<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 16, 1997
REGISTRATION NO.: 333-34257
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PACIFIC CREST CAPITAL, INC.
(Exact name of registrant as specified
in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
6036
(Primary Standard Industrial
Classification Code Number)
95-4437818
(I.R.S. Employer Identification No.)
30343 CANWOOD STREET
AGOURA HILLS, CALIFORNIA 91301
(818) 865-3300
(Address including zip code, and telephone number, including area code, of
registrant's principal executive office)
PCC CAPITAL I
(Exact name of co-registrant as specified
in charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
6719
(Primary Standard Industrial
Classification Code Number)
95-4648343
(I.R.S. Employer Identification No.)
C/O PACIFIC CREST CAPITAL, INC.
30343 CANWOOD STREET
AGOURA HILLS, CALIFORNIA 91301
(818) 865-3300
(Address including zip code, and telephone number, including area code, of
co-registrant's principal executive office)
------------------------
GARY L. WEHRLE
CHIEF EXECUTIVE OFFICER
PACIFIC CREST CAPITAL, INC.
30343 CANWOOD STREET
AGOURA HILLS, CALIFORNIA 91301
(818) 865-3300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO:
WILLIAM T. QUICKSILVER, ESQ. JEFFREY D. HAAS, ESQ.
MANATT, PHELPS & PHILLIPS, LLP ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
11355 WEST OLYMPIC BOULEVARD 734 15TH STREET, N.W., 12TH FLOOR
LOS ANGELES, CA WASHINGTON, DC 20005
90064-1614 TELEPHONE: (202) 347-0300
TELEPHONE: (310) 312-4210
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
(CONTINUED ON NEXT PAGE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
% Cumulative Trust Preferred Securities
of PCC Capital I......................... 1,725,000 shares $10 $17,250,000 $5,228
Junior Subordinated Deferrable Interest
Debentures of Pacific Crest Capital,
Inc.(2).................................. -- -- -- --
Pacific Crest Capital, Inc. Guarantee with
respect to % Cumulative Trust Preferred
Securities(3)............................ -- -- -- --
Total(4)................................... -- -- -- $5,228
</TABLE>
(1) Estimated solely to calculate the registration fee pursuant to Rule 457(a).
(2) The Junior Subordinated Deferrable Interest Debentures will be purchased by
PCC Capital I with the proceeds from the sale of the % Cumulative Trust
Preferred Securities. Such securities may later be distributed for no
additional consideration to the holders of the % Cumulative Trust
Preferred Securities of PCC Capital I upon its dissolution and the
distribution of its assets.
(3) No separate consideration will be received for the Pacific Crest Capital,
Inc. Guarantee.
(4) This Registration Statement is deemed to cover the Junior Subordinated
Deferrable Interest Debentures of Pacific Crest Capital, Inc., the rights of
holders of Junior Subordinated Deferrable Interest Debentures of Pacific
Crest Capital, Inc. under the Indenture, the rights of holders of Trust
Preferred Securities of PCC Capital I under the Trust Agreement, the rights
of holders of the % Cumulative Trust Preferred Securities under the
Guarantee and the Expense Agreement entered into by Pacific Crest Capital,
Inc. and certain backup undertakings as described herein, which taken
together, fully, irrevocably and unconditionally guarantee all of the
obligations of PCC Capital I under the % Cumulative Trust Preferred
Securities.
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 SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION DATED SEPTEMBER 16, 1997
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
1,500,000 TRUST PREFERRED SECURITIES
PCC CAPITAL I
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
PACIFIC CREST CAPITAL, INC.
The % Cumulative Trust Preferred Securities (the "Trust Preferred
Securities") offered hereby represent preferred undivided beneficial interests
in the assets of PCC Capital I, a statutory business trust created under the
laws of the State of Delaware ("PCC Capital"). Pacific Crest Capital, Inc., a
Delaware corporation (referred to as the "Company" when such reference includes
Pacific Crest Capital, Inc. and its
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" COMMENCING ON PAGE 16 HEREIN FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, BY ANY OTHER
GOVERNMENTAL AGENCY, OR OTHERWISE.
------------------------
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.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PCC
PUBLIC DISCOUNT(1) CAPITAL(2)
<S> <C> <C> <C>
Per Trust Preferred Security.............. $10 (2) $10
Total(3).................................. $15,000,000 (2) $15,000,000
</TABLE>
(1) Pacific Crest and PCC Capital have each agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended the ("Securities Act"). See "Underwriting."
(2) In view of the fact that all of the proceeds of the sale of the Trust
Preferred Securities will be used to purchase the Junior Subordinated
Debentures, Pacific Crest has agreed to pay the Underwriters as compensation
for arranging the investment therein of such proceeds, $ per Trust
Preferred Security, or $ in the aggregate. See "Underwriting."
Pacific Crest has also agreed to pay the expenses of the offering estimated
to be $300,000.
(3) PCC Capital has granted the Underwriters an option exercisable within 30
days from the date of this Prospectus to purchase up to 225,000 additional
Trust Preferred Securities on the same terms and conditions set forth above
to cover over-allotments, if any. If all such additional Trust Preferred
Securities are purchased, the total Price to Public and Proceeds to PCC
Capital will be $17,250,000. See "Underwriting."
The Trust Preferred Securities are being offered by the Underwriters named
herein subject to prior sale and when, as and if delivered to and accepted by
the Underwriters. It is expected that the Trust Preferred Securities will be
ready for delivery in book-entry form only through the facilities of The
Depository Trust Company in New York, New York, on or about , 1997,
against payment therefor in immediately available funds.
SANDLER O'NEILL & PARTNERS, L.P. SUTRO & CO. INCORPORATED
, 1997
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
subsidiaries, collectively, or "Pacific Crest" when referring only to the parent
company), will be the owner of all of the beneficial interests represented by
common securities of PCC Capital (the "Common Securities" and, collectively with
the Trust Preferred Securities, the "Trust Securities"). PCC Capital exists for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in an equivalent amount of % Junior Subordinated Deferrable Interest
Debentures (the "Junior Subordinated Debentures") to be issued by Pacific Crest.
