directors of the Bank have been
elected to the following classes: one class of directors, consisting of Messrs.
Wu, Downing and Fell, has a term expiring at the first annual meeting of
stockholders; the second class, consisting of Dr. Wong, has a term of office
expiring at the second annual meeting of stockholders; and the third class,
consisting of Mr. Lam, has a term of office expiring at the third annual meeting
of stockholders. The remaining two vacancies are expected to be filled by the
Board of Directors of the Bank in the near future. There are no arrangements or
understandings between the Company and the Bank and any person pursuant to which
such person has been proposed to be a director, and no director nominee is
related to any other director nominee or executive officer of the Company or the
Bank by blood, marriage or adoption.
Directors and Executive Officers
The directors and executive officers of the Company and the Bank are
set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Directors:
Sau-wing Lam.................................. 45 Chairman of the Boards of Directors
Tommy S. Wu................................... 40 President, Chief Executive Officer and Director
Jonathan H. Downing........................... 46 Senior Vice President, Chief Financial Officer,
Treasurer and Director
Robert Fell................................... 77 Director
Godwin Wong................................... 48 Director
Executive Officers Who Are Not Directors:
Louis E. Barbarelli........................... 56 Senior Vice President and Director of Operations
and Systems
William T. Goldrick........................... 66 Senior Vice President and Chief Credit Officer
Cecilia Lai................................... 48 Senior Vice President, Director of Retail
Banking
Dennis Alan Lee............................... 55 Vice President and Corporate Counsel
Sylvia Loh.................................... 42 Senior Vice President and Director of Commercial
Banking
Deanne Miller................................. 50 Senior Vice President and Director of Human
Resources
</TABLE>
Mr. Lam was appointed President, Chief Executive Officer and Vice
Chairman of the Board of Directors of the Bank in December 1996. On December 31,
1997, he retired as President and Chief Executive Officer of the Bank but
remained as Vice Chairman of the Board of Directors. Previously, Mr. Lam served
as President and Chief Executive Officer of Pacific Link Communications Limited
located in Hong Kong, a subsidiary of the First Pacific Group. Mr. Lam was
appointed President, Chief Executive Officer and Director of the Bank in March
1991 and left in 1995 to head up Pacific Link Communications Limited. Mr. Lam's
banking experience began when he joined the International Division of Crocker
National Bank in San Francisco in July 1977. He was transferred to Crocker's
Hong Kong Regional Officer in 1979 where he directed the administration,
correspondent banking and marketing functions. He returned to Crocker's
headquarters in 1983 where he directed Correspondent Banking for the Asia
Pacific Region. In February 1984, he joined The Hibernia Bank in San Francisco,
then a First Pacific Group ("Group") subsidiary, as the head of Trust Banking.
When the Group acquired the Bank in 1986, Mr. Lam was appointed its Chief
Administrative Officer and Senior Vice President, Retail Banking. In 1989, he
was transferred to the Group's headquarters in Hong
78
<PAGE>
Kong to become the Group Treasurer. Mr. Lam devotes a significant amount of his
personal time on voluntary services in the ethnic Chinese communities. Mr. Lam
graduated with a B.S. degree in Business Administration from California State
University at Fresno in 1975, and a MBA degree in International Finance at the
University of California at Berkeley in 1977.
Mr. Wu was appointed President and Chief Executive Officer of the Bank
effective January 1, 1998. Prior to that appointment, Mr. Wu was the Executive
Vice President and Director of the Bank as of September 25, 1997. Previously,
Mr. Wu was the Director of Customer Care for Pacific Link Communications Limited
in Hong Kong where he managed over 600 employees and was responsible for
formulating and implementing customer care, customer retention, and customer
communications strategies. Mr. Wu served as a director of the Bank from
1995-1996 and was a Senior Vice President, Head of Retail Banking of the Bank
from 1992-1996 when he directed the marketing, public relations, loan
originations, branch administration and operations control functions. Mr. Wu
also served the Bank as Vice President, Regional Manager, of its Southern
California Retail Banking Division from 1991-1992. Prior to joining the Bank in
1991, Mr. Wu was at First Pacific Bank, Hong Kong where he served as Vice
President and Team Leader of its Business Banking Group; Vice President, Deputy
Head, Retail Banking Group; and Assistant Vice President, Retail Banking Group
from 1986-1991. Prior to First Pacific Bank, Mr. Wu's experience included the
following: Assistant Treasurer, and Branch Manager for Chase Manhattan Bank,
N.A., Hong Kong; Assistant Manager, Banque Nationale De Paris, Hong Kong;
Assistant Officer, Standard Chartered Bank, Hong Kong (1977-1986). Mr. Wu has
also served on the Board of Directors of the Self-Help For the Elderly (also a
member of the finance committee) and the PineView Housing Corporation (also
chairperson of the finance committee). Mr. Wu is a graduate of Cognitio College,
Hong Kong and has taken numerous banking and management courses at the
University of California, Berkeley and the Chartered Institute of Bankers.
Mr. Barbarelli has been Senior Vice President and Director of
Operations and Systems of the Bank since August 1993, and served as a member of
the Board of Directors from 1994 to 1998. Prior to 1993, he served for two years
as a Senior Vice President and Chief Auditor of the Bank. Before joining the
Bank, Mr. Barbarelli was the General Auditor at Jackson County Federal Bank in
Medford, Oregon. Mr. Barbarelli has also served at the senior management level
at Hibernia Bancshares (San Francisco, California), Central Bank (Concord,
California), Bank of California, Fireman's Fund Insurance and U.S. Leasing. Mr.
Barbarelli has a B.S. in Information Systems Management from the University of
San Francisco.
Mr. Downing has been Senior Vice President and Chief Financial Officer
of the Bank since 1989. Mr. Downing has served as a director of the Bank since
January 1991. Mr. Downing joined the First Pacific Group in July 1983 as one of
four professionals contracted to create a de novo mortgage banking operation
(FPM Inc.) in California. Mr. Downing served as Chief Financial Officer of FPM
Inc. until it was merged into United Savings Bank in 1986. At that time he
assumed the responsibilities of Director of Secondary Marketing for the Bank and
was appointed its Chief Financial Officer in 1989. Prior to joining the First
Pacific Group, Mr. Downing was with Arthur Andersen and Co. Mr. Downing received
a B.S. in Business Administration from California State University, San Diego.
Mr. Downing is a CPA and a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants.
Mr. Goldrick has been Senior Vice President and Chief Credit Officer of
the Bank since January 1997. Prior to joining the Bank, Mr. Goldrick was the
Senior Vice President, Senior Credit Officer for America California Bank; Chief
Lending Officer for National American Bank; First Vice President-Manager Loan
Administration for MBANK; Vice President-Credit Policy, Vice President-Senior
Credit Officer for Asia and Vice President-Division Administrator for Crocker
National Bank. Mr. Goldrick has also held various international banking
positions with Crocker National Bank and Citibank. Mr. Goldrick received a B.A.
in Economics from the University of California, Santa Barbara in 1957.
Ms. Lai has served as a member of the Board of Directors from 1997 to
1998, and has served as the Senior Vice President and Director of Retail Banking
since 1997. Prior to holding that position she was Vice President of Credit Risk
Management and Compliance, as well as CRA Officer and Compliance Officer at the
Bank since 1992.
79
<PAGE>
From 1988 to 1992, Ms. Lai held a variety of positions (Director of Marketing,
Manager, Market Support Group, Branch Manager and Marketing Analyst) within the
Bank. Prior to joining the Bank, Ms. Lai served as Executive Director of the
Oakland Chinese Community Council and in various positions at Automatic Data
Processing, Underwriters Travelers Insurance., and Allstate Insurance Company.
Ms. Lai received a B.A. and M.A. from Holy Names College.
Mr. Lee has served as Corporate Counsel for the Bank since June, 1993.
Currently, he also serves as Vice President for the Bank. Prior to joining the
Bank, Mr. Lee was a director and General Counsel for Golden Coin Savings and
Loan Association. Prior to this, Mr. Lee was in private practice at the Law
Office of Barkley & Lee. Mr. Lee has also served in a variety of positions in
the legal profession, including City Attorney for the City of Pleasant Hill,
City Attorney for the cities of Martinez and Pleasant Hill, Senior Assistant
City Attorney for the City of Redwood City, Acting City Attorney and Assistant
City Attorney for the City of Berkeley, Judge Pro-Tem at the Berkeley-Albany
Municipal Court and Temporary Court Commissioner. Mr. Lee received an A.A.
degree from Warren Wilson Junior College (Asheville, North Carolina), B.A.
degree from San Francisco State College in 1966 and a J.D. from the University
of California, Hastings College of Law in 1969. Mr. Lee is a member of the State
Bar of California.
Ms. Loh is a Senior Vice President and Director of Commercial Banking
of the Bank and joined the Bank as Vice President and Head of Commercial Banking
in January 1996. Ms. Loh created the commercial banking division for the Bank
and manages three marketing teams which focus on commercial real estate, trade
finance, business banking loan products and SBA. Prior to joining the Bank, Ms.
Loh held the position of Vice President, Relationship Manager, Bank of America,
International Trade Bank from 1992-1996. In this position, she managed an export
portfolio with an annual fee income of $12,000,000 and managed and increased an
import credit portfolio to $45,000,000. From 1988-1992, Ms. Loh was the Vice
President, Team Manager, Commercial Banking, Security Pacific Asian Bank where
she managed a team of loan officers with a focus on trade finance, real estate
investment and private banking. Ms. Loh was the Vice President, Preferred
Banking Manager, Bank of America, Golden Gate Area Management Group from 1987-
1988 where she managed a team of seven Preferred Bankers supporting 26 retail
branches with a focus on high net worth clientele. From 1982-1985, Ms. Loh was
the Assistant Vice President, Credit Administration, San Francisco Main Office
where she was responsible for the credit quality of a $200,000,000 commercial
loan portfolio, assisted the commercial banking officers in credit structuring
and achieved excellent credit examinations for three consecutive years. Ms. Loh
was the Branch Manager, for Bank of America's Mandarin Towers Branch from
1979-1982. Ms. Loh received a B.A. degree in Accounting and Finance from the
California State University in San Francisco in 1979 and is a past President of
the Association of Asian American Bankers (1996-1997).
Ms. Miller is Senior Vice President and Director of Human Resources of
the Bank. Ms. Miller joined the Bank in 1986 as Assistant Vice President and
Employment Manager. In 1993 Ms. Miller was promoted to Vice President and
Director of Human Resources, and was promoted to Senior Vice President in 1997.
Prior to joining the Bank, Ms. Miller was a Human Resources Representative at
Crocker National Bank/Wells Fargo Bank, and a Personnel Recruiter for Allan Kent
Personnel Service. Ms. Miller is a graduate of Cedar Rapids Business College,
and completed the Paralegal Studies Program at San Francisco State University
and has taken personnel course work at the University of California, Berkeley.
Mr. Fell was appointed to the Board of the Bank in 1994. Mr. Fell
joined the Board of the FPB Bank Holding Company Limited in August 1993. Mr.
Fell is currently a financial consultant and is Chairman of the International
Securities Consultancy Limited. Mr. Fell is a published author, having written
his personal account of the history of the stock market and banking in Hong Kong
during the last ten years. Mr. Fell is a British subject who currently resides
in London, United Kingdom. He began his Civil Service career after the War with
the British Board of Trade where he concentrated on international trade and
finance. He served for five years in Australia as a Trade Commissioner and five
years in India. From 1967 to 1980 he was in charge of the United Kingdom's
export policy and commercial relations with the United States. He later became
the head of the Export Credits Guarantee Department where he was closely
involved with the United States EXIM Bank and the Department of the Treasury. In
1974 he left government service to become the first Chief Executive of the
London Stock Exchange. In 1981, he was invited by the Hong Kong government to
become a Commissioner for Securities. He was instrumental in the unification of
Hong Kong's three stock exchanges and the creation of a financial futures
market. In 1984 he was appointed Commissioner of Banking
80
<PAGE>
and of Deposit-taking Companies. He was directly responsible for the changes in
Hong Kong's banking regulations and the successful rescue of several banks
during the crisis of 1983. After the stock market crash in October 1987, he took
over as Chief Executive of the Hong Kong Stock Exchange and introduced the new
management set up which is still in use today.
Dr. Wong has been a director of the Bank since 1994. Dr. Wong has been
on the Faculty of the Haas School of Business at the University of California at
Berkeley for the last thirteen years. Dr. Wong has also been a tenured professor
of management at Golden Gate University for the last fifteen years. Dr. Wong has
been on the faculty of the Graduate School of Business Administration, Zurich,
Switzerland for the last nine years and lectured in 16 countries to high level
business executives throughout the world. Dr. Wong was appointed by the FDIC,
Federal Home Loan Bank Board, Resolution Trust Corporation and the OTS to be on
the Boards of Directors of various financial institutions, including Gateway
Bank and California National Bank. Dr. Wong has also served on the Boards of
other organizations, including World Affairs Council, International Forum,
Harvard Club and Chinatown Resources Development Center. Dr. Wong graduated with
a Bachelor's degree from the University of Wisconsin, a M.B.A. from the
University of California, Los Angeles and a M.A. and Ph.D from Harvard
University.
Meetings of the Board of Directors and Committees of the Board of Directors of
the Company
The Board of Directors of the Company conducts its business through
meetings of the Board of Directors and through activities of its committees. The
Board of Directors of the Company meets every other month and may have
additional meetings as needed. During the year ended December 31, 1997, the
Board of Directors of the Company acted eight times by unanimous written consent
in lieu of meeting. All of the directors of the Company participated in at least
75% of the total number of the Company's Board meetings held and committee
meetings on which such directors served during 1997. The Board of Directors of
the Company maintains an Audit and Examining Committee, a Credit Policy and
Investment Committee and a Human Resources Committee, the nature and composition
of which are described below:
Audit Committee. The Audit and Examining Committee of the Company and
the Bank consist of Messrs. Fell and Wong. The Audit Committee is responsible
for reporting to the Board on the general financial condition of the Bank and
the results of the annual audit, and is responsible for ensuring that the Bank's
activities are being conducted in accordance with applicable laws and
regulations. The Audit and Examining Committee of the Company was formed in May
1998. The Audit and Examining Committee of the Bank met six times in 1997.
Human Resources Committee. The Human Resources Committee of the Company
consists of Messrs. Lam and Fell. The Human Resources Committee of the Company
reviews and recommends to the Board of Directors compensation for senior
management of the Bank; the adoption, amendment and implementation of incentive
compensation plans, stock option plans, and other benefit plans and programs for
the Company and the Bank. The Human Resources Committee of the Company and the
Bank is also responsible for maintaining on behalf of the Board of Directors a
current senior management succession and contingency plan; charged with the
investigation and resolution of any incident which may be construed as a
potential conflict of interest on behalf of any member of senior management or
other offices of the Company and the Bank wherein Board of Directors oversight
and action are appropriate; and may be required from time to time that senior
management of the Bank and officers and directors of the Company provide
proposals for, or status or progress reports on, policies or programs which may
have a material bearing on the strategic human resources philosophy and
consequent operational direction of the Bank. The Human Resources Committee of
the Company was formed in 1998. The Compensation Committee of the Bank met four
times in 1997.
Credit Policy and Investment Committee. The Credit Policy and
Investment Committee of the Company and the Bank consists of Messrs. Wong,
Downing, Fell, Lam and Wu. The committee is responsible for approving credit
policies, setting parameters for credit risks, monitoring the overall credit
risk profile of the Company and the Bank and the valuation allowance reserve.
The Credit Policy and Investment Committee of the Company was formed in May
1998. The Credit Policy and Investment Committee of the Bank met six times in
1997.
81
<PAGE>
Directors' Compensation
Directors' Fees. Currently, all outside directors of the Company and
the Bankeach receive an annual retainer of $25,200, while the Chairman of the
Board of Directors of the Company and the Bank receives an annual retainer of
$150,000, for service on the Board of Directors of the Company and the Bank. No
committee meeting fees are paid by the Company or the Bank. Messrs. Wu and
Downing do not receive any additional compensation for serving as directors of
the Company and the Bank.
82
<PAGE>
Summary Compensation Table
The following shows, for the year ended December 31, 1997, the cash
compensation paid by the Company and the Bank as well as certain other
compensation paid for that year, to the Chief Executive Officer and the other
five most highly compensated executive officers at the Company.
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------
Awards Payouts
----------------------------- --------
Annual Compensation
-----------------------------------
Other Restricted Securities LTIP All
Name and Bonus Annual Stock Underlying Payouts Other
Principal Position Year Salary (3) Compensation Awards Options/SARs (4) Compensation
- ------------------- ------ --------- ---------- -------------- ------------- ------------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sau-wing Lam (1) 1997 $285,554 $ -- $3,529 $-- -- $-- $--
Chairman of the
Board of Directors
Tommy S. Wu (2) 1997 $47,788 $30,000 $1,334 -- -- -- --
President, Chief
Executive Officer
and Director
Jonathan H. 1997 $159,000 $17,500 $499 -- -- -- --
Downing
Senior Vice
President, Chief
Financial Officer,
Treasurer and
Director
Louis E. Barbarelli 1997 $126,000 $25,000 $242 -- -- -- --
Senior Vice
President and
Director of
Operations and
Systems
Cecilia Lai 1997 $101,246 $20,000 $194
Senior Vice
President and
Director of Retail
Banking
Dennis A. Lee 1997 $117,468 $3,000 $2,697 -- -- -- --
Vice President and
Corporate Counsel
Sylvia Loh 1997 $117,600 $20,000 $220 -- -- -- --
Senior Vice
President and
Director of
Commercial
Banking
</TABLE>
- ----------
83
<PAGE>
(1) Mr. Lam was President and Chief Executive Officer of the Bank and Vice
Chairman of the Board of Directors of the Bank during 1997. Effective
December 31, 1997, Mr. Lam resigned as President and Chief Executive
Officer of the Bank but remained as Vice Chairman of the Board of
Directors. Effective April 17, 1998, Mr. Lam was elected as Chairman of
the Board of Directors of the Bank and the Company.
(2) Mr. Wu re-joined the Bank on September 23, 1997, after spending one
year with a former overseas affiliate. Mr. Wu was named President and
Chief Executive Officer of the Bank effective January 1, 1998. Mr. Wu
was elected President and Chief Executive Officer of the Company
effective March 26, 1998 and as a director of the Company on April 17,
1998.
(3) The referenced bonus represents a performance bonus for the year ended
December 31, 1996 which was paid in the first quarter of 1997.
(4) The former Long-Term Incentive Plan was terminated in conjunction with the
Private Offerings.
Employment and Change in Control Agreements
The Bank and the Company have entered into employment agreements with
Tommy S. Wu, the President and Chief Executive Officer of the Company and the
Bank (the "Executive"). These employment agreements are intended to ensure that
the Bank and the Company will be able to maintain a stable and competent
management base. The continued success of the Bank and the Company depends to a
significant degree on the skills and competence of the Executive.
The employment agreements provide for a three-year term. The Bank
employment agreement provides that, commencing on the first anniversary date and
continuing each anniversary date thereafter, the Board of Directors will review
the agreement and the Executive's performance for purposes of determining
whether to extend the agreement for an additional year so that the remaining
term shall be three years, unless written notice of non-renewal is given by the
Board of Directors after conducting a performance evaluation of the Executive.
The term of the Company employment agreement shall be extended on a daily basis
unless written notice of non-renewal is given by the Board of Directors after
conducting a performance evaluation of the Executive. The agreements provide
that the Executive's base salary will be reviewed annually. In addition to the
base salary, the agreements provide for, among other things, participation in
stock benefit plans and other fringe benefits applicable to executive personnel.
The agreements provide for termination by the Bank or the Company for cause as
would be defined in the agreements, at any time. In the event the Bank or the
Company choose to terminate the Executive's employment for any reasons other
than for cause, or in the event of the Executive's resignation from the Bank and
the Company upon: (i) failure to re-elect the Executive to Executive's current
offices; (ii) a material change in the Executive's functions, duties or
responsibilities; (iii) a relocation of the Executive's principal place of
employment by more than 25 miles; (iv) liquidation or dissolution of the Bank or
the Company; or (v) a breach of the agreement by the Bank or the Company; the
Executive or, in the event of death, the Executive's beneficiary, would be
entitled to receive an amount equal to the remaining base salary payments due to
the Executive and the contributions that would have been made on the Executive's
behalf to any employee benefit plans of the Bank or the Company during the
remaining term of the agreement. The Bank and the Company would also continue
and pay for the Executive's life, health and disability insurance coverage for
the remaining term of the agreement.
Under the agreements, if voluntary or involuntary termination follows a
change in control of the Bank or the Company as defined in the proposed
employment agreements, it is expected that, the Executive, or, in the event of
the Executive's death, his beneficiary, would be entitled to a severance payment
equal to the greater of: (i) the payments due for the remaining terms of the
agreement; or (ii) three times the highest annual compensation paid for the
preceding three years. It is expected that the Bank and the Company would also
continue the Executive's life, health and disability insurance coverage for 36
months.
The Bank and the Company have entered into three-year termination and
change in control agreements ("CIC Agreements") with certain other executive
officers (the "Officers") of the Company and the Bank. The CIC Agreements
provide that commencing on the first anniversary date and continuing on each
anniversary thereafter, the Bank's CIC Agreements may be renewed by the Board of
Directors for an additional year. The Company's CIC Agreements are similar to
the Bank's CIC Agreements except that the term of the Company's CIC Agreements
shall be extended on a
84
<PAGE>
daily basis. The CIC Agreements provide that in the event voluntary or
involuntary termination follows a change in control of the Bank or the Company,
the Officer would be entitled to receive a severance payment equal to three
times the Officer's highest annual compensation for the three years preceding
the change in control. The Bank would also continue, and pay for, the Officer's
life, health and disability insurance coverage for the remaining term of the
agreements. Payments to the Officer under the Bank's CIC Agreements are
guaranteed by the Company in the event that payments of benefits are not paid by
the Bank. The CIC Agreements also provide that if an Officer is terminated
during the existence of the CIC Agreement for any reason other than resignation,
cause (as defined in the CIC Agreements), death or permanent disability, but
prior to any change in control of the Company or the Bank, the Officer shall be
paid a severance payment equal to the highest annual compensation paid to such
Officer for the three preceding years.
In the event of a change in control, total payments to executives and
officers under the employment agreements and the CIC Agreements, based solely on
current base salary, would be $3.2 million.
Stock Option Plan
The Board of Directors of the Company has adopted a Stock Option Plan
(the "Stock Option Plan") which provides for the granting of stock options to
eligible officers, employees and directors of the Company and the Bank. The
Company has reserved 653,333 shares of Common Stock to be issued pursuant to the
Stock Option Plan, of which 598,000 were granted at an exercise price of $15.00
and will vest over a three-year period.
The stock option benefits provided under the Stock Option Plan are
designed to attract and retain qualified personnel in key positions, provide
officers, directors and key employees with a proprietary interest in the Company
as an incentive to contribute to the success of the Company, promote the
attention of management to other stockholder's concerns and reward key employees
for outstanding performance. All employees and directors of the Company and its
subsidiaries are eligible to participate in such plan. The Stock Option Plan
provides for the grant of: (i) options to purchase the Company's Common Stock
intended to qualify as incentive stock options under Section 422 of the Code
("Incentive Stock Options"); or (ii) options that do not so qualify
("Non-Statutory Stock Options"). Unless sooner terminated, the Stock Option Plan
will be in effect for a period of ten years from the date of adoption by the
Board of Directors. The Company intends to grant all future options under the
Stock Option Plan at an exercise price equal to the fair market value of the
underlying Common Stock on the date of grant. Following termination of
employment or service in the event of disability, a change in control or death,
all Non-Statutory Stock Options, whether or not exercisable, shall vest and
become immediately exercisable. In the event of termination for cause or
termination of employment for any other reason including retirement or voluntary
resignation, all vested Non-Statutory Stock Options as of the date of
termination shall remain exercisable for a period of one year, and all unvested
Non-Statutory Stock Options shall become null and void. Following termination of
employment or service in the event of disability, retirement, a change in
control or death, all Incentive Stock Options, whether or not exercisable, shall
vest and become immediately exercisable. In the event of termination for cause
or termination of employment for any other reason including voluntary
resignation, all vested Incentive Stock Options as of the date of termination
shall remain exercisable for a period of one year, and all unvested Incentive
Stock Options shall become null and void. It is anticipated that all options
granted to officers and employees will be intended to be Incentive Stock Options
to the extent permitted under Section 422 of the Code.
Transactions With Certain Related Persons
The Financial Institutions Reform, Recovery and Enforcement Act
("FIRREA") requires that all loans or extensions of credit to executive officers
and directors must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. In addition, loans made
to a director or executive officer in excess of the greater of $25,000 or 5% of
the Bank's capital and surplus (up to a maximum of $500,000) must be approved in
advance by a majority of the disinterested members of the Board of Directors.
The Bank's policy provides that no loans may be made by the Bank to its
executive officers and directors.
85
<PAGE>
It is the policy of the Company that all transactions between the
Company and holders of 10% or more of the shares of any class of its common
stock and affiliates thereof, contain terms no less favorable to the Company
than could have been obtained by it in arm's-length negotiations with
unaffiliated persons and are required to be approved by a majority of
independent outside directors of the Company not having any interest in the
transaction.
Security Ownership of Management and Other Beneficial Owners
The following table sets forth, as of June 19, 1998, certain
information as to those persons who were known by management to be beneficial
owners of more than 5% of the Company's outstanding shares of Common Stock, each
director, each Named Executive Officer and the shares of Common Stock
beneficially owned by all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
Number Percentage
of Beneficially
Name of Beneficial Owner Position(s) with the Company Shares(1) Owned
- ------------------------ ---------------------------- ---------- ------------
<S> <C> <C> <C>
Sau-wing Lam............................ Chairman of the Board of 50,000
Directors
Tommy S. Wu............................. Director, President and Chief 33,333 *
Executive Officer
Jonathan H. Downing..................... Senior Vice President, Chief 16,667 *
Financial Officer, Treasurer
and Director
Robert Fell............................. Director -- *
Godwin Wong............................. Director 3,333 *
Louis E. Barbarelli..................... Senior Vice President and 16,667 *
Director of Operations and
Systems
Cecilia Lai............................. Senior Vice President and 10,000 *
Director of Retail Banking
Dennis Alan Lee......................... Vice President and Corporate 6,667 *
Counsel
Sylvia Loh.............................. Senior Vice President and 16,667 *
Director of Commercial
Banking
All Executive Officers and Directors
as a Group (11 persons).............. 163,333 1.75%
</TABLE>
- ----------
* Does not exceed 1.0% of the Company's voting securities.
(1) The number of shares of Common Stock outstanding and the number owned by
the individuals or entities listed does not include any shares issuable
pursuant to outstanding options, none of which may be exercised until
April 17, 1999.
86
<PAGE>
UCBH TRUST CO.
The Trust is a statutory business trust formed under Delaware law by
the filing of a certificate of trust with the Delaware Secretary of State on
September 26, 1997. The Trust exists for the exclusive purposes of: (i) issuing
and selling the Trust Securities; (ii) using the proceeds from the sale of Trust
Securities to acquire the Junior Subordinated Debentures; and (iii) engaging in
only those other activities necessary, advisable or incidental thereto. The
Junior Subordinated Debentures are the sole assets of the Trust, and
accordingly, payments under the Junior Subordinated Debentures will be the sole
revenues of the Trust. All of the Common Securities are owned by Holdings. The
Common Securities rank pari passu, and payments will be made thereon pro rata,
with the Capital Securities, except that upon the occurrence and continuance of
an event of default under the Trust Agreement resulting from a Debenture Event
of Default, the rights of Holdings as holder of the Common Securities to
payments in respect of Distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the Capital
Securities. See "Description of Exchange Capital Securities--Subordination of
Common Securities." Holdings has acquired Common Securities in a Liquidation
Amount equal to 3% of the total capital of the Trust. The Trust has a term of 31
years, but may be dissolved earlier as provided in the Trust Agreement. The
Trust's business and affairs are conducted by the Issuer Trustees, each
appointed by Holdings as holder of the Common Securities. The Issuer Trustees
for the Trust are Wilmington Trust Company, as the Property Trustee, Wilmington
Trust Company, as Delaware Trustee, and three Administrative Trustees who are
officers of Holdings., Wilmington Trust Company, as Property Trustee, is sole
indenture trustee under the Trust Agreement. See "Description of Exchange
Guarantee" and "Description of Exchange Junior Subordinated Debentures." The
holder of the Common Securities of the Trust or, if an Event of Default under
the Trust Agreement has occurred and is continuing, the holders of a majority in
Liquidation Amount of the Capital Securities will be entitled to appoint, remove
or replace the Property Trustee and/or the Delaware Trustee. In no event will
the holders of the Capital Securities have the right to vote to appoint, remove
or replace the Administrative Trustees; such voting rights will be vested
exclusively in the holder of the Common Securities. The duties and obligations
of each Issuer Trustee are governed by the Trust Agreement. Holdings, as issuer
of the Junior Subordinated Debentures, will pay all fees, expenses, debts and
obligations (other than the payment of principal, interest and premium, if any,
on the Trust Securities) related to the Trust and the Exchange Offer, and will
pay, directly or indirectly, all ongoing costs, expenses and liabilities of the
Trust. The principal executive office of the Trust is c/o UCBH Holdings, Inc.,
711 Van Ness Avenue, San Francisco, CA 94102.
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
In connection with the sale of the Original Capital Securities, the
Company and the Trust entered into the Capital Securities Registration Rights
Agreement with the Purchasers, pursuant to which the Company and the Trust
agreed to file and use reasonable best efforts to cause to become effective with
the Commission a registration statement relating to the exchange of the Exchange
Capital Securities for the Original Capital Securities. A copy of the Capital
Securities Registration Rights Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations
of the Company and the Trust under the Capital Securities Registration Rights
Agreement. The form and terms of the Exchange Capital Securities are the same as
the form and terms of the Original Capital Securities except that the Exchange
Capital Securities have been registered under the Securities Act, will not be
subject to certain restrictions on transfer applicable to the Original Capital
Securities and will not provide for any increase in the Distribution rate
thereon. In that regard, the Original Capital Securities provide, among other
things, that, if a registration statement relating to the Exchange Offer has not
been filed by August 14, 1998 and declared effective by October 16, 1998, the
Distribution rate borne by the Original Capital Securities will increase by
0.25% per annum until such registration statement is filed or declared
effective, as the case may be. In addition, the Original Capital Securities
provide that, if the Trust has not exchanged Exchange Capital Securities for all
Original Capital Securities validly tendered by the 45th day after the date on
which the registration statement is declared effective, the Distribution rate
borne by the Original Capital Securities will increase
87
<PAGE>
by 0.25% per annum for the period from the occurrence of such event until the
Exchange Offer has been consummated. Upon consummation of the Exchange Offer,
holders of Original Capital Securities will not be entitled to any increase in
the Distribution rate thereon or any further registration rights under the
Capital Securities Registration Rights Agreement, except under limited
circumstances. See "Risk Factors--Consequences of a Failure to Exchange Original
Capital Securities" and "Description of Original Securities."
The Exchange Offer is not being made to, nor will the Trust accept
tenders for exchange from, holders of Original Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect
to the Exchange Offer means any person in whose name the Original Capital
Securities are registered on the books of the Trust or any other person who has
obtained a properly completed bond power from the registered holder, or any
person whose Original Capital Securities are held of record by DTC who desires
to deliver such Original Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, as soon as practicable after the
Expiration Date, the Company will exchange the Exchange Junior Subordinated
Debentures for the Original Junior Subordinated Debentures in a principal amount
corresponding to the Liquidation Amount of the Original Capital Securities
accepted for exchange and will execute the Exchange Guarantee in respect of the
Exchange Capital Securities exchanged for such Original Capital Securities. The
Exchange Guarantee and the Exchange Junior Subordinated Debentures have been
registered under the Securities Act.
Terms of the Exchange Offer
The Trust hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to and including $30,000,000 aggregate Liquidation Amount of
Exchange Capital Securities for a like aggregate Liquidation Amount of Original
Capital Securities properly tendered on or prior to the Expiration Date and not
properly withdrawn in accordance with the procedures described herein. The Trust
will issue, as soon as practicable after the Expiration Date, an aggregate
Liquidation Amount of up to and including $30,000,000 of Exchange Capital
Securities in exchange for a like Liquidation Amount of outstanding Original
Capital Securities tendered and accepted in connection with the Exchange Offer.
Holders may tender their Original Capital Securities in whole or in part in a
Liquidation Amount of not less than $100,000 (100 Capital Securities) or any
integral multiple of $1,000 Liquidation Amount (one Capital Security) in excess
thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation
Amount of Original Capital Securities being tendered. As of the date of this
Prospectus, $30,000,000 aggregate Liquidation Amount of the Original Capital
Securities is outstanding.
Holders of Original Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Original Capital
Securities that are not tendered for or are tendered but not accepted in
connection with the Exchange Offer will remain outstanding and be entitled to
the benefits of the Trust Agreement, but will not be entitled to any further
registration rights under the Capital Securities Registration Rights Agreement,
except under limited circumstances. See "Risk Factors--Consequences of a Failure
to Exchange Original Capital Securities" and "Description of Original
Securities."
If any tendered Original Capital Securities are not accepted for
exchange because of an invalid tender, the occurrence of certain other events
set forth herein or otherwise, certificates for any such unaccepted Original
Capital Securities will be returned, without expense, to the tendering holder
thereof as soon as practicable after the Expiration Date.
Holders who tender Original Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect
88
<PAGE>
to the exchange of Original Capital Securities in connection with the Exchange
Offer. The Company will pay all charges and expenses, other than certain
applicable taxes described herein, in connection with the Exchange Offer. See
"--Fees and Expenses."
NEITHER THE COMPANY, THE BOARD OF DIRECTORS OF THE COMPANY NOR ANY
ISSUER TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF ORIGINAL
CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY
PORTION OF THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. EACH
HOLDER OF ORIGINAL CAPITAL SECURITIES MUST DECIDE WHETHER TO TENDER PURSUANT TO
THE EXCHANGE OFFER AND, IF SO, THE LIQUIDATION AMOUNT OF ORIGINAL CAPITAL
SECURITIES TO TENDER BASED ON SUCH HOLDER'S OWN FINANCIAL POSITION AND
REQUIREMENTS.
Expiration Date, Extensions, Amendments
The term "Expiration Date" means 5:00 p.m., New York City time, on
__________________, 1998 unless the Exchange Offer is extended by the Company or
the Trust (in which case the term "Expiration Date" shall mean the latest date
and time to which the Exchange Offer is extended).
The Company and the Trust expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Original Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any Original
Capital Securities have theretofore been accepted for exchange) if the Trust
determines, in its sole and absolute discretion that if any of the events or
conditions referred to under "--Conditions to the Exchange Offer" have occurred
or exist or have not been satisfied, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Original Capital Securities tendered pursuant to
the Exchange Offer, subject, however, to the right of holders of Original
Capital Securities to withdraw their tendered Original Capital Securities as
described under "--Withdrawal Rights," (iv) to waive any condition or (v) amend
the terms of the Exchange Offer, subject to the Capital Securities Registration
Rights Agreement, in any respect. If the Exchange Offer is amended in a manner
determined by the Company and the Trust to constitute a material change, or if
the Company and the Trust waive a material condition of the Exchange Offer, the
Company and the Trust will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the holders of the Original
Capital Securities, and the Company and the Trust will extend the Exchange Offer
to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will
be followed promptly by oral or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
Business Day (as defined herein) after the previously scheduled Expiration Date.
Without limiting the manner in which the Company and the Trust may choose to
make any public announcement and subject to applicable laws, the Company and the
Trust shall have no obligation to publish, advertise or otherwise communicate
any such public announcement other than by issuing a release to an appropriate
news agency.
Acceptance for Exchange and Issuance of Exchange Capital Securities
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue Exchange Capital Securities for Original
Capital Securities validly tendered and not withdrawn promptly after the
Expiration Date.
In all cases, delivery of Exchange Capital Securities in exchange for
Original Capital Securities tendered and accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
(i) the book-entry confirmation described below under "--Procedures for
Tendering Original Capital Securities--Book-Entry Transfer" or (ii) certificates
representing such Original Capital Securities, and the Letter of Transmittal (or
89
<PAGE>
facsimile thereof) properly completed and duly executed, with any required
signature guarantees, and any other documents required by the Letter of
Transmittal.
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will be deemed to have accepted for exchange, and thereby exchanged,
Original Capital Securities validly tendered and not withdrawn as, if and when
the Trust gives oral or written notice to the Exchange Agent (any such oral
notice to be promptly confirmed in writing) of the Trust's acceptance of such
Original Capital Securities for exchange pursuant to the Exchange Offer. The
Exchange Agent will act as agent for the Trust for the purpose of receiving
tenders of book-entry confirmations or certificates representing Original
Capital Securities, Letters of Transmittal and related documents, and as agent
for tendering holders for the purpose of receiving book-entry confirmations or
certificates representing Original Capital Securities, Letters of Transmittal
and related documents and transmitting Exchange Capital Securities to validly
tendering holders. Such exchange will be made as soon as practicable after the
Expiration Date. If for any reason whatsoever, acceptance for exchange or the
exchange of any Original Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Trust's acceptance for exchange of
Original Capital Securities) or the Trust extends the Exchange Offer or is
unable to accept for exchange or exchange Original Capital Securities tendered
pursuant to the Exchange Offer, then, without prejudice to the Trust's rights
set forth herein, the Exchange Agent may, nevertheless, on behalf of the Trust
and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Original
Capital Securities and such Original Capital Securities may not be withdrawn
except to the extent tendering holders are entitled to withdrawal rights as
described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Original Capital
Securities will represent, warrant and agree that it has full power and
authority to tender, exchange, sell, assign and transfer Original Capital
Securities, that the Trust will acquire good, marketable and unencumbered title
to the tendered Original Capital Securities, free and clear of all liens,
restrictions, charges and encumbrances, and the Original Capital Securities
tendered for exchange are not subject to any adverse claims or proxies. The
holder also will represent, warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Trust or the Exchange
Agent to be necessary or desirable to complete the exchange, sale, assignment,
and transfer of the Original Capital Securities tendered pursuant to the
Exchange Offer. Tendering holders of Original Capital Securities that use ATOP
will, by doing so, acknowledge that such holder has received and agrees to be
bound by the terms of the Letter of Transmittal and the Company may enforce the
Letter of Transmittal against such holder.
Procedures for Tendering Original Capital Securities
Valid Tender. Except as set forth herein, in order for Original Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at its address set forth under "--Exchange
Agent," and (i) tendered Original Capital Securities must be received by the
Exchange Agent, or (ii) such Original Capital Securities must be tendered
pursuant to the procedures for book-entry transfer set forth herein and a
book-entry confirmation must be received by the Exchange Agent, in each case on
or prior to the Expiration Date, or (iii) the guaranteed delivery procedures set
forth herein must be complied with.
If less than all of the Original Capital Securities are tendered, a
tendering holder should fill in the Liquidation Amount of Original Capital
Securities being tendered in the appropriate box on the Letter of Transmittal or
so indicate in an agent's message in lieu of the Letter of Transmittal. The
entire Liquidation Amount of Original Capital Securities delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF THE BOOK-ENTRY CONFIRMATIONS OR CERTIFICATES,
THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND
SOLE RISK OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED
MAIL, RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT
90
<PAGE>
DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. For purposes of the Exchange Offer, the Exchange
Agent will establish an account with respect to the Original Capital Securities
at DTC within two Business Days after the date of this Prospectus. Any tendering
financial institution that is a participant in DTC's book-entry transfer
facility system must make a book-entry delivery of the Original Capital
Securities by causing DTC to transfer such Original Capital Securities into the
Exchange Agent's account at DTC in accordance with DTC's ATOP procedures for
transfers. Such holder of Original Capital Securities using ATOP should transmit
its acceptance to DTC on or prior to the Expiration Date (or comply with the
guaranteed delivery procedures set forth below). DTC will verify such
acceptance, execute a book-entry transfer of the tendered Original Capital
Securities into the Exchange Agent's account at DTC and then send to the
Exchange Agent confirmation of such book-entry transfer, including an agent's
message confirming that DTC has received an express acknowledgment from such
holder that such holder has received and agrees to be bound by the Letter of
Transmittal and that the Trust and the Company may enforce the Letter of
Transmittal against such holder (a "book-entry confirmation").
A beneficial owner of Original Capital Securities that are held by or
registered in the name of a custodian is urged to contact such Custodian
promptly if such beneficial owner wishes to participate in the Exchange Offer.
Certificates. If the tender is not made through ATOP, certificates
representing Original Capital Securities, as well as the Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other required documents required by the Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
under "--Exchange Agent" on or prior to the Expiration Date in order for such
tender to be effective (or the guaranteed delivery procedure set forth herein
must be complied with).
If less than all of the Original Capital Securities are tendered, a
tendering holder should fill in the Liquidation Amount of Original Capital
Securities being tendered in the appropriate box on the Letter of Transmittal.
The entire Liquidation Amount of Original Capital Securities delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
Signature Guarantees. Certificates for the Original Capital Securities
need not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Original Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (ii) such holder completes the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" in the Letter of Transmittal. In the case of
(i) or (ii) above, such certificates for Original Capital Securities must be
duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (a) a bank; (b) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (c) a credit union;
(d) a national securities exchange, registered securities association or
clearing agency; or (e) a savings association that is a participant in a
Securities Transfer Association (each of the foregoing, an "Eligible
Institution"), unless surrendered on behalf of such Eligible Institution. See
Instruction 1 to the Letter of Transmittal.
Delivery. The method of delivery of the book-entry confirmation or
certificates representing tendered Original Capital Securities, the Letter of
Transmittal, and all other required documents is at the option and sole risk of
the tendering holder, and delivery will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail, return
receipt requested, properly insured, or an overnight delivery service is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
Notwithstanding any other provision hereof, the delivery of Exchange
Capital Securities in exchange for Original Capital Securities tendered and
accepted for exchange pursuant to the Exchange Offer will in all cases be made
91
<PAGE>
only after timely receipt by the Exchange Agent of (i) a book-entry confirmation
with respect to such Original Capital Securities or (ii) certificates
representing Original Capital Securities and a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees and any other documents required by the Letter of
Transmittal. Accordingly, the delivery of Exchange Capital Securities might not
be made to all tendering holders at the same time and will depend upon when
book-entry confirmations with respect to Original Capital Securities or
certificates representing Original Capital Securities and other required
documents are received by the Exchange Agent.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Guaranteed Delivery. If a holder desires to tender Original Capital
Securities pursuant to the Exchange Offer and the certificates for such Original
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, such Original Capital Securities may nevertheless be tendered, provided
that all of the following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed notice to the Exchange
Agent guaranteeing delivery to the Exchange Agent of either certificates
representing Original Capital Securities or a book-entry confirmation in
compliance with the requirements set forth herein (a "Notice of Guaranteed
Delivery"), substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided herein, on or prior to the
Expiration Date; and
(iii) a book-entry confirmation or the certificates representing all
tendered Original Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are, in any case, received by the
Exchange Agent within three New York Stock Exchange trading days after the date
of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
The Trust's acceptance for exchange of Original Capital Securities
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering holder and the Trust upon the terms and
subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Original Capital Securities will be determined by the Company and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. The Company and the Trust reserve the absolute right, in
their sole and absolute discretion, to reject any and all tenders determined by
them not to be in proper form or the acceptance of which, or exchange for, may,
in the opinion of counsel to the Company and the Trust, be unlawful. The Company
and the Trust also reserve the absolute right, subject to applicable law, to
waive any of the conditions of the Exchange Offer as set forth under
"--Conditions to the Exchange Offer" or any condition or irregularity in any
tender of Original Capital Securities of any particular holder, whether or not
similar conditions or irregularities are waived in the case of other holders.
The interpretation by the Company and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Original Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. None of the Company, the
Trust, any affiliates or assigns of the Company or the Trust, the Exchange Agent
or any other
92
<PAGE>
person shall be under any duty to give any notification of any irregularities in
tenders or incur any liability for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney, or any other document required by the Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company
and the Trust, proper evidence satisfactory to the Company and the Trust, in
their sole discretion, of such person's authority to so act must be submitted.
Resales of Exchange Capital Securities
The Trust is making the Exchange Offer for the Exchange Capital
Securities in reliance on the position of the Staff of the Commission as set
forth in certain interpretive letters addressed to third parties in other
transactions. However, neither the Company nor the Trust sought its own
interpretive letter and there can be no assurance that the Staff of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the Staff of the Commission, and subject to the two
immediately following sentences, the Company and the Trust believe that Exchange
Capital Securities issued pursuant to the Exchange Offer in exchange for
Original Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such Exchange Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. However, any holder of
Original Capital Securities who is an "affiliate" of the Company or the Trust or
who intends to participate in the Exchange Offer for the purpose of distributing
Exchange Capital Securities, or any broker-dealer who purchased Original Capital
Securities from the Trust for resale pursuant to Rule 144A or any other
available exemption under the Securities Act, (i) will not be able to rely on
the interpretations of the Staff of the Commission set forth in the above-
mentioned interpretive letters, (ii) will not be permitted or entitled to tender
such Original Capital Securities in the Exchange Offer and (iii) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Original Capital
Securities unless such sale is made pursuant to an exemption from such
requirements. In addition, as described herein, if any broker-dealer holds
Original Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such New Capital
Securities for Original Capital Securities, then such broker-dealer must deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resales of such Exchange Capital Securities.
Each holder of Original Capital Securities who wishes to exchange
Original Capital Securities for Exchange Capital Securities in the Exchange
Offer will be required to represent that (i) it is not an "affiliate" of the
Company or the Trust, (ii) any Exchange Capital Securities to be received by it
are being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such Exchange Capital Securities,
and (iv) if such holder is not a broker-dealer, such holder is not engaged in,
and does not intend to engage in, a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. In addition, the Company
and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to the Company and
the Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) on
behalf of whom such holder holds the Original Capital Securities to be exchanged
in the Exchange Offer. Each broker-dealer that receives Exchange Capital
Securities for its own account pursuant to the Exchange Offer must acknowledge
that it acquired the Original Capital Securities for its own account as the
result of market-making activities or other trading activities and must agree
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such Exchange Capital Securities. The Letter of
Transmittal states that, by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the Staff of the
Commission in the interpretive letters referred to above, the Company and the
Trust believe that Participating Broker-Dealers who acquired Original
93
<PAGE>
Capital Securities for their own accounts as a result of market-making
activities or other trading activities may fulfill their prospectus delivery
requirements with respect to the Exchange Capital Securities received upon
exchange of such Original Capital Securities (other than Original Capital
Securities which represent an unsold allotment from the initial sale of the
Original Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such Exchange Capital Securities. Accordingly, this Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer during the period referred to below in connection
with resales of Exchange Capital Securities received in exchange for Original
Capital Securities where such Original Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Company and the Trust have agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such Exchange
Capital Securities for a period ending 90 days after the Expiration Date
(subject to extension under certain limited circumstances described herein) or,
if earlier, when all such Exchange Capital Securities have been disposed of by
such Participating Broker-Dealer. See "Plan of Distribution." However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Exchange Capital Securities received in exchange for Original
Capital Securities pursuant to the Exchange Offer must notify the Company or the
Trust, or cause the Company or the Trust to be notified, on or prior to the
Expiration Date, that it is a Participating Broker-Dealer. Such notice may be
given in the space provided for that purpose in the Letter of Transmittal or may
be delivered to the Exchange Agent at its address set forth herein under
"--Exchange Agent." Any Participating Broker-Dealer who is an "affiliate" of the
Company or the Trust may not rely on such interpretive letters and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders
Original Capital Securities pursuant to the Exchange Offer will be deemed to
have agreed, by execution of the Letter of Transmittal, that, upon receipt of
notice from the Company or the Trust of the occurrence of any event or the
discovery of (i) any fact that makes any statement contained or incorporated by
reference in this Prospectus untrue in any material respect or (ii) any fact
that causes this Prospectus to omit to state a material fact necessary in order
to make the statements contained or incorporated by reference herein, in the
light of the circumstances under which they were made, not misleading, or of the
occurrence of certain other events specified in the Capital Securities
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of Exchange Capital Securities (or the Exchange Guarantee or the Exchange
Junior Subordinated Debentures, as applicable) pursuant to this Prospectus until
the Company or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer, or the Company or
the Trust has given notice that the sale of the Exchange Capital Securities (or
the Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be. If the Company or the Trust
gives such notice to suspend the sale of the Exchange Capital Securities (or the
Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable), it shall extend the 90-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in connection
with the resale of Exchange Capital Securities by the number of days during the
period from and including the date of the giving of such notice to and including
the date when Participating Broker-Dealers shall have received copies of the
amended or supplemented Prospectus necessary to permit resales of the Exchange
Capital Securities or to and including the date on which the Company or the
Trust has given notice that the sale of Exchange Capital Securities (or the
Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of Original Capital
Securities may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written, telegraphic or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its address set forth under "--Exchange Agent" on or prior
94
<PAGE>
to the Expiration Date. Any such notice of withdrawal must specify the name of
the person who tendered the Original Capital Securities to be withdrawn, the
aggregate Liquidation Amount of Original Capital Securities to be withdrawn, and
(if certificates for such Original Capital Securities have been tendered) the
name of the registered holder of the Original Capital Securities as set forth on
the certificates if different from that of the person who tendered such Original
Capital Securities. If certificates representing Original Capital Securities
have been delivered or otherwise identified to the Exchange Agent, then prior to
the physical release of such certificates, the tendering holder must submit the
serial numbers shown on the particular certificates to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Original Capital Securities tendered for the
account of an Eligible Institution. If Original Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth in
"--Procedures for Tendering Original Capital Securities--Book-Entry Transfer,"
the notice of withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawal of Original Capital Securities. Withdrawals
of tenders of Original Capital Securities may not be rescinded. Original Capital
Securities properly withdrawn will not be deemed validly tendered for purposes
of the Exchange Offer, but may be retendered at any subsequent time on or prior
to the Expiration Date by following any of the procedures described above under
"--Procedures for Tendering Original Capital Securities."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Trust, in its
sole discretion, whose determination shall be final and binding on all parties.
None of the Company, the Trust, any affiliates or assigns of the Company or the
Trust, the Exchange Agent or any other person shall be under any duty to give
any notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Original Capital
Securities that have been tendered but are withdrawn will be returned to the
holder thereof promptly after withdrawal.
Distributions on the Exchange Capital Securities
Holders of Original Capital Securities whose Original Capital
Securities are accepted for exchange on or prior to November 1, 1998 will not
receive Distributions on such Original Capital Securities and will be deemed to
have waived the right to receive any Distributions on such Original Capital
Securities accumulated from and including April 17, 1998. Accordingly, holders
of Exchange Capital Securities as of the close of business on October 15, 1998
will be entitled to receive Distributions accumulated from and including April
17, 1998.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company and the Trust will not be required
to accept for exchange, or to exchange, any Original Capital Securities for any
Exchange Capital Securities, and, as described herein, may terminate the
Exchange Offer (whether or not any Original Capital Securities have theretofore
been accepted for exchange) or may waive any conditions to or amend the Exchange
Offer, if any of the following conditions have occurred or exists or have not
been satisfied prior to the Expiration Date:
(i) there shall occur a change in the current interpretation by the
Staff of the Commission that permits the Exchange Capital Securities issued
pursuant to the Exchange Offer in exchange for Original Capital Securities to be
offered for resale, resold and otherwise transferred by holders thereof (other
than broker-dealers and any such holder that is an "affiliate" of the Company or
the Trust within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Capital Securities are acquired in
the ordinary course of such holders' business and such holders have no
arrangement or understanding with any person to participate in the distribution
of such Exchange Capital Securities; or
(ii) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Company or the Trust, would reasonably be
expected to impair its ability to proceed with the Exchange Offer; or
95
<PAGE>
(iii) a stop order shall have been issued by the Commission or any
state securities authority suspending the effectiveness of the Registration
Statement, or proceedings shall have been initiated or, to the knowledge of the
Company or the Trust, threatened for that purpose, or any governmental approval
has not been obtained, which approval the Company or the Trust shall, in its
sole disretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby; or
(iv) the Company shall have determined in good faith that there is a
reasonable likelihood that, or a material uncertainty exists as to whether,
consummation of the Exchange Offer would result in an adverse tax consequence to
the Trust or the Company.
If the Company or the Trust determine in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, it may, subject to applicable law, terminate the
Exchange Offer (whether or not any Original Capital Securities have theretofore
been accepted for exchange) or may waive any such condition or otherwise amend
the terms of the Exchange Offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, the Company or the Trust
will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Original
Capital Securities and will extend the Exchange Offer to the extent required by
Rule 14e-1 under the Exchange Act.
Exchange Agent
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMITTAL: BY HAND OR OVERNIGHT
(Registered or Certified Mail (Eligible Institutions Only) DELIVERY:
Recommended) ( ) _________ Wilmington Trust Company
Wilmington Trust Company [Rodney Square North]
[Rodney Square North] TO CONFIRM BY TELEPHONE [1100 North Market Street]
[1100 North Market Street] ( ) _________ Wilmington, Delaware 19890
Wilmington, Delaware 19890
</TABLE>
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
Fees and Expenses
The Company has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Company will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Original Capital Securities,
and in handling or tendering for their customers.
Holders who tender their Original Capital Securities for exchange will
not be obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Capital Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Original Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Original Capital Securities in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
96
<PAGE>
Neither the Company nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
The summary herein of certain provisions of the Capital Securities
Registration Rights Agreement does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all the provisions of the
Capital Securities Registration Rights Agreement, a form of which is available
upon request to the Company. See "Additional Information." In addition, the
information set forth above concerning certain interpretations of and positions
taken by the Staff of the Commission is not intended to constitute legal advice,
and prospective investors should consult their own legal advisors with respect
to such matters.
97
<PAGE>
DESCRIPTION OF EXCHANGE CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Trust will issue the
Exchange Capital Securities. The Exchange Capital Securities will represent
beneficial interests in the Trust and the holders thereof will be entitled to a
preference over the Common Securities in certain circumstances with respect to
Distributions and amounts payable on redemption of the Trust Securities or
liquidation of the Trust. See "--Subordination of Common Securities." The Trust
Agreement has been qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). This summary of certain provisions of the Exchange
Capital Securities, the Common Securities and the Trust Agreement does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Trust Agreement, including the
definitions therein of certain terms.
General
The Exchange Capital Securities will be limited to $30,000,000
aggregate Liquidation Amount. The Exchange Capital Securities will rank pari
passu, and payments will be made thereon pro rata, with the Original Capital
Securities and the Common Securities except as described under "--Subordination
of Common Securities." Legal title to the Exchange Junior Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Exchange Guarantee will not guarantee
payment of Distributions or amounts payable on redemption of the Capital
Securities or liquidation of the Trust when the Trust does not have funds on
hand legally available for such payments. See "Description of Exchange
Guarantee."
Distributions
Distributions on the Exchange Capital Securities will be cumulative,
will accumulate from April 17, 1998, and will be payable semi-annually in
arrears on May 1 and November 1 of each year, commencing on November 1, 1998, at
the annual rate of 9.375% of the Liquidation Amount to the holders of the
Exchange Capital Securities on the relevant record dates. The record dates will
be the fifteenth day of the month preceding the month in which the relevant
Distribution Date (as defined herein) falls. The amount of Distributions payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months and, for any period of less than a full calendar month, the number of
days elapsed in such month. In the event that any date on which Distributions
are payable on the Exchange Capital Securities is not a Business Day (as defined
below), payment of the Distribution 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 to any such delay), except that if such next succeeding
Business Day falls 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 such date (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 State of Delaware or San Francisco, California are
authorized or required by law or executive order to remain closed.
So long as no Debenture Event of Default shall have occurred and be
continuing, Holdings will have the right under the Indenture to elect to defer
the payment of interest on the Exchange Junior 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
shall end on a date other than an Interest Payment Date or extend beyond the
Stated Maturity Date. Upon any such election, semi-annual Distributions on the
Exchange Capital Securities will be deferred by the Trust during such Extension
Period. Distributions to which holders of the Exchange Capital Securities are
entitled during any such Extension Period will accumulate additional
Distributions thereon at the rate per annum of 9.375% thereof, compounded
semi-annually from the relevant Distribution Date, but not exceeding the
interest rate then accruing on the Exchange Junior Subordinated Debentures. The
term "Distributions," as used herein, shall include any such additional
Distributions.
Prior to the termination of any such Extension Period, Holdings may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, to end
on a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination
98
<PAGE>
of any such Extension Period and the payment of all amounts then due on any
Interest Payment Date, Holdings 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. Holdings must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
election of any such Extension Period (or an extension thereof) at least five
Business Days prior to the earlier of (i) the date the Distributions on the
Exchange Capital Securities would have been payable except for the election to
begin such Extension Period and (ii) the date the Administrative Trustees are
required to give notice to any securities exchange or automated quotation system
or to holders of such Exchange Capital Securities of the record date or the date
such Distributions are payable, but in any event not less than five Business
Days prior to such record date. There is no limitation on the number of times
that Holdings may elect to begin an Extension Period. See "Description of
Exchange Junior Subordinated Debentures--Option to Extend Interest Payment Date"
and "Certain Federal Income Tax Consequences with Respect to the Exchange
Capital Securities--Interest Income and Original Issue Discount."
During any such Extension Period, Holdings may not: (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of Holdings' capital stock; (ii) make
any payment of principal of or premium, if any, on or repay, repurchase or
redeem any debt securities of Holdings (including any Other Debentures) that
rank pari passu with or junior in right of payment to the Junior Subordinated
Debentures; or (iii) make any guarantee payments with respect to any guarantee
by Holdings of the debt securities of any subsidiary of Holdings (including
Other Guarantees) if such guarantee ranks pari passu with or junior in right of
payment to the Junior Subordinated Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, common stock of Holdings, (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
Guarantee, (d) as a result of a reclassification of Holdings' capital stock or
the exchange or conversion of one class or series of Holdings' capital stock for
another class or series of Holdings' capital stock, (e) the purchase of
fractional interests in shares of Holdings' capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged and (f) purchases of common stock related to the issuance
of common stock or rights under any of Holdings' benefit plans for its
directors, officers or employees or any of Holdings' dividend reinvestment
plans). Holdings has no current intention to exercise its option to defer
payments of interest on the Junior Subordinated Debentures.
The revenue of the Trust available for distribution to holders of the
Exchange Capital Securities will be limited to payments under the Exchange
Junior Subordinated Debentures in which the Trust will invest the proceeds from
the issuance and sale of the Trust Securities. See "Description of Exchange
Junior Subordinated Debentures--General." If Holdings does not make interest
payments on the Exchange Junior Subordinated Debentures, the Property Trustee
will not have funds available to pay Distributions on the Exchange Capital
Securities. The payment of Distributions (if and to the extent the Trust has
funds on hand legally available for the payment of such Distributions) will be
guaranteed by Holdings on a limited basis as set forth herein under "Description
of Exchange Guarantee."
Redemption
Upon the repayment on the Stated Maturity Date or prepayment in whole
or in part prior to the Stated Maturity Date of the Exchange Junior Subordinated
Debentures (other than following the distribution of the Junior Subordinated
Debentures to the holders of the Trust Securities), the proceeds from such
repayment or prepayment shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days' notice of a date of redemption (the "Redemption Date"),
at the applicable Redemption Price, which shall be equal to (i) in the case of
the repayment of the Exchange Junior Subordinated Debentures on the Stated
Maturity Date, the Maturity Redemption Price (equal to the principal of, and
accrued and unpaid interest on, the Exchange Junior Subordinated Debentures),
(ii) in the case of the optional prepayment of the Exchange Junior Subordinated
Debentures before the Initial Optional Prepayment Date upon the occurrence and
continuation of a Special Event, the Special Event Redemption Price (equal to
the Special Event Prepayment Price in respect of the Junior Subordinated
Debentures) and (iii) in the case of the optional prepayment of the Exchange
Junior Subordinated Debentures on or after the Initial
99
<PAGE>
Optional Prepayment Date, the Optional Redemption Price (equal to the principal
of, and accrued and unpaid interest on, the Junior Subordinated Debentures). See
"Description of Exchange Junior Subordinated Debentures--Optional Prepayment"
and "--Special Event Prepayment." If less than all of the Exchange Junior
Subordinated Debentures are to be prepaid on a Redemption Date, then the
proceeds of such prepayment shall be allocated pro rata to the Trust Securities.
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Exchange Junior Subordinated Debentures to be paid in accordance with
their terms and (ii) with respect to a distribution of Exchange Junior
Subordinated Debentures upon the liquidation of the Trust, Exchange Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the holder to whom such Exchange Junior
Subordinated Debentures are distributed.
Holdings will have the option to prepay the Exchange Junior
Subordinated Debentures, (i) in whole or in part, on or after the Initial
Optional Prepayment Date, at the Optional Prepayment Price and (ii) in whole but
not in part, at any time prior to the Initial Optional Prepayment Date, upon the
occurrence of a Special Event, at the Special Event Prepayment Price, in each
case subject to the receipt of any required regulatory approval. See
"Description of Exchange Junior Subordinated Debentures--Optional Prepayment"
and "--Special Event Prepayment."
Liquidation of the Trust and Distribution of Exchange Junior Subordinated
Debentures
Holdings will have the right at any time to terminate the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Exchange Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
Such right is subject to: (i) Holdings having received an opinion of counsel to
the effect that such distribution will not be a taxable event to holders of
Exchange Capital Securities; and (ii) the receipt of any required regulatory
approval.
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of Holdings; (ii) the
distribution of a Like Amount of the Exchange Junior Subordinated Debentures to
the holders of the Trust Securities, if Holdings, as Sponsor, has given written
direction to the Property Trustee to terminate the Trust (which direction is
optional and, except as described above, wholly within the discretion of
Holdings, as Sponsor); (iii) redemption of all of the Trust Securities as
described under "--Redemption;" (iv) expiration of the term of the Trust; and
(v) the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction.
If a termination occurs as described in clause (i), (ii), (iv), or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Trust Securities a Like Amount of the Exchange Junior
Subordinated Debentures, unless such distribution is determined by the Property
Trustee not to be practicable, in which event such holders will be entitled to
receive out of the assets of the Trust legally available for distribution to
holders, after satisfaction of liabilities to creditors of the Trust as provided
by applicable law, an amount equal to the aggregate of the Liquidation Amount
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If such Liquidation Distribution
can be paid only in part because the Trust has insufficient assets on hand
legally available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by the Trust on the Trust Securities shall be paid
on a pro rata basis, except that if a Debenture Event of Default has occurred
and is continuing, the Exchange Capital Securities shall have a priority over
the Common Securities. See "--Subordination of Common Securities."
If Holdings elects not to prepay the Exchange Junior Subordinated
Debentures prior to maturity in accordance with their terms and either elects
not to or is unable to liquidate the Trust and distribute the Exchange Junior
Subordinated Debentures to holders of the Trust Securities, the Trust Securities
will remain outstanding until the repayment of the Exchange Junior Subordinated
Debentures on the Stated Maturity Date.
100
<PAGE>
After the liquidation date is fixed for any distribution of Exchange
Junior Subordinated Debentures to holders of the Trust Securities, (i) the Trust
Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee
will receive, in respect of each registered global certificate, if any,
representing Trust Securities and held by it, a registered global certificate or
certificates representing the Exchange Junior Subordinated Debentures to be
delivered upon such distribution and (iii) any certificates representing Trust
Securities not held by DTC or its nominee will be deemed to represent Exchange
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of such Trust Securities, and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid Distributions on such
Trust Securities until such certificates are presented to the Administrative
Trustees or their agent for cancellation, whereupon Holdings will issue to such
holder, and the Debenture Trustee will authenticate, a certificate representing
such Exchange Junior Subordinated Debentures.
There can be no assurance as to the market prices for the Exchange
Capital Securities or the Exchange Junior Subordinated Debentures that may be
distributed in exchange for the Trust Securities if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Exchange Capital
Securities that an investor may purchase, or the Exchange Junior Subordinated
Debentures that the investor may receive on dissolution and liquidation of the
Trust, may trade at a discount to the price that the investor paid to purchase
such securities.
Redemption Procedures
If applicable, Trust Securities shall be redeemed at the applicable
Redemption Price with the proceeds from the contemporaneous repayment or
prepayment of the Exchange Junior Subordinated Debentures. Any redemption of
Trust Securities shall be made and the applicable Redemption Price shall be
payable on the Redemption Date only to the extent that the Trust has funds
legally available for the payment of such applicable Redemption Price. See also
"--Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the Exchange
Capital Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are legally available, with respect to the Exchange
Capital Securities held by DTC or its nominees, the Property Trustee will
deposit or cause the Paying Agent (as defined herein) to deposit irrevocably
with DTC funds sufficient to pay the applicable Redemption Price. See "--Form,
Denomination, Book-Entry Procedures and Transfer." With respect to the Exchange
Capital Securities held in certificated form, the Property Trustee, to the
extent funds are legally available, will irrevocably deposit with the paying
agent for the Exchange Capital Securities funds sufficient to pay the applicable
Redemption Price and will give such paying agent irrevocable instructions and
authority to pay the applicable Redemption Price to the holders thereof upon
surrender of their certificates evidencing the Exchange Capital Securities. See
"--Payment and Paying Agency." Notwithstanding the foregoing, Distributions
payable on or prior to the Redemption Date shall be payable to the holders of
such Exchange Capital 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 the Exchange Capital Securities called for redemption will cease,
except the right of the holders of such Exchange Capital Securities to receive
the applicable Redemption Price, but without interest on such Redemption Price,
and such Exchange Capital Securities will cease to be outstanding. In the event
that any Redemption Date of Exchange Capital Securities is not a Business Day,
then the applicable Redemption Price payable on such date will be paid on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such next succeeding
Business Day falls in the next calendar year, such payment shall be made on the
immediately preceding Business Day. In the event that payment of the applicable
Redemption Price is improperly withheld or refused and not paid either by the
Trust or by Holdings pursuant to the Exchange Guarantee as described under
"Description of Exchange Guarantee," (i) Distributions on Exchange Capital
Securities will continue to accumulate at the then applicable rate, from the
Redemption Date originally established by the Trust to the date such applicable
Redemption Price is actually paid and (ii) the actual payment date will be the
Redemption Date for purposes of calculating the applicable Redemption Price.
101
<PAGE>
Subject to applicable law (including, without limitation, United States
federal securities law), Holdings or its subsidiaries may at any time and from
time to time purchase outstanding Exchange Capital Securities by tender, in the
open market or by private agreement.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days prior to the Redemption Date to each holder of Trust Securities at
its registered address. Unless Holdings defaults in payment of the applicable
Redemption Price on, or in the repayment of, the Exchange Junior Subordinated
Debentures, on and after the Redemption Date, Distributions will cease to accrue
on the Trust Securities called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Trust
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any Distribution
Date or Redemption Date a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution on, or applicable Redemption Price
of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of the Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
on all of the outstanding Exchange Capital Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
applicable Redemption Price the full amount of such Redemption Price, 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 Exchange Capital Securities then due and payable.
In the case of any Event of Default, Holdings as holder of the Common
Securities will be deemed to have waived any right to act with respect to such
Event of Default until the effect of such Event of Default shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the holders of the Exchange Capital Securities and not on behalf of
Holdings as holder of the Common Securities, and only the holders of the
Exchange Capital Securities will have the right to direct the Property Trustee
to act on their behalf.
Events of Default; Notice
The occurrence of a Debenture Event of Default (see "Description of
Exchange Junior Subordinated Debentures--Debenture Events of Default")
constitutes an "Event of Default" under the Trust Agreement.
Within ten 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 Exchange Capital
Securities, the Administrative Trustees and Holdings, as Sponsor, unless such
Event of Default shall have been cured or waived. Holdings, as Sponsor, 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 a Debenture Event of Default has occurred and is continuing, the
Exchange Capital Securities shall have a preference over the Common Securities
as described under "--Liquidation of the Trust and Distribution of Exchange
Junior Subordinated Debentures" and "--Subordination of Common Securities."
Removal of Issuer Trustees
Unless a Debenture Event of Default shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by the holder of the
Common Securities. If a Debenture Event of Default 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
Exchange Capital Securities. In no event will the holders of the Exchange
Capital Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights
102
<PAGE>
are vested exclusively in Holdings as the holder of the Common Securities. No
resignation or removal of an 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.
Merger or Consolidation of Issuer Trustees
Any Person 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 Person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under the
Trust Agreement, provided such Person shall be otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other Person,
except as described below or as otherwise described under "--Liquidation of the
Trust and Distribution of Exchange Junior Subordinated Debentures." The Trust
may, at the request of Holdings, as Sponsor, with the consent of the
Administrative Trustees but without the consent of the holders of the Exchange
Capital Securities, merge with or into, consolidate, amalgamate, or be replaced
by or convey, transfer or lease its properties and assets as an entirety or
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 Trust with respect to the Trust Securities or (b)
substitutes for the Trust Securities other securities having substantially the
same terms as the Trust Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Trust Securities rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise; (ii) Holdings expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee with respect to
the Exchange Junior Subordinated Debentures; (iii) the Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Trust Securities are then listed or quoted, if any; (iv) if the Exchange Capital
Securities (including any Successor Securities) are rated by any nationally
recognized statistical rating organization prior to such transaction, such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not cause the Exchange Capital Securities (including any Successor
Securities) or, if the Exchange Junior Subordinated Debentures are so rated, the
Exchange Junior Subordinated Debentures, to be downgraded by any such 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 Trust
Securities (including any Successor Securities) in any material respect; (vi)
such successor entity has a purpose identical to that of the Trust; (vii) prior
to such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease, Holdings has received an opinion from independent counsel to the Trust
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 Trust
Securities (including any Successor Securities) in any material respect (other
than any dilution of such holders' interests in the new entity), and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust 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 (viii) Holdings or any permitted
successor or assignee owns all of the 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 Exchange Guarantee and the
Common Guarantee. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in Liquidation Amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets as an entirety or
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 Trust or the successor entity not to be classified as a grantor
trust for United States federal income tax purposes.
103
<PAGE>
Voting Rights; Amendment of the Trust Agreement
Except as provided below and under "--Mergers, Consolidations,
Amalgamations or Replacements of the Trust" and "Description of Exchange
Guarantee--Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Exchange Capital Securities will have no
voting rights.
The Trust Agreement may be amended from time to time by Holdings, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities (i) to 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, (ii) to modify, eliminate or add to any
provisions of the Trust Agreement to such extent as shall be necessary to ensure
that the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Trust Securities are outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act or (iii) to modify, eliminate or add
any provisions of the Trust Agreement to such extent as shall be necessary to
enable the Trust or Holdings to conduct the Exchange Offer in the manner
contemplated by the Capital Securities Registration Rights Agreement; provided,
however, that in each such case such action shall not adversely affect in any
material respect the interests of the holders of the Trust Securities. Any
amendments of the Trust Agreement pursuant to the foregoing shall become
effective when notice thereof is given to the holders of the Trust Securities.
The Trust Agreement may be amended by the Issuer Trustees and Holdings (i) with
the consent of holders representing a majority (based upon Liquidation Amount)
of the outstanding Trust Securities and (ii) upon receipt by the Issuer Trustees
of an opinion of counsel experienced in such matters to the effect that such
amendment or the exercise of any power granted to the Issuer Trustees in
accordance with such amendment will not affect the Trust's status as a grantor
trust for United States federal income tax purposes or the Trust's exemption
from status as an "investment company" under the Investment Company Act,
provided that, without the consent of each holder of Trust Securities, the Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
So long as any Exchange Junior Subordinated Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or execute any trust or power conferred on the Debenture Trustee with
respect to the Exchange Junior Subordinated Debentures, (ii) waive certain past
defaults under the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Exchange
Junior Subordinated Debentures or (iv) consent to any amendment, modification or
termination of the Indenture or the Exchange Junior Subordinated Debentures,
where such consent shall be required, without, in each case, obtaining the prior
approval of the holders of a majority in Liquidation Amount of all outstanding
Exchange Capital Securities; provided, however, that where a consent under the
Indenture would require the consent of each holder of Exchange Junior
Subordinated Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior approval of each holder of the Exchange
Capital Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Exchange Capital
Securities except by subsequent vote of such holders. The Property Trustee shall
notify each holder of Exchange Capital Securities of any notice of default with
respect to the Exchange Junior Subordinated Debentures. In addition to obtaining
the foregoing approvals of such holders of the Exchange Capital Securities,
prior to taking any of the foregoing actions, the Issuer Trustees shall obtain
an opinion of counsel experienced in such matters to the effect that the Trust
will not be classified as an association taxable as a corporation for United
States federal income tax purposes on account of such action.
Any required approval of holders of Exchange Capital Securities may be
given at a meeting of such holders convened for such purpose or pursuant to
written consent. The Property Trustee will cause a notice of any meeting at
which holders of Exchange Capital 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 Exchange Capital Securities in the manner
set forth in the Trust Agreement.
104
<PAGE>
No vote or consent of the holders of Exchange Capital Securities will
be required for the Trust to redeem and cancel the Exchange Capital Securities
in accordance with the Trust Agreement.