The Junior Subordinated Debentures will mature on , 2027, which date
may be shortened (such date, as it may be shortened, the "Stated Maturity") to a
date not earlier than , 2002 if certain conditions are met (including
Pacific Crest having received any necessary regulatory approval to do so if then
required under applicable capital guidelines or policies). Although Pacific
Crest is not currently subject to capital requirements, it is possible that in
the future it could become subject to capital requirements of the Board of
Governors of the Federal Reserve System (the "Federal Reserve") as a result of,
among other things, the acquisition of a bank or a change in law or applicable
regulations that subjects Pacific Crest to such Federal Reserve requirements.
The Trust Preferred Securities will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities, which will be
held by Pacific Crest. See "Description of the Trust Preferred
Securities--Subordination of Common Securities of PCC Capital Held by Pacific
Crest."
Holders of the Trust Preferred Securities will be entitled to receive
preferential cumulative cash distributions accruing from the date of original
issuance and payable quarterly in arrears on the 15th day of March, June,
September and December of each year (subject to possible deferral as described
below), commencing , 1997, at the annual rate of % of the Liquidation
Amount (as defined herein) of $10 per Trust Preferred Security
("Distributions"). The amount of each Distribution due with respect to the Trust
Preferred Securities will include amounts accrued through the date the
Distribution payment is due. Pacific Crest will have the right, so long as no
Debenture Event of Default (as defined below) has occurred and is continuing, to
defer payments of interest on the Junior Subordinated Debentures at any time or
from time to time for a period not exceeding 20 consecutive quarters with
respect to each deferral period (each, an "Extension Period"), provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, Pacific Crest may elect to begin a new
Extension Period subject to the requirements set forth herein. If interest
payments on the Junior Subordinated Debentures are so deferred, Distributions on
the Trust Preferred Securities will also be deferred and Pacific Crest will not
be permitted, subject to certain exceptions described herein, to declare or pay
any cash distributions with respect to its capital stock or to make any payment
with respect to its debt securities that rank PARI PASSU with or junior to the
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 Preferred Securities are entitled
will accumulate) at the rate of % per annum, compounded quarterly, and
holders of the Trust Preferred Securities will be required to accrue income and
will be required to pay United States federal income tax on that income. See
"Description of Junior Subordinated Debentures--Option to Defer Interest Payment
Period" and "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
Pacific Crest has, through the Guarantee, the Guarantee Agreement, the Trust
Agreement, the Junior Subordinated Debentures, the Indenture and the Expense
Agreement (each as defined herein), taken together, fully, irrevocably and
unconditionally guaranteed all of PCC Capital's obligations under the Trust
Preferred Securities. See "Relationship Among the Trust Preferred Securities,
the Junior Subordinated Debentures and the Guarantee--Full and Unconditional
Guarantee." Under the Guarantee, Pacific Crest guarantees the payment of
Distributions by PCC Capital and payments on liquidation of or redemption of the
Trust Preferred Securities (subordinate to the right to payment of Senior and
Subordinated Debt of
(CONTINUED ON NEXT PAGE)
2
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
Pacific Crest, as defined herein) to the extent of funds held by PCC Capital.
See "Description of Guarantee." If Pacific Crest does not make required payments
on the Junior Subordinated Debentures held by PCC Capital, PCC Capital will have
insufficient funds to pay Distributions on the Trust Preferred Securities. The
Guarantee does not cover payment of Distributions when PCC Capital does not have
sufficient funds to pay such Distributions. In such event, a holder of the Trust
Preferred Securities may institute a legal proceeding directly against Pacific
Crest pursuant to the terms of the Indenture to enforce payment of such
Distributions to such holder. See "Description of Junior Subordinated
Debentures-- Enforcement of Certain Rights by Holders of Trust Preferred
Securities." The obligations of Pacific Crest under the Guarantee and the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Senior and Subordinated Debt (as defined in "Description of Junior Subordinated
Debentures--Subordination") of Pacific Crest.
The Trust Preferred Securities are subject to mandatory redemption, in whole
or in part, upon repayment of the Junior Subordinated Debentures at the Stated
Maturity or their earlier redemption in each case at a redemption price equal to
the aggregate liquidation preference of the Trust Preferred Securities plus any
accumulated and unpaid Distributions thereon to the date of redemption. Subject
to regulatory approval, if then required under applicable regulatory policies,
the Junior Subordinated Debentures are redeemable prior to maturity at the
option of Pacific Crest (i) on or after , 2002, in whole at any time or
in part from time to time, or (ii) at any time, in whole (but not in part),
within 90 days following the occurrence of a Tax Event, an Investment Company
Event or a Capital Treatment Event (each as defined herein), in each case at a
redemption price equal to the accrued and unpaid interest on the Junior
Subordinated Debentures to the date fixed for redemption, plus 100% of the
principal amount thereof. See "Description of the Trust Preferred
Securities--Redemption."
Pacific Crest will have the right at any time to dissolve PCC Capital and,
after satisfaction of liabilities to creditors of PCC Capital as provided by
applicable law, cause a Like Amount (as defined herein) of the Junior
Subordinated Debentures to be distributed to the holders of the Trust Securities
in liquidation of PCC Capital, subject to Pacific Crest having received prior
approval of the primary federal regulator of Pacific Crest if then required
under applicable capital guidelines or policies of such primary regulator. See
"Description of the Trust Preferred Securities--Liquidation Distribution Upon
Dissolution."
In the event of the dissolution of PCC Capital, after satisfaction of
liabilities to creditors of PCC Capital as required by applicable law, the
holders of Trust Preferred Securities will be entitled to receive a liquidation
amount of $10 per Trust Preferred Security ("Liquidation Amount"), plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a Distribution of such Like Amount of Junior Subordinated
Debentures, subject to certain exceptions. See "Description of the Trust
Preferred Securities--Liquidation Distribution Upon Dissolution."
The Junior Subordinated Debentures are unsecured and subordinated to all
Senior and Subordinated Debt. As of June 30, 1997, Pacific Crest had no Senior
and Subordinated Debt outstanding. The terms of the Junior Subordinated
Debentures place no limitation on the amount of Senior and Subordinated Debt
that Pacific Crest can issue. See "Risk Factors--Ranking of Pacific Crest's
Obligations Under the Junior Subordinated Debentures and the Guarantee" and
"Description of Junior Subordinated Debentures-- Subordination."
The Trust Preferred Securities have been approved for listing on The Nasdaq
Stock Market's National Market (the "Nasdaq National Market"), subject to
official notice of issuance. Although the Underwriters have indicated an
intention to make a market in the Trust Preferred Securities, the Underwriters
are not obligated to do so, and any market making may be discontinued at any
time at the sole discretion of either Underwriter. There can be no assurance
that a market will develop for the Trust Preferred Securities. See "Risk
Factors--Absence of Existing Public Market; Market Prices" and "Underwriting."
(CONTINUED ON NEXT PAGE)
3
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
The Trust Preferred Securities will be represented by one or more global
certificates registered in the name of The Depository Trust Company (the
"Depositary") or its nominee. Beneficial interests in the Trust Preferred
Securities will be shown on, and transfers thereof will be effected only
through, records maintained by participants in the Depositary. Except as
described herein, the Trust Preferred Securities in certificate form will not be
issued in exchange for global certificates. See "Book-Entry Issuance."
AS USED HEREIN, (I) THE "INDENTURE" MEANS THE JUNIOR SUBORDINATED INDENTURE
DATED AS OF ,1997, AS AMENDED AND SUPPLEMENTED FROM TIME TO TIME,
BETWEEN PACIFIC CREST AND WILMINGTON TRUST COMPANY, AS TRUSTEE (THE "INDENTURE
TRUSTEE"), UNDER WHICH THE JUNIOR SUBORDINATED DEBENTURES WILL BE ISSUED, (II)
THE "TRUST AGREEMENT" MEANS THE AMENDED AND RESTATED TRUST AGREEMENT RELATING TO
PCC CAPITAL AMONG PACIFIC CREST, AS DEPOSITOR, WILMINGTON TRUST COMPANY, AS
PROPERTY TRUSTEE (THE "PROPERTY TRUSTEE"), WILMINGTON TRUST COMPANY, AS DELAWARE
TRUSTEE (THE "DELAWARE TRUSTEE"), THE ADMINISTRATIVE TRUSTEES NAMED THEREIN
(COLLECTIVELY, WITH THE PROPERTY TRUSTEE AND DELAWARE TRUSTEE, THE "ISSUER
TRUSTEES") AND THE HOLDERS, FROM TIME TO TIME, OF THE TRUST SECURITIES, (III)
THE "GUARANTEE AGREEMENT" MEANS THE GUARANTEE AGREEMENT RELATING TO THE
GUARANTEE BETWEEN PACIFIC CREST AND WILMINGTON TRUST COMPANY, AS GUARANTEE
TRUSTEE, AND (IV) THE "EXPENSE AGREEMENT" MEANS THE EXPENSE AGREEMENT BETWEEN
PACIFIC CREST AND PCC CAPITAL.
4
<PAGE>
AVAILABLE INFORMATION
Pacific Crest and PCC Capital have jointly filed with the Commission a
Registration Statement on Form S-2 (together with all amendments and exhibits
thereto the "Registration Statement") under the Securities Act, with respect to
the offering of the securities offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company, PCC Capital and
the securities offered hereby, reference is made to the Registration Statement
and the exhibits and the financial statements, notes and schedules filed as a
part thereof or incorporated by reference therein, which may be inspected at the
public reference facilities of the Commission, at the addresses set forth below.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as an
exhibit to the Registration Statement.
Pacific Crest is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Reports, proxy statements and other information
filed by Pacific Crest can be inspected and copies of such material can be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C.
20549, and at the following Regional Offices of the Commission: Chicago Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and New York Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048. The Commission also maintains a Web site (http://www.sec.gov) at
which reports, proxy and information statements and other information regarding
Pacific Crest may be accessed. In addition, such reports, proxy statements and
other information can also be inspected at the offices of The Nasdaq Stock
Market, 1735 K Street, N.W., Washington, D.C. 20006.
No separate financial statements of PCC Capital have been included herein.
Pacific Crest and PCC Capital do not consider that such financial statements
would be material to holders of the Trust Preferred Securities because PCC
Capital 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 of Pacific Crest and issuing the Trust Securities. See "Prospectus
Summary--PCC Capital," "Description of the Trust Preferred Securities,"
"Description of Junior Subordinated Debentures" and "Description of Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996; (attached hereto as Appendix A); and
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997 (attached hereto as Appendix B); and
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
4. The Company's Proxy Statement dated April 7, 1997.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
5
<PAGE>
As used herein, the terms "Prospectus" and "herein" means this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY REFERENCE HEREIN (OTHER
THAN EXHIBITS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
IN SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO: PACIFIC
CREST CAPITAL, INC., 30343 CANWOOD STREET, AGOURA HILLS, CALIFORNIA 90343, ATTN:
CHIEF FINANCIAL OFFICER (TELEPHONE (818) 865-3300).
The Company will provide to the holders of the Trust Preferred Securities
quarterly reports containing unaudited financial statements and annual reports
containing financial statements audited by the Company's independent auditors.