Notwithstanding that holders of the Exchange Capital Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Exchange Capital Securities that are owned by Holdings, the Issuer
Trustees or any affiliate of Holdings or any Issuer Trustees, shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
Form, Denomination, Book-entry Procedures and Transfer
The Exchange Capital Securities initially will be represented by one or
more Exchange Capital Securities in registered, global form (the "Global Capital
Securities"). The Global Capital Securities will be deposited upon issuance with
the Property Trustee as custodian for DTC, in New York, New York, and registered
in the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
In the event that Exchange Capital Securities are issued in
certificated form, the Exchange Capital Securities will be in blocks having a
Liquidation Amount of not less than $100,000 (100 Capital Securities) and may be
transferred or exchanged only in such blocks in the manner and at the offices
described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee and only in amounts that would not cause a
holder to own less than 100 Capital Securities. Beneficial interests in the
Global Capital Securities may not be exchanged for Exchange Capital Securities
in certificated form, except in the limited circumstances described below. See
"--Exchange of Book-Entry Capital Securities for Certificated Capital
Securities."
Depository Procedures
DTC has advised the Trust and Holdings that DTC is a limited-purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
Indirect access to DTC's system is also available to other entities such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
(collectively, the "Indirect Participants"). Persons who are not Participants
may beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interest and transfer
of ownership interest of each actual purchaser of each security held by or on
behalf of DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised the Trust and Holdings that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants with portions of the Liquidation
Amount of the Global Capital Securities and (ii) ownership of such interests in
the Global Capital Securities will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with respect
to the Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Investors in the Global Capital Securities may hold their interests
therein directly through DTC if they are Participants in such system, or
indirectly through organizations (including Euroclear and Cedel) which are
Participants in such system. All interest in a Global Capital Security,
including those held through Euroclear or Cedel, will be subject to the
procedures and requirements of DTC. Those interests held through Euroclear or
Cedel also may be
105
<PAGE>
subject to the procedures and requirements of such system. The laws of some
states require that certain persons take physical delivery in certified form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Capital Security to such persons will be limited to that
extent. Because DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having beneficial interests in a Global Capital Security to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Exchange Capital Securities, see
"--Exchange of Book-Entry Capital Securities for Certificated Capital
Securities" and "--Exchange of Certificated Capital Securities for Book-Entry
Capital Securities."
Except as described below, owners of interests in the Global Capital
Securities will not have Capital Securities registered in their name, will not
receive physical delivery of Exchange Capital Securities in certificated form
and will not be considered the registered owners or holders thereof under the
Trust Agreement for any purpose.
Payments in respect of the Global Capital Security registered in the
name of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms of
the Trust Agreement, the Property Trustee will treat the persons in whose names
the Exchange Capital Securities, including the Global Capital Securities, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Property
Trustee nor any agent thereof has or will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Capital Securities, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Capital Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Trust and Holdings that its current practice, upon receipt of any
payment in respect of securities such as the Global Capital Securities, is to
credit the accounts of the relevant Participants with the payment on the payment
date, in amounts proportionate to their respective holdings in Liquidation
Amount of beneficial interests in the relevant security as shown on the records
of DTC unless DTC has reason to believe it will not receive payment on such
payment date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Global Capital Securities will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Property Trustee, the Trust or Holdings. None of the Trust, Holdings or
the Property Trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the Global Capital
Securities, and the Trust or Holdings and the Property Trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its nominee
for all purposes.
Secondary market trading activity in interests in the Global Capital
Securities will settle in immediately available funds, subject in all cases to
the rules and procedures of DTC and its participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will settle in same-day funds.
DTC has advised the Trust and Holdings that it will take any action
permitted to be taken by a holder of Exchange Capital Securities (including,
without limitation, the presentation of Exchange Capital Securities for exchange
as described below) only at the direction of one or more Participants to whose
account with DTC interests in the Global Capital Securities are credited and
only in respect of such portion of the Liquidation Amount of the Exchange
Capital Securities as to which such Participant or Participants has or have
given such direction. However, if there is an Event of Default under the Trust
Agreement, DTC reserves the right to exchange the Global Capital Securities for
Exchange Capital Securities in certificated form and to distribute such Exchange
Capital Securities to its Participants.
The information in this section concerning DTC, Euroclear and Cedel and
its book-entry system has been obtained from sources that the Trust and Holdings
believe to be reliable, but neither the Trust nor Holdings takes responsibility
for the accuracy thereof.
106
<PAGE>
Although DTC has agreed to the foregoing procedures to facilitate
transfers of interest in the Global Capital Securities among Participants in
DTC, they are under no obligation to perform or to continue to perform such
procedures, and such procedures may be discontinued at any time. None of the
Trust, Holdings or the Property Trustee will have any responsibility for the
performance by DTC or their respective Participants or Indirect Participants of
their respective obligations under the rules and procedures governing its
operations.
Exchange of Book-entry Capital Securities for Certificated Capital Securities
A Global Capital Security is exchangeable for Exchange Capital
Securities in registered certificated form if (i) DTC (x) notifies the Trust
that it is unwilling or unable to continue as Depositary for the Global Capital
Security and the Trust thereupon fails to appoint a successor Depositary within
90 days or (y) has ceased to be a clearing agency registered under the Exchange
Act, (ii) Holdings in its sole discretion elects to cause the issuance of the
Exchange Capital Securities in certificated form or (iii) there shall have
occurred and be continuing an Event of Default or any event which after notice
or lapse of time or both would be an Event of Default under the Trust Agreement.
In addition, beneficial interests in a Global Capital Security may be exchanged
by or on behalf of DTC for certificated Exchange Capital Securities upon request
by DTC, but only upon at least 20 days' prior written notice given to the
Property Trustee in accordance with DTC's customary procedures. In all cases,
certificated Exchange Capital Securities delivered in exchange for any Global
Capital Security or beneficial interests therein will be registered in the
names, and issued in any approved denominations, requested by or on behalf of
the Depositary (in accordance with its customary procedures) unless the Property
Trustee determines otherwise in compliance with applicable law.
Exchange of Certificated Capital Securities for Book-entry Capital Securities
Other Capital Securities, which will be issued in certificated form,
may not be exchanged for beneficial interests in any Global Capital Security
unless such exchange occurs in connection with a transfer of such Other Capital
Securities and the transferor first delivers to the Property Trustee a written
certificate (in the form provided in the Trust Agreement) to the effect that
such transfer will comply with the appropriate transfer restrictions applicable
to such Capital Securities.
Payment and Paying Agency
Payments in respect of the Global Capital Securities shall be made to
the Depositary, which shall credit the relevant accounts at the Depositary on
the applicable Distribution Dates, or in respect of the Exchange Capital
Securities that are not held by the Depositary, such payments shall be made by
check mailed to the address of the holder entitled thereto as such address shall
appear on the register. The paying agent (the "Paying Agent") shall initially be
the Property Trustee and any co-paying agent chosen by the Property Trustee and
acceptable to the Administrative Trustees and Holdings. The Paying Agent shall
be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee, the Administrative Trustees and Holdings. 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 Holdings) to act as Paying Agent.
Restrictions on Transfer
The Exchange Capital Securities will be issued, and may be transferred,
only in blocks having a Liquidation Amount of not less than $100,000 (100
Capital Securities) and multiples of $1,000 in excess thereof. Any attempted
sale, transfer or other disposition of Exchange Capital Securities in a block
having a Liquidation Amount of less than $100,000 shall be deemed to be void and
of no legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such Exchange Capital Securities for any purpose, including but not
limited to the receipt of Distributions on such Exchange Capital Securities, and
such transferee shall be deemed to have no interest whatsoever in such Exchange
Capital Securities.
107
<PAGE>
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Exchange Capital Securities.
Registration of transfers of the Exchange Capital Securities will be
effected without charge by or on behalf of the Trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to be
registered the transfer of the Exchange Capital Securities after they have been
called for redemption.
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, during the existence of an
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 Trust 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 Exchange Capital
Securities or the Common Securities are entitled under the Trust Agreement to
vote, then the Property Trustee shall take such action as is directed by
Holdings and, if not so directed, shall take such action as it deems advisable
and in the best interests of the holders of the Trust 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 Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Exchange Junior
Subordinated Debentures will be treated as indebtedness of Holdings for United
States federal income tax purposes. In this connection, Holdings and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of the Trust or the Trust Agreement,
that Holdings 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 Trust
Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge
any of its assets.
DESCRIPTION OF EXCHANGE JUNIOR SUBORDINATED DEBENTURES
The Exchange Junior Subordinated Debentures are to be issued under an
Indenture, as supplemented from time to time (as so supplemented, the
"Indenture"), between Holdings and Wilmington Trust Company, as trustee (the
"Debenture Trustee"). The Indenture will be qualified under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), and will, by its terms,
incorporate certain provisions of the Trust Indenture Act. This summary of
certain terms and provisions of the Exchange Junior Subordinated Debentures and
the Indenture does not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, some of which are not otherwise defined herein,
are qualified in their entirety by reference to all of the provisions of the
Indenture and those terms made a part of the Indenture by the Trust Indenture
Act.
108
<PAGE>
General
Concurrently with the issuance of the Original Capital Securities, the
Trust invested the proceeds thereof, together with the consideration paid by
Holdings for the Common Securities, in Original Junior Subordinated Debentures
issued by Holdings. Pursuant to the Exchange Offer, the Company will exchange
the Exchange Junior Subordinated Debentures for Original Junior Subordinated
Debentures accepted for exchange. The Exchange Junior Subordinated Debentures
will bear interest from April 17, 1998 at the annual rate of 9.375% of the
principal amount thereof, payable semi-annually in arrears on May 1 and November
1 of each year (each, an "Interest Payment Date"), commencing November 1, 1998,
to the person in whose name each Exchange Junior Subordinated Debenture is
registered, subject to certain exceptions, at the close of business on the
fifteenth day of the month preceding the month in which the relevant payment
date falls. It is anticipated that, until the liquidation, if any, of the Trust,
each Exchange Junior Subordinated Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Trust
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and, for any period of less
than a full calendar month, the number of days elapsed in such month. In the
event that any date on which interest is payable on the Exchange Junior
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 next succeeding Business Day falls in the next succeeding
calendar year, then such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date. 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 9.375% thereof, compounded semi-annually. 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 defined below), as applicable.
The Exchange Junior Subordinated Debentures will be issued in
denominations of $1,000 and integral multiples thereof. The Exchange Junior
Subordinated Debentures will mature on May 1, 2028 (the "Stated Maturity Date").
The Exchange Junior Subordinated Debentures will be unsecured and rank
pari passu with the Original Junior Subordinated Debentures and all Other
Debentures and will be unsecured and will rank subordinate and junior in right
of payment to all Senior Indebtedness to the extent and in the manner set forth
in the Indenture. See "--Subordination."
Holdings is a holding company and almost all of the operating assets of
Holdings are owned by Holdings' subsidiaries. Holdings is a legal entity
separate and distinct from its subsidiaries. Holders of Exchange Junior
Subordinated Debentures should look only to Holdings for payments on the
Exchange Junior Subordinated Debentures. The principal sources of Holdings'
income are dividends, interest and fees from its subsidiaries. Holdings relies
primarily on dividends from the Bank to meet its obligations for payment of
principal and interest on its outstanding debt obligations and corporate
expenses. There are regulatory limitations on the payment of dividends directly
or indirectly to Holdings from the Bank. As of March 31, 1998, under OTS
regulations, the total capital available for payment of dividends by the Bank to
Holdings was approximately $5.8 million. However, the OTS has the power to
prohibit any act, including the payment of dividends, if such act would reduce
bank capital to a point that, in its opinion, would render the Bank
undercapitalized and thus constitute an unsafe or unsound banking practice. In
addition, the Bank is subject to certain restrictions imposed by federal law on
any extensions of credit to, and certain other transactions with, Holdings and
certain other affiliates, and on investments in stock or other securities
thereof. Such restrictions prevent Holdings and such other affiliates from
borrowing from the Bank unless the loans are secured by various types of
collateral. Further, such secured loans, other transactions and investments by
the Bank are generally limited in amount as to Holdings and as to each of such
other affiliates to 10% of the Bank's capital and surplus and as to Holdings and
all of such other affiliates to an aggregate of 20% of the Bank's capital and
surplus.
Because Holdings is a holding company, the right of Holdings to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Capital Securities to benefit indirectly from such distribution),
is subject to the prior claims of creditors of that
109
<PAGE>
subsidiary (including depositors, in the case of the Bank), except to the extent
Holdings may itself be recognized as a creditor of that subsidiary. At March 31,
1998, the subsidiaries of Holdings had total liabilities (excluding liabilities
owed to Holdings) of $1.47 billion. Accordingly, the Exchange Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of Holdings' subsidiaries (including the Bank's deposit
liabilities) and all liabilities of any future subsidiaries of Holdings. The
Indenture does not limit the incurrence or issuance of other secured or
unsecured debt of Holdings or any subsidiary, including Senior Indebtedness. See
"--Subordination."
Form, Registration and Transfer
If the Exchange Junior Subordinated Debentures are distributed to the
holders of the Trust Securities, the Exchange Junior Subordinated Debentures may
be represented by one or more global certificates registered in the name of Cede
& Co. as the nominee of DTC. The depositary arrangements for such Exchange
Junior Subordinated Debentures are expected to be substantially similar to those
in effect for the Exchange Capital Securities. For a description of DTC and the
terms of the depositary arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "Description of
Exchange Capital Securities--Form, Denomination, Book-Entry Procedures and
Transfer."
Payment and Paying Agents
Payment of principal of (and premium, if any) and interest on Exchange
Junior Subordinated Debentures will be made at the office of the Debenture
Trustee in Wilmington, Delaware or at the office of such Paying Agent or Paying
Agents as Holdings may designate from time to time, except that at the option of
Holdings payment of any interest may be made, except in the case of Exchange
Junior Subordinated Debentures in global form, (i) by check mailed to the
address of the Person entitled thereto as such address shall appear in the
register for Exchange Junior Subordinated Debentures or (ii) by transfer to an
account maintained by the Person entitled thereto as specified in such register,
provided that proper transfer instructions have been received by the relevant
Record Date. Payment of any interest on any Exchange Junior Subordinated
Debenture will be made to the Person in whose name such Exchange Junior
Subordinated Debenture is registered at the close of business on the Record Date
for such interest, except in the case of defaulted interest. Holdings may at any
time designate additional Paying Agents or rescind the designation of any Paying
Agent; however, Holdings will at all times be required to maintain a Paying
Agent in each place of payment for the Exchange Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by Holdings in trust, for the payment of the principal of (and
premium, if any) or interest on any Exchange Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall, at the request of Holdings, be repaid
to Holdings and the holder of such Exchange Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to Holdings for payment
thereof.
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and is
continuing, Holdings will have the right under the Indenture to defer the
payment of interest on the Exchange Junior Subordinated Debentures at any time
and 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
shall end on a date other than an Interest Payment Date or extend beyond the
Stated Maturity Date. At the end of such Extension Period, Holdings must pay all
interest then accrued and unpaid (together with interest thereon at the annual
rate of 9.375%, compounded semi-annually, to the extent permitted by applicable
law ("Compounded Interest")). During an Extension Period, interest will continue
to accrue and, if the Exchange Junior Subordinated Debentures have been
distributed to holders of the Trust Securities, holders of Exchange Junior
Subordinated Debentures (or holders of the Trust Securities while Trust
Securities are outstanding) will be required to accrue such deferred interest
income for United States federal income tax purposes prior to the receipt of
cash attributable to such income. See "Certain Federal Income Tax Consequences
with Respect to the Exchange Capital Securities--Interest Income and Original
Issue Discount."
110
<PAGE>
During any such Extension Period, Holdings may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of Holdings' capital stock, (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of Holdings (including any Other Debentures) that
rank pari passu with or junior in right of payment to the Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee by
Holdings of the debt securities of any subsidiary of Holdings (including any
Other Guarantees) if such guarantee ranks pari passu with or junior in right of
payment to the Exchange Junior Subordinated Debentures (other than (a) dividends
or distributions in shares of, or options, warrants or rights to subscribe for
or purchase shares of, common stock of Holdings, (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
Guarantee, (d) as a result of a reclassification of Holdings' capital stock or
the exchange or conversion of one class or series of Holdings' capital stock for
another class or series of Holdings' capital stock, (e) the purchase of
fractional interests in shares of Holdings' capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights under any of Holdings' benefit plans for its
directors, officers or employees or any of Holdings' dividend reinvestment
plans).
Prior to the termination of any such Extension Period, Holdings may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity
Date. Upon the termination of any such Extension Period and the payment of all
amounts then due on any Interest Payment Date, Holdings 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. Holdings must
give the Property Trustee, the Administrative Trustees and the Debenture Trustee
notice of its election of any Extension Period (or an extension thereof) at
least five Business Days prior to the earlier of (i) the date the Distributions
on the Trust Securities would have been payable except for the election to begin
or extend such Extension Period or (ii) the date the Administrative Trustees are
required to give notice to any securities exchange or to holders of Exchange
Capital Securities of the Record Date or the date such Distributions are
payable, but in any event not less than five Business Days prior to such Record
Date. The Debenture Trustee shall give notice of Holdings' election to begin or
extend a new Extension Period to the holders of the Exchange Capital Securities.
There is no limitation on the number of times that Holdings may elect to begin
an Extension Period.
Optional Prepayment
The Exchange Junior Subordinated Debentures will be prepayable, in
whole or in part, at the option of Holdings on or after the Initial Optional
Prepayment Date, subject to Holdings having received any required regulatory
approval, at 100% of the principal amount thereon plus accrued and unpaid
interest thereon to the date of prepayment (the "Optional Prepayment Price").
Special Event Prepayment
If a Special Event shall occur and be continuing prior to the Initial
Optional Prepayment Date, Holdings may, at its option and subject to receipt of
any required regulatory approval, prepay the Exchange Junior Subordinated
Debentures in whole (but not in part) at any time (i) within 90 days of the
occurrence of such Special Event and (ii) prior to May 1, 2005, at a prepayment
price (the "Special Event Prepayment Price") equal to the Make-Whole Amount (as
defined below). The "Make-Whole Amount" shall be equal to the greater of (x)
100% of the principal amount of the Exchange Junior Subordinated Debentures to
be prepaid or (y) the sum, as determined by a Quotation Agent (as defined
herein), of the present values of the scheduled payments of principal and
interest on the Exchange Junior Subordinated Debentures from the prepayment date
to the Maturity Date discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus, in the case of each of clauses (x) and (y), accrued and
unpaid interest thereon to the date of prepayment. If, following the occurrence
of a Special Event, Holdings exercises its option to prepay the Exchange Junior
Subordinated Debentures, then the proceeds of that prepayment must be applied to
redeem a Like Amount of Trust Securities at the Special Event
111
<PAGE>
Redemption Price (equal to the Special Event Prepayment Price in respect of the
Exchange Junior Subordinated Debentures). See "Description of Exchange Capital
Securities--Redemption."
A "Special Event" means a Tax Event or a Regulatory Capital Event, as
the case may be.
A "Tax Event" means the receipt by Holdings and the Trust 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 April 17, 1998, there is
more than an insubstantial risk that: (i) the Trust 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 Junior Subordinated
Debentures; (ii) interest payable by Holdings on the Junior Subordinated
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by Holdings, in whole or in part, for United States federal income
tax purposes; or (iii) the Trust is, or will be within 90 days of the date of
such opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
A "Regulatory Capital Event" means that Holdings shall have become, or
pursuant to law or regulation will become within 180 days, subject to capital
requirements under which, in the written opinion of counsel experienced in such
matters, the Capital Securities would not constitute Tier 1 Capital (as that
concept is used in the guidelines or regulations issued by the Board of
Governors of the Federal Reserve Board as of the date of this Prospectus)
applied as if Holdings (or its successor) were a bank holding company, or the
then-equivalent of such Tier 1 Capital (provided, however, that the distribution
of the Junior Subordinated Debentures in connection with the liquidation of the
Trust by the Company shall not in and of itself constitute a Regulatory Capital
Event unless such liquidation shall have occurred in connection with a Tax
Event).
"Adjusted Treasury Rate" means, with respect to any prepayment date,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such prepayment date plus (i) five basis points less than the
difference between the coupon of the Capital Securities at pricing and the yield
on the 6.125% U.S. Treasury Bond due November, 2027 if such prepayment date
occurs prior to May 1, 1999 and (ii) 55 basis points less than the difference
between the coupon of the Capital Securities at pricing and the yield on the
6.125% U.S. Treasury Bond due November, 2027, in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life of the Junior Subordinated Debentures to be prepaid 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 the Remaining
Life, the two most closely corresponding United States Treasury securities as
selected by the Quotation Agent 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.
"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 Board 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
112
<PAGE>
Treasury Issue, calculated equal to the Comparable Treasury Price for such
prepayment date. The Treasury Rate shall be calculated on the third Business Day
preceding the prepayment date.
"Remaining Life" means the term of the Junior Subordinated Debenture
from the Prepayment Date to the Stated Maturity Date.
"Quotation Agent" means the Reference Treasury Dealer appointed by
Holdings. "Reference Treasury Dealer" means a nationally-recognized U.S.
Government securities dealer in New York City selected by Holdings.
"Comparable Treasury Price" means, with respect to any prepayment date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such prepayment 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 prepayment 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 prepayment date.
Notice of any prepayment will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Exchange Junior
Subordinated Debentures to be prepaid at its registered address. Unless Holdings
defaults in payment of the prepayment price, on and after the prepayment date
interest ceases to accrue on such Exchange Junior Subordinated Debentures called
for prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, Holdings will pay as additional
amounts on the Exchange Junior Subordinated Debentures such amounts as shall be
necessary in order that the amount of Distributions then due and payable by the
Trust on the outstanding Trust Securities shall not be reduced as a result of
any additional taxes, duties and other governmental charges to which the Trust
has become subject as a result of a Tax Event ("Additional Sums").
Certain Covenants of Holdings
Holdings will also covenant that it will not, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of Holdings' capital stock, (ii) make
any payment of principal, interest or premium, if any, on or repay or repurchase
or redeem any debt securities of Holdings (including Other Debentures) that rank
pari passu with or junior in right of payment to the Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee by
Holdings of the debt securities of any subsidiary of Holdings (including under
Other Guarantees) if such guarantee ranks pari passu or junior in right of
payment to the Junior Subordinated Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, common stock of Holdings, (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
Guarantee, (d) as a result of a reclassification of Holdings' capital stock or
the exchange or conversion of one class or series of Holdings' capital stock for
another class or series of Holdings' capital stock, (e) the purchase of
fractional interests in shares of Holdings' capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights under any of Holdings' benefit plans for its
directors, officers or employees or any of Holdings' dividend reinvestment
plans) if at
113
<PAGE>
such time (1) there shall have occurred any event of which Holdings has actual
knowledge that (a) is, or with the giving of notice or the lapse of time, or
both, would be, a Debenture Event of Default and (b) in respect of which
Holdings shall not have taken reasonable steps to cure, (2) Holdings shall be in
default with respect to its payment of any obligations under the Guarantee or
(3) Holdings shall have given notice of its election of an Extension Period as
provided in the Indenture and shall not have rescinded such notice, and such
Extension Period, or any extension thereof, shall have commenced and be
continuing.
So long as the Trust Securities remain outstanding, Holdings also will
covenant: (i) to directly or indirectly maintain 100% direct or indirect
ownership of the Common Securities, provided, however, that any permitted
successor of Holdings under the Indenture may succeed to Holdings' ownership of
such Common Securities; (ii) to use its reasonable efforts to cause the Trust
(a) to remain a business trust, except in connection with the distribution of
Junior Subordinated Debentures to the holders of Trust Securities in liquidation
of the Trust, the redemption of all of the Trust Securities of the Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the Trust
Agreement, and (b) to otherwise continue to be classified as a grantor trust for
United States federal income tax purposes; and (iii) to use its reasonable
efforts to cause each holder of Trust Securities to be treated as owning an
undivided beneficial interest in the Junior Subordinated Debentures.
Modification of Indenture
From time to time Holdings and the Debenture Trustee may, without the
consent of the holders of Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies or enabling Holdings and the
Trust to conduct an Exchange Offer as contemplated by the Capital Securities
Registration Rights Agreement, provided that any such action does not materially
adversely affect the interest of the holders of Junior Subordinated Debentures),
and qualifying, or maintaining the qualification of, the Indenture under the
Trust Indenture Act. The Indenture contains provisions permitting Holdings and
the Debenture Trustee, with the consent of the holders of a majority in
principal amount of Junior Subordinated Debentures, to modify the Indenture in a
manner affecting the rights of the holders of Junior Subordinated Debentures;
provided that no such modification may, without the consent of the holders of
each outstanding Junior Subordinated Debenture so affected, (i) change the
Stated Maturity Date, or reduce the principal amount of the Junior Subordinated
Debentures or reduce the amount payable on redemption thereof or reduce the rate
or extend the time of payment of interest thereon except pursuant to Holdings'
right under the Indenture to defer the payment of interest as provided therein
(see "--Option to Extend Interest Payment Date") or make the principal of, or
interest or premium on, the Junior Subordinated Debentures payable in any coin
or currency other than that provided in the Junior Subordinated Debentures, or
impair or affect the right of any holder of Junior Subordinated Debentures to
institute suit for the payment thereof, or (ii) reduce the percentage of
principal amount of Junior Subordinated Debentures, the holders of which are
required to consent to any such modification of the Indenture.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a
"Debenture Event of Default" (whatever the reason for such Debenture Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) failure for 30 days to pay any interest (including
Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on the Junior Subordinated
Debentures or any Other 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 or premium, if any, on the
Junior Subordinated Debentures or any Other Debentures
when due whether at maturity, upon redemption, by
declaration of acceleration of maturity or otherwise; or
114
<PAGE>
(iii) failure to observe or perform in any material respect
certain other covenants contained in the Indenture for 90
days after written notice to Holdings from the Debenture
Trustee or the holders of at least 25% in aggregate
outstanding principal amount of Junior Subordinated
Debentures; or
(iv) certain events in bankruptcy, insolvency or
reorganization of Holdings.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have, subject to certain exceptions, 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 Junior
Subordinated Debentures may declare the principal due and payable immediately
upon a Debenture Event of Default. The holders of a majority in aggregate
outstanding principal amount of the Junior Subordinated Debentures may annul
such declaration and waive the default if the default (other than the
non-payment of the principal of the Junior 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.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive any past default, except a default
in the payment of principal (or premium, if any) on or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest (and premium, if any) and principal due otherwise than by acceleration
has been deposited with the 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 Junior Subordinated
Debenture.
The Indenture requires the annual filing by Holdings with the Debenture
Trustee of a certificate as to the absence of certain defaults under the
Indenture.
The Indenture provides that the Debenture Trustee may withhold notice of a
Debenture Event of Default from the holders of the Junior Subordinated
Debentures if the Debenture Trustee considers it in the interest of such holders
to do so.
Enforcement of Certain Rights by Holders of Exchange Capital Securities
If a Debenture Event of Default shall have occurred and be continuing and
shall be attributable to the failure of Holdings to pay the principal of (or
premium, if any), or interest (including Compounded Interest and Additional
Sums, if any), on the Exchange Junior Subordinated Debentures on the due date, a
holder of Exchange Capital Securities may institute a Direct Action. Holdings
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 Exchange
Capital Securities. Notwithstanding any payments made to a holder of Exchange
Capital Securities by Holdings in connection with a Direct Action, Holdings
shall remain obligated to pay the principal of (or premium, if any) or interest
(including Compounded Interest and Additional Sums, if any) on the Exchange
Junior Subordinated Debentures, and Holdings shall be subrogated to the rights
of the holder of such Exchange Capital Securities with respect to payments on
the Exchange Capital Securities to the extent of any payments made by Holdings
to such holder in any Direct Action.
The holders of the Exchange Capital 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 Exchange Junior Subordinated
Debentures unless there shall have been an Event of Default under the Trust
Agreement. See "Description of Exchange Capital Securities--Events of Default;
Notice."
115
<PAGE>
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that Holdings shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties as an entirety
or substantially as an entirety to any Person, and no Person shall consolidate
with or merge into Holdings or convey, transfer or lease its properties as an
entirety or substantially as an entirety to Holdings, unless: (i) in case
Holdings consolidates with or merges into another Person or conveys or transfers
its properties 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 Holdings' obligations on
the Junior Subordinated Debentures; (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; and (iii) certain other conditions as prescribed in
the Indenture are met.
The general provisions of the Indenture do not afford holders of the
Exchange Junior Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving Holdings that may adversely affect
holders of the Exchange Junior Subordinated Debentures.
Satisfaction and Discharge
The Indenture provides that when, among other things, all Exchange Junior
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 maturity or called for redemption within one year, and Holdings deposits or
causes to be deposited with the Debenture Trustee funds, in trust, for the
purpose and in an amount sufficient to pay and discharge the entire indebtedness
on the Exchange Junior Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation, for the principal (and premium, if any) and
interest to the date of the deposit or to the Stated Maturity Date, as the case
may be, then the Indenture will cease to be of further effect (except as to
Holdings' obligations to pay all other sums due pursuant to the Indenture and to
provide the officers' certificates and opinions of counsel described therein),
and Holdings will be deemed to have satisfied and discharged the Indenture.
Subordination
In the Indenture, Holdings has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Indebtedness 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 Holdings, all Senior Indebtedness must be paid in full
before the holders of Junior Subordinated Debentures will be entitled to receive
or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of such
Senior Indebtedness before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the Junior Subordinated
Debentures.
No payments on account of principal, or premium, if any, or interest, if
any, in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Indebtedness" shall mean (i) every obligation of Holdings for money
borrowed; (ii) every obligation of Holdings evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of Holdings with respect to letters of credit, banker's
acceptances or similar facilities issued for the account of Holdings; (iv) every
obligation of Holdings
116
<PAGE>
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 Holdings; (vi) all
indebtedness of Holdings whether incurred on or prior to the date of the
Indenture or thereafter incurred, 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, Holdings has guaranteed
or is responsible or liable, directly or indirectly, as obligor or otherwise.
"Indebtedness Ranking on a Parity with the Junior Subordinated Debentures"
shall mean (i) Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, to the extent such
indebtedness by its terms ranks equally with and not prior to the Junior
Subordinated Debentures in the right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of Holdings and (ii)
all other debt securities, and guarantees in respect of those debt securities,
issued to any other trust, or a trustee of such trust, partnership or other
entity affiliated with Holdings that is a financing vehicle of Holdings (a
"financing entity") in connection with the issuance by such financing entity of
equity securities or other securities guaranteed by Holdings pursuant to an
instrument that ranks pari passu with or junior in right of payment to the
Guarantee. The securing of any Indebtedness, otherwise constituting Indebtedness
Ranking on a Parity with the Junior Subordinated Debentures, shall not be deemed
to prevent such Indebtedness from constituting Indebtedness Ranking on a Parity
with the Junior Subordinated Debentures.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures" shall
mean any Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, to the extent such
indebtedness by its terms ranks junior to and not equally with or prior to the
Junior Subordinated Debentures (and any other Indebtedness Ranking on a Parity
with the Junior Subordinated Debentures) in right of payment upon the happening
of the dissolution or winding-up or liquidation or reorganization of Holdings.
The securing of any Indebtedness, otherwise constituting Indebtedness Ranking
Junior to the Junior Subordinated Debentures, shall not be deemed to prevent
such Indebtedness from constituting Indebtedness Ranking Junior to the Junior
Subordinated Debentures.
"Senior Indebtedness" shall mean all Indebtedness, whether outstanding on
the date of execution of the Indenture or thereafter created, assumed or
incurred, except Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures or Indebtedness Ranking Junior to the Junior Subordinated Debentures,
and any deferrals, renewals or extensions of such Senior Indebtedness.
Holdings is a holding company and almost all of the operating assets of
Holdings are owned by Holdings' subsidiaries. Holdings relies primarily on
dividends from the Bank to meet its obligations for payment of principal and
interest on its outstanding debt obligations and corporate expenses. Holdings is
a legal entity separate and distinct from its subsidiaries. Holders of Exchange
Junior Subordinated Debentures should look only to Holdings for payments on the
Exchange Junior Subordinated Debentures. There are regulatory limitations on the
payment of dividends directly or indirectly to Holdings from the Bank. See
"--General." In addition, the Bank is subject to certain restrictions imposed by
federal law on any extensions of credit to, and certain other transactions with,
Holdings and certain other affiliates, and on investments in stock or other
securities thereof. Such restrictions prevent Holdings and such other affiliates
from borrowing from the Bank unless the loans are secured by various types of
collateral. Further, such secured loans, other transactions and investments by
the Bank are generally limited in amount as to Holdings and as to each of such
other affiliates to 10% of the Bank's capital and surplus and as to Holdings and
all of such other affiliates to an aggregate of 20% of the Bank's capital and
surplus. Accordingly, the Exchange Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of Holdings'
subsidiaries.
Because Holdings is a holding company, the right of Holdings to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Exchange Capital Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary
(including depositors, in the case of the Bank), except to the extent Holdings
may itself be recognized
117
<PAGE>
as a creditor of that subsidiary. At March 31, 1998, the subsidiaries of
Holdings had total liabilities of $1.47 billion. Accordingly, the Exchange
Junior Subordinated Debentures will be effectively subordinated to all existing
and future liabilities of Holdings' subsidiaries (including the subsidiaries'
deposit liabilities) and all liabilities of any future subsidiaries of Holdings.
The Indenture does not limit the incurrence or issuance of other secured or
unsecured debt of Holdings or any subsidiary, including Senior Indebtedness. See
"--Subordination."
Restrictions on Transfer
The Exchange Junior Subordinated Debentures will be issued, and may be
transferred, only in blocks having an aggregate principal amount of not less
than $100,000 (100 Exchange Junior Subordinated Debentures) and multiples of
$1,000 in excess thereof. Any such transfer of Exchange Junior Subordinated
Debentures in a block having an aggregate principal amount of less than $100,000
shall be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Exchange Junior
Subordinated Debentures for any purpose, including but not limited to the
receipt of payments on such Exchange Junior Subordinated Debentures, and such
transferee shall be deemed to have no interest whatsoever in such Exchange
Junior Subordinated Debentures.
Governing Law
The Indenture and the Exchange Junior Subordinated Debentures will be
governed by and construed in accordance with the laws of the State of Delaware.
Information Concerning the Debenture Trustee
Following the Exchange Offer and the qualification of the Indenture under
the Trust Indenture Act, the Debenture Trustee shall have and be subject to all
the duties and responsibilities specified with respect to an indenture trustee
under the Trust Indenture Act. Subject to such provisions, the 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 Exchange Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
DESCRIPTION OF EXCHANGE GUARANTEE
The Exchange Guarantee will be executed and delivered by Holdings
concurrently with the issuance by the Trust of the Exchange Capital Securities
for the benefit of the holders from time to time of the Exchange Capital
Securities. The terms of the Exchange Guarantee are identical in all material
respects to the terms of the Original Guarantee. Wilmington Trust Company will
act as Guarantee Trustee under the Exchange Guarantee. The Exchange Guarantee
has been qualified under the Trust Indenture Act. This summary of certain
provisions of the Exchange 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 Guarantee, including the definitions therein of certain terms, and the
Trust Indenture Act. The Guarantee Trustee will hold the Exchange Guarantee for
the benefit of the holders of the Capital Securities.
Status of the Original Guarantee
If not all the Original Capital Securities are exchanged for Exchange
Capital Securities in the Exchange Offer, the Original Guarantee will not
terminate, but will continue to guarantee the obligations of the Company for the
benefit of the holders of the Original Capital Securities. The Original
Guarantee will terminate upon full payment of the applicable Redemption Price of
the Original Capital Securities, upon full payment of the Liquidation Amount
payable upon liquidation of the Trust or upon distribution of Original Junior
Subordinated Debentures to the holders of the Original Capital Securities. The
Original Guarantee will continue to be effective or will be reinstated, as the
case may be, if at
118
<PAGE>
any time any holder of the Original Capital Securities must restore payment of
any sums paid under the Original Capital Securities or the Original Guarantee.
General
Holdings will irrevocably agree 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 Exchange Capital Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
Exchange Capital Securities, to the extent not paid by or on behalf of the Trust
(the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Exchange Capital
Securities, to the extent that the Trust has funds on hand legally available
therefor at such time, (ii) the applicable Redemption Price with respect to the
Exchange Capital Securities called for redemption, to the extent that the Trust
has funds on hand legally available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding-up or liquidation of the Trust
(other than in connection with the distribution of the Exchange Junior
Subordinated Debentures to holders of the Exchange Capital Securities or the
redemption of all Exchange Capital Securities), the lesser of (a) the
Liquidation Distribution, to the extent the Trust has funds legally available
therefor at the time, and (b) the amount of assets of the Trust remaining
available for distribution to holders of Exchange Capital Securities after
satisfaction of liabilities to creditors of the Trust as required by applicable
law. Holdings' obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by Holdings to the holders of the Exchange
Capital Securities or by causing the Trust to pay such amounts to such holders.
The Exchange Guarantee will rank subordinate and junior in right of
payment to all Senior Indebtedness to the extent provided therein. See "--Status
of the Exchange Guarantee." Because Holdings is a holding company, the right of
Holdings 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 Holdings may
itself be recognized as a creditor of that subsidiary. Accordingly, Holdings'
obligations under the Guarantee effectively will be subordinated to all existing
and future liabilities of Holdings' subsidiaries (including the Bank's deposit
liabilities), and all liabilities of any future subsidiaries of Holdings.
Claimants should look only to the assets of Holdings for payments under the
Exchange Guarantee. See "Description of the Exchange Junior Subordinated
Debentures--General." The Exchange Guarantee does not limit the incurrence or
issuance of other secured or unsecured debt of Holdings, including Senior
Indebtedness, whether under the Indenture, any other indenture that Holdings may
enter into in the future or otherwise.
Holdings will, through the Exchange Guarantee, the Trust Agreement, the
Exchange Junior Subordinated Debentures and the Indenture, taken together,
fully, irrevocably and unconditionally guarantee all of the Trust's obligations
under the Exchange Capital 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
Trust's obligations under the Exchange Capital Securities. See "Relationship
Among the Exchange Capital Securities, the Exchange Junior Subordinated
Debentures and the Exchange Guarantee."
Status of the Guarantee
The Exchange Guarantee will constitute an unsecured obligation of Holdings
and will rank subordinate and junior in right of payment to all Senior
Indebtedness in the same manner as the Exchange Junior Subordinated Debentures.
The Exchange Guarantee will rank pari passu with all Other Guarantees
issued by Holdings after the Issue Date with respect to capital securities (if
any) issued by Other Trusts. The Exchange Guarantee will constitute a guarantee
of payment and not of collection (i.e., the guaranteed party may institute a
legal proceeding directly against Holdings to enforce its rights under the
Exchange Guarantee without first instituting a legal proceeding against any
other person
119
<PAGE>
or entity). The Exchange Guarantee will be held for the benefit of the holders
of the Exchange Capital Securities. The Exchange Guarantee will not be
discharged except by payment of the Guarantee Payments in full to the extent not
paid by the Trust or upon distribution to the holders of the Exchange Capital
Securities of the Exchange Junior Subordinated Debentures. The Exchange
Guarantee does not place a limitation on the amount of additional Senior
Indebtedness that may be incurred by Holdings.
Events of Default
An event of default under the Exchange Guarantee will occur upon the
failure of Holdings to perform any of its payment or other obligations
thereunder, provided, however, that except with respect to a default in payment
of any Guarantee Payment, Holdings shall have received notice of default and
shall not have cured such default within 60 days after receipt of such notice.
The holders of not less than a majority in Liquidation Amount of the Exchange
Capital Securities will 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 Exchange Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under the Exchange Guarantee.
Any holder of the Exchange Capital Securities may institute a legal
proceeding directly against Holdings to enforce its rights under the Exchange
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
Holdings, as guarantor, will be required to file annually with the
Guarantee Trustee a certificate as to whether or not Holdings is in compliance
with all the conditions and covenants applicable to it under the Exchange
Guarantee.
Amendments and Assignment
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Exchange Capital Securities (in which case no vote
will be required), the Exchange Guarantee may not be amended without the prior
approval of the holders of a majority of the Liquidation Amount of such
outstanding Exchange Capital Securities. The manner of obtaining any such
approval will be as set forth under "Description of Exchange Capital
Securities--Voting Rights; Amendment of the Trust Agreement." All guarantees
and agreements contained in the Exchange Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of Holdings and shall inure to
the benefit of the holders of the Exchange Capital Securities then outstanding.
Termination of the Guarantee
The Exchange Guarantee will terminate and be of no further force and
effect upon full payment of the applicable Redemption Price of the Exchange
Capital Securities, upon full payment of the Liquidation Amount payable upon
liquidation of the Trust or upon distribution of Exchange Junior Subordinated
Debentures to the holders of the Exchange Capital Securities. The Exchange
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the Exchange Capital Securities must restore
payment of any sums paid under the Exchange Capital Securities or the Exchange
Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by Holdings in performance of the Exchange Guarantee, will undertake
to perform only such duties as are specifically set forth in the Exchange
Guarantee and, in case a default with respect to the Exchange Guarantee has
occurred, 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 will be under no obligation to exercise any of
the powers vested in it by the Exchange Guarantee at the request of any holder
of the Exchange Capital Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby.
120
<PAGE>
Governing Law
The Exchange Guarantee will be governed by and construed in accordance
with the laws of the State of Delaware.
DESCRIPTION OF ORIGINAL SECURITIES
The terms of the Original Securities are identical in all materials
respects to the Exchange Securities, except that (i) the Original Securities
have not been registered under the Securities Act, are subject to certain
restrictions on transfer and are entitled to certain rights under the Capital
Securities Registration Rights Agreement (which rights will terminate upon
consummation of the Exchange Offer, except under limited circumstances), (ii)
the Exchange Capital Securities will not provide for any increase in the
Distribution rate thereon and (iii) the Exchange Junior Subordinated Debentures
will not provide for any liquidated damages thereon. The Original Securities
provide that, if a registration statement relating to the Exchange Offer has not
been filed by August 14, 1998 and been declared effective by October 16, 1998,
then liquidated damages will accrue at the rate of 0.25% per annum on the
principal amount of the Original Junior Subordinated Debentures and
Distributions will accrue at the rate of 0.25% per annum on the Liquidation
Amount of the Original Capital Securities, for the period from the occurrence of
such event until such time as such registration statement has been filed or
declared effective, as the case may be. In addition, the Original Capital
Securities provide that, if the Trust has not exchanged Exchange Capital
Securities for all Original Capital Securities validly tendered by the 45th day
after the date on which the registration statement is declared effective, the
Distribution rate borne by the Original Capital Securities will increase by
0.25% per annum for the period from the occurrence of such event until such time
as the Exchange Offer has been consummated. The Exchange Securities are not, and
upon consummation of the Exchange Offer the Original Securities will not be,
entitled to any such additional interest or Distributions. Accordingly, holders
of Original Capital Securities should review the information set forth under
"Risk Factors--Consequences of a Failure to Exchange Original Capital
Securities" and "Description of Exchange Securities."
RELATIONSHIP AMONG THE EXCHANGE CAPITAL SECURITIES, THE EXCHANGE JUNIOR
SUBORDINATED DEBENTURES AND THE EXCHANGE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Exchange Capital
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be irrevocably guaranteed by Holdings as and
to the extent set forth under "Description of Exchange Guarantee." Taken
together, Holdings' obligations under the Exchange Junior Subordinated
Debentures, the Indenture, the Trust Agreement and the Exchange Guarantee will
provide, in the aggregate, a full, irrevocable and unconditional guarantee of
payments of Distributions and other amounts due on the Exchange Capital
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 Trust's obligations under the
Exchange Capital Securities. If and to the extent that Holdings does not make
the required payments on the Exchange Junior Subordinated Debentures, the Trust
will not have sufficient funds to make the related payments, including
Distributions, on the Exchange Capital Securities. The Exchange Guarantee will
not cover any such payment when the Trust does not have sufficient funds on hand
legally available therefor. In such event, the remedy of a holder of Exchange
Capital Securities is to institute a Direct Action. The obligations of Holdings
under the Exchange Guarantee will be subordinate and junior in right of payment
to all Senior Indebtedness.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on
the Exchange Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the Exchange Capital Securities,
primarily because: (i) the aggregate principal amount or Prepayment Price of the
Exchange Junior Subordinated Debentures will be equal to the sum of the
Liquidation Amount or Redemption Price, as applicable, of
121
<PAGE>
the Trust Securities; (ii) the interest rate and interest and other payment
dates on the Exchange Junior Subordinated Debentures will match the Distribution
rate and Distribution and other payment dates for the Trust Securities; (iii)
Holdings, as Sponsor, shall pay for all and any costs, expenses and liabilities
of the Trust except the Trust's obligations to holders of Trust Securities under
such Trust Securities; and (iv) the Trust Agreement will provide that the Trust
is not authorized to engage in any activity that is not consistent with the
limited purposes thereof.
Enforcement Rights of Holders of Exchange Capital Securities
A holder of any Exchange Capital Security may institute a legal proceeding
directly against Holdings to enforce its rights under the Exchange Guarantee
without first instituting a legal proceeding against the Guarantee Trustee, the
Trust or any other person or entity.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Trust Agreement. However, in
the event of payment defaults under, or acceleration of, Senior Indebtedness,
the subordination provisions of the Indenture will provide that no payments may
be made in respect of the Exchange Junior Subordinated Debentures until such
Senior Indebtedness has been paid in full or any payment default thereunder has
been cured or waived. Failure to make required payments on Exchange Junior
Subordinated Debentures would constitute an Event of Default under the Trust
Agreement.
Limited Purpose of the Trust
The Exchange Capital Securities will represent beneficial interests in the
Trust, and the Trust exists for the sole purpose of issuing and selling the
Trust Securities, using the proceeds from the sale of the Trust Securities to
acquire the Exchange Junior Subordinated Debentures, exchanging the Exchange
Capital Securities and the Original Junior Subordinated Debentures in the
Exchange Offer and engaging in only those other activities necessary, advisable
or incidental thereto. A principal difference between the rights of a holder of
a Exchange Capital Security and a holder of a Exchange Junior Subordinated
Debenture is that a holder of a Exchange Junior Subordinated Debenture will be
entitled to receive from Holdings the principal amount of (and premium, if any)
and interest on Exchange Junior Subordinated Debentures held, while a holder of
Exchange Capital Securities is entitled to receive Distributions from the Trust
(or, in certain circumstances, from Holdings under the Guarantee) if and to the
extent the Trust has funds on hand legally available for the payment of such
Distributions.
Rights upon Termination
Unless the Exchange Junior Subordinated Debentures are distributed to
holders of the Trust Securities, upon any voluntary or involuntary termination,
winding-up or liquidation of the Trust, after satisfaction of the liabilities of
creditors of the Trust as required by applicable law, the holders of the Trust
Securities will be entitled to receive, out of assets held by the Trust, the
Liquidation Distribution in cash. See "Description of Exchange Capital
Securities--Liquidation of the Trust and Distribution of Exchange Junior
Subordinated Debentures." Upon any voluntary or involuntary liquidation or
bankruptcy of Holdings, the Property Trustee, as holder of the Exchange Junior
Subordinated Debentures, would be a subordinated creditor of Holdings,
subordinated in right of payment to all Senior Indebtedness as set forth in the
Indenture, but entitled to receive payment in full of principal (and premium, if
any) and interest, before any stockholders of Holdings receive payments or
distributions. Since Holdings will be the guarantor under the Exchange Guarantee
and will agree to pay for all costs, expenses and liabilities of the Trust
(other than the Trust's obligations to the holders of its Trust Securities), the
positions of a holder of Exchange Capital Securities and a holder of Exchange
Junior Subordinated Debentures relative to other creditors and to stockholders
of Holdings in the event of liquidation or bankruptcy of Holdings are expected
to be substantially the same.
122
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
In the opinion of Patton Boggs LLP, special federal income tax counsel to
Holdings and the Trust ("Tax Counsel"), the following is a summary of certain of
the principal United States federal income tax consequences under current law of
the purchase, ownership and disposition of Capital Securities held as capital
assets by a holder who purchases such Capital Securities upon initial issuance.
It does not deal with special classes of holders such as banks, thrifts, real
estate investment trusts, regulated investment companies, insurance companies,
dealers in securities or currencies, tax-exempt investors, United States Alien
Holders (as defined below) engaged in a U.S. trade or business or persons that
will hold the Capital Securities as a position in a "straddle," as part of a
"synthetic security" or "hedge," as part of a "conversion transaction" or other
integrated investment, or as other than a capital asset. This summary also does
not address the tax consequences to persons that have a functional currency
other than the U.S. dollar or the tax consequences to shareholders, partners or
beneficiaries of a holder of Capital Securities. Further, it does not include
any description of any alternative minimum tax consequences or the tax laws of
any state or local government or of any foreign government that may be
applicable to the Capital Securities. This summary is based on the Code,
Treasury regulations thereunder and the administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. An opinion of Tax Counsel is not
binding on the IRS or the courts. No rulings have been or are expected to be
sought from the IRS with respect to any of the transactions described herein and
no assurance can be given that the IRS will not take contrary positions.
Moreover, no assurance can be given that the opinions expressed herein will not
be challenged by the IRS or, if challenged, that such a challenge would not be
successful.
Exchange of Capital Securities
The exchange of Original Capital Securities for Exchange Capital
Securities should not be a taxable event to holders for United States federal
income tax purposes. The exchange of Original Capital Securities for Exchange
Capital Securities pursuant to the Exchange Offer should not be treated as an
"exchange" for United States federal income tax purposes because the Exchange
Capital Securities should not be considered to differ materially in kind or
extent from the Original Capital Securities and because the exchange will occur
by operation of the terms of the Original Capital Securities. Accordingly, the
Exchange Capital Securities should have the same issue price as the Original
Capital Securities, and a holder should have the same adjusted tax basis and
holding period in the Exchange Capital Securities immediately after the exchange
as the holder had in the Original Capital Securities immediately before the
exchange.
Classification of the Junior Subordinated Debentures
In connection with the issuance of the Junior Subordinated Debentures, Tax
Counsel will render its opinion generally to the effect that, under then current
law and assuming full compliance with the terms of the Indenture (and certain
other documents), and based on certain facts and assumptions contained in such
opinion, the Junior Subordinated Debentures will be classified for United States
federal income tax purposes as indebtedness of Holdings. Holdings, the Trust and
the holders of the Capital Securities (by acceptance of a beneficial interest in
a Capital Security) will agree to treat the Junior Subordinated Debentures as
indebtedness of Holdings for all United States federal income tax purposes.
Classification of the Trust
In connection with the issuance of the Capital Securities, Tax Counsel
will render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Trust Agreement and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Capital Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures, and each holder will
be
123
<PAGE>
required to include in its gross income any interest (or OID accrued) with
respect to its allocable share of those Junior Subordinated Debentures.
Interest Income and Original Issue Discount
Under recently issued Treasury regulations (the "Regulations") applicable
to debt instruments issued on or after August 13, 1996, a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with OID. Holdings believes that the
likelihood of its exercising its option to defer payments of interest is
"remote" since exercising that option would, among other things, prevent
Holdings from declaring dividends on any class of its equity securities.
Accordingly, Holdings intends to take the position based on the advice of Tax
Counsel that the Junior Subordinated Debentures will not be considered to be
issued with OID and, accordingly, stated interest on the Junior Subordinated
Debentures generally will be taxable to a holder as ordinary income at the time
it is paid or accrued in accordance with such holder's method of tax accounting.
Under the Regulations, if Holdings were to exercise its option to defer
payments of interest, the Junior Subordinated Debentures would at that time be
treated as issued with OID, and all stated interest on the Junior Subordinated
Debentures would thereafter be treated as OID as long as the Junior Subordinated
Debentures remain outstanding. In such event, all of a holder's taxable interest
income with respect to the Junior Subordinated Debentures would thereafter be
accounted for on an economic accrual basis regardless of such holder's method of
tax accounting, and actual distributions of stated interest would not be
reported as taxable income. Consequently, a holder of Capital Securities would
be required to include in gross income OID even though Holdings would not make
actual cash payments during an Extension Period. Moreover, under the
Regulations, if the option to defer the payment of interest was determined not
to be "remote," the Junior Subordinated Debentures would be treated as having
been originally issued with OID. In such event, all of a holder's taxable
interest income with respect to the Junior Subordinated Debentures would be
accounted for on an economic accrual basis regardless of such holder's method of
tax accounting, and actual distributions of stated interest would not be
reported as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation described herein.
Because income on the Capital Securities will constitute interest or OID,
corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
Receipt of Junior Subordinated Debentures or Cash upon Liquidation of the Trust
Holdings will have the right at any time to liquidate the Trust and cause
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. Under current law, such a distribution, for United States federal
income tax purposes, would be treated as a nontaxable event to each holder, and
each holder would receive an aggregate tax basis in the Junior Subordinated
Debentures equal to such holder's aggregate tax basis in its Capital Securities.
A holder's holding period in the Junior Subordinated Debentures so received in
liquidation of the Trust would include the period during which the Capital
Securities were held by such holder.
Under certain circumstances described herein (see "Description of Capital
Securities"), the Junior Subordinated Debentures may be redeemed for cash and
the proceeds of such redemption distributed to holders in redemption of their
Capital Securities. Under current law, such a redemption would, for United
States federal income tax purposes, constitute a taxable disposition of the
redeemed Capital Securities, and a holder could recognize gain or loss as if it
sold such redeemed Capital Securities for cash. See "--Sales of Capital
Securities."
124
<PAGE>
Sales of Capital Securities
A holder that sells Capital Securities (including a redemption of the
Capital Securities by the Company) will recognize gain or loss equal to the
difference between its adjusted tax basis in the Capital Securities and the
amount realized on the sale of such Capital Securities (other than with respect
to accrued and unpaid interest which has not yet been included in income, which
will be treated as ordinary income). A holder's adjusted tax basis in the
Capital Securities generally will be its initial purchase price increased by OID
(if any) previously includable in such holder's gross income to the date of
disposition and decreased by payments (if any) received on the Capital
Securities in respect of OID. Such gain or loss generally will be a capital gain
or loss and generally will be a long-term capital gain or loss if the Capital
Securities have been held for more than one year.
The Capital Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debenture are deemed to have been issued with OID) who disposes of
his Capital Securities between record dates for payments of distributions
thereon will be required to include accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income as ordinary
income (i.e., interest or, if applicable, OID), and to add such amount to his
adjusted tax basis in his pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include all accrued but unpaid interest)
a holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a holder of Capital Securities who or which is (i) a
citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for United States federal income tax purposes,
(ii) a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision thereof, (iii) an estate the
income of which is includable in its gross income for United States federal
income tax purposes without regard to its source or (iv) a trust over which (A)
a court within the United States is able to exercise primary supervision over
the administration of the trust and (B) one or more United States trustees have
the authority to control all substantial decisions of the trust.
Under present United States federal income tax laws: (i) payments by the
Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the Capital
Security does not actually or constructively own 10 percent or more of the total
combined voting power of all classes of stock of Holdings entitled to vote, (b)
the beneficial owner of the Capital Security is not a controlled foreign
corporation that is related to Holdings through stock ownership, and (c) either
(A) the beneficial owner of the Capital Security certifies to the Trust or its
agent, under penalties of perjury, that it is not a United States holder and
provides its name and address or (B) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and holds the
Capital Security in such capacity, certifies to the Trust or its agent, under
penalties of perjury, that such statement has been received from the beneficial
owner by it or by a Financial Institution between it and the beneficial owner
and furnishes the Trust or its agent with a copy thereof; and (ii) a United
States Alien Holder of a Capital Security will not be subject to United States
federal withholding tax on any gain realized upon the sale or other disposition
of a Capital Security.
As discussed above, changes in legislation affecting the United States
federal income tax treatment of the Junior Subordinated Debentures are possible,
and could adversely affect the ability of Holdings to deduct the interest
payable on the Junior Subordinated Debentures. Moreover, any such legislation
could adversely affect United States Alien
125
<PAGE>
Holders by characterizing income derived from the Junior Subordinated Debentures
as dividends, generally subject to a 30% income tax (on a withholding basis)
when paid to a United States Alien Holder, rather than as interest which, as
discussed above, is generally exempt from income tax in the hands of a United
States Alien Holder.
A United States Alien Holder that holds Capital Securities in connection
with the active conduct of a United States trade or business will be subject to
income tax on all income and gains recognized with respect to its proportionate
share of the Junior Subordinated Debentures.
Information Reporting to Holders
Generally, income on the Capital Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
Backup Withholding
Payments made on, and proceeds from the sale of, the Capital Securities
may be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Each of Holdings (the obligor with respect to the Exchange Junior
Subordinated Debentures held by the Trust), and its affiliates and the Property
Trustee may be considered a "party in interest" (within the meaning of ERISA) or
a "disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many Plans that are subject to ERISA and certain employee
benefit-related provisions of the Code. The purchase and/or holding of Exchange
Capital Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section 4975 of
the Code (including individual retirement arrangements and other plans described
in Section 4975(e)(1) of the Code) and with respect to which Holdings, the
Property Trustee or any affiliate is a service provider (or otherwise is a party
in interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Exchange
Capital Securities are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts), PTCE 95-60
(an exemption for transactions involving certain insurance company general
accounts) or PTCE 96-23 (an exemption for certain transactions determined by an
in-house asset manager). In addition, a Plan fiduciary considering the purchase
of Exchange Capital Securities should be aware that the assets of the Trust may
be considered "plan assets" for ERISA purposes. In such event, any persons
exercising discretion with respect to the Exchange Junior Subordinated
Debentures may become fiduciary parties in interest or disqualified persons with
respect to investing Plans. In order to avoid certain prohibited transactions
under ERISA and the Code that could thereby result, each investing Plan, by
purchasing the Exchange Capital Securities, will be deemed to have directed the
Trust to invest in the Exchange Junior Subordinated Debentures and to have
consented to the appointment of the Property Trustee. In this regard, it should
be noted that, in an Event
126
<PAGE>
of Default, Holdings may not remove the Property Trustee without the approval of
a majority of the holders of the Exchange Capital Securities.
A Plan fiduciary should consider whether the purchase of Exchange Capital
Securities could result in a delegation of fiduciary authority to the Property
Trustee, and, if so, whether such a delegation of authority is permissible under
the Plan's governing instrument or any investment management agreement with the
Plan. In making such determination, a Plan fiduciary should note that the
Property Trustee is a U.S. bank qualified to be an investment manager (within
the meaning of Section 3(38) of ERISA) to which such a delegation of authority
generally would be permissible under ERISA. Further, prior to an Event of
Default with respect to the Exchange Junior Subordinated Debentures, the
Property Trustee will have only limited custodial and ministerial authority with
respect to Trust assets.
THE SALE OF INVESTMENTS TO PLANS IS IN NO RESPECT A REPRESENTATION BY THE
TRUST, HOLDINGS, THE PROPERTY TRUSTEE OR ANY OTHER PERSON ASSOCIATED WITH THE
SALE OF THE CAPITAL SECURITIES THAT SUCH SECURITIES MEET ALL RELEVANT LEGAL
REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR
PLAN, OR THAT SUCH SECURITIES ARE OTHERWISE APPROPRIATE FOR PLANS GENERALLY OR
ANY PARTICULAR PLAN. ANY PURCHASER PROPOSING TO ACQUIRE CAPITAL SECURITIES WITH
ASSETS OF ANY PLAN SHOULD CONSULT WITH ITS COUNSEL.
127
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Capital Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Capital
Securities received in exchange for Original Capital Securities where such
Original Capital Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Trust and the Company
have agreed that, starting on the Expiration Date and ending on the close of
business on the 90th day following the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, for a period of 90 days after
the Expiration Date, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.
The Trust and the Company will not receive any proceeds from any issuance
of Exchange Capital Securities. Exchange Capital Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions, in the over-the-counter market,
in negotiated transactions, through the writing of options on the Exchange
Capital Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such Exchange Capital Securities. Any broker-dealer that
resells Exchange Capital Securities that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Capital Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit of any
such resale of Exchange Capital Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
EXPERTS
The consolidated balance sheets as of December 31, 1997 and 1996 and
the consolidated statements of operations, of stockholders' equity and of cash
flows for the years ended December 31, 1997, 1996 and 1995 included in this
Prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the
Exchange Capital Securities, the enforceability of the Trust Agreement and the
formation of the Trust will be passed upon by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special counsel to Holdings and the Trust. The validity of
the Exchange Junior Subordinated Debentures and the Exchange Guarantee will be
passed upon for the Company by Patton Boggs LLP, Washington, D.C., counsel to
the Company.
Patton Boggs LLP will rely on the opinions of Richards, Layton &
Finger, P.A. as to matters of Delaware law. Certain matters relating to United
States federal income tax considerations will be passed upon for the Company by
Patton Boggs LLP.
The Company has filed with the SEC a registration statement under the
Securities Act with respect to the Exchange Securities offered hereby. As
permitted by the rules and regulations of the SEC, this Prospectus does not
contain all the information set forth in the registration statement. Such
information can be examined without charge at the public reference facilities of
the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
128
<PAGE>
such material can be obtained from the SEC at prescribed rates. In addition, the
SEC maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC, including the Company. This Prospectus contains a
description of the material terms and features of all material contracts,
reports or exhibits to the Registration Statement required to be described,
however, the statements contained in this Prospectus as to the contents of any
contract or other document filed as an exhibit to the registration statement
are, of necessity, brief descriptions thereof and are not necessarily complete;
each such statement is qualified by reference to such contract or document.
The Company currently intends to register its Common Stock with the SEC
under Section 12(g) of the Exchange Act in conjunction with this Exchange Offer,
and, upon such registration, the Company and the holders of its stock will
become subject to the proxy solicitation rules, reporting requirements and
restrictions on stock purchases and sales by directors, officers and greater
than 10% stockholders, the annual and periodic reporting and certain other
requirements of the Exchange Act.
A copy of the Certificate of Incorporation and the Bylaws of the
Company are available without charge from the Company.
No separate financial statements of the Trust have been included
herein. Holdings and the Trust do not consider that such financial statements
would be material to holders of the Trust Securities because the Trust 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 Junior Subordinated Debentures and
issuing the Capital Securities. In addition, the Company does not expect that
the Trust will file reports, proxy statements and other information under the
Exchange Act with the SEC.
129
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS EXCHANGE OFFER, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY HOLDINGS OR THE TRUST. NEITHER THE DELIVERY OF THIS PRIVATE OFFERING
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN AFFAIRS OF HOLDINGS OR THE
TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
130
<PAGE>
-------------------
TABLE OF CONTENTS
PAGE
----
Summary................................................................
Selected Consolidated Financial Data...................................
Risk Factors...........................................................
Use of Proceeds........................................................
Ratios of Earnings to Combined Fixed Charges...........................
Accounting Treatment...................................................
Capitalization and Debt Structure......................................
Consolidated Statements of Operations..................................
Management's Discussion and Analysis of Financial
Condition and Results of Operations................................
Business...............................................................
Supervision and Regulation.............................................
Management of the Company and the Bank.................................
UCBH Trust Co..........................................................
The Exchange Offer.....................................................
Description of Exchange Capital Securities.............................
Description of Exchange Junior Subordinated Debentures.................
Description of Exchange Guarantee......................................
Description of Original Securities.....................................
Relationship among the Exchange Capital Securities, the Exchange
Junior Subordinated Debentures and the Exchange Guarantee..........
Certain Federal Income Tax Consequences................................
ERISA Considerations...................................................
Plan of Distribution...................................................
Experts................................................................
Legal Matters..........................................................
Additional Information.................................................
Index to Consolidated Financial Statements.............................
131
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997................................... F-2
Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and 1997................. F-3
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997................. F-4
Notes to Consolidated Financial Statements for the Three Months Ended March 31, 1998 and 1997............ F-5
Report of Independent Accountants........................................................................ F-7
Consolidated Balance Sheets as of December 31, 1997 and 1996............................................. F-8
Consolidated Statements of Operations For Years Ended December 31, 1997, 1996 and 1995................... F-9
Consolidated Statements of Changes in Stockholders' Equity For Years Ended December 31, 1997, 1996 and
1995................................................................................................... F-10
Consolidated Statements of Cash Flows For Years Ended December 31, 1997, 1996 and 1995................... F-11
Notes to Consolidated Financial Statements For Years Ended December 31, 1997, 1996 and 1995.............. F-13
</TABLE>
F-1
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------ ---------------
UNAUDITED
<S> <C> <C>
ASSETS
Cash and due from banks........................................................... $ 11,214 $ 13,853
Federal funds sold................................................................ 3,000 21,000
Investment securities, at cost (market value $3,998 at December 1997)............. -- 4,000
Mortgage-backed securities available for sale, at market value.................... 83,565 84,308
Mortgage-backed securities, at cost (market value $173,441 at March 31, 1998 and
$174,972 at December 31, 1997).................................................. 178,861 181,795
Federal Home Loan Bank stock...................................................... 14,120 13,914
Loans............................................................................. 1,240,250 1,214,237
Allowance for loan losses......................................................... (12,552) (12,142)
---------- -----------
Net loans......................................................................... 1,227,698 1,202,095
---------- -----------
Accrued interest receivable....................................................... 8,661 8,594
Premises and equipment, net....................................................... 23,405 23,931
Other assets...................................................................... 6,627 8,160
---------- -----------
Total assets................................................................. $1,557,151 $ 1,561,650
========== ===========
LIABILITIES
Deposits.......................................................................... $1,463,323 $ 1,468,987
Accrued interest payable.......................................................... 1,063 452
Long-term debt to affiliates (including capitalized interest)..................... 20,060 20,060
Other liabilities................................................................. 8,106 9,599
----------- -----------
Total liabilities............................................................ 1,492,552 1,499,098
----------- -----------
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01, 10,000,000 shares authorized, none outstanding at
March 31, 1998; none authorized or outstanding at December 31, 1997............. -- --
Common stock, par value $0.01, authorized 25,000,000 shares; 6,000,000 shares
issued and outstanding at March 31, 1998; par value $0.00167, 18,000,000 shares
authorized, 6,000,000 shares issued and outstanding at December 31, 1997........ 60 10
Additional paid-in capital........................................................ 30,228 30,278
Accumulated other comprehensive income............................................ (1,232) (1,728)
Retained earnings-substantially restricted........................................ 35,543 33,992
---------- -----------
Total stockholders' equity................................................... 64,599 62,552
---------- -----------
Total liabilities and stockholders' equity................................... $1,557,151 $ 1,561,650
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------
1998 1997
--------- ---------
UNAUDITED UNAUDITED
<S> <C> <C>
Interest income:
Interest on loans....................................................................... $23,833 $20,467
Interest on funds sold and securities purchased under agreements to resell.............. 166 452
Interest on investment and mortgage-backed securities................................... 4,121 4,946
------- -------
Total interest income................................................................ 28,120 25,865
------- -------
Interest expense:
Interest on deposits.................................................................... 15,669 14,257
Interest on short-term borrowings....................................................... -- 206
Interest on Federal Home Loan Bank advances............................................. -- 218
Interest on long-term debt to affiliates................................................ 502 431
------- -------
Total interest expense............................................................... 16,171 15,112
------- -------
Net interest income.................................................................. 11,949 10,753
Provision for loan losses................................................................. 633 17
------- -------
Net interest income after provision for loan losses.................................. 11,316 10,736
------- -------
Noninterest income:
Commercial banking fees................................................................. 254 208
Service charges on deposit accounts..................................................... 218 216
Gain on sale of loans, securities and servicing rights.................................. 35 54
Loan servicing income................................................................... 44 294
Miscellaneous income.................................................................... 7 90
------- -------
Total noninterest income............................................................. 558 862
------- -------
Noninterest expense:
Personnel............................................................................... 4,308 3,786
Occupancy............................................................................... 1,246 1,159
Data processing......................................................................... 749 500
Furniture and equipment................................................................. 604 386
Deposit insurance....................................................................... 231 572
Communication........................................................................... 97 85
Professional fees and contracted services............................................... 454 385
Foreclosed assets expense............................................................... (32) 168
Miscellaneous expense................................................................... 1,588 1,095
------- -------
Total noninterest expense............................................................ 9,245 8,136
------- -------
Income before taxes....................................................................... 2,629 3,462
Income tax expense ....................................................................... 1,078 1,425
------- -------
Net income......................................................................... $ 1,551 $ 2,037
======= =======
Basic earnings per share.................................................................. $ 0.26 $ 0.34
Diluted earnings per share................................................................ $ 0.23 $ 0.29
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1998 1997
-------- --------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net income ............................................................................... $ 1,551 $ 2,037
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of investment and mortgage-backed securities premium..................... (54) 123
Amortization of loan discount......................................................... (14) (49)
Provision for loan losses............................................................. 633 17
Increase in accrued interest receivable............................................... (67) (141)
Depreciation and amortization of premises and equipment............................... 640 495
Amortization of servicing rights...................................................... 40 157
Decrease (increase) in other assets................................................... 804 (563)
Increase in accrued interest payable.................................................. 612 783
Increase (decrease) in other liabilities.............................................. (1,493) 1,817
Gain on sale of foreclosed assets..................................................... (61) (73)
Gain on sale of loans................................................................. (35) (54)
-------- ---------
Net cash provided by operating activities.......................................... 2,556 4,549
-------- ---------
INVESTING ACTIVITIES
Investments and mortgage-backed securities held to maturity:
Principal payments and maturities....................................................... 6,835 5,723
Purchases............................................................................... -- (100)
Principal payments and maturities on investments and mortgage-backed
securities, available for sale........................................................... 1,531 6,092
Net decrease in credit card loans......................................................... 299 100
Loans purchased........................................................................... (217) (361)
Loans originated net of principal collections............................................. (29,813) (10,241)
Proceeds from sale of loans............................................................... 3,544 994
Purchases of premises and equipment....................................................... (177) (152)
Proceeds from sale of premises and equipment.............................................. 63 80
Proceeds from sale of foreclosed assets................................................... 404 573
-------- ---------
Net cash used in (provided by) investing activities..................................... (17,531) 2,708
-------- ---------
FINANCING ACTIVITIES
Net increase in NOW accounts, money market accounts and passbook accounts................. 8,930 7,005
Net decrease in time deposits............................................................. (14,594) (12,140)
Net increase in long-term borrowings...................................................... -- 1,500
Increase in capitalized interest component of long-term debt to affiliate.................
-------- ---------
Net cash used in financing activities................................................... (5,664) (3,635)
-------- ---------
Increase (decrease) in cash and cash equivalents............................................ (20,639) 3,622
Cash and cash equivalents at beginning of period............................................ 34,853 18,394
-------- ---------
Cash and cash equivalents at end of period.................................................. $ 14,214 $ 22,016
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest.................................................. $ 15,560 $ 14,329
Cash paid during the period for income taxes.............................................. 1,956 2,850
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Receivable resulting from sale of servicing rights........................................ 261 --
Real estate acquired through foreclosure.................................................. -- 1,780
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES
Basis of Presentation
The Consolidated Balance Sheet as of March 31, 1998 and the Consolidated
Statements of Operations and Consolidated Statements of Cash Flows for the three
months ended March 31, 1998 and 1997 have been prepared by the Company and are
not audited.
The unaudited financial statement information presented was prepared on the
same basis as the audited financial statements for the year ended December 31,
1997. In the opinion of management such unaudited financial statements reflect
all adjustments necessary for a fair statement of the results of operations and
balances for the interim periods presented. Such adjustments are of a normal
recurring nature. The results of operations for the three months ended March 31,
1998 are not necessarily indicative of the results to be expected for the full
year.
On April 17, 1998, the Company completed a 6,000-for-1 stock split.
Accordingly, the financial statements for all periods presented have been
restated to reflect the impact of the stock split. On April 17, 1998, the
Company's long-term debt to affiliates was converted to 1,974,000 shares of
common stock, as adjusted for the aforementioned stock split. Given the
occurrence of this conversion, management has considered this long-term debt to
affiliates as convertible debt for purposes of its calculation of diluted
earnings per share.
Principles of Consolidation and Presentation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. There have been no changes in the
subsidiaries of the Company between December 31, 1997 and March 31, 1998. All
significant intercompany balances and transactions have been eliminated in
consolidation.
2. RECENT ACCOUNTING PRONOUNCEMENTS
The provisions of Statement of Financial Accounting Standards ("SFAS") No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," that were deferred by SFAS No. 127, "Deferral
of the Effective Date of Certain Provisions of FASB Statement No. 125--An
Amendment of FASB Statement No. 125," became effective as to repurchase
agreements, dollar rolls, securities lending and certain other transactions
after December 31, 1997. Management does not believe implementation of such
provisions will have a significant effect on the Company's financial position,
results of operations, or capital.
As of December 31, 1997, the Company adopted SFAS No. 128, "Earnings per
Share," which specifies the computation, presentation and disclosure
requirements for earnings per share ("EPS"). Basic EPS is computed by dividing
net income by the weighted average number of shares outstanding during the
period. Diluted EPS considers the possible dilutive effect of instruments such
as convertible debt, convertible preferred stock, and stock options. Prior
period EPS has been expanded to comply with the provisions of SFAS No. 128.
SFAS No. 130, "Reporting Comprehensive Income," is effective for fiscal
years beginning after December 15, 1997. SFAS No. 130 establishes presentation
and disclosure requirements for comprehensive income; however, it does not
affect existing recognition or measurement standards. For the Company,
comprehensive income consists of net income and the change in unrealized gains
and losses on available-for-sale securities. For the three months ended March
31, 1998 and 1997, total comprehensive income was $2.047 million and $1.477
million, respectively.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," is effective for fiscal years beginning after December 15, 1997.
SFAS No. 131 establishes standards for reporting information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim reports issued to shareholders.