The Company will also furnish annual reports on Form 10-K and quarterly reports
on Form 10-Q free of charge to holders of the Trust Preferred Securities who so
request in writing to the Company.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE TRUST PREFERRED
SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTTING THE TRUST PREFERRED
SECURITIES AND BIDDING FOR AND PURCHASING SUCH TRUST PREFERRED SECURITIES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." SUCH STABILIZING
TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
6
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL INFORMATION APPEARING ELSEWHERE OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. UNLESS THE CONTEXT CLEARLY
SUGGESTS OTHERWISE, REFERENCES TO THE "COMPANY" INCLUDE PACIFIC CREST CAPITAL,
INC. AND ITS SUBSIDIARIES, COLLECTIVELY, AND REFERENCES TO "PACIFIC CREST"
INCLUDE THE PARENT COMPANY ONLY. IN ADDITION TO THE HISTORICAL INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN, CERTAIN STATEMENTS IN THIS
PROSPECTUS CONSTITUTE "FORWARD-LOOKING STATEMENTS" UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 (THE "REFORM ACT") WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE
DISCUSSED HEREIN. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE
NOT LIMITED TO, THOSE DISCUSSED UNDER THE CAPTION "RISK FACTORS" AS WELL AS
THOSE DISCUSSED ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
INCLUDING UNDER THE CAPTION "CAUTIONARY STATEMENTS FOR PURPOSES OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995" IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997, WHICH IS ATTACHED HERETO AS
APPENDIX B. SEE "RISK FACTORS--FORWARD-LOOKING STATEMENTS."
THE COMPANY
Pacific Crest is a financial institution holding company based in Agoura
Hills, California that was organized in 1993 to hold 100% of the stock of
Pacific Crest Bank which was being distributed in a spin-off from The Foothill
Group, Inc. As a result of the 1993 spin-off, Pacific Crest became a public
company with common and preferred stock traded on the Nasdaq National Market.
The Company operates primarily through its wholly owned subsidiary, Pacific
Crest Bank, a California industrial loan company. Pacific Crest is not a bank
holding company under the Bank Holding Company Act of 1956, as amended, or a
savings and loan association holding company under the Home Owners Loan Act, as
amended, and, therefore, is not regulated or supervised by the Federal Reserve
or the Office of Thrift Supervision. At June 30, 1997, the Company had
consolidated assets of $371.1 million, total loans of $227.7 million, total
deposits of $305.0 million and total shareholders' equity of $26.3 million.
PACIFIC CREST BANK
Pacific Crest Bank commenced operation in 1974 and until 1993 was known as
Foothill Thrift and Loan. From 1994 through July 31, 1997 Pacific Crest Bank was
known as Pacific Crest Investment and Loan until the name was changed in August
1997. Pacific Crest Bank is subject to regulation by the California Department
of Financial Institutions and the Federal Deposit Insurance Corporation (the
"FDIC"). The deposits of Pacific Crest Bank are insured by the FDIC up to
applicable limits.
Pacific Crest Bank is headquartered in Agoura Hills, California and operates
three California deposit gathering branches located in Beverly Hills, Encino,
and San Diego and loan production offices in Northern and Southern California
and Portland, Oregon. As a specialized deposit institution, Pacific Crest Bank
offers a select number of competitive savings programs designed for customers
seeking high yield and liquidity. As a niche commercial real estate lender,
Pacific Crest Bank focuses on meeting the needs of entrepreneurs and investors.
In addition, Pacific Crest Bank expanded its federal Small Business
Administration ("SBA") lending program in mid-1996 by adding a dedicated staff
to run the program. While its deposit gathering activities are predominantly in
Southern California, and to a lesser extent national in scope through the use of
national media and electronic communication, lending activities target virtually
the entire West Coast.
Management's strategy is focused on reducing credit and collateral risk in
its lending operations, generating a higher level of fee income, controlling
general and administrative expense, maximizing investment portfolio yield
consistent with safety and liquidity goals and reducing funding costs.
Management attempts to achieve these goals while providing an exceptional level
of personal service in response to its customers needs. In furtherance of this
strategy, Pacific Crest Bank intends to continue to emphasize
7
<PAGE>
the SBA program as a way to reduce lending risk because of the government
guarantees and to increase fee income potential to the extent government
guaranteed loans are sold into the secondary market.
At June 30, 1997, Pacific Crest Bank had total assets of $371.1 million,
total loans of $227.7 million and total deposits of $305.0 million. At June 30,
1997, $221.1 million, or 97.1% of loans consisted of loans secured by commercial
real estate, which were primarily made for terms between one and ten years at
adjustable interest rates. In addition, as of June 30, 1997, Pacific Crest Bank
had $4.3 million in SBA loans of which $3.4 million were fully guaranteed by the
SBA.
PACIFIC COMMERCIAL REAL ESTATE LENDING, INC.
In April 1997, Pacific Crest formed a new corporation in partnership with
Barry S. Slatt Mortgage Company ("Slatt"), based in the San Francisco Bay area,
to focus on generating mortgage loans of between $2.0 million and $20.0 million
for funding by conduits, insurance companies and banks. The new corporation,
Pacific Commercial Real Estate Lending, Inc. ("PCREL"), will earn fees for
originating loans, but will not fund the loans or retain any credit risk. PCREL
is 50% owned by Pacific Crest and 50% by Slatt. Pacific Crest does not expect
that the operations of PCREL will be material to the financial condition and
results of operations of the Company in 1997.
PCC CAPITAL
PCC Capital is a statutory business trust created under Delaware law
pursuant to (i) the Trust Agreement and (ii) the filing of a Certificate of
Trust with the Delaware Secretary of State on August 18, 1997, as amended. PCC
Capital's business and affairs are conducted by the Property Trustee, Delaware
Trustee and three individual Administrative Trustees who are officers of the
Company. PCC Capital exists for the exclusive purposes of (i) issuing and
selling the Trust Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures issued by Pacific
Crest, and (iii) engaging in only those other activities necessary, advisable or
incidental thereto. The Junior Subordinated Debentures will be the sole assets
of PCC Capital, and payments by Pacific Crest under the Junior Subordinated
Debentures and the Expense Agreement will be the sole revenues of PCC Capital.
All of the Common Securities will be owned by Pacific Crest. The Common
Securities will rank PARI PASSU, and payments will be made thereon pro rata,
with the Trust Preferred Securities, except that upon the occurrence and during
the continuance of an event of default under the Trust Agreement resulting from
an event of default under the Indenture, the rights of Pacific Crest as holder
of the Common Securities to payment in respect of Distributions and payments
upon liquidation, redemption or otherwise will be subordinated to the rights of
the holders of the Trust Preferred Securities. See "Description of the Trust
Preferred Securities--Subordination of Common Securities of PCC Capital Held by
Pacific Crest." Pacific Crest will acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of PCC Capital. PCC Capital
has a term of 31 years, but may dissolve earlier as provided in the Trust
Agreement.
PCC Capital's principal offices are located at 30343 Canwood Street, Agoura
Hills, California 91301 and its telephone number is (818) 865-3300.
8
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Trust Preferred Securities issuer... PCC Capital
Securities offered.................. 1,500,000 Trust Preferred Securities having a
Liquidation Amount of $10 per Trust Preferred
Security. The Trust Preferred Securities represent
preferred undivided beneficial interests in PCC
Capital's assets, which will consist solely of the
Junior Subordinated Debentures and payments
thereunder. PCC Capital has granted the Underwriters
an option, exercisable within 30 days after the date
of this Prospectus, to purchase up to an additional
225,000 Trust Preferred Securities at the initial
offering price, solely to cover over-allotments, if
any.
Distributions....................... The Distributions payable on each Trust Preferred
Security will be fixed at a rate per annum of % of
the Liquidation Amount of $10 per Trust Preferred
Security, will be cumulative, will accrue from the
date of issuance of the Trust Preferred Securities,
and will be payable quarterly in arrears on the 15th
day of March, June, September and December of each
year, commencing on , 1997 (subject to
possible deferral as described below). The amount of
each Distribution due with respect to the Trust
Preferred Securities will include amounts accrued
through the date the Distribution payment is due. See
"Description of the Trust Preferred Securities."
Extension periods................... So long as no Debenture Event of Default (as defined
herein) has occurred and is continuing, Pacific Crest
will have the right, at any time, to defer payments
of interest on the Junior Subordinated Debentures by
extending the interest payment period thereon for a
period not exceeding 20 consecutive quarters with
respect to each deferral period (each an "Extension
Period"), provided that no Extension Period may
extend beyond the Stated Maturity of the Junior
Subordinated Debentures. If interest payments are so
deferred, Distributions on the Trust Preferred
Securities will also be deferred and Pacific Crest
will not be permitted, subject to certain exceptions
described herein, to declare or pay any cash
distributions with respect to Pacific Crest's capital
stock or debt securities that rank PARI PASSU with or
junior to the Junior Subordinated Debentures. During
an Extension Period, Distributions will continue to
accumulate with income thereon compounded quarterly.
Because interest would continue to accrue and
compound on the Junior Subordinated Debentures, to
the extent permitted by applicable law, holders of
the Trust Preferred Securities will be required to
accrue income for United States federal income tax
purposes. See "Description of Junior Subordinated
Debentures--Option to Defer Interest Payment Period"
and "Certain Federal Income Tax
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Consequences--Interest Income and Original Issue
Discount."
Maturity............................ The Junior Subordinated Debentures will mature on
, 2027 which date may be shortened (such
date, as it may be shortened, the "Stated Maturity")
to a date not earlier than , 2002 if
certain conditions are met (including Pacific Crest
having received prior approval of the primary federal
regulator of Pacific Crest to do so if then required
under applicable capital guidelines or policies of
such primary regulator).
Redemption.......................... The Trust Preferred Securities are subject to
mandatory redemption upon repayment of the Junior
Subordinated Debentures at their stated maturity or
their earlier redemption at a redemption price equal
to the aggregate Liquidation Amount of the Trust
Preferred Securities plus accumulated and unpaid
Distributions thereon to the date of redemption.
Subject to regulatory approval, if then required
under applicable regulatory policies, the Junior
Subordinated Debentures are redeemable prior to
maturity at the option of Pacific Crest (i) on or
after , 2002 in whole at any time or in
part from time to time, or (ii) at any time, in whole
(but not in part), within 90 days following the
occurrence of a Tax Event, an Investment Company
Event or a Capital Treatment Event, in each case at a
redemption price equal to 100% of the principal
amount of the Junior Subordinated Debentures so
redeemed, together with any accrued but unpaid
interest to the date fixed for redemption. See
"Description of the Trust Preferred
Securities--Redemption" and "Description of Junior
Subordinated Debentures--Redemption."
Distribution of Junior Subordinated
Debentures........................ Pacific Crest has the right at any time to dissolve
PCC Capital, and, after satisfaction of creditors of
PCC Capital as required by applicable law, cause the
Junior Subordinated Debentures to be distributed to
holders of Trust Preferred Securities in liquidation
of PCC Capital, subject to Pacific Crest having
received prior approval of the primary federal
regulator of Pacific Crest to do so if then required
under applicable capital guidelines or policies of
such primary regulator. See "Description of the Trust
Preferred Securities--Distribution of Junior
Subordinated Debentures."
Guarantee........................... Taken together, Pacific Crest's obligations under
various documents described herein, including the
Guarantee Agreement, provide a full guarantee of
payments by PCC Capital of Distributions and other
amounts due on the Trust Preferred Securities. Under
the Guarantee Agreement, Pacific Crest guarantees the
payment of Distributions by PCC Capital and payments
on liquidation of or redemption of the
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Trust Preferred Securities (subordinate to the right
to payment of Senior and Subordinated Debt of Pacific
Crest, as defined herein) to the extent of funds held
by PCC Capital. If PCC Capital has insufficient funds
to pay Distributions on the Trust Preferred
Securities (i.e., if Pacific Crest has failed to make
required payments under the Junior Subordinated
Debentures), a holder of the Trust Preferred
Securities would have the right to institute a legal
proceeding directly against Pacific Crest to enforce
payment of such Distributions to such holder. See
"Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders
of the Trust Preferred Securities," "Description of
Junior Subordinated Debentures--Debenture Events of
Default" and "Description of Guarantee."