It also establishes standards for related disclosures about products and
services, geographic areas, and major customers. SFAS No. 131 does not affect
existing
F-5
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. RECENT ACCOUNTING PRONOUNCEMENTS--(CONTINUED)
recognition or measurement standards. The provisions of SFAS No. 131 need not
be applied to interim financial statements in the initial year of its
application. Accordingly, such disclosures have not been presented herein.
3. EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominator of the
basic and diluted earnings per share:
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic:
Net income......................................... $ 1,551 6,000,000 $0.26
Effect of long-term debt to affiliates............... 296 1,974,000
------- ---------
Diluted:
Net income and assumed conversions................. $ 1,847 7,974,000 $0.23
======= =========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
-----------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic:
Net income......................................... $ 2,037 6,000,000 $0.34
Effect of long-term debt to affiliates............... 254 1,974,000
------- ---------
Diluted:
Net income and assumed conversions................. $ 2,291 7,974,000 $0.29
======= =========
</TABLE>
F-6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of UCBH Holdings, Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and of changes in stockholders'
equity and of cash flows present fairly, in all material respects, the financial
position of UCBH Holdings, Inc. and its subsidiaries at December 31, 1997 and
1996, and the results of their operations and their cash flows for the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
March 30, 1998, except for paragraph 3 of Note 1,
as to which the date is June 26, 1998
F-7
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Cash and due from banks............................................................... $ 13,853 $ 16,044
Federal funds sold.................................................................... 21,000 2,350
Investment securities, at cost (market value $3,998 in 1997 and $15,617 in 1996)...... 4,000 15,670
Mortgage-backed securities available for sale, at market value........................ 84,308 119,514
Mortgage-backed securities, at cost (market value $174,972 in 1997 and $199,483 in
1996)............................................................................... 181,795 208,555
Federal Home Loan Bank stock.......................................................... 13,914 13,082
Loans................................................................................. 1,214,237 1,066,368
Allowance for loan losses............................................................. (12,142) (11,682)
---------- ----------
Net loans............................................................................. 1,202,095 1,054,686
---------- ----------
Accrued interest receivable........................................................... 8,594 8,002
Premises and equipment, net........................................................... 23,931 22,839
Other assets.......................................................................... 8,160 13,875
---------- ----------
Total assets..................................................................... $1,561,650 $1,474,617
========== ==========
LIABILITIES
Deposits.............................................................................. $1,468,987 $1,393,125
Accrued interest payable.............................................................. 452 500
Long-term debt to affiliates (including capitalized interest)......................... 20,060 16,736
Other liabilities..................................................................... 9,599 9,912
---------- ----------
Total liabilities................................................................ 1,499,098 1,420,273
---------- ----------
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY
Common stock, par value $0.00167 authorized 18,000,000 shares; 6,000,000 shares issued
and outstanding..................................................................... 10 10
Additional paid-in capital............................................................ 30,278 30,278
Unrealized loss on mortgage-backed securities available for sale...................... (1,728) (2,637)
Retained earnings-substantially restricted............................................ 33,992 26,693
---------- ----------
Total stockholders' equity....................................................... 62,552 54,344
---------- ----------
Total liabilities and stockholders' equity....................................... $1,561,650 $1,474,617
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Interest income:
Interest on loans............................................................ $ 86,141 $ 78,711 $72,742
Interest on funds sold and securities purchased under agreements to resell... 2,760 1,417 398
Interest on investment and mortgage-backed securities........................ 18,690 22,836 25,894
-------- -------- -------
Total interest income..................................................... 107,591 102,964 99,034
-------- -------- -------
Interest expense:
Interest on deposits......................................................... 61,513 59,273 56,038
Interest on short-term borrowings............................................ 294 998 6,550
Interest on Federal Home Loan Bank advances.................................. 620 2,044 5,867
Interest on long-term debt to affiliates..................................... 1,825 1,640 1,741
-------- -------- -------
Total interest expense.................................................... 64,252 63,955 70,196
-------- -------- -------
Net interest income....................................................... 43,339 39,009 28,838
Provision for loan losses...................................................... 1,154 1,476 8,777
-------- -------- -------
Net interest income after provision for loan losses....................... 42,185 37,533 20,061
-------- -------- -------
Noninterest income:
Commercial banking fees...................................................... 977 421 92
Service charges on deposit accounts.......................................... 888 615 566
Gain on sale of loans, securities and servicing rights....................... 155 1,200 1,137
Loan servicing income........................................................ 601 680 272
Miscellaneous income......................................................... 473 481 1,700
-------- -------- -------
Total noninterest income.................................................. 3,094 3,397 3,767
-------- -------- -------
Noninterest expense:
Personnel.................................................................... 14,087 14,875 12,000
Occupancy.................................................................... 4,811 4,754 4,355
Data processing.............................................................. 2,059 1,859 1,696
Furniture and equipment...................................................... 1,902 1,814 1,357
Deposit insurance............................................................ 1,798 3,519 3,051
SAIF recapitalization assessment............................................. -- 7,716 --
Communication................................................................ 400 383 317
Professional fees and contracted services.................................... 2,242 1,551 1,303
Foreclosed assets expense.................................................... 671 686 2,785
Miscellaneous expense........................................................ 4,220 4,256 3,278
-------- -------- -------
Total noninterest expense................................................. 32,190 41,413 30,142
-------- -------- -------
Income (loss) before taxes..................................................... 13,089 (483) (6,314)
Income tax expense (benefit)................................................... 5,790 (177) (3,406)
-------- -------- -------
Net income (loss)....................................................... $ 7,299 $ (306) $(2,908)
======== ======== =======
Basic earnings (loss) per share................................................ $ 1.22 $ (0.05) $ (0.48)
======== ======== =======
Diluted earnings (loss) per share.............................................. $ 1.05 $ 0.05 $ (0.48)
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
ADDITIONAL ON SECURITIES TOTAL
COMMON PAID-IN AVAILABLE RETAINED STOCKHOLDERS'
STOCK CAPITAL FOR SALE EARNINGS EQUITY
------ ---------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994....................... $ 10 $ 30,278 $ (845) $ 29,907 $59,350
Net loss......................................... (2,908) (2,908)
Change in unrealized net loss on securities
available for sale, after applicable taxes.... (985) (985)
---- ------- ------- -------- -------
Balance at December 31, 1995....................... 10 $ 30,278 (1,830) 26,999 55,457
Net loss......................................... (306) (306)
Change in unrealized net loss on securities
available for sale, after applicable taxes.... (807) (807)
---- ------- ------- -------- -------
Balance at December 31, 1996....................... 10 30,278 (2,637) 26,693 54,344
Net income....................................... 7,299 7,299
Change in unrealized net loss on securities
available for sale, after applicable taxes.... 909 909
---- -------- ------- -------- -------
Balance at December 31, 1997....................... $ 10 $ 30,278 $(1,728) $ 33,992 $62,552
==== ======== ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Operating activities
Net income (loss)........................................................... $ 7,299 $ (306) $ (2,908)
Adjustments to reconcile net income to net cash provided by (used for)
operating activities:
Amortization of investment and mortgage-backed securities premium....... 138 193 762
Amortization of loan discount........................................... 66 76 (571)
Provision for loan losses............................................... 1,154 1,476 8,777
Decrease (increase) in accrued interest receivable...................... (592) 1,140 (1,038)
Depreciation and amortization of premises and equipment................. 2,254 1,981 1,576
Amortization of servicing rights........................................ (590) 849 1,527
Decrease in other assets................................................ 2,808 1,439 3,426
Decrease in accrued interest payable.................................... (49) (663) (186)
Increase (decrease) in other liabilities................................ (313) 133 (2,967)
Gain on sale of servicing rights........................................ (1,165) (672) (755)
Gain on sale of foreclosed assets....................................... (401) (602) (684)
Loss on sale of loans................................................... 204 -- 28
Gain on branch sale..................................................... -- -- (656)
Loss on sale of securities.............................................. 806 335 --
--------- --------- ---------
Net cash provided by operating activities............................ 11,619 5,379 6,331
--------- --------- ---------
Investing activities
Investments and mortgage-backed securities held to maturity:
Principal payments and maturities and securities called................... 37,980 56,095 33,899
Purchases................................................................. (200) (80) (75)
Investments and mortgage-backed securities, available for sale:
Principal payments and maturities and securities called................... 12,124 18,217 1,373
Sale of securities........................................................ 23,495 8,800 --
Net increase in credit card loans........................................... (39) (131) (1,121)
Loans purchased............................................................. (44,416) (7,643) (16,677)
Loans originated net of principal collections............................... (151,334) (41,217) (49,698)
Proceeds from sale of loans................................................. 43,350 478 8,384
Purchases of premises and equipment......................................... (3,453) (2,540) (2,035)
Proceeds from sale of premises and equipment................................ 106 61 74
Proceeds from sale of servicing rights...................................... 3,760 672 227
Proceeds from sale of foreclosed assets..................................... 4,280 4,532 6,766
Proceeds from sale of branch deposits....................................... -- -- (28,770)
Purchase of branch deposits................................................. -- -- 10,582
--------- --------- ---------
Net cash (used in) provided by investing activities....................... (74,347) 37,244 (37,071)
--------- --------- ---------
Financing activities
Net increase (decrease) in NOW accounts, money market accounts and passbook
accounts.................................................................. (90) 14,719 (51,794)
Net increase in time deposits............................................... 75,952 66,802 213,993
Net decrease in short-term borrowings....................................... -- (128,600) (136,741)
Increase (decrease) in long-term debt to affiliates......................... 1,500 -- (500)
Increase in capitalized interest component of long-term debt to
affiliates................................................................ 1,825 1,640 --
--------- --------- ---------
Net cash provided by (used in) financing activities....................... 79,187 (45,439) 24,958
--------- --------- ---------
Increase (decrease) in cash and cash equivalents.............................. 16,459 (2,816) (5,782)
Cash and cash equivalents at beginning of year................................ 18,394 21,210 26,992
--------- --------- ---------
Cash and cash equivalents at end of year...................................... $ 34,853 $ 18,394 $ 21,210
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------------
1997 1996 1995
------- ------- --------
<S> <C> <C> <C>
Supplemental disclosure of cash flow information
Cash paid during the year for interest........................................ $62,475 $62,978 $ 70,098
Cash paid during the year for income taxes.................................... 4,083 832 495
Supplemental schedule of noncash investing and financing activities
Receivable resulting from sale of servicing rights............................ $ 371 $ -- $ 528
Real estate acquired through foreclosure...................................... 4,260 4,443 5,373
Securities transferred to available for sale securities....................... -- -- 125,987
Long-term debt resulting from refinance of long-term debt to affiliates and
related accrued interest................................................... -- 15,048 --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES
Organization
UCBH Holdings, Inc. (the Company), is a savings institution holding company
that conducts its business through its principal subsidiary, United Commercial
Bank (United), a federally chartered savings bank based in California. Through
December 31, 1997, United was known as United Savings Bank, F.S.B. and through
March 30, 1998, the Company was known as USB Holdings, Inc. The Company is a
wholly-owned subsidiary of Chief Investments, Ltd.
Principles of Consolidation and Presentation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. The Company's business consists primarily of
attracting retail deposits from consumers and business customers and originating
loans. The Company originates loans secured by mortgages on residential real
estate and loans secured by commercial real estate, including multi-family
housing, mixed use properties, retail and other commercial uses. The Company
also offers commercial loans and lines of credit, trade finance lines and other
commercial loans, as well as a variety of consumer loan products. The Company
also provides a variety of fee-generating services to both commercial customers
and consumers. Substantially all loans are originated for portfolio and held for
investment. All significant intercompany balances and transactions have been
eliminated in consolidation. Certain reclassifications have been made to prior
years' consolidated financial statements to conform to the December 31, 1997
presentation.
On April 17, 1998, the Company completed a 6,000-for-1 stock split.
Accordingly, the financial statements for all years presented have been restated
to reflect the impact of the stock split. On April 17, 1998, the Company's
long-term debt to affiliates was converted to 1,974,000 shares of common stock,
as adjusted for the aforementioned stock split. Given the occurrence of this
conversion, management has considered this long-term debt to affiliates as
convertible debt for purposes of its calculation of diluted earnings per share.
Risks and Uncertainties
In the normal course of its business, the Company encounters two
significant types of risk: economic and regulatory. There are three main
components of economic risk: interest rate risk, credit risk and market risk.
The Company is subject to interest rate risk to the degree that its
interest-bearing liabilities mature or reprice at different speeds, or on a
different basis, than its interest-earning assets. Related to interest rate risk
is prepayment risk. Prepayment risk is the risk associated with the prepayment
of assets, and the write-off of premiums associated with those assets, should
interest rates fall dramatically. Credit risk is the risk of default, primarily
in the Company's loan portfolio that results from the borrowers' inability or
unwillingness to make contractually required payments. Market risk reflects
changes in the value of securities, the value of collateral underlying loans
receivable and the valuation of real estate owned.
The Company is subject to the regulations of various governmental agencies.
These regulations change significantly from period to period. Such regulations
can also restrict the growth of the Company and United as a result of capital
requirements. The Company also undergoes periodic examinations by the regulatory
agencies which may subject it to further changes with respect to asset
valuations, amounts of required loss allowances and operating restrictions. Such
changes may result from the regulators' judgments based on information available
to them at the time of their examination.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
F-13
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and noninterest bearing deposits,
federal funds sold and securities purchased under agreements to resell. For
purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with original maturities when purchased of three months
or less to be cash equivalents.
Securities Purchased Under Agreements to Resell
The Company periodically purchases securities under agreements to resell
(repurchase agreements). The amounts advanced under such agreements represent
short-term loans. During the agreement period, the securities are maintained by
the dealer under a written custodial agreement that explicitly recognizes the
Company's interest in the securities.
Investment and Mortgage-backed Securities
In accordance with Statement of Financial Accounting Standards No. 115
(SFAS 115) "Accounting for Certain Investments in Debt and Equity Securities,"
the Company has designated a portion of the investment and mortgage-backed
securities portfolio as "held to maturity" securities. As such, this portion of
the portfolio is carried at cost, adjusted for the amortization of premiums and
accretion of discounts. Cost is determined on a specific identification basis.
Inasmuch as the Company has the ability and intent to hold the "held to
maturity" securities in its portfolio until maturity, the carrying value has not
been adjusted to reflect decreases in market value from book value, if any. Also
in accordance with SFAS 115, the Company has designated a portion of the
mortgage-backed securities portfolio as "available for sale." Such securities
are carried at fair value. Fair value is the quoted market price. Unrealized
holding gains or losses for "available for sale" securities are excluded from
earnings and reported in a separate component of stockholders' equity, net of
tax. Premiums and discounts on investment and mortgage-backed securities are
amortized against interest income, using the interest method, with the
amortization period extending to the maturity date of the securities. Gains or
losses on the sale of securities are recognized when sold.
In November 1995, the Financial Accounting Standards Board issued a Special
Report, "A Guide to Implementation of Statement 115 on Accounting for Certain
Debt and Equity Securities." Concurrent with the implementation of the Guide,
but not later than December 31, 1995, all institutions could conduct a one time
reassessment of the classification of all securities held at that time. In
accordance with the provisions of the Guide, management elected to transfer
securities with a fair value of $123.3 million and amortized cost of $126
million from the held-to-maturity classification to the available-for-sale
classification. The unrealized holding gain (loss) at the transfer date of $1.6
million (tax effected) has been reflected as a separate component of
shareholder's equity.
Loans
Loans are carried at the principal balance outstanding adjusted for the
amortization of premiums and the accretion of discounts. Premiums and discounts
are recognized as an adjustment of loan yield by the interest method based on
contractual term of the loans. Interest is accrued as earned.
Loans are generally placed on nonaccrual status when the payments become 90
days past due, or earlier if, in management's opinion, the full and timely
collection of principal or interest becomes uncertain. Any accrued and unpaid
interest on such loans is reversed and charged against current income.
F-14
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
The Company recognizes interest income on impaired loans to the extent
received in cash. However, where there is doubt regarding the ultimate
collectibility of the loan principal, cash receipts, whether designated as
principal or interest, are applied to reduce the carrying value of the loan.
Loan origination fees, net of certain direct origination costs, are
deferred and recognized as an adjustment of the loan yield over the contractual
life of the loan. Amortization of deferred loan fees is discontinued on
nonperforming loans.
Allowance for Loan Losses
The allowance for loan losses is based on management's continuous
evaluation of various factors affecting collectibility of the loan portfolio.
These factors include, but are not limited to, changes in the composition of the
portfolio, current and forecasted economic conditions, overall portfolio
quality, review of specific problem loans, and historical loan-loss experience.
The allowance for loan losses is based on estimates, and ultimate losses may
vary from the current estimates. These estimates are reviewed periodically and,
as adjustments become necessary, they are reported in earnings in the period in
which they become known. The allowance is increased by provisions charged to
expense and reduced by loan losses, net of recoveries.
A portion of the allowance for loan losses is allocated to individual
impaired loans at the difference between the loan amount and the fair value of
collateral less estimated selling costs. The Company considers a loan to be
impaired when, based upon current information and events, it believes it is
probable that the Company will be unable to collect all amounts due according to
the contractual terms of the loan agreement on a timely basis.
The determination of the allowance for loan losses is based on estimates
that are susceptible to changes in the economic environment and market
conditions. Management believes that, as of December 31, 1997 and 1996, the
allowance for loan losses is adequate based on information currently available.
If recent improvements in the economies of the Company's principal market areas
are not sustainable, the Company's loan portfolios could be adversely affected
and higher charge-offs and increases in non-performing assets could result. Such
an adverse impact could also require a larger allowance for loan losses.
Mortgage Banking Activities
Through 1996, the Company operated a mortgage banking division. This
division was closed in early 1997 and mortgage banking activities are no longer
a significant business activity for the Company. The Company periodically sells
some of its mortgage loan production for cash proceeds equal to the market value
of the loans. Gain or loss is recognized to the extent of the difference between
the cash proceeds received and the carrying value of the loans sold. In
addition, for loans sold in which servicing has been retained by the Company,
gain is recognized and an asset is recorded at the time of sale based upon the
present value of amounts expected to be received resulting from the difference
between the borrowers' contractual interest rates and the rates paid to the
investors.
Through December 31, 1996, the Company accounted for its loan servicing
assets in accordance with the provisions of Statement of Financial Standards No.
122 (SFAS 122) "Accounting for Mortgage Servicing Rights," which required that
rights to service mortgage loans be recognized as separate assets, whether
originated or acquired. Management implemented this Statement on December 31,
1995.
On January 1, 1997, the Company adopted Statements of Financial Accounting
Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities" (SFAS 125). SFAS 125 requires application of
a financial components approach that focuses on control. Under this approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, derecognizes
financial assets when control has been surrendered, and derecognizes
F-15
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
liabilities when extinguished. The statement also distinguishes transfers of
financial assets that are sales from transfers of financial assets that are
secured borrowings.
SFAS 125 supersedes the provisions SFAS 122; however, mortgage banking
activities are now an insignificant part of the Company's business, and there
are no significant differences in The Company's accounting for mortgage banking
activities or mortgage servicing rights under SFAS 125.
Implementation of the provisions of SFAS 125 did not have a significant
effect on the Company's financial position or results of operations.
Premises and Equipment
Premises and equipment are carried at cost, less accumulated depreciation
and amortization. Provisions for depreciation and amortization are determined on
a straight-line basis over the lesser of the estimated useful lives or the terms
of the leases. Terms range from three to ten years for furniture, equipment, and
computer software, and from forty to fifty years for premises.
Foreclosed Assets
Foreclosed assets (other real estate owned) consist of properties acquired
through, or in lieu of, foreclosure and are carried at the lower of cost or fair
value (less estimated selling costs). Cost includes the unpaid loan balance
adjusted for applicable accrued interest, unamortized deferred loan fees and
acquisition costs. In the event that the fair value (less estimated selling
costs) is less than cost at the time of acquisition, the shortfall is charged to
the allowance for loan losses. Subsequent write-downs, if any, and disposition
gains and losses are reflected as charges to current operations.
Goodwill
Goodwill resulted from a variety of transactions, including branch
acquisitions and is generally amortized over seven years. Goodwill is included
in other assets.
Securities Sold Under Agreements to Repurchase
The Company periodically enters into sales of securities under agreements
to repurchase (reverse repurchase agreements). Fixed-coupon reverse repurchase
agreements are treated as financings. Accordingly, the securities underlying the
agreement remain in the asset accounts and the obligations to repurchase
securities sold are reflected as a liability in the consolidated balance sheets.
The securities underlying the agreements are delivered to the dealers who
arrange the transactions. Under some agreements, the dealers may sell, lend, or
otherwise dispose of the securities to other parties and agree to resell to the
Company substantially identical securities at the maturities of the agreements.
Interest Rate Swap and Cap Agreements
The Company periodically enters into interest rate swap and cap agreements
as a means of managing its interest rate exposure. The differential to be paid
or received on interest rate swap agreements entered into to reduce the impact
of changes in interest rates is recognized over the life of the agreements.
Premiums paid on cap agreements are amortized over the life of the agreements.
The results of swap and cap transactions are recognized currently as an
adjustment to interest expense.
Accounting for Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes." SFAS 109 requires the recognition of deferred tax assets
F-16
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
and liabilities for the expected future tax consequences of events that have
been recognized in the Company's financial statements or tax returns. The
Company provides a valuation allowance against net deferred tax assets to the
extent that realization of the assets is not considered more likely than not.
The Company and United file a consolidated federal income tax return and a
combined California tax return. The Company allows all tax benefits generated
within the consolidated group to be retained by United.
Impairment of Long-Lived Assets
On January 1, 1996, the Company adopted prospectively, the provisions of
Statement of Financial Accounting Standards No. 121 (SFAS 121), "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." This Statement establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. Long-lived assets and identifiable
intangibles held by the Company consist of premises and equipment, other real
estate owned, and goodwill. Implementation of SFAS 121 did not have an effect on
the financial position or results of operations of the Company since management
determined that there was no impairment with respect to premises and equipment
or goodwill. The Company's previous accounting treatment of other real estate
owned was substantially identical to the treatment required under SFAS 121.
Accordingly, no adjustment was required in connection with the implementation of
SFAS 121.
2. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
Securities purchased under agreements to resell averaged $44.0 million and
$22.1 million during 1997 and 1996, respectively, and the maximum amounts
outstanding at any month-end during 1997 and 1996 were $70 million and $20
million, respectively. At December 31, 1997 and 1996, there were no securities
purchased under agreements to resell.
3. INVESTMENT SECURITIES
The amortized cost and approximate market value of investment securities
classified as held to maturity at December 31, 1997 and 1996 were (dollars in
thousands):
<TABLE>
<CAPTION>
1997
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Held to maturity
FHLB Note................................. $ 2,000 $-- $ 2 $ 1,998
FNMA Note................................. 2,000 -- -- 2,000
------- --- --- -------
$ 4,000 $-- $ 2 $ 3,998
======= === === =======
</TABLE>
<TABLE>
<CAPTION>
1996
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Held to maturity
FHLB Note................................. $ 8,670 $2 $ 43 $ 8,629
FHLB CD................................... 2,000 -- -- 2,000
Other..................................... 5,000 -- 12 4,988
------- --- ---- -------
$15,670 $2 $ 55 $15,617
======= === ==== =======
</TABLE>
F-17
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. INVESTMENT SECURITIES--(CONTINUED)
For 1996, other investments consisted primarily of medium-term notes and
certificates of deposit with financial institutions and medium-term notes with
governmental agencies.
The amortized cost and approximate market value of investment securities
classified as held to maturity at December 31, 1997 and 1996, by contractual
maturity, are shown below (dollars in thousands):
<TABLE>
<CAPTION>
1997
--------------------
AMORTIZED MARKET
COST VALUE
--------- -------
<S> <C> <C>
Held to maturity
Due in one year or less................................. $ 2,000 $ 1,998
Due after one year through five years................... 2,000 2,000
------- -------
$ 4,000 $ 3,998
======= =======
</TABLE>
<TABLE>
<CAPTION>
1996
--------------------
AMORTIZED MARKET
COST VALUE
--------- -------
<S> <C> <C>
Held to maturity
Due in one year or less................................. $11,670 $11,662
Due after one year through five years................... 4,000 3,955
------- -------
$15,670 $15,617
======= =======
</TABLE>
During 1996, $29 million of securities classified as investments held to
maturity were called by the issuer.
4. MORTGAGE-BACKED SECURITIES
The amortized cost and approximate market value of mortgage-backed
securities classified as held to maturity and available for sale at December 31,
1997 and 1996, were (dollars in thousands):
<TABLE>
<CAPTION>
1997
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Held to maturity
FHLMC................................... $ 48,536 -- $1,918 $ 46,618
FNMA.................................... 117,184 -- 4,396 112,788
Other................................... 16,075 -- 509 15,566
-------- --- ------ --------
$181,795 $-- $6,823 $174,972
======== === ====== ========
Available for sale
FNMA.................................... $ 87,237 $-- $2,929 $ 84,308
======== === ====== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1996
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Held to maturity
FHLMC................................... $ 61,629 -- $2,615 $ 59,014
FNMA.................................... 124,710 -- 5,489 119,221
Other................................... 22,216 -- 968 21,248
-------- --- ---------- --------
$208,555 $-- $9,072 $199,483
======== === ====== ========
Available for sale
FNMA.................................... $123,982 $-- $4,468 $119,514
======== === ====== ========
</TABLE>
F-18
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Approximately $45.6 million and $75.5 million of mortgage-backed securities
have been pledged to secure contractual arrangements entered into by the Company
at December 31, 1997 and 1996, respectively.
Proceeds from the sale of available for sale securities during 1997 and
1996 totaled $23.4 million and $8.8 million, respectively. There were no sales
of available for sale securities during 1995. Gross realized losses totaled
$806,000 and $335,000 for 1997 and 1996, respectively.
Mortgage-backed securities sold under agreements to repurchase as of
December 31, 1997 and 1996 were (dollars in millions):
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Book value.................................................... $-- $ --
Market value.................................................. -- --
Obligations................................................... -- --
Weighted average interest rate at end of period............... -- --
Weighted average interest rate during the period.............. 5.47% 6.31%
Average balance during the year............................... 5.3 15.8
Maximum amount outstanding at any month end during the year... -- 74.4
</TABLE>
When the Company enters into these transactions, the obligations generally
mature within one year and generally represent agreements to repurchase the same
securities.
As of December 31, 1997 and 1996, remaining maturities on mortgage-backed
securities classified as held to maturity and available for sale were as follows
(dollars in thousands):
<TABLE>
<CAPTION>
1997
---------------------
AMORTIZED MARKET
COST VALUE
--------- --------
<S> <C> <C>
Held to maturity
In one year or less.................................... $ 1,413 $ 1,406
After one year through five years...................... -- --
After five years through ten year...................... 2,961 2,881
After ten years........................................ 177,421 170,685
--------- --------
$ 181,795 $174,972
========= ========
Available for sale
After ten years........................................ $ 87,237 $ 84,308
========= ========
</TABLE>
<TABLE>
<CAPTION>
1996
---------------------
AMORTIZED MARKET
COST VALUE
--------- --------
<S> <C> <C>
Held to maturity:
In one year or less.................................... $ 4,595 $ 4,485
After one year through five years...................... 1,845 1,820
After five years through ten year...................... 3,096 2,995
After ten years........................................ 199,019 190,183
--------- --------
$ 208,555 $199,483
========= ========
Available for sale
After ten years........................................ $ 123,982 $119,514
========= ========
</TABLE>
F-19
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. LOANS
As of December 31, 1997 and 1996, the composition of the loan portfolio was
as follows (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Consumer
Residential mortgage (one to four family).......... $ 691,167 $ 541,156
Home equity........................................ 16,743 10,673
Other.............................................. 2,732 2,642
---------- ----------
710,642 554,471
---------- ----------
Commercial
Secured by real estate - multifamily............... 339,257 361,591
Secured by real estate - nonresidential............ 115,366 123,003
Construction....................................... 26,603 19,892
Lines of credit.................................... 21,146 6,595
---------- ----------
502,372 511,081
---------- ----------
Gross loans............................................. 1,213,014 1,065,552
Net deferred loan costs................................. 1,223 816
Allowance for loan losses............................... (12,142) (11,682)
---------- ----------
Net loans............................................... $1,202,095 $1,054,686
========== ==========
</TABLE>
In the table above, construction loans are presented net of undrawn
commitments of $71.0 million and $25.8 million at December 31, 1997 and 1996,
respectively.
As of December 31, 1997, loans at fixed interest rates amounted to $241.5
million, and loans at variable interest rates amounted to $971.5 million. Loans
of approximately $9.9 million and $19.5 million were on nonaccrual status at
December 31, 1997 and 1996, respectively.
As of December 31, 1997, the portfolio above contained $685.0 million of
loans that were interest-rate sensitive within one year, $304.2 million from one
to five years, $12.3 million from five to ten years, $175.2 million from ten to
twenty years and $36.3 million over twenty years.
As of December 31, 1997, loans with a book value and market value of $245.3
million were pledged to secure FHLB advances (see Note 10).
The Company serviced real estate loans for others of $11.0 million and
$300.0 million at December 31, 1997 and 1996, respectively. These loans are not
included in the consolidated balance sheets. In connection therewith, the
Company held trust funds of approximately $2.1 million and $4.7 million as of
December 31, 1997 and 1996, respectively, all of which were segregated in
separate accounts and included in the respective balance sheets.
Some agreements with investors to whom the Company has sold loans have
provisions which could require repurchase of loans under certain circumstances.
Management does not believe that any such repurchases will be significant.
F-20
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. LOANS--(CONTINUED)
The following table sets forth impaired loan disclosures as of and for the
year ended December 31, 1997 and 1996 (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Impaired loans with an allowance................................. $1,359 $2,894
Impaired loans without an allowance.............................. 20 6,218
------ ------
Total impaired loans........................................ $1,379 $9,112
====== ======
Allowance for impaired loans under SFAS 114...................... $ 109 $ 315
====== ======
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Interest income recognized on impaired loans during the period......... $68 $181 $167
=== ==== ====
</TABLE>
In the table above, loans included in the "Impaired loans without an
allowance" category are those loans for which the discounted cash flows,
collateral value (net of estimated selling costs) or market price equals or
exceeds the carrying value of the loan. Such loans do not require an allowance.
For the years ended December 31, 1997, 1996 and 1995, the activity in the
allowance for loan losses was as follows (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year................................. $11,682 $13,699 $ 7,550
Provision for loan losses.................................... 1,154 1,476 8,777
Loans charged off............................................ (1,069) (4,562) (2,696)
Recoveries of loans previously charged off................... 375 1,069 68
------- ------- -------
Balance at end of year....................................... $12,142 $11,682 $13,699
======= ======= =======
</TABLE>
6. PREMISES AND EQUIPMENT
As of December 31, 1997 and 1996, premises and equipment were as follows
(dollars in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Land and buildings........................................... $ 19,054 $ 18,866
Leasehold improvements....................................... 8,420 7,901
Equipment, furniture and fixtures............................ 11,853 9,936
-------- --------
39,327 36,703
Less accumulated depreciation and amortization............... (15,396) (13,864)
-------- --------
Total................................................... $ 23,931 $ 22,839
======== ========
</TABLE>
Depreciation and amortization expense was $2.3 million, $2.0 million and
$1.6 million for the years ended December 31, 1997, 1996 and 1995, respectively.
F-21
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. SERVICING ASSETS
Included in other assets are servicing assets. For the years ended December
31, 1997, 1996 and 1995, activity with respect to servicing assets was as
follows (dollars in thousands):
<TABLE>
<CAPTION>
1997
--------------------------------------
CAPITALIZED PURCHASED ORIGINATED
EXCESS MORTGAGE MORTGAGE
SERVICING SERVICING SERVICING
FEES RIGHTS RIGHTS
----------- --------- ----------
<S> <C> <C> <C>
Beginning balance, net................................... $ 546 $ 1,832 $ 382
Sales............................................... (5) (2,532) (428)
Additions........................................... -- -- 44
Amortization:
Normal......................................... (206) (150) (51)
Decrease in valuation allowance..................... -- 850 147
----- ------- ------
Ending balance, net...................................... $ 335 $ -- $ 94
===== ======= ======
</TABLE>
<TABLE>
<CAPTION>
1996
--------------------------------------
CAPITALIZED PURCHASED ORIGINATED
EXCESS MORTGAGE MORTGAGE
SERVICING SERVICING SERVICING
FEES RIGHTS RIGHTS
----------- --------- ----------
<S> <C> <C> <C>
Beginning balance, net................................... $ 672 $ 2,509 $ --
Additions........................................... -- -- 576
Amortization:
Normal......................................... (126) (627) (47)
Increase in valuation allowance..................... -- (50) (147)
----- ------- ------
Ending balance, net...................................... $ 546 $ 1,832 $ 382
===== ======= ======
</TABLE>
<TABLE>
<CAPTION>
1995
--------------------------------------
CAPITALIZED PURCHASED ORIGINATED
EXCESS MORTGAGE MORTGAGE
SERVICING SERVICING SERVICING
FEES RIGHTS RIGHTS
----------- --------- ----------
<S> <C> <C> <C>
Beginning balance, net................................... $ 902 $ 3,806 $ --
Additions........................................... -- -- --
Amortization:
Normal......................................... (230) (497) --
Increase in valuation allowance..................... -- (800) --
----- ------- ------
Ending balance, net...................................... $ 672 $ 2,509 $ --
===== ======= ======
</TABLE>
For the years ended December 31, 1997, 1996 and 1995, the activity in the
valuation allowance for servicing assets was as follows (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
----- ---- ----
<S> <C> <C> <C>
Balance, beginning of year............................................ $ 997 $800 $ --
Provision for impairment.............................................. -- 197 800
Reversal of valuation allowance....................................... (997) -- --
Write-downs........................................................... -- -- --
----- ---- ----
Balance, end of year.................................................. $ -- $997 $800
===== ==== ====
</TABLE>
F-22
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. FORECLOSED ASSETS
As of December 31, 1997 and 1996, other assets include $412,000 and $1.6
million, respectively, in real estate acquired through foreclosure.
9. DEPOSITS
As of December 31, 1997 and 1996, deposit balances were as follows (dollars
in thousands):
<TABLE>
<CAPTION>
1997
----------------------
WEIGHTED
AVERAGE
BALANCE RATE
---------- --------
<S> <C> <C>
NOW and checking accounts.................................. $ 111,984 0.80%
Money market accounts...................................... 20,986 2.48%
Passbook accounts.......................................... 212,013 2.11%
Time deposits:
Less than $100,000.................................... 831,292 5.12%
$100,000 or greater................................... 292,712 5.41%
---------- ----
Total................................................. $1,468,987 4.38%
========== ====
</TABLE>
<TABLE>
<CAPTION>
1996
----------------------
WEIGHTED
AVERAGE
BALANCE RATE
---------- --------
<S> <C> <C>
NOW and checking accounts.................................. $ 106,491 0.79%
Money market accounts...................................... 22,111 2.39%
Passbook accounts.......................................... 216,471 2.20%
Time deposits:
Less than $100,000.................................... 773,571 4.87%
$100,000 or greater................................... 274,481 5.16%
---------- ----
Total................................................. $1,393,125 4.17%
========== ====
</TABLE>
As of December 31, 1997, remaining maturities on time deposits were as
follows (dollars in thousands):
<TABLE>
<S> <C>
1998.................................................................. $1,111,927
1999.................................................................. 10,324
2000.................................................................. 1,753
----------
Total................................................................. $1,124,004
==========
</TABLE>
For the years ended December 31, 1997, 1996 and 1995, interest expense on
deposits was as follows (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
NOW and demand deposit accounts.............................. $ 875 $ 826 $ 781
Money market accounts........................................ 517 561 654
Passbook accounts............................................ 4,834 4,772 4,797
Time deposits................................................ 55,570 53,360 50,046
Less penalties for early withdrawal.......................... (283) (246) (240)
------- ------- -------
Total................................................... $61,513 $59,273 $56,038
======= ======= =======
</TABLE>
F-23
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. DEPOSITS--(CONTINUED)
As of December 31, 1997 and 1996, the composition of deposits by interest
rate was as follows (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Under 3%................................................ $ 345,473 $ 345,027
3.00% to 3.99%.......................................... 45,148 49,750
4.00% to 4.99%.......................................... 262,607 423,922
5.00% to 5.99%.......................................... 681,977 562,446
6.00% to 6.99%.......................................... 133,313 11,099
7.00% to 7.99%.......................................... -- 251
8.00% to 8.99%.......................................... 469 630
---------- ----------
Total.............................................. $1,468,987 $1,393,125
========== ==========
</TABLE>
10. FEDERAL HOME LOAN BANK ADVANCES
The Company maintains a secured credit facility with the Federal Home Loan
Bank of San Francisco (FHLB-SF) against which the Company may take advances. The
terms of this credit facility require the Company to maintain in safekeeping
with the FHLB-SF eligible collateral of least 100% of outstanding advances.
There were no advances outstanding at December 31, 1997 or 1996. At December 31,
1997, credit availability under this facility was approximately $291 million.
11. LONG-TERM DEBT TO AFFILIATES
The Company has a promissory note to United Holdings Int'l Ltd. (UHIL)
dated April 1, 1996 for a principal sum of $15,548,000. This note refinanced
previous affiliate debt and related accrued interest. Interest is capitalized on
the note through December 31, 1999 and calculated at a compound annual interest
rate of 10%. As of January 1, 2000, accrued interest is payable annually within
60 days after each year end. The Company has an additional promissory note to
Chief Investments Limited (Chief) dated February 28, 1997 for a principal sum of
$1,500,000. Interest is capitalized on the note through December 31, 1999 and
calculated at a compound annual interest rate of 10%. Annual payments
representing the lesser of $1,000,000 or the outstanding balance of the note are
to be paid within 60 days of each calendar year end, effective December 31,
1999. Chief is the Company's parent and UHIL is another related party.
At December 31, 1997, future principal payments (including capitalized
interest) on long term debt are payable as follows (dollars in thousands):
<TABLE>
<S> <C>
1998..................................................................... $ --
1999..................................................................... --
2000..................................................................... 1,000
2001..................................................................... 3,127
2002..................................................................... 3,000
Aggregate thereafter..................................................... 12,933
-------
Total............................................................... $20,060
=======
</TABLE>
F-24
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS
The Company and United are subject to various regulatory requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory--and possibly additional
discretionary--actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, United
must meet specific capital guidelines that involve quantitative measures of
United's assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices. United's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require United to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1997, that United
meets all capital adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the Office of
Thrift Supervision categorized United as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
United must maintain minimum total risk-based, Tier I risk-based, Tier I
leverage ratios as set forth in the table. There are no conditions or events
since that notification that management believes have changed the institution's
category. As of December 31, 1996, the Office of Thrift Supervision categorized
United as adequately capitalized under the regulatory framework for prompt
corrective action.
United's actual capital amounts and ratios are also presented in the
following table (dollars in thousands):
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
-------------- --------------------- ---------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital (to risk weighted assets)... $94,547 11.15% $67,837 8.00% $84,796 10.00%
Core Capital (to adjusted tangible
assets)................................. 83,927 5.37% 62,519 4.00% 78,148 5.00%
Tier I Capital (to risk weighted
assets)................................. 83,927 9.90% 33,919 4.00% 50,864 6.00%
Tangible Capital (to tangible assets)..... 83,927 5.37% 23,444 1.50% N/A N/A
</TABLE>
The following table is a reconciliation of United's capital under Generally
Accepted Accounting Principles ("GAAP") with its regulatory capital at December
31, 1997 (dollars in thousands):
<TABLE>
<CAPTION>
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
-------- ------- ----------
<S> <C> <C> <C>
GAAP Capital.......................................................... $82,556 $82,556 $ 82,556
Nonallowable components:
Unrealized losses on securities available for sale.................. 1,728 1,728 1,728
Goodwill............................................................ (348) (348) (348)
Mortgage servicing rights-excess.................................... (9) (9) (9)
Additional capital components:
Allowance for loan losses--allowable in risk-based capital.......... -- -- 10,620
------- ------- --------
United regulatory capital............................................. $83,927 $83,927 $ 94,547
======= ======= ========
</TABLE>
F-25
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS--(CONTINUED)
The Company, as a savings institution holding company, is not subject to
regulatory capital requirements separate from its subsidiary, United.
United is prohibited by federal regulations from paying dividends if the
payment would reduce United's net worth below certain minimum requirements. The
Company has agreed that United would not declare or pay in any year a dividend
that exceeds 50% of The Company's net operating income (dividends may be
deferred and paid in a subsequent year) without the prior written consent of the
Office of Thrift Supervision (OTS). At December 31, 1997, $5.1 million of
United's retained earnings were available for distribution as dividends to the
Company.
13. FEDERAL AND STATE TAXES ON INCOME
Following is a summary of the provision for taxes on income (dollars in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------
1997 1996 1995
------ ----- -------
<S> <C> <C> <C>
Current tax (benefit) expense:
Federal........................................................ $3,244 $ 174 $ (783)
State.......................................................... 1,881 28 317
------ ----- -------
5,125 202 (466)
------ ----- -------
Deferred tax (benefit) expense:
Federal........................................................ 1,155 (327) (2,199)
State.......................................................... (490) (52) (741)
------ ----- -------
665 (379) (2,940)
------ ----- -------
$5,790 $(177) $(3,406)
====== ===== =======
</TABLE>
F-26
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. FEDERAL AND STATE TAXES ON INCOME--(CONTINUED)
Deferred tax liabilities (assets) are comprised of the following (dollars
in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Deferred loan fees............................................................. $ 3,356 $ 3,812
FHLB dividends................................................................. 2,803 2,456
Amortization of excess servicing fees.......................................... 138 225
Market value adjustments on certain loans and securities....................... 81 1,409
Purchase accounting adjustments................................................ 229 306
Capitalized originated mortgage servicing...................................... 39 153
-------- --------
6,646 8,361
-------- --------
Deferred tax assets:
Net operating loss carryforwards............................................... (84) (3,282)
Loan and OREO loss allowances.................................................. (4,162) (4,028)
Servicing rights impairment allowance.......................................... -- (331)
AMT credit carryover........................................................... (1,166) (1,707)
State taxes.................................................................... (539) (129)
Depreciation................................................................... (396) (270)
Unrealized losses on securities available for sale............................. (1,130) (1,707)
Deferred compensation.......................................................... (132) (211)
Other deferred deduction items................................................. (2,562) (1,749)
-------- --------
(10,171) (13,414)
-------- --------
Deferred tax assets valuation allowance.......................................... -- 286
-------- --------
Net deferred tax assets.......................................................... $ (3,525) $ (4,767)
======== ========
</TABLE>
The following table reconciles the statutory income tax rate to the
consolidated effective income tax rate:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1997 1996 1995
---- ----- -----
<S> <C> <C> <C>
Federal income tax rate........................................... 34.0% (34.0)% (34.0)%
State franchise tax rate, net of federal income tax effects....... 7.2% (7.6)% (7.6)%
---- ---- ----
Statutory income tax rate......................................... 41.2% (41.6)% (41.6)%
(Reduction) increase in tax rate resulting from:
Amortization of intangibles..................................... 0.2% 2.0% 0.4%
Reversal of taxes previously provided........................... -- -- (16.0)%
Reversal of valuation allowance................................. (2.2)% -- --
Other items, net................................................ 5.0% 3.0% 3.3%
---- ---- ----
44.2% (36.6)% (53.9)%
==== ==== ====
</TABLE>
F-27
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. FEDERAL AND STATE TAXES ON INCOME--(CONTINUED)
Taxes on income included the following (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1997 1996
------- -------
<S> <C> <C>
Net deferred (asset) liability:
Federal income tax..................................................... $(3,429) $(5,004)
State franchise tax.................................................... (96) 237
------- -------
(3,525) (4,767)
(Prepaid income taxes) taxes payable..................................... 40 (656)
------- -------
$(3,485) $(5,423)
======= =======
</TABLE>
The Company computes its bad debt deduction using the experience method for
Federal and state tax purposes which considers current year charge-offs together
with those from the previous five years.
During 1996, legislation was enacted which eliminated the Company's tax
exposure relating to tax bad debt reserve that arose prior to 1988. In
accordance with SFAS 109, a deferred tax liability of $946,000 had not been
recognized at December 31, 1995 for $2,784,000 of these temporary differences.
Tax years 1996 through 1997 remain open for Internal Revenue Service
purposes and tax years 1994 through 1997 remain open for California Franchise
Tax Board purposes.
At December 31, 1997, the Company had regular Federal net operating loss
carryovers of $248,000 which expire 2005.
14. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK
The Company is a party to derivative financial instruments and financial
instruments with off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers and to reduce its own exposure to
fluctuations in interest rates. The Company does not hold or issue financial
instruments for trading purposes. Financial instruments in the normal course of
business include commitments to extend and purchase credit, forward commitments
to sell loans, long put and call options, letters of credit and interest-rate
swaps and caps. Those instruments involve, to varying degrees, elements of
credit and interest-rate risk in excess of the amount recognized in the
statement of financial position. The contract or notional amounts of those
instruments reflects the extent of involvement the Company has in particular
classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual or notional amount of those instruments. The
Company uses the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments. For interest-rate swap
and cap transactions and forward commitments to sell loans, the contract or
notional amounts do not represent exposure to credit loss. The Company controls
the credit risk of its interest-rate swap and cap agreements and forward
commitments to sell loans through credit approvals, limits, and monitoring
procedures. The Company does not require collateral or other security to support
interest-rate swap transactions with credit risk.
F-28
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK--(CONTINUED)
Contract or notional amounts of derivative financial instruments and
financial instruments with off-balance-sheet risk as of December 31, 1997 and
1996 are as follows (dollars in millions):
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit:
Consumer (including residential mortgage)......................................... $65.0 $47.0
Commercial (excluding construction)............................................... 10.8 16.0
Construction...................................................................... 78.7 29.5
Commitments to purchase loans........................................................ 0.1 0.4
Letters of credit.................................................................... 1.9 1.3
Financial instruments whose notional or contract amounts exceed the amount of credit
risk:
Forward commitments to sell loans.................................................... 3.5 4.2
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses.
The Company evaluates each customer's credit worthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary by the Company upon
extension of credit, is based on management's credit evaluation of the
counterparty. Collateral held generally includes residential or commercial real
estate, accounts receivable, or other assets.
Commitments to purchase loans are agreements to buy loans from a primary
broker/dealer as long as there are no violations of any condition established in
the contract. Commitments terminate on the final closing date mutually agreed
upon by the purchaser and seller as defined in the contract. The Company
evaluates each loan's worthiness on a loan-by-loan basis. Each loan is
collateralized by residential real estate.
Letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. These letters of credit are usually
secured by inventories or by deposits held at the Company.
Interest rate swap transactions generally involve the exchange of fixed-
and floating-rate interest payment obligations without the exchange of the
underlying principal amounts. Interest-rate swaps are entered into to reduce the
Company's exposure to interest rate movements and are used as part of
asset/liability management. The Company typically becomes a principal in the
exchange of fixed- and floating-rate interest payment obligations with another
party and, therefore, is exposed to loss if the other party defaults. The
Company minimizes this risk by performing normal credit reviews on its swap
counterparties.
Interest rate caps are interest rate protection instruments that involve
the payment from the seller to the buyer of an interest differential. This
differential represents the difference between current interest rates and
agreed-upon rate applied to a notional principal amount. The Company is a
purchaser of interest rate caps.
Entering into interest-rate swap agreements involves not only the risk of
dealing with counterparties and their ability to meet the terms of the
contracts, but also the interest-rate risk associated with unmatched positions.
Notional principal amounts often are used to express the volume of these
transactions, but the amounts potentially subject to credit risk are much
smaller.
Forward contracts are contracts for delayed delivery of securities or loans
in which the seller agrees to make delivery at a specified future date of a
specified instrument at a specified price or yield. Risks arise from the
possible inability of counterparties to meet the terms of their contracts and
from movements in security values and interest rates. In order to minimize the
exposure arising from forward contracts, the Company entered into
F-29
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK--(CONTINUED)
long put options amounting to $1 million and $4 million as of December 31, 1997
and 1996, respectively. The Company had $0.6 million and $1.1 million of long
call options as of December 31, 1997 and 1996, respectively.
Interest rate swaps with a notional amount of $20 million matured in 1996.
For the years ended December 31, 1996 and 1995, costs associated with the
interest rate swaps and caps negatively impacted net interest income by $137,000
and $538,000, respectively.
15. CONCENTRATIONS OF CREDIT RISK
All of the Company's loan activity is with customers located throughout the
State of California. Substantially all residential and commercial real estate
loans are secured by properties located in the State of California. The Company
is required by law to maintain 70% of its portfolio assets--as defined by
regulations--in qualifying residential or small business assets. As of December
31, 1997, 91.1% of the Company's portfolio assets consisted of such qualifying
assets.
Substantially all real estate loans in the portfolio are originated at 80%
loan-to-value or better. Management believes that the risk of significant losses
in excess of underlying collateral value is low.
16. LEASE COMMITMENTS AND CONTINGENT LIABILITIES
Lease Commitments
The Company leases various premises under noncancelable operating leases,
many of which contain renewal options and some of which contain escalation
clauses.
Future minimum rental payments, which do not include common area costs, due
each year under existing operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31, 1997, are
payable as follows (dollars in thousands):
<TABLE>
<S> <C>
1998..................................................................... $ 3,016
1999..................................................................... 2,017
2000..................................................................... 1,853
2001..................................................................... 1,382
2002..................................................................... 1,208
Aggregate thereafter..................................................... 10,642
-------
Total minimum payments required $20,118
=======
</TABLE>
Rental expense was approximately $3.2 million, $3.5 million and $3.0
million for the years ended December 31, 1997, 1996 and 1995, respectively.
Contingent Liabilities
The Company is subject to pending or threatened actions and proceedings
arising in the normal course of business. In the opinion of management, the
ultimate disposition of all pending or threatened actions and proceedings will
not have a material adverse effect on the Company's operations or financial
condition.
17. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instrument," requires all entities to estimate the fair
value of all financial instrument assets, liabilities, and off-balance-sheet
transactions. Fair values are point-in-time estimates that can change
significantly based on
F-30
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
17. FAIR VALUE OF FINANCIAL INSTRUMENTS--(CONTINUED)
numerous factors. Accordingly, management cannot provide any assurance that the
estimated fair values presented below could actually be realized. The fair value
estimates for financial instruments were determined as of December 31, 1997 and
1996, by application of the described methods and significant assumptions.
Cash and Short-Term Investments
For these short-term instruments, the carrying value of $34,797,000 at
December 31, 1997 and $18,383,000 at December 31, 1996 is a reasonable estimate
of fair value.
Investment And Mortgage-Backed Securities
The aggregate fair value of investment and mortgage-backed securities is
$277,192,000 at December 31, 1997 and $347,696,000 at December 31, 1996. Fair
value equals quoted market price, if available. If a quoted market price is not
available, fair value is estimated using quoted market prices for similar
securities.
Loans Receivable
The aggregate fair value of loans receivable is $1,212,105,000 at December
31, 1997 and $1,036,369,000 at December 31, 1996. Fair value is estimated by
discounting the future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit ratings at the same remaining
maturities. In addition, the allowance for loan losses was considered a
reasonable adjustment for credit risk for the entire portfolio.
Capitalized Servicing Fees
Fair value is estimated by discounting estimated future cash flows using
current rates which are required for similar assets. Fair value is estimated to
be the same as the carrying value of $429,087 at December 31, 1997 and $929,000
at December 31, 1996.
Deposit Liabilities
Fair value of demand deposits, savings accounts, and certain money market
deposits is the amount payable on demand at the reporting date. The fair value
of fixed maturity certificates of deposit is estimated using the rates currently
offered for deposits of similar remaining maturities. The aggregate fair value
of deposits is $1,426,274,000 at December 31, 1997 and $1,392,058,000 at
December 31, 1996.
Federal Home Loan Bank Advances
No Federal Home Loan Bank advances were outstanding at December 31, 1997 or
1996.
Long-term Debt to Affiliates
Due to the related party nature of the Company's long-term debt, management
does not believe that fair value estimates are meaningful. Accordingly, such
estimates have not been presented.
Securities Sold Under Agreement to Repurchase
No securities sold under agreement to repurchase were outstanding at
December 31, 1997 or 1996.
Interest Rate Swap and Cap Agreements
The fair value of the swap and cap agreements used for hedging purposes is
the estimated amount that the Company would receive or pay to terminate the
agreements at the reporting date, taking into account current
F-31
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
17. FAIR VALUE OF FINANCIAL INSTRUMENTS--(CONTINUED)
interest rates and the current creditworthiness of the swap and cap
counterparties. There were no swap of cap agreements at December 31, 1997 and
1996.
Commitments to Extend Credit, Commitments to Purchase Loans, Securities Sold
But Not Owned, and Options on Interest Rate Futures
The fair value of commitments is estimated using the fees currently charged
to enter into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counterparties. For
fixed-rate commitments, fair value also considers the difference between current
levels of interest rates and the committed rates. Fair values for securities
sold but not owned and options on interest rate futures are based on quoted
market prices or dealer quotes. The fair value of commitments to extend credit
and commitments to purchase loans cannot be readily determined. The fair value
of put options on interest rate futures is $56,875 at December 31, 1997 and
$50,625 at December 31, 1996. The fair value of call options on interest rate
futures is $28,437 at December 31, 1997 and $11,016 at December 31, 1996.
18. PARENT COMPANY
Condensed unconsolidated financial information of UCBH Holdings, Inc. is
presented below. See Note 11 for information regarding the Company's long-term
debt.
CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
------- -------
<S> <C> <C>
ASSETS
Cash and due from banks......................................................... $ 56 $ 11
Investment in subsidiary........................................................ 82,556 71,069
------- -------
Total assets................................................................. $82,612 $71,080
======= =======
LIABILITIES
Long-term debt to affiliates.................................................... $20,060 $16,736
------- -------
Total liabilities............................................................ 20,060 16,736
------- -------
STOCKHOLDERS' EQUITY
Common stock.................................................................... 10 10
Additional paid-in capital...................................................... 30,278 30,278
Unrealized loss on subsidiary's mortgage-backed securities available for sale... (1,728) (2,637)
Retained earnings............................................................... 33,992 26,693
------- -------
Total stockholders' equity................................................... 62,552 54,344
------- -------
Total liabilities and stockholders' equity................................... $82,612 $71,080
======= =======
</TABLE>
F-32
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
18. PARENT COMPANY--(CONTINUED)
CONDENSED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
INCOME
Dividends from subsidiary............................................... $ 250 $ -- $ 354
------- ------- -------
Total income....................................................... 250 -- 354
------- ------- -------
EXPENSE
Interest expense in long-term debt to affiliates........................ 1,825 1,640 1,741
Miscellaneous expense................................................... 205 -- --
------- ------- -------
Total expense...................................................... 2,030 1,640 1,741
------- ------- -------
Loss before taxes and equity in undistributed net income (loss) of
subsidiary............................................................ (1,780) (1,640) (1,387)
Income tax benefit...................................................... -- -- --
Equity in undistributed net income (loss) of subsidiary................. 9,078 1,334 (1,521)
------- ------- -------
Net income......................................................... $ 7,298 $ (306) $(2,908)
======= ======= =======
</TABLE>
CONDENSED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)....................................................... $ 7,298 $ (306) $(2,908)
Adjustment to reconcile net income to net cash provided by (used for)
operating activities:
Equity in undistributed net (income) loss of subsidiary............ (9,078) (1,334) 1,521
Increase in accrued interest payable............................... -- -- 1,457
Decrease in dividends payable...................................... -- -- 417
------- ------- -------
Net cash (used for) provided by operating activities............. (1,780) (1,640) 487
------- ------- -------
INVESTING ACTIVITIES
Capital contribution to subsidiary...................................... (1,500) -- --
------- ------- -------
Net cash used in investing activities............................ (1,500) -- --
------- ------- -------
FINANCING ACTIVITIES
Long-term debt to affiliates issued..................................... 1,500 -- --
Long-term debt to affiliates repaid..................................... -- -- (500)
Increase in capitalized interest component of long-term debt to
affiliates............................................................ 1,825 1,640 --
------- ------- -------
Net cash provided by (used in) financing activities.............. 3,325 1,640 (500)
------- ------- -------
Net increase (decrease) in cash and cash equivalents.................... 45 -- (13)
Cash and cash equivalents beginning of year............................. 11 11 24
------- ------- -------
Cash and cash equivalents end of year................................... $ 56 $ 11 $ 11
======= ======= =======
</TABLE>
F-33
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
19. LEGISLATION ENACTED IN 1996
Legislation was enacted in 1996 to recapitalize the FDIC's Savings
Association Insurance Fund (SAIF). Under this legislation, all institutions with
SAIF-insured deposits, including the Company's subsidiary United, were required
to pay a one-time assessment to recapitalize this insurance fund. For the
United, this assessment was approximately $7.7 million, which resulted in a
charge against 1996 earnings. This assessment was tax deductible and is expected
to substantially reduce the level of future periodic SAIF assessments paid by
United.
20. SUBSEQUENT EVENTS
On March 30, 1998, the Company changed its name from USB Holdings, Inc. to
UCBH Holdings, Inc.
21. EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominator of the
basic and diluted earnings per share:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997, 1996 AND 1995
-------------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
(Dollars in thousands, except per share amounts)
1997:
Basic:
Net income............................................ $ 7,299 6,000,000 $ 1.22
Effect of long-term debt to affiliates..................... 1,077 1,974,000
------- ---------
Diluted:
Net income and assumed conversions.................... $ 8,376 7,974,000 $ 1.05
======= =========
1996:
Basic:
Net loss.............................................. ($ 306) 6,000,000 ($ 0.05)
Effect of long-term debt to affiliates..................... 968 1,974,000
------- ---------
Diluted:
Net income and assumed conversions.................... $ 662 7,974,000 ($ 0.05)
======= =========
1995:
Basic:
Net loss.............................................. ($2,908) 6,000,000 ($ 0.48)
Effect of long-term debt to affiliates..................... 1,027 1,974,000
Diluted:
------- ---------
Net loss and assumed conversions...................... ($1,881) 7,974,000 ($ 0.48)
======= =========
</TABLE>
For the years ended December 31, 1996 and 1995, the assumed conversions of
long-term debt to affiliates would be considered anti-dilutive. Accordingly,
diluted loss per share for these periods is equal to basic loss per share.
F-34
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
In accordance with the General Corporation Law of the State of Delaware (being
Chapter 1 of Title 8 of the Delaware Code), Articles 10 and 11 of UCBH Holdings,
Inc.'s Certificate of Incorporation provide as follows:
TENTH:
A. Each person who was or is made a party or is threatened to be made a party to
or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent, or in any other capacity while serving as a Director,
Officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than such law permitted the
Corporation to provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith; provided, however, that, except as
provided in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article TENTH
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a Director or Officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, services to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article TENTH shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid in full by
the Corporation within sixty days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If
<PAGE>
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the expenses of
prosecuting or defending such suit. In (i) any suit brought by the indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the
indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the indemnitee
has not met any applicable standard for indemnification set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses under this
Article TENTH or otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses conferred in
this Article TENTH shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, the Corporation's Certificate
of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested
Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect itself and
any Director, Officer, employee or agent of the Corporation or subsidiary or
Affiliate or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by the Board
of Directors, grant rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
ELEVENTH:
A Director of this Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except for liability: (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the Director derived an improper personal
benefit. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
Directors, then the liability of a Director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
<PAGE>
Any repeal or modification of the foregoing paragraph by the stockholders of the
Corporation shall not adversely affect any right or protection of a Director of
the Corporation existing at the time of such repeal or modification.
Under the Declaration of Trust of UCBH Trust Co., the Company has agreed to
indemnify each of the Trustees of the Trust, and to hold each Trustee harmless
against any loss, damage, claim, liability or expense incurred without
negligence or bad faith on its part, arising out of, or in connection with, the
acceptance or administration of the Declaration of Trust, including the costs
and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties under the Trust.
Item 21. Exhibits and Financial Statement Schedules
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
(a) List of Exhibits (Filed herewith unless otherwise noted)
4.1 Indenture of the Company relating to the Junior Subordinated Debentures
4.2 Form of Certificate of Series B Junior Subordinated Debenture
4.3 Certificate of Trust of UCBH Trust Co.
4.4 Amended and Restated Declaration of Trust of UCBH Trust Co.
4.5 Form of Series B Capital Security Certificate for UCBH Trust Co.
4.6 Form of Series B Guarantee of the Company relating to the Series B
Capital Securities
4.7 Capital Securities Registration Rights Agreement
5.1 Opinion and consent of Patton Boggs LLP as to legality of the Series B
Junior Subordinated Debentures and the Series B Guarantee to be issued
by the Company
5.2 Opinion and consent of Richards, Layton & Finger, P.A. as to the
legality of the Series B Capital Securities to be issued by UCBH Trust
Co.
8.0 Opinion of Patton Boggs LLP as to certain federal income tax matters*
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Patton Boggs LLP (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2)
24.1 Power of Attorney of certain officers and directors of the Corporation
(located on the signature page hereto)
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Declaration of Trust of UCBH Trust Co.
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Guarantee for the benefit of the holders of Series B
Capital Securities of UCBH Trust Co.
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Exchange Agent Agreement
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees
99.5 Form of Letter to Clients
- ----------
* To be filed by amendment.
<PAGE>
(b) Financial Statement Schedules
All schedules have been omitted as not applicable or not required under the
rules of Regulation S-X.
Item 22. Undertakings.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any Prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the Offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a trustee, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question
<PAGE>
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on June 30, 1998.
UCBH HOLDINGS, INC.
By: /s/ Tommy S. Wu
-------------------------------------
Tommy S. Wu
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Tommy S. Wu and Jonathan H. Downing,
jointly and severally, each in his own capacity, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for such person and in such person's name, place and stead, in
any and all capacities, to sign any or all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully or do cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Name Date
----- ----
/s/ Tommy S. Wu President, Chief Executive Officer and June 30, 1998
- ------------------- Director (principal executive officer)
Tommy S. Wu
/s/ Jonathan H. Downing Senior Vice President, Chief June 30, 1998
- ----------------------- Financial Officer, and Treasurer and
Jonathan H. Downing Director (principal accounting and
financial officer)
/s/ Robert Fell Director June 30, 1998
- -------------------
Robert Fell
/s/ Sau-wing Lam Director June 30, 1998
- -------------------
Sau-wing Lam
/s/ Godwin Wong Director June 30, 1998
- -------------------
Godwin Wong
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on June 30, 1998.
UCBH TRUST CO.
By: /s/ Tommy S. Wu
-----------------------
Tommy S. Wu
Administrative Trustee
By: /s/ Jonathan H. Downing
-----------------------
Jonathan H. Downing
Administrative Trustee
By: /s/ Dennis Alan Lee
-----------------------
Dennis Alan Lee
Administrative Trustee
Exhibit 4.1
UCBH HOLDINGS, INC.
------------------------------
------------------------------
INDENTURE
Dated as of April 17, 1998
------------------------------
WILMINGTON TRUST COMPANY
as Trustee
------------------------------
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
<PAGE>
TIE-SHEET /1/
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
April 17, 1998 between UCBH Holdings, Inc. and Wilmington Trust Company,
Trustee:
ACT SECTION INDENTURE
SECTION
310(a)(1)...............................................................6.09
310(a)(2)...............................................................6.09
310(a)(3).................................................................N/A
310(a)(4).................................................................N/A
310(a)(5).............................................................6.10, 6.11
310(b)....................................................................N/A
310(c)..................................................................6.13
311(a) and (b)............................................................N/A
311(c).............................................................4.01, 4.02(a)
312(a)..................................................................4.02
312(b) and (c)..........................................................4.04
313(a)..................................................................4.04
313(b)(1)...............................................................4.04
313(b)(2)...............................................................4.04
313(c)..................................................................4.04
313(d)..................................................................4.04
314(a)..................................................................4.03
314(b)....................................................................N/A
314(c)(1) and (2).......................................................6.07
314(c)(3).................................................................N/A
314(d) ...................................................................N/A
314(e)..................................................................6.07
314(f)...................................................................N/A
315(a)(c) and (d).......................................................6.01
315(b)..................................................................5.08
315(e)..................................................................5.09
316(a)(1)...............................................................5.07
316(a)(2)................................................................N/A
316(a) last sentence....................................................2.09
316(b) .................................................................9.02
317(a) .................................................................5.05
317(b) .................................................................6.05
318(a) ................................................................13.08
- ---------------
1 THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED
<PAGE>
TABLE OF CONTENTS/1/
Page
ARTICLE I ----
DEFINITIONS
SECTION 1.01
Definitions..................................................................1
Additional Sums..............................................................1
Adjusted Treasury Rate.......................................................1
Affiliate....................................................................2
Agency Agreement.............................................................2
Authenticating Agent.........................................................2
Bankruptcy Law...............................................................2
Board of Directors...........................................................2
Board Resolution ............................................................2
Business Day.................................................................2
Capital Securities...........................................................2
Capital Securities Guarantee.................................................2
Commission...................................................................2
Common Securities............................................................3
Common Securities Guarantee..................................................3
Common Stock.................................................................3
Company......................................................................3
Company Request..............................................................3
Comparable Treasury Issue....................................................3
Comparable Treasury Price....................................................3
Compounded Interest..........................................................4
Custodian....................................................................4
Declaration..................................................................4
Default ....................................................................4
Defaulted Interest...........................................................4
Deferred Interest ...........................................................4
Definitive Securities........................................................4
Depositary...................................................................4
Dissolution Event............................................................4
Event of Default.............................................................4
Exchange Act.................................................................4
Exchange Offer...............................................................4
Extended Interest Payment Period.............................................4
Federal Reserve..............................................................5
Global Security..............................................................5
Indebtedness.................................................................5
- --------
1 THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO
BE A PART OF THE INDENTURE.
<PAGE>
Indebtedness Ranking on a Parity with the Securities..........................5
Indebtedness Ranking Junior to the Securities.................................5
Indenture.....................................................................6
Initial Optional Redemption Date..............................................6
Interest Payment Date.........................................................6
Issue Date....................................................................6
Liquidated Damages............................................................6
Make Whole Amount.............................................................6
Maturity Date.................................................................6
Mortgage......................................................................6
Non Book-Entry Capital Securities.............................................6
Officers .....................................................................6
Officers' Certificate.........................................................6
Opinion of Counsel ...........................................................6
Optional Redemption Price.....................................................6
Other Debentures..............................................................6
Other Guarantees..............................................................6
Outstanding...................................................................7
Person .....................................................................7
Predecessor Security..........................................................7
Principal Office of the Trustee...............................................7
Property Trustee..............................................................7
Quotation Agent...............................................................7
Redemption Price..............................................................7
Reference Treasury Dealer.....................................................8
Reference Treasury Dealer Quotations..........................................8
Registration Rights Agreement.................................................8
Regulatory Capital Event......................................................8
Remaining Life................................................................8
Responsible Officer...........................................................8
Restricted Security...........................................................8
Rule 144A ....................................................................8
Securities....................................................................8
Securities Act................................................................8
Securityholder................................................................9
Holder of Securities..........................................................9
Security Register.............................................................9
Senior Indebtedness...........................................................9
Series A Securities...........................................................9
Series B Securities...........................................................9
Special Event.................................................................9
Special Event Redemption Price................................................9
Subsidiary....................................................................9
Tax Event....................................................................10
Treasury Rate................................................................10
Trustee ....................................................................10
Trust Indenture Act of 1939..................................................10
<PAGE>
Trust Securities.............................................................10
UCBH Trust Co................................................................10
U.S. Government Obligations..................................................10
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally .........................................11
SECTION 2.02. Execution and Authentication ............................11
SECTION 2.03. Form and Payment ........................................12
SECTION 2.04. Legends. ................................................12
SECTION 2.05. Global Security .........................................12
SECTION 2.06 Interest ................................................14
SECTION 2.07. Transfer and Exchange ...................................14
SECTION 2.08. Replacement Securities ..................................16
SECTION 2.09. Temporary Securities.....................................17
SECTION 2.10. Cancellation ............................................17
SECTION 2.11. Defaulted Interest ......................................17
SECTION 2.12. CUSIP Numbers ...........................................18
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY ..........................................19
SECTION 3.01. Payment of Principal, Premium and Interest ..............19
SECTION 3.02. Offices for Notices and Payments, etc. ..................19
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office ......20
SECTION 3.04. Provision as to Paying Agent ............................20
SECTION 3.05. Certificate to Trustee ..................................21
SECTION 3.06. Compliance with Consolidation Provisions ................21
SECTION 3.07. Limitation on Dividends .................................21
SECTION 3.08. Covenants as to UCBH Trust Co. ..........................22
SECTION 3.09. Payment of Expenses .....................................22
SECTION 3.10. Payment Upon Resignation or Removal .....................23
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE ....................................................23
SECTION 4.01. Securityholders' Lists...................................23
SECTION 4.02. Preservation and Disclosure of Lists ....................23
SECTION 4.03. Reports by Company ......................................25
SECTION 4.04. Reports by the Trustee ..................................26
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT .........................................................27
<PAGE>
SECTION 5.01. Events of Default........................................27
SECTION 5.02. Payment of Securities on Default; Suit Therefor .........28
SECTION 5.03. Application of Moneys Collected by Trustee ..............30
SECTION 5.04. Proceedings by Securityholders ..........................31
SECTION 5.05. Proceedings by Trustee ..................................32
SECTION 5.06. Remedies Cumulative and Continuing ......................32
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders.................32
SECTION 5.08. Notice of Defaults.......................................33
SECTION 5.09. Undertaking to Pay Costs.................................33
ARTICLE VI
CONCERNING THE TRUSTEE ......................................................34
SECTION 6.01. Duties and Responsibilities of Trustee ..................34
SECTION 6.02. Reliance on Documents, Opinions, etc. ...................35
SECTION 6.03. No Responsibility for Recitals, etc. ....................36
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securities..........37
SECTION 6.05. Moneys to be Held in Trust ..............................37
SECTION 6.06. Compensation and Expenses of Trustee ....................37
SECTION 6.07. Officers' Certificate as Evidence .......................38
SECTION 6.08. Conflicting Interest of Trustee .........................38
SECTION 6.09. Eligibility of Trustee ..................................38
SECTION 6.10. Resignation or Removal of Trustee .......................39
SECTION 6.11. Acceptance by Successor Trustee .........................40
SECTION 6.12. Succession by Merger, etc. ..............................41
SECTION 6.13. Limitation on Rights of Trustee as a Creditor ...........41
SECTION 6.14. Authenticating Agents ...................................41
ARTICLE VII
CONCERNING THE SECURITYHOLDERS ...............................................43
SECTION 7.01. Action by Securityholders ...............................43
SECTION 7.02. Proof of Execution by Securityholders ...................44
SECTION 7.03. Who Are Deemed Absolute Owners ..........................44
SECTION 7.04. Securities Owned by Company Deemed
Not Outstanding .......................................44
SECTION 7.05. Revocation of Consents; Future Holders Bound ............44
ARTICLE VIII
SECURITYHOLDERS' MEETINGS ....................................................45
SECTION 8.01. Purposes of Meetings ....................................45
SECTION 8.02. Call of Meetings by Trustee .............................45
SECTION 8.03. Call of Meetings by Company or Securityholders ..........45
SECTION 8.04. Qualifications for Voting ...............................46
<PAGE>
SECTION 8.05. Regulations .............................................46
SECTION 8.06. Voting ..................................................46
ARTICLE IX
AMENDMENTS .........................................................47
SECTION 9.01. Without Consent of Securityholders ......................47
SECTION 9.02. With Consent of Securityholders .........................49
SECTION 9.03. Compliance with Trust Indenture Act; Effect
of Supplemental Indentures .............................50
SECTION 9.04. Notation on Securities...................................50
SECTION 9.05. Evidence of Compliance of Supplemental Indenture
to be Furnished Trustee............................50
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE ............................50
SECTION 10.01. Company May Consolidate, etc., on Certain Terms .........50
SECTION 10.02. Successor Corporation to be Substituted for Company .....51
SECTION 10.03. Opinion of Counsel to be Given Trustee ..................52
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE ......................................52
SECTION 11.01. Discharge of Indenture ..................................52
SECTION 11.02. Deposited Moneys and U.S. Government Obligations
to be Held in Trust by Trustee ..........................53
SECTION 11.03. Paying Agent to Repay Moneys Held .......................53
SECTION 11.04. Return of Unclaimed Moneys ..............................53
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations ..................................53
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS .....................................................55
SECTION 12.01. Indenture and Securities Solely Corporate Obligations....55
ARTICLE XIII
MISCELLANEOUS PROVISIONS .....................................................55
SECTION 13.01. Successors...............................................55
SECTION 13.02. Official Acts by Successor Corporation ..................55
<PAGE>
SECTION 13.03. Surrender of Company Powers .............................56
SECTION 13.04. Addresses for Notices, etc. .............................56
SECTION 13.05. Governing Law ...........................................56
SECTION 13.06. Evidence of Compliance with Conditions Precedent ........56
SECTION 13.07. Business Days ...........................................57
SECTION 13.08. Trust Indenture Act to Control ..........................57
SECTION 13.09. Table of Contents, Headings, etc. .......................57
SECTION 13.10. Execution in Counterparts ...............................57
SECTION 13.11. Separability ............................................57
SECTION 13.12. Assignment ..............................................58
SECTION 13.13. Acknowledgement of Rights ...............................58
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND .....................................................58
SECTION 14.01. Special Event Redemption ................................58
SECTION 14.02. Optional Redemption by Company ..........................59
SECTION 14.03. No Sinking Fund .........................................60
SECTION 14.04. Notice of Redemption; Selection of Securities ...........60
SECTION 14.05. Payment of Securities Called for Redemption .............61
ARTICLE XV
SUBORDINATION OF SECURITIES ..................................................61
SECTION 15.01. Agreement to Subordinate ................................61
SECTION 15.02. Default on Senior Indebtedness ..........................62
SECTION 15.03. Liquidation; Dissolution; Bankruptcy ....................62
SECTION 15.04. Subrogation .............................................63
SECTION 15.05. Trustee to Effectuate Subordination .....................64
SECTION 15.06. Notice by the Company ...................................65
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness ...66
SECTION 15.08. Subordination May Not Be Impaired .......................66
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD .........................................67
SECTION 16.01. Extension of Interest Payment Period ....................67
SECTION 16.02. Notice of Extension .....................................67
EXHIBIT AA-1
Testimonium
Signatures
Acknowledgements
<PAGE>
THIS INDENTURE, dated as of April 17, 1998, between UCBH
Holdings, Inc., a Delaware corporation (hereinafter sometimes called the
"Company"), and Wilmington Trust Company, a Delaware banking corporation, as
trustee (hereinafter sometimes called the "Trustee"),
W I T N E S E T H :
In consideration of the premises, and the purchase of the
Securities by the holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective holders from
time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which
are by reference therein defined in the Securities Act, shall (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture as originally executed.