Ranking............................. The Trust Preferred Securities will rank PARI PASSU,
and payments thereon will be made pro rata, with the
Common Securities of PCC Capital held by Pacific
Crest, except as described under "Description of the
Trust Preferred Securities--Subordination of Common
Securities of PCC Capital Held by Pacific Crest." The
obligations of Pacific Crest under the Guarantee, the
Junior Subordinated Debentures and other documents
described herein are unsecured and rank subordinate
and junior in right of payment to all current and
future Senior and Subordinated Debt, the amount of
which is unlimited. At June 30, 1997, Pacific Crest
had no outstanding Senior and Subordinated Debt. In
addition, because Pacific Crest is a holding company,
all obligations of Pacific Crest relating to the
securities described herein will be effectively
subordinated to all existing and future liabilities
of Pacific Crest's subsidiaries, including Pacific
Crest Bank. Pacific Crest may cause additional Trust
Preferred Securities to be issued by trusts similar
to PCC Capital in the future, and there is no limit
on the amount of such securities that may be issued.
In this event, Pacific Crest's obligations under the
Junior Subordinated Debentures to be issued to such
other trusts and Pacific Crest's guarantees of the
payments by such trusts will rank PARI PASSU with
Pacific Crest's obligations under the Junior
Subordinated Debentures and the Guarantee,
respectively.
Voting rights....................... The holders of the Trust Preferred Securities will
generally have limited voting rights relating only to
the modification of the Trust Preferred Securities,
the dissolution, winding-up or termination of PCC
Capital and certain other matters described herein.
See "Description of the Trust Preferred
Securities--Voting Rights; Amendment of the Trust
Agreement."
ERISA considerations................ Prospective purchasers must carefully consider the
information set forth under "ERISA Considerations."
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Nasdaq National Market symbol....... PCCIP.
Use of proceeds..................... The proceeds to PCC Capital from the sale of the
Trust Preferred Securities offered hereby will be
invested by PCC Capital in the Junior Subordinated
Debentures of Pacific Crest. Pacific Crest intends to
invest $5.0 million of the net proceeds in Pacific
Crest Bank to increase its capital level to support
future growth. Pacific Crest intends to use the
remaining net proceeds for general corporate
purposes, which may include without limitation,
funding additional investments in, or extensions of
credit to, Pacific Crest Bank and possible future
acquisitions if and when suitable opportunities
arise. See "Use of Proceeds."
</TABLE>
12
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial information of the Company and
its subsidiaries as of and for the years ended December 31, 1996, 1995, 1994,
1993 and 1992 has been derived from the Company's audited consolidated financial
statements. The following summary consolidated financial information as of and
for the six months ended June 30, 1997 and 1996 has been derived from the
Company's unaudited consolidated quarterly financial statements which, in the
opinion of management, include all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation. The summary
consolidated financial information should be read in conjunction with the
Company's consolidated financial statements and related notes incorporated
herein by reference. The consolidated financial information for the six months
ended June 30, 1997 is not necessarily indicative of the operating results to be
expected for the entire year.
<TABLE>
<CAPTION>
AT OR FOR THE
SIX MONTHS
ENDED JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Investment securities........................ $ 136,330 $ 64,392 $ 83,494 -- $ 55,248 $ 898 $ 1,705
Total loans, net of deferred fees............ 227,063 181,344 211,095 $ 196,778 182,461 204,406 218,828
Allowance for loan losses.................... 3,795 3,292 3,400 4,500 8,075 3,910 3,195
Other real estate owned...................... 1,914 3,044 3,469 4,355 5,724 9,092 8,065
Other assets................................. 7,710 6,930 6,593 6,309 6,958 5,329 3,666
Total assets................................. 371,126 290,443 304,085 259,109 248,520 242,443 243,549
Total deposits............................... 304,954 264,780 266,695 234,510 226,350 213,162 222,598
Other borrowings............................. 36,900 -- 10,000 -- -- -- --
Subordinated debt............................ -- -- -- -- -- -- 1,000
Shareholders' equity......................... 26,288 23,422 24,468 21,952 19,628 27,179 15,830
STATEMENT OF OPERATION DATA:
Total interest income........................ $ 15,840 $ 13,230 $ 26,567 $ 23,799 $ 21,114 $ 21,583 $ 22,814
Total interest expense....................... 8,343 6,733 13,500 12,084 9,358 9,365 11,229
Net interest income.......................... 7,497 6,497 13,067 11,715 11,756 12,218 11,585
Provision for loan losses.................... 530 1,100 1,917 960 8,343 4,398 1,893
Net interest income after provision for loan
losses..................................... 6,967 5,397 11,150 10,755 3,413 7,820 9,692
Noninterest income:
Gain (loss) on investment securities......... -- 350 413 851 (780) (277) (71)
Other noninterest income(1).................. 450 344 1,068 470 404 375 295
Total noninterest income..................... 450 694 1,481 1,321 (376) 98 224
Noninterest expense:
Valuation adjustments to OREO................ 340 70 155 344 1,719 3,314 1,179
OREO expenses................................ 18 23 150 203 850 1,166 375
Other general & administrative expenses...... 4,183 3,631 7,818 8,362 8,841 6,794 7,596
Total noninterest expense.................... 4,541 3,724 8,123 8,909 11,410 11,274 9,150
Income (loss) before income taxes and
cumulative effect of accounting change..... 2,876 2,367 4,508 3,167 (8,373) (3,356) 766
Income tax provision (benefit)............... 1,146 910 1,505 (77) (1,914) (1,303) 203
Cumulative effect of accounting change(2).... -- -- -- -- -- (560) --
Net income (loss)............................ 1,730 1,457 3,003 3,244 (6,459) (1,493) 563
Preferred dividends declared................. -- -- -- (920) (1,104) -- --
Net income (loss) applicable to common
stock...................................... $ 1,730 $ 1,457 $ 3,003 $ 2,324 $ (7,563) $ (1,493) $ 563
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE
SIX MONTHS
ENDED JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL RATIOS:(3)
Return on average total assets(4)............ 1.03% 1.04% 1.06% 1.34% (2.56)% (0.62)% 0.24%
Return on average shareholders' equity(5).... 13.91% 13.00% 12.96% 16.02% (24.73)% (8.91)% 3.54%