The following terms have the meanings given to them in the Declaration: (i)
Clearing Agency; (ii) Delaware Trustee; (iii) Property Trustee; (iv)
Administrative Trustees; (v) Series A Capital Securities; (vi) Series B Capital
Securities; (vii) Direct Action; and (viii) Distributions. All accounting terms
used herein and not expressly defined shall have the meanings assigned to such
terms in accordance with generally accepted accounting principles and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted at the time of any computation. The words "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision. Headings are used for convenience of reference only and do not
affect interpretation. The singular includes the plural and vice versa.
"Additional Sums" shall have the meaning set forth in Section
2.06(c).
"Adjusted Treasury Rate" means, with respect to any prepayment
date, the rate per annum equal to the semi-annual equivalent yield to maturity
of the Comparable Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such prepayment date plus (i) five basis points
less than the difference between the coupon of the Capital Securities at pricing
and the yield on the 6.125% U.S. Treasury Bond due November, 2027 if such
prepayment date
1
<PAGE>
occurs prior to May 1, 1999 and (ii) 55 basis points less than the difference
between the coupon of the Capital Securities at pricing and the yield on the
6.125% U.S. Treasury Bond due November, 2027, in all other cases.
"Affiliate" shall have the meaning given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
"Agency Agreement" shall mean the Agency Agreement dated March
31, 1998 among the Company, UCBH Trust Co. and the Agent named therein.
"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors
of the Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the date
of such certification, and delivered to the Trustee.
"Business Day" shall mean, with respect to any series of
Securities, any day other than a Saturday or a Sunday or a day on which banking
institutions in the States of Delaware or California are authorized or required
by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests
in the assets of UCBH Trust Co, which rank pari passu with the Common Securities
issued by UCBH Trust Co.; provided, however, that if an Event of Default has
occurred and is continuing, no payments in respect of Distributions on, or
payments upon liquidation, redemption or otherwise with respect to, the Common
Securities shall be made until the holders of the Capital Securities shall be
paid in full the Distributions and the liquidation, redemption and other
payments to which they are entitled. References to "Capital Securities" shall
include collectively any Series A Capital Securities and Series B Capital
Securities.
"Capital Securities Guarantee" shall mean any guarantee that
the Company may enter into with Wilmington Trust Company or other Persons that
operates directly or indirectly for the benefit of holders of Capital Securities
and shall include a Series A Capital Securities Guarantee and a Series B Capital
Securities Guarantee with respect to the Series A Capital Securities and the
Series B Capital Securities, respectively.
"Commission" shall mean the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act, or
if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under
2
<PAGE>
the Trust Indenture Act, then the body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests
in the assets of UCBH Trust Co. which rank pari passu with Capital Securities
issued by UCBH Trust Co.; provided, however, that if an Event of Default has
occurred and is continuing, no payments in respect of Distributions on, or
payments upon liquidation, redemption or otherwise with respect to, the Common
Securities shall be made until the holders of the Capital Securities shall be
paid in full the Distributions and the liquidation, redemption and other
payments to which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that
the Company may enter into with any Person or Persons that operates directly or
indirectly for the benefit of holders of Common Securities of UCBH Trust Co.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean UCBH Holdings, Inc., a Delaware
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
"Company Request" or "Company Order" shall mean a written
request or order signed in the name of the Company by the Chairman, the Chief
Executive Officer, the President, a Vice Chairman, a Vice President, the
Comptroller, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
remaining term to maturity of the Junior Subordinated Debentures (the "Remaining
Life") to be prepaid 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. If no United States
Treasury security has a maturity which is within a period from three months
before to three months after the Remaining Life, the two most closely
corresponding United States Treasury securities as selected by the Quotation
Agent 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.
"Comparable Treasury Price" means, with respect to any
redemption date pursuant to Section 14.01, (i) the average of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) on the third Business Day preceding such redemption
date, as set forth in the daily statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
Business Day, (A) the
3
<PAGE>
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Quotations.
"Compounded Interest" shall have the meaning set forth in
Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Declaration" means the Amended and Restated Declaration of
Trust of UCBH Trust Co., dated as of April 17, 1998, as amended from time to
time.
"Default" means any event, act or condition that with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulted Interest" shall have the same meaning set forth in
Section 2.11.
"Deferred Interest" shall have the meaning set forth in
Section 16.01.
"Definitive Securities" shall mean those securities issued in
fully registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities, for which
the Company shall determine that such Securities will be issued as a Global
Security, The Depository Trust Company, New York, New York, another clearing
agency, or any successor registered as a clearing agency under the Exchange Act
or other applicable statute or regulation, which, in each case, shall be
designated by the Company pursuant to Section 2.05(d).
"Dissolution Event" means the liquidation of UCBH Trust Co.
pursuant to the Declaration, and the distribution of the Securities held by the
Property Trustee to the holders of the Trust Securities issued by UCBH Trust Co.
pro rata in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section
5.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Offer" means the offer that may be made pursuant to
the Registration Rights Agreement (i) by the Company to exchange Series B
Securities for Series A Securities and to exchange a Series B Capital Securities
Guarantee for a Series A Capital Securities Guarantee and (ii) by UCBH Trust Co.
to exchange Series B Capital Securities for Series A Capital Securities.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 16.01.
4
<PAGE>
"Federal Reserve" shall mean the Board of Governors of the
Federal Reserve System.
"Global Security" means, with respect to the Securities, a
Security executed by the Company and delivered by the Trustee to the Depositary
or pursuant to the Depositary's instruction, all in accordance with the
Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Indebtedness" shall mean (i) every obligation of the Company
for money borrowed; (ii) every obligation of the Company evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of the Company with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of the
Company; (iv) every obligation of the Company 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 the Company; (vi) all indebtedness of the Company
whether incurred on or prior to the date of the Indenture or thereafter
incurred, 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, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.
"Indebtedness Ranking on a Parity with the Securities" shall
mean (i) Indebtedness, whether outstanding on the date of execution of this
Indenture or hereafter created, assumed or incurred, to the extent such
indebtedness specifically by its terms ranks equally with and not prior to the
Securities in the right of payment upon the happening of any dissolution or
winding up or liquidation or reorganization of the Company, and (ii) all other
debt securities, and guarantees in respect of those debt securities, issued to
any trust other than UCBH Trust Co., or a trustee of such trust, partnership or
other entity affiliated with the Company that is a financing vehicle of the
Company (a "financing entity") in connection with the issuance by such financing
entity of equity securities or other securities guaranteed by the Company
pursuant to an instrument that ranks pari passu with or junior in right of
payment to the Capital Securities Guarantee. The securing of any Indebtedness,
otherwise constituting Indebtedness Ranking on a Parity with the Securities,
shall not be deemed to prevent such Indebtedness from constituting Indebtedness
Ranking on a Parity with the Securities.
"Indebtedness Ranking Junior to the Securities" shall mean any
Indebtedness, whether outstanding on the date of execution of this Indenture or
hereafter created, assumed or incurred, to the extent such indebtedness
specifically by its terms ranks junior to and not equally with or prior to the
Securities (and any other Indebtedness Ranking on a Parity with the Securities)
in right of payment upon the happening of any dissolution or winding up or
liquidation or reorganization of the Company. The securing of any Indebtedness,
otherwise constituting Indebtedness Ranking Junior to the Securities, shall not
be deemed to prevent such Indebtedness from constituting Indebtedness Ranking
Junior to the Securities.
5
<PAGE>
"Indenture" shall mean this instrument as originally executed
or, if amended as herein provided, as so amended.
"Initial Optional Redemption Date" means May 1, 2005.
"Interest Payment Date" shall have the meaning set forth in
Section 2.06(a).
"Issue Date" shall mean the date of issuance of the Capital
Securities.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Make Whole Amount" shall mean an amount equal to the greater
of (i) 100% of the principal amount of the Securities to be redeemed or (ii) the
sum, as determined by a Quotation Agent, of the present values of remaining
scheduled payments of principal and interest on the Securities, discounted to
the prepayment date on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Adjusted Treasury Rate, plus, in the case of
each of clauses (i) and (ii), accrued and unpaid interest thereon, including
Compounded Interest and Additional Sums, if any, to the date of such redemption.
"Maturity Date" shall mean May 1, 2028.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning set
forth in Section 2.05(a)(ii).
"Officers" shall mean any of the Chairman, a Vice Chairman,
the Chief Executive Officer, the President, a Vice President, the Comptroller,
the Secretary or an Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two
Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Company, and who shall be acceptable to the
Trustee.
"Optional Redemption Price" shall have the meaning set forth
in Section 14.02(a).
"Other Debentures" means all junior subordinated debentures
issued by the Company from time to time and sold to trusts to be established by
the Company (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees to be issued by the
Company with
6
<PAGE>
respect to capital securities (if any) and issued to other trusts to be
established by the Company (if any), in each case similar to the Trust.
The term "outstanding" when used with reference to Securities,
shall, subject to the provisions of Section 7.04, mean, as of any particular
time, all Securities authenticated and delivered by the Trustee or the
Authenticating Agent under this Indenture, except
(a) Securities theretofore canceled by the Trustee or the
Authenticating Agent or delivered to the Trustee for
cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount
shall have been deposited in trust with the Trustee
or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by
the Company (if the Company shall act as its own
paying agent); provided that, if such Securities, or
portions thereof, are to be redeemed prior to
maturity thereof, notice of such redemption shall
have been given as in Article XIV provided or
provision satisfactory to the Trustee shall have been
made for giving such notice; and
(c) Securities in lieu of or in substitution for which
other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Company and the
Trustee is presented that any such Securities are
held by bona fide holders in due course.
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt and as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.08 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar term,
shall mean the office of the Trustee, at which at any particular time its
corporate trust business shall be administered.
"Property Trustee" shall have the same meaning as set forth in
the Declaration.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Company.
"Redemption Price" means the Special Event Redemption Price or
the Optional Redemption Price, as the context requires.
7
<PAGE>
"Reference Treasury Dealer" means a nationally recognized U.S.
Government securities dealer in New York City selected by the Company.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date pursuant to Section
14.01, the average, as determined by the 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 Trustee by such Reference Treasury
Dealer at 5:00 p.m. New York City time on the third Business Day preceding such
redemption date.
"Registration Rights Agreement" means the Capital Securities
Registration Rights Agreement, dated as of April 13, 1998, by and among the
Company, the Trust and the Purchasers named therein, as such agreement may be
amended, modified or supplemented from time to time.
A "Regulatory Capital Event" means that the Company shall have
received an opinion of independent bank regulatory counsel experienced in such
matters to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
Federal Reserve or (b) 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 Issue Date, the Capital Securities do not constitute, or within 90 days of
the date thereof, will not constitute, Tier I Capital (or its then equivalent);
provided, however, that the distribution of the Junior Subordinated Debentures
in connection with a termination of the Trust by the Company shall not in and of
itself constitute a Regulatory Capital Event.
"Remaining Life" means the term of the Securities from the
Prepayment Date to the stated Maturity Date.
"Responsible Officer" shall mean any officer of the Trustee
with direct responsibility for the administration of the Indenture and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Security" shall mean Securities that bear or are
required to bear the legends relating to transfer restrictions under the
Securities Act set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities" means the Series A Securities and the Series B
Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
8
<PAGE>
"Securityholder", "holder of Securities", or other similar
terms, shall mean any Person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that purpose
in accordance with the terms hereof.
"Security Register" shall mean (i) prior to a Dissolution
Event, the list of holders provided to the Trustee pursuant to Section 4.01 and
(ii) following a Dissolution Event, any security register maintained by a
security registrar for the Securities appointed by the Company following the
execution of a supplemental indenture providing for transfer procedures as
provided for in Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness, whether
outstanding on the date of execution of this Indenture or hereafter created,
assumed or incurred, except Indebtedness Ranking on a Parity with the Securities
or Indebtedness Ranking Junior to the Securities, and any deferrals, renewals or
extensions of such Senior Indebtedness.
"Series A Securities" means the Company's Series A 9 3/8%
Junior Subordinated Deferrable Interest Debentures due May 1, 2028 as
authenticated and issued under this Indenture.
"Series B Securities" means the Company's Series B 9 3/8%
Junior Subordinated Deferrable Interest Debentures due May 1, 2028, as
authenticated and issued under this Indenture.
"Special Event" means either a Regulatory Capital Event or a
Tax Event.
"Special Event Redemption Price" shall mean, with respect to
any redemption of the Securities following a Special Event, an amount in cash
equal to the Make Whole Amount.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" shall mean the receipt by UCBH Trust Co. and the
Company 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
9
<PAGE>
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the Issue Date, there
is more than an insubstantial risk that (i) UCBH Trust Co. 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 Securities, (ii) interest
payable by the Company on the Securities is not, or within 90 days of the date
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States Federal income tax purposes or (iii) UCBH Trust Co., or will
be within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"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 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 equal to the Comparable Treasury Price for such prepayment date. The
Treasury Rate shall be calculated on a third Business Day preceding the
prepayment date.
"Trustee" shall mean the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article VI hereof,
shall also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust Indenture
Act of 1939 as in force at the date of execution of this Indenture; provided,
however, that, in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act of 1939" shall mean, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Securities" shall mean the Capital Securities and the
Common Securities, collectively.
"UCBH Trust Co." or the "Trust" shall mean UCBH Trust Co., a
Delaware business trust created for the purpose of issuing its undivided
beneficial interests in connection with the issuance of Securities under this
Indenture.
"U.S. Government Obligations" shall mean securities that are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality
10
<PAGE>
of the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case under clauses (i) or (ii) are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
denominations of $1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
The Securities shall be executed on behalf of the Company by a
duly authorized officer and attested by a Secretary or an Assistant Secretary.
The signature of any such person on the Securities may be manual or facsimile.
If an Officer whose signature is on a Security no longer holds that office at
the time the Security is authenticated, the Security shall nevertheless be
valid.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be borne by
the Securities shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed $30,928,000 aggregate principal amount of
the Securities, except as provided in Sections 2.07, 2.08, 2.09 and 14.05. The
series of Securities to be initially issued hereunder shall be the Series A
Securities.
11
<PAGE>
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities shall be
issued in fully registered certificated form without interest coupons. Principal
of, premium, if any, and interest on the Securities issued in certificated form
will be payable, the transfer of such Securities will be registrable and such
Securities will be exchangeable for Securities bearing identical terms and
provisions at the office or agency of the Company maintained for such purpose
under Section 3.02; provided, however, that payment of interest with respect to
Securities (other than a Global Security) may be made at the option of the
Company (i) by check mailed to the holder at such address as shall appear in the
Security Register or (ii) by transfer to an account maintained by the Person
entitled thereto, provided that proper transfer instructions have been received
in writing by the relevant record date. Notwithstanding the foregoing, so long
as the holder of any Securities is the Property Trustee, the payment of the
principal of, premium, if any, and interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, on such Securities held
by the Property Trustee will be made at such place and to such account as may be
designated by the Property Trustee.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this Section 2.04
or as otherwise determined by the Company in accordance with applicable law,
each Security shall bear the applicable legends relating to restrictions on
transfer pursuant to the securities laws in substantially the form set forth on
Exhibit A hereto.
(b) In the event of an Exchange Offer, the Company shall issue
and the Trustee, upon Company Order, shall authenticate Series B Securities in
exchange for Series A Securities accepted for exchange in the Exchange Offer,
which Series B Securities shall not bear the legends required by subsection (a)
above (other than the legend dealing with the restriction referred to in Section
2.07(a)(ii) of this Indenture), in each case unless the holder of such Series A
Securities is either (A) a broker dealer who purchased such Series A Securities
directly from the Company for resale pursuant to Rule 144A or any other
available exemption under the Securities Act, (B) a Person participating in the
distribution of the Series A Securities or (C) a Person who is an Affiliate of
the Company.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in
book-entry form, the related Definitive Securities shall be presented to the
Trustee (if an arrangement with the Depositary has been maintained) by the
Property Trustee in exchange for one or more Global Securities (as may be
required pursuant to Section 2.07) in an aggregate principal amount equal to the
aggregate principal amount of all outstanding Securities, to be registered in
the name of the Depositary, or its nominee, and delivered by the Trustee to the
Depositary for crediting to the accounts of its participants pursuant to the
instructions of the Administrative Trustees; the Company upon any
12
<PAGE>
such presentation shall execute one or more Global Securities in such aggregate
principal amount and deliver the same to the Trustee for authentication and
delivery in accordance with this Indenture; and payments on the Securities
issued as a Global Security will be made to the Depositary; and
(ii) if any Capital Securities are held in
certificated form, the related Definitive Securities may be presented to the
Trustee by the Property Trustee and any Capital Security certificate which
represents Capital Securities other than Capital Securities in book-entry form
("Non Book-Entry Capital Securities") will be deemed to represent beneficial
interests in Securities presented to the Trustee by the Property Trustee having
an aggregate principal amount equal to the aggregate liquidation amount of the
Non Book-Entry Capital Securities until such Capital Security certificates are
presented to the Security Registrar for transfer or reissuance, at which time
such Capital Security certificates will be canceled and a Security, registered
in the name of the holder of the Capital Security certificate or the transferee
of the holder of such Capital Security certificate, as the case may be, with an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Security certificate canceled, will be executed by the Company and
delivered to the Trustee for authentication and delivery in accordance with this
Indenture. Upon the issuance of such Securities, Securities with an equivalent
aggregate principal amount that were presented by the Property Trustee to the
Trustee will be canceled.
(b) The Global Securities shall represent the aggregate amount
of outstanding Securities from time to time endorsed thereon; provided, that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented thereby
shall be made by the Trustee, in accordance with instructions given by the
Company as required by this Section 2.05.
(c) The Global Securities may be transferred, in whole but not
in part, only to the Depositary, another nominee of the Depositary, or to a
successor Depositary selected or approved by the Company or to a nominee of such
successor Depositary.
(d) If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary or the Depositary has ceased to
be a clearing agency registered under the Exchange Act, and a successor
Depositary is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the case may be, the
Company will execute, and the Trustee, upon receipt of a Company Order, will
authenticate and make available for delivery the Definitive Securities, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Security in exchange for such Global Security. If
there is an Event of Default, the Depositary shall have the right to exchange
the Global Securities for Definitive Securities. In addition, the Company may at
any time determine that the Securities shall no longer be represented by a
Global Security. In the event of such an Event of Default or such a
determination, the Company shall execute, and subject to Section 2.07, the
Trustee, upon receipt of an Officers' Certificate
13
<PAGE>
evidencing such determination by the Company and a Company Order, will
authenticate and make available for delivery the Definitive Securities, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Security in exchange for such Global Security.
Upon the exchange of the Global Security for such Definitive Securities, in
authorized denominations, the Global Security shall be canceled by the Trustee.
Such Definitive Securities issued in exchange for the Global Security shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Definitive Securities
to the Depositary for delivery to the Persons in whose names such Definitive
Securities are so registered.
SECTION 2.06 Interest.
(a) Each Security will bear interest at the rate of 9 3/8% per
annum (the "Coupon Rate") from the most recent date to which interest has been
paid or duly provided for or, if no interest has been paid or duly provided for,
from November 1, 1998, until the principal thereof becomes due and payable, and
at the Coupon Rate on any overdue principal (and premium, if any) and (to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest, compounded semi-annually, payable (subject to
the provisions of Article XVI) semi-annually in arrears on May 1 and November 1
of each year (each, an "Interest Payment Date") commencing on the Issue Date, to
the Person in whose name such Security or any predecessor Security is
registered, at the close of business on the regular record date for such
interest installment, which shall be the fifteenth day of the month preceding
the month in which the relevant Interest Payment Date falls.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period of less than a full
calendar month, the number of days lapsed in such month based on a 30-day month.
In the event that any Interest Payment Date falls on a day that is not a
Business Day, then payment of interest 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 next succeeding
Business Day falls in the next succeeding calendar year, then such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
(c) During such time as the Property Trustee is the holder of
any Securities, the Company shall pay any additional amounts on the Securities
as may be necessary in order that the amount of Distributions then due and
payable by UCBH Trust Co. on the outstanding Trust Securities shall not be
reduced as a result of any additional taxes, duties and other governmental
charges to which UCBH Trust Co. has become subject as a result of a Tax Event
("Additional Sums").
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. (i) The Series A Securities, and
those Series B Securities with respect to which any Person described in Section
2.04(b)(A), (B) or (C) is the
14
<PAGE>
beneficial owner, may not be transferred except in compliance with the legends
contained in Exhibit A unless otherwise determined by the Company in accordance
with applicable law. Upon any distribution of the Securities following a
Dissolution Event, the Company and the Trustee shall enter into a supplemental
indenture pursuant to Section 9.01 to provide for the transfer restrictions and
procedures with respect to the Securities substantially similar to those
contained in the Declaration to the extent applicable in the circumstances
existing at such time.
(ii) The Securities will be issued and may be
transferred only in blocks having an aggregate principal amount of not less than
$100,000. Any such transfer of the Securities in a block having an aggregate
principal amount of less than $100,000 shall be deemed to be voided and of no
legal effect whatsoever. Any such transferee shall be deemed not to be a holder
of such Securities for any purpose, including, but not limited to the receipt of
payments on such Securities, and such transferee shall be deemed to have no
interest whatsoever in such Securities.
(b) General Provisions Relating to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Definitive Securities and Global Securities at
the Security Registrar's request. All Definitive Securities and Global
Securities issued upon any registration of transfer or exchange of Definitive
Securities or Global Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Definitive Securities or Global Securities surrendered upon
such registration of transfer or exchange.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith.
The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption or any
notice of selection of Securities for redemption under Article XIV hereof and
ending at the close of business on the day of such mailing; or (ii) register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
Prior to due presentment for the registration of a transfer of
any Security, the Trustee, the Company and any agent of the Trustee or the
Company may deem and treat the Person in whose name any Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and interest on such Securities, neither the
Trustee, nor the Company nor any agent of the Trustee or the Company shall be
affected by notice to the contrary.
(c) Exchange of Series A Securities for Series B Securities.
The Series A Securities may be exchanged for Series B Securities pursuant to the
terms of the Exchange Offer. The Trustee shall make the exchange as follows:
15
<PAGE>
The Company shall present the Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Securities, the
transactions contemplated by the Exchange Offer have
been consummated; and
(B) the principal amount of Series A Securities properly
tendered in the Exchange Offer that are represented
by a Global Security and the principal amount of
Series A Securities properly tendered in the Exchange
Offer that are represented by Definitive Securities,
the name of each holder of such Definitive
Securities, the principal amount properly tendered in
the Exchange Offer by each such holder and the name
and address to which Definitive Securities for Series
B Securities shall be registered and sent for each
such holder.
The Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Series B Securities have
been registered under Section 5 of the Securities Act and the Indenture has been
qualified under the Trust Indenture Act and (y) with respect to the matters set
forth in Section 3(p) of the Registration Rights Agreement and (iii) a Company
Order, shall authenticate (A) a Global Security representing Series B Securities
in aggregate principal amount equal to the aggregate principal amount of Series
A Securities represented by a Global Security indicated in such Officers'
Certificate as having been properly tendered and (B) Definitive Securities
representing Series B Securities registered in the names of, and in the
principal amounts indicated in, such Officers' Certificate.
If the principal amount of the Global Security for the Series
B Securities is less than the principal amount of the Global Security for the
Series A Securities, the Trustee shall make an endorsement on such Global
Security for Series A Securities indicating a reduction in the principal amount
represented thereby.
The Trustee shall deliver such Definitive Securities
representing Series B Securities to the holders thereof as indicated in such
Officers' Certificate.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
for replacements of Securities are met. An indemnity bond must be supplied by
the holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any agent thereof or any authenticating agent
from any loss that any of them may suffer if a Security is replaced. The Company
or the Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and
shall be entitled
16
<PAGE>
to all of the benefits of this Indenture equally and proportionately with all
other Securities duly issued hereunder.
SECTION 2.09. Temporary Securities.
Pending the preparation of Definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the Definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company shall cause
Definitive Securities to be prepared without unreasonable delay. The Definitive
Securities shall be printed, lithographed or engraved, or provided by any
combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at the office
or agency maintained by the Company for such purpose pursuant to Section 3.02
hereof, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, in exchange therefor the same
aggregate principal amount of Definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as Definitive Securities.
SECTION 2.10. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or dispose of canceled Securities in accordance
with its normal practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to it. The Company
may not issue new Securities to replace Securities that have been redeemed or
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest.
Any interest on any Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the holder
on the relevant regular record date by virtue of having been such holder; and
such Defaulted Interest shall be paid by the Company, at its election, as
provided in clause (a) or clause (b) below:
17
<PAGE>
(a) The Company may make payment of any Defaulted
Interest on Securities to the Persons in whose names
such Securities (or their respective Predecessor
Securities) are registered at the close of business
on a special record date for the payment of such
Defaulted Interest, which shall be fixed in the
following manner: the Company shall notify the
Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security
and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special
record date for the payment of such Defaulted
Interest which shall not be more than 15 nor less
than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such
special record date and, in the name and at the
expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the
special record date therefor to be mailed, first
class postage prepaid, to each Securityholder at his
or her address as it appears in the Security
Register, not less than 10 days prior to such special
record date. Notice of the proposed payment of such
Defaulted Interest and the special record date
therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in
whose names such Securities (or their respective
Predecessor Securities) are registered on such
special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted
Interest on any Securities in any other lawful manner
not inconsistent with the requirements of any
securities exchange on which such Securities may be
listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed
practicable by the Trustee.
SECTION 2.12. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in
18
<PAGE>
or omission of such numbers. The Company will promptly notify the Trustee of
any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the
holders of the Securities that it will duly and punctually pay or cause to be
paid the principal of, premium, if any, and interest on the Securities at the
place, at the respective times and in the manner provided herein. Except as
provided in Section 2.03, each installment of interest on the Securities may be
paid by mailing checks for such interest payable to the order of the holder of
Security entitled thereto as they appear in the Security Register. The Company
further covenants to pay any and all amounts, including, without limitation,
Additional Sums, as may be required pursuant to Section 2.06(c), Liquidated
Damages, if any, on the dates and in the manner required under the Registration
Rights Agreement and Compounded Interest, as may be required pursuant to Section
16.01.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the
Company will maintain in the State of Delaware, an office or agency where the
Securities may be presented for payment, an office or agency where the
Securities may be presented for registration of transfer and for exchange as in
this Indenture provided and an office or agency where notices and demands to or
upon the Company in respect of the Securities or of this Indenture may be
served. The Company will give to the Trustee written notice of the location of
any such office or agency and of any change of location thereof. Until otherwise
designated from time to time by the Company in a notice to the Trustee, any such
office or agency for all of the above purposes shall be the Principal Office of
the Trustee. In case the Company shall fail to maintain any such office or
agency in the State of Delaware or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the Principal Office of the Trustee.
In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside the State of
Delaware where the Securities may be presented for payment, registration of
transfer and for exchange in the manner provided in this Indenture, and the
Company may from time to time rescind such designation, as the Company may deem
desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
any such office or agency in the state of Delaware for the purposes above
mentioned. The Company will give to the Trustee prompt written notice of any
such designation or rescission thereof.
19
<PAGE>
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office.
The Company, whenever necessary to avoid or fill a vacancy in
the office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other
than the Trustee with respect to the Securities, it
will cause such paying agent to execute and deliver
to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the
provision of this Section 3.04,
(1) that it will hold all sums held by it as
such agent for the payment of the principal
of and premium, if any, or interest on the
Securities (whether such sums have been paid
to it by the Company or by any other obligor
on the Securities) in trust for the benefit
of the holders of the Securities; and
(2) that it will give the Trustee notice of any
failure by the Company (or by any other
obligor on the Securities) to make any
payment of the principal of and premium or
interest (including Additional Sums and
Compounded Interest, if any) and Liquidated
Damages, if any, on the Securities when the
same shall be due and payable.
(b) If the Company shall act as its own paying agent, it
will, on or before each due date of the principal of
and premium, if any, or interest on the Securities,
set aside, segregate and hold in trust for the
benefit of the holders of the Securities a sum
sufficient to pay such principal, premium or interest
so becoming due and will notify the Trustee of any
failure to take such action and of any failure by the
Company (or by any other obligor under the
Securities) to make any payment of the principal of
and premium, if any, or interest on the Securities
when the same shall become due and payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for
the purpose of obtaining a satisfaction and discharge
with respect to the Securities hereunder, or for any
other reason, pay or cause to be paid to the Trustee
all sums held in trust for such Securities by the
Trustee or any paying agent hereunder, as required by
this Section 3.04, such sums to be held by the
Trustee upon the trusts herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust
as provided in this Section 3.04 is subject
20
<PAGE>
to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year in each year, commencing with the first fiscal
year ending after the date hereof, so long as Securities are outstanding
hereunder, an Officers' Certificate, one of the signers of which shall be the
principal executive, principal financial or principal accounting officer of the
Company, stating that in the course of the performance by the signers of their
duties as officers of the Company they would normally have knowledge of any
default by the Company in the performance of any covenants contained herein,
stating whether or not they have knowledge of any such default and, if so,
specifying each such default of which the signers have knowledge and the nature
thereof.
SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other Person unless the
provisions of Article X hereof are complied with.
SECTION 3.07. Limitation on Dividends.
The Company will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock), (ii) make any payment of principal, premium, if any, or
interest on or repay or repurchase or redeem any debt securities of the Company
(including Other Debentures) that rank pari passu with or junior in right of
payment to the Securities or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any Subsidiary of the
Company (including Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the Securities (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, Common Stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholder's 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 Capital
Securities Guarantee, (d) as a result of a reclassification of the Company's
capital stock or the exchange or the conversion of one class or series of the
Company's capital stock for another class or series of the Company's capital
stock, (e) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged and (f) purchases of Common
Stock related to the issuance of Common Stock or rights under any of the
Company's benefit plans for its directors, officers or employees or any of the
Company's dividend reinvestment plans) if at such time (1) there shall have
occurred any event of which the Company has actual knowledge that (a) is or,
with the giving of notice or the lapse of time, or both, would constitute an
Event of Default and (b) in respect of which the Company shall not have taken
reasonable steps to cure, (2) if such Securities are held by the Property
Trustee, the Company
21
<PAGE>
shall be in default with respect to its payment obligations under the Capital
Securities Guarantee or (3) the Company shall have given notice of its election
of the exercise of its right to extend the interest payment period pursuant to
Section 16.01 and any such extension shall be continuing.
SECTION 3.08. Covenants as to UCBH Trust Co.
In the event Securities are issued to UCBH Trust Co. or a
trustee of such trust in connection with the issuance of Trust Securities by
UCBH Trust Co., for so long as such Trust Securities remain outstanding, the
Company (i) will maintain 100% direct or indirect ownership of the Common
Securities of UCBH Trust Co.; provided, however, that any successor of the
Company, permitted pursuant to Article X, may succeed to the Company's ownership
of such Common Securities, (ii) will use its reasonable efforts to cause UCBH
Trust Co. (a) to remain a business trust, except in connection with a
distribution of Securities to the holders of Trust Securities in liquidation of
the Trust, the redemption of all of the Trust Securities of UCBH Trust Co. or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration of UCBH Trust Co., and (b) to otherwise continue to be treated as a
grantor trust and not an association taxable as a corporation for United States
federal income tax purposes and (iii) use its reasonable efforts to cause each
holder of Trust Securities to be treated as owning an undivided beneficial
interest in the Securities.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of the
Securities to UCBH Trust Co. and in connection with the sale of the Trust
Securities by UCBH Trust Co., the Company, in its capacity as borrower with
respect to the Securities, shall:
(a) pay all costs and expenses relating to the offering, sale
and issuance of the Securities, including commissions and expenses and
indemnification obligations, if any, to or for the benefit of the Placement
Agent (as defined in the Agency Agreement) payable pursuant to the Agency
Agreement, fees and expenses in connection with any exchange offer, filing of a
shelf registration statement or other action to be taken pursuant to the
Registration Rights Agreement and compensation of the Trustee in accordance with
the provisions of Section 6.06;
(b) pay all costs and expenses of the Trust (including, but
not limited to, costs and expenses relating to the organization of UCBH Trust
Co., the offering, sale and issuance of the Trust Securities (including
commissions to the initial purchasers in connection therewith), the fees and
expenses of the Property Trustee and the Delaware Trustee, the costs and
expenses relating to the operation of UCBH Trust Co., including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition, financing, and
disposition of assets of UCBH Trust Co.;
(c) be primarily and fully liable for any indemnification
obligations arising
22
<PAGE>
with respect to the Declaration;
(d) pay any and all taxes (other than United States
withholding taxes attributable to UCBH Trust Co. or its assets) and all
liabilities, costs and expenses with respect to such taxes of the Trust; and
(e) pay all other fees, expenses, debts and obligations (other
than in respect of principal, interest and premium, if any, on the Trust
Securities) related to UCBH Trust Co.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or
resignation of the Trustee, unless otherwise stated, the Company shall pay to
the Trustee all amounts accrued and owing to the date of such termination,
removal or resignation. Upon termination of the Declaration or the removal or
resignation of the Delaware Trustee or the Property Trustee, as the case may be,
pursuant to Section 5.7 of the Declaration, the Company shall pay to the
Delaware Trustee or the Property Trustee, as the case may be, all amounts
accrued and owing to the date of such termination, removal or resignation.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee:
(a) on a semi-annual basis on each regular record date
for the Securities, a list, in such form as the
Trustee may reasonably require, of the names and
addresses of the Securityholders as of such record
date; and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the
Company, of any such request, a list of similar form
and content as of a date not more than 15 days prior
to the time such list is furnished,
except that, no such lists need be furnished so long as the
Trustee is in possession thereof by reason of its acting as Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as
is reasonably
23
<PAGE>
practicable, all information as to the names and
addresses of the holders of the Securities (1)
contained in the most recent list furnished to it as
provided in Section 4.01 or (2) received by it in the
capacity of Securities registrar (if so acting)
hereunder. The Trustee may destroy any list furnished
to it as provided in Section 4.01 upon receipt of a
new list so furnished.
(b) In case three or more holders of Securities
(hereinafter referred to as "applicants") apply in
writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a
Security for a period of at least six months
preceding the date of such application, and such
application states that the applicants desire to
communicate with other holders of Securities or with
holders of all Securities with respect to their
rights under this Indenture and is accompanied by a
copy of the form of proxy or other communication
which such applicants propose to transmit, then the
Trustee shall within five Business Days after the
receipt of such application, at its election, either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section
4.02, or
(2) inform such applicants as to the approximate number
of holders of all Securities, whose names and
addresses appear in the information preserved at the
time by the Trustee in accordance with the provisions
of subsection (a) of this Section 4.02, and as to the
approximate cost of mailing to such Securityholders
the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee
shall, upon the written request of such applicants,
mail to each Securityholder whose name and address
appear in the information preserved at the time by
the Trustee in accordance with the provisions of
subsection (a) of this Section 4.02 a copy of the
form of proxy or other communication which is
specified in such request with reasonable promptness
after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment,
of the reasonable expenses of mailing, unless within
five days after such tender, the Trustee shall mail
to such applicants and file with the Commission,
together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion
of the Trustee, such mailing would be contrary to the
best interests of the holders of Securities of such
series or all Securities, as the case may be, or
would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If
the Commission, after opportunity for a hearing upon
the objections specified in the written
24
<PAGE>
statement so filed, shall enter an order refusing to
sustain any of such objections or if, after the entry
of an order sustaining one or more of such
objections, the Commission shall find, after notice
and opportunity for hearing, that all the objections
so sustained have been met and shall enter an order
so declaring, the Trustee shall mail copies of such
material to all such Securityholders with reasonable
promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such
applicants respecting their application.
(c) Each and every holder of Securities, by receiving and
holding the same, agrees with the Company and the
Trustee that neither the Company nor the Trustee nor
any paying agent shall be held accountable by reason
of the disclosure of any such information as to the
names and addresses of the holders of Securities in
accordance with the provisions of subsection (b) of
this Section 4.02, regardless of the source from
which such information was derived, and that the
Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under
said subsection (b).
SECTION 4.03. Reports by Company.
(a) The Company covenants and agrees to file with the
Trustee, within 15 days after the date on which the
Company is required to file the same with the
Commission, copies of the annual reports and of the
information, documents and other reports (or copies
of such portions of any of the foregoing as said
Commission may from time to time by rules and
regulations prescribe) which the Company may be
required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or,
if the Company is not required to file information,
documents or reports pursuant to either of such
sections, then to file with the Trustee and the
Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such
of the supplementary and periodic information,
documents and reports which may be required pursuant
to Section 13 of the Exchange Act in respect of a
security listed and registered on a national
securities exchange as may be prescribed from time to
time in such rules and regulations.
(b) The Company covenants and agrees to file with the
Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time by
said Commission, such additional information,
documents and reports with respect to compliance by
the Company with the conditions and covenants
provided for in this Indenture as may be required
from time to time by such rules and regulations.
25
<PAGE>
(c) The Company covenants and agrees to transmit by mail
to all holders of Securities, as the names and
addresses of such holders appear upon the Security
Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information,
documents and reports required to be filed by the
Company pursuant to subsections (a) and (b) of this
Section 4.03 as may be required by rules and
regulations prescribed from time to time by the
Commission.
(d) Delivery of such reports, information and documents
to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute
constructive notice of any information contained
therein or determinable from information contained
therein, including the Company's compliance with any
of its covenants hereunder (as to which the Trustee
is entitled to rely exclusively on Officers'
Certificates).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule
144A under the Securities Act, the Company shall,
upon request, provide the information required by
clause (d)(4) thereunder to each Securityholder and
to each beneficial owner and prospective purchaser of
Securities identified by each Securityholder of
Restricted Securities, unless such information is
furnished to the Commission pursuant to Section 13 or
15(d) of the Exchange Act.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such
reports concerning the Trustee and its actions under
this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section
313(a) of the Trust Indenture Act, the Trustee shall,
within sixty days after each May 15 following the
date of this Indenture, commencing May 15, 1999,
deliver to Securityholders a brief report, dated as
of such May 15, which complies with the provisions of
such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the
Trustee with each stock exchange, if any, upon which
the Securities are listed, with the Commission and
with the Company. The Company will promptly notify
the Trustee when the Securities are listed on any
stock exchange.
26
<PAGE>
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall
constitute an Event of Default hereunder:
(a) default in the payment of any interest (including
Compounded Interest or Additional Sums, if any) or
Liquidated Damages, if any, upon any Security or any
Other Debentures when it becomes due and payable, and
continuance of such default for a period of 30 days;
provided, however, that a valid extension of an
interest payment period by the Company in accordance
with the terms hereof shall not constitute a default
in the payment of interest for this purpose; or
(b) default in the payment of all or any part of the
principal of (or premium, if any, on) any Security or
any Other Debentures as and when the same shall
become due and payable either at maturity, upon
redemption, by declaration of acceleration of
maturity or otherwise; or
(c) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture
(other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of
such default or breach for a period of 90 days after
there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company
and the Trustee by the holders of at least 25% in
aggregate principal amount of the outstanding
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" hereunder;
or
(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the
Company in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or
for any substantial part of its property, or ordering
the winding-up or liquidation of its affairs and such
decree or order shall remain unstayed and in effect
for a period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar
law now or hereafter in effect,
27
<PAGE>
shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall
consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the
Company or of any substantial part of its property,
or shall make any general assignment for the benefit
of creditors, or shall fail generally to pay its
debts as they become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Trustee or the
holders of not less than 25% in aggregate principal amount of the Securities
then outstanding may declare the principal amount of all Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the holders of the outstanding Securities), and upon any
such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Securities shall have
been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay (A) all matured installments of interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, upon all
the Securities and the principal of and premium, if any, on any and all
Securities which shall have become due otherwise than by acceleration (with
interest upon such principal and premium, if any, and, to the extent that
payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the same rate as the rate of interest specified in
the Securities to the date of such payment or deposit) and (B) such amount as
shall be sufficient to cover compensation due to the Trustee and each
predecessor Trustee, their respective agents, attorneys and counsel, pursuant to
Section 6.06, and (ii) any and all Events of Default under the Indenture, other
than the non-payment of the principal of the Securities which shall have become
due solely by such declaration of acceleration, shall have been cured, waived or
otherwise remedied as provided herein, then, in every such case, the holders of
a majority in aggregate principal amount of the Securities then outstanding, by
written notice to the Company and to the Trustee, may rescind and annul such
declaration and its consequences, but no such waiver or rescission and annulment
shall extend to or shall affect any subsequent default or shall impair any right
consequent thereon.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the holders of the Securities shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the Trustee and the holders of the
Securities shall continue as though no such proceeding had been taken.
SECTION 5.02. Payment of Securities on Default; Suit
Therefor.
The Company covenants that (a) in case default shall be made
in the payment of
28
<PAGE>
any installment of interest (including Compounded Interest and Additional Sums,
if any) and Liquidated Damages, if any, upon any of the Securities as and when
the same shall become due and payable, and such default shall have continued for
a period of 30 days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Securities as and when the same
shall have become due and payable, whether at maturity of the Securities or upon
redemption or by declaration or otherwise, then, upon demand of the Trustee, the
Company will pay to the Trustee, for the benefit of the holders of the
Securities, the whole amount that then shall have become due and payable on all
such Securities for principal and premium, if any, or interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
or both, as the case may be, with interest upon the overdue principal and
premium, if any, and (to the extent that payment of such interest is enforceable
under applicable law and, if the Securities are held by UCBH Trust Co. or a
trustee of such trust, without duplication of any other amounts paid by UCBH
Trust Co. or a trustee in respect thereof) upon the overdue installments of
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, at the rate borne by the Securities; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including a reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any other amount due to the Trustee
pursuant to Section 6.06.
In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on the Securities and collect in the manner provided by law out of the
property of the Company or any other obligor on the Securities wherever situated
the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy
or for the reorganization of the Company or any other obligor on the Securities
under Title 11, United States Code, or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company or
such other obligor, or in the case of any other similar judicial proceedings
relative to the Company or other obligor upon the Securities, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.02, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the Securities
and, in case of any judicial proceedings, to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for amounts due to the Trustee pursuant to
6.06) and of the Securityholders allowed in such judicial proceedings relative
to the Company or any other obligor on the Securities, or to the creditors or
property of the Company or such other obligor, unless prohibited by applicable
law and regulations, to vote on behalf of the holders of the Securities in any
election of a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or person
29
<PAGE>
performing similar functions in comparable proceedings, and to collect and
receive any moneys or other property payable or deliverable on any such claims,
and to distribute the same after the deduction of its charges and expenses; and
any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Securityholders to make such payments to the Trustee,
and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
amounts due to the Trustee pursuant to Section 6.06.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities, or the production thereof on
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the holders of the Securities, and it shall not be necessary to make any holders
of the Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the Securities in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to the Securities and all other amounts due to the Trustee under
Section 6.06;
Second: To the payment of all Senior Indebtedness of the
Company if and to the extent required by Article XV;
Third: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and be
unpaid, to the payment of the amounts then due and unpaid upon Securities for
principal of (and premium, if any) and interest (including Compounded Interest
and Additional Sums, if any) and Liquidated Damages, if any, on the Securities,
in respect of which or for the benefit of which money has been collected,
30
<PAGE>
ratably, without preference of priority of any kind, according to the amounts
due on such Securities for principal (and premium, if any) and interest,
respectively; and
Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof with respect to the
Securities specifying such Event of Default, as hereinbefore provided, and
unless also the holders of not less than 25% in aggregate principal amount of
the Securities then outstanding shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any such action,
suit or proceeding, it being understood and intended, and being expressly
covenanted by the taker and holder of every Security with every other taker and
holder and the Trustee, that no one or more holders of Securities shall have any
right in any manner whatever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any other holder of
Securities, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Securities.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Security to receive payment of the
principal of (premium, if any) and interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, on such Security, on or
after the same shall have become due and payable, or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the
consent of such holder and by accepting a Security hereunder it is expressly
understood, intended and covenanted by the taker and holder of every Security
with every other such taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any manner whatsoever by virtue or
by availing of any provision of this Indenture to affect, disturb or prejudice
the rights of the holders of any other Securities, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Securities. For the
protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set
31
<PAGE>
forth therein, to commence a Direct Action with respect to any Event of Default
under this Indenture and the Securities.
SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to Securities
and is continuing, the Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the Trustee
or to the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to the
Trustee or the holders of the Securities, by judicial proceedings or otherwise,
to enforce the performance or observance of the covenants and agreements
contained in this Indenture or otherwise established with respect to the
Securities, and no delay or omission of the Trustee or of any holder of any of
the Securities to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 5.04, every power and remedy
given by this Article V or by law to the Trustee or to the Securityholders may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
however, that (subject to the provisions of Section 6.01) the Trustee shall have
the right to decline to follow any such direction if the Trustee shall determine
that the action so directed would be unjustly prejudicial to the holders not
taking part in such direction or if the Trustee being advised by counsel
determines that the action or proceeding so directed may not lawfully be taken
or if the Trustee in good faith by its board of directors or trustees, executive
committee, or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Trustee in personal liability. Prior to any declaration accelerating
the maturity of the Securities, the holders of a majority in aggregate principal
amount of the Securities at the time outstanding may on behalf of the holders of
all of the Securities waive any past default or Event of Default and its
consequences except a default (a) in the payment of principal of or premium, if
any, or interest
32
<PAGE>
(including Compounded Interest and Additional Sums, if any) or Liquidated
Damages, if any, on any of the Securities or (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the consent of the
holder of each Security affected; provided, however, that if the Securities are
held by the Property Trustee, such waiver or modification to such waiver shall
not be effective until the holders of a majority in aggregate liquidation amount
of Trust Securities shall have consented to such waiver or modification to such
waiver; provided further, that if the consent of the holder of each outstanding
Security is required, such waiver shall not be effective until each holder of
the Trust Securities shall have consented to such waiver. Upon any such waiver,
the default covered thereby shall be deemed to be cured for all purposes of this
Indenture and the Company, the Trustee and the holders of the Securities shall
be restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon. Whenever any default or Event of Default hereunder shall
have been waived as permitted by this Section 5.07, said default or Event of
Default shall for all purposes of the Securities and this Indenture be deemed to
have been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
The Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities known to a Responsible Officer of the
Trustee, mail to all Securityholders, as the names and addresses of such holders
appear upon the Security Register, notice of all defaults known to the Trustee,
unless such defaults shall have been cured before the giving of such notice (the
term "defaults" for the purpose of this Section 5.08 being hereby defined to be
the events specified in clauses (a), (b), (c), (d) and (e) of Section 5.01, not
including periods of grace, if any, provided for therein, and irrespective of
the giving of written notice specified in clause (c) of Section 5.01); and
provided that, except in the case of default in the payment of the principal of
or premium, if any, or interest (including Compounded Interest or Additional
Sums, if any) or Liquidated Damages, if any, on any of the Securities, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders; and
provided further, that in the case of any default of the character specified in
Section 5.01(c) no such notice to Securityholders shall be given until at least
60 days after the occurrence thereof but shall be given within 90 days after
such occurrence.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees and expenses, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.09 shall not apply to any suit
33
<PAGE>
instituted by the Trustee, to any suit instituted by any Securityholder, or
group of Securityholders, holding in the aggregate more than 10% in aggregate
principal amount of the Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest (including Compounded Interest and Additional Sums,
if any) or Liquidated Damages, if any, on any Security against the Company on or
after the same shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default has occurred (which has not
been cured or waived) the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may have occurred,
(1) the duties and obligations of the Trustee
shall be determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Officers, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts; and
34
<PAGE>
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 5.07, relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or liability is not reasonably assured to it under
the terms of this Indenture or adequate indemnity against such risk is not
reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, note,
debenture or other paper or document believed by it
to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request, direction, order or demand of the
Company mentioned herein may be sufficiently
evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically
prescribed); and any Board Resolution may be
evidenced to the Trustee by a copy thereof certified
by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel of its selection
and any advice or Opinion of Counsel shall be full
and complete authorization and protection in respect
of any action taken or suffered omitted by it
hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this
Indenture at the request, order or direction of any
of the Securityholders, pursuant to the provisions of
this Indenture, unless such Securityholders shall
have offered to the Trustee reasonable and sufficient
security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or
powers conferred upon it by this Indenture; nothing
contained herein shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of
Default (that has not been cured or waived), to
exercise
35
<PAGE>
such of the rights and powers vested in it by this
Indenture, and to use the same degree of care and
skill in their exercise, as a prudent man would
exercise or use under the circumstances in the
conduct of his own affairs;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order,
approval, bond, debenture, coupon or other paper or
document, unless requested in writing to do so by the
holders of a majority in aggregate principal amount
of the outstanding Securities; provided, however,
that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such
expense or liability as a condition to so proceeding;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either
directly or by or through agents (including any
Authenticating Agent) or attorneys, and the Trustee
shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney
appointed by it with due care;
(h) the Trustee shall not be charged with knowledge of
any Default or Event of Default with respect to the
Securities unless (1) such default is a default under
Sections 5.01(a) (other than a default with respect
to the payment of Compounded Interest, Liquidated
Damages or Additional Sums) and 5.01(b) of the
Indenture, (2) a Responsible Officer shall have
actual knowledge of such Default or Event of Default
or (3) written notice of such Default or Event of
Default shall have been given to the Trustee by the
Company or any other obligor on the Securities or by
any holder of the Securities; and
(i) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith, without
negligence or willful misconduct and believed by it
to be authorized or within the discretion or rights
or powers conferred upon it by this Indenture.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in
the certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Securities. The Trustee and
the Authenticating Agent shall not be accountable for the use or application by
the Company of any
36
<PAGE>
Securities or the proceeds of any Securities authenticated and delivered by the
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture. The Trustee shall not be charged with knowledge of any default or
Event of Default under Section 5.01 (a) or (b) relating to Other Debentures
unless (i) a Responsible Officer of the Trustee assigned to its Principal Office
shall have actual knowledge thereof or (ii) the Corporation, any Securityholder
or the holder of any Other Debenture shall have given the Trustee written notice
thereof in accordance with Section 13.04.
SECTION 6.04. Trustee, Authenticating Agent, Paying
Agents, Transfer Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it
would have if it were not Trustee, Authenticating Agent, paying agent, transfer
agent or Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys
received by the Trustee or any paying agent shall, until used or applied as
herein provided, be held in trust for the purpose for which they were received,
but need not be segregated from other funds except to the extent required by
law. The Trustee and any paying agent shall be under no liability for interest
on any money received by it hereunder except as otherwise agreed in writing with
the Company. So long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys shall be paid from time to
time upon the written order of the Company, signed by the Chairman of the Board
of Directors, the President, a Vice President, the Treasurer or an Assistant
Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as issuer of Securities under this Indenture,
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, such compensation as shall be agreed to in writing between
the Company and the Trustee (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust), and the Company
will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Company also covenants to indemnify
each of the Trustee or any predecessor Trustee (and its officers, agents,
directors and employees) for, and to hold it harmless against, any and all loss,
damage, claim, liability or expense including taxes (other than taxes based on
the income of the Trustee) incurred without negligence or bad faith on the part
of the Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises. The obligations of the
Company
37
<PAGE>
under this Section 6.06 to compensate and indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness shall be secured
by a lien prior to that of the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the holders of particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or Section
5.01(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation
or removal of the Trustee and the defeasance or other termination of this
Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02,
whenever in the administration of the provisions of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or omitting any action hereunder, such matter (unless other
evidence in respect thereof is herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Trustee, and such certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken
or omitted by it under the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and
the Company shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia or a corporation
or other Person permitted to act as trustee by the Commission authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000) and subject to
supervision or examination by federal, state, territorial, or District of
Columbia authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 6.09 the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
38
<PAGE>
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written
notice of such resignation to the Company and by
mailing notice thereof to the holders of the
Securities at their addresses as they shall appear on
the Security register. Upon receiving such notice of
resignation, the Company shall promptly appoint a
successor trustee or trustees by written instrument,
in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to
the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment
within 60 days after the mailing of such notice of
resignation to the affected Securityholders, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor
trustee, or any Securityholder who has been a bona
fide holder of a Security for at least six months
may, subject to the provisions of Section 5.09, on
behalf of himself and all others similarly situated,
petition any such court for the appointment of a
successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the
provisions of Section 6.08 after written
request therefor by the Company or by any
Securityholder who has been a bona fide
holder of a Security or Securities for at
least six months, or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section
6.09 and shall fail to resign after written
request therefor by the Company or by any
such Securityholder, or
(3) the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or
of its property shall be appointed, or any
public officer shall take charge or control
of the Trustee or of its property or affairs
for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, the Company may remove the
Trustee and appoint
39
<PAGE>
a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to
the successor trustee, or, subject to the provisions
of Section 5.09, any Securityholder who has been a
bona fide holder of a Security for at least six
months may, on behalf of himself and all others
similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint
a successor trustee.
(c) The holders of a majority in aggregate principal
amount of the Securities at the time outstanding may
at any time remove the Trustee and nominate a
successor trustee, which shall be deemed appointed as
successor trustee unless within 10 days after such
nomination the Company objects thereto or if no
successor trustee shall have been so appointed and
shall have accepted appointment within 30 days after
such removal, in which case the Trustee so removed or
any Securityholder, upon the terms and conditions and
otherwise as in subsection (a) of this Section 6.10
provided, may petition any court of competent
jurisdiction for an appointment of a successor
trustee.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of
the provisions of this Section 6.10 shall become
effective upon acceptance of appointment by the
successor trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10
shall execute, acknowledge and deliver to the Company and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Company or of the successor trustee,
the trustee ceasing to act shall, upon payment of any amounts then due it
pursuant to the provisions of Section 6.06, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
trustee all property and money held by such retiring trustee thereunder. Upon
request of any such successor trustee, the Company shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.06.
No successor trustee shall accept appointment as provided in
this Section 6.11
40
<PAGE>
unless at the time of such acceptance such successor trustee shall be qualified
under the provisions of Section 6.08 and eligible under the provisions of
Section 6.09.
Upon acceptance of appointment by a successor trustee as
provided in this Section 6.11, the Company shall mail notice of the succession
of such trustee hereunder to the holders of Securities at their addresses as
they shall appear on the Security register. If the Company fails to mail such
notice within 10 days after the acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor trustee; and in all such cases such certificates shall have the
full force which the Securities or this Indenture elsewhere provides that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or
authenticate Securities in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a
Creditor.
The Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 311(b)
of the Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by
the Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Securities issued
upon exchange or transfer thereof as fully to all intents and purposes as though
any such Authenticating Agent had been expressly authorized to authenticate and
deliver Securities; provided, that the Trustee shall have no liability to the
Company for any acts or omissions of the Authenticating Agent with respect to
the
41
<PAGE>
authentication and delivery of Securities. Any such Authenticating Agent shall
at all times be a corporation organized and doing business under the laws of the
United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of at least $50,000,000 and being subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section 6.14 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section 6.14 without the execution or filing of any paper or
any further act on the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee may
at any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time any Authenticating Agent shall cease to be eligible under this Section
6.14, the Trustee may, and upon the request of the Company shall, promptly
appoint a successor Authenticating Agent eligible under this Section 6.14, shall
give written notice of such appointment to the Company and shall mail notice of
such appointment to all Securityholders as the names and addresses of such
holders appear on the Security Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating
Agent from time to time reasonable compensation for its services. Any
Authenticating Agent shall have no responsibility or liability for any action
taken by it as such in accordance with the directions of the Trustee.
42
<PAGE>
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of
a specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the holders of such specified percentage have
joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Securities voting in favor thereof at any meeting of such Securityholders duly
called and held in accordance with the provisions of Article VIII, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of such Securityholders.
If the Company shall solicit from the Securityholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Securityholders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other action, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the outstanding Securities shall be computed as of
the record date; provided, however, that no such authorization, agreement or
consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05,
proof of the execution of any instrument by a Securityholder or his agent or
proxy shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall be proved by the
Security Register or by a certificate of the Security registrar. The Trustee may
require such additional proof of any matter referred to in this Section as it
shall deem necessary.
The record of any Securityholders' meeting shall be proved in
the manner provided in Section 8.06.
43
<PAGE>
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any Security registrar may deem the person in whose name
such Security shall be registered upon the Security Register to be, and may
treat him as, the absolute owner of such Security (whether or not such Security
shall be overdue) for the purpose of receiving payment of or on account of the
principal of and premium, if any, and (subject to Section 2.06) interest on such
Security and for all other purposes; and neither the Company nor the Trustee nor
any Authenticating Agent nor any paying agent nor any transfer agent nor any
Security registrar shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being or upon his order shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Security.
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Securities shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Securities which a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 7.04 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Securities and that the pledgee is not the Company or any such other
obligor or Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such other obligor. In
the case of a dispute as to such right, any decision by the Trustee taken upon
the advice of counsel shall be full protection to the Trustee.
SECTION 7.05. Revocation of Consents; Future Holders
Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Securities specified in
this Indenture in connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution therefor),
subject to Section 7.01, the serial number of which is shown by the evidence to
be included in the Securities the holders of which have consented to such action
may, by filing written notice with the Trustee at its principal office and upon
proof of holding as provided in Section 7.02, revoke such action so far as
concerns such Security (or so far as concerns the principal amount represented
by any exchanged or substituted Security). Except as aforesaid any such action
taken by the holder of any Security shall be conclusive and binding upon such
holder and upon all future holders and owners of such Security, and of any
Security issued in exchange or
44
<PAGE>
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon such Security or any Security issued in exchange or
substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time and
from time to time pursuant to the provisions of this Article VIII for any of the
following purposes:
(a) to give any notice to the Company or to the Trustee,
or to give any directions to the Trustee, or to
consent to the waiving of any default hereunder and
its consequences, or to take any other action
authorized to be taken by Securityholders pursuant to
any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor
trustee pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate
principal amount of such Securities under any other
provision of this Indenture or under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 8.01, to be held at such time and at
such place in the State of Delaware or the City of San Francisco, California, as
the Trustee shall determine. Notice of every meeting of the Securityholders,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to holders of
Securities at their addresses as they shall appear on the Securities Register.
Such notice shall be mailed not less than 20 nor more than 180 days prior to the
date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or
Securityholders.
In case at any time the Company pursuant to a resolution of
the Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Securities then outstanding, shall have requested the Trustee to
call a meeting of Securityholders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Securityholders may determine
the time and the place in said
45
<PAGE>
State of Delaware for such meeting and may call such meeting to take any action
authorized in Section 8.01, by mailing notice thereof as provided in Section
8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a
Person shall (a) be a holder of one or more Securities or (b) a Person appointed
by an instrument in writing as proxy by a holder of one or more Securities. The
only Persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each
holder of Securities or proxy therefor shall be entitled to one vote for each
$1,000 principal amount of Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not outstanding and ruled by the chairman of the meeting
to be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Securities held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Securityholders. Any meeting of Securityholders duly called pursuant to the
provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, and the meeting may be held as so adjourned without
further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of
holders of Securities shall be by written ballots on which shall be subscribed
the signatures of such holders or of their representatives by proxy and the
serial number or numbers of the Securities held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the
46
<PAGE>
meeting. A record in duplicate of the proceedings of each meeting of
Securityholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was mailed as provided in Section 8.02. The record
shall show the serial numbers of the Securities voting in favor of or against
any resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates shall
be delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
The holders of the Series A Capital Securities and the Series B Capital
Securities shall vote for all purposes as a single class.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time amend the Indenture, without the
consent of the Securityholders, for one or more of the following purposes:
(a) to evidence the succession of another Person to the
Company, or successive successions, and the
assumption by the successor Person of the covenants,
agreements and obligations of the Company pursuant to
Article X hereof;
(b) to add to the covenants of the Company such further
covenants, restrictions or conditions for the
protection of the Securityholders as the Board of
Directors and the Trustee shall consider to be for
the protection of the Securityholders, and to make
the occurrence, or the occurrence and continuance, of
a default in any of such additional covenants,
restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of
the remedies provided in this Indenture as herein set
forth; provided, however, that in respect of any such
additional covenant, restriction or condition such
amendment may provide for a particular period of
grace after default (which period may be shorter or
longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement
upon such default or may limit the remedies available
to the Trustee upon such default;
47
<PAGE>
(c) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities
registrable as to principal only) and to provide for
exchangeability of such Securities with the
Securities issued hereunder in fully registered form
and to make all appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental
indenture which may be defective or inconsistent with
any other provision contained herein or in any
supplemental indenture, or to make such other
provisions in regard to matters or questions arising
under this Indenture; provided that any such action
shall not materially adversely affect the interests
of the holders of the Securities;
(e) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with
respect to the Securities;
(f) to make provision for transfer procedures,
certification, book-entry provisions, the form of
restricted securities legends, if any, to be placed
on Securities, and all other matters required
pursuant to Section 2.07 or otherwise necessary,
desirable or appropriate in connection with the
issuance of Securities to holders of Capital
Securities in the event of a distribution of
Securities by UCBH Trust Co. following a Dissolution
Event;
(g) to qualify or maintain qualification of this
Indenture under the Trust Indenture Act;
(h) to enable the Company and the Trust to conduct an
Exchange Offer as contemplated by the Registration
Rights Agreement, provided that any such action shall
not materially adversely affect the interests of the
holders of the Securities; or
(i) to make any change that does not adversely affect the
rights of any Securityholder in any material respect.
The Trustee is hereby authorized to join with the Company in
the execution of any supplemental indenture to effect such amendment, to make
any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any amendment to the Indenture authorized by the provisions of
this Section 9.01 may be executed by the Company and the Trustee without the
consent of the holders of any of
48
<PAGE>
the Securities at the time outstanding, notwithstanding any of the provisions of
Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of
the holders of a majority in aggregate principal amount of the Securities at the
time outstanding, the Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time amend the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the holders of the Securities; provided, however, that no such amendment shall
without the consent of the holders of each Security then outstanding and
affected thereby (i) change the Maturity Date of any Security, or reduce the
rate or extend the time of payment of interest thereon (except as contemplated
by Article XVI), or reduce the principal amount thereof, or reduce any amount
payable on redemption thereof, or make the principal thereof or any interest or
premium thereon payable in any coin or currency other than that provided in the
Securities, or impair or affect the right of any Securityholder to institute
suit for payment thereof, or (ii) reduce the aforesaid percentage of Securities
the holders of which are required to consent to any such amendment to the
Indenture, provided, however, that if the Securities are held by UCBH Trust Co.,
such amendment shall not be effective until the holders of a majority in
liquidation amount of Trust Securities shall have consented to such amendment;
provided, further, that if the consent of the holder of each outstanding
Security is required, such amendment shall not be effective until each holder of
the Trust Securities shall have consented to such amendment.
Upon the request of the Company accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture affecting such
amendment, and upon the filing with the Trustee of evidence of the consent of
Securityholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
It shall not be necessary for the consent of the
Securityholders under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
49
<PAGE>
SECTION 9.03. Compliance with Trust Indenture Act; Effect
of Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions
of this Article IX shall comply with the Trust Indenture Act. Upon the execution
of any supplemental indenture pursuant to the provisions of this Article IX,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Securities shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the execution of
any supplemental indenture affecting such series pursuant to the provisions of
this Article IX may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Company, authenticated by the Trustee or the Authenticating
Agent and delivered in exchange for the Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive, in addition to the document required by Section 13.06, an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article IX. The Trustee may received an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article is
authorized or permitted by, and conforms to, the terms of this Article and that
it is proper for the Trustee under the provisions of this Article to join in the
execution thereof.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain
Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the Company with or into
any other Person (whether or not affiliated
50
<PAGE>
with the Company, as the case may be), or successive consolidations or mergers
in which the Company or its successor or successors, as the case may be, shall
be a party or parties, or shall prevent any sale, conveyance, transfer or lease
of the property of the Company, or its successor or successors as the case may
be, as an entirety, or substantially as an entirety, to any other Person
(whether or not affiliated with the Company, or its successor or successors, as
the case may be) authorized to acquire and operate the same; provided, that (a)
the Company is the surviving Person, or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
conveyance, transfer or lease of property is made is a Person organized and
existing under the laws of the United States or any State thereof or the
District of Columbia, and (b) upon any such consolidation, merger, sale,
conveyance, transfer or lease, the due and punctual payment of the principal of
(and premium, if any) and interest on the Securities according to their tenor
and the due and punctual performance and observance of all the covenants and
conditions of this Indenture to be kept or performed by the Company shall be
expressly assumed, by supplemental indenture (which shall conform to the
provisions of the Trust Indenture Act, as then in effect) satisfactory in form
to the Trustee executed and delivered to the Trustee by the Person formed by
such consolidation, or into which the Company shall have been merged, or by the
Person which shall have acquired such property, as the case may be, (c) after
giving effect to such consolidation, merger, sale, conveyance, transfer or
lease, no Default or Event of Default shall have occurred and be continuing and
(d) such consolidation, merger, sale, conveyance, transfer or lease does not
cause the Securities to be downgraded by a nationally recognized statistical
rating organization.
SECTION 10.02. Successor Corporation to be Substituted for
Company.
In case of any such consolidation, merger, conveyance or
transfer and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to the
Trustee, of the due and punctual payment of the principal of and premium, if
any, and interest on all of the Securities and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to be
performed or observed by the Company, such successor Person shall succeed to and
be substituted for the Company, with the same effect as if it had been named
herein as the party of the first part, and the Company thereupon shall be
relieved of any further liability or obligation hereunder or upon the
Securities. Such successor Person thereupon may cause to be signed, and may
issue either in its own name or in the name of UCBH Holdings, Inc., any or all
of the Securities issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee or the Authenticating Agent;
and, upon the order of such successor Person instead of the Company and subject
to all the terms, conditions and limitations in this Indenture prescribed, the
Trustee or the Authenticating Agent shall authenticate and deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee or the Authenticating Agent for authentication,
and any Securities which such successor Person thereafter shall cause to be
signed and delivered to the Trustee or the Authenticating Agent for that
purpose. All the Securities so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Indentures had been issued at the date of the execution hereof.
51
<PAGE>
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale, conveyance, transfer or lease, and any assumption,
permitted or required by the terms of this Article X complies with the
provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than any Securities
which shall have been destroyed, lost or stolen and which shall have been
replaced as provided in Section 2.08) and not theretofore canceled, or (b) all
the Securities not theretofore canceled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds
sufficient to pay on the Maturity Date or upon redemption all of the Securities
(other than any Securities which shall have been destroyed, lost or stolen and
which shall have been replaced as provided in Section 2.08) not theretofore
canceled or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, due or to become due to the
Maturity Date or redemption date, as the case may be, but excluding, however,
the amount of any moneys for the payment of principal of or premium, if any, or
interest (including Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on the Securities (1) theretofore repaid to the
Company in accordance with the provisions of Section 11.04, or (2) paid to any
State or to the District of Columbia pursuant to its unclaimed property or
similar laws, and if in either case the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect except for the provisions of Sections 2.02, 2.07,
2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04 hereof, which shall survive until
such Securities shall mature and be paid. Thereafter, Sections 6.06, 6.10 and
11.04 shall survive, and the Trustee, on demand of the Company accompanied by
any Officers' Certificate and an Opinion of Counsel and at the cost and expense
of the Company, shall execute proper instruments acknowledging satisfaction of
and discharging this Indenture, the Company, however, hereby agreeing to
reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred by the Trustee in connection with this Indenture or the
Securities.
52
<PAGE>
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys and
U.S. Government Obligations deposited with the Trustee pursuant to Sections
11.01 or 11.05 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Company if acting as its own
paying agent), to the holders of the particular Securities for the payment of
which such moneys or U.S. Government Obligations have been deposited with the
Trustee, of all sums due and to become due thereon for principal, premium, if
any, and interest.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.05 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Monies Held.
Upon the satisfaction and discharge of this Indenture all
monies then held by any paying agent of the Securities (other than the Trustee)
shall, upon written demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such paying agent shall be released from all further
liability with respect to such monies.
SECTION 11.04. Return of Unclaimed Moneys.
Any monies deposited with or paid to the Trustee or any paying
agent for payment of the principal of or premium, if any, or interest on
Securities and not applied but remaining unclaimed by the holders of Securities
for two years after the date upon which the principal of or premium, if any, or
interest (including Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on such Securities, as the case may be, shall have
become due and payable, shall be repaid to the Company by the Trustee or such
paying agent on written demand; and the holder of any of the Securities shall
thereafter look only to the Company for any payment which such holder may be
entitled to collect and all liability of the Trustee or such paying agent with
respect to such monies shall thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Monies or U.S.
Government Obligations.
The Company shall be deemed to have been Discharged (as
defined below) from its obligations with respect to the Securities on the 91st
day after the applicable conditions set forth below have been satisfied:
(1) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee or the
Defeasance Agent (as defined below) as trust funds in
trust, specifically pledged as security for, and
dedicated solely to, the benefit of the holders of
the Securities (i) money in an amount, or (ii) U.S.
53
<PAGE>
Government Obligations which through the payment of
interest and principal in respect thereof in
accordance with their terms will provide, not later
than one day before the due date of any payment,
money in an amount, or (iii) a combination of (i) and
(ii), sufficient, in the opinion (with respect to
(ii) and (iii)) of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee and
the Defeasance Agent, if any, to pay and discharge
each installment of principal of and interest and
premium, if any, on the outstanding Securities on the
dates such installments of principal, interest or
premium are due;
(2) if the Securities are then listed on any national
securities exchange, the Company shall have delivered
to the Trustee and the Defeasance Agent, if any, an
Opinion of Counsel to the effect that the exercise of
the option under this Section 11.05 would not cause
such Securities to be delisted from such exchange;
(3) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on
the date of such deposit; and
(4) the Company shall have delivered to the Trustee and
the Defeasance Agent, if any, an Opinion of Counsel
to the effect that holders of the Securities will not
recognize income, gain or loss for United States
federal income tax purposes as a result of the
exercise of the option under this Section 11.05 and
will be subject to United States federal income tax
on the same amount and in the same manner and at the
same times as would have been the case if such option
had not been exercised, and such opinion shall be
based on a statute so providing or be accompanied by
a private letter ruling to that effect received from
the United States Internal Revenue Service or a
revenue ruling pertaining to a comparable form of
transaction to that effect published by the United
States Internal Revenue Service.
"Discharged" means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by, and obligations
under, the Securities and to have satisfied all the obligations under this
Indenture relating to the Securities (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), except (A)
the rights of holders of Securities to receive, from the trust fund described in
clause (1) above, payment of the principal of and the interest and premium, if
any, on the Securities when such payments are due; (B) the Company's obligations
with respect to the Securities under Sections 2.07, 2.08, 5.02 and 11.04; and
(C) the rights, powers, trusts, duties and immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which
is eligible to act as Trustee hereunder and which assumes all of the obligations
of the Trustee necessary to enable the Trustee to act hereunder. In the event
such a Defeasance Agent is appointed pursuant to this
54
<PAGE>
Section, the following conditions shall apply:
(1) The Trustee shall have approval rights over the
document appointing such Defeasance Agent and the
document setting forth such Defeasance Agent's rights
and responsibilities;
(2) The Defeasance Agent shall provide verification to
the Trustee acknowledging receipt of sufficient money
and/or U. S. Government Obligations to meet the
applicable conditions set forth in this Section
11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations.
No recourse for the payment of the principal of or premium, if
any, or interest on any Security, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture, or in any Security, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor Person to the Company, either
directly or through the Company or any successor Person to the Company, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and as
a consideration for, the execution of this Indenture and the issue of the
Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in
this Indenture contained by the Company shall bind its successors and assigns
whether so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done
55
<PAGE>
and performed with like force and effect by the like board, committee or officer
of any corporation that shall at the time be the lawful sole successor of the
Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of
2/3 (two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company, and thereupon such power so
surrendered shall terminate both as to the Company, as the case may be, and as
to any successor Person.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the holders
of Securities on the Company may be given or served by being deposited postage
prepaid by first class mail, registered or certified mail, overnight courier
service or conformed telecopy addressed (until another address is filed by the
Company with the Trustee for the purpose) to the Company, 711 Van Ness Avenue,
San Francisco, CA 94102, Attention Tommy S. Wu. Any notice, direction, request
or demand by any Securityholder to or upon the Trustee shall be deemed to have
been sufficiently given or made, for all purposes, if given or made in writing
at the office of the Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890 Attention: Corporate Trust
Administration (unless another address is provided by the Trustee to the Company
for such purpose). Any notice or communication to a Securityholder shall be
mailed by first class mail to his or her address shown on the register kept by
the Security Registrar. Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its sufficiency with respect
to other Securityholders.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a
contract made under the laws of the State of Delaware, and for all purposes
shall be governed by and construed in accordance with the laws of said State,
without regard to conflicts of laws principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions
Precedent.
Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that in the
opinion of the signers all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture (except certificates delivered pursuant to
Section 3.05) shall include (1) a statement that the
56
<PAGE>
Person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
Person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of or
premium, if any, or interest on the Securities will not be a Business Day, the
payment of such principal of or premium, if any, or interest on the Securities
need not be made on such date but may be made on the next succeeding Business
Day, with the same force and effect as if made on the date of payment and no
interest shall accrue for the period from and after such date, except that if
such next succeeding Business Day falls in the next succeeding calendar year,
then such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, such imposed duties shall
control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the
articles and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
the Securities, but this Indenture and the Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
57
<PAGE>
SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of
its respective rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company, provided that, in the event of
any such assignment, the Company will remain primarily liable for all such
obligations. Subject to the foregoing, the Indenture is binding upon and inures
to the benefit of the parties thereto and their respective successors and
assigns. This Indenture may not otherwise be assigned by the parties thereto.
SECTION 13.13. Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities
held by UCBH Trust Co. or a trustee of such trust, if the Property Trustee of
such Trust fails to enforce its rights under this Indenture as the holder of the
Securities held as the assets of UCBH Trust Co. any holder of Capital Securities
may institute legal proceedings directly against the Company to enforce such
Property Trustee's rights under this Indenture without first instituting any
legal proceedings against such Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
principal of or premium, if any, or interest on the Securities when due, the
Company acknowledges that a holder of Capital Securities may directly institute
a proceeding for enforcement of payment to such holder of the principal of or
premium, if any, or interest on the Securities having a principal amount equal
to the aggregate liquidation amount of the Capital Securities of such holder on
or after the respective due date specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Redemption.
If, prior to the Initial Optional Redemption Date, a Special
Event has occurred and is continuing then, notwithstanding Section 14.02(a) but
subject to Section 14.02(c), the Company shall have the right, at any time
within 90 days following the occurrence of such Special Event and prior to the
Initial Optional Redemption Date, upon (i) not less than 45 days written notice
to the Trustee and (ii) not less than 30 days nor more than 60 days written
notice to the Securityholders, to redeem the Securities, in whole (but not in
part), at the Special Event Redemption Price. Following a Special Event, the
Company shall take such action as is necessary to promptly determine the Special
Event Redemption Price, including without limitation the appointment by the
Company of a Quotation Agent. The Special Event Redemption Price shall be paid
prior to 12:00 noon, New York time, on the date of such redemption or such
earlier time as the Company determines, provided that the Company shall
58
<PAGE>
deposit with the Trustee an amount sufficient to pay the Special Event
Redemption Price by 10:00 a.m., New York time, on the date such Special Event
Redemption Price is to be paid. The Company shall provide the Trustee with
written notice of the Special Event Redemption Price promptly after the
calculation thereof, which notice shall include any calculation made by the
Quotation Agent in connection with the determination of the Special Event
Redemption Price.
SECTION 14.02. Optional Redemption by Company.
(a) Subject to the provisions of this Article XIV, the
Company shall have the right to redeem the
Securities, in whole or in part, from time to time,
on or after the Initial Optional Redemption Date, at
100% of the principal amount thereof plus, in each
case, accrued and unpaid interest thereon (including
Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, to the date of redemption
(the "Optional Redemption Price").
If the Securities are only partially redeemed
pursuant to this Section 14.02, the Securities to be
redeemed shall be selected on a pro rata basis, by
lot or other method utilized by the Trustee, not more
than 60 days prior to the date fixed for redemption
from the outstanding Securities not previously called
for redemption, provided, however, that with respect
to Securityholders that would be required to hold
Securities with an aggregate principal amount of less
than $100,000 but more than an aggregate principal
amount of zero as a result of such pro rata
redemption, the Company shall redeem Securities of
each such Securityholder so that after such
redemption such Securityholder shall hold Securities
either with an aggregate principal amount of at least
$100,000 or such Securityholder no longer holds any
Securities and shall use such method (including,
without limitation, by lot) as the Company shall deem
fair and appropriate, provided, further, that any
such method of selection may be made on the basis of
the aggregate principal amount of Securities held by
each Securityholder and may be made by making such
adjustments as the Company deems fair and appropriate
in order that only Securities in denominations of
$1,000 or integral multiples thereof shall be
redeemed. The Optional Redemption Price shall be paid
prior to 12:00 noon, New York time, on the date of
such redemption or at such earlier time as the
Company determines, provided that the Company shall
deposit with the Trustee an amount sufficient to pay
the Optional Redemption Price by 10:00 a.m., New York
time, on the date such Optional Redemption Price is
to be paid.
(b) Notwithstanding the first sentence of Section 14.02,
upon the entry of an order for dissolution of UCBH
Trust Co. by a court of competent jurisdiction, the
Securities thereafter will be subject to optional
redemption, in whole only, but not in part, on or
after May 1, 2005, at the
59
<PAGE>
Optional Redemption Price and otherwise in accordance
with this Article XIV.
(c) Any redemption of Securities pursuant to Section
14.01 or Section 14.02 shall be subject to the
receipt by the Company of any required regulatory
approval.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking
fund.
SECTION 14.04. Notice of Redemption; Selection of
Securities.
In case the Company shall desire to exercise the right to
redeem all, or, as the case may be, any part of the Securities in accordance
with their terms, it shall fix a date for redemption and shall mail a notice of
such redemption at least 30 and not more than 60 days prior to the date fixed
for redemption to the holders of Securities so to be redeemed as a whole or in
part at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.
Each such notice of redemption shall specify the CUSIP number
of the Securities to be redeemed, the date fixed for redemption, the redemption
price at which the Securities are to be redeemed (or the method by which such
redemption price is to be calculated), the place or places of payment that
payment will be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. If less than all the Securities are
to be redeemed the notice of redemption shall specify the numbers of the
Securities to be redeemed. In case any Security is to be redeemed in part only,
the notice of redemption shall state the portion of the principal amount thereof
to be redeemed and shall state that on and after the date fixed for redemption,
upon surrender of such Security, a new Security or Securities in principal
amount equal to the unredeemed portion thereof will be issued.
By 10:00 a.m. New York time on the redemption date specified
in the notice of redemption given as provided in this Section, the Company will
deposit with the Trustee or with one or more paying agents an amount of money
sufficient to redeem on the redemption date all the Securities so called for
redemption at the appropriate Redemption Price, together with accrued interest
to the date fixed for redemption.
The Company will give the Trustee notice not less than 45 days
prior to the redemption date as to the aggregate principal amount of Securities
to be redeemed and the
60
<PAGE>
Trustee shall select, in such manner as in its sole discretion it shall deem
appropriate and fair, the Securities or portions thereof (in integral multiples
of $1,000, except as otherwise set forth in the applicable form of Security) to
be redeemed.
SECTION 14.05. Payment of Securities Called for Redemption.
If notice of redemption has been given as provided in Section
14.04, the Securities or portions of Securities with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable Redemption Price, together
with interest accrued to the date fixed for redemption (subject to the rights of
holders of Securities on the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the redemption
date), and on and after said date (unless the Company shall default in the
payment of such Securities at the Redemption Price, together with interest
accrued to said date) interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on the Securities or portions of
Securities so called for redemption shall cease to accrue. On presentation and
surrender of such Securities at a place of payment specified in said notice, the
said Securities or the specified portions thereof shall be paid and redeemed by
the Company at the applicable Redemption Price, together with interest
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, accrued thereon to the date fixed for redemption (subject to
the rights of holders of Securities on the close of business on a regular record
date in respect of an Interest Payment Date occurring on or prior to the
redemption date).
Upon presentation of any Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of
Securities issued hereunder likewise covenants and agrees, that the Securities
shall be issued subject to the provisions of this Article XV; and each holder of
a Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of, premium, if
any, and interest (including Compounded Interest and Additional Sums, if any)
and Liquidated Damages, if any, on all Securities issued hereunder shall, to the
extent and in the manner hereinafter set forth, be subordinated and junior in
right of payment to all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred.
61
<PAGE>
No provision of this Article XV shall prevent the occurrence
of any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment due
on any Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in either case, no
payment shall be made by the Company with respect to the principal (including
redemption payments) of or premium, if any, or interest on the Securities.
In the event of the acceleration of the maturity of the
Securities, then no payment shall be made by the Company with respect to the
principal (including redemption payments) of or premium, if any, or interest on
the Securities until the holders of all Senior Indebtedness outstanding at the
time of such acceleration shall receive payment in full of such Senior
Indebtedness (including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraphs of this Section 15.02, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing, within 90 days of
such payment of the amounts then due and owing on such Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of such Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness of the Company shall
first be paid in full, or payment thereof provided for in money in accordance
with its terms, before any payment is made by the Company on account of the
principal (and premium, if any) or interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, on the Securities; and
upon any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Securityholders
or the Trustee would be entitled to receive from the Company, except for the
provisions of this Article XV, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Securityholders or by the Trustee under the
Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Company (pro rata to such holders on the basis of the
62
<PAGE>
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Securityholders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee before all Senior Indebtedness is paid in full, or provision is made
for such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over or
delivered to the holders of such Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all such Senior Indebtedness in full in money in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XV with respect
to the Securities to the payment of Senior Indebtedness that may at the time be
outstanding, provided that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale,
conveyance, transfer or lease of its property as an entirety, or substantially
as an entirety, to another Person upon the terms and conditions provided for in
Article X of this Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 15.03 if such
other Person shall, as a part of such consolidation, merger, sale, conveyance,
transfer or lease, comply with the conditions stated in Article X of this
Indenture. Nothing in Section 15.02 or in this Section 15.03 shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 6.06 of this
Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Securityholders shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company, as the case may be, applicable to such
Senior Indebtedness until the principal of (and premium, if any) and
63
<PAGE>
interest on the Securities shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Securityholders or
the Trustee would be entitled except for the provisions of this Article XV, and
no payment over pursuant to the provisions of this Article XV to or for the
benefit of the holders of such Senior Indebtedness by Securityholders or the
Trustee, shall, as between the Company, its creditors other than holders of
Senior Indebtedness of the Company, and the holders of the Securities, be deemed
to be a payment by the Company to or on account of such Senior Indebtedness. It
is understood that the provisions of this Article XV are and are intended solely
for the purposes of defining the relative rights of the holders of the
Securities, on the one hand, and the holders of such Senior Indebtedness on the
other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest (including Compounded Interest
and Additional Sums, if any) and Liquidated Damages, if any, on the Securities
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders of
the Securities and creditors of the Company, as the case may be, other than the
holders of Senior Indebtedness of the Company, as the case may be, nor shall
anything herein or therein prevent the Trustee or the holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under the Indenture, subject to the rights, if any, under this Article XV of the
holders of such Senior Indebtedness in respect of cash, property or securities
of the Company, as the case may be, received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee, subject to the provisions of
Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders, for
the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, as the case may be, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XV.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance
thereof authorizes and directs the Trustee on such Securityholder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
64
<PAGE>
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article XV. Notwithstanding the
provisions of this Article XV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article XV, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any trustee therefor; and before the receipt of any such written notice,
the Trustee, subject to the provisions of Article VI of this Indenture, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 15.06 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any) or interest
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee on behalf of such holder), as the case
may be, to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XV, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article XV, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee and the Securityholders shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Trustee or to the
Securityholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or
65
<PAGE>
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article XV.
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XV, and
no implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of such Senior
Indebtedness and, subject to the provisions of Article VI of this Indenture, the
Trustee shall not be liable to any holder of such Senior Indebtedness if it
shall pay over or deliver to Securityholders, the Company or any other Person
money or assets to which any holder of such Senior Indebtedness shall be
entitled by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company, as the case may be, or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company, as the
case may be, with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Securities to the holders of
such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Company, as the case may be, and any
other Person.
66
<PAGE>
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable; provided that no
Extended Interest Payment Period shall end on a date other than an Interest
Payment Date or extend beyond the Maturity Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this Section 16.01, will
bear interest thereon at the Coupon Rate compounded semi-annually for each
semi-annual period of the Extended Interest Payment Period ("Compounded
Interest"). At the end of the Extended Interest Payment Period, the Company
shall pay all interest accrued and unpaid on the Securities, including any
Additional Sums and Compounded Interest (together, "Deferred Interest") that
shall be payable to the holders of the Securities in whose names the Securities
are registered in the Security Register on the first record date preceding the
end of the Extended Interest Payment Period. Before the termination of any
Extended Interest Payment Period, the Company may further defer payments of
interest by further extending such period, provided that such period, together
with all such previous and further extensions within such Extended Interest
Payment Period, shall not exceed 10 consecutive semi-annual periods, including
the first such semi-annual period during such Extended Interest Payment Period,
end on a date other than an Interest Payment Date or extend beyond the Maturity
Date of the Securities. Upon the termination of any Extended Interest Payment
Period and the payment of all Deferred Interest then due, the Company may
commence a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extended Interest
Payment Period, except at the end thereof, but the Company may prepay at any
time all or any portion of the interest accrued during an Extended Interest
Payment Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder of
the Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give written notice to the Administrative Trustees,
the Property Trustee and the Trustee of its selection of such Extended Interest
Payment Period five Business Days before the earlier of (i) the next succeeding
date on which Distributions on the Trust Securities issued by the Trust are
payable, or (ii) the date the Trust is required to give notice of the record
date, or the date such Distributions are payable, to any national securities
exchange or to holders of the Capital Securities issued by the Trust, but in any
event at least five Business Days before such record date.
67
<PAGE>
(b) If the Property Trustee is not the only holder of the
Securities at the time the Company selects an Extended Interest Payment Period,
the Company shall give the holders of the Securities and the Trustee written
notice of its selection of such Extended Interest Payment Period at least 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of the record or
payment date of such interest payment to any national securities exchange.
(c) The semi-annual period in which any notice is given
pursuant to paragraphs (a) or (b) of this Section 16.02 shall be counted as one
of the 10 semi-annual periods permitted in the maximum Extended Interest Payment
Period permitted under Section 16.01.
Wilmington Trust Company hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
UCBH HOLDINGS, INC.
By: /s/ Tommy S. Wu
----------------------------
Name: Tommy S. Wu
Title: President and Chief Executive Officer
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ James P. Lawler
---------------------------
Name: James P. Lawler
Title: Vice President
68
<PAGE>
EXHIBIT A
(FORM OF FACE OF SECURITY)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
(i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY,
AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEREE TO THE COMPANY. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.
A-1
<PAGE>
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 (100
SECURITIES). ANY SUCH TRANSFER OF SECURITIES IN A BLOCK HAVING AN AGGREGATE
PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE
RECEIPT OF PRINCIPAL, PREMIUM (IF ANY) OR INTEREST OF SUCH SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS SECURITY BY IT IS NOT
PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S. INTERNAL
REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH PROHIBITION.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY.
No. CUSIP No. __________
UCBH HOLDINGS, INC.
9 3/8% JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURE DUE MAY 1, 2028
UCBH Holdings, Inc., a Delaware corporation (the "Company,"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Wilmington Trust
Company, as Property Trustee for UCBH Trust Co. or registered assigns, the
principal sum of $30,928,000 on May 1, 2028 (the "Maturity Date"), unless
previously redeemed, and to pay interest on the outstanding principal amount
hereof from April 17, 1998, or from the most recent interest payment date (each
such date, an "Interest Payment Date") to which interest has been paid or duly
provided for, semi-annually (subject to deferral as set forth herein) in arrears
on May 1 and November 1 of each year, commencing on November 1, 1998, at the
rate of 9 3/8% per annum until the principal hereof shall have become
A-2
<PAGE>
due and payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum compounded semi-annually. The amount of interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months and, for any period less than a full calendar month, the number of days
elapsed in such month based on a 30-day month. In the event that any date on
which the principal of (or premium, if any) or interest on this Security is
payable is not a Business Day, then the payment payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), except that if such next
succeeding Business Day falls in the next calendar year, then such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date. Pursuant to the Indenture, in certain
circumstances the Company will be required to pay Additional Sums and Compounded
Interest (each as defined in the Indenture) with respect to this Security.
Pursuant to the Registration Rights Agreement, in certain limited circumstances
the Company will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to this Security.
The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the close
of business on the regular record date for such interest installment, which
shall be at the close of business on the fifteenth day of the month preceding
the month in which the relevant interest payment date falls. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the holders on such regular record date and may be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the holders of Securities not less than 10 days prior to such special
record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on this Security shall be payable at the office or agency of the Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that, payment of interest may be made at the
option of the Company by (i) check mailed to the holder at such address as shall
appear in the Security Register or (ii) by transfer to an account maintained by
the Person entitled thereto, provided that proper written transfer instructions
have been received by the relevant record date. Notwithstanding the foregoing,
so long as the Holder of this Security is the Property Trustee, the payment of
the principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on this
Security will be made at such place and to such account as may be designated by
the Property Trustee.
A-3
<PAGE>
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Security are continued on the reverse
side hereof and such provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed and sealed.
Dated: ________________, 1998
UCBH HOLDINGS, INC.
By: ____________________________
Name:
Title:
Attest:
By: _______________________
Name:
Title:
A-4
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Wilmington Trust Company Dated: April 17, 1998
as Trustee
By____________________
Authorized Signatory
A-5
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of April 17,
1998 (the "Indenture"), duly executed and delivered between the Company and
Wilmington Trust Company, as Trustee (the "Trustee"), to which Indenture
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Securities.
Upon the occurrence and continuation of a Special Event prior
to May 1, 2005 (the "Initial Optional Redemption Date"), the Company shall have
the right, at any time within 90 days following the occurrence of such Special
Event, to redeem this Security in whole (but not in part) at the Special Event
Redemption Price. "Special Event Redemption Price" shall mean, with respect to
any redemption of the Securities following a Special Event, an amount in cash
equal to the Make Whole Amount. The "Make Whole Amount" shall mean an amount
equal to the greater of (i) 100% of the principal amount to be redeemed or (ii)
the sum, as determined by a Quotation Agent, of the present values of remaining
scheduled payments of principal and interest, discounted to the prepayment date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate, plus, in the case of each of clauses (i)
and (ii), any accrued and unpaid interest thereon (including Compounded Interest
and Additional Sums, if any) and Liquidated Damages, if any, to the date of such
redemption.
In addition, the Company shall have the right to redeem this
Security, in whole or in part, at any time on or after the Initial Optional
Redemption Date (an "Optional Redemption"), at 100% or the principal amount
thereof plus, in each case, accrued and unpaid interest thereon (including
Additional Sums and Compounded Interest, if any) and Liquidated Damages, if any,
to the date of redemption (the "Optional Redemption Price").
The Optional Redemption Price or the Special Event Redemption Price, as
the case requires, shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or at such earlier time as the Company determines, provided,
that the Company shall deposit with the Trustee an amount sufficient to pay the
applicable Redemption Price by 10:00 a.m., New York City, on the date such
Redemption Price is to be paid. Any redemption pursuant to this paragraph will
be made upon not less than 30 days nor more than 60 days notice. If the
Securities are only partially redeemed by the Company pursuant to an Optional
Redemption, the particular Securities to be redeemed shall be selected on a pro
rata basis, by lot or such other method that the Trustee shall utilize, not more
than 60 days prior to the date fixed for redemption from the outstanding
Securities not previously called for redemption, provided, however, that with
respect to Securityholders that would be required to hold Securities with an
aggregate principal amount of less than $100,000 but more than an aggregate
principal amount of zero as a result of such pro rata redemption, the Company
shall redeem Securities of each such Securityholder so that after such
redemption such Securityholder shall hold Securities either with an aggregate
principal amount of at least $100,000 or such Securityholder no longer holds any
Securities and shall use such method (including, without limitation, by lot) as
the Company shall
A-6
<PAGE>
deem fair and appropriate, provided, further, that any such method of selection
may be made on the basis of the aggregate principal amount of Securities held by
each Securityholder thereof and may be made by making such adjustments as the
Company deems fair and appropriate in order that only Securities in
denominations of $1,000 or integral multiples thereof shall be redeemed.
In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof will be issued in
the name of the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any redemption of Securities by
the Company shall be subject to the receipt of any required regulatory approval.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Securities
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Securities at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of the
Securities; provided, however, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and affected
thereby, (i) change the Maturity Date of any Securities, or reduce the principal
amount thereof, or reduce any amount payable on redemption thereof, or reduce
the rate or extend the time of payment of interest thereon (subject to Article
XVI of the Indenture), or make the principal of, or interest or premium on, the
Securities payable in any coin or currency other than U.S. dollars, or impair or
affect the right of any holder of Securities to institute suit for the payment
thereof, or (ii) reduce the aforesaid percentage of Securities, the holders of
which are required to consent to any such supplemental indenture. The Indenture
also contains provisions permitting the holders of a majority in aggregate
principal amount of the Securities at the time outstanding affected thereby, on
behalf of all of the holders of the Securities, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture, and its consequences, except a default in the payment
of the principal of or premium, if any, or interest on any of the Securities or
a default in respect of any covenant or provision under which the Indenture
cannot be modified or amended without the consent of each holder of Securities
then outstanding. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future holders and owners of this Security and of
any Security issued in exchange herefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and
A-7
<PAGE>
unconditional, to pay the principal of and premium, if any, and interest
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, on this Security at the time and place and at the rate and in
the money herein prescribed.
So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right, at any time and from time to time
during the term of the Securities, to defer payments of interest by extending
the interest payment period of such Securities for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual period
during such extension period, and not extending beyond the Maturity Date of the
Securities (an "Extended Interest Payment Period") or ending on a date other
than an Interest Payment Date, at the end of which period the Company shall pay
all interest then accrued and unpaid (together with interest thereon at the rate
specified for the Securities to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such Extended
Interest Payment Period, the Company may further defer payments of interest by
further extending such Extended Interest Payment Period, provided that such
Extended Interest Payment Period, together with all such previous and further
extensions within such Extended Interest Payment Period, (i) shall not exceed 10
consecutive semi-annual periods, including the first semi-annual period during
such Extended Interest Payment Period, (ii) shall not end on any date other than
an Interest Payment Date, and (iii) shall not extend beyond the Maturity Date of
the Securities. Upon the termination of any such Extended Interest Payment
Period and the payment of all accrued and unpaid interest and any additional
amounts then due, the Company may commence a new Extended Interest Payment
Period, subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in right of
payment to the Securities or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any Subsidiary of the
Company if such guarantee ranks pari passu or junior in right of payment to the
Securities (other than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Common Stock of the
Company, (b) any declaration of a dividend in connection with the implementation
of a stockholder's 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 Capital Securities Guarantee, (d) as a result of a
reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock, for another
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the exchange or
conversion of such capital stock or the security being exchanged or converted
and (f) purchases of Common Stock related to the issuance of Common Stock or
rights under any of the Company's benefit plans for its directors, officers or
employees or any of the Company's dividend reinvestment plans) if at such time
(1) there shall have occurred any event of which the Company has actual
knowledge that (a) is or, with the giving of notice or the lapse of time, or
both, would be, an Event of Default and (b) in respect of which the Company
shall not have taken reasonable steps to cure, (2) if the Securities
A-8
<PAGE>
are held by UCBH Trust Co., the Company shall be in default with respect to its
payment obligations under the Capital Securities Guarantee or (3) the Company
shall have given notice of its election of the exercise of its right to extend
the interest payment period and any such extension shall be continuing.
Subject to (i) the receipt of any required regulatory approval
and (ii) the receipt by the Company of an opinion of counsel to the effect that
such distribution will not be a taxable event to holders of Capital Securities,
the Company will have the right at any time to liquidate UCBH Trust Co. and
cause the Securities to be distributed to the holders of the Trust Securities in
liquidation of the Trust.
The Securities are issuable only in registered form without
coupons in denominations of $1,000.00 and any integral multiple thereof. As
provided in the Indenture and subject to the transfer restrictions limitations
as may be contained herein and therein from time to time, this Security is
transferable by the holder hereof on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the office or agency
of the Company in the City of San Francisco and the State of California
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the holder hereof or
his attorney duly authorized in writing, and thereupon one or more new
Securities of authorized denominations and for the same aggregate principal
amount and series will be issued to the designated transferee or transferees. No
service charge will be made for any such registration of transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any authenticating agent, any paying agent,
any transfer agent and the registrar may deem and treat the holder hereof as the
absolute owner hereof (whether or not this Security shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Security Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and (subject to the
Indenture) interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any authenticating agent nor any paying agent nor
any transfer agent nor any registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of
or premium, if any, or interest on this Security, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor Person,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issuance
hereof, expressly waived and released.
All terms used in this Security that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
A-9
<PAGE>
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.
A-10
Exhibit 4.2
(FORM OF FACE OF SECURITY)
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 (100 SECURITIES).
ANY SUCH TRANSFER OF SECURITIES IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT
OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH
SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF
PRINCIPAL, PREMIUM (IF ANY) OR INTEREST OF SUCH SECURITIES, AND SUCH TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY.
No. CUSIP No. __________
UCBH HOLDINGS, INC.
SERIES B 9.375% JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURE DUE MAY 1, 2028
UCBH Holdings, Inc., a Delaware corporation (the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Wilmington Trust Company, as Property
Trustee for UCBH Trust Co. or registered assigns, the principal sum of
$____________ on May 1, 2028 (the "Maturity Date"), unless previously redeemed,
and to pay interest on the outstanding principal amount hereof from April 17,
1998, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
semi-annually (subject to deferral as set forth herein) in arrears on May 1 and
November 1 of each year, commencing on November 1, 1998, at the rate of 9.375%
per annum until the principal hereof shall have become due and payable, and on
any overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded
<PAGE>
semi-annually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months and, for any
period less than a full calendar month, the number of days elapsed in such month
based on a 30-day month. In the event that any date on which the principal of
(or premium, if any) or interest on this Security is payable is not a Business
Day, then the payment payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay), except that if such next succeeding Business Day falls in
the next calendar year, then such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. Pursuant to the Indenture, in certain circumstances the Company
will be required to pay Additional Sums and Compounded Interest (each as defined
in the Indenture) with respect to this Security.
The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the close
of business on the regular record date for such interest installment, which
shall be at the close of business on the fifteenth day of the month preceding
the month in which the relevant interest payment date falls. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the holders on such regular record date and may be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the holders of Securities not less than 10 days prior to such special
record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any), on this Security shall be
payable at the office or agency of the Trustee maintained for that purpose in
any coin or currency of the United States of America that at the time of payment
is legal tender for payment of public and private debts; provided, however,
that, payment of interest may be made at the option of the Company by (i) check
mailed to the holder at such address as shall appear in the Security Register or
(ii) by transfer to an account maintained by the Person entitled thereto,
provided that proper written transfer instructions have been received by the
relevant record date. Notwithstanding the foregoing, so long as the Holder of
this Security is the Property Trustee, the payment of the principal of (and
premium, if any) and interest (including Compounded Interest and Additional
Sums, if any), on this Security will be made at such place and to such account
as may be designated by the Property Trustee.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect
<PAGE>
thereto. Each holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Security are continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed and sealed.
Dated: ________________, 1998
UCBH HOLDINGS, INC.
By: ____________________________
Name:
Title:
Attest:
By: _______________________
Name:
Title:
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Wilmington Trust Company Dated: ________, 1998
as Trustee
By____________________
Authorized Signatory
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein sometimes
referred to as the "Securities"), specified in the Indenture, all issued or to
be issued under and pursuant to an Indenture, dated as of April 17, 1998 (the
"Indenture"), duly executed and delivered between the Company and Wilmington
Trust Company, as Trustee (the "Trustee"), to which Indenture reference is
hereby made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Securities.
Upon the occurrence and continuation of a Special Event prior to May 1,
2005 (the "Initial Optional Redemption Date"), the Company shall have the right,
at any time within 90 days following the occurrence of such Special Event, to
redeem this Security in whole (but not in part) at the Special Event Redemption
Price. "Special Event Redemption Price" shall mean, with respect to any
redemption of the Securities following a Special Event, an amount in cash equal
to the Make Whole Amount. The "Make Whole Amount" shall mean an amount equal to
the greater of (i) 100% of the principal amount to be redeemed or (ii) the sum,
as determined by a Quotation Agent, of the present values of remaining scheduled
payments of principal and interest, discounted to the prepayment date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus, in the case of each of clauses (i) and
(ii), any accrued and unpaid interest thereon (including Compounded Interest and
Additional Sums, if any), to the date of such redemption.
In addition, the Company shall have the right to redeem this Security,
in whole or in part, at any time on or after the Initial Optional Redemption
Date (an "Optional Redemption"), at 100% or the principal amount thereof plus,
in each case, accrued and unpaid interest thereon (including Additional Sums and
Compounded Interest, if any), to the date of redemption (the "Optional
Redemption Price").
The Optional Redemption Price or the Special Event Redemption Price, as
the case requires, shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or at such earlier time as the Company determines, provided,
that the Company shall deposit with the Trustee an amount sufficient to pay the
applicable Redemption Price by 10:00 a.m., New York City, on the date such
Redemption Price is to be paid. Any redemption pursuant to this paragraph will
be made upon not less than 30 days nor more than 60 days notice. If the
Securities are only partially redeemed by the Company pursuant to an Optional
Redemption, the particular Securities to be redeemed shall be selected on a pro
rata basis, by lot or such other method that the Trustee shall utilize, not more
than 60 days prior to the date fixed for redemption from the outstanding
Securities not previously called for redemption, provided, however, that with
respect to Securityholders that would be required to hold Securities with an
aggregate principal amount of less than $100,000 but more than an aggregate
principal amount of zero as a result of such pro rata redemption, the Company
shall redeem Securities of each such Securityholder so that after such
redemption such Securityholder shall hold Securities either with an aggregate
principal amount of at least $100,000 or such Securityholder no longer holds any
<PAGE>
Securities and shall use such method (including, without limitation, by lot) as
the Company shall deem fair and appropriate, provided, further, that any such
method of selection may be made on the basis of the aggregate principal amount
of Securities held by each Securityholder thereof and may be made by making such
adjustments as the Company deems fair and appropriate in order that only
Securities in denominations of $1,000 or integral multiples thereof shall be
redeemed.
In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof will be issued in
the name of the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any redemption of Securities by
the Company shall be subject to the receipt of any required regulatory approval.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Securities
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Securities at the time outstanding, as defined in the Indenture,
to execute supplemental indentures for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of modifying in any manner the rights of the holders of the Securities;
provided, however, that no such supplemental indenture shall, without the
consent of each holder of Securities then outstanding and affected thereby, (i)
change the Maturity Date of any Securities, or reduce the principal amount
thereof, or reduce any amount payable on redemption thereof, or reduce the rate
or extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or make the principal of, or interest or premium on, the Securities
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any holder of Securities to institute suit for the payment thereof, or
(ii) reduce the aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture. The Indenture also
contains provisions permitting the holders of a majority in aggregate principal
amount of the Securities at the time outstanding affected thereby, on behalf of
all of the holders of the Securities, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture, and its consequences, except a default in the payment
of the principal of or premium, if any, or interest on any of the Securities or
a default in respect of any covenant or provision under which the Indenture
cannot be modified or amended without the consent of each holder of Securities
then outstanding. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future holders and owners of this Security and of
any Security issued in exchange herefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Security.
<PAGE>
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest (including Compounded Interest and Additional Sums, if any), on this
Security at the time and place and at the rate and in the money herein
prescribed.
So long as no Event of Default shall have occurred and be continuing,
the Company shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period, and not extending beyond the Maturity Date of the Securities
(an "Extended Interest Payment Period") or ending on a date other than an
Interest Payment Date, at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate
specified for the Securities to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such Extended
Interest Payment Period, the Company may further defer payments of interest by
further extending such Extended Interest Payment Period, provided that such
Extended Interest Payment Period, together with all such previous and further
extensions within such Extended Interest Payment Period, (i) shall not exceed 10
consecutive semi-annual periods, including the first semi-annual period during
such Extended Interest Payment Period, (ii) shall not end on any date other than
an Interest Payment Date, and (iii) shall not extend beyond the Maturity Date of
the Securities. Upon the termination of any such Extended Interest Payment
Period and the payment of all accrued and unpaid interest and any additional
amounts then due, the Company may commence a new Extended Interest Payment
Period, subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in right of
payment to the Securities or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any Subsidiary of the
Company if such guarantee ranks pari passu or junior in right of payment to the
Securities (other than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Common Stock of the
Company, (b) any declaration of a dividend in connection with the implementation
of a stockholder's 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 Capital Securities Guarantee, (d) as a result of a
reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock, for another
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the exchange or
conversion of such capital stock or the security being exchanged or converted
and (f) purchases of Common Stock related to the
<PAGE>
issuance of Common Stock or rights under any of the Company's benefit plans for
its directors, officers or employees or any of the Company's dividend
reinvestment plans) if at such time (1) there shall have occurred any event of
which the Company has actual knowledge that (a) is or, with the giving of notice
or the lapse of time, or both, would be, an Event of Default and (b) in respect
of which the Company shall not have taken reasonable steps to cure, (2) if the
Securities are held by UCBH Trust Co., the Company shall be in default with
respect to its payment obligations under the Capital Securities Guarantee or (3)
the Company shall have given notice of its election of the exercise of its right
to extend the interest payment period and any such extension shall be
continuing.
Subject to (i) the receipt of any required regulatory approval and (ii)
the receipt by the Company of an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Capital Securities, the
Company will have the right at any time to liquidate UCBH Trust Co. and cause
the Securities to be distributed to the holders of the Trust Securities in
liquidation of the Trust.
The Securities are issuable only in registered form without coupons in
denominations of $1,000.00 and any integral multiple thereof. As provided in the
Indenture and subject to the transfer restrictions limitations as may be
contained herein and therein from time to time, this Security is transferable by
the holder hereof on the Security Register of the Company, upon surrender of
this Security for registration of transfer at the office or agency of the
Company in the City of San Francisco and the State of California accompanied by
a written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any authenticating agent, any paying agent,
any transfer agent and the registrar may deem and treat the holder hereof as the
absolute owner hereof (whether or not this Security shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Security Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and (subject to the
Indenture) interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any authenticating agent nor any paying agent nor
any transfer agent nor any registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of
or premium, if any, or interest on this Security, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor Person,
whether by
<PAGE>
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICT OF
LAW PROVISIONS THEREOF.
Exhibit 4.3
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF TRUST
OF
USBH TRUST CO.
THIS Certificate of Amendment of USBH Trust Co. (the "Trust"), dated
March 27, 1998, is being duly executed and fileld by the undersigned trustee to
amend a business trust formed under the Delaware Business Trust Act (12 Del.
C. ss. 3801 et seq.).
1. Name. The name of the business trust amended hereby is USBH Trust
Co.
2. Amendment of Trust. The Certificate of Trust of the Trust is hereby
amended by changing the name of the Trust to:
UCBH Trust Co.
3. Effective Date. This Certificate of Amendment shall be effective
upon filing.
IN WITNESS WHEREOF, the undersigned Trustee of the Trust has executed
this Certificate of Amendment as of the date and year first above written.
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Patricia A. Evans
---------------------
Name: Patricia A. Evans
Title: Financial Services Officer
<PAGE>
CERTIFICATE OF TRUST
OF
USBH TRUST CO.
This Certificate of Trust of USBH Trust Co. (the "Trust"), dated
September 26, 1997, is being duly executed and fileld by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. ((S)) 3801, et seq.).
1. Name. The name of this business trust being formed hereby is USBH
Trust Co.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware are Wilmington Trust Company, Rodney Square,
North, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Corporate Trust Administrator.
3. Effective Date. This Certificate of Trust shall be effective upon
its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the trust,
have executed this Certificate of Trust as of the date first above written.
Wilmington Trust Company,
as Trustee
By: /s/ Donald G. MacKelcan
-----------------------
Name: Donald G. MacKelcan
Title: Assistant Vice President
/s/ Tommy Wu
-----------------------
Tommy Wu
Administrative Trustee
/s/ Dennis Alan Lee
-----------------------
Dennis Alan Lee
Administrative Trustee
/s/ Jonathan H. Downing
-----------------------
Jonathan H. Downing
Administrative Trustee
Exhibit 4.4
================================================================================
AMENDED AND RESTATED DECLARATION
OF TRUST
UCBH TRUST CO.
Dated as of April 17, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions............................................. 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application ......................... 9
SECTION 2.2 Lists of Holders of Securities ............................ 10
SECTION 2.3 Reports by the Property Trustee ........................... 10
SECTION 2.4 Periodic Reports to Property Trustee ...................... 10
SECTION 2.5 Evidence of Compliance with Conditions Precedent .......... 11
SECTION 2.6 Events of Default; Waiver ................................. 11
SECTION 2.7 Event of Default; Notice .................................. 13
ARTICLE III
ORGANIZATION
SECTION 3.1 Name ...................................................... 13
SECTION 3.2 Office .................................................... 14
SECTION 3.3 Purpose ................................................... 14
SECTION 3.4 Authority ................................................. 14
SECTION 3.5 Title to Property of the Trust ............................ 14
SECTION 3.6 Powers and Duties of the Administrative Trustees .......... 14
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees ...... 18
SECTION 3.8 Powers and Duties of the Property Trustee ................. 18
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee 21
SECTION 3.10 Certain Rights of Property Trustee ........................ 22
SECTION 3.11 Delaware Trustee ......................................... 24
SECTION 3.12 Execution of Documents .................................... 25
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities .... 25
SECTION 3.14 Duration of Trust ......................................... 25
SECTION 3.15 Mergers ................................................... 25
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities ................... 27
SECTION 4.2 Responsibilities of the Sponsor ........................... 27
SECTION 4.3 Right to Proceed .......................................... 28
i
<PAGE>
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee .............. 28
SECTION 5.2 Delaware Trustee ........................................... 29
SECTION 5.3 Property Trustee; Eligibility .............................. 29
SECTION 5.4 Certain Qualifications of Administrative Trustees and
Delaware Trustee Generally ................................. 30
SECTION 5.5 Administrative Trustees .................................... 30
SECTION 5.6 Delaware Trustee ........................................... 30
SECTION 5.7 Appointment, Removal and Resignation of Trustees ........... 31
SECTION 5.8 Vacancies among Trustees ................................... 32
SECTION 5.9 Effect of Vacancies......................................... 32
SECTION 5.10 Meetings ................................................... 33
SECTION 5.11 Delegation of Power ........................................ 33
SECTION 5.12 Merger, Conversion, Consolidation or Succession to
Business ................................................... 34
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions .............................................. 34
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities .................... 34
SECTION 7.2 Execution and Authentication ............................... 35
SECTION 7.3 Form and Dating ............................................ 36
SECTION 7.4 Registrar, Paying Agent and Exchange Agent ................. 38
SECTION 7.5 Paying Agent to Hold Money in Trust ........................ 38
SECTION 7.6 Replacement Securities ..................................... 38
SECTION 7.7 Outstanding Capital Securities ............................. 39
SECTION 7.8 Capital Securities in Treasury ............................. 39
SECTION 7.9 Temporary Securities........................................ 39
SECTION 7.10 Cancellation ............................................... 40
SECTION 7.11 CUSIP Numbers .............................................. 40
ii
<PAGE>
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust ....................................... 41
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities ..................................... 42
SECTION 9.2 Transfer Procedures and Restrictions........................ 43
SECTION 9.3 Deemed Security Holders .................................... 51
SECTION 9.4 Book Entry Interests ....................................... 51
SECTION 9.5 Notices to Clearing Agency ................................. 52
SECTION 9.6 Appointment of Successor Clearing Agency ................... 52
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability .................................................. 52
SECTION 10.2 Exculpation ................................................ 53
SECTION 10.3 Fiduciary Duty ............................................. 53
SECTION 10.4 Indemnification ............................................ 54
SECTION 10.5 Outside Businesses.......................................... 57
SECTION 10.6 Compensation; Fees.......................................... 57
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year ................................................ 58
SECTION 11.2 Certain Accounting Matters ................................. 58
SECTION 11.3 Banking .................................................... 59
SECTION 11.4 Withholding ................................................ 59
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.................................................. 59
SECTION 12.2 Meetings of the Holders; Action by Written Consent ......... 61
iii
<PAGE>
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee ......... 62
SECTION 13.2 Representations and Warranties of Delaware Trustee ......... 63
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement .............................. 64
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices .................................................... 64
SECTION 15.2 Governing Law .............................................. 65
SECTION 15.3 Intention of the Parties ................................... 66
SECTION 15.4 Headings ................................................... 66
SECTION 15.5 Successors and Assigns ..................................... 66
SECTION 15.6 Partial Enforceability ..................................... 66
SECTION 15.7 Counterparts ............................................... 66
ANNEX I TERMS OF SECURITIES .............................................. I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE ................... A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE .................... A2-1
EXHIBIT B SPECIMEN OF DEBENTURE................................... B-1
EXHIBIT C AGENCY AGREEMENT ....................................... C-1
EXHIBIT D REGISTRATION RIGHTS AGREEMENT .......................... D-1
iv
<PAGE>
CROSS-REFERENCE TABLE*
Section of Trust Indenture Act of 1939, as amended ..............
Declaration Section..............................................
310(b).......................................................... 5.3(c), 5.3(d)
311(a).......................................................... 2.2(b)
311(b).......................................................... 2.2(b)
312(b).......................................................... 2.2(b)
313............................................................. 2.3
314(a).......................................................... 2.4; 3.6(j)
314(c).......................................................... 2.5
316(a).......................................................... 2.6
316(c).......................................................... 3.6(e)
317(a).......................................................... 3.8(h)
317(b).......................................................... 3.8(i)
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
UCBH TRUST CO.
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of April 17, 1998 by the Trustees (as defined herein), the Sponsor
(as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, certain of the Trustees and the Sponsor established UCBH Trust
Co., a trust created under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of September 26, 1997 (the "Original
Declaration"), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on September 26, 1997, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer (each as hereinafter defined), and engaging in only those
other activities necessary, advisable or incidental thereto; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory business trust under the Business Trust Act
and that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Administrative Trustee" has the meaning set forth in Section 5.1(b).
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Agency Agreement" means the Agency Agreement for the initial offering
and sale of Capital Securities in the form of Exhibit C.
"Authorized Officer" of a Person means any other Person that is
authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
2
<PAGE>
"Business Day" means any day other than a Saturday or a Sunday or a day
on which banking institutions in the States of California and Delaware are
authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code ss.3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Capital Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
Securities and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the Series A
Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the United States Securities and Exchange Commission
as from time to time constituted, or if any time after the execution of this
Declaration such Commission is not existing and performing the duties now
assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement dated as of
April 17, 1998 of the Sponsor in respect of the Common Securities.
3
<PAGE>
"Company Indemnified Person" means (a) any Administrative Trustee; (b)
any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attention Corporate Trust Administration.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means UCBH Holdings, Inc., a Delaware corporation,
or any successor entity resulting from any consolidation, amalgamation, merger
or other business combination, in its capacity as issuer of the Debentures under
the Indenture.
"Debenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, Series A Debentures and the Series B
Debentures.
"Default" means an event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in
Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance
with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
4
<PAGE>
"Exchange Agent" has the meaning set forth in Section 7.4.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer to
exchange Series B Debentures for Series A Debentures and the Series B Capital
Securities Guarantee for the Series A Capital Securities Guarantee.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Capital Security" has the meaning set forth in Section 7.3(a).
"Holder" means a Person in whose name a Security is registered, such
Person being a beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of April 17, 1998, among the
Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Issue Date" means the date of issuance of the Securities.
"Legal Action" has the meaning set forth in Section 3.6(g).
"List of Holders" has the meaning set forth in Section 2.2(a).
"Liquidated Damages" has the meaning set forth in the Registration
Rights Agreement.
"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount of all outstanding Securities of the relevant class.
5
<PAGE>
"Offering Memorandum" has the meaning set forth in Section 3.6(b)(i).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by any of the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary of such Person. Any Officers' Certificate delivered by the
Trust shall be signed by at least one Administrative Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of the Sponsor, and who shall be acceptable to the Property Trustee.
"Paying Agent" has the meaning specified in Section 7.4.
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"PORTAL" has the meaning set forth in Section 3.6(b)(iii).
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in Section
3.8(c)(i).
"QIBs" shall mean qualified institutional buyers as defined in Rule
144A.
6
<PAGE>
"Quorum" means a majority of the Administrative Trustees or, if there
are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Capital Securities
Registration Rights Agreement dated as of April 13, 1998, by and among the
Trust, the Debenture Issuer and the initial purchaser named therein, as amended
from time to time.
"Regulation S" means Regulation S under the Securities Act, as such
regulation may be amended from time to time or any similar rule or regulation
hereafter adopted by the Commission.
"Registration Statement" has the meaning set forth in the Registration
Rights Agreement.
"Regulation S Global Capital Security" has the meaning set forth in
Section 7.3(a).
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means any officer within the Corporate Trust
Administration department of the Property Trustee with direct responsibility for
the administration of this Declaration and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Restricted Definitive Capital Securities" has the meaning set forth in
Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by
Section 9.2 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in Section
9.2(i).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
7
<PAGE>
"Rule 144A" means Rule 144A under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" or "Trust Securities" means the Common Securities and the
Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in Section
7.1(a) and may be alternatively referred to as the 9 3/8% Capital Securities.
"Series A Capital Securities Guarantee" means the guarantee agreement
dated as of April 17, 1998, by the Sponsor in respect of the Series A Capital
Securities.
"Series A Debentures" means the Series A 9 3/8% Junior Subordinated
Deferrable Interest Debentures due May 1, 2028 of the Debenture Issuer issued
pursuant to the Indenture.
"Series B Capital Securities" has the meaning specified in Section
7.1(a).
"Series B Capital Securities Guarantee" means the guarantee agreement
to be entered in connection with the Exchange Offer by the Sponsor in respect of
the Series B Capital Securities.
"Series B Debentures" means the Series B 9 3/8% Junior Subordinated
Deferrable Interest Debentures due May 1, 2028 of the Debenture Issuer issued
pursuant to the Indenture.
"Special Event" has the meaning set forth in Section 4(c) of Annex I
hereto.
"Sponsor" means UCBH Holdings, Inc. a Delaware corporation, or any
successor entity resulting from any merger, consolidation, amalgamation or other
business combination, in its capacity as sponsor of the Trust.
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate liquidation
amount of all outstanding Securities of the relevant class.
8
<PAGE>
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Unrestricted Global Capital Security" has the meaning set forth in
Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration in order for this
Declaration to be qualified under the Trust Indenture Act and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by ss.ss. 310 to 317, inclusive,
of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
9
<PAGE>
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide the Property Trustee, unless the Property Trustee is
Registrar for the Securities, (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders ("List of
Holders") as of such record date, provided that neither the Sponsor nor the
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time that the List of Holders does not differ from
the most recent List of Holders given to the Property Trustee by the Sponsor and
the Administrative Trustees on behalf of the Trust, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity), provided that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
ss.ss.311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, commencing May 15, 1999, the
Property Trustee shall provide to the Holders of the Capital Securities such
reports as are required by ss. 313 of the Trust Indenture Act, if any, in the
form and in the manner provided by ss. 313 of the Trust Indenture Act. The
Property Trustee shall also comply with the requirements of ss. 313(d) of the
Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as are required by ss. 314 (if any) and the compliance certificate
required by ss. 314 of the Trust Indenture Act in the form, in the manner and at
the times required by ss. 314(a)(4) of the Trust Indenture Act, such compliance
certificate to be delivered annually on or before 120 days after the end of each
fiscal year of the Sponsor. Delivery of such documents, reports and information
to the Property Trustee is for informational purposes only and the Property
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Sponsor's compliance with any of its covenants hereunder
(as to which the Property Trustee is entitled to rely exclusively on Officers'
Certificates).
10
<PAGE>
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of the
matters set forth in ss. 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to ss. 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital Securities
and its consequences, provided that, if the underlying Event of Default under
the Indenture:
(i) is not waivable under the Indenture, the Event of Default under the
Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super Majority")
to be waived under the Indenture, the Event of Default under the Declaration may
only be waived by the vote of the Holders of at least the proportion in
aggregate liquidation amount of the Capital Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
The Holders of a Majority in liquidation amount of the Capital Securities shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee or to direct the exercise of
any trust or power conferred upon the Property Trustee, including the right to
direct the Property Trustee to exercise the remedies available to it as holder
of the Debentures, provided however, that (subject to the provisions of Section
3.9) the Property Trustee shall have the right to decline to follow any such
direction if the Property Trustee shall determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such direction
or if the Property Trustee, being advised by counsel, determines that the action
of proceeding so directed may not lawfully be taken or if the Property Trustee,
in good faith, by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or Responsible Officers, shall
determine that the action or proceedings so directed would involve the Property
Trustee in personal liability.
11
<PAGE>
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default under the
Declaration as provided below in this Section 2.6(b), the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this Section 2.6(b),
the Event of Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in aggregate liquidation amount of the Common
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding;
provided further, the Holders of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and their consequences if all Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital Securities and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
such waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
A waiver of an Event of Default under the Indenture by the Property
Trustee, at the direction of the Holders of the Capital Securities, constitutes
a waiver of the corresponding Event of Default under this Declaration. The
foregoing provisions of this Section 2.6(c) shall be in lieu of ss. 316(a)(1)(B)
of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust Indenture Act
is hereby expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act.
12
<PAGE>
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence of
a default actually known to a Responsible Officer, transmit by mail, first class
postage prepaid, to the Holders, notices of all defaults with respect to the
Securities actually known to a Responsible Officer, unless such defaults have
been cured before the giving of such notice (the term "defaults" for the
purposes of this Section 2.7(a) being hereby defined to be an Event of Default
as defined in the Indenture, not including any periods of grace provided for
therein and irrespective of the giving of any notice provided therein); provided
that, except for a default in the payment of principal of (or premium, if any)
or interest (including Compounded Interest and Additional Sums (as such terms
are defined in the Indenture), if any) or Liquidated Damages (as defined in the
Registration Rights Agreement) on any of the Debentures, the Property Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 5.01(a) (other than the payment of
Compounded Interest, Additional Sums and Liquidated Damages) and 5.01(b) of the
Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice or of which a Responsible Officer charged with the administration
of the Declaration shall have actual knowledge.
(c) Within ten 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 Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "UCBH Trust Co." as such name may be modified from
time to time by the Administrative Trustees following written notice to the
Delaware Trustee, the Property Trustee and the Holders. The Trust's activities
may be conducted under the name of the Trust or any other name deemed advisable
by the Administrative Trustees.
13
<PAGE>
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o UCBH Holdings,
Inc. 711 Van Ness Boulevard, San Francisco, CA 94102. On ten Business Days
written notice to the Delaware Trustee, the Property Trustee and the Holders of
Securities, the Administrative Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities, (b) use the proceeds from the sale of the Securities to acquire
the Debentures, and (c) except as otherwise limited herein, to engage in only
those other activities necessary, advisable or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, mortgage or pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
14
<PAGE>
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that except as contemplated in Section 7.1(a),
(i) the Trust may issue no more than one series of Capital Securities and no
more than one series of Common Securities, (ii) there shall be no interests in
the Trust other than the Securities, and (iii) the issuance of Securities shall
be limited to a simultaneous issuance of both Capital Securities and Common
Securities at the Closing Time;
(b) in connection with the issue and sale of the Capital Securities and
the consummation of the Exchange Offer to:
(i) prepare and execute, if necessary, a private offering memorandum
(the "Offering Memorandum") in preliminary and final form prepared by the
Sponsor, in relation to the offering and sale of Series A Capital Securities to
qualified institutional buyers in reliance on Rule 144A under the Securities Act
and to institutional "accredited investors" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) and outside the United States to non-U.S.
persons in offshore transactions in reliance in Regulation S under the
Securities Act, and to execute and file with the Commission, at such time as
determined by the Sponsor, any Registration Statement, including any amendments
thereto, as contemplated by the Registration Rights Agreement;
(ii) execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor to be necessary, in order to qualify or
register all or part of the Capital Securities in any State in which the Sponsor
has determined to qualify or register such Capital Securities for sale;
(iii) execute and file an application, prepared by the Sponsor, to
permit the Capital Securities to trade or be quoted or listed in or on the
Private Offerings, Resales and Trading through Automated Linkages ("PORTAL")
Market or any other securities exchange, quotation system or the Nasdaq Stock
Market's National Market;
(iv) execute and deliver letters, documents or instruments with DTC and
other Clearing Agencies relating to the Capital Securities;
(v) if required, execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by the
Sponsor, relating to the registration of the Capital Securities under Section
12(g) of the Exchange Act, as appropriate; and
(vi) execute and enter into the Common Securities Guarantee and the
Debenture Subscription Agreement dated as of April 17, 1998 between the Sponsor
and the Trust, the Common Securities Subscription Agreement dated as of April
17, 1998, between the Sponsor and the Trust, and the Registration Rights
Agreement providing for the sale and registration of the Capital Securities;
15
<PAGE>
(c) to acquire the Series A Debentures with the proceeds of the sale of
the Series A Capital Securities and the Common Securities and to exchange the
Series A Debentures for a like principal amount of Series B Debentures, pursuant
to the Exchange Offer; provided, however, that the Administrative Trustees shall
cause legal title to the Debentures to be held of record in the name of the
Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of ss.316(c) of the Trust Indenture Act, Distributions,
voting rights, redemptions and exchanges, and to issue relevant notices to the
Holders of Capital Securities and Holders of Common Securities as to such
actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out any
of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
16
<PAGE>
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the Trust
to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or with
applicable law, that the Administrative Trustees determine in their discretion
to be necessary or desirable in carrying out the activities of the Trust as set
out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for United
States federal income tax purposes;
(p) to take all action necessary to consummate the Exchange Offer or
otherwise cause the Capital Securities to be registered pursuant to an effective
registration statement in accordance with the provisions of the Registration
Rights Agreement;
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Administrative Trustees, on behalf of
the Trust; and
(r) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Administrative Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Administrative Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
3.8.
The Administrative Trustees shall take all actions on behalf of the
Trust that are not specifically required by this Declaration to be taken by any
other Trustee.
17
<PAGE>
Any expenses incurred by the Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee and the Delaware Trustee) shall not, engage in any activity other than
as required or authorized by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant to the
terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever, except as
otherwise expressly provided herein;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Securities;
(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of conducting any proceeding with respect to
any remedy available to the Debenture Trustee, or exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B) waive
any past default that is waivable under the Indenture or (C) exercise any right
to rescind or annul any declaration that the principal of all the Debentures
shall be due and payable; or
(viii) consent to any amendment, modification or termination of
the Indenture or the Debentures where such consent shall be required unless the
Trust shall have received an opinion of independent tax counsel experienced in
such matters to the effect that such amendment, modification or termination will
not cause more than an insubstantial risk that for United States federal income
tax purposes the Trust will not be classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders. The right, title and interest of the Property Trustee to the Debentures
shall vest automatically in each Person who may hereafter be appointed as
Property Trustee in accordance with Section 5.7. Such vesting and cessation of
title shall be effective whether or not conveyancing documents with regard to
the Debentures have been executed and delivered.
18
<PAGE>
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders and, upon the receipt
of payments of funds made in respect of the Debentures held by the Property
Trustee, deposit such funds into the Property Trustee Account and make payments
or cause the Paying Agent to make payments to the Holders from the Property
Trustee Account in accordance with Section 6.1. Funds in the Property Trustee
Account shall be held uninvested until disbursed in accordance with this
Declaration. The Property Trustee Account shall be an account that is maintained
with a banking institution the rating on whose long-term unsecured indebtedness
by a "nationally recognized statistical rating organization", as that term is
defined for purposes of Rule 436(g)(2) under the Securities Act, is at least
investment grade;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Trust Securities to the extent
the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the Securities, engage
in such ministerial activities as shall be necessary or appropriate to effect
the distribution of the Debentures to Holders upon the occurrence of certain
events.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act. If an
Event of Default has occurred and is continuing and such event is attributable
to the failure of the Debenture Issuer to pay the principal of or premium, if
any, or interest (including Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on the Debentures on the date such principal,
premium, if any, or interest (including Compounded Interest and Additional Sums,
if any) or Liquidated Damages, if any, is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of Capital Securities may
directly institute a proceeding for enforcement of payment to such Holder of the
principal of or premium, if any, or interest (including Compounded Interest and
Additional
19
<PAGE>
Sums, if any) or Liquidated Damages, if any, on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of Capital Securities to the extent of any payment made by the
Debenture Issuer to such Holder of Capital Securities in such Direct Action.
Except as provided in the preceding sentence, the Holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Debentures.
(f) The resignation of the Property Trustee shall not be effective
unless either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders pursuant to the terms of the
Securities; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7 (a "Successor Property
Trustee").
(g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if an Event of Default actually known to a Responsible Officer occurs and
is continuing, the Property Trustee shall, for the benefit of Holders, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake any actions
set forth in ss. 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional Paying
Agents and to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities and any such Paying Agent
shall comply with ss. 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time the Property
Trustee remains as Paying Agent and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by the
Property Trustee while the Property Trustee is so acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Administrative
Trustees set forth in Section 3.6.
Notwithstanding anything expressed or implied to the contrary in this
Declaration or any Annex or Exhibit hereto, (i) the Property Trustee must
exercise the powers set forth in this Section 3.8 in a manner that is consistent
with the purposes and functions of the Trust set out in Section 3.3 and (ii) the
Property Trustee shall not take any action that is inconsistent with the
purposes and functions of the Trust set out in Section 3.3.
20
<PAGE>
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and in the Securities and no implied covenants shall be read into
this Declaration against the Property Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer has actual knowledge, the Property Trustee shall exercise
such of the rights and powers vested in it by this Declaration, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this Declaration
and in the Securities and the Property Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Declaration and in the Securities,
and no implied covenants or obligations shall be read into this
Declaration or the Securities against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Property Trustee and conforming to the requirements of this
Declaration; provided, however, that in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee, the
Property Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be proved
that the Property Trustee was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of
the Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this Declaration;
21
<PAGE>
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Property
Trustee Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with the
Sponsor. Money held by the Property Trustee need not be segregated from other
funds held by it except in relation to the Property Trustee Account maintained
by the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the Property Trustee
be liable for any default or misconduct of the Administrative Trustees or the
Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Declaration may be sufficiently
evidenced by an Officers' Certificate;
22
<PAGE>
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly delivered by
the Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection and the advice or opinion of such counsel and experts
with respect to legal matters or advice within the scope of such experts' area
of expertise shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion, such counsel may be counsel to the
Sponsor or any of its Affiliates, and may include any of its employees. The
Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any Holder, unless such Holder shall have provided to
the Property Trustee security and indemnity, reasonably satisfactory to the
Property Trustee, against the costs, expenses (including reasonable attorneys'
fees and expenses and the expenses of the Property Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by
the Property Trustee provided, that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the occurrence
of an Event of Default, of its obligation to exercise the rights and powers
vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Property Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Debenture Issuer, personally or by agent or attorney at the sole cost of
the Debenture Issuer and shall incur no liability or additional liability of any
kind by reason of such inquiry or investigation;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Property Trustee shall
not be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
23
<PAGE>
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature of the
Property Trustee or its agents alone shall be sufficient and effective to
perform any such action and no third party shall be required to inquire as to
the authority of the Property Trustee to so act or as to its compliance with any
of the terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking such
action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders which instructions may
only be given by the Holders of the same proportion in liquidation amount of the
Securities as would be entitled to direct the Property Trustee under the terms
of the Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received and (iii) shall be protected in conclusively relying
on or acting in or accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without negligence,
and reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Administrative Trustees or the Property Trustee described in this
Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
ss.3807 of the Business Trust Act. In the event the Delaware Trustee shall at
any time be required to take any action or perform any duty hereunder, the
Delaware Trustee shall be entitled to the benefits of Section 3.9(b)(ii)-(viii)
and Section 3.10. No implied covenants or obligations shall be read into this
Declaration against the Delaware Trustee.
24
<PAGE>
SECTION 3.12 Execution of Documents.
Except as otherwise required by the Business Trust Act or this
Declaration, any Administrative Trustee is authorized to execute on behalf of
the Trust any documents that the Administrative Trustees have the power and
authority to execute pursuant to Section 3.6; provided that any Registration
Statements contemplated by the Registration Rights Agreement and referred to in
Section 3.6(b)(i), including any amendments thereto, shall be signed by all of
the Administrative Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration, the Debentures or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless dissolved pursuant to the provisions of Article
VIII hereof, shall have existence up to April 17, 2029.
SECTION 3.15 Mergers.
(a) The Trust may not merge with or into, consolidate, amalgamate
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c) of this Trust Agreement or Section 3 of Annex I.
(b) The Trust may, at the request of the Sponsor, with the consent
of the Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees and without the consent of the Holders, the Delaware
Trustee or the Property Trustee, merge with or into, consolidate, amalgamate or
be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, a trust organized as such under the
laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as
the Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
25
<PAGE>
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee as the
holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Capital Securities
are then listed or quoted, if any;
(iv) if the Capital Securities (including any Successor
Securities) are rated by any nationally recognized statistical rating
organization prior to such transaction, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities), or if the Debentures
are so rated, the Debentures, 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 (including the holders of any Successor
Securities) in any material respect (other than with respect to any dilution of
such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose substantially identical
to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an opinion
of an independent counsel to the Trust 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 (including the
holders of any Successor Securities) in any material respect
(other than with respect to any dilution of the Holders' interest
in the new entity); and
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor
the Successor Entity will be required to register as an Investment
Company;
(viii) the Sponsor or any permitted successor or assignee owns all
of the 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 Capital Securities Guarantee and the Common Securities
Guarantee; and
26
<PAGE>
(ix) there shall have been furnished to the Property Trustee an
Officer's Certificate and an Opinion of Counsel, each to the effect that all
conditions precedent in this Declaration to such transaction have been
satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, any other Person or permit any other Person to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the Successor Entity not to be classified as a grantor trust for United
States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount equal to at least 3% of the
total capital of the Trust, at the same time as the Series A Capital Securities
are issued and sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Memorandum and to prepare for filing by the
Trust with the Commission any Registration Statement, including any amendments
thereto, as contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to permit the Capital Securities to trade or
be quoted or listed in or on the PORTAL market, or any other securities
exchange, quotation system or the Nasdaq Stock Market's National Market;
27
<PAGE>
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any amendments thereto, relating
to the registration of the Capital Securities under Section 12(b) or 12(g) of
the Exchange Act, if required; and
(e) to negotiate the terms of and execute the Agency Agreement and to
negotiate the terms of the Registration Rights Agreement providing for the sale
and registration of the Capital Securities.
SECTION 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on the
Capital Securities is attributable to the failure of the Company to pay interest
or principal on the Debentures, to institute a proceeding directly against the
Debenture Issuer for enforcement of its payment obligations on the Debentures.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee.
The number of Trustees initially shall be five, and:
(a) at any time before the issuance of any Securities, the Sponsor may,
by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holders of a Majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities;
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee shall satisfy the requirements of
the Delaware Trustee pursuant to Section 5.2; (2) there shall be at least one
Trustee who is an officer of the Sponsor (an "Administrative Trustee"); and (3)
one Trustee shall be the Property Trustee for so long as this Declaration is
required to qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as Delaware Trustee if it meets the applicable
requirements. Notwithstanding the above, 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 or of any jurisdiction in which
any part of the Trust's property may at the time be located, the Holders of a
Majority in liquidation amount of the Common Securities acting as a class at a
meeting of the Holders of the 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 the Trust's 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 this Declaration. In case
an Event of Default has occurred and is continuing, the Property Trustee alone
shall have power to make any such appointment of a co-trustee.
28
<PAGE>
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the Commission to
act as an institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section 5.3(a)(ii),
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of ss. 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in ss. 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of ss. 310(b) of the Trust Indenture Act.
29
<PAGE>
(d) The Capital Securities Guarantee and the Indenture shall be deemed
to be specifically described in this Declaration for purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Attention: Corporate Trust Administration
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally.
Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as the Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Administrative Trustees.
The initial Administrative Trustees shall be:
Tommy S. Wu
Jonathan H. Downing
Dennis Alan Lee
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Administrative Trustees is called with respect to any matter over
which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(b) An Administrative Trustee shall have the authority set forth in
Section 3.12 to execute on behalf of the Trust any documents which the
Administrative Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6.
(c) An Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute pursuant to
Section 3.6.
30
<PAGE>
SECTION 5.6 Delaware Trustee.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19899
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b) of this Declaration and to Section 6(b)
of Annex I hereto, Trustees may be appointed or removed without cause at any
time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the Holders of a
Majority in liquidation amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be continuing
after the issuance of the Securities, with respect to the Property Trustee or
the Delaware Trustee, by vote of Holders of a Majority in liquidation amount of
the Capital Securities voting as a class at a meeting of Holders of the Capital
Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.7(a) until a Successor Property Trustee ("Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Administrative Trustees and the Sponsor; and
(ii) The Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 5.2 and
5.4 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation. Any
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing signed by the Trustee and delivered to the Sponsor
and the Trust, which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:
31
<PAGE>
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor Property
Trustee and delivered to the Trust, the Sponsor and the resigning Property
Trustee; or
(B) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the Holders; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been appointed
and has accepted such appointment by instrument executed by such Successor
Delaware Trustee and delivered to the Trust, the Sponsor and the resigning
Delaware Trustee.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.7 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(g) At the time of resignation or removal of the Property Trustee or
the Delaware Trustee, the Debenture Issuer shall pay to such Trustee any amounts
that may be owed to such Trustee pursuant to Section 10.4.
SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.7.
32
<PAGE>
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the
number of Administrative Trustees shall occur, until such vacancy is filled by
the appointment of an Administrative Trustee in accordance with Section 5.7, the
Administrative Trustees in office, regardless of their number, shall have all
the powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Declaration.
SECTION 5.10 Meetings.
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting. Notice of
any telephonic meetings of the Administrative Trustees or any committee thereof
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Administrative Trustees. In the event
there is only one Administrative Trustee, any and all action of such
Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to delegate from time
to time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
33
<PAGE>
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee or
any Administrative Trustee that is not a natural person, as the case may be, may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Property
Trustee or the Delaware Trustee, as the case may be, shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
the Property Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Property Trustee or the Delaware Trustee, as the case may be,
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the applicable
terms of the relevant Holder's Securities. If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest and
Additional Sums), premium and/or principal on the Debentures held by the
Property Trustee or Liquidated Damages or any other payments pursuant to the
Registration Rights Agreement with respect to the Debentures held by the
Property Trustee (the amount of any such payment being a "Payment Amount"), the
Property Trustee shall and is directed, to the extent funds are available for
that purpose, to make a distribution (a "Distribution") of the Payment Amount to
Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the Trust issue one
class of capital securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the "Series A
Capital Securities") and one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Common Securities"). The Administrative Trustees shall on
behalf of the Trust issue one class of capital securities representing undivided
beneficial interests in the Trust having such terms as set forth in Annex I (the
"Series B Capital Securities") in exchange for the Series A Capital Securities
accepted for exchange in the Exchange Offer,
34
<PAGE>
which Series B Capital Securities shall not bear the legends required by Section
9.2(i) unless the Holder of such Series A Capital Securities is either (A) a
broker-dealer who purchased such Series A Capital Securities directly from the
Trust for resale pursuant to Rule 144A or any other available exemption under
the Securities Act, (B) a Person participating in the distribution of the Series
A Capital Securities or (C) a Person who is an affiliate (as defined in Rule
144A) of the Trust, provided, however, any Series B Capital Securities issued in
a Private Exchange, as defined in the Registration Rights Agreement, shall bear
a customary legend with respect to restrictions on transfer pursuant to the
Securities Act. The Trust shall issue no securities or other interests in the
assets of the Trust other than the Trust Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable undivided beneficial interests in the assets of the Trust.
(d) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
SECTION 7.2 Execution and Authentication.
The Securities shall be signed on behalf of the Trust by an
Administrative Trustee by manual or facsimile signature. In case any
Administrative Trustee of the Trust who shall have signed any of the Securities
shall cease to be such Administrative Trustee before the Securities so signed
shall be delivered by the Trust, such Securities nevertheless may be delivered
as though the person who signed such Securities had not ceased to be such
Administrative Trustee; and any Securities may be signed on behalf of the Trust
by such persons who, at the actual date of execution of such Security, shall be
the Administrative Trustees of the Trust, although at the date of the execution
and delivery of the Declaration any such person was not such an Administrative
Trustee.
(b) One Administrative Trustee shall sign the Capital Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Capital Security shall not be valid until authenticated by the manual
or facsimile signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Capital Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative Trustee,
the Property Trustee shall authenticate the Capital Securities for original
issue. The aggregate number of Capital Securities outstanding at any time shall
not exceed the number set forth in the Terms in Annex I hereto except as
provided in Section 7.6.
35
<PAGE>
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating.
The Capital Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates representing the Securities may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by their execution thereof. The
Securities may have letters, CUSIP or other numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in writing. Each
Capital Security shall be dated the date of its authentication. The terms and
provisions of the Securities set forth in Annex I and the forms of Securities
set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and
to the extent applicable, the Property Trustee and the Sponsor, by their
execution and delivery of this Declaration, expressly agree to such terms and
provisions and to be bound thereby.
(a) Global Securities. Securities offered and sold to QIBs in reliance
on Rule 144A or offered and sold outside of the United States to non-U.S.
persons in offshore transactions in reliance on Regulation S, as provided in the
Placement Agreement, shall be issued in the form of one or more permanent global
Securities in definitive, fully registered form without distribution coupons
with the appropriate global legends and Restricted Securities Legend set forth
in Exhibit A-1 hereto (a "Global Capital Security" or "Regulation S Global
Capital Security" and together the "Global Capital Securities"), which shall be
deposited on behalf of the purchasers of the Capital Securities represented
thereby with the Property Trustee, as custodian for the Clearing Agency, and
registered in the name of the Clearing Agency or a nominee of the Clearing
Agency, duly executed by the Trust and authenticated by the Property Trustee as
hereinafter provided. The number of Capital Securities represented by a Global
Capital Security and the Regulation S Global Capital Security may from time to
time be increased or decreased by adjustments made on the records of the
Property Trustee and the Clearing Agency or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only to the
Global Capital Securities, Regulation S Global Capital Securities and such other
Capital Securities in global form as may be authorized by the Trust to be
deposited with or on behalf of the Clearing Agency.
36
<PAGE>
The Trust shall execute and the Property Trustee shall, in accordance
with this Section 7.3, authenticate and make available for delivery initially
one or more Global Capital Securities and one or Regulation S Global Capital
Securities that (i) shall be registered in the name of Cede & Co. or other
nominee of such Clearing Agency and (ii) shall be delivered by the Trustee to
such Clearing Agency or pursuant to such Clearing Agency's written instructions
or held by the Property Trustee as custodian for the Clearing Agency.
Members of, or participants in, the Clearing Agency ("Participants")
shall have no rights under this Declaration with respect to any Global Capital
Security or any Regulation S Global Capital Security held on their behalf by the
Clearing Agency or by the Property Trustee as the custodian of the Clearing
Agency or under such Global Capital Security or such Regulation S Global Capital
Security, and the Clearing Agency may be treated by the Trust, the Property
Trustee and any agent of the Trust or the Property Trustee as the absolute owner
of such Global Capital Security or such Regulation S Global Capital Security for
all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Trust, the Property Trustee or any agent of the Trust or the
Property Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Clearing Agency or impair, as between the
Clearing Agency and its Participants, the operation of customary practices of
such Clearing Agency governing the exercise of the rights of a holder of a
beneficial interest in any Global Capital Securities.
Definitive Capital Securities. Except as provided in Section 7.9 or
9.2(f)(i), owners of beneficial interests in a Global Capital Security or a
Regulation S Global Capital Security will not be entitled to receive physical
delivery of certificated Capital Securities ("Definitive Capital Securities").
Purchasers of Securities (other than QIBs) who are "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and did not
purchase Capital Securities in reliance on Regulation S will receive Capital
Securities in the form of individual certificates in definitive, fully
registered form without distribution coupons and with the Restricted Securities
Legend set forth in Exhibit A-1 hereto ("Restricted Definitive Capital
Securities"); provided, however, that upon transfer of such Restricted
Definitive Capital Securities to a QIB, such Restricted Definitive Capital
Securities will, unless the Global Capital Security has previously been
exchanged, be exchanged for an interest in a Global Capital Security pursuant to
the provisions of Section 9.2. Restricted Definitive Capital Securities will
bear the Restricted Securities Legend set forth on Exhibit A-1 unless removed in
accordance with this Section 7.3 or Section 9.2.
(d) Authorized Denominations. The Capital Securities are issuable only
in denominations of $1,000 and any integral multiple thereof.
37
<PAGE>
SECTION 7.4 Registrar, Paying Agent and Exchange Agent.
The Trust shall maintain in the State of Delaware, (i) an office or
agency where Capital Securities may be presented for registration of transfer
("Registrar"), (ii) an office or agency where Capital Securities may be
presented for payment ("Paying Agent") and (iii) an office or agency where
Securities may be presented for exchange ("Exchange Agent"). The Registrar shall
keep a register of the Capital Securities and of their transfer. The Trust may
appoint the Registrar, the Paying Agent and the Exchange Agent and may appoint
one or more co-registrars, one or more additional paying agents and one or more
additional exchange agents in such other locations as it shall determine. The
term "Registrar" includes any additional registrar, "Paying Agent" includes any
additional paying agent and the term "Exchange Agent" includes any additional
exchange agent. The Trust may change any Paying Agent, Registrar, co-registrar
or Exchange Agent without prior notice to any Holder. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees. The Trust shall notify the Property Trustee of the name
and address of any Agent not a party to this Declaration. If the Trust fails to
appoint or maintain another entity as Registrar, Paying Agent or Exchange Agent,
the Property Trustee shall act as such. The Trust or any of its Affiliates may
act as Paying Agent, Registrar, or Exchange Agent. The Trust shall act as Paying
Agent, Registrar, and Exchange Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar and
Paying Agent for the Capital Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of liquidation amounts or Distributions, and will notify the
Property Trustee if there are insufficient funds for such purpose. While any
such insufficiency continues, the Property Trustee may require a Paying Agent to
pay all money held by it to the Property Trustee. The Trust at any time may
require a Paying Agent to pay all money held by it to the Property Trustee and
to account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
SECTION 7.6 Replacement Securities.
If a Holder claims that a Security owned by it has been lost, destroyed
or wrongfully taken or if such Security is mutilated and is surrendered to the
Trust or in the case of the Capital Securities to the Property Trustee, the
Trust shall issue and the Property Trustee shall, upon written order of the
Trust, authenticate a replacement Security if the Property Trustee's and the
Trust's requirements, as the case may be, are met. An indemnity bond must be
provided by the Holder which, in the judgment of the Property Trustee, is
sufficient to protect the Trustees, the Sponsor, the Trust or any authenticating
agent from any loss which any of them may suffer if a Security is replaced. The
Trust may charge such Holder for its expenses in replacing a Security.
38
<PAGE>
SECTION 7.7 Outstanding Capital Securities.
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those cancelled by
it, those delivered to it for cancellation and those described in this Section
as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Capital
Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the terms
of this Declaration, they cease to be outstanding and Distributions on them
shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 Capital Securities in Treasury.
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Capital Securities owned by
the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be, shall
be disregarded and deemed not to be outstanding, except that for the purposes of
determining whether the Property Trustee shall be fully protected in relying on
any such direction, waiver or consent, only Securities which a Responsible
Officer of the Property Trustee actually knows are so owned shall be so
disregarded.
SECTION 7.9 Temporary Securities.
(a) Until Definitive Capital Securities are ready for delivery, the
Trust may prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Capital Securities but may have
variations that the Trust considers appropriate for temporary Securities.
Without unreasonable delay, the Trust shall prepare and, in the case of the
Capital Securities, the Property Trustee shall authenticate Definitive Capital
Securities in exchange for temporary Securities.
(b) A Global Capital Security deposited with the Clearing Agency or
with the Property Trustee as custodian for the Clearing Agency pursuant to
Section 7.3 shall be transferred to the beneficial owners thereof in the form of
Definitive Capital Securities only if such transfer complies with Section 9.2
and (i) the Clearing Agency notifies the Sponsor that it is unwilling or unable
to continue as Clearing Agency for such Global Capital Security or if at any
time such Clearing Agency ceases to be a "clearing agency" registered under the
Exchange Act and a clearing agency is not appointed by the Sponsor within 90
days of such notice, (ii) a Default or an Event of Default has occurred and is
continuing or (iii) the Trust at its sole discretion elects to cause the
issuance of Definitive Capital Securities.
39
<PAGE>
(c) Any Global Capital Security that is transferable to the beneficial
owners thereof in the form of Definitive Capital Securities pursuant to this
Section 7.9 shall be surrendered by the Clearing Agency to the Property Trustee
located in the State of Delaware, to be so transferred, in whole or from time to
time in part, without charge, and the Property Trustee shall authenticate and
make available for delivery, upon such transfer of each portion of such Global
Capital Security, an equal aggregate liquidation amount of Securities of
authorized denominations in the form of certificated Capital Securities. Any
portion of a Global Capital Security in transferred pursuant to this Section
shall be registered in such names as the Clearing Agency shall direct. Any
Capital Security in the form of Definitive Capital Securities delivered in
exchange for an interest in the Global Capital Security shall, except as
otherwise provided by Sections 7.3 and 9.2, bear the Restricted Securities
Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of a Global
Capital Security may grant proxies and otherwise authorize any Person, including
Participants and Persons that may hold interests through Participants, to take
any action which such Holder is entitled to take under this Declaration or the
Securities.
(e) In the event of the occurrence of any of the events specified in
Section 7.9(b), the Trust will promptly make available to the Property Trustee a
reasonable supply of certificated Capital Securities in fully registered form
without distribution coupons.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Exchange Agent shall
forward to the Property Trustee any Capital Securities surrendered to them for
registration of transfer, redemption, exchange or payment. The Property Trustee
shall promptly cancel all Capital Securities, surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation and shall
dispose of cancelled Capital Securities in accordance with its customary
procedures unless the Trust otherwise directs. The Trust may not issue new
Capital Securities to replace Capital Securities that it has paid or that have
been delivered to the Property Trustee for cancellation or that any Holder has
exchanged.
SECTION 7.11 CUSIP Numbers.
The Trust in issuing the Capital Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Property Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
40
<PAGE>
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust.
(a) The Trust shall automatically dissolve:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the revocation of
the Sponsor's charter and the expiration of 90 days after the date of revocation
without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, provided that, the Property Trustee has received
written notice from the Sponsor directing the Property Trustee to dissolve the
Trust (which direction is optional, and except as otherwise expressly provided
below, within the discretion of the Sponsor) and provided, further, that such
direction and such distribution is conditioned on (a) the receipt of any
required regulatory approval and (b) the Administrative Trustees' receipt of an
opinion of an independent tax counsel experienced in such matters, which opinion
may rely on published rulings of the Internal Revenue Service, to the effect
that the Holders will not recognize any gain or loss for United States federal
income tax purposes as a result of the dissolution of the Trust and the
distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of the
Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been paid
to the Holders in accordance with the terms of the Securities; or
(vi) the expiration of the term of the Trust provided in Section
3.14.
(b) As soon as is practicable after the occurrence of an event referred
to in Section 8.1(a), after completion of the winding up of the affairs of the
Trust, the Administrative Trustees shall file a certificate of cancellation with
the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
41
<PAGE>
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) The Administrative Trustees shall provide for the registration of
Capital Securities and of the transfer of Capital Securities, which will be
effected without charge but only upon payment (with such indemnity as the
Administrative Trustees may require) in respect of any tax or other governmental
charges that may be imposed in relation to it. Upon surrender for registration
of transfer of any Capital Securities, the Administrative Trustees shall cause
one or more new Capital Securities to be issued in the name of the designated
transferee or transferees. Every Capital Security surrendered for registration
of transfer shall be accompanied by a written instrument of transfer in form
satisfactory to the Administrative Trustees and the Registrant duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each Capital
Security surrendered for registration of transfer shall be canceled by the
Property Trustee. A transferee of a Capital Security shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Capital Security. By acceptance of a Capital Security, each
transferee shall be deemed to have agreed to be bound by this Declaration.
(c) For so long as the Trust Securities remain outstanding, the Sponsor
will covenant (i) to directly or indirectly maintain 100% direct or indirect
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of the Sponsor under the Indenture may succeed to the
Sponsor's ownership of such Common Securities, (ii) to use its reasonable
efforts to cause the Trust (a) to remain a business trust, except in connection
with the distribution of Debentures to the Holders of Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities, or
certain mergers, consolidations or amalgamations, each as permitted by this
Declaration, and (b) to otherwise continue to be classified as a grantor trust
for United States federal income tax purposes and (iii) to use its reasonable
efforts to cause each holder of Trust Securities to be treated as owning an
undivided beneficial interest in the Debentures.
SECTION 9.2 Transfer Procedures and Restrictions
(a) General. Except as otherwise provided in Section 9.2(b), if Capital
Securities are issued upon the registration of transfer, exchange or replacement
of Capital Securities bearing the Restricted Securities Legend set forth in
Exhibit A-1 hereto, or if a request is made to remove such Restricted Securities
Legend on Capital Securities, the Capital Securities so issued shall bear the
Restricted Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Trust and the
Property
42
<PAGE>
Trustee such evidence satisfactory to the Sponsor, which shall include an
Opinion of Counsel as may be reasonably required by the Sponsor, that neither
the legend nor the restrictions on transfer set forth therein are required to
ensure that transfers thereof are made pursuant to an exception from the
registration requirements of the Securities Act or, with respect to Restricted
Definitive Capital Securities, that such Securities are not "restricted" within
the meaning of Rule 144. Upon provision of such satisfactory evidence, the
Property Trustee, at the written direction of the Trust, shall authenticate and
deliver Capital Securities that do not bear the legend.
(b) Transfers After Effectiveness of a Registration Statement. After
the effectiveness of a Registration Statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply (other than the legend requiring that transfers of Capital
Securities be made in blocks having an aggregate liquidation amount of not less
than $100,000 or the legend required if Series B Capital Securities are issued
in a Private Exchange), and beneficial interests in a Capital Security in global
form without legends will be available to transferees of such Capital
Securities, upon exchange of the transferring Holder's Restricted Definitive
Capital Security or directions to transfer such Holder's beneficial interest in
the Global Capital Security or the Regulation S Global Capital Security, as the
case may be. No such transfer or exchange of a Restricted Definitive Capital
Security or of an interest in the Global Capital Security or the Regulation S
Global Capital Security shall be effective unless the transferor delivers to the
Trust a certificate in a form substantially similar to that attached hereto as
the form of "Assignment" in Exhibit A-1. Except as otherwise provided in Section
9.2(m), after the effectiveness of a Registration Statement, the Trust shall
issue and the Property Trustee, upon a written order of the Trust signed by one
Administrative Trustee, shall authenticate a Capital Security in global form
without the Restricted Securities Legend (the "Unrestricted Global Capital
Security") for deposit with the Clearing Agency or its custodian to evidence
transfers of beneficial interests from the (i) Global Capital Security or the
Regulation S Global Capital Security and (ii) Restricted Definitive Capital
Securities.
(c) Transfer and Exchange of Definitive Capital Securities. When
Definitive Capital Securities are presented to the Registrar or co-Registrar
(x) to register the transfer of such Definitive Capital Securities; or
(y) to exchange such Definitive Capital Securities which became
mutilated, destroyed, defaced, stolen or lost, for an equal number of Definitive
Capital Securities,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Capital Securities surrendered for
registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Administrative Trustees and
the Registrar or co-Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
43
<PAGE>
(ii) in the case of Definitive Capital Securities that are
Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities are being delivered
to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect; or
(B) if such Restricted Capital Securities are being
transferred: (i) a certification from the transferor in a form
substantially similar to that attached hereto as the form of
"Assignment" in Exhibit A-1, and (ii) if the Trust or Registrar so
requests, evidence reasonably satisfactory to it as to the
compliance with the restrictions set forth in the Restricted
Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital Security for a
Beneficial Interest in a Global Capital Security. A Definitive Capital Security
may not be exchanged for a beneficial interest in a Global Capital Security
except upon satisfaction of the requirements set forth below. Upon receipt by
the Property Trustee of a Definitive Capital Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Property Trustee and the Administrative Trustees, together with:
(i) if such Definitive Capital Security is a Restricted Capital
Security, certification (in a form substantially similar to that attached hereto
as the form of "Assignment" in Exhibit A-1), provided, however, that such
Definitive Capital Security may only be exchanged for an interest in a
Regulation S Global Security where such Definitive Capital Security is being
transferred pursuant to Regulation S or Rule 144 (if applicable); and
(ii) whether or not such Definitive Capital Security is a
Restricted Capital Security, written instructions directing the Property Trustee
to make, or to direct the Clearing Agency to make, an adjustment on its books
and records with respect to the appropriate Global Capital Security to reflect
an increase in the number of the Capital Securities represented by such Global
Capital Security, then the Property Trustee shall cancel such Definitive Capital
Security and cause, or direct the Clearing Agency to cause, the aggregate number
of Capital Securities represented by the appropriate Global Capital Security to
be increased accordingly. If no Global Capital Securities are then outstanding,
the Trust shall issue and the Property Trustee shall authenticate, upon written
order of any Administrative Trustee, an appropriate number of Capital Securities
in global form.
(e) Transfer and Exchange of Global Capital Securities. Subject to
Section 9.2(f), the transfer and exchange of Global Capital Securities or
beneficial interests therein shall be effected through the Clearing Agency, in
accordance with this Declaration (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Clearing Agency therefor.
44
<PAGE>
(f) Transfer of a Beneficial Interest in a Global Capital Security for
a Definitive Capital Security.
(i) Any Person having a beneficial interest in a Global Capital
Security may upon request, but only upon 20 days prior notice to the Property
Trustee, and if accompanied by the information specified below, exchange such
beneficial interest for a Definitive Capital Security representing the same
number of Capital Securities. Upon receipt by the Property Trustee from the
Clearing Agency or its nominee on behalf of any Person having a beneficial
interest in a Global Capital Security of written instructions or such other form
of instructions as is customary for the Clearing Agency or the Person designated
by the Clearing Agency as having such a beneficial interest in a Restricted
Capital Security and a certification from the transferor (in a form
substantially similar to that attached hereto as the form of "Assignment" in
Exhibit A-1), which may be submitted by facsimile, then the Property Trustee
will cause the aggregate number of Capital Securities represented by Global
Capital Securities to be reduced on its books and records and, following such
reduction, the Trust will execute and the Property Trustee will authenticate and
make available for delivery to the transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a beneficial
interest in a Global Capital Security pursuant to this Section 9.2(f) shall be
registered in such names and in such authorized denominations as the Clearing
Agency, pursuant to instructions from its Clearing Agency Participants or
otherwise, shall instruct the Property Trustee in writing. The Property Trustee
shall deliver such Capital Securities to the Persons in whose names such Capital
Securities are so registered in accordance with such instructions of the
Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital Securities.
Notwithstanding any other provisions of this Declaration (other than the
provisions set forth in subsection (h) of this Section 9.2 and subsection (b) of
Section 7.9), a Global Capital Security may not be transferred as a whole except
by the Clearing Agency to a nominee of the Clearing Agency or another nominee of
the Clearing Agency or by the Clearing Agency or any such nominee to a successor
Clearing Agency or a nominee of such successor Clearing Agency.
Prior to the expiration of the restricted period, as contemplated by
Regulation S, beneficial interests in the Regulation S Global Capital Security
may be exchanged for beneficial interests in the Global Capital Security only if
such exchange occurs in connection with a transfer of the Capital Securities
pursuant to Rule 144A and the transferor first delivers to the Property Trustee
a written certificate (in a form substantially similar to that attached hereto
as the "Form of Assignment" in Exhibit A-1) to the effect that Capital
Securities are being transferred to a Person who the transferor reasonably
believes is a QIB, purchasing for its own account or the account of a QIB in a
transaction meeting the requirements of Rule 144A and in accordance with all
applicable securities laws of the states of the United States and other
jurisdictions.
45
<PAGE>
Beneficial interests in the Global Capital Security may be transferred
to a person who takes delivery in the form of an interest in the Regulation S
Global Capital Security, whether before or after the expiration of such
restricted period, as contemplated by Regulation S, only if the transferor first
delivers to the Property Trustee written certificate (in a form substantially
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1) to
the effect that such transfer is being made in accordance with Rule 903 or Rule
904 of Regulation S or Rule 144 (if available) and that, if such transfer occurs
prior to the expiration of such restricted period, the interest transferred will
be held immediately thereafter through the Euroclear System or Cedel Bank,
societe anonyme.
(h) Authentication of Definitive Capital Securities. If at any time:
(i) there occurs a Default or an Event of Default which is
continuing, or
(ii) the Trust, in its sole discretion, notifies the Property
Trustee in writing that it elects to cause the issuance of Definitive Capital
Securities under this Declaration, then an Administrative Trustee on behalf of
the Trust will execute, and the Property Trustee, upon receipt of a written
order of the Trust signed by one Administrative Trustee requesting the
authentication and delivery of Definitive Capital Securities to the Persons
designated by the Trust, will authenticate and make available for delivery
Definitive Capital Securities, equal in number to the number of Capital
Securities represented by the Global Capital Securities, in exchange for such
Global Capital Securities.
(i) Legend.
(i) Except as permitted by the following paragraph (ii), each Capital
Security certificate evidencing the Global Capital Securities and the Definitive
Capital Securities (and all Capital Securities issued in exchange therefor or
substitution thereof) shall bear a legend (the "Restricted Securities Legend")
in substantially the following form:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY,
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
46
<PAGE>
ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH UCBH HOLDINGS,
INC. (THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE
OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL
SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) PURSUANT TO CLAUSE (E) TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF
THIS CAPITAL SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE
TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY
IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000
(100 CAPITAL SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL
BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH CAPITAL
SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE
RECEIPT OF DISTRIBUTIONS OF SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH
CAPITAL SECURITIES.
47
<PAGE>
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR (ii) THE ACQUISITION
AND HOLDING OF THIS CAPITAL SECURITY BY IT IS NOT PROHIBITED BY
EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S. INTERNAL
REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH
PROHIBITION.
and in the case of the Regulation S Global Capital Security:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED
UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.
(ii) Upon any sale or transfer of a Restricted Capital Security
(including any Restricted Capital Security represented by a Global Capital
Security) pursuant to an effective registration statement under the Securities
Act or pursuant to Rule 144 under the Securities Act after such registration
statement ceases to be effective:
(A) in the case of any Restricted Capital Security that is a
Definitive Capital Security, the Registrar shall permit the Holder thereof to
exchange such Restricted Capital Security for a Definitive Capital Security that
does not bear the Restricted Securities Legend and rescind any restriction on
the transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security that is
represented by a Global Capital Security, the Registrar shall permit the Holder
of such Global Capital Security to exchange such Global Capital Security for
another Global Capital Security that does not bear the Restricted Securities
Legend.
48
<PAGE>
(j) Cancellation or Adjustment of Global Capital Security. At such time
as all beneficial interests in a Global Capital Security have either been
exchanged for Definitive Capital Securities to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Capital Security shall be canceled by the Property
Trustee. At any time prior to such cancellation, if any beneficial interest in a
Global Capital Security is exchanged for Definitive Capital Securities, Capital
Securities represented by such Global Capital Security shall be reduced and an
adjustment shall be made on the books and records of the Clearing Agency and the
Registrar, to reflect such reduction.
(k) Obligations with Respect to Transfers and Exchanges of Capital
Securities.
(i) To permit registrations of transfers and exchanges, the Trust shall
execute and the Property Trustee shall authenticate Definitive Capital
Securities and Global Capital Securities at the Registrar's or co-registrar's
request in accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected without
charge, but only upon payment (with such indemnity as the Trust or the Sponsor
may require) in respect of any tax or other governmental charge that may be
imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required to register
the transfer of or exchange of (a) Capital Securities during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Capital Securities for redemption and
ending at the close of business on the day of such mailing; or (b) any Capital
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Capital Security being redeemed in part.
(iv) Prior to the due presentation for registration of transfer of any
Capital Security, the Trust, the Property Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the Person in whose name a
Capital Security is registered as the absolute owner of such Capital Security
for the purpose of receiving Distributions on such Capital Security (subject to
Section 2(c) of Annex I) and for all other purposes whatsoever, and none of the
Trust, the Property Trustee, the Paying Agent, the Registrar or any co-registrar
shall be affected by notice to the contrary.
(v) All Capital Securities issued upon any registration of transfer or
exchange pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this Declaration as
the Capital Securities surrendered upon such registration of transfer or
exchange.
(l) No Obligation of the Property Trustee.
49
<PAGE>
(i) The Property Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Capital Security, a Clearing Agency Participant
in the Clearing Agency or other Person with respect to the accuracy of the
records of the Clearing Agency or its nominee or of any Clearing Agency
Participant thereof, with respect to any ownership interest in the Capital
Securities or with respect to the delivery to any Clearing Agency Participant,
beneficial owner or other Person (other than the Clearing Agency) of any notice
(including any notice of redemption) or the payment of any amount, under or with
respect to such Capital Securities. All notices and communications to be given
to the Holders and all payments to be made to Holders under the Capital
Securities shall be given or made only to or upon the order of the registered
Holders (which shall be the Clearing Agency or its nominee in the case of a
Global Capital Security). The rights of beneficial owners in any Global Capital
Security shall be exercised only through the Clearing Agency subject to the
applicable rules and procedures of the Clearing Agency. The Property Trustee may
conclusively rely and shall be fully protected in relying upon information
furnished by the Clearing Agency or any agent thereof with respect to its
Clearing Agency Participants and any beneficial owners.
(ii) The Property Trustee and the Registrar shall have no obligation or
duty to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Declaration or under applicable law with respect to
any transfer of any interest in any Capital Security (including any transfers
between or among Clearing Agency Participants or beneficial owners in any Global
Capital Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Declaration, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
(m) Exchange of Series A Capital Securities for Series B Capital
Securities. The Series A Capital Securities may be exchanged for Series B
Securities pursuant to the terms of the Exchange Offer. The Property Trustee
shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities, the
transactions contemplated by the Exchange Offer have been consummated; and
(B) the number of Series A Capital Securities properly tendered in
the Exchange Offer that are represented by a Global Capital Security and the
number of Series A Capital Securities properly tendered in the Exchange Offer
that are represented by Definitive Capital Securities, the name of each Holder
of such Definitive Capital Securities, the liquidation amount of Capital
Securities properly tendered in the Exchange Offer by each such Holder and the
name and address to which Definitive Capital Securities for Series B Capital
Securities shall be registered and sent for each such Holder.
50
<PAGE>
The Property Trustee, upon receipt of (i) such Officers' Certificate
and (ii) an Opinion of Counsel (x) to the effect that the Series B Capital
Securities have been registered under Section 5 of the Securities Act and the
Indenture has been qualified under the Trust Indenture Act and (y) with respect
to the matters set forth in Section 3(p) of the Registration Rights Agreement,
shall authenticate (A) a Global Capital Security representing Series B Capital
Securities in aggregate liquidation amount equal to the aggregate liquidation
amount of Series A Capital Securities represented by a Global Capital Security
indicated in such Officers' Certificate as having been properly tendered and (B)
Definitive Capital Securities representing Series B Capital Securities
registered in the names of, and in the liquidation amounts indicated in such
Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Capital Security representing Series A Capital Securities indicating the
reduction in the number and aggregate liquidation amount represented thereby as
a result of the Exchange Offer.
The Trust shall deliver such Definitive Capital Securities representing
Series B Capital Securities to the Holders thereof as indicated in such
Officers' Certificate.
(n) Minimum Transfers. Series A Capital Securities and, when issued,
Series B Capital Securities may only be transferred in minimum blocks of
$100,000 aggregate liquidation amount. Any transfer of Series A Capital
Securities or Series B Capital Securities in a block having an aggregate
liquidation amount of less than $100,000 shall be deemed to be voided and of no
legal effect whatsoever. Any such transferee shall be deemed not to be a Holder
of such Series A or Series B Capital Securities for any purpose, including, but
not limited to, the receipt of Distributions on such Capital Securities, and
such transferee shall be deemed to have no interest whatsoever in such Capital
Securities.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Security shall be
registered on the books and records of the Trust as the sole owner of such
Security for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Security on the part of any Person, whether
or not the Trust shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Global Capital Securities shall initially be registered on the books
and records of the Trust in the name of Cede & Co., the nominee of the Clearing
Agency, and no Capital Security Beneficial Owner will receive a definitive
Capital Security Certificate representing such Capital Security Beneficial
Owner's interests in such Global Capital Securities, except as provided in
Section 9.2 and Section 7.9. Unless and until definitive, fully registered
Capital Securities certificates have been issued to the Capital Security
Beneficial Owners pursuant to Section 9.2 and Section 7.9:
51
<PAGE>
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Capital Securities and receiving approvals, votes or
consents hereunder) as the Holder of the Capital Securities and the sole holder
of the Global Certificates and shall have no obligation to the Capital Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with
any other provisions of this Declaration, the provisions of this Section 9.4
shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants and the
Clearing Agency shall receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants. DTC will make book
entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Capital Security
Holders is required under this Declaration, the Trustees shall give all such
notices and communications specified herein to be given to the Holders of Global
Capital Securities to the Clearing Agency, and shall have no notice obligations
to the Capital Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Capital Securities, the Administrative Trustees
may, in their sole discretion, appoint a successor Clearing Agency with respect
to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
52
<PAGE>
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders which shall be made solely
from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any deficit
upon dissolution or termination of the Trust or otherwise.
(b) The Debenture Issuer shall be liable for all of the debts and
obligations of the Trust (other than in respect of the payment of principal,
interest and premium, if any, on the Securities) to the extent not satisfied out
of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and, if selected by such Indemnified Person, has been selected by
such Indemnified Person with reasonable care on behalf of the Trust, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders might
properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
53
<PAGE>
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons and any Indemnified Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner that
is, or provides terms that are, fair and reasonable to the Trust or any Holder
of Securities, the Indemnified Person shall resolve such conflict of interest,
take such action or provide such terms, considering in each case the relative
interest of each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors as
it desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the Trust or any
other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration.
SECTION 10.4 Indemnification.
(a)(i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees and expenses), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Trust, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
54
<PAGE>
(ii) The Debenture Issuer shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Trust to procure a judgment in its favor by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such Person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a), or in defense of any claim, issue or matter therein, he
shall be indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this Section
10.4(a) (unless ordered by a court) shall be made by the Debenture Issuer only
as authorized in the specific case upon a determination that indemnification of
the Company Indemnified Person is proper in the circumstances because he has met
the applicable standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Administrative Trustees by a majority
vote of a Quorum consisting of such Administrative Trustees who were not parties
to such action, suit or proceeding, (2) if such a Quorum is not obtainable, or,
even if obtainable, if a Quorum of disinterested Administrative Trustees so
directs, by independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred by a
Company Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no
55
<PAGE>
advance shall be made by the Debenture Issuer if a determination is reasonably
and promptly made (i) by the Administrative Trustees by a majority vote of a
quorum of disinterested Administrative Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written opinion or (iii)
the Common Security Holder of the Trust, that, based upon the facts known to the
Administrative Trustees, counsel or the Common Security Holder at the time such
determination is made, such Company Indemnified Person acted in bad faith or in
a manner that such person did not believe to be in or not opposed to the best
interests of the Trust, or, with respect to any criminal proceeding, that such
Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Administrative Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or Capital
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company Indemnified
Person who serves in such capacity at any time while this Section 10.4(a) is in
effect. Any repeal or modification of this Section 10.4(a) shall not affect any
rights or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified Person
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Debenture
Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
10.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
56
<PAGE>
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee or the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense including taxes (other than taxes based on the income
of such Fiduciary Indemnified Person) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against or investigating any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 10.4(b) shall survive the resignation or
removal of the Property Trustee or the Delaware Trustee and the satisfaction and
discharge of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee (subject to Section 5.3(c)) may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
SECTION 10.6 Compensation; Fees.
The Debenture Issuer agrees:
(a) to pay to the Trustees from time to time such compensation for
all services rendered by them hereunder as the parties shall agree in writing
from time to time (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust); and
57
<PAGE>
(b) except as otherwise expressly provided herein, to reimburse
the Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision of
this Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith.
The provisions of this Section 10.6 shall survive the dissolution
of the Trust and the termination of this Declaration and the removal or
resignation of any Trustee.
No Trustee may claim any lien or charge on any property of the
Trust as a result of any amount due pursuant to this Section 10.6.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The books of account and the records of the
Trust shall be examined by and reported upon as of the end of each Fiscal Year
of the Trust by a firm of independent certified public accountants selected by
the Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly prepared
and delivered to each of the Holders, any annual United States federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Administrative Trustees shall endeavor
to deliver all such information statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly prepared
and filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Administrative Trustees on behalf of the Trust with any state or
local taxing authority.
58
<PAGE>
SECTION 11.3 Banking.
The Trust may maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Debentures held by the Property Trustee shall be made directly
to the Property Trustee Account and no other funds of the Trust shall be
deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Administrative Trustees; provided, however,
that the Property Trustee shall designate the signatories for the Property
Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Administrative Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to Distributions or allocations to any Holder, the amount withheld shall
be deemed to be a Distribution in the amount of the withholding to the Holder.
In the event of any claimed over withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration (including
Section 7 of the Annex I hereto) or by any applicable terms of the Securities,
this Declaration may only be amended by a written instrument approved and
executed by:
(i) the Administrative Trustees (or if there are more than two
Administrative Trustees a majority of the Administrative Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
59
<PAGE>
(b) No amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities); and
(B) an Opinion of Counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to, the terms of
this Declaration (including the terms of the Securities) and that all conditions
precedent, if any, in this Declaration to the execution and delivery of such
amendment have been satisfied, provided, however, that the Property Trustee
shall not be required to sign any such amendment which affects the rights,
powers, duties, obligations or immunities of the Property Trustee; or
(ii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder may be effected only with such additional requirements
as may be set forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders;
(e) Article Four shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities and;
(f) The rights of the Holders of the Common Securities under Article
Five to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders to:
60
<PAGE>
(i) cure any ambiguity, correct or supplement any provision in
this Declaration that may be inconsistent with any other provision of this
Declaration or to make any other provisions with respect to matters or questions
arising under this Declaration which shall not be inconsistent with the other
provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified for United States federal income tax purposes as a grantor trust
at all times that any Securities are outstanding or to ensure that the Trust
will not be required to register as an Investment Company under the Investment
Company Act; and
(iii) to modify, eliminate or add any provisions of the
Declaration to such extent as shall be necessary to enable the Trust and the
Sponsor to conduct an Exchange Offer in the manner contemplated by the
Registration Rights Agreement; provided, however, that in each case such action
shall not adversely affect in any material respect the interests of the Holders,
and any amendments of this Declaration shall become effective when notice
thereof is given to the Holders.
SECTION 12.2 Meetings of the Holders; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Administrative Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Administrative Trustees shall
call a meeting of the Holders of such class if directed to do so by the Holders
of at least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrative Trustees one or
more notices in writing stating that the signing Holders wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders calling a meeting shall specify in writing the Security
Certificates held by the Holders exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders:
(i) notice of any such meeting shall be given to all the Holders
having a right to vote thereat at least seven days and not more than 60 days
before the date of such meeting. Whenever a vote, consent or approval of the
Holders is permitted or required under this Declaration or the rules of any
stock exchange on which the Capital Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of the
Holders. Any action that may be taken at a meeting of the Holders may be taken
without a meeting if a consent in writing setting forth the action so taken is
signed by the Holders owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such action at a
meeting at which all Holders having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall be given
to the Holders entitled to vote who have not consented in writing. The
Administrative Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrative Trustees;
61
<PAGE>
(ii) each Holder may authorize any Person to act for it by proxy
on all matters in which a Holder is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy shall
be valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the Holder executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware corporation
and the Holders were stockholders of a Delaware corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the Administrative Trustees
may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed or trading, otherwise
provides, the Administrative Trustees, in their sole discretion, shall establish
all other provisions relating to meetings of Holders, including notice of the
time, place or purpose of any meeting at which any matter is to be voted on by
any Holders, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a Delaware banking corporation, a national
banking association or a bank or trust company organized under the laws of any
State of the United States or the District of Columbia, in any case with trust
powers and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration;
62
<PAGE>
(b) The execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) The execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration with or
notice to, any Delaware or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware or the United States, with
trust power and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Delaware Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Delaware Trustee. This Declaration has been duly executed and
delivered by the Delaware Trustee and, assuming due authorization, execution and
delivery of the Declaration by each of the other parties thereto, constitutes a
legal, valid and binding obligation of the Delaware Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration with or
notice to, any federal banking authority is required for the execution, delivery
or performance by the Delaware Trustee of this Declaration; and
63
<PAGE>
(d) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement.
The Holders of the Capital Securities, the Debentures and the Capital
Securities Guarantee are entitled to the benefits of a Registration Rights
Agreement. In certain limited circumstances set forth in the Registration Rights
Agreement, the Debenture Issuer shall be required to pay Liquidated Damages with
respect to the Debentures. Unless otherwise stated, the term "Distribution", as
used in this Declaration, includes such Liquidated Damages.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, overnight courier service or confirmed telecopy, as
follows:
(a) if given to the Trust, in care of the Administrative Trustees at
the Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Property Trustee, the Delaware Trustee and the
Holders):
UCBH Trust Co.
c/o UCBH Holdings, Inc.
711 Van Ness Boulevard
San Francisco California 84102
Attention: Tommy S. Wu
Telecopy: (415) 346-2266
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attention: Corporate Trust Administration
Telecopy: 302-651-1576
64
<PAGE>
(c) if given to the Property Trustee, at the Property Trustee's mailing
address set forth below (or such other address as the Property Trustee may give
notice of to the Holders):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attention: Corporate Trust Administration
Telecopy: 302-651-1576
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Property Trustee and the Trust):
UCBH Trust Co.
c/o UCBH Holdings, Inc.
711 Van Ness Boulevard
San Francisco California 84102
Attention: Tommy Wu
Telecopy: (415) 346-2266
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
65
<PAGE>
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The provisions
of this Declaration shall be interpreted to further this intention of the
parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
66
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
WILMINGTON TRUST COMPANY
as Delaware Trustee
By: /s/ James P. Lawler
----------------------
Name: James P. Lawler
Title: Vice President
WILMINGTON TRUST COMPANY
as Property Trustee
By: /s/ James P. Lawler
-------------------
Name: James P. Lawler
Title: Vice President
UCBH HOLDINGS, INC.
as Sponsor and Debenture Issuer
By: /s/ Tommy S. Wu
---------------------------
Name: Tommy S. Wu
Title: President and Chief
Executive Officer
67
<PAGE>
ANNEX I
TERMS OF
SERIES A/SERIES B 9 3/8% CAPITAL SECURITIES
9 3/8% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of April 17, 1998 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the Offering
Memorandum referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Capital Securities. Thirty thousand Series A Capital Securities of
the Trust and Series B Capital Securities of the Trust, both series together
with an aggregate liquidation amount with respect to the assets of the Trust of
thirty million dollars ($30,000,000), and each with a liquidation amount with
respect to the assets of the Trust of $1,000 per security, are hereby designated
for the purposes of identification only as "Series A 9 3/8% Capital Securities"
and "Series B 9 3/8% Capital Securities", respectively (collectively, the
"Capital Securities"). The certificates evidencing the Capital Securities shall
be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any exchange or
quotation system on or in which the Capital Securities are listed, traded or
quoted.
(b) Common Securities. 928 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of nine
hundred twenty-eight thousand dollars ($928,000) and a liquidation amount with
respect to the assets of the Trust of $1,000 per security, are hereby designated
for the purposes of identification only as "9 3/8% Common Securities"
(collectively, the "Common Securities"). The certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of 9 3/8% (the "Coupon Rate") of the liquidation amount of $1,000 per
Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one semi-annual period will bear additional distributions
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes distributions of
any such Liquidated Damages payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent the Property Trustee has funds on
hand legally available therefor.
<PAGE>
(b) Distributions on the Securities will be cumulative, will accumulate
from the most recent date to which Distributions have been paid or duly provided
for or, if no Distributions have been paid or duly provided for, from the Issue
Date, and will be payable semi-annually in arrears on May 1 and November 1 of
each year, commencing on November 1, 1998 (each, a "Distribution Date"), except
as otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and for any period less than a
full calendar month on the basis of the actual number of days elapsed in such
month. As long as no Event of Default has occurred and is continuing under the
Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
period (each an "Extension Period"), during which Extension Period no interest
shall be due and payable on the Debentures, provided that no Extension Period
shall end on a date other than an Interest Payment Date for the Debentures or
extend beyond the Maturity Date of the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such deferral,
Distributions will continue to accumulate with additional Distributions thereon
(to the extent permitted by applicable law but not at a rate greater than the
rate at which interest is then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or extend
beyond the Maturity Date of the Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the close of
business on the fifteenth day of the month preceding the month in which the
relevant Distribution Date occurs, which Distribution Dates correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Global Capital Securities will be made as described under the heading
"Description of Capital Securities -- Form, Denomination, Book-Entry Procedures
and Transfer" in the Offering Memorandum dated March 31, 1998, of the Debenture
Issuer and the Trust relating to the Securities and the Debentures. Payments in
respect of Capital Securities held in certificated form will be made by check
mailed to the Holder entitled thereto. The relevant record dates for the Common
Securities shall be the same as the record dates for the Capital Securities.
Distributions payable on any Securities that are not punctually paid on any
Distribution Date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, will cease to be payable to the Holder on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that if such next succeeding Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day with the same force and effect as if made on
such date.
I-1
<PAGE>
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders.
3. Liquidation Distribution Upon Dissolution.
In the event of any dissolution of the Trust or the Sponsor otherwise
gives notice of its election to dissolve the Trust pursuant to Section
8.1(a)(iii) of the Declaration, the Trust shall be dissolved by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the Holders a Like
Amount (as defined below) of the Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
Holders will be entitled to receive Pro Rata out of the assets of the Trust
legally available for distribution to Holders, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, an amount equal to the
aggregate of the liquidation amount of $1,000 per Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the Securities,
Securities having a Liquidation Amount equal to the principal amount of
Debentures to be paid in accordance with their terms and (ii) with respect to a
distribution of Debentures upon the liquidation of the Trust, Debentures having
a principal amount equal to the Liquidation Amount of the Securities of the
Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets on hand legally available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part, at
maturity or upon early redemption (either at the option of the Debenture Issuer
or pursuant to a Special Event, as described below), the proceeds from such
repayment shall be simultaneously applied by the Property Trustee (subject to
the Property Trustee having received written notice no later than 45 days prior
to such repayment) to redeem a Like Amount of the Securities at a redemption
price equal to (i) in the case of the repayment of the Debentures at maturity,
the Maturity Redemption Price (as defined below), (ii) in the case of the
optional redemption of the Debentures upon the occurrence and continuation of a
Special Event, the Special Event Redemption Price (as defined below) and (iii)
in the case of the optional redemption of the Debentures on or after May 1,
2005, the Optional Redemption Price (as defined below). The Maturity Redemption
Price, the Special Event Redemption Price and the Optional Redemption Price are
referred to collectively as the "Redemption Price". Holders will be given not
less than 30 nor more than 60 days notice of such redemption.
I-2
<PAGE>
(b) (i) The "Maturity Redemption Price", with respect to a redemption
of Securities, shall mean an amount equal to the principal of and accrued and
unpaid interest on the Debentures as of the maturity date thereof.
(ii) In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Securities to be redeemed will
be determined as described in Section 4(f)(ii) below. Upon the entry of an order
for the dissolution of the Trust by a court of competent jurisdiction, the
Debentures thereafter will be subject to optional repayment, in whole, but not
in part, on or after May 1, 2005 (the "Initial Optional Redemption Date").
The Debenture Issuer shall have the right (subject to the conditions in
the Indenture) to elect to redeem the Debentures in whole or in part at any time
on or after the Initial Optional Redemption Date, upon not less than 30 days and
not more than 60 days notice, at the Optional Redemption Price and, simultaneous
with such redemption, to cause a Like Amount of the Securities to be redeemed by
the Trust at the Optional Redemption Price on a Pro Rata basis. "Optional
Redemption Price" shall mean a price equal to 100% of the liquidation amount of
Securities to be redeemed plus accumulated and unpaid Distributions thereon, if
any, to the date of such redemption.
(c) If at any time a Tax Event or a Regulatory Capital Event (each as
defined below, and each a "Special Event") occurs, the Debenture Issuer shall
have the right (subject to the conditions set forth in the Indenture) at any
time prior to the Initial Optional Redemption Date, upon not less than 30 nor
more than 60 days notice, to redeem the Debentures in whole, but not in part,
within the 90 days following the occurrence of such Special Event (the "90 Day
Period"), and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Special Event Redemption Price on
a Pro Rata basis.
"Make-Whole Amount" shall be equal to the greater of (i) 100% of the
principal of a Like Amount of Debentures to be redeemed or (ii) the sum, as
determined by a Quotation Agent (as defined in the Indenture), of the present
values of remaining scheduled payments of principal amount and interest on the
Debentures, 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
(as defined in the Indenture), plus, in the case of each of clauses (i) and
(ii), accrued and unpaid Distributions thereon, if any, to the date of such
redemption.
I-3
<PAGE>
"Tax Event" shall occur upon receipt by the Sponsor and the Trust of an
Opinion of Counsel from 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 Issue Date, there
is more than an insubstantial risk that (i) the Trust 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 Debentures, (ii) interest
payable by the Debenture Issuer on the Debentures is not, or within 90 days of
the date of such opinion, will not be, deductible by the Debenture Issuer, in
whole or in part, for United States federal income tax purposes, or (iii) the
Trust is, or will be within 90 days of the date of such opinion, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that the Sponsor shall have become,
or pursuant to law or regulation will become within 180 days, subject to capital
requirements under which, in the written opinion of independent bank regulatory
counsel experienced in such matters, the Capital Securities would not constitute
Tier 1 Capital (as that concept is used in the guidelines or regulations issued
by the Federal Reserve Board as of the date of the Offering Memorandum) applied
as if the Sponsor (or its successor) were a bank holding company, or the
then-equivalent of such Tier 1 Capital.
"Special Event Redemption Price" shall mean, with respect to a
redemption of Securities, a price equal to the Make-Whole Amount.
(d) On and from the date fixed by the Administrative Trustees for any
distribution of Debentures and liquidation of the Trust: (i) the Securities will
no longer be deemed to be outstanding, (ii) the Clearing Agency or its nominee
(or any successor Clearing Agency or its nominee), as the Holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and any
certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in a Like Amount of Debentures until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue.
(e) The Trust may not redeem fewer than all the outstanding Securities
unless all accumulated and unpaid Distributions have been paid on all Securities
for all semi-annual Distribution periods terminating on or before the date of
redemption.
(f) The procedure with respect to redemptions or distributions of
Securities shall be as follows:
I-4
<PAGE>
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder to be redeemed or exchanged
not fewer than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this
Section 4(f)(i), a Redemption/ Distribution Notice shall be deemed to be given
on the day such notice is first mailed by first-class mail, postage prepaid, to
Holders. Each Redemption/Distribution Notice shall be addressed to the Holders
at the address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing of
either thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to
be redeemed, the particular Securities to be redeemed shall be selected on a Pro
Rata basis (based upon Liquidation Amounts) not more than 60 days prior to the
date fixed for redemption from the outstanding Capital Securities not previously
called for redemption, provided, however, that with respect to Holders that
would be required to hold less than 100 but more than zero Securities as a
result of such pro rata redemption, the Trust shall redeem Securities of each
such Holder so that after such redemption such Holder shall hold either 100
Securities or such Holder no longer holds any Securities and shall use such
method (including, without limitation, by lot) as the Trust shall deem fair and
appropriate, provided, further, that any such proration may be made on the basis
of the aggregate Liquidation Amount of Securities held by each Holder thereof
and may be made by making such adjustments as the Trust deems fair and
appropriate in order that only Securities in denominations of $1,000 or integral
multiples thereof shall be redeemed. In respect of Capital Securities registered
in the name of and held of record by the Clearing Agency or its nominee (or any
successor Clearing Agency or its nominee) or any nominee, the distribution of
the proceeds of such redemption will be made to the Clearing Agency and
disbursed by such Clearing Agency in accordance with the procedures applied by
such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable), then (A)
with respect to Capital Securities issued in book-entry form, by 12:00 noon, New
York City time, on the redemption date, provided that the Debenture Issuer has
paid the Property Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures by 10:00 a.m., New York City
time, on the maturity date or the date of redemption, as the case requires, the
Property Trustee will deposit irrevocably with the Clearing Agency or its
nominee (or successor Clearing Agency or its nominee) funds sufficient to pay
the applicable Redemption Price with respect to such Capital Securities and will
give the Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the relevant Clearing Agency Participants, and (B) with
respect to Capital Securities issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
Debentures, the Property Trustee will pay the relevant Redemption Price to the
Holders by check mailed to the address of the relevant Holder appearing on the
books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
date of such deposit, or on the redemption date, as applicable, Distributions
will cease to accumulate on the Securities so called for redemption and all
rights of Holders so called for redemption will cease, except the right of the
Holders of such Securities to receive the Redemption Price, but without interest
on such Redemption Price, and such Securities shall cease to be outstanding.
I-5
<PAGE>
(iv) Payment of accumulated and unpaid Distributions on the Redemption
Date of the Securities will be subject to the rights of Holders on the close of
business on a regular record date in respect of a Distribution Date occurring on
or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required to
register or cause to be registered the transfer of (i) any Securities beginning
on the opening of business 15 days before the day of mailing of a notice of
redemption and ending at the close of business on the day of such mailing or
(ii) any Securities selected for redemption except the unredeemed portion of any
Security being redeemed. If any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such next
succeeding Business Day falls in the next calendar year, such payment shall be
made on the immediately preceding Business Day, with the same force and effect
as if made on such date fixed for redemption. If payment of the Redemption Price
in respect of any Securities is improperly withheld or refused and not paid
either by the Property Trustee or by the Sponsor as guarantor pursuant to the
relevant Securities Guarantee, Distributions on such Securities will continue to
accumulate from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital Securities, the
Clearing Agency or its nominee (or any successor Clearing Agency or its nominee)
if the Global Certificates have been issued or, if Definitive Capital Security
Certificates have been issued, to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking laws), provided
the acquiror is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from time
to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
5. Voting Rights - Capital Securities.
I-6
<PAGE>
(a) Except as provided under Sections 5(b), 6(b) and 7 herein and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
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 such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation amount
of all outstanding Capital Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Capital Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Capital Securities except by subsequent vote of such Holders. Subject to
Section 2.7 of the Declaration, the Property Trustee shall notify each Holder of
Capital Securities of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of the Capital
Securities, prior to taking any of the foregoing actions, the Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that the
Trust will not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on a
Like Amount of Debentures (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Common Securities Holder will be subrogated to the rights of such
Holder of Capital Securities to the extent of any payment made by the Debenture
Issuer to such Holder of Capital Securities in such Direct Action. Except as
provided in the second preceding sentence, the Holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Debentures.
Any approval or direction of Holders of Capital Securities may be given
at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which Holders of Capital Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of record of Capital Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
I-7
<PAGE>
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c), and 7 herein as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by the holder of the Common Securities.
If an Event of Default 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 Capital Securities. In no event will the
holders of the Capital Securities have the right to vote to appoint, remove or
replace, or increase or decrease the number of, the Administrative Trustees,
which voting rights are vested exclusively in the Sponsor as the holder of the
Common Securities. No resignation or removal of a 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 Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
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 such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation amount
of all outstanding Common Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Common Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Common Securities except by subsequent vote of such Holders. Subject to
Section 2.7 of the Declaration, the Property Trustee shall notify each Holder of
Common Securities of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of the Common
Securities, prior to taking any of the foregoing actions, the Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that the
Trust will not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such action.
I-8
<PAGE>
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Common Securities may institute a Direct Action for enforcement of payment to
such Holder of the principal of or premium, if any, or interest on a Like Amount
of Debentures on or after the respective due date specified in the Debentures.
In connection with Direct Action, the rights of the Common Securities Holder
will be subordinated to the rights of such Holder of Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of Common
Securities in such Direct Action. Except as provided in the second preceding
sentence, the Holders of Common Securities will not be able to exercise directly
any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Administrative Trustees will cause a notice of any meeting
at which Holders of Common Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of the
Holders (i) to cure any ambiguity, correct or supplement any provisions in the
Declaration that may be inconsistent with any other provisions, or to make any
other provisions with respect to matters or questions arising under the
Declaration which shall not be inconsistent with the other provisions of the
Declaration, (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified for United States federal income tax purposes as a grantor trust
at all times that any Securities are outstanding or to ensure that the Trust
will not be required to register as an "Investment Company" under the Investment
Company Act or (iii) to modify, eliminate or add any provisions of the
Declaration to such extent as shall be necessary to enable the Trust and the
Sponsor to conduct an Exchange Offer in the manner contemplated by the
Registration Rights Agreement; provided, however, that in each case such action
shall not adversely affect in any material respect the interests of any Holder.
Any amendments of the Declaration shall become effective when notice thereof is
given to the Holders. Under the circumstances referred to in Section 12.1(c) of
the Declaration, the Declaration also may be amended by the Trustees and the
Sponsor with (i) the consent of Holders representing a Majority in liquidation
amount of all outstanding Securities, and (ii) receipt by the Trustees of an
Opinion of Counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment will not affect
the Trust's status as a grantor trust for United States federal income tax
purposes or the Trust's exemption from status as an Investment Company under the
Investment Company Act, provided that, without the consent of each Holder of
Trust Securities, the Declaration may not be amended to (i) change the amount or
timing of any Distribution on the Trust Securities or otherwise adversely affect
the amount of any Distribution required to be made in respect of the Trust
Securities as of a specified date or (ii) restrict the right of a holder of
Trust Securities to institute suit for the enforcement of any such payment on or
after such date.
I-9
<PAGE>
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the Capital
Securities pro rata according to the aggregate liquidation amount of Capital
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Capital Securities outstanding, and only after satisfaction of all
amounts owed to the Holders of the Capital Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Common Securities outstanding. In any such proration, the Trust
may make such adjustments as may be appropriate in order that only securities in
authorized denominations shall be redeemed (subject to the minimum block
requirements of Section 9.2(n) of the Declaration).
9. Ranking.
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default under the Declaration occurs and is continuing, no
payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and other payments to
which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities Guarantee
and the Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights.
The Holders shall have no preemptive or similar rights to subscribe for
any additional securities.
12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee, the Common Securities Guarantee (as may be appropriate)
and the Indenture (including any supplemental indenture) to a Holder without
charge upon written request to the Sponsor at its principal place of business.
I-10
<PAGE>
EXHIBIT A-1
FORM OF SERIES A CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.]
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[IF THIS CAPITAL SECURITY IS A RESTRICTED CAPITAL SECURITY, INSERT:]
THESE CAPITAL SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE
A1-1
<PAGE>
DATE HEREOF AND THE LAST DATE ON WHICH UCBH HOLDINGS, INC. (THE "COMPANY") OR
ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE REVERSE OF THIS CAPITAL SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEREE TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND.]
[IF THIS CAPITAL SECURITY IS A REGULATION S GLOBAL SECURITY, INSERT:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.]
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL
SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO
THE RECEIPT OF DISTRIBUTIONS OF SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS THE ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT IS
NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH PROHIBITION.
A1-2
<PAGE>
Number of Series A Aggregate Liquidation
Capital Securities: Amount: $30,000,000
30,000 CUSIP NO. ___________
Certificate Evidencing Series A Capital Securities
of
UCBH TRUST CO.
Series A 9 3/8% Capital Securities
(liquidation amount $1,000 per Capital Security)
UCBH Trust Co., a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of $30,000,000 in aggregate liquidation amount
of Capital Securities of the Trust representing undivided beneficial interests
in the assets of the Trust designated the Series A 9 3/8% Capital Securities
(liquidation amount $1,000 per Capital Security) (the "Capital Securities").
Subject to the Declaration (as defined below), the Capital Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of April 17,
1998, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Capital Securities as set forth in
Annex I to the Declaration. Capitalized terms used but not defined herein shall
have the meaning given them in the Declaration. The Sponsor will provide a copy
of the Declaration, the Capital Securities Guarantee, the Common Securities
Guarantee (as may be appropriate), and the Indenture (including any supplemental
indenture) to a Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
A1-3
<PAGE>
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
Dated:
UCBH TRUST CO.
By:________________________________
Name: ____________________________
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
WILMINGTON TRUST CO.
as Property Trustee
Dated: By: ___________________________
Authorized Signatory
A1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 9 3/8% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions," as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for, if no Distributions have been paid or duly provided for, from
the Issue Date and will be payable semi-annually in arrears, on May 1 and
November 1 of each year, commencing on November 1, 1998, except as otherwise
described below. Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a full calendar
month, the number of days elapsed in such month. As long as no Event of Default
has occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive calendar semi-annual periods, including
the first such semi-annual period during such extension period (each an
"Extension Period"), provided that no Extension Period shall end on a date other
than an Interest Payment Date for the Debentures or extend beyond the Maturity
Date of the Debentures. As a consequence of such deferral, Distributions also
will be deferred. Despite such deferral, semi-annual Distributions will continue
to accumulate with interest thereon (to the extent permitted by applicable law,
but not at a rate exceeding the rate of interest then accruing on the
Debentures) at the Coupon Rate compounded semi-annually during any such
Extension Period. Prior to the termination of any such Extension Period, the
Debenture Issuer may further defer payments of interest by further extending
such Extension Period; provided that such Extension Period, together with all
such previous and further extensions within such Extension Period, may not
exceed 10 consecutive semi-annual periods, including the first semi-annual
period during such Extension Period, end on a date other than an Interest
Payment Date for the Debentures or extend beyond the Maturity Date of the
Debentures. Payments of accumulated Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension Period
and the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to the receipt of any required regulatory approval and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time dissolve the
Trust and, after satisfaction of liabilities to creditors of the Trust, cause
the Debentures to be distributed to the holders of the Securities in liquidation
of the Trust or, simultaneous with any redemption of the Debentures, cause a
Like Amount of the Securities to be redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
A1-5
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
_______________________________________________________________________________
_______________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
_______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_______________________________________________________________________________
_______________________________________________________________________________
___________________________________________________________ agent to transfer
this Capital Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: ______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee1: ___________________________________
__________________________
1/ Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A1-6
<PAGE>
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend]
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without
transfer; or
(2) / / transferred pursuant to and in compliance with Rule
144A under the Securities Act of 1933, as amended;
or
(3) / / transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
(4) / / z transferred to an "accredited investor" within the
meaning of subparagraph (a) of Rule 501 under the
Securities Act of 1933, as amended, that is acquiring
the Capital Securities for its own account, or for
the account of such an institutional "accredited
investor," for investment purposes and not with a
view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act of
1933, as amended; or
(5) / / transferred pursuant to another available exemption
from the registration requirements of
the Securities Act of 1933, as amended; or
(6) / / transferred pursuant to an effective Registration
Statement.
Unless one of the boxes is checked, the Registrar will refuse to register any of
the Capital Securities evidenced by this certificate in the name of any Person
other than the registered Holder thereof; provided, however, that if box (3) or
(4) is checked, the Registrar may require, prior to registering any such
transfer of the Capital Securities, such legal opinions, certifications and
other information as the Trust has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, as
amended, such as the exemption provided by Rule 144 under such Act; provided,
further, that if box (2) is checked, the transferee must also certify in the
form attached hereto that it is a "qualified institutional buyer" as defined in
Rule 144A ; provided, further, that after the date that a Registration Statement
has been filed and so long as such Registration Statement continues to be
effective, the Registrar may only permit transfers for which box (5) has been
checked.
------------------------------
Signature
A1-7
<PAGE>
CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER
The undersigned transferee of Capital Securities hereby certifies that (i)
the undersigned is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), (ii) the undersigned is aware that the transfer of the
Capital Securities to the undersigned is being made in reliance on Rule 144A and
(iii) the undersigned is acquiring the Capital Securities for its own account or
for the account of another QIB over which the undersigned exercises its sole
investment discretion.
The undersigned also understands and acknowledges that the Capital
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto and,
in each case, in compliance with the terms of the Capital Securities and the
terms of the Amended and Restated Declaration of Trust of UCBH Trust Co., dated
as of April 17, 1998, as the same may be amended from time to time.
-----------------------------
Signature
A1-8
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH UCBH HOLDINGS, INC.
(THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL
SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) SO LONG AS THIS COMMON SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE REVERSE OF THIS COMMON SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEREE TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS COMMON SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND.
THIS COMMON SECURITY IS NOT TRANSFERABLE EXCEPT AS SET FORTH IN SECTION
9.1(c) OF THE AMENDED AND RESTATED DECLARATION OF TRUST OF UCBH TRUST CO., DATED
AS OF APRIL 17, 1998, AS THE SAME MAY BE AMENDED FROM TIME TO TIME.
A2-1
<PAGE>
Certificate Evidencing Common Securities
of
UCBH TRUST CO.
9 3/8% Common Securities
(liquidation amount $1,000 per Common Security)
UCBH Trust Co., a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that UCBH Holdings, Inc.
(the "Holder") is the registered owner of 928 common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 9 3/8% Common Securities (liquidation amount $1,000 per Common
Security) (the "Common Securities"). Subject to the limitations in Section
9.1(c) of the Declaration (as defined below), the Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of April 17,
1998, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used but not defined herein shall
have the meaning given them in the Declaration. The Sponsor will provide a copy
of the Declaration, the Common Securities Guarantee, the Capital Securities
Guarantee (as may be appropriate) and the Indenture (including any supplemental
indenture) to a Holder without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this 17th
day of April, 1998.
UCBH TRUST CO.
By:_______________________________
Name: _________________________
Administrative Trustee
A2-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 9 3/8% (the "Coupon Rate") of the liquidation amount of $1,000 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative, will accrue
from the most recent date to which Distributions have been paid or duly provided
for or, if no Distributions have been paid or duly provided for, from the Issue
Date and will be payable semi-annually in arrears, on May 1 and November 1 of
each year, commencing on November 1, 1998, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period less than a full calendar month, the
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive calendar semi-annual periods, including
the first such semi-annual period during such extension period (each an
"Extension Period"), provided that no Extension Period shall end on a date other
than an Interest Payment Date for the Debentures or extend beyond the Maturity
Date of the Debentures. As a consequence of such deferral, Distributions also
will be deferred. Despite such deferral, Distributions will continue to
accumulate with interest thereon (to the extent permitted by applicable law, but
not at a rate exceeding the rate of interest then accruing on the Debentures) at
the Coupon Rate compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture Issuer may
further defer payments of interest by further extending such Extension Period;
provided that such Extension Period, together with all such previous and further
extensions within such Extension Period, may not exceed 10 consecutive
semi-annual periods, including the first semi-annual period during such
Extension Period, or end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. Payments of
accrued Distributions will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
A2-3
<PAGE>
Subject to the receipt of any required regulatory approval and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time dissolve the
Trust and, after satisfaction of liabilities to creditors of the Trust, cause
the Debentures to be distributed to the holders to the Securities in liquidation
of the Trust or, simultaneous with any redemption of the Debentures, cause a
Like Amount of the Securities to be redeemed by the Trust.
Under certain circumstances, the right of the holders of the Common
Securities shall be subordinate to the rights of the holders of the Capital
Securities (as defined in the Declaration), as provided in the Declaration.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-4
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_______________________________________________________________________________
_______________________________________________________________________________
___________________________________________________________ agent to transfer
this Common Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
A2-5
<PAGE>
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without
transfer; or
(2) / / transferred pursuant to and in compliance with Rule
144A under the Securities Act of 1933, as amended; or
(3) / / transferred to an institutional "accredited
investor" within the meaning of subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the Securities Act
of 1933, as amended, that is acquiring the Common
Securities for its own account, or for the account of
such an institutional "accredited investor," for
investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in
violation of the Securities Act of 1933; or
(4) / / transferred pursuant to another available exemption
from the registration requirements of the Securities
Act of 1933, as amended; or
(5) / / transferred pursuant to an effective Registration
Statement.
Unless one of the boxes is checked, the Registrar will refuse to register any of
the Common Securities evidenced by this certificate in the name of any Person
other than the registered Holder thereof; provided, however, that if box (3) or
(4) is checked, the Registrar may require, prior to registering any such
transfer of the Common Securities, such legal opinions, certifications and other
information as the Trust has reasonably requested to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act of 1933, as amended, such as
the exemption provided by Rule 144 under such Act; provided, further, that if
box (2) is checked, the transferee must also certify in the form attached that
it is a "qualified institutional buyer" as defined in Rule 144A.
Signature
<PAGE>
CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER
The undersigned transferee of Common Securities hereby certifies that
(i) the undersigned is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), (ii) the undersigned is aware that the transfer of the
Common Securities to the undersigned is being made in reliance on Rule 144A and
(iii) the undersigned is acquiring the Common Securities for its own account or
for the account of another QIB over which the undersigned exercises its sole
investment discretion.
The undersigned also understands and acknowledges that the Common
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto and,
in each case, in compliance with the terms of the Common Securities and the
terms of the Amended and Restated Declaration of Trust of UCBH Trust Co., dated
as of ________ __, 1998, as the same may be amended from time to time.
Signature
Exhibit 4.5
EXHIBIT A-1
FORM OF SERIES B CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY,
INSERT: THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF
THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.]
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100
CAPITAL SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO
THE RECEIPT OF DISTRIBUTIONS OF SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES.
<PAGE>
THE HOLDER OF THIS CAPITAL SECURITY BY ITS THE ACCEPTANCE
HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL
SECURITY BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975
OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH
PROHIBITION.
<PAGE>
Number of Series B Aggregate Liquidation
Capital Securities: Amount: $______________
CUSIP NO. _____________
Certificate Evidencing Series B Capital Securities
of
UCBH TRUST CO.
Series B 9.375% Capital Securities
(liquidation amount $1,000 per Capital Security)
UCBH Trust Co., a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of $______________ in aggregate liquidation
amount of Capital Securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the Series B 9.375% Capital
Securities (liquidation amount $1,000 per Capital Security) (the "Capital
Securities"). Subject to the Declaration (as defined below), the Capital
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of April 17, 1998, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Exchange Capital Securities
Guarantee, the Common Securities Guarantee (as may be appropriate), and the
Indenture (including any supplemental indenture) to a Holder without charge upon
written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Exchange Capital Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
<PAGE>
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
Dated:
UCBH TRUST CO.
By:________________________________
Name:______________________________
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
WILMINGTON TRUST CO.
as Property Trustee
Dated: By:________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed
at a rate per annum of 9.375% (the "Coupon Rate") of the liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one semi-annual period will bear interest thereon compounded semi-annually
at the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions," as used herein, includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds on hand legally
available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for, if no Distributions have been paid or duly provided for, from
the Issue Date and will be payable semi-annually in arrears, on May 1 and
November 1 of each year, commencing on November 1, 1998, except as otherwise
described below. Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a full calendar
month, the number of days elapsed in such month. As long as no Event of Default
has occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive calendar semi-annual periods, including
the first such semi-annual period during such extension period (each an
"Extension Period"), provided that no Extension Period shall end on a date other
than an Interest Payment Date for the Debentures or extend beyond the Maturity
Date of the Debentures. As a consequence of such deferral, Distributions also
will be deferred. Despite such deferral, semi-annual Distributions will continue
to accumulate with interest thereon (to the extent permitted by applicable law,
but not at a rate exceeding the rate of interest then accruing on the
Debentures) at the Coupon Rate compounded semi-annually during any such
Extension Period. Prior to the termination of any such Extension Period, the
Debenture Issuer may further defer payments of interest by further extending
such Extension Period; provided that such Extension Period, together with all
such previous and further extensions within such Extension Period, may not
exceed 10 consecutive semi-annual periods, including the first semi-annual
period during such Extension Period, end on a date other than an Interest
Payment Date for the Debentures or extend beyond the Maturity Date of the
Debentures. Payments of accumulated Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension Period
and the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
<PAGE>
Subject to the receipt of any required regulatory approval and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time dissolve the
Trust and, after satisfaction of liabilities to creditors of the Trust, cause
the Debentures to be distributed to the holders of the Securities in liquidation
of theTrust or, simultaneous with any redemption of the Debentures, cause a Like
Amount of the Securities to be redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Capital Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: ______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee1: ___________________________________
- --------------------------------------------------------------------------------
1
Signature must be guaranteed by an "eligible guarantor
institution" that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities and Exchange Act of 1934, as amended.
Exhibit 4.6
================================================================================
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
UCBH Holdings, Inc.
Dated as of ________, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application 5
SECTION 2.2 Lists of Holders of Securities 6
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee 6
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent 6
SECTION 2.6 Events of Default; Waiver 7
SECTION 2.7 Event of Default; Notice 7
SECTION 2.8 Conflicting Interests 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities
Guarantee Trustee 7
SECTION 3.2 Certain Rights of Capital Securities
Guarantee Trustee 9
SECTION 3.3. Not Responsible for Recitals or Issuance of
Series B Capital Securities Guarantee 11
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility 11
SECTION 4.2 Appointment, Removal and Resignation of
Capital Securities Guarantee Trustee 12
- 2 -
<PAGE>
TABLE OF CONTENTS (cont'd)
Page
----
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee 13
SECTION 5.2 Waiver of Notice and Demand 13
SECTION 5.3 Obligations Not Affected 13
SECTION 5.4 Rights of Holders 14
SECTION 5.5 Guarantee of Payment 14
SECTION 5.6 Subrogation 15
SECTION 5.7 Independent Obligations 15
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions 15
SECTION 6.2 Ranking 16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination 16
ARTICLE VIII
COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 8.1 Compensation and Expenses 17
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation 17
SECTION 9.2 Indemnification 18
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Successors and Assigns 18
SECTION 10.2 Amendments 18
SECTION 10.3 Notices 19
- 3 -
<PAGE>
TABLE OF CONTENTS (cont'd)
Page
----
SECTION 10.4 Benefit 20
SECTION 10.5 Governing Law 20
- 4 -
<PAGE>
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
This SERIES B GUARANTEE AGREEMENT (the "Series B Capital
Securities Guarantee"), dated as of ________, 1998, is executed and delivered by
UCBH Holdings, Inc., a Delaware corporation (the "Guarantor"), and Wilmington
Trust Company, a Delaware banking corporation, as trustee (the "Capital
Securities Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Series B Capital Securities (as defined herein)
of UCBH Trust Co., a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of April 17, 1998, among the trustees of the
Issuer, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer issued on
the date thereof 30,000 capital securities, having an aggregate liquidation
amount of $30,000,000, such capital securities being designated the Series B 9
3/8% Capital Securities (collectively the "Series A Capital Securities"); and
WHEREAS, as incentive for the Holders to exchange the Series A
Capital Securities for the Series B Capital Securities, the Guarantor desires
irrevocably and unconditionally to agree, to the extent set forth in this Series
B Capital Securities Guarantee, to pay to the Holders the Guarantee Payments (as
defined below) and to make certain other payments on the terms and conditions
set forth herein; and
WHEREAS, the Guarantor has executed and delivered a guarantee
agreement (the "Common Securities Guarantee"), dated as of April 17, 1998, with
substantially identical terms to this Series B Capital Securities Guarantee, for
the benefit of the holders of the Common Securities (as defined herein), except
that if an Event of Default (as defined in the Declaration) has occurred and is
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated, to the extent
and in the manner set forth in the Common Securities Guarantee, to the rights of
holders of Series A Capital Securities and the Series B Capital Securities to
receive Guarantee Payments under the Series A Capital Securities Guarantee and
this Series B Capital Securities Guarantee, as the case may be;
NOW, THEREFORE, in consideration of the exchange of Series A
Capital Securities for Series B Capital Securities by each Holder, which
exchange the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Series B Capital Securities Guarantee for
the benefit of the Holders.
-5-
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Series B Capital Securities Guarantee, unless the
context otherwise requires:
(a) Capitalized terms used in this Series B Capital Securities
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as of the date of
execution of this Series B Capital Securities Guarantee have the same meaning
when used in this Series B Capital Securities Guarantee unless otherwise defined
in this Series B Capital Securities Guarantee;
(c) a term defined anywhere in this Series B Capital
Securities Guarantee has the same meaning throughout;
(d) all references to "the Series B Capital Securities
Guarantee" or "this Series B Capital Securities Guarantee" are to this Series B
Capital Securities Guarantee as modified, supplemented or amended from time to
time;
(e) all references in this Series B Capital Securities
Guarantee to Articles and Sections are to Articles and Sections of this Series B
Capital Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Series B Capital Securities Guarantee, unless
otherwise defined in this Series B Capital Securities Guarantee or unless the
context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Business Day" means any day other than a Saturday or a
Sunday, or a day on which banking institutions in the States of Delaware or
California are authorized or required by law or executive order to close.
"Capital Securities Guarantee Trustee" means Wilmington Trust
Company, a Delaware banking corporation, as trustee hereunder, until a Successor
Capital Securities Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms
- 6 -
<PAGE>
of this Series B Capital Securities Guarantee and thereafter means each such
Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital
Securities Guarantee Trustee at which the corporate trust business of the
Capital Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware.
"Covered Person" means any Holder of Series B Capital
Securities.
"Debentures" means the series of subordinated debt securities
of the Guarantor designated the Series B 9 3/8% Junior Subordinated Deferrable
Interest Debentures due May 1, 2028 held by the Property Trustee (as defined in
the Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Series B Capital Securities
Guarantee, provided, however, that except with respect to a default in payment
of any Guarantee Payment, the Guarantor shall have received notice of default
and shall not have cured such default within 60 days after receipt of such
notice.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Series B Capital
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid Distributions (as defined in the Declaration) that are required to be
paid on such Series B Capital Securities, to the extent the Issuer has funds on
hand legally available therefor at such time, (ii) the redemption price,
including all accumulated and unpaid Distributions to the date of redemption
(the "Redemption Price"), to the extent the Issuer has funds on hand legally
available therefor at such time, with respect to any Series B Capital Securities
called for redemption by the Issuer and (iii) upon a voluntary or involuntary
termination and liquidation of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Series B Capital
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accumulated and unpaid Distributions on the
Series B Capital Securities to the date of payment, to the extent the Issuer has
funds on hand legally available therefor, and (b) the amount of assets of the
Issuer remaining available for distribution to Holders in liquidation of the
Issuer. If an Event of Default has occurred and is continuing, no Guarantee
Payments under the Common Securities Guarantee with respect to the Common
Securities or any guarantee payment under any Other Common Securities Guarantees
shall be made until the Holders shall be paid in full the Guarantee Payments to
which they are entitled under this Series B Capital Securities Guarantee.
- 7 -
<PAGE>
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Series B Capital Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Series B
Capital Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Person known to a Responsible
Officer of the Capital Securities Guarantee Trustee to be an Affiliate of the
Guarantor.
"Indemnified Person" means the Capital Securities Guarantee
Trustee, any Affiliate of the Capital Securities Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Securities
Guarantee Trustee.
"Indenture" means the Indenture dated as of April 17, 1998,
among the Guarantor (the "Debenture Issuer") and Wilmington Trust Company, as
trustee (the "Indenture Trustee"), pursuant to which the Debentures are to be
issued to the Property Trustee of the Issuer.
"Indenture Event of Default" shall mean any event specified in
Section 5.01 of the Indenture.
"Majority in liquidation amount of the Series B Capital
Securities" means, except as provided by the Declaration or by the Trust
Indenture Act, a vote by Holder(s) of more than 50% of the aggregate liquidation
amount of all Series B Capital Securities.
"Officers' Certificate" means, with respect to the Guarantor,
a certificate signed by any of the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, a Vice President, the Comptroller, the
Secretary or an Assistant Secretary of the Guarantor. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Series B Capital Securities Guarantee (other than pursuant to Section
314(d)(4) of the Trust Indenture Act) shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(c) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same
meaning as "Other Guarantees" as defined in the Common Securities Guarantee.
- 8 -
<PAGE>
"Other Debentures" means all junior subordinated debentures,
other than the Debentures and the Series A Debentures (as defined in the
Indenture), issued by the Guarantor from time to time and sold to trusts other
than the Issuer to be established by the Guarantor (if any), in each case
similar to the Issuer.
"Other Guarantees" means all guarantees, other than this
Series B Capital Securities Guarantee and the Series A Capital Securities
Guarantee, to be issued by the Guarantor with respect to capital securities (if
any) similar to the Series B Capital Securities issued by trusts other than the
Issuer to be established by the Guarantor (if any), in each case similar to the
Issuer.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Capital
Securities Guarantee Trustee, any officer within the Corporate Trust
Administration department of the Capital Securities Guarantee Trustee with
direct responsibility for the administration of this Series B Capital Securities
Guarantee and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Capital Securities Guarantee Trustee" means a
successor Capital Securities Guarantee Trustee possessing the qualifications to
act as Capital Securities Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trust Securities" means the Common Securities and the Series
A Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series B Capital Securities Guarantee is subject to
the provisions of the Trust Indenture Act that are required to be part of this
Series B Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions.
- 9 -
<PAGE>
(b) If and to the extent that any provision of this Series B
Capital Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities
Guarantee Trustee (unless the Capital Securities Guarantee Trustee is otherwise
the registrar of the Capital Securities) with a list, in such form as the
Capital Securities Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such date, (i) within 14 days
after April 15 and October 15 of each year, and (ii) at any other time within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more than 14 days before such List of Holders is given to the
Capital Securities Guarantee Trustee, provided, that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Capital Securities
Guarantee Trustee by the Guarantor. The Capital Securities Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Capital Securities Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after May 15 of each year, commencing May 15,
1999, the Capital Securities Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Capital Securities Guarantee Trustee shall also comply with the other
requirements of Section 313 of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act, provided that such compliance certificate shall
be delivered on or before 120 days after the end of each fiscal year of the
Guarantor. Delivery of such reports, information and documents to the Capital
Securities Guarantee Trustee is for informational purposes only and the Capital
Securities Guarantee Trustee's receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information
contained therein, including the Guarantor's compliance with any of its
covenants hereunder (as to which the Capital Securities Guarantee Trustee is
entitled to rely exclusively on Officers' Certificates).