Net interest rate spread(6).................. 4.27% 4.42% 4.41% 4.60% 4.49% 5.18% 4.74%
Net interest margin(7)....................... 4.59% 4.76% 4.76% 4.98% 4.82% 5.33% 5.03%
Ratio of other general & administrative
expenses to average total assets........... 2.49% 2.59% 2.77% 3.46% 3.50% 2.84% 3.23%
Total average shareholders' equity to total
average assets............................. 7.42% 7.99% 8.20% 8.38% 10.34% 7.01% 6.75%
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends:
Excluding interest paid on deposits........ 5.01x 21.65x 17.75x 2.93x * * 3.66x
Including interest paid on deposits........ 1.34x 1.35x 1.33x 1.17x 0.11x 0.65x 1.07x
ASSET QUALITY RATIOS:
Nonperforming assets to total assets at end
of period(8)............................... 1.10% 2.51% 1.60% 3.60% 6.24% 6.26% 6.83%
Total nonaccrual loans & OREO as a percent of
total loans & OREO......................... 1.78% 3.95% 2.26% 4.63% 8.24% 6.69% 6.58%
Net loan charge-offs to average loans........ 0.13% 2.42% 1.68% 2.45% 2.14% 1.73% 0.61%
Net loan charge-offs & OREO valuation
adjustments to average loans and OREO...... 0.44% 2.44% 1.73% 2.57% 2.92% 3.16% 1.14%
Allowance for loan losses to total loans net
of deferred fees........................... 1.67% 1.82% 1.61% 2.29% 4.43% 1.91% 1.46%
Allowance for loans losses to nonaccrual
loans...................................... 176.10% 77.57% 245.31% 90.27% 82.57% 75.40% 46.58%
PER SHARE DATA(9)(10) (IN THOUSANDS):
Common shares outstanding.................... 2,968 2,960 2,960 2,954 1,102 1,099 N/A
Common stock equivalents of preferred
stock(11).................................. -- -- -- -- 1,558 1,558 N/A
Treasury shares.............................. (30) -- (12) -- -- N/A N/A
Other common stock equivalents............... 113 55 94 -- -- N/A N/A
Total common stock equivalents, assuming full
conversion of preferred stock.............. 3,051 3,015 3,042 2,954 2,660 2,657 N/A
Book value per common share.................. 8.95 7.91 8.35 7.43 7.38 10.23 N/A
Fully diluted earnings (loss) per common
share...................................... 0.57 0.49 1.00 1.20 (6.88) N/A N/A
PACIFIC CREST BANK REGULATORY CAPITAL RATIOS:
Tier 1 risk-based capital.................... 10.00 10.90 10.31 9.48 8.87 9.52 6.71
Total risk-based capital..................... 11.25 12.16 11.56 10.74 9.01 10.72 8.39
Leverage ratio(12)........................... 7.07 7.82 7.96 7.82 7.15 8.98 6.50
</TABLE>
- ------------------------
(1) 1996 includes a $264,000 gain on the sale of $28.2 million in deposits.
(2) Represents the cumulative effect of implementing Statement of Financial
Accounting Standards No. 109.
(3) The Company's performance ratios are based on actual daily averages and are
annualized where appropriate.
(4) Net income (loss) divided by average total assets.
(5) Net income (loss) divided by total average shareholders' equity.
(6) Average yield earned on interest-earning assets less the average rate paid
on interest-bearing liabilities.
(7) Net interest income divided by total average interest-earning assets.
(8) Nonperforming assets include total nonaccrual loans, OREO and nonperforming
investments.
(9) The Company did not have any assets and did not conduct any significant
business prior to December 23, 1993 when The Foothill Group, Inc.
contributed 100% of the outstanding shares of Pacific Crest Bank common
stock to Pacific Crest in exchange for 1,099,490 shares of its common stock.
Upon completion of a preferred stock offering by the Company, The Foothill
Group, Inc. then distributed to its shareholders as a stock dividend 100% of
the outstanding shares of the Company's common stock.
14
<PAGE>
(10) Per share data is based on actual daily averages.
(11) The conversion price of the preferred stock for these calculations is $9.00
per share. The preferred stock was converted into common stock of the
Company in December 1995.
(12) Based on quarter end asset balances of Pacific Crest Bank.
* The ratios of earnings to fixed charges and preferred stock dividends were
computed by dividing (x) income (loss) before income taxes and cumulative
effect of an accounting change, plus fixed charges by (y) fixed charges and
preferred stock dividends. Fixed charges represent total interest expense,
including and excluding interest on deposits, as applicable, as well as the
interest component of rental expense. Earnings for the years ended December
31, 1994 and 1993 were inadequate to cover fixed charges by $8.2 million and
$3.1 million, respectively.
15
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE FOLLOWING
FACTORS IN CONNECTION WITH A DECISION TO PURCHASE THE TRUST PREFERRED
SECURITIES.
RANKING OF PACIFIC CREST'S OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEE
All obligations of Pacific Crest under the Guarantee, the Junior
Subordinated Debentures and other documents described herein are unsecured and
rank subordinate and junior in right of payment to all current and future Senior
and Subordinated Debt, the amount of which is unlimited. At June 30, 1997,
Pacific Crest had no Senior and Subordinated Debt outstanding. In addition,
because Pacific Crest is a holding company, all obligations of Pacific Crest
relating to the securities described herein will be effectively subordinated to
all existing and future liabilities of Pacific Crest's subsidiaries, including
Pacific Crest Bank. As a holding company, the right of Pacific Crest 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 Trust Preferred Securities to benefit indirectly from such
distribution) is subject to the prior claims of creditors of that subsidiary,
except to the extent that Pacific Crest may itself be recognized as a creditor
of that subsidiary. Accordingly, the Junior Subordinated Debentures and all
obligations of Pacific Crest relating to the Trust Preferred Securities will be
effectively subordinated to all existing and future liabilities of Pacific Crest
Bank, and holders of the Trust Preferred Securities should look only to the
assets of Pacific Crest, and not of its subsidiaries, for principal and interest
payments on the Junior Subordinated Debentures. None of the Indenture, the
Guarantee, the Guarantee Agreement or the Trust Agreement places any limitation
on the amount of secured or unsecured debt, including Senior and Subordinated
Debt, that may be incurred by Pacific Crest or its subsidiaries. Further, there
is no limitation on Pacific Crest's ability to issue additional Junior
Subordinated Debentures in connection with any further offerings of Trust
Preferred Securities, and such additional debentures would rank PARI PASSU with
the Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures--Subordination" and "Description of Guarantee--Status of the
Guarantee."