- 10 -
<PAGE>
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Series B Capital Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series B
Capital Securities may, by vote, on behalf of all Holders, waive any past Event
of Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Series B Capital Securities
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 90
days after the occurrence of a default with respect to this Capital Securities
Guarantee, mail by first class postage prepaid, to all Holders, notices of all
defaults actually known to a Responsible Officer, unless such defaults have been
cured before the giving of such notice, provided, that, except in the case of
default in the payment of any Guarantee Payment, the Capital Securities
Guarantee Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust committee of
directors and/or a Responsible Officer in good faith determines that the
withholding of such notice is in the interests of the Holders.
(b) The Capital Securities Guarantee Trustee shall not be
deemed to have knowledge of any Event of Default unless the Capital Securities
Guarantee Trustee shall have received written notice from the Guarantor, or a
Responsible Officer charged with the administration of this Series A Capital
Securities Guarantee shall have obtained actual knowledge, of such Event of
Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Series B Capital Securities Guarantee for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
- 11 -
<PAGE>
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series B Capital Securities Guarantee shall be held
by the Capital Securities Guarantee Trustee for the benefit of the Holders, and
the Capital Securities Guarantee Trustee shall not transfer this Series B
Capital Securities Guarantee to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee
Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of
its appointment to act as Successor Capital Securities Guarantee Trustee. The
right, title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer has occurred and is continuing, the Capital Securities Guarantee Trustee
shall enforce this Series B Capital Securities Guarantee for the benefit of the
Holders.
(c) The Capital Securities Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Series B Capital Securities Guarantee, and no
implied covenants shall be read into this Series B Capital Securities Guarantee
against the Capital Securities Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer, the Capital Securities Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Series
B Capital Securities Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Series B Capital Securities Guarantee
shall be construed to relieve the Capital Securities Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital
Securities Guarantee Trustee shall be determined solely by the
express provisions of this Series B Capital Securities
Guarantee, and the Capital Securities Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Series B
Capital
- 12 -
<PAGE>
Securities Guarantee, and no implied covenants or obligations
shall be read into this Series B Capital Securities Guarantee
against the Capital Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Capital Securities Guarantee Trustee, the Capital Securities
Guarantee Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Capital Securities Guarantee Trustee and conforming to the
requirements of this Series B Capital Securities Guarantee;
but in the case of any such certificates or opinions that by
any provision hereof are specifically required to be furnished
to the Capital Securities Guarantee Trustee, the Capital
Securities Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Series B Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Capital Securities Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of a Majority in
liquidation amount of the Series B Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the
Capital Securities Guarantee Trustee, or exercising any trust or power conferred
upon the Capital Securities Guarantee Trustee under this Series B Capital
Securities Guarantee; and
(iv) no provision of this Series B Capital Securities
Guarantee shall require the Capital Securities Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers, if the Capital Securities Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Series A Capital Securities
Guarantee or indemnity, reasonably satisfactory to the Capital Securities
Guarantee Trustee, against such risk or liability is not reasonably assured to
it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or
refraining from acting, upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
- 13 -
<PAGE>
(ii) Any direction or act of the Guarantor
contemplated by this Series B Capital Securities Guarantee may
be sufficiently evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Series
B Capital Securities Guarantee, the Capital Securities
Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any
action hereunder, the Capital Securities Guarantee Trustee
(unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Capital Securities Guarantee Trustee shall
have no duty to see to any recording, filing or registration
of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Capital Securities Guarantee Trustee may
consult with counsel of its selection, and the advice or
opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Capital
Securities Guarantee Trustee shall have the right at any time
to seek instructions concerning the administration of this
Series B Capital Securities Guarantee from any court of
competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall
be under no obligation to exercise any of the rights or powers
vested in it by this Series B Capital Securities Guarantee at
the request or direction of any Holder, unless such Holder
shall have provided to the Capital Securities Guarantee
Trustee such security and indemnity, reasonably satisfactory
to the Capital Securities Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and
the expenses of the Capital Securities Guarantee Trustee's
agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Capital Securities Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve
the Capital Securities Guarantee Trustee, upon the occurrence
of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Series B Capital
Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall
not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Capital
Securities Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as
it may see fit.
- 14 -
<PAGE>
(viii) The Capital Securities Guarantee Trustee may
execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Capital Securities
Guarantee Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Capital Securities
Guarantee Trustee or its agents hereunder shall bind the
Holders, and the signature of the Capital Securities Guarantee
Trustee or its agents alone shall be sufficient and effective
to perform any such action. No third party shall be required
to inquire as to the authority of the Capital Securities
Guarantee Trustee to so act or as to its compliance with any
of the terms and provisions of this Series B Capital
Securities Guarantee, both of which shall be conclusively
evidenced by the Capital Securities Guarantee Trustee's or its
agent's taking such action.
(x) Whenever in the administration of this Series B
Capital Securities Guarantee the Capital Securities Guarantee
Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other
action hereunder, the Capital Securities Guarantee Trustee (i)
may request instructions from the Holders of a Majority in
liquidation amount of the Series B Capital Securities, (ii)
may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (iii)
shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Capital Securities Guarantee Trustee shall
not be liable for any action taken, suffered, or omitted to be
taken by it in good faith, without negligence, and reasonably
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Series B Capital
Securities Guarantee.
(b) No provision of this Series B Capital Securities Guarantee
shall be deemed to impose any duty or obligation on the Capital Securities
Guarantee Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Capital Securities Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Series B Capital
Securities Guarantee
The recitals contained in this Series B Capital Securities
Guarantee shall be taken as the statements of the Guarantor, and the Capital
Securities Guarantee Trustee does not assume any responsibility for their
correctness. The Capital Securities Guarantee Trustee makes no representation as
to the validity or sufficiency of this Series B Capital Securities Guarantee.
- 15 -
<PAGE>
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject
to supervision or examination by Federal, State, Territorial
or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining
authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Capital Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Capital
Securities Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act, subject to the penultimate paragraph thereof.
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee
(a) Subject to Section 4.2(b), the Capital Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Capital Securities
Guarantee Trustee has been
- 16 -
<PAGE>
appointed and has accepted such appointment by written instrument executed by
such Successor Capital Securities Guarantee Trustee and delivered to the
Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been appointed
or until its removal or resignation. The Capital Securities Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Securities Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Capital Securities Guarantee Trustee and delivered to the Guarantor and the
resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Capital Securities
Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable
for the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Series B Capital Securities
Guarantee or removal or resignation of the Capital Securities Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Capital Securities
Guarantee Trustee all amounts due to the Capital Securities Guarantee Trustee
accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
- 17 -
<PAGE>
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Series B Capital Securities Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Series B Capital Securities Guarantee shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Series B Capital
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Series B Capital Securities or
the extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Series B Capital Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Series B Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Series
B Capital Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred;
- 18 -
<PAGE>
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Series B Capital Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series B Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to
enforce this Series B Capital Securities Guarantee, any Holder may institute a
legal proceeding directly against the Guarantor to enforce the Capital
Securities Guarantee Trustee's rights under this Series B Capital Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Capital Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action be brought first
against the Issuer or any other person or entity before proceeding directly
against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Series B Capital Securities Guarantee creates a guarantee
of payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Series B Capital Securities Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Series B Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Series A Capital Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
- 19 -
<PAGE>
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Series B
Capital Securities, and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this Series
B Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Series B Capital Securities remain outstanding,
the Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock (which includes common and preferred stock), (ii)
make any payment of principal of, or premium, if any, or interest on or repay,
repurchase or redeem any debt securities of the Guarantor (including any Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Debentures (other than (a) dividends or distributions
in shares of, or options, warrants, rights to subscribe for or purchase shares
of, common stock of the Guarantor, (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 A
Capital Securities Guarantee and the Series B Capital Securities Guarantee, (d)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged and (f) purchases of common stock related
to the issuance of common stock or rights under any of the Guarantor's benefit
plans for its directors, officers or employees or any of the Guarantor's
dividend reinvestment plans) if at such time (i) there shall have occurred any
event of which the Guarantor has actual knowledge that (a) is, or with the
giving of notice or the lapse of time, or both, would be an Indenture Event of
Default and (b) in respect of which the Guarantor shall not have taken
reasonable steps to cure, (ii) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment of any
obligations under this Series B Capital Securities Guarantee or (iii) the
Guarantor shall have given notice of its election of the exercise of its right
to extend the interest payment period pursuant to Section 16.01 of the Indenture
and any such extension shall be continuing.
- 20 -
<PAGE>
SECTION 6.2 Ranking
This Series B Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture), to the
same extent and in the same manner that the Debentures are subordinated to
Senior Indebtedness pursuant to the Indenture, (ii) pari passu with the
Debentures, the Other Debentures, the Series A Capital Securities Guarantee, the
Common Securities Guarantee and any Other Guarantee and any Other Common
Securities Guarantee, and (iii) senior to the Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series B Capital Securities Guarantee shall terminate (i)
upon full payment of the Redemption Price (as defined in the Declaration) of all
Series B Capital Securities or (ii) upon liquidation of the Issuer, the full
payment of the amounts payable in accordance with the Declaration or the
distribution of the Debentures to the Holders and the holders of Common
Securities. Notwithstanding the foregoing, this Series B Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid under the
Series B Capital Securities or under this Series B Capital Securities Guarantee.
ARTICLE VIII
COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 8.1 Compensation and Expenses
The Guarantor covenants and agrees to pay to the Capital
Securities Guarantee Trustee from time to time, and the Capital Securities
Guarantee Trustee shall be entitled to, such compensation as shall be agreed to
in writing between the Guarantor and the Capital Securities Guarantee Trustee
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Guarantor will pay or
reimburse the Capital Securities Guarantee Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Capital
Securities Guarantee Trustee in accordance with any of the provisions of this
Capital Securities Guarantee (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Guarantor also covenants to indemnify each of
the Capital Securities Guarantee Trustee (and its officers, agents, directors
and employees) for, and to hold it harmless against, any and all loss,
- 21 -
<PAGE>
damage, claim, liability or expense including taxes (other than taxes based on
the income of the Capital Securities Guarantee Trustee) incurred without
negligence or bad faith on the part of the Capital Securities Guarantee Trustee
and arising out of or in connection with the acceptance or administration of
this guarantee, including the costs and expenses of defending itself against any
claim of liability in the premises. The obligations of the Guarantor under this
Article VIII to compensate and indemnify the Capital Securities Guarantee
Trustee and to pay or reimburse the Capital Securities Guarantee Trustee for
expenses, disbursements and advances shall be secured by a lien prior to that of
the Series B Capital Securities upon all property and funds held or collected by
the Capital Securities Guarantee Trustee as such, except funds held in trust for
the benefit of the holders of particular Series B Capital Securities.
The provisions of this Article shall survive the termination
of this Series B Capital Securities Guarantee.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation
No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Series
B Capital Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Series B Capital Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 9.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses
- 22 -
<PAGE>
(including reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 9.2 shall survive the termination of this
Series B Capital Securities Guarantee.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Successors and Assigns
All guarantees and agreements contained in this Series B
Capital Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders then outstanding.
SECTION 10.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Series A Capital Securities Guarantee may only be amended
with the prior approval of the Holders of a Majority in liquidation amount of
the Series B Capital Securities (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined). The provisions of
the Declaration with respect to consents to amendments thereof (whether at a
meeting or otherwise) shall apply to the giving of such approval.
SECTION 10.3 Notices
All notices provided for in this Series B Capital Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative
Trustee at the Issuer's mailing address set forth below (or such other address
as the Issuer may give notice of to the Holders and the Capital Securities
Guarantee Trustee):
UCBH Trust Co.
c/o UCBH Holdings, Inc.
711 Van Ness Avenue
San Francisco, California 94102
Attention: Tommy S. Wu
Telecopy: (415) 346-2266
- 23 -
<PAGE>
(b) If given to the Capital Securities Guarantee Trustee, at
the Capital Securities Guarantee Trustee's mailing address set forth below (or
such other address as the Capital Securities Guarantee Trustee may give notice
of to the Holders and the Issuer):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Telecopy: (302) 651-8882
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders and the Capital Securities Guarantee Trustee):
UCBH Holdings, Inc.
711 Van Ness Avenue
San Francisco, California 94102
Attention: Tommy S. Wu
Telecopy: (415) 346-2266
(d) If given to any Holder, at the address set forth on the
books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 10.4 Benefit
This Series B Capital Securities Guarantee is solely for the
benefit of the Holders and, subject to Section 3.1(a), is not separately
transferable from the Series B Capital Securities.
SECTION 10.5 Governing Law
THIS SERIES B CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
- 24 -
<PAGE>
THIS SERIES B CAPITAL SECURITIES GUARANTEE is executed as of
the day and year first above written.
UCBH HOLDINGS, INC.
as Guarantor
By: ________________________________
Name:
Title:
Wilmington Trust Company
as Capital Securities Guarantee Trustee
By: _________________________________
Name:
Title:
- 25 -
Exhibit 4.7
CAPITAL SECURITIES REGISTRATION RIGHTS AGREEMENT
THIS CAPITAL SECURITIES REGISTRATION RIGHTS AGREEMENT (the 'Agreement') is
made and entered into as of April 13, 1998 among UCBH Holdings, Inc., a
Delaware corporation (the 'Company'), UCBH Trust Co., a Delaware statutory
business trust (the 'Trust') and each of the undersigned Investors (hereinafter
referred to individually as an 'Investor' and collectively as the 'Investors').
This Agreement is made pursuant to the Purchase Agreement (the 'Purchase
Agreement'), among the Company, as issuer of the Series A 9.375% Junior
Subordinated Deferrable Interest Debentures due March 31, 2028 (the
'Subordinated Debentures'), the Trust and the Investors, which provides for,
among other things, the sale by the Trust to the Investors of the Trust's Series
A 9.375% Capital Securities, liquidation amount $1,000 per Capital Security (the
'Capital Securities'), the proceeds of which will be used by the Trust to
purchase Subordinated Debentures. The Capital Securities, together with the
Subordinated Debentures and the Company's guarantee of the Capital Securities
(the 'Capital Securities Guarantee'), are collectively referred to as the
'Securities'. In order to induce the Investors to enter into the Purchase
Agreement, the Company and the Trust have agreed to provide to the Investors and
their direct and indirect transferees the registration rights set forth in this
Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
'Additional Distributions' shall have the meaning set forth in
Section 2(e) hereof.
'Advice' shall have the meaning set forth in the last paragraph of
Section 3 hereof.
'Affiliate' has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
'Agency Agreement' shall mean the Agency Agreement between the
Company, United Commercial Bank, the Trust and the Placement Agent with
respect to the sale of, among other things, the Capital Securities.
'Applicable Period' shall have the meaning set forth in Section
3(t) hereof.
'Business Day' means any day other than a Saturday, a Sunday, or a
day on which banking institutions in the State of California are
authorized or required by law or executive order to close.
'Capital Securities Shelf Registration' shall mean a registration
effected pursuant to Section 2(b) hereof.
'Capital Securities Shelf Registration Event' shall have the
meaning set forth in Section 2(b) hereof.
'Capital Securities Shelf Registration Event Date' shall have the
meaning set forth in Section 2(b) hereof.
'Capital Securities Shelf Registration Statement' shall mean a
'shelf' registration statement of the Company and the Trust pursuant to
the provisions of Section 2(b) hereof which covers all of the
Registrable Securities, on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the SEC, and
all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
'Closing Date' shall mean the Closing Date as defined in the Agency
Agreement.
'Company' shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted
assigns.
D-1
<PAGE>
'Declaration' or 'Declaration of Trust' shall mean the Amended and
Restated Declaration of Trust of UCBH Trust Co., by the trustees named
therein, the Company as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust.
'Depositary' shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; provided, however, that such
depositary must have an address in the Borough of Manhattan, in The City
of New York.
'Effectiveness Period' shall have the meaning set forth in Section
2(b) hereof.
'Exchange Act' shall mean the Securities Exchange Act of 1934, as
amended from time to time.
'Exchange Offer' shall mean the offer by the Company and the Trust
to the Holders to exchange all of the Registrable Securities for a like
principal amount of Exchange Securities pursuant to Section 2(a) hereof.
'Exchange Offer Registration' shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
'Exchange Offer Registration Statement' shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
'Exchange Period' shall have the meaning set forth in Section 2(a)
hereof.
'Exchange Securities' shall mean (i) with respect to the
Subordinated Debentures, the Series B 9.375% Junior Subordinated
Deferrable Interest Debentures due May 1, 2028 (the 'Exchange
Debentures') containing terms substantially identical to the
Subordinated Debentures (except that they will not contain terms with
respect to the transfer restrictions under the Securities Act (other
than requiring minimum transfers thereof to be in blocks of $100,000
aggregate principal amount), and will not provide for any Liquidated
Damages thereon), (ii) with respect to the Capital Securities, the
Trust's Series B 9.375% Capital Securities, liquidation amount $1,000
per Capital Security (the 'Exchange Capital Securities') which will have
terms substantially identical to the Capital Securities (except they
will not contain terms with respect to transfer restrictions under the
Securities Act (other than requiring minimum transfers thereof to be in
blocks of $100,000 aggregate liquidation amount), and will not provide
for any increase in Additional Distributions thereon) and (iii) with
respect to the Capital Securities Guarantee, the Company's guarantee
(the 'Exchange Capital Securities Guarantee') of the Exchange Capital
Securities which will have terms substantially identical to the Capital
Securities Guarantee.
'Holder' shall mean the Investors, for so long as they own any
Registrable Securities, and each of their respective successors, assigns
and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture or Declaration of Trust.
'Indenture' shall mean the Indenture relating to the Subordinated
Debentures and the Exchange Debentures between the Company, as issuer,
and Wilmington Trust Company, as trustee, as the same may be amended
from time to time in accordance with the terms thereof.
'Inspectors' shall have the meaning set forth in Section 3(n)
hereof.
'Issue Date' shall mean April 17, 1998, the date of original
issuance of the Securities.
'Liquidated Damages' shall have the meaning set forth in Section
2(e) hereof.
'Majority Holders' shall mean the Holders of a majority of the
aggregate liquidation amount of outstanding Capital Securities.
'Participating Broker-Dealer' shall have the meaning set forth in
Section 3(t) hereof.
'Person' shall mean an individual, partnership, corporation, trust
or unincorporated organization, limited liability company, or a
government or agency or political subdivision thereof.
D-2
<PAGE>
'Placement Agent' shall mean the Placement Agent as defined in the
Agency Agreement.
'Prospectus' shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Capital Securities
Shelf Registration Statement, and by all other amendments and
supplements to a prospectus, including post-effective amendments, and in
each case including all material incorporated by reference therein.
'Purchase Agreement' shall mean the Agreement between the Company
and the Investors named therein.
'Records' shall have the meaning set forth in Section 3(n) hereof.
'Registrable Securities' shall mean the Securities; provided,
however, that Securities shall cease to be Registrable Securities when
(i) a Capital Securities Registration Statement with respect to such
Securities for the exchange or resale thereof, as the case may be, shall
have been declared effective under the Securities Act and such
Securities, shall have been disposed of pursuant to such Capital
Securities Registration Statement, (ii) such Securities shall have been
sold to the public pursuant to Rule 144(k) (or any similar provision
then in force, but not Rule 144A) under the Securities Act or are
eligible to be sold without restriction as contemplated by Rule 144(k),
(iii) such Securities shall have ceased to be outstanding or (iv) such
Securities shall have been exchanged for Exchange Securities upon
consummation of the Exchange Offer and are thereafter freely tradeable
by the holder thereof (other than an Affiliate of the Company).
'Registration Expenses' shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC or National Association of
Securities Dealers, Inc. (the 'NASD') registration and filing fees,
including, if applicable, the fees and expenses of any 'qualified
independent underwriter' (and its counsel) that is required to be
retained by any Holder of Registrable Securities in accordance with the
rules and regulations of the NASD, (ii) all fees and expenses incurred
in connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of one counsel for all
underwriters or Holders as a group in connection with blue sky
qualification of any of the Exchange Securities or Registrable
Securities) and compliance with the rules of the NASD, (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Capital Securities
Registration Statement, any Prospectus and any amendments or supplements
thereto, and in preparing or assisting in preparing, printing and
distributing any underwriting agreements, securities sales agreements
and other documents relating to the performance of and compliance with
this Agreement, (iv) all rating agency fees, (v) the fees and
disbursements of counsel for the Company and of the independent
certified public accountants of the Company, including the expenses of
any 'cold comfort' letters required by or incident to such performance
and compliance, (vi) the fees and expenses of the Trustee and its
counsel and any exchange agent or custodian, (vii) all fees and expenses
incurred in connection with the listing, if any, of any of the Exchange
Securities or the Registrable Securities on any securities exchange or
exchanges, and (viii) the reasonable fees and expenses of any special
experts retained by the Company in connection with any Registration
Statement.
'Registration Statement' shall mean any registration statement of
the Company and the Trust which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement, and
all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
'Rule 144(k) Period' shall mean the period of two years (or such
shorter period as may hereafter be referred to in Rule 144(k) under the
Securities Act (or similar successor rule)) commencing on the Issue
Date.
'SEC' shall mean the Securities and Exchange Commission.
D-3
<PAGE>
'Securities' shall have the meaning set forth in the preamble to
this Agreement.
'Securities Act' shall mean the Securities Act of 1933, as amended
from time to time.
'TIA' shall have the meaning set forth in Section 3(l) hereof.
'Trustees' shall mean any and all trustees with respect to (i) the
Capital Securities under the Declaration, (ii) the Subordinated
Debentures under the Indenture and (iii) the Capital Securities
Guarantee.
2. Registration Under the Securities Act.
(a) Exchange Offer. Except as set forth in Section 2(b) below, the Company
and the Trust shall, for the benefit of the Holders, use their reasonable best
efforts to (i) cause to be filed with the SEC within 120 days after the Issue
Date an Exchange Offer Registration Statement on an appropriate form under the
Securities Act relating to the Exchange Offer, (ii) cause such Exchange Offer
Registration Statement to be declared effective under the Securities Act by the
SEC not later than the date which is 150 days after the Issue Date, and (iii)
keep such Exchange Offer Registration Statement effective for not less than 30
calendar days (or longer if required by applicable law) after the date notice of
the Exchange Offer is mailed to the Holders. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company and the Trust shall promptly
commence the Exchange Offer, it being the objective of such Exchange Offer to
enable each Holder eligible and electing to exchange Registrable Securities for
a like principal amount of Exchange Debentures or a like liquidation amount of
Exchange Capital Securities, together with the Exchange Guarantee, as applicable
(assuming that such Holder (i) is not an Affiliate of the Trust or the Company,
(ii) is not a broker-dealer tendering Registrable Securities acquired directly
from the Company for its own account, (iii) acquires the Exchange Securities in
the ordinary course of such Holder's business and (iv) has no arrangements or
understandings with any Person to participate in the Exchange Offer for the
purpose of distributing the Exchange Securities) to transfer such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and under state securities or blue sky laws (other than
requiring minimum transfers in blocks having an aggregate principal or
liquidation amount, as the case may be, of $100,000).
In connection with the Exchange Offer, the Company and the Trust shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders
(or longer if required by applicable law) (such period referred to herein
as the 'Exchange Period');
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last Business Day of the
Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Securities delivered for exchange, and
a statement that such Holder is withdrawing his election to have such
Securities exchanged;
(v) notify each Holder that any Security not tendered by such Holder
in the Exchange Offer will remain outstanding and continue to accrue
interest or accumulate distributions, as the case may be, but will not
retain any rights under this Agreement (except in the case of the
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the Company
and the Trust, as the case requires, shall:
(i) accept for exchange all Securities or portions thereof tendered
and not validly withdrawn pursuant to the Exchange Offer;
D-4
<PAGE>
(ii) deliver, or cause to be delivered, to the applicable Trustee for
cancellation all Securities or portions thereof so accepted for exchange by
the Company; and
(iii) issue, and cause the applicable Trustee under the Indenture, the
Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities, equal in principal amount
to the principal amount of the Subordinated Debentures or equal in
liquidation amount to the liquidation amount of the Capital Securities
(together with the guarantee thereof) as are surrendered by such Holder.
Distributions on each Exchange Capital Security and interest on each
Exchange Debenture issued pursuant to the Exchange Offer will accrue from the
last date on which a Distribution or interest was paid on the Capital Security
or the Subordinated Debenture surrendered in exchange therefor or, if no
Distribution or interest has been paid on such Capital Security or Subordinated
Debenture, from the Issue Date. To the extent not prohibited by any law or
applicable interpretation of the staff of the SEC, the Company and the Trust
shall use their reasonable best efforts to complete the Exchange Offer as
provided above, and shall comply with the applicable requirements of the
Securities Act, the Exchange Act and other applicable laws in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the staff of the SEC. Each Holder of Registrable
Securities who wishes to exchange such Registrable Securities for Exchange
Securities in the Exchange Offer will be required to make certain customary
representations in connection therewith, including, in the case of any Holder of
Capital Securities, representations that (i) it is not an Affiliate of the Trust
or the Company, (ii) the Exchange Securities to be received by it were acquired
in the ordinary course of its business and (iii) at the time of the Exchange
Offer, it has no arrangement with any person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Capital Securities.
The Company and the Trust shall inform the Placement Agent, after consultation
with the applicable Trustees, of the names and addresses of the Holders to whom
the Exchange Offer is made, and the Placement Agent shall have the right to
contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with this Section
2(a), the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Securities that are Exchange
Securities held by Participating Broker-Dealers, and the Company and the Trust
shall have no further obligation to register the Registrable Securities held by
any Holder pursuant to Section 2(b) of this Agreement.
(b) Capital Securities Shelf Registration. In the event that (i) the
Company, the Trust or the Majority Holders reasonably determine, after
conferring with counsel (which may be in-house counsel), that the Exchange Offer
Registration provided in Section 2(a) above is not available under applicable
law and regulations and currently prevailing interpretations of the staff of the
SEC, (ii) the Company shall determine in good faith that there is a reasonable
likelihood that, or a material uncertainty exists as to whether, consummation of
the Exchange Offer would result in (x) the Trust becoming subject to federal
income tax with respect to income received or accrued on the Subordinated
Debentures or the Exchange Debentures (collectively, the 'Debentures'), (y)
interest payable by the Company on the Debentures not being deductible by the
Company for United States federal income tax purposes or (z) the Trust becoming
subject to more than a de minimus amount of other taxes, duties or governmental
charges or, (iii) the Exchange Offer Registration Statement is not declared
effective within 150 days of the Issue Date (any of the events specified in
(i)-(iii) being a 'Capital Securities Shelf Registration Event' and the date of
occurrence thereof, the 'Capital Securities Shelf Registration Event Date'),
then in addition to or in lieu of conducting the Exchange Offer contemplated by
Section 2(a), as the case may be, the Company and the Trust shall use their
reasonable best efforts to cause to be filed as promptly as practicable after
such Capital Securities Shelf Registration Event Date, as the case may be, and,
in any event, within 45 days after such Capital Securities Shelf Registration
Event Date (which shall be no earlier than 75 days after the Closing Date), a
Capital Securities Shelf Registration Statement providing for the sale by the
Holders of all of the Registrable Securities and shall use its reasonable best
efforts to have such Capital Securities Shelf Registration Statement declared
effective by the SEC as soon as practicable. No Holder of Registrable Securities
shall be entitled to include any of its Registrable Securities in any Capital
Securities Shelf Registration pursuant to this Agreement unless and until such
Holder furnishes to the Company and the Trust in writing, within 15 days after
receipt of a request therefor, such information as the Company and the Trust
may, after conferring with counsel with regard to information relating to
Holders that would be required by the SEC to be included in such
D-5
<PAGE>
Capital Securities Shelf Registration Statement or Prospectus included therein,
reasonably request for inclusion in any Capital Securities Shelf Registration
Statement or Prospectus included therein. Each Holder as to which any Capital
Securities Shelf Registration is being effected agrees to furnish to the Company
and the Trust all information with respect to such Holder necessary to make the
information previously furnished to the Company by such Holder not materially
misleading.
The Company and the Trust agree to use their reasonable best efforts to
keep the Capital Securities Shelf Registration Statement continuously effective
and usable for resales for the Rule 144(k) Period in the case of a Capital
Securities Shelf Registration Statement filed pursuant to Section 2(b) (subject
in each case to extension pursuant to the last paragraph of Section 3 hereof),
or for such shorter period which will terminate when all of the Registrable
Securities covered by the Capital Securities Shelf Registration Statement have
been sold pursuant to the Capital Securities Shelf Registration Statement or
cease to be outstanding (the 'Effectiveness Period'). The Company and the Trust
shall not permit any securities other than Registrable Securities to be included
in the Capital Securities Shelf Registration Statement. The Company and the
Trust will, in the event a Capital Securities Shelf Registration Statement is
declared effective, provide to each Holder a reasonable number of copies of the
Prospectus which is a part of the Capital Securities Shelf Registration
Statement and notify each such Holder when the Capital Securities Shelf
Registration Statement has become effective. The Company and the Trust further
agree, if necessary, to supplement or amend the Capital Securities Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Capital
Securities Shelf Registration Statement or by the Securities Act or by any other
rules and regulations thereunder for shelf registrations, and the Company and
the Trust agree to furnish to the Holders of Registrable Securities copies of
any such supplement or amendment promptly after its being used or filed with the
SEC.
(c) Expenses. The Company, as issuer of the Subordinated Debentures, shall
pay all Registration Expenses in connection with any Registration Statement
filed pursuant to Section 2(a) and/or 2(b) hereof and will reimburse the
Placement Agent for the reasonable fees and disbursements of Elias, Matz,
Tiernan & Herrick LLP, counsel for the Placement Agent, incurred in connection
with the Exchange Offer, or any one other counsel designated in writing by the
Majority Holders to act as counsel for the Holders of the Registrable Securities
in connection with a Capital Securities Shelf Registration Statement, which
other counsel shall be reasonably satisfactory to the Company. Except as
provided herein, each Holder shall pay all expenses of its counsel and any of
its other advisors or experts, underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Capital Securities Shelf Registration
Statement.
(d) Effective Registration Statement. An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof or a Capital Securities Shelf
Registration Statement pursuant to Section 2(b) hereof will not be deemed to
have become effective unless it has been declared effective by the SEC;
provided, however, that if, after it has been declared effective, the offering
of Registrable Securities pursuant to such Exchange Offer Registration Statement
or Capital Securities Shelf Registration Statement is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be deemed not to
have been effective during the period of such interference, until the offering
of Registrable Securities pursuant to such Registration Statement may legally
resume. The Company and the Trust will be deemed not to have used their
reasonable best efforts to cause the Exchange Offer Registration Statement or
the Capital Securities Shelf Registration Statement, as the case may be, to
become, or to remain, effective during the requisite period if either of them
voluntarily takes any action that would result in any such Registration
Statement not being declared effective or that would result in the Holders of
Registrable Securities covered thereby not being able to exchange or offer and
sell such Registrable Securities during that period unless such action is
required by applicable law.
(e) Liquidated Damages. In the event that:
(i) neither the Exchange Offer Registration Statement is filed with
the SEC on or prior to the 120th day after the Issue Date nor a Capital
Securities Shelf Registration Statement is filed with the SEC on or prior
to the 45th day after the Capital Securities Shelf Registration Event Date
in respect of a Capital Securities Shelf Registration Event attributable to
any of the events set forth in Sections 2(b)(i), (ii) and (iii) (provided
that in no event shall such date be earlier than 75 days after the Issue
Date), then, commencing on the day
D-6
<PAGE>
after the applicable required filing date, liquidated damages ('Liquidated
Damages') shall accrue on the principal amount of the Subordinated
Debentures, and additional distributions ('Additional Distributions') shall
accumulate on the liquidation amount of the Trust Securities (as such term
is defined in the Declaration), each at a rate of .25% per annum; or
(ii) In the event the Exchange Offer Registration Statement is not
declared effective by the SEC on or prior to the 180th day after the Issue
Date or, in the event that a Capital Securities Shelf Registration
Statement is filed following a Capital Securities Shelf Registration Event
attributable to any of the events set forth in Sections 2(b)(i), (ii) and
(iii) on or prior to the later of (A) the 60th day after the date such
Capital Securities Shelf Registration Statement was required to be filed
and (B) the 180th day after the Issue Date then, commencing on the 181st
day after the Issue Date (in the case of an Exchange Offer Registration
Statement) or the later of (A) the 61st day after the day such Capital
Securities Shelf Registration Statement was required to be filed in respect
of a Capital Securities Shelf Registration Event attributable to any of the
events set forth in Sections 2(b)(i), (ii) and (iii) and (B) the 181st day
after the Issue Date, Liquidated Damages shall accrue on the principal
amount of the Subordinated Debentures, and Additional Distributions shall
accumulate on the liquidation amount of the Trust Securities, each at a
rate of .25% per annum;
(iii) (A) the Trust has not exchanged Exchange Capital Securities or
the Company has not exchanged Exchange Guarantees or Exchange Subordinated
Debentures for all Capital Securities, Guarantees or Subordinated
Debentures, as the case may be, validly tendered, in accordance with the
terms of the Exchange Offer on or prior to the 45th day after the date on
which the Exchange Offer Registration Statement was declared effective or
(B) if applicable, the Capital Securities Shelf Registration Statement in
respect of a Capital Securities Shelf Registration Event attributable to
any of the events set forth in Sections 2(b)(i), (ii) and (iii) has been
declared effective and such Capital Securities Shelf Registration Statement
ceases to be effective or usable for resales (whether as a result of an
event contemplated by Section 3(e) or otherwise) at any time prior to the
expiration of the Rule 144(k) Period (other than after such time as all
Securities have been disposed of thereunder or otherwise cease to be
Registrable Securities), then Liquidated Damages shall accrue on the
principal amount of Subordinated Debentures, and Additional Distributions
shall accumulate on the liquidation amount of the Trust Securities, each at
a rate of .25% per annum commencing on (x) the 46th day after such
effective date, in the case of (A) above, or (y) the day such Capital
Securities Shelf Registration Statement ceases to be effective or usable
for resales in the case of (B) above;
provided, however, that neither the Liquidated Damages rate on the Subordinated
Debentures, nor the Additional Distribution rate on the liquidation amount of
the Trust Securities, may exceed in the aggregate .25% per annum; provided,
further, however, that (1) upon the filing of the Exchange Offer Registration
Statement or a Capital Securities Shelf Registration Statement (in the case of
clause (i) above), (2) upon the effectiveness of the Exchange Offer Registration
Statement or a Capital Securities Shelf Registration Statement (in the case of
clause (ii) above), or (3) upon the exchange of Exchange Capital Securities,
Exchange Guarantees and Exchange Debentures for all Capital Securities,
Guarantees and Subordinated Debentures validly tendered (in the case of clause
(iii)(A) above), or at such time as the Capital Securities Shelf Registration
Statement which had ceased to remain effective or usable for resales again
becomes effective and usable for resales (in the case of clause (iii)(B) above),
Liquidated Damages on the principal amount of the Subordinated Debentures and
Additional Distributions on the liquidation amount of the Trust Securities as a
result of such clause (or the relevant subclause thereof) shall cease to accrue
and accumulate.
Any amounts of Liquidated Damages and Additional Distributions due pursuant
to Section 2(e)(i), (ii) or (iii) above will be payable in cash on the next
succeeding May 1 and November 1, as the case may be, to Holders on the
relevant record dates for the payment of interest and distributions pursuant to
the Indenture and the Declaration, respectively.
(f) Specific Enforcement. Without limiting the remedies available to the
Holders, the Company and the Trust acknowledge that any failure by the Company
or the Trust to comply with its obligations under Section 2(a) and Section 2(b)
hereof may result in material irreparable injury to the Holders for which there
is no adequate remedy at law, that it would not be possible to measure damages
for such injuries precisely and that, in
D-7
<PAGE>
the event of any such failure, any Holder may obtain such relief as may be
required to specifically enforce the Company's and the Trust's obligations under
Section 2(a) and Section 2(b) hereof.
(g) Distribution of Subordinated Debentures. Notwithstanding any other
provisions of this Agreement, in the event that Subordinated Debentures are
distributed to holders of Capital Securities in liquidation of the Trust
pursuant to the Declaration, (i) all references in this Section 2 and in Section
3 to Securities, Registrable Securities and Exchange Securities shall not
include the Capital Securities and Capital Securities Guarantee or Exchange
Capital Securities and Exchange Capital Securities Guarantee issued or to be
issued in exchange therefor in the Exchange Offer and (ii) all requirements for
action to be taken by the Trust in this Section 2 and in Section 3 shall cease
to apply and all requirements for action to be taken by the Company in this
Section 2 and in Section 3 shall apply to the Subordinated Debentures and
Exchange Debentures issued or to be issued in exchange therefor in the Exchange
Offer.
3. Registration Procedures. In connection with the obligations of the
Company and the Trust with respect to the Registration Statements pursuant to
Sections 2(a) and 2(b) hereof, the Company and the Trust shall:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be selected
by the Company and the Trust, (ii) shall, in the case of a Capital
Securities Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and, in the case of an Exchange
Offer, be available for the exchange of Registrable Securities, and (iii)
shall comply as to form in all material respects with the requirements of
the applicable form and include all financial statements required by the
SEC to be filed therewith; and use its best efforts to cause such Capital
Securities Registration Statement to become effective and remain effective
(and, in the case of a Capital Securities Shelf Registration Statement,
usable for resales) in accordance with Section 2 hereof; provided, however,
that if (1) such filing is pursuant to Section 2(b), or (2) a Prospectus
contained in an Exchange Offer Registration Statement filed pursuant to
Section 2(a) is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities, before
filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Company and the Trust shall furnish to and afford
the Holders of the Registrable Securities and each such Participating
Broker-Dealer, as the case may be, covered by such Registration Statement,
their counsel and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed. The Company and the Trust shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity to
review prior to the filing of such document if the Majority Holders or such
Participating Broker-Dealer, as the case may be, their counsel or the
managing underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the Effectiveness Period or the
Applicable Period, as the case may be; and cause each Prospectus to be
supplemented, if so determined by the Company or the Trust or requested by
the SEC, by any required prospectus supplement and as so supplemented to be
filed pursuant to Rule 424 (or any similar provision then in force) under
the Securities Act, and comply with the provisions of the Securities Act,
the Exchange Act and the rules and regulations promulgated thereunder
applicable to it with respect to the disposition of all securities covered
by each Registration Statement during the Effectiveness Period or the
Applicable Period, as the case may be, in accordance with the intended
method or methods of distribution by the selling Holders thereof described
in this Agreement (including sales by any Participating Broker-Dealer);
(c) in the case of a Capital Securities Shelf Registration, (i) notify
each Holder of Registrable Securities included in the Capital Securities
Shelf Registration Statement, at least three Business Days prior to filing,
that a Capital Securities Shelf Registration Statement with respect to the
Registrable Securities is being filed and advising such Holder that the
distribution of Registrable Securities will be made in accordance with the
method selected by the Majority Holders; and (ii) furnish to each Holder of
Registrable Securities included in the Capital Securities Shelf
Registration Statement and to each underwriter of an underwritten offering
of
D-8
<PAGE>
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter
may reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) consent to the use of
the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities included in the Capital
Securities Shelf Registration Statement in connection with the offering and
sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(d) in the case of a Capital Securities Shelf Registration, use its
reasonable best efforts to register or qualify the Registrable Securities
under all applicable state securities or 'blue sky' laws of such
jurisdictions by the time the applicable Capital Securities Shelf
Registration Statement is declared effective by the SEC as any Holder of
Registrable Securities covered by a Capital Securities Shelf Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request in writing in advance of such date of
effectiveness, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder and underwriter to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that the Company and
the Trust shall not be required to (i) qualify as a foreign company or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (ii) file any general
consent to service of process in any jurisdiction where it would not
otherwise be subject to such service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not then so subject;
(e) (1) in the case of a Capital Securities Shelf Registration or (2)
if Participating Broker-Dealers from whom the Company or the Trust has
received prior written notice that they will be utilizing the Prospectus
contained in the Exchange Offer Registration Statement as provided in
Section 3(t) hereof, are seeking to sell Exchange Securities and are
required to deliver Prospectuses, promptly notify each Holder of
Registrable Securities, or such Participating Broker-Dealers, as the case
may be, their counsel and the managing underwriters, if any, and promptly
confirm such notice in writing (i) when a Capital Securities Shelf
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by
the SEC or any state securities authority for amendments and supplements to
a Capital Securities Shelf Registration Statement or Prospectus or for
additional information after the Capital Securities Shelf Registration
Statement has become effective, (iii) of the issuance by the SEC or any
state securities authority of any stop order suspending the effectiveness
of a Capital Securities Shelf Registration Statement or the qualification
of the Registrable Securities or the Exchange Securities to be offered or
sold by any Participating Broker-Dealer in any jurisdiction described in
paragraph 3(d) hereof or the initiation of any proceedings for that
purpose, (iv) in the case of a Capital Securities Shelf Registration, if,
between the effective date of a Capital Securities Shelf Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company and the Trust
contained in any purchase agreement, securities sales agreement or other
similar agreement cease to be true and correct in all material respects,
(v) of the happening of any event or the failure of any event to occur or
the discovery of any facts or otherwise, during the Effectiveness Period
which makes any statement made in such Capital Securities Shelf
Registration Statement or the related Prospectus untrue in any material
respect or which causes such Registration Statement or Prospectus to omit
to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
(vi) the Company and the Trust's reasonable determination that a
post-effective amendment to the Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Capital Securities Shelf Registration
Statement at the earliest possible moment;
(g) in the case of a Capital Securities Shelf Registration, furnish to
each Holder of Registrable Securities included within the coverage of such
Capital Securities Shelf Registration Statement, without charge, one
conformed copy of each Capital Securities Shelf Registration Statement
relating to such Capital Securities Shelf Registration and any
post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
D-9
<PAGE>
(h) in the case of a Capital Securities Shelf Registration, cooperate
with the selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends (other than
with respect to restrictions requiring minimum transfers in blocks having
an aggregate principal or liquidation amount, as the case may be, of
$100,000) and in such denominations (consistent with the provisions of the
Indenture and the Declaration) and registered in such names as the selling
Holders or the underwriters may reasonably request at least two Business
Days prior to the closing of any sale of Registrable Securities pursuant to
such Capital Securities Shelf Registration Statement;
(i) in the case of a Capital Securities Shelf Registration or an
Exchange Offer Registration, upon the occurrence of any circumstance
contemplated by Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof,
use its reasonable best efforts to prepare a supplement or post-effective
amendment to such Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; and to notify each Holder to suspend use of
the Prospectus as promptly as practicable after the occurrence of such an
event, and each Holder hereby agrees to suspend use of the Prospectus until
the Company has amended or supplemented the Prospectus to correct such
misstatement or omission;
(j) obtain a CUSIP number for all Exchange Capital Securities and the
Capital Securities (and if the Trust has made a distribution of the
Subordinated Debentures to the Holders of the Capital Securities, the
Subordinated Debentures or the Exchange Debentures) as the case may be, not
later than the effective date of a Registration Statement, and provide the
Trustee with printed certificates for the Exchange Securities or the
Registrable Securities, as the case may be, in a form eligible for deposit
with the Depositary;
(k) cause the Indenture, the Declaration, the Guarantee and the
Exchange Guarantee to be qualified under the Trust Indenture Act of 1939
(the 'TIA') in connection with the registration of the Exchange Securities
or Registrable Securities, as the case may be, and effect such changes to
such documents as may be required for them to be so qualified in accordance
with the terms of the TIA and execute, and use its best efforts to cause
the relevant trustee to execute, all documents as may be required to effect
such changes, and all other forms and documents required to be filed with
the SEC to enable such documents to be so qualified in a timely manner;
(l) in the case of a Capital Securities Shelf Registration, enter into
such agreements (including underwriting agreements) as are customary in
underwritten offerings and take all such other appropriate actions in
connection therewith as are reasonably requested by the holders of at least
25% in aggregate principal or liquidation amount, as the case may be, of
the Registrable Securities in order to expedite or facilitate the
registration or the disposition of the Registrable Securities;
(m) in the case of a Capital Securities Shelf Registration, whether or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, if requested by Holders of at
least 25% in aggregate principal or liquidation amount, as the case may be,
of the Registrable Securities covered thereby: (i) make such
representations and warranties to Holders of such Registrable Securities
and the underwriters (if any), with respect to the business of the Trust,
the Company and its subsidiaries as then conducted and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers of debt securities to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) obtain opinions of counsel to
the Company and the Trust and updates thereof (which may be in the form of
a reliance letter) in form and substance reasonably satisfactory to the
managing underwriters (if any) and the Holders of a majority in principal
amount of the Registrable Securities being sold, addressed to each selling
Holder and the underwriters (if any) covering the matters customarily
covered in opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such underwriters (it being
agreed that the matters to be covered by such opinion may be subject to
customary qualifications and exceptions); (iii) obtain 'cold comfort'
letters and updates thereof in form and substance reasonably satisfactory
to the managing underwriters from the independent certified public
accountants of the Company and the Trust
D-10
<PAGE>
(and, if necessary, any other independent certified public accountants of
any subsidiary of the Company and the Trust or of any business acquired by
the Company and the Trust for which financial statements and financial data
are, or are required to be, included in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in 'cold comfort'
letters in connection with underwritten offerings and such other matters as
reasonably requested by such underwriters in accordance with Statement on
Auditing Standards No. 72; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no
less favorable than those set forth in Section 4 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount or liquidation amount, as the case may be, of Registrable
Securities covered by such Registration Statement and the managing
underwriters and agents) customary for such agreements with respect to all
parties to be indemnified pursuant to said Section (including, without
limitation, such underwriters and selling Holders). The above shall be done
at each closing under such underwriting agreement, or as and to the extent
required thereunder;
(n) if (1) a Capital Securities Shelf Registration Statement is filed
pursuant to Section 2(b) or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2(a) is required to be
delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable Period, make
reasonably available for inspection by any selling Holder of such
Registrable Securities or Participating Broker-Dealer, as applicable, who
certifies to the Company and the Trust that it has a current intention to
sell Registrable Securities pursuant to the Capital Securities Shelf
Registration Statement, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the 'Inspectors'), at the offices where normally kept,
during the Company's normal business hours, all financial and other
records, pertinent corporate documents and properties of the Trust, the
Company and its subsidiaries (collectively, the 'Records') as shall be
reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees
of the Trust, the Company and its subsidiaries to supply all relevant
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement. Records which the Company and
the Trust determine, in good faith, to be confidential and any Records
which it notifies the Inspectors are confidential shall not be disclosed by
the Inspectors unless (i) the disclosure of such Records is necessary to
avoid or correct a material misstatement or omission in such Registration
Statement, (ii) subject to the last sentence of this Section 3(n), the
release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or is necessary in connection with
any action, suit or proceeding or (iii) the Information in such Records has
been made generally available to the public (other than by an Inspector or
a selling Holder in breach of its obligations hereunder). Each selling
Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to agree in writing that information
obtained by it as a result of such inspections shall be deemed confidential
and shall not be used by it as the basis for any market transactions in the
securities of the Trust or the Company unless and until such is made
generally available to the public through no fault of an Inspector or a
Selling Holder. Each selling Holder of such Registrable Securities and each
such Participating Broker-Dealer will be required to further agree in
writing that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, or in connection with any
action, suit or proceeding give notice to the Company and allow the Company
at its expense to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(o) comply with all applicable rules and regulations of the SEC so
long as any provision of this Agreement shall be applicable and make
generally available to its securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90 days after
the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities
are sold to underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements
shall cover said 12-month periods;
D-11
<PAGE>
(p) upon consummation of an Exchange Offer, if requested by a Trustee,
obtain an opinion of counsel to the Company addressed to the Trustee for
the benefit of all Holders of Registrable Securities participating in the
Exchange Offer, substantially to the effect that (i) the Company and the
Trust, as the case requires, has duly authorized, executed and delivered
the Exchange Securities, and (ii) each of the Exchange Securities
constitutes a legal, valid and binding obligation of the Company or the
Trust, as the case requires, enforceable against the Company or the Trust,
as the case requires, in accordance with its respective terms (in each
case, with customary exceptions);
(q) if an Exchange Offer is to be consummated, upon delivery of the
Registrable Securities by Holders to the Company or the Trust, as
applicable (or to such other Person as directed by the Company or the
Trust, respectively), in exchange for the Exchange Securities, the Company
or the Trust, as applicable, shall mark, or cause to be marked, on such
Registrable Securities delivered by such Holders that such Registrable
Securities are being cancelled in exchange for the Exchange Securities; in
no event shall such Registrable Securities be marked as paid or otherwise
satisfied;
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the NASD;
(s) take all other steps necessary to effect the registration of the
Registrable Securities covered by a Registration Statement contemplated
hereby;
(t) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled
'Plan of Distribution,' which section shall be reasonably acceptable to the
Placement Agent or a representative of the Participating Broker-Dealers,
and which shall contain a summary statement of the positions taken or
policies made by the staff of the SEC with respect to the potential
'underwriter' status of any broker-dealer (a 'Participating Broker-Dealer')
that holds Registrable Securities acquired for its own account as a result
of market-making activities or other trading activities and that will be
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Securities to be received by such broker-dealer in the Exchange
Offer, whether such positions or policies have been publicly disseminated
by the staff of the SEC or such positions or policies, in the reasonable
judgment of the Placement Agent or such other representative, represent the
prevailing views of the staff of the SEC, including a statement that any
such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory
underwriter and must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Securities,
(ii) furnish to each Participating Broker-Dealer who has delivered to the
Company the notice referred to in Section 3(e), without charge, as many
copies of each Prospectus included in the Exchange Offer Registration
Statement, including any preliminary prospectus, and any amendment or
supplement thereto, as such Participating Broker-Dealer may reasonably
request (each of the Company and the Trust hereby consents to the use of
the Prospectus forming part of the Exchange Offer Registration Statement or
any amendment or supplement thereto by any Person subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, in connection with the sale or transfer of the Exchange
Securities covered by the Prospectus or any amendment or supplement
thereto), (iii) use its reasonable best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of
the Securities Act for such period of time as such Persons must comply with
such requirements under the Securities Act and applicable rules and
regulations in order to resell the Exchange Securities; provided, however,
that such period shall not be required to exceed 90 days (or such longer
period if extended pursuant to the last sentence of Section 3 hereof) (the
'Applicable Period'), and (iv) include in the transmittal letter or similar
documentation to be executed by an exchange offeree in order to participate
in the Exchange Offer (x) the following provision:
'If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-making
activities or other trading activities, it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any
resale of
D-12
<PAGE>
Exchange Securities received in respect of such Registrable
Securities pursuant to the Exchange Offer';
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer will
not be deemed to admit that it is an underwriter within the meaning of the
Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the Company
and the Trust agree to deliver to the Placement Agent or to a representative of
the Participating Broker-Dealers, if requested by the Placement Agent or such
other representative of Participating Broker-Dealers, on behalf of the
Participating Broker-Dealers upon consummation of the Exchange Offer (i) an
opinion of counsel in form and substance reasonably satisfactory to the
Placement Agent or such other representative of the Participating
Broker-Dealers, covering the matters customarily covered in opinions requested
in connection with Exchange Offer Registration Statements and such other matters
as may be reasonably requested (it being agreed that the matters to be covered
by such opinion may be subject to customary qualifications and exceptions), (ii)
an officers' certificate containing certifications substantially similar to
those set forth in Section 4.2(k) of the Agency Agreement and such additional
certifications as are customarily delivered in a public offering of debt
securities and (iii) as well as upon the effectiveness of the Exchange Offer
Registration Statement, a comfort letter, in each case, in customary form if
permitted by Statement on Auditing Standards No. 72.
The Company or the Trust may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company or the
Trust, as applicable, such information regarding such seller as may be required
by the staff of the SEC to be included in a Registration Statement. The Company
or the Trust may exclude from such registration the Registrable Securities of
any seller who fails to furnish such information within a reasonable time after
receiving such request. The Company shall have no obligation to register under
the Securities Act the Registrable Securities of a seller who so fails to
furnish such information.
In the case of a Capital Securities Shelf Registration Statement, or if
Participating Broker-Dealers who have notified the Company and the Trust that
they will be utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in Section 3(t) hereof, are seeking to sell
Exchange Securities and are required to deliver Prospectuses, each Holder agrees
that, upon receipt of any notice from the Company or the Trust of the happening
of any event of the kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or
3(e)(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(i) hereof or until it is advised in writing (the 'Advice') by the
Company and the Trust that the use of the applicable Prospectus may be resumed,
and, if so directed by the Company and the Trust, such Holder will deliver to
the Company or the Trust (at the Company's or the Trust's expense, as the case
requires) all copies in such Holder's possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities or Exchange Securities, as the case may be, current at
the time of receipt of such notice. If the Company or the Trust shall give any
such notice to suspend the disposition of Registrable Securities or Exchange
Securities, as the case may be, pursuant to a Registration Statement, the
Company and the Trust shall use their reasonable best efforts to file and have
declared effective (if an amendment) as soon as practicable an amendment or
supplement to the Registration Statement and shall extend the period during
which such Registration Statement is required to be maintained effective and
usable for resales pursuant to this Agreement by the number of days in the
period from and including the date of the giving of such notice to and including
the date when the Company and the Trust shall have made available to the Holders
(x) copies of the supplemented or amended Prospectus necessary to resume such
dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Company and the Trust shall, jointly and severally,
indemnify and hold harmless the Placement Agent, each Holder, each underwriter
who participates in an offering of the Registrable Securities, each
Participating Broker-Dealer, each Person, if any, who controls any of such
parties within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act and each of their respective partners, directors, officers,
employees and agents, as follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in
D-13
<PAGE>
any Registration Statement (or any amendment thereto), covering Registrable
Securities or Exchange Securities, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus (or
any amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation
or proceeding by any court or governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, if such
settlement is effected with the prior written consent of the Company; and
(iii) from and against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by such
Holder, such Participating Broker-Dealer, or any underwriter (except to the
extent otherwise expressly provided in Section 4(c) hereof)), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) of this Section 4(a);
provided, however, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information furnished in writing to the Company or
the Trust by such Holder, such Participating Broker-Dealer or any underwriter
with respect to such Holder, Participating Broker-Dealer or any underwriter, as
the case may be, expressly for use in a Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto) and (ii) the
Company and the Trust shall not be liable to any such Holder, Participating
Broker-Dealer, any underwriter or controlling person, with respect to any untrue
statement or alleged untrue statement or omission or alleged omission in any
preliminary Prospectus to the extent that any such loss, liability, claim,
damage or expense of any Holder, Participating Broker-Dealer, any underwriter or
controlling person results from the fact that such Holder, any underwriter or
Participating Broker-Dealer sold Securities to a person to whom there was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the final Prospectus as then amended or supplemented if the Company had
previously furnished copies thereof to such Holder, underwriter or Participating
Broker-Dealer and the loss, liability, claim, damage or expense of such Holder,
underwriter, Participating Broker-Dealer or controlling person results from an
untrue statement or omission of a material fact contained in the preliminary
Prospectus which was corrected in the final Prospectus. Any amounts advanced by
the Company or the Trust to an indemnified party pursuant to this Section 4 as a
result of such losses shall be returned to the Company or the Trust if it shall
be finally determined by such a court in a judgment not subject to appeal or
final review that such indemnified party was not entitled to indemnification by
the Company or the Trust.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Trust, any underwriter and the other selling Holders
and each of their respective directors, officers (including each officer of the
Company and the Trust who signed the Registration Statement), employees and
agents and each Person, if any, who controls the Company, the Trust, any
underwriter or any other selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
loss, liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in a
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company or the Trust by such selling Holder with
respect to such Holder expressly for use in such Registration Statement (or any
amendment thereto), or any such Prospectus (or any amendment or supplement
thereto); provided, however, that in the case of a Capital Securities Shelf
Registration Statement, no such Holder shall be liable for any claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to such Capital Securities Shelf Registration
Statement.
D-14
<PAGE>
(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, enclosing a copy of all papers properly served on such
indemnified party, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability which it may have under this
Section 4, except to the extent that it is materially prejudiced by such
failure. An indemnifying party may participate at its own expense in the defense
of such action, or, if it so elects within a reasonable time after receipt of
such notice, assume the defense of any suit brought to enforce any such claim;
but if it so elects to assume the defense, such defense shall be conducted by
counsel chosen by it and approved by the indemnified party or parties which
approval shall not be unreasonably withheld. In the event that an indemnifying
party elects to assume the defense of any such suit and retain such counsel, the
indemnified party or parties shall bear the fees and expenses of any additional
counsel thereafter retained by such indemnified party or parties; provided,
however, that the indemnified party or parties shall have the right to employ
counsel (in addition to local counsel) to represent the indemnified party or
parties who may be subject to liability arising out of any action in respect of
which indemnity may be sought against the indemnifying party if, in the
reasonable judgment of counsel for the indemnified party or parties, there may
be legal defenses available to such indemnified party or parties which are
different from or in addition to those available to the indemnifying party, in
which event the fees and expenses of appropriate separate counsel shall be borne
by the indemnifying party. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel (in addition to local
counsel), separate from its own counsel, for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 4 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional written release in form and substance satisfactory to
the indemnified parties of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Trust, and
the Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company, the Trust, and the Holders, as incurred; provided that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any Person that
was not guilty of such fraudulent misrepresentation. As between the Company, the
Trust, and the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Company and Trust, on the one hand, and the Holders, on
the other hand, with respect to the statements or omissions which resulted in
such loss, liability, claim, damage or expense, or action in respect thereof, as
well as any other relevant equitable considerations. The relative fault of the
Company and the Trust, on the one hand, and of the Holders, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Trust, on the one hand, or by or on behalf of the Holders, on the other, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Trust and the
Holders of the Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 4 were to be determined by
pro rata allocation or by any other method of allocation that does not take into
account the relevant equitable considerations. For purposes of this Section 4,
each Affiliate of a Holder, and each director, officer, employee, agent and
Person, if any, who controls a Holder or such Affiliate within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Holder, and each director of each of the
Company or the Trust, each officer of each of the Company or the Trust who
signed the Registration Statement, and each Person, if any, who controls each of
the Company and the Trust
D-15
<PAGE>
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as each of the Company
or the Trust.
5. Participation in an Underwritten Registration. No Holder may
participate in an underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Registrable Securities on the basis provided in the
underwriting arrangement approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents reasonably required under the terms of such underwriting
arrangements.
6. Selection of Underwriters. The Holders of Registrable Securities
covered by the Capital Securities Shelf Registration Statement who desire to do
so may sell the securities covered by such Capital Securities Shelf Registration
Statement in an underwritten offering, subject to the provisions of section 3(l)
hereof. In any such underwritten offering, the underwriter or underwriters and
manager or managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount or liquidation amount, as
applicable, of the Registrable Securities included in such offering; provided,
however, that such underwriters and managers must be reasonably satisfactory to
the Company and the Trust.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Company or the Trust is
subject to the reporting requirements of Section 13 or 15 of the Exchange Act
and any Registrable Securities remain outstanding, each of the Company and the
Trust, as the case may be, will file the reports required to be filed by it
under the Securities Act and Section 13(a) or 15(d) of the Exchange Act and the
rules and regulations adopted by the SEC thereunder, provided that if it ceases
to be so required to file such reports, it will, upon the request of any Holder
of Registrable Securities (a) make publicly available such information as is
necessary to permit sales of its securities pursuant to Rule 144 under the
Securities Act, (b) deliver such information to a prospective purchaser as is
necessary to permit sales of its securities pursuant to Rule 144A under the
Securities Act, and (c) take such further action that is reasonable in the
circumstances, in each case, to the extent required from time to time to enable
such Holder to sell its Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such rule may be amended from time to time, (ii)
Rule 144A under the Securities Act, as such rule may be amended from time to
time, or (iii) any similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Securities, the Company and the
Trust will deliver to such Holder a written statement as to whether it has
complied with such requirements.
(b) No Inconsistent Agreements. The Company or the Trust has not entered
into, nor will the Company or the Trust on or after the date of this Agreement
enter into, any agreement which is inconsistent with the rights granted to the
Holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to the
holders of the Company's or the Trust's other issued and outstanding securities
under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company and the Trust has obtained the written consent of
Holders of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure; provided that no amendment, modification or supplement or
waiver or consent to the departure with respect to the provisions of Section 4
hereof shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder of Registrable Securities.
Notwithstanding the foregoing sentence, (i) this Agreement may be amended,
without the consent of any Holder of Registrable Securities, by written
agreement signed by the Company and the Trust, to cure any ambiguity, correct or
supplement any provision of this Agreement that may be inconsistent with any
other provision of this Agreement or to make any other provisions with respect
to matters or questions arising under this Agreement which shall not be
inconsistent with other provisions of this Agreement, (ii) this Agreement may be
amended, modified or supplemented, and waivers and consents to departures from
the provisions hereof may be given by written agreement signed by the Company
and the Trust to the extent that any such amendment,
D-16
<PAGE>
modification, supplement, waiver or consent is, in their reasonable judgment,
necessary or appropriate to comply with applicable law (including any
interpretation of the staff of the SEC) or any change therein and (iii) any
provision of this Agreement may be amended and the observance of any provision
of this Agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively, and either for a specified period of time
or indefinitely), with the written consent of the Company and the Holders of not
less than a majority of the Registrable Securities; provided, however, that no
such amendment or waiver shall reduce the aforesaid percentage of Registrable
Securities the Holders of which are required to consent to any waiver or
supplemental agreement without the consent of the Holders of all outstanding
Registrable Securities. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon the Company, the Trust and each Holder under
this Agreement. Upon the effectuation of each such amendment or waiver, the
Company and the Trust shall promptly give written notice thereof to the Holders
who have not previously consented thereto in writing.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company or the Trust by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is the address set
forth in the Investor Signature Page to the Purchase Agreement; and (ii) if to
the Company or the Trust, initially at the Company's address set forth in the
Agency Agreement and thereafter at such other address, notice of which is given
in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of the Investors,
including, without limitation and without the need for an express assignment,
subsequent Holders; provided, however, that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiary. The Placement Agent and any Participating
Broker-Dealer shall be a third party beneficiary of the agreements made
hereunder between the Company and the Trust, on the one hand, and the Holders,
on the other hand, and shall have the right to enforce such agreements directly
to the extent it deems such enforcement necessary or advisable to protect its
rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE
STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE
TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
D-17
<PAGE>
MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL
JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY,
ON BEHALF OF ITSELF AND THE SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, THE
TRUST), IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
UCBH HOLDINGS, INC.
By: /s/ Tommy S. Wu
--------------------------------
Name: Tommy S. Wu
Title: President and Chief
Executive Officer
UCBH TRUST CO.
By: /s/ Tommy S. Wu
--------------------------------
Name: Tommy S. Wu
Title: Administrative Trustee
By: /s/ Jonathan H. Downing
--------------------------------
Name: Jonathan H. Downing
Title: Administrative Trustee
By: /s/ Dennis Alan Lee
--------------------------------
Name: Dennis Alan Lee
Title: Administrative Trustee
D-18
<PAGE>
Investor Signature Page to the Capital Securities Registration Rights Agreement
____________________________________
Name of Investor
By: ____________________________________
Name:
Title:
Address:____________________________
____________________________________
____________________________________
D-19
Exhibit 5.1
July 1, 1998
UCBH Holdings, Inc.
711 Van Ness Avenue
San Francisco, California 94102
Re: UCBH Holdings, Inc.
UCBH Trust Co.
Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel to UCBH Holdings, Inc., a Delaware corporation
(the "Company") and Sponsor of UCBH Trust Co., a Delaware statutory business
trust (the "Trust"), in connection with a Registration Statement on Form S-4
(the "Registration Statement") relating to: (i) the proposed issuance by the
Trust of $30,000,000 aggregate Liquidation Amount of the Trust's Series B 9.375%
Capital Securities (the "Exchange Capital Securities") registered under the
Securities Act of 1933, as amended (the "Securities Act"), in exchange for up to
$30,000,000 aggregate Liquidation Amount of the Trust's outstanding Series A
9.375% Capital Securities (the "Original Capital Securities"); (ii) the proposed
issuance by the Company to the Trust, in an aggregate principal amount
corresponding to the aggregate Liquidation Amount of the Exchange Capital
Securities, of the Company's Series B 9.375% Junior Subordinated Deferrable
Interest Debentures due May 1, 2028 (the "Exchange Junior Subordinated
Debentures") registered under the Securities Act in exchange for a comparable
aggregate principal amount of the Company's outstanding Series A 9.375% Junior
Subordinated Deferrable Interest Debentures due May 1, 2028 (the "Original
Junior Subordinated Debentures"); and (iii) the Company's guarantee of the
Exchange Capital Securities (the "Exchange Guarantee") registered under the
Securities Act in exchange for the Company's guarantee of the Original Capital
Securities (the "Original Guarantee"). The Exchange Capital Securities will be
issued under an Amended and Restated Declaration of Trust for the Trust, dated
as of April 17, 1998 (the "Amended Declaration"), among the Company, as Sponsor,
Wilmington Trust Company, and the Administrative Trustees named therein, while
the Exchange Junior Subordinated Debentures will be issued under an Indenture,
dated as of April 17, 1998 (the "Indenture"), between the Company and Wilmington
Trust Company, as Debenture Trustee.
We have examined such documents and records as we deemed appropriate,
including the following:
(i) Copy of the Articles of Incorporation, as amended of the
Company, certified as of a recent date by the Secretary of
State of Delaware.
<PAGE>
(ii) Copy of the Bylaws of the Company, as amended, certified as of
a recent date by the Secretary of the Company to be a true and
complete copy.
(iii) Copy, certified as of a recent date by the Secretary of the
Company to be a true copy, of the resolutions duly adopted by
the Board of Directors of the Company authorizing the filing
of the Registration Statement and the exchange of the Exchange
Capital Securities, the Exchange Junior Subordinated
Debentures and the Exchange Guarantee in the circumstances
referred to above.
(iv) Executed counterparts of the Amended Declaration.
(v) Specimen of the Exchange Capital Security.
(vi) Executed counterparts of the Indenture.
(vii) Specimen of the Exchange Junior Subordinated Debenture.
(viii) Executed counterparts of the Exchange Guarantee.
(ix) Executed counterparts of the Capital Securities Registration
Rights Agreement, dated as of April 13, 1998 (the "Capital
Securities Registration Rights Agreement"), among the Trust,
the Company and the Purchasers named therein.
In addition, as to questions of fact material to our opinions, we have
relied upon certificates of officers of the Company, the Administrative Trustees
of the Trust and public officials.
In the course of our examination, we have assumed the legal capacity of
all natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Company or the
Trust, we have assumed that such parties had the power, corporate or other, to
enter into and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents and the validity, binding effect and
enforceability thereof on such parties.
Based upon the foregoing, we are of the opinion that:
(1) The Exchange Junior Subordinated Debentures have been duly
authorized by all requisite corporate action of the Company and, when executed
and authenticated in the manner provided for in the Indenture and delivered
against surrender and cancellation of a like aggregate principal amount of
Original Junior Subordinated Debentures as contemplated in the Capital
Securities Registration Rights Agreement, the Exchange Junior Subordinated
Debentures will constitute valid and binding obligations of the Company entitled
to the benefits of the Indenture
<PAGE>
and enforceable against the Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of whether considered
in a proceeding in equity or at law).
(2) The Exchange Guarantee has been duly authorized by all requisite
corporate action of the Company and, when executed and delivered to Wilmington
Trust Company, as Guarantee Trustee, as contemplated in the Capital Securities
Registration Rights Agreement, the Exchange Guarantee will constitute a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles (regardless of whether considered in a proceeding in equity or at
law).
We express no opinion as to the laws of any jurisdiction other than the
laws of the State of Delaware and the federal laws of the United States of
America and, with respect to the laws of the State of Delaware, we have made no
independent investigation of such laws and have relied exclusively on all
matters governed by such laws upon the attached opinion of Richards, Layton &
Finger, P.A.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and all amendments thereto and to the reference to our
firm under the caption "Legal Matters" contained in the Prospectus included
therein.
Very truly yours,
PATTON BOGGS LLP
By: /s/ Mary M. Sjoquist
--------------------------
Mary M. Sjoquist
Exhibit 5.2
[Richards, Layton & Finger Letterhead]
July 1, 1998
UCBH Trust Co.
c/o UCBH Holdings, Inc.
711 Van Ness Avenue
San Francisco, California 64102
Re: UCBH Trust Co.
Ladies and Gentlemen:
We have acted as special Delaware counsel for UCBH Trust Co., a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, as filed in the office of
the Secretary of State of the State of Delaware (the "Secretary of State") on
September 26, 1997, as amended by the Certificate of Amendment of the Trust,
dated March 27, 1998, as filed in the office of the Secretary of State (the
"Certificate");
(b) The Trust Agreement of the Trust, dated as of September 26, 1997,
between UCBH Holdings, Inc., a Delaware corporation (the "Company"), and the
trustees of the Trust named therein (the "Trustees"), as amended by the
Amendment to Trust Agreement dated March 27, 1998, between the Company and the
Trustees;
(c) The Registration Statement (the "Registration Statement") on Form
S-4, including a prospectus (the "Prospectus") relating to the 9.375% Capital
Securities of the Trust representing preferred undivided beneficial interests in
the Trust (each, an "Exchange Capital Security" and collectively, the "Exchange
Capital Securities"), as filed by the Company and the Trust as set forth therein
with the Securities and Exchange Commission on or about July 1, 1998;
<PAGE>
UCBH Trust Co.
July 1, 1998
Page 2
(d) A Certificate of Good Standing for the Trust, dated June 26, 1998,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Exchange Capital Security is to be issued by the Trust (collectively, the
"Exchange Capital Security Holders") of a Exchange Capital Security Certificate
for such Exchange Capital Security and the payment for the Exchange Capital
Security acquired by it, in accordance with the Trust Agreement and the
Prospectus, and (vii) that the Exchange Capital Securities are issued and sold
to the Exchange Capital Security Holders in accordance with the Trust Agreement
and the Prospectus. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of
<PAGE>
UCBH Trust Co.
July 1, 1998
Page 3
any other jurisdiction, including federal laws and rules and regulations
relating thereto. Our opinions are rendered only with respect to Delaware laws
and rules, regulations and orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law of the State of Delaware as we have considered necessary or appropriate, and
subject to the assumptions, qualifications, limitations and exceptions set forth
herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del. C.
ss. 3801, et seq.
2. The Exchange Capital Securities will represent valid and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Exchange Capital Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Exchange Capital
Security Holders may be obligated to make payments as set forth in the Trust
Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of our report dated March 30, 1998, relating
to the financial statements of UCBH Holdings, Inc., which appears in such
Prospectus. We also consent to the reference to us under the heading "Experts"
in such Prospectus.
PricewaterhouseCoopers LLP
San Francisco, California
July 1, 1998
Exhibit 25.1
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
UCBH HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
Delaware Being applied for
(State of incorporation) (I.R.S. employer identification no.)
711 Van Ness Avenue
San Francisco, California 94104
(Address of principal executive offices) (Zip Code)
Series B 9.375% Junior Subordinated Deferrable
Interest Debentures of UCBH Holdings, Inc.
(Title of the indenture securities)
================================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 24th day
of June, 1998.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ W. Chris Sponenberg By: /s/ Emmett R. Harmon
------------------------ ---------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
<PAGE>
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "Wilmington Trust Company" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is Wilmington
Trust Company whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE>
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences of
debt, to receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and
enjoy all the powers, rights, privileges and franchises
incident to a corporation which are proper or necessary for
the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
2
<PAGE>
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual
3
<PAGE>
owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it
may think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
4
<PAGE>
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
Fourth: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative.
The voting powers and the preferences and relative, participating,
optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of
5
<PAGE>
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article Fourth), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
Fourth), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article Fourth), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to
6
<PAGE>
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article Fourth, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article Fourth and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article Fourth that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
7
<PAGE>
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the ByLaws of the Corporation),
any director or the entire Board of Directors of the
8
<PAGE>
Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
9
<PAGE>
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
Eleventh: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the
world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
Fourteenth: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
Fifteenth: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
10
<PAGE>
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article Fifteenth
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
11
<PAGE>
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by
any Interested Stockholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
12
<PAGE>
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article Fifteenth on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market value of
$1,000,000 or more.
(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter
or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
13
<PAGE>
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on January 16, 1997
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its
<PAGE>
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
Committees
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who
2
<PAGE>
shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of
the Board ofDirectors when it is not in session to transact all business for and
in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend
all investments that may be made of the funds of the Company, and shall direct
the disposal of the same, in accordance with such rules and regulations as the
Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.
3
<PAGE>
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee shall
be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever
the majority of its members shall deem it to be proper for the transaction of
its business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than
4
<PAGE>
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called
at any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. The Vice Chairman of the Board. The Vice
Chairman of the Board of
5
<PAGE>
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further authority
and powers and shall perform such duties as the Board of Directors or the
Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE>
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE>
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in connection
with obtaining the consent of stockholders for any purpose, which record date
shall not be more than 60 nor less than 10 days proceeding the date of any
meeting of stockholders or the date for the payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE>
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors who
serve as members of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as members of
committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses
9
<PAGE>
under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE>
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: June 24, 1998 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
Name of Bank City
in the State of DELAWARE , at the close of business on December 31, 1997.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.............................................236,646
Interest-bearing balances........................................................................... 0
Held-to-maturity securities............................................................................... 331,880
Available-for-sale securities.............................................................................1,258,661
Federal funds sold and securities purchased under agreements to resell...................................... 91,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,822,320
LESS: Allowance for loan and lease losses. . . . . . 59,373
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve..............................3,762,947
Assets held in trading accounts...................................................................................0
Premises and fixed assets (including capitalized leases)....................................................129,740
Other real estate owned...................................................................................... 2,106
Investments in unconsolidated subsidiaries and associated companies............................................ 22
Customers' liability to this bank on acceptances outstanding......................................................0
Intangible assets.............................................................................................4,905
Other assets................................................................................................100,799
Total assets..............................................................................................5,919,206
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE>
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices.......................................................................................4,034,633
Noninterest-bearing . . . . . . . . 839,928
Interest-bearing. . . . . . . . . . 3,194,705
Federal funds purchased and Securities sold under agreements to repurchase................................. 575,827
Demand notes issued to the U.S. Treasury.....................................................................61,290
Trading liabilities (from Schedule RC-D)..........................................................................0
Other borrowed money:.......................................................................................///////
With original maturity of one year or less......................................................673,000
With original maturity of more than one year.....................................................43,000
Bank's liability on acceptances executed and outstanding..........................................................0
Subordinated notes and debentures.................................................................................0
Other liabilities (from Schedule RC-G).................................................................... 76,458
Total liabilities.........................................................................................5,464,208
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................................................................0
Common Stock....................................................................................................500
Surplus (exclude all surplus related to preferred stock).....................................................62,118
Undivided profits and capital reserves......................................................................385,018
Net unrealized holding gains (losses) on available-for-sale securities........................................7,362
Total equity capital........................................................................................454,998
Total liabilities, limited-life preferred stock, and equity capital.......................................5,919,206
</TABLE>
2
Exhibit 25.2
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ____
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
UCBH HOLDINGS, INC.
UCBH TRUST CO.
(Exact name of obligor as specified in its charter)
Delaware Being applied for
(State of incorporation) (I.R.S. employer identification no.)
711 Van Ness Avenue
San Francisco, California 94104
(Address of principal executive offices) (Zip Code)
Series B 9.375% Capital Securities of UCBH Trust Co.
(Title of the indenture securities)
================================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 24th day
of June, 1998.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ W. Chris Sponenberg By: /s/ Emmett R. Harmon
----------------------- --------------------
W. Chris Sponenberg Name: Emmett R. Harmon
Assistant Secretary Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
<PAGE>
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "Wilmington Trust Company" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is Wilmington
Trust Company whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE>
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences of
debt, to receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and
enjoy all the powers, rights, privileges and franchises
incident to a corporation which are proper or necessary for
the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
2
<PAGE>
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual
3
<PAGE>
owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it
may think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
4
<PAGE>
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
Fourth: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative.
The voting powers and the preferences and relative, participating,
optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of
5
<PAGE>
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article Fourth), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
Fourth), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article Fourth), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to
6
<PAGE>
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article Fourth, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article Fourth and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article Fourth that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
7
<PAGE>
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the ByLaws of the Corporation),
any director or the entire Board of Directors of the
8
<PAGE>
Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
9
<PAGE>
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
Eleventh: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the
world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
Fourteenth: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
Fifteenth: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
10
<PAGE>
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article Fifteenth
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
11
<PAGE>
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by
any Interested Stockholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
12
<PAGE>
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article Fifteenth on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market value of
$1,000,000 or more.
(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter
or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
13
<PAGE>
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on January 16, 1997
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its
<PAGE>
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
Committees
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who
2
<PAGE>
shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of
the Board of Directors when it is not in session to transact all business for
and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend
all investments that may be made of the funds of the Company, and shall direct
the disposal of the same, in accordance with such rules and regulations as the
Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.
3
<PAGE>
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee shall
be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever
the majority of its members shall deem it to be proper for the transaction of
its business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than
4
<PAGE>
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called
at any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of
5
<PAGE>
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further authority
and powers and shall perform such duties as the Board of Directors or the
Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE>
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE>
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in connection
with obtaining the consent of stockholders for any purpose, which record date
shall not be more than 60 nor less than 10 days proceeding the date of any
meeting of stockholders or the date for the payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE>
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors who
serve as members of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as members of
committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses
9
<PAGE>
under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE>
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: June 24, 1998 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
Name of Bank City
in the State of DELAWARE , at the close of business on December 31, 1997.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.............................................236,646
Interest-bearing balances........................................................................... 0
Held-to-maturity securities............................................................................... 331,880
Available-for-sale securities.............................................................................1,258,661
Federal funds sold and securities purchased under agreements to resell...................................... 91,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,822,320
LESS: Allowance for loan and lease losses. . . . . . 59,373
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve..............................3,762,947
Assets held in trading accounts...................................................................................0
Premises and fixed assets (including capitalized leases)....................................................129,740
Other real estate owned...................................................................................... 2,106
Investments in unconsolidated subsidiaries and associated companies............................................ 22
Customers' liability to this bank on acceptances outstanding......................................................0
Intangible assets.............................................................................................4,905
Other assets................................................................................................100,799
Total assets..............................................................................................5,919,206
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE>
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices.......................................................................................4,034,633
Noninterest-bearing . . . . . . . . 839,928
Interest-bearing. . . . . . . . . . 3,194,705
Federal funds purchased and Securities sold under agreements to repurchase................................. 575,827
Demand notes issued to the U.S. Treasury.....................................................................61,290
Trading liabilities (from Schedule RC-D)..........................................................................0
Other borrowed money:.......................................................................................///////
With original maturity of one year or less......................................................673,000
With original maturity of more than one year.....................................................43,000
Bank's liability on acceptances executed and outstanding..........................................................0
Subordinated notes and debentures.................................................................................0
Other liabilities (from Schedule RC-G).................................................................... 76,458
Total liabilities.........................................................................................5,464,208
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................................................................0
Common Stock....................................................................................................500
Surplus (exclude all surplus related to preferred stock).....................................................62,118
Undivided profits and capital reserves......................................................................385,018
Net unrealized holding gains (losses) on available-for-sale securities........................................7,362
Total equity capital........................................................................................454,998
Total liabilities, limited-life preferred stock, and equity capital.......................................5,919,206
</TABLE>
2
Exhibit 25.3
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)____
WILMINGTON TRUST COMPANY
---------------------------------------------------
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
- ------------------------ ------------------------------------
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
----------------------------------------
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
---------------------------------------------------------
(Name, address and telephone number of agent for service)
UCBH HOLDINGS, INC.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware Being applied for
- ------------------------ ------------------------------------
(State of incorporation) (I.R.S. employer identification no.)
711 Van Ness Avenue
San Francisco, California 94104
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
UCBH Holdings, Inc. Series B Guarantee with respect to
Series B 9.375% Capital Securities
-----------------------------------
(Title of the indenture securities)
================================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 24th day
of June, 1998.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ W. Chris Sponenberg By:/s/ Emmett R. Harmon
----------------------- -----------------------
W. Chris Sponenberg Name: Emmett R. Harmon
Assistant Secretary Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
<PAGE>
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "Wilmington Trust Company" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is Wilmington
Trust Company whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE>
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences of
debt, to receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and
enjoy all the powers, rights, privileges and franchises
incident to a corporation which are proper or necessary for
the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
2
<PAGE>
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual
3
<PAGE>
owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it
may think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
4
<PAGE>
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
Fourth: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative.
The voting powers and the preferences and relative, participating,
optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of
5
<PAGE>
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article Fourth), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
Fourth), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article Fourth), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to
6
<PAGE>
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article Fourth, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article Fourth and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article Fourth that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
7
<PAGE>
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the
8
<PAGE>
Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
9
<PAGE>
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
Eleventh: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the
world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
Fourteenth: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
Fifteenth: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
10
<PAGE>
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article Fifteenth
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
11
<PAGE>
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by
any Interested Stockholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
12
<PAGE>
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article Fifteenth on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market value of
$1,000,000 or more.
(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter
or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
13
<PAGE>
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on January 16, 1997
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its
<PAGE>
members, or at the call of the Chairman of the Board of Directors or the
President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
Committees
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who
2
<PAGE>
shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of
the Board of Directors when it is not in session to transact all business for
and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend
all investments that may be made of the funds of the Company, and shall direct
the disposal of the same, in accordance with such rules and regulations as the
Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.
3
<PAGE>
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee shall
be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever
the majority of its members shall deem it to be proper for the transaction of
its business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than
4
<PAGE>
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called
at any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of
5
<PAGE>
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further authority
and powers and shall perform such duties as the Board of Directors or the
Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
6
<PAGE>
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of
7
<PAGE>
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in connection
with obtaining the consent of stockholders for any purpose, which record date
shall not be more than 60 nor less than 10 days proceeding the date of any
meeting of stockholders or the date for the payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE>
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors who
serve as members of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as members of
committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses
9
<PAGE>
under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE>
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: June 24, 1998 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has not
been approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ----------------------------------------------------------- ------------------
Name of Bank City
in the State of DELAWARE, at the close of business on December 31, 1997.
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
--------------------
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.............................................236,646
Interest-bearing balances........................................................................... 0
Held-to-maturity securities............................................................................... 331,880
Available-for-sale securities.............................................................................1,258,661
Federal funds sold and securities purchased under agreements to resell...................................... 91,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,822,320
LESS: Allowance for loan and lease losses. . . . . . 59,373
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve..............................3,762,947
Assets held in trading accounts...................................................................................0
Premises and fixed assets (including capitalized leases)....................................................129,740
Other real estate owned...................................................................................... 2,106
Investments in unconsolidated subsidiaries and associated companies............................................ 22
Customers' liability to this bank on acceptances outstanding......................................................0
Intangible assets.............................................................................................4,905
Other assets................................................................................................100,799
Total assets..............................................................................................5,919,206
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices.......................................................................................4,034,633
Noninterest-bearing . . . . . . . . 839,928
Interest-bearing. . . . . . . . . . 3,194,705
Federal funds purchased and Securities sold under agreements to repurchase................................. 575,827
Demand notes issued to the U.S. Treasury.....................................................................61,290
Trading liabilities (from Schedule RC-D)..........................................................................0
Other borrowed money:.......................................................................................///////
With original maturity of one year or less......................................................673,000
With original maturity of more than one year.....................................................43,000
Bank's liability on acceptances executed and outstanding..........................................................0
Subordinated notes and debentures.................................................................................0
Other liabilities (from Schedule RC-G).................................................................... 76,458
Total liabilities.........................................................................................5,464,208
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................................................................0
Common Stock....................................................................................................500
Surplus (exclude all surplus related to preferred stock).....................................................62,118
Undivided profits and capital reserves......................................................................385,018
Net unrealized holding gains (losses) on available-for-sale securities........................................7,362
Total equity capital........................................................................................454,998
Total liabilities, limited-life preferred stock, and equity capital.......................................5,919,206
</TABLE>
2
Exhibit 99.1
LETTER OF TRANSMITTAL
UCBH TRUST CO.
OFFER TO EXCHANGE ITS
SERIES B 9.375% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
SERIES A 9.375% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
UCBH HOLDINGS, INC.
PURSUANT TO THE PROSPECTUS DATED _______________, 1998
(AS THE SAME MAY BE AMENDED OR SUPPLEMENTED, THE "PROSPECTUS")
------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998,
----------------------
OR ON SUCH LATER DATE OR TIME TO WHICH
THE COMPANY OR THE TRUST
MAY EXTEND THE EXCHANGE OFFER (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE.
------------------------------------------------------------------------
The Exchange Agent For The Exchange Offer Is:
Wilmington Trust Company
BY HAND, OVERNIGHT DELIVERY, REGISTERED OR CERTIFIED MAIL:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
CONFIRM BY TELEPHONE: ( )
FACSIMILE TRANSMISSIONS: ( )
(ELIGIBLE INSTITUTIONS ONLY)
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
1
<PAGE>
Capitalized terms used but not defined herein shall have the same
meaning given them in the Prospectus. As used herein, the term "Holder" means a
holder of Series A 9.375% Capital Securities (the "Original Capital
Securities"), including any participant ("DTC Participant") in the book-entry
transfer facility system of The Depository Trust Company ("DTC") whose name
appears on a security position listing as the owner of the Original Capital
Securities. As used herein, the term "Certificates" means physical certificates
representing Original Capital Securities.
To participate in the Exchange Offer (as defined below), Holders must
tender by (a) book-entry transfer pursuant to the procedures set forth in the
Prospectus under "The Exchange Offer-Procedures for Tendering Original Capital
Securities," or (b) forwarding Certificates herewith.
Holders who are DTC Participants tendering by book-entry transfer must
execute such tender through the Automated Tender Offer Program ("ATOP") of DTC.
A Holder using ATOP should transmit its acceptance to DTC on or prior to the
Expiration Date. DTC will verify such acceptance, execute a book-entry transfer
of the tendered Original Capital Securities into the Exchange Agent's account at
DTC and then send to the Exchange Agent confirmation of such book-entry transfer
(a "book-entry confirmation"), including an agent's message ("Agent's Message")
confirming that DTC has received an express acknowledgment from such Holder that
such Holder has received and agrees to be bound by this Letter of Transmittal
and that the Trust and the Company may enforce this Letter of Transmittal
against such Holder. The book-entry confirmation must be received by the
Exchange Agent in order for the tender relating thereto to be effective.
Book-entry transfer to DTC in accordance with DTC's procedures does not
constitute delivery of the book-entry confirmation to the Exchange Agent.
If the tender is not made through ATOP, Certificates, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date in order for
such tender to be effective.
Holders of Original Capital Securities who cannot complete the
procedures for delivery by book-entry transfer of such Original Capital
Securities on a timely basis or who cannot deliver their Certificates for such
Original Capital Securities and all other required documents to the Exchange
Agent on or prior to the Expiration Date, must, in order to participate in the
Exchange Offer, tender their Original Capital Securities according to the
guaranteed delivery procedures set forth in the Prospectus under "The Exchange
Offer--Procedures for Tendering Original Capital Securities."
THE METHOD OF DELIVERY OF THE BOOK-ENTRY CONFIRMATION OR CERTIFICATES,
THIS LETTER OF TRANSMITTAL, AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION
AND SOLE RISK OF THE TENDERING HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY
SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
ALL TENDERING HOLDERS COMPLETE THIS BOX:
DESCRIPTION OF ORIGINAL CAPITAL SECURITIES
<TABLE>
<CAPTION>
If blank, please print name
and address of registered Original Capital Securities tendered
holder. (Attach additional list if necessary)
- ---------------------------- --------------------------------------------------------------------------
Liquidation Amount of
Aggregate Liquidation Original Capital
Certificate Amount of Original Securities Tendered
Number(s) Capital Securities (if less than all)/**/
--------- ------------------ ----------------------
<S> <C> <C> <C>
TOTAL AMOUNT
TENDERED: __________________
</TABLE>
- ---------------
* Need not be completed by book-entry holders.
** Original Capital Securities may be tendered in whole or in part in
Liquidation Amounts of $100,000 and integral multiples of $1,000 in
excess thereof, provided that if any Original Capital Securities are
tendered for exchange in part, the untendered Liquidation Amount
thereof must be $100,000 or any integral multiple of $1,000 in excess
thereof. All Original Capital Securities held shall be deemed tendered
unless a lesser number is specified in this column. See Instruction No.
4.
3
<PAGE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
(__) CHECK HERE IF TENDERED ORIGINAL CAPITAL SECURITIES ARE BEING DELIVERED
BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT WITH DTC, AND COMPLETE THE FOLLOWING:
Name of Tendering Institution___________________________________________________
DTC Account Number______________________________________________________________
Transaction Code Number_________________________________________________________
(__) CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY
IF TENDERED ORIGINAL CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT,
AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)___________________________________________
Window Ticket Number (if any)__________________________________________
Date of Execution of Notice of Guaranteed Delivery_____________________
Name of Institution which Guaranteed Delivery__________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution__________________________________________
DTC Account Number_____________________________________________________
Transaction Code Number________________________________________________
(__) CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE
ORIGINAL CAPITAL SECURITIES FOR YOUR OWN ACCOUNT AS A RESULT OF
MARKET MAKING OR OTHER TRADING ACTIVITIES AND WISH TO RECEIVE TEN
ADDITIONAL COPIES OF THE PROSPECTUS AND TEN COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:__________________________________________________________________
Address:_______________________________________________________________
4
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to UCBH Trust Co., a trust formed under
the laws of the State of Delaware (the "Trust"), and UCBH Holdings, Inc., a
Delaware corporation (the "Company"), the above described aggregate Liquidation
Amount of the Trust's Original Capital Securities in exchange for a like
aggregate Liquidation Amount of the Trust's Series B 9.375% Capital Securities
(the "Exchange Capital Securities"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), upon the terms and
subject to the conditions set forth in the Prospectus, receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, together with the
Prospectus, constitute the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Original Capital Securities tendered herewith in accordance with
the terms and conditions of the Exchange Offer (including, if the Exchange Offer
is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Trust all right, title and interest in and to such Original Capital
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company and the Trust in connection with the Exchange Offer) with respect to the
tendered Original Capital Securities, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest) subject only to the right of withdrawal described in the Prospectus,
to (i) deliver Certificates for Original Capital Securities to the Company or
the Trust together with all accompanying evidences of transfer and authenticity
to, or upon the order of, the Trust, upon receipt by the Exchange Agent, as the
undersigned's agent, of the Exchange Capital Securities to be issued in exchange
for such Original Capital Securities, (ii) present Certificates for such
Original Capital Securities for transfer, and to transfer the Original Capital
Securities on the books of the Trust, and (iii) receive for the account of the
Trust all benefits and otherwise exercise all rights of beneficial ownership of
such Original Capital Securities, all in accordance with the terms and
conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
ORIGINAL CAPITAL SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED
FOR EXCHANGE, THE TRUST WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE ORIGINAL CAPITAL SECURITIES TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE TRUST OR THE EXCHANGE AGENT TO BE
NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE
ORIGINAL CAPITAL SECURITIES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY
WITH ITS OBLIGATIONS UNDER THE REGISTRATION AGREEMENT. THE UNDERSIGNED HAS READ
AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered Holder(s) of the
Original Capital Securities
5
<PAGE>
tendered hereby should be printed in the box entitled "Description of Original
Capital Securities" above, if they are not already set forth in such box, as
they appear on the Certificates representing such Original Capital Securities or
on the records of DTC, as the case may be. The Certificate number(s) of any such
Certificates and the Liquidation Amount of such Original Capital Securities
should be specified in such box as indicated therein.
The undersigned understands that tenders of Original Capital Securities
pursuant to any one of the procedures described in "The Exchange Offer--
Procedures for Tendering Original Capital Securities" in the Prospectus and in
the instructions attached hereto will, upon the Company's and the Trust's
acceptance for exchange of such tendered Original Capital Securities, constitute
a binding agreement between the undersigned, the Company and the Trust upon the
terms and subject to the conditions of the Exchange Offer.
The undersigned recognizes that, under certain circumstances set forth
in the Prospectus, the Company and the Trust may not be required to accept for
exchange any of the Original Capital Securities tendered hereby.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Capital
Securities be issued in the name(s) of the undersigned or credited to the
account at DTC indicated above in the case of a book-entry transfer of Original
Capital Securities.
If any Original Capital Securities are submitted for more Original
Capital Securities than are tendered or accepted for exchange, then, without
expense to the tendering Holder, promptly following the expiration or
termination of the Exchange Offer, such non-exchanged or non-tendered Original
Capital Securities will, if evidenced by Certificates, be returned, or will, if
evidenced by book-entry, be credited to the account at DTC indicated above. If
applicable, substitute Certificates representing non- exchanged Original Capital
Securities will be issued to the undersigned or nonexchanges Original Capital
Securities will be credited to the account at DTC indicated above in the case of
a book-entry transfer of Original Capital Securities.
Unless otherwise indicated under "Special Delivery Instructions,"
certificates for Original Capital Securities and for Exchange Capital Securities
will be delivered to the undersigned at the address shown below the
undersigned's signature.
BY TENDERING ORIGINAL CAPITAL SECURITIES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (1) THE
UNDERSIGNED IS NOT AN "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES
ACT) OF THE COMPANY OR THE TRUST, (2) ANY EXCHANGE CAPITAL SECURITIES TO BE
RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS
BUSINESS, (3) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY
PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES
ACT) OF EXCHANGE CAPITAL SECURITIES TO BE RECEIVED IN THE EXCHANGE OFFER, AND
(4) IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED
IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION (WITHIN THE MEANING OF
6
<PAGE>
THE SECURITIES ACT) OF SUCH EXCHANGE CAPITAL SECURITIES. BY TENDERING ORIGINAL
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF
TRANSMITTAL, A HOLDER OF ORIGINAL CAPITAL SECURITIES THAT IS A BROKER-DEALER
REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY
THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE
COMMISSION TO THIRD PARTIES, THAT (1) SUCH ORIGINAL CAPITAL SECURITIES ARE HELD
BY SUCH BROKER-DEALER ONLY AS A NOMINEE, OR (2) SUCH ORIGINAL CAPITAL SECURITIES
WERE ACQUIRED BY IT FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES
OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER THE PROSPECTUS MEETING THE
REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH
EXCHANGE CAPITAL SECURITIES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY
DELIVERING THE PROSPECTUS, IT WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE COMPANY AND THE TRUST HAVE AGREED THAT, SUBJECT TO THE PROVISIONS
OF THE CAPITAL SECURITIES REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS MAY BE
USED IN CONNECTION WITH RESALES OF EXCHANGE CAPITAL SECURITIES RECEIVED IN
EXCHANGE FOR ORIGINAL CAPITAL SECURITIES BY A BROKER-DEALER WHO ACQUIRED
ORIGINAL CAPITAL SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR
OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") FOR A PERIOD ENDING
90 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN LIMITED
CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH
EXCHANGE CAPITAL SECURITIES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING
BROKER-DEALER. IN THAT REGARD, EACH PARTICIPATING BROKER-DEALER, BY TENDERING
SUCH ORIGINAL CAPITAL SECURITIES AND EXECUTING THIS LETTER OF TRANSMITTAL OR BY
TENDERING THROUGH BOOK-ENTRY TRANSFER IN LIEU THEREOF, AGREES THAT, UPON RECEIPT
OF NOTICE FROM THE COMPANY OR THE TRUST OF THE OCCURRENCE OF ANY EVENT OR THE
DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED IN THE PROSPECTUS
UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A
MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED THEREIN, IN
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING OR OF THE
OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE CAPITAL SECURITIES
REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE
SALE OF EXCHANGE CAPITAL SECURITIES PURSUANT TO THE PROSPECTUS UNTIL (1) THE
COMPANY AND THE TRUST HAVE AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT
SUCH MISSTATEMENT OR OMISSION AND HAVE FURNISHED COPIES OF THE AMENDED OR
SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR (2) THE COMPANY OR
THE TRUST HAS GIVEN NOTICE THAT THE SALE OF THE EXCHANGE CAPITAL SECURITIES MAY
BE RESUMED, AS THE CASE MAY BE. IF THE COMPANY OR THE TRUST GIVES SUCH NOTICE TO
SUSPEND THE SALE OF THE EXCHANGE CAPITAL
7
<PAGE>
SECURITIES, THEY SHALL EXTEND THE 90-DAY PERIOD REFERRED TO ABOVE DURING WHICH
PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN CONNECTION
WITH THE RESALE OF EXCHANGE CAPITAL SECURITIES BY THE NUMBER OF DAYS DURING THE
PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING
THE DATE ON WHICH (1) PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF
THE SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE
EXCHANGE CAPITAL SECURITIES OR (2) THE COMPANY OR THE TRUST HAS GIVEN NOTICE
THAT THE SALE OF EXCHANGE CAPITAL SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
AS A RESULT, A PARTICIPATING BROKER-DEALER WHO INTENDS TO USE THE
PROSPECTUS IN CONNECTION WITH RESALES OF EXCHANGE CAPITAL SECURITIES RECEIVED IN
EXCHANGE FOR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER MUST
NOTIFY THE COMPANY AND THE TRUST, OR CAUSE THE COMPANY AND THE TRUST TO BE
NOTIFIED, ON OR PRIOR TO THE EXPIRATION DATE THAT IT IS A PARTICIPATING
BROKER-DEALER. SUCH NOTICE MAY BE GIVEN IN THE SPACE PROVIDED ABOVE OR MAY BE
DELIVERED TO THE EXCHANGE AGENT AT THE ADDRESS SET FORTH IN THE PROSPECTUS UNDER
"THE EXCHANGE OFFER- EXCHANGE AGENT."
Holders whose Original Capital Securities are accepted for exchange on
or prior to November 1, 1998 will not receive Distributions on such Original
Capital Securities and the undersigned hereby waives the right to receive any
Distributions on such Original Capital Securities accumulated from and including
April 17, 1998. Accordingly, holders of Exchange Capital Securities as of the
close of business on the record date for the payment of Distributions on
November 1, 1998 will be entitled to Distributions accumulated from and
including April 17, 1998.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company or the Trust to be necessary or desirable to
complete the sale, assignment and transfer of the Original Capital Securities
tendered hereby. All authority herein conferred or agreed to be conferred in
this Letter of Transmittal shall survive the death or incapacity of the
undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees in
bankruptcy, legal representatives, successors and assigns of the undersigned.
Except as stated in the Prospectus, this tender is irrevocable.
8
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF
ORIGINAL CAPITAL SECURITIES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO
HAVE TENDERED THE ORIGINAL CAPITAL SECURITIES AS SET FORTH IN SUCH BOX.
HOLDER(S) SIGN HERE
(SEE ATTACHED INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON THE LAST PAGE)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered Holder(s) exactly as name(s) appear(s) on
Certificate(s) for the Original Capital Securities hereby tendered or on the
records of DTC, as the case may be, or by any person(s) authorized to become the
registered Holder(s) by endorsements and documents transmitted herewith
(including such opinions of counsel, certifications and other information as may
be required by the Trust to comply with the restrictions on transfer applicable
to the Original Capital Securities). If signature is by an attorney-in-fact,
executor, administrator, trustee, guardian, officer of a corporation or another
acting in a fiduciary capacity or representative capacity, set forth the
signatory's full title. See Instruction 5.
________________________________________________________________________________
________________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S))
Date ________________________________________, 1998
Name(s) _______________________________________________________________________
_______________________________________________________________________
(PLEASE PRINT)
Capacity (full title) __________________________________________________________
Address ________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
________________________________________________________________________________
Area Code and Telephone Number__________________________________________________
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
9
<PAGE>
GUARANTEE OF SIGNATURE(S)
(SEE ATTACHED INSTRUCTIONS 2 AND 5)
________________________________________________________________________________
(AUTHORIZED SIGNATURE)
Date _______________, 1998
Name of Firm ___________________________________________________________________
Capacity (full title)___________________________________________________________
(PLEASE PRINT)
Address_________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
________________________________________________________________________________
Area Code and Telephone Number__________________________________________________
10
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE ATTACHED INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if certificates for Exchange Capital Securities or
non-tendered or nonexchanged Original Capital Securities are to be issued in the
name of someone other than the registered Holder(s) of the Original Capital
Securities whose name(s) appear(s) above.
Issue:
(__) Non-tendered or non-exchanged Original Capital Securities to:
(__) Exchange Capital Securities to:
Name(s)_________________________________________________________________________
Address_________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
Area Code and
Telephone Number________________________________________________________________
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
SPECIAL ISSUANCE INSTRUCTIONS
(SEE ATTACHED INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if certificates for Exchange Capital Securities or
non-tendered or nonexchanged Original Capital Securities are to be sent to
someone other than the registered Holder(s) of the Original Capital Securities
whose name(s) appear(s) at an address other than that above.
Mail:
(__) Non-tendered or non-exchanged Original Capital Securities to:
(__) Exchange Capital Securities to:
Name(s) _____________________________________________________________________
Address _____________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
Area Code and
Telephone Number ____________________________________________________________
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
11
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. BOOK-ENTRY TRANSFER; DELIVERY OF LETTER OF TRANSMITTAL AND
CERTIFICATES; GUARANTEED DELIVERY PROCEDURES. To tender in the Exchange Offer,
Holders must tender by (a) forwarding Certificates herewith or (b) book-entry
transfer pursuant to the procedures set forth in "The Exchange Offer--Procedures
for Tendering Original Capital Securities" in the Prospectus. Holders who are
DTC Participants tendering by book-entry transfer must execute such tender
through DTC's ATOP system. A Holder using ATOP should transmit its acceptance to
DTC on or prior to the Expiration Date. DTC will verify such acceptance, execute
a book-entry transfer of the tendered Original Capital Securities into the
Exchange Agent's account at DTC and then send to the Exchange Agent a book-entry
confirmation, including an Agent's Message confirming that DTC has received an
express acknowledgment from such Holder that such Holder has received and agrees
to be bound by this Letter of Transmittal and that the Trust and the Company may
enforce this Letter of Transmittal against such Holder. The book-entry
confirmation must be received by the Exchange Agent
in order for the tender relating thereto to be effective. Book-entry transfer to
DTC in accordance with DTC's procedure does not constitute delivery of the
book-entry confirmation to the Exchange Agent.
If the tender is not made through ATOP, certificates, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date in order for
such tender to be effective.
Original Capital Securities may be tendered in whole or in part in the
Liquidation Amount of $100,000 (100 Capital Securities) and integral multiples
of $1,000 Liquidation Amount (one Capital Security) in excess thereof, provided
that, if any Original Capital Securities are tendered for exchange in part, the
untendered Liquidation Amount thereof must be $100,000 (100 Capital Securities)
or any integral multiple of $1,000 Liquidation Amount (one Capital Security) in
excess thereof.
Holders who wish to tender their Original Capital Securities and (i)
whose Original Capital Securities are not immediately available or (ii) who
cannot deliver their Original Capital Securities, this Letter of Transmittal and
all other required documents to the Exchange Agent on or prior to the Expiration
Date or (iii) who cannot complete the procedures for delivery by book-entry
transfer on a timely basis, may tender their Original Capital Securities by
properly completing and duly executing a notice to the Exchange Agent
guaranteeing delivery to the Exchange Agent of either certificates representing
the Original Capital Securities or a book-entry confirmation in compliance with
the requirements set forth in the Prospectus (the "Notice of Guaranteed
Delivery"), pursuant to the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer--Procedures for Tendering Original Capital
Securities--Guaranteed Delivery." Pursuant to such procedures: (i) such tender
must be made by or through an Eligible Institution (as defined below); (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying this Letter of Transmittal, must be
received by the Exchange Agent on or prior to the Expiration Date; and (iii) (a)
a book-entry confirmation or (b) the certificates representing all tendered
Original Capital Securities, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by this
12
<PAGE>
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in the Prospectus under "The Exchange
Offer-- Procedures for Tendering Original Capital Securities-- Guaranteed
Delivery".
A Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Original Capital
Securities to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or
prior to the Expiration Date. As used herein and in the Prospectus, "Eligible
Institution" means a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as "an eligible guarantor institution," including (as such terms
are defined therein) (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association.
The method of delivery of the book-entry confirmation or certificates,
this Letter of Transmittal, and all other required documents is at the option
and sole risk of the tendering Holder and the delivery will be deemed made only
when actually received by the Exchange Agent. If delivery is by mail, registered
mail with return receipt requested, properly insured, or overnight delivery
service is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
Neither the Company nor the Trust will accept any alternative,
conditional or contingent tenders. Each tendering Holder, by book-entry transfer
through ATOP or execution of a Letter of Transmittal (or facsimile thereof),
waives any right to receive any notice of the acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered
Holder(s) of Original Capital Securities tendered herewith,
unless such Holder(s) has completed either the box entitled
"Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" above, or
(ii) such Original Capital Securities are tendered for the account
of a firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature(s) on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Original Capital Securities" is inadequate, the Certificate
number(s) and/or the Liquidation Amount of Original Capital Securities and any
other required information should be listed on a separate signed schedule which
is attached to this Letter of Transmittal.
13
<PAGE>
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Original Capital
Securities will be accepted only in the Liquidation Amount of $100,000 (100
Capital Securities) and integral multiples of $1,000 Liquidation Amount (one
Capital Security) in excess thereof, provided that if any Original Capital
Securities are tendered for exchange in part, the untendered Liquidation Amount
thereof must be $100,000 (100 Capital Securities) or any integral multiple of
$1,000 Liquidation Amount (one Capital Security) in excess thereof. If less than
all the Original Capital Securities are to be tendered, fill in the Liquidation
Amount of Original Capital Securities that are to be tendered in the box
entitled "Liquidation Amount of Original Capital Securities Tendered." If
applicable, new Certificate(s) for the Original Capital Securities that were not
tendered will be sent to the address designated herein by such Holder promptly
after the Expiration Date. All Original Capital Securities represented by
Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Original Capital
Securities may be withdrawn at any time on or prior to the Expiration Date. In
order for a withdrawal to be effective on or prior to such date, a written or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth above or in the Prospectus
on or prior to such date. Any such notice of withdrawal must specify the name of
the person who tendered the Original Capital Securities to be withdrawn, the
aggregate Liquidation Amount of Original Capital Securities to be withdrawn,
and, if any Certificates for Original Capital Securities have been tendered, the
name of the registered Holder of the Original Capital Securities as set forth on
any such Certificates, if different from that of the person who tendered such
Original Capital Securities. If Certificates for the Original Capital Securities
have been delivered or otherwise identified to the Exchange Agent, then prior to
the physical release of such Certificates, the tendering Holder must submit the
serial numbers shown on the particular Certificates to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Original Capital Securities tendered for the
account of an Eligible Institution. If Original Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth in the
Prospectus under "The Exchange Offer--Procedures for Tendering Original Capital
Securities," the notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawal of Original Capital
Securities. Withdrawals of tenders of Original Capital Securities may not be
rescinded. Original Capital Securities properly withdrawn will not be deemed
validly tendered for purposes of the Exchange Offer, but may be retendered at
any subsequent time on or prior to the Expiration Date by following any of the
procedures described herein.
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Company and the
Trust, in their sole discretion, whose determination shall be final and binding
on all parties. Neither the Company, the Trust, any affiliates or assigns of the
Company or the Trust or the Exchange Agent nor any other person shall be under
any duty to give any notification of any irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification. Any
Original Capital Securities which have been tendered but which are withdrawn
will be returned or transferred by book-entry, as the case may be, to the Holder
thereof without cost to such Holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered Holder(s) of the
Original Capital Securities tendered hereby, the signature(s) must correspond
exactly with the name(s) as written
14
<PAGE>
on the face of the Certificate(s) for such Original Capital Securities, without
alteration, enlargement or any change whatsoever, or as recorded in DTC's
book-entry transfer facility system, as the case may be.
If any Certificates tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Original Capital Securities are registered in different
names on several Certificates, it will be necessary to complete, sign and submit
as many separate Letters of Transmittal as there are different registrations of
Certificates. If any tendered Original Capital Securities are registered in
different names in several book-entry accounts, proper procedures for book-entry
transfer must be followed for each account.
If this Letter of Transmittal or any Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the Company and the Trust in their sole discretion, of
each such person's authority so to act.
When this Letter of Transmittal is signed by the registered Holder(s)
of the Original Capital Securities listed and transmitted hereby, or book-entry
transfer is effectuated by such Holder(s), no endorsement(s) of Certificate(s)
or separate bond power(s) are required except if Exchange Capital Securities are
to be issued in the name of a person other than the registered Holder(s). If
such exception applies, signature(s) on such Certificate(s) or bond power(s)
must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered Holder(s) of the Original Capital Securities listed, the
Certificate(s) must be endorsed or accompanied by appropriate bond powers,
signed exactly as the name(s) of the registered Holder(s) appear(s) on the
Certificates, and also must be accompanied by such opinions of counsel,
certifications and other information as the Company or the Trust may require in
accordance with the restrictions on transfer applicable to the Original Capital
Securities. In such event, signatures on such Certificates or bond powers must
be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Capital
Securities are to be issued in the name of a person other than the signer of
this Letter of Transmittal, or if Exchange Capital Securities are to be sent to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Original Capital Securities not exchanged will be returned,
if evidenced by Certificates, by mail or, if tendered by book-entry transfer, by
crediting the account at DTC indicated above in Instruction 4.
7. IRREGULARITIES. The Company and the Trust will determine, in their
sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Original Capital Securities, which determination shall be final and
binding on all parties. The Company and the Trust reserve the absolute right to
reject any and all tenders determined by either of them not to be in proper form
or the acceptance of which, or exchange
15
<PAGE>
for which, may in the view of counsel to the Company and the Trust be unlawful.
The Company and the Trust also reserve the absolute right, subject to applicable
law, to waive any of the conditions of the Exchange Offer set forth in the
Prospectus under "The Exchange Offer--Conditions to the Exchange Offer" or any
conditions or irregularity in any tender of Original Capital Securities of any
particular Holder whether or not similar conditions or irregularities are waived
in the case of other Holders. The Company's and the Trust's interpretation of
the terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) will be final and binding. No tender of
Original Capital Securities will be deemed to have been validly made until all
irregularities with respect to such tender have been cured or waived. Neither
the Company, the Trust, any affiliates or assigns of the Company or the Trust,
the Exchange Agent nor any other person shall not be under any duty to give
notification of any irregularities in tenders or incur any liability for failure
to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front cover of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and this
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal
income tax law, a Holder whose tendered Original Capital Securities are accepted
for exchange is required to provide the Exchange Agent with such Holder's
correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If
the Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the Holder or other payee to a $50 penalty. In
addition, payments to such Holders or other payees with respect to Original
Capital Securities exchanged pursuant to the Exchange Offer may be subject to
31% backup withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering Holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
Holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form W-9.
If the Holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60-day period
will be remitted to the Holder and no further amounts shall be retained or
withheld from payments made to the Holder thereafter. If, however, the Holder
has not provided the Exchange Agent with its TIN within such 60-day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Original Capital Securities or of the last transferee appearing on the
transfers attached to, or endorsed on, the Original Capital Securities. If the
Original Capital Securities are registered in more than one name or are not in
the name of the actual
16
<PAGE>
owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain Holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such Holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
Holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax.
Rather, the U.S. Federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
10. WAIVER OF CONDITIONS. The Company and the Trust reserve the
absolute right to waive satisfaction of any or all conditions enumerated in the
Prospectus.
11. NO CONDITIONAL TENDERS. No alternative, conditional or contingent
tenders will be accepted. All tendering Holders, by execution of this Letter of
Transmittal, shall waive any right to receive notice of the acceptance of
Original Capital Securities for exchange.
Neither the Company, the Trust, the Exchange Agent nor any other person
is obligated to give notice of any defect or irregularity with respect to any
tender of Original Capital Securities nor shall any of them incur any liability
for failure to give any such notice.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Original Capital Securities have been lost, destroyed or stolen,
the Holder should promptly notify the Exchange Agent. The Holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
13. SECURITY TRANSFER TAXES. Holders who tender their Original Capital
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, Exchange Capital Securities are to be
delivered to, or are to be issued in the name of, any person other than the
Holder of the Original Capital Securities tendered, or if a transfer tax is
imposed for any reason other than the exchange of Original Capital Securities in
connection with the Exchange Offer, then the amount of any such transfer tax
(whether imposed on the Holder or any other persons) will be payable by the
tendering Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with this Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
IMPORTANT: BOOK-ENTRY CONFIRMATION OR THIS LETTER OF
TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
17
<PAGE>
TO BE COMPLETED BY ALL TENDERING SECURITYHOLDERS
(SEE INSTRUCTION 9)
PAYOR'S NAME: WILMINGTON TRUST COMPANY
SUBSTITUTE Part 1-PLEASE PROVIDE
FORM W-9 YOUR TIN IN THE BOX AT TIN: _________________________
RIGHT AND CERTIFY BY Social Security Number or
SIGNING AND DATING Employer Identification Number
BELOW:
Department of the
Treasury
Internal Revenue
Service
Part 2-TIN Applied For / /
<TABLE>
<S> <C> <C>
Payer's Request
for Taxpayer
Identification Number ("TIN") CERTIFICATION-UNDER THE PENALTIES OF PERJURY,
and Certification I CERTIFY THAT:
(1) The number shown on this form is my
correct taxpayer identification
number (or I am waiting for a number
to be issued to me).
(2) I am not subject to backup
withholding either because (i) I am
exempt from backup withholding, (ii)
I have not been notified by the
Internal Revenue Service ("IRS")
that I am subject to backup
withholding as a result of a failure
to report all interest or dividends,
or (iii) the IRS has notified me
that I am no longer subject to
backup withholding, and
(3) any other information provided on
this form is true and correct. The
Internal Revenue Service does not
require you consent to any provision
of this document other than the
certifications required to avoid
backup withholding.
SIGNATURE__________________ DATE___________
</TABLE>
You must cross out item (3) in Part (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not been notified by the
IRS that you are no longer subject to backup withholding.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN
CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS
PAID TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
18
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
payments made to me on account of the Exchange Capital Securities shall be
retained until I provide a taxpayer identification number to the Exchange Agent
and that, if I do not provide my taxpayer identification number within 60 days,
such retained amounts shall be remitted to the Internal Revenue Service as
backup withholding and 31% of all reportable payments made to me thereafter will
be withheld and remitted to the Internal Revenue Service until I provide a
taxpayer identification number.
- ------------------------------------- ---------------------------
Signature(s) Date
19
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
SERIES A 9.375% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
UCBH TRUST CO.
UNCONDITIONALLY GUARANTEED BY
UCBH HOLDINGS, INC.
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Series A 9.375% Capital Securities of UCBH Trust Co. (the
"Original Capital Securities") are not immediately available, (ii) Original
Capital Securities, the Letter of Transmittal and all other required documents
cannot be delivered to Wilmington Trust Company (the "Exchange Agent") on or
prior to the Expiration Date (as defined in the Prospectus referred to below) or
(iii) the procedures for delivery by book-entry transfer cannot be completed on
a timely basis. This Notice of Guaranteed Delivery may be delivered by hand,
overnight courier or mail, or transmitted by facsimile transmission, to the
Exchange Agent. See "The Exchange Offer--Procedures for Tendering Original
Capital Securities" in the Prospectus. In addition, in order to utilize the
guaranteed delivery procedure to tender Original Capital Securities pursuant to
the Exchange Offer, a completed, signed and dated Letter of Transmittal relating
to the Original Capital Securities (or facsimile thereof) must also be received
by the Exchange Agent on or prior to the Expiration Date. Capitalized terms not
defined herein have the meanings assigned to them in the Prospectus.
The Exchange Agent For The Exchange Offer Is:
Wilmington Trust Company
By Hand, Overnight Delivery, Registered or Certified Mail:
WILMINGTON TRUST COMPANY
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
CONFIRM BY TELEPHONE: ( )
FACSIMILE TRANSMISSIONS: ( )
(ELIGIBLE INSTITUTIONS ONLY)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to UCBH Trust Co., a Delaware business
trust (the "Trust"), and to UCBH Holdings, Inc., an a Delaware corporation (the
"Company"), upon the terms and subject to the conditions set forth in the
Prospectus dated ______________, 1998 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate Liquidation Amount of Original Capital
Securities set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer-- Procedures for
Tendering Original Capital Securities."
Aggregate Liquidation Amount: ________________________________________________
Name(s) of Registered Holder(s): _____________________________________________
Amount Tendered: $ ___________________________________________________________
Certificate No(s) (if available): ____________________________________________
*Total Liquidation Amount Represented by Original Capital Securities
Certificate(s):
$ __________________________________
If Original Capital Securities will be tendered by book-entry transfer, provide
the following information:
DTC Account Number: __________________________
Date: ________________________________________
* Must be in Liquidation Amounts of $1,000 and any integral multiple thereof,
and not less than $100,000 aggregate Liquidation Amount.
<PAGE>
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
PLEASE SIGN HERE:
X _______________________________________________ ____________________
X _______________________________________________ ____________________
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number: _______________________________________________
This Notice of Guaranteed Delivery must be signed by the holder(s) of
the Original Capital Securities as their name(s) appear(s) on certificates for
Original Capital Securities or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
Please print name(s) and address(es):
Name(s): ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
Capacity: ___________________________________________________________________
Address(es): ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker or government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either the Original
Capital Securities tendered hereby in proper form for transfer, or confirmation
of the book-entry transfer of such Original Capital Securities to the Exchange
Agent's account at The Depository Trust Company, pursuant to the procedures for
book-entry transfer set forth in the Prospectus, in either case together with
one or more properly completed and duly executed Letter(s) of Transmittal (or
facsimile thereof) and any other required documents within three business days
after the date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Original Capital Securities tendered hereby to the Exchange
Agent within the time period set forth above and that failure to do so could
result in a financial loss to the undersigned.
__________________________________ ____________________________________
Name of Firm Authorized Signature
__________________________________ ____________________________________
Address Title
__________________________________ ____________________________________
Zip Code (Please Type or Print)
Area Code and Telephone No. _________________________ Dated: _________________
NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL CAPITAL SECURITIES WITH THIS FORM.
CERTIFICATES FOR ORIGINAL CAPITAL SECURITIES SHOULD ONLY BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
Exhibit 99.3
_____________, 1998
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Ladies and Gentlemen:
UCBH Holdings, Inc., a Delaware corporation, as Sponsor (the
"Company"), and UCBH Trust Co., a trust formed under the laws of the State of
Delaware (the "Trust"), hereby appoint Wilmington Trust Company to act as
exchange agent (the "Exchange Agent") in connection with an exchange offer by
the Company and the Trust to exchange up to and including $30,000,000 aggregate
Liquidation Amount of the Trust's Series B 9.375% Capital Securities (the
"Exchange Securities"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), for a like aggregate Liquidation Amount
of the Trust's outstanding Series A 9.375% Capital Securities (the "Original
Capital Securities"). The terms and conditions of the exchange offer are set
forth in a Prospectus dated __________, 1998 (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the related Letter of
Transmittal, which together constitute the "Exchange Offer." The registered
holders of the Original Capital Securities and the Exchange Capital Securities
(together, the "Capital Securities") are hereinafter referred to as the
"Holders." Capitalized terms used herein and not defined shall have the
respective meanings assigned thereto in the Prospectus.
The Exchange Offer is expected to be commenced by the Trust on or about
___________, 1998. The Letter of Transmittal accompanying the Prospectus (or, in
the case of book-entry securities, the ATOP system) is to be used by the Holders
of the Original Capital Securities to accept the Exchange Offer and contains
instructions with respect to (i) the delivery of certificates for Original
Capital Securities tendered in connection therewith and (ii) the book-entry
transfer of Original Capital Securities to the Exchange Agent's account.
The Exchange Offer shall expire at 5:00 p.m. New York City time, on
___________, 1998, or on such later date or time to which the Trust may extend
the Exchange Offer from time to time by giving oral (to be confirmed in writing)
or written notice to the Exchange Agent before 9:00 a.m., New York City time, on
the business day following the previously scheduled Expiration Date.
The Trust expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange and Original Capital Securities
not theretofore accepted for exchange, based upon any conditions of the Exchange
Offer described in the Prospectus. The Trust will give oral (to be confirmed in
writing) or written notice of any amendment, termination or nonacceptance of
Original Capital Securities to the Exchange Agent promptly after any amendment,
termination or nonacceptance.
<PAGE>
On the basis of the representations, warranties and agreements of the
Company, the Trust and the Exchange Agent contained herein and subject to the
terms and conditions hereof, the following sets forth the agreement between the
Company, the Trust and the Exchange Agent for the Exchange Offer:
1. APPOINTMENT AND DUTIES AS EXCHANGE AGENT.
a. The Company and the Trust hereby authorize and appoint Wilmington
Trust Company to act as Exchange Agent in connection with the Exchange Offer and
Wilmington Trust Company agrees to act as Exchange Agent in connection with the
Exchange Offer. As Exchange Agent, Wilmington Trust Company will perform those
services as are specifically set forth in the section of the Prospectus
captioned "The Exchange Offer" and as are outlined herein.
b. The Company and the Trust acknowledge and agree that Wilmington
Trust Company has been retained pursuant to this Agreement to act solely as
Exchange Agent in connection with the Exchange Offer, and in such capacity, the
Exchange Agent shall perform such duties in good faith.
c. The Exchange Agent will establish an account with respect to the
Original Capital Securities at The Depository Trust Company ("DTC") for the
purposes of the Exchange Offer within two business days after the date of the
Prospectus, and any financial institution that is a participant in DTC's system
may make book-entry delivery of the Original Capital Securities by causing DTC
to transfer such Original Capital Securities into the Exchange Agent's account
in accordance with DTC's procedure for such transfer.
d. The Exchange Agent will examine each of the Letters of Transmittal
and certificates for Original Capital Securities and any book-entry
confirmations and any other documents delivered or mailed to the Exchange Agent
by or for Holders of the Original Capital Securities to ascertain whether: (i)
the Letters of Transmittal and any such other documents are duly executed and
properly completed in accordance with the instructions set forth therein and
that such book-entry confirmations are in due and proper form and contain the
information required to be set forth therein, (ii) the Original Capital
Securities have otherwise been properly tendered, and (iii) Holders have
provided their correct Tax Identification Number or required certification.
Determination of all questions as to validity, form, eligibility and acceptance
for exchange of any Original Capital Securities shall be made by the Company or
the Trust, whose determination shall be final and binding. In each case where
the Letters of Transmittal or any other documents have been improperly completed
or executed or where book- entry confirmations are not in due and proper form or
omit certain information, or any of the certificates for Original Capital
Securities are not in proper form for transfer or some other irregularity in
connection with the tender of the Original Capital Securities exists, the
Exchange Agent will endeavor to advise the tendering Holders of the irregularity
and to take any other action may be necessary or advisable as to cause such
irregularity to be corrected. Notwithstanding the foregoing, the Exchange Agent
shall not incur any liability for failure to give any such notification.
e. With the approval of any Administrative Trustee of the Trust or any
person designated in writing by the Company (a "Designated Officer") (such
approval, if given orally, to
<PAGE>
be confirmed in writing) or any other party designated by any such
Administrative Trustee or Designated Officer, the Exchange Agent is authorized
to waive any irregularities in connection with any tender of Original Capital
Securities pursuant to the Exchange Offer.
f. Tenders of Original Capital Securities may be made only as set forth
in the Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer" and Original Capital Securities shall be considered properly
tendered only when tendered in accordance with the procedures set forth therein.
Notwithstanding the provisions of this paragraph, Original Capital Securities
which any Administrative Trustee or Designated Officer shall approve (such
approval, if given orally, to be confirmed in writing) as having been properly
tendered shall be considered to be properly tendered.
g. The Exchange Agent shall advise the Company and the Trust with
respect to any Original Capital Securities received after 5:00 p.m., New York
City time, on the Expiration Date and accept their instructions with respect to
disposition of such Original Capital Securities.
h. The Exchange Agent shall accept tenders:
(a) in cases where the Original Capital Securities are
registered in two or more names only if signed by all
named Holders;
(b) in cases where the signing person (as indicated on
the Letter of Transmittal) is acting in a fiduciary
or a representative capacity only when proper
evidence of such person's authority so to act is
submitted; and
(c) from persons other than the Holder of Original
Capital Securities provided that customary transfer
requirements, including any applicable transfer
taxes, are fulfilled.
The Exchange Agent shall accept partial tenders of Original
Capital Securities where so indicated and as permitted in the Letter of
Transmittal and deliver certificates for Original Capital Securities to the
transfer agent for split-up and return any untendered Original Capital
Securities or Original Capital Securities which have not been accepted by the
Company and the Trust to the Holder (or such other person as may be designated
in the Letter of Transmittal) as promptly as practicable after expiration or
termination of the Exchange Offer.
i. Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Trust will notify the Exchange Agent (such notice if given orally, to
be confirmed in writing) of its acceptance, promptly after the Expiration Date,
of all Original Capital Securities properly tendered and the Exchange Agent, on
behalf of the Trust, will exchange such Original Capital Securities for Exchange
Capital Securities and cause such Original Capital Securities to be canceled.
Delivery of Exchange Capital Securities will be made on behalf of the Trust by
the Exchange Agent at the rate of $1,000 Liquidation Amount of Original Capital
Securities tendered promptly after notice (such notice if given orally, to be
confirmed in writing) of acceptance of said Original Capital Securities by the
Trust; provided, however, that in all cases, Original Capital Securities
tendered pursuant to
<PAGE>
the Exchange Offer will be exchanged only after timely receipt by the Exchange
Agent of certificates for such Original Capital Securities (or confirmation of
book-entry transfer into the Exchange Agent's account at DTC), a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) or
Agent's Message in lieu thereof), with any required signature guarantees and any
other required documents. You shall issue Exchange Capital Securities only in
Liquidation Amounts of $100,000 or any integral multiples of $1,000 in excess
thereof.
j. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and the conditions set forth in the Prospectus and the
Letter of Transmittal, Original Capital Securities tendered pursuant to the
Exchange Offer may be withdrawn at any time on or prior to the Expiration Date.
k. The Trust shall not be required to exchange any Original Capital
Securities tendered if any of the conditions set forth in the Exchange Offer are
not met. Notice of any decision by the Company and the Trust not to exchange any
Original Capital Securities tendered shall be given by the Company or the Trust
orally (and confirmed in writing) to the Exchange Agent.
l. If, pursuant to the Exchange Offer, the Company and the Trust do not
accept for exchange all or part of the Original Capital Securities tendered
because of an invalid tender, the occurrence of certain other events set forth
in the Prospectus under the caption "The Exchange Offer- -Conditions to the
Exchange Offer" or otherwise, the Exchange Agent shall promptly after the
expiration or termination of the Exchange Offer return such certificates for
unaccepted Original Capital Securities (or effect appropriate book-entry
transfer), together with any related required documents and the Letters of
Transmittal relating thereto that are in the Exchange Agent's possession, to the
persons who deposited such certificates.
m. Certificates for reissued Original Capital Securities, unaccepted
Original Capital Securities or for Exchange Capital Securities shall be
forwarded by (a) first-class certified mail, return receipt requested under a
blanket surety bond obtained by the Exchange Agent protecting the Exchange
Agent, the Company and the Trust from loss or liability arising out of the
non-receipt or non-delivery or such certificates or (b) by registered mail
insured by the Exchange Agent separately for the replacement value of each such
certificate.
n. The Exchange Agent is not authorized to pay or offer to pay any
concessions, commissions or solicitation fees to any broker, dealer, commercial
bank, trust company or other persons or to engage or use any person to solicit
tenders.
o. As Exchange Agent, Wilmington Trust Company:
(i) shall have no duties or obligations other than those
specifically set forth in the section of the Prospectus
captioned "The Exchange Offer," the Letter of Transmittal or
herein or as may be subsequently agreed to in writing;
(ii) will make no representations and will have no
responsibilities as to the validity, value or genuineness of
any of the certificates for the Original Capital Securities
<PAGE>
deposited pursuant to the Exchange Offer, and will not be
required to and will make no representation as to the
validity, value or genuineness of the Exchange Offer;
(iii) shall not be obligated to take any legal action
hereunder which might in the Exchange Agent's reasonable
judgment involve any expense or liability, unless the Exchange
Agent shall have been furnished with reasonable indemnity;
(iv) may reasonably rely on and shall be protected in acting
in reliance upon any certificate, instrument, opinion, notice,
letter, telegram or other document or security delivered to
the Exchange Agent and reasonably believed by the Exchange
Agent to be genuine and to have been signed by the proper
party or parties;
(v) may reasonably act upon any tender, statement, request,
agreement or other instrument whatsoever not only as to its
due execution and validity and effectiveness of its
provisions, but also as to the truth and accuracy of any
information contained therein, which the Exchange Agent
believes in good faith to be genuine and to have been signed
or represented by a proper person or persons;
(vi) may rely on and shall be protected in acting upon written
or oral instructions from any Administrative Trustee or
Designated Officer;
(vii) may consult with its own counsel with respect to any
questions relating to the Exchange Agent's duties and
responsibilities and the advice of such counsel shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted to be taken by the Exchange
Agent hereunder in good faith and in accordance with the
advice or opinion of such counsel;
(viii) shall not advise any person tendering Original Capital
Securities pursuant to the Exchange Offer as to whether to
tender or refrain from tendering all or any portion of its
Original Capital Securities or as to the market value, decline
or appreciation in market value of any Original Capital
Securities or as to the market value of the Exchange Capital
Securities; and
(ix) The Exchange Agent shall take such action as may from
time to time be requested by the Company or the Trust to
furnish copies of the Prospectus, Letter of Transmittal and
the Notice of Guaranteed Delivery, or such other forms as may
be approved from time to time by the Company and the Trust, to
all persons requesting such documents and to accept and comply
with telephone requests for information relating to the
procedures for accepting (or withdrawing from) the Exchange
Offer. The Company and the Trust will furnish you with copies
of such documents at your request.
p. The Exchange Agent shall advise by facsimile transmission or
telephone and promptly thereafter confirm in writing to the Company and the
Trust and such other persons as the Company and the Trust may request, daily
(and more frequently during the week immediately
<PAGE>
preceding the Expiration Date and if otherwise requested), up to and including
the Expiration Date, the aggregate Liquidation Amount of Original Capital
Securities which have been tendered pursuant to the Exchange Offer and the items
received by the Exchange Agent pursuant to the Exchange Offer and this
Agreement, reporting separately and cumulatively as to items properly received
and items improperly received. In addition, the Exchange Agent will also
provide, and cooperate in making available to the Company and the Trust or any
such other persons as requested from time to time, such other information in its
possession as the Company and the Trust may reasonably request. Such cooperation
shall include, without limitation, the granting by the Exchange Agent to the
Company and the Trust, and such persons as the Company and the Trust may
request, of access to those persons on the Exchange Agent's staff who are
responsible for receiving tenders, in order to ensure that immediately prior to
the Expiration Date the Company and the Trust shall have received information in
sufficient detail to enable the Company and the Trust to decide whether to
extend the Exchange Offer. The Exchange Agent shall prepare a final list of all
persons whose tenders were accepted, the aggregate Liquidation Amount of
Original Capital Securities tendered and the aggregate Liquidation Amount of
Original Capital Securities accepted and deliver said list to the Company and
the Trust.
q. Letters of Transmittal, book-entry confirmation and Notices of
Guaranteed Delivery shall be stamped by the Exchange Agent as to the date and
time of receipt thereof and shall be preserved by the Exchange Agent for a
period of time at least equal to the period of time the Exchange Agent preserves
other records pertaining to the transfer of securities, or one year, whichever
is longer, and thereafter shall be delivered by the Exchange Agent to the
Company and the Trust. The Exchange Agent shall dispose of unused Letters of
Transmittal and other surplus materials by returning them to the Company or the
Trust.
r. The Exchange Agent hereby expressly waives any lien, encumbrance or
right of set-off whatsoever that the Exchange Agent may have respect to funds
deposited with it for the payment of transfer taxes by reasons of amounts, if
any, borrowed by the Company or the Trust, of any of its or their subsidiaries
or affiliates pursuant to any loan or credit agreement with the Exchange Agent
or for compensation owed to the Exchange Agent hereunder or for any other
matter.
s. The Exchange Agent hereby acknowledges receipt of the Prospectus and
the Letter of Transmittal and the Notice of Guaranteed Delivery and further
acknowledges that it has examined each of them. Any inconsistency between this
Agreement, on the one hand, and the Prospectus, the Letter of Transmittal and
the Notice of Guaranteed Delivery (as they may be amended or supplemented from
time to time), on the other hand, shall be resolved in favor of the latter three
documents, except with respect to the duties, liabilities and indemnification of
the Exchange Agent which shall be controlled by this Agreement.
2. COMPENSATION
For services rendered as Exchange Agent hereunder, the Exchange Agent
shall be entitled to such compensation as is set forth on Schedule I attached
hereto.
<PAGE>
3. INDEMNIFICATION
a. The Trust hereby agrees to indemnify and hold harmless the Exchange
Agent against and from any and all costs, losses, liabilities and expenses
(including reasonable counsel fees and disbursements) arising out of or in
connection with any act, omission, delay or refusal made by the Exchange Agent
in reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other instrument or document reasonably believed
by the Exchange Agent to be valid, genuine and sufficient and in accepting any
tender or effecting any transfer of Original Capital Securities reasonably
believed by the Exchange Agent in good faith to be authorized, and in delaying
or refusing in good faith to accept any tenders or effect any transfer of
Original Capital Securities. Anything in this Agreement to the contrary
notwithstanding, neither the Company nor the Trust shall be liable for
indemnification or otherwise for any loss, liability, cost or expense to the
extent arising out of the Exchange Agent's bad faith, negligence or willful
misconduct. In no case shall the Trust be liable under this indemnity with
respect to any claim against the Exchange Agent until the Trust shall be
notified by the Exchange Agent, by letter, of the written assertion of a claim
against the Exchange Agent or of any other action commenced against the Exchange
Agent, promptly after the Exchange Agent shall have received any such written
assertion or notice of commencement of action. The Trust shall be entitled to
participate at its own expense in the defense of any such claim or other action,
and, if the Trust so elects, the Trust may assume the defense of any pending or
threatened action to enforce any such claim. In the event that the Trust shall
assume the defense of any such suit or threatened action in respect of which
indemnification may be sought hereunder, the Trust shall not be liable for the
fees and expenses incurred thereafter of any additional counsel retained by the
Exchange Agent so long as the Exchange Agent consents to the Trust's retention
of counsel, which consent may not be unreasonably withheld; provided, however,
that the Trust shall not be entitled to assume the defense of any such action if
the named parties to such action include the Company or the Trust and the
Exchange Agent and representation of the parties by the same legal counsel
would, in the written opinion of counsel for the Exchange Agent, be
inappropriate due to actual or potential conflicting interests among them. It is
understood that neither the Company nor the Trust shall be liable under this
paragraph for the fees and disbursements of more than one legal counsel for the
Exchange Agent. In the event that the Trust shall assume the defense of any such
suit with counsel reasonably acceptable to the Exchange Agent, the Trust shall
not thereafter be liable for the fees and expenses of any counsel retained by
the Exchange Agent.
b. The Exchange Agent agrees that, without the prior written consent of
the Trust, it will not settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding in respect of
which indemnification could be sought in accordance with the indemnification
provision of this Agreement (whether or not the Exchange Agent, the Company and
the Trust or any of their directors, officers and controlling persons is an
actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Company and the Trust and its directors, officers and controlling persons from
all liability arising out of such claim, action or proceeding.
4. TAX INFORMATION
a. The Exchange Agent shall arrange to comply with all
requirements under the tax laws
<PAGE>
of the United States, including those relating to missing Tax Indemnification
Numbers, and shall file any appropriate reports with the Internal Revenue
Service. The Company and the Trust understand that the Exchange Agent is
required, in certain instances, to deduct 31% with respect to interest paid on
the Exchange Capital Securities and proceeds from the sale, exchange, redemption
or retirement of the Exchange Capital Securities from Holders who have not
supplied their correct Taxpayer Identification Number or required certification.
Such funds will be turned over to the Internal Revenue Service in accordance
with applicable regulations. The Exchange Agent shall notify the Company and the
Trust of any Holder who has failed to supply such Taxpayer Identification Number
or certification.
b. The Exchange Agent shall notify the Trust of the amount of any
transfer taxes payable in respect of the exchange of Original Capital Securities
and, upon receipt of written approval from the Trust, the Exchange Agent shall
deliver or cause to be delivered, in a timely manner to each governmental
authority to which any transfer taxes are payable in respect of the exchange of
Original Capital Securities, its check in the amount of all transfer taxes so
payable, and the Trust shall reimburse the Exchange Agent for the amount of any
and all transfer taxes payable in respect of the exchange of Original Capital
Securities; provided, however, that the Exchange Agent shall reimburse the trust
for amounts refunded to the Exchange Agent in respect of you payment of any such
transfer taxes, as such time as such refund is received by the Exchange Agent.
5. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed in that state without regard to conflicts of
laws principles.
6. NOTICES. Any communication or notice provided for hereunder shall be in
writing and shall be given (and shall be deemed to have been given upon receipt)
by delivery in person, telecopy, or overnight delivery or by registered or
certified mail (postage prepaid, return receipt requested) to the applicable
party at the address indicated below:
If to the Trust:
UCBH Trust Co.
c/o UCBH Holdings, Inc.
711 Van Ness Avenue
San Francisco, California 94102
Telephone: (415) 928-0700
Telecopy: ________________
Attention: Jonathan H. Downing
<PAGE>
If to the Exchange Agent:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Telephone: (302) 651-1118
Telecopy: (302) 651-1576
Attention: Corporate Trust Department
or, as to each party, at such other address as shall be designated by such party
in a written notice complying as to delivery with the terms of this Section.
7. PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their successors and assigns and
noting in this Agreement, express or implied, is intended to or shall confer
upon any other person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement. Without limitation to the foregoing, the
parties hereto expressly agree that no Holder of Original Capital Securities or
Exchange Capital Securities shall have any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
8. COUNTERPARTS; SEVERABILITY. This Agreement may be executed in one or
more counterparts, and each of such counterparts shall together constitute one
and the same agreement. If any term or other provision of this Agreement or the
application thereto is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the agreements contained herein is not affected in any manner
adverse to any party. Upon such determination that any term or provision or the
application thereof is invalid, illegal or unenforceable, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the agreements contained herein may be performed as
originally contemplated to the fullest extent possible.
9. CAPTIONS. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
10. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be amended or modified nor may any provision hereof be
waived except in writing signed by each party to be bound thereby.
11. TERMINATION. This Agreement shall terminate upon the earlier of (a) the
90th day following the expiration, withdrawal, or termination of the Exchange
Offer, (b) the close of business on the date of actual receipt of written notice
by the Exchange Agent from the Company and the
<PAGE>
Trust stating that this Agreement is terminated, (c) one year following the date
of this Agreement, or (d) the time and date on which this Agreement shall be
terminated by mutual consent of the parties hereto. Notwithstanding the
foregoing, Paragraphs 2, 3 and 4 shall survive termination of this Agreement.
Kindly indicate the Exchange Agent's acceptance of the foregoing
provisions by signing in the space provided below for that purpose and returning
to the Company a copy of this Agreement so signed, whereupon this Agreement
shall constitute a binding agreement among the Exchange Agent, the Company and
the Trust.
Very truly yours,
UCBH HOLDINGS, INC.
By: __________________________________________
Name: Jonathan H. Downing
Title: Senior Vice President, Chief Financial
Officer and Treasurer
UCBH TRUST CO.
By: __________________________________________
Name: Jonathan H. Downing
Title: Administrative Trustee
Accepted and agreed to as of
the date first written above:
WILMINGTON TRUST COMPANY
By:______________________
Name:
Title:
<PAGE>
SCHEDULE I
WILMINGTON TRUST COMPANY
FEE SCHEDULE
EXCHANGE AGENT SERVICES
UCBH TRUST CO.
I. Exchange Agency
A fee for the receipt of exchanged Series A 9.375% Capital Securities
of UCBH Trust Co. will be charged at $__________ per Letter of
Transmittal. The total charge will be subject to a minimum of
$____________ and maximum of $____________.
This fee covers examination and execution of all required
documentation, receipt of transmittal letters, reporting as required to
the Company and communication with DTC.
II. Miscellaneous
Fees for services not specifically covered in this schedule will be
assessed in amounts commensurate with the services rendered.
Exhibit 99.4
UCBH TRUST CO.
Offer for all Outstanding
Series A 9.375% Capital Securities
in Exchange for
Series B 9.375% Capital Securities
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
UCBH Trust Co. (the "Trust") is offering, upon and subject to the terms
and conditions set forth in a prospectus dated _____________, 1998 (as the same
may be amended or supplemented from time to time, the "Prospectus"), and the
enclosed letter of transmittal (the "Letter of Transmittal"), to exchange (the
"Exchange Offer") its Series B 9.375% Capital Securities (the "Exchange Capital
Securities") for any and all of its outstanding Series A 9.375% Capital
Securities (the "Original Capital Securities"). The Exchange Offer is being made
in order to satisfy certain obligations of the Trust and UCBH Holdings, Inc.
(the "Company") contained in the Capital Securities Registration Rights
Agreement, dated as of April 13, 1998, among the Trust, the Company and the
initial purchasers of the Original Capital Securities.
We are requesting that you contact your clients for whom you hold
Original Capital Securities regarding the Exchange Offer. For your information
and for forwarding to your clients for whom you hold Original Capital Securities
registered in your name or in the name of your nominee, or who hold Original
Capital Securities registered in their own names, we are enclosing the following
documents:
1. The Prospectus dated ______________, 1998;
2. The Letter of Transmittal for your use and for the information
(or the use, where relevant) of your clients;
3. A Notice of Guaranteed Delivery to be used to accept the
Exchange Offer if certificates for Original Capital Securities
are not immediately available or time will not permit all
required documents to reach the Exchange Agent prior to the
Expiration Date (as defined below) or if the procedure for
book-entry transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
account you hold Original Capital Securities registered in
your name or the name of your nominee, with space provided for
obtaining such clients' instructions with regard to the
Exchange Offer; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON ________, 1998, OR ON SUCH LATER DATE OR TIME TO
WHICH THE COMPANY OR THE TRUST MAY EXTEND THE EXCHANGE OFFER (THE "EXPIRATION
DATE"). THE ORIGINAL CAPITAL SECURITIES TENDERED PURSUANT TO THE EXCHANGE OFFER
MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
<PAGE>
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent and certificates representing the Original Capital Securities
should be delivered to the Exchange Agent, all in accordance with the
instructions set forth in the Letter of Transmittal and the Prospectus.
If holders of Original Capital Securities wish to tender, but it is
impracticable for them to forward their certificates for Original Capital
Securities prior to the expiration of the Exchange Offer or to comply with the
book-entry transfer procedures on a timely basis, a tender may be effected by
following the guaranteed delivery procedures described in the Prospectus under
"The Exchange Offer--Procedures for Tendering Original Capital
Securities--Guaranteed Delivery."
The Trust will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Original Capital Securities held by them as nominee or in a
fiduciary capacity. The Trust will pay or cause to be paid all stock transfer
taxes applicable to the exchange of Original Capital Securities pursuant to the
Exchange Offer, except as set forth in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or
requests for additional copies of the enclosed materials, should be directed to
Wilmington Trust Company, the Exchange Agent for the Original Capital
Securities, at its address and telephone number set forth on the front of the
Letter of Transmittal.
Very truly yours,
UCBH TRUST CO.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE TRUST OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
Exhibit 99.5
UCBH TRUST CO.
Offer for all Outstanding
Series A 9.375% Capital Securities
in Exchange for
Series B 9.375% Capital Securities
To Our Clients:
Enclosed for your consideration is a prospectus dated ___________, 1998
(as the same may be amended or supplemented from time to time, the
"Prospectus"), and the related letter of transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of UCBH Trust Co.
(the "Trust") and UCBH Holdings, Inc. (the "Company") to exchange the Trust's
Series B 9.375% Capital Securities (the "Exchange Capital Securities") for any
and all of the Trust's outstanding Series A 9.375% Capital Securities (the
"Original Capital Securities"), upon the terms and subject to the conditions
described in the Prospectus. The Exchange Offer is being made in order to
satisfy certain obligations of the Trust and the Company contained in the
Capital Securities Registration Rights Agreement, dated as of April 13, 1998,
among the Trust, the Company and the initial purchasers of the Original Capital
Securities.
This material is being forwarded to you as the beneficial owner of the
Original Capital Securities carried by us in your account but not registered in
your name. A tender of such Original Capital Securities may only be made by us
as the holder of record and pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to
tender on your behalf the Original Capital Securities held by us for your
account, pursuant to the terms and conditions set forth in the enclosed
Prospectus and Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Original Capital Securities on your behalf in
accordance with the provisions of the Exchange Offer. The Exchange Offer shall
expire at 5:00 p.m., New York City time, on ________, 1998, or on such later
date or time to which the Company or the Trust may extend the Exchange Offer.
Any Original Capital Securities tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Original Capital
Securities.
2. The Exchange Offer is subject to certain conditions set forth
in the Prospectus in the section captioned "The Exchange
Offer--Conditions to the Exchange Offer".
3. Any transfer taxes incident to the transfer of Original
Capital Securities from the holder to the Company will be paid
by the Company, except as otherwise provided in the
Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time,
on ________, 1998, or on such later date or time to which the
Company or the Trust may extend the Exchange Offer.
If you wish to have us tender your Original Capital Securities, please
so instruct us by completing, executing and returning to us the instruction form
on the back of this letter. The Letter of Transmittal is furnished to you for
information only and may not be used directly by you to tender Original Capital
Securities.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by UCBH Trust
Co. with respect to its Original Capital Securities.
This will instruct you to tender the Original Capital Securities held
by you for the account of the undersigned, upon and subject to the terms and
conditions set forth in the Prospectus and the related Letter of Transmittal.
Please tender the Original Capital Securities held by you for my
account as indicated below:
AGGREGATE LIQUIDATION AMOUNT AT MATURITY
OF ORIGINAL CAPITAL SECURITIES TENDERED
Series A 9.375% Capital Securities: _______________________
/ / Please do not tender any Original Capital Securities held by you for my
account.
Dated: ____________, 1998 _______________________________________________
_______________________________________________
Signature(s)
_______________________________________________
_______________________________________________
Please print name(s) here
_______________________________________________
_______________________________________________
_______________________________________________
Addresses
_______________________________________________
Area code and telephone number
_______________________________________________
Tax Identification or Social Security number(s)
None of the Original Capital Securities held by us for your account
will be tendered unless we receive written instructions from you to do so.
Unless a specific contrary instruction is given in the space provided, your
signature(s) hereon shall constitute an instruction to us to tender all the
Original Capital Securities held by us for your account.