OPTION TO DEFER INTEREST PAYMENT PERIOD; TAX CONSEQUENCES OF A DEFERRAL OF
INTEREST PAYMENTS
So long as no Debenture Event of Default (as defined herein) has occurred
and is continuing, Pacific Crest has the right under the Indenture to defer
payment of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarters with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. As a consequence of any
such deferral, quarterly Distributions on the Trust Preferred Securities by PCC
Capital will be deferred (and the amount of Distributions to which holders of
the Trust Preferred Securities are entitled will accumulate additional amounts
thereon at the rate of % per annum, compounded quarterly, from the relevant
payment date for such Distributions, to the extent permitted by applicable law)
during any such Extension Period. During any such Extension Period, Pacific
Crest will be prohibited from making certain payments or distributions with
respect to Pacific Crest's capital stock (including dividends on or redemptions
of common or preferred stock) and from making certain payments with respect to
any debt securities of Pacific Crest that rank pari passu with or junior in
interest to the Junior Subordinated Debentures; however, Pacific Crest will not
be restricted from (a) paying dividends or distributions in common stock of
Pacific Crest, (b) redeeming rights or taking certain other actions under a
shareholders' rights plan, (c) making payments under the Guarantee or (d) making
purchases of common stock related to the issuance of common stock or rights
under any of Pacific Crest's benefit plans for its directors, officers or
employees. Further, during an Extension Period, Pacific Crest would have the
ability to continue to make payments on Senior and Subordinated Debt. Prior to
the termination of any Extension Period, Pacific Crest may further extend such
Extension Period provided that such extension does not cause such Extension
Period to exceed 20 consecutive quarters or to extend beyond the Stated
Maturity. Upon the termination of any Extension
16
<PAGE>
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at the annual rate of %, compounded quarterly, to the extent
permitted by applicable law), Pacific Crest may elect to begin a new Extension
Period subject to the above requirements. There is no limitation on the number
of times that Pacific Crest may elect to begin an Extension Period. See
"Description of the Trust Preferred Securities--Distributions" and "Description
of Junior Subordinated Debentures--Option to Defer Interest Payment Period."
Because Pacific Crest has no current plan to exercise its option to defer
payments of interest, the Junior Subordinated Debentures will be treated as
issued without "original issue discount" for United States federal income tax
purposes. As a result, holders of Trust Preferred Securities will include
interest in taxable income under their own methods of accounting (i.e., cash or
accrual). If Pacific Crest exercises its right to defer payments of interest,
the holders of Trust Preferred Securities will be required to include their pro
rata share of original issue discount in gross income as it accrues for United
States federal income tax (and possibly other) purposes in advance of the
receipt of cash. See "Certain Federal Income Tax Consequences--Interest Income
and Original Issue Discount." Pacific Crest has no current intention of
exercising its right to defer payments of interest by extending the interest
payment period on the Junior Subordinated Debentures. However, should Pacific
Crest elect to exercise its right to defer payments of interest in the future,
the market price of the Trust Preferred Securities is likely to be adversely
affected. A holder that disposes of such holder's Trust Preferred Securities
during an Extension Period, therefore, might not receive the same return on such
holder's investment as a holder that continues to hold the Trust Preferred
Securities.
TAX EVENT REDEMPTION, INVESTMENT COMPANY ACT REDEMPTION OR CAPITAL TREATMENT
EVENT REDEMPTION
Upon the occurrence and during the continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event (whether occurring before
or after , 2002), Pacific Crest has the right, if certain conditions
are met, to redeem the Junior Subordinated Debentures in whole (but not in part)
at 100% of the principal amount together with accrued but unpaid interest to the
date fixed for redemption within 90 days following the occurrence of such Tax
Event, Investment Company Event or Capital Treatment Event and therefore cause a
mandatory redemption of the Trust Securities. See "Description of the Trust
Preferred Securities--Redemption."
A "Tax Event" means the receipt by Pacific Crest and PCC Capital 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 prospective change, pronouncement or decision is announced on or after the
original issuance of the Trust Preferred Securities, there is more than an
insubstantial risk that (i) PCC Capital 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 Pacific Crest on the Junior Subordinated Debentures is not,
or within 90 days of such opinion, will not be, deductible by Pacific Crest, in
whole or in part, for United States federal income tax purposes, or (iii) PCC
Capital is, or will be within 90 days of the date of the opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges. See "--Possible Tax Law Changes Affecting the Trust Preferred
Securities" below for a discussion of certain legislative proposals that, if
adopted, could give rise to a Tax Event, which may permit Pacific Crest to cause
a redemption of the Junior Subordinated Debentures (and therefore the Trust
Preferred Securities) prior to , 2002.
An "Investment Company Event" means the receipt by Pacific Crest and PCC
Capital of an opinion of counsel experienced in such matters to the effect that,
as a result of any change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, PCC Capital is or will be considered an
"investment company" that is
17
<PAGE>
required to be registered under the Investment Company Act, which change becomes
effective on or after the original issuance of the Trust Preferred Securities.
A "Capital Treatment Event" means, in the event that Pacific Crest becomes
subject to capital adequacy guidelines, the reasonable determination by Pacific
Crest 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 thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such prospective change, pronouncement, or decision is announced on
or after the date of issuance of the Trust Preferred Securities under the Trust
Agreement, there is more than an insubstantial risk of impairment of Pacific
Crest's ability to treat an amount equal to the Liquidation Amount of the Trust
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the primary federal regulator of
Pacific Crest, as then in effect and applicable to Pacific Crest.
POSSIBLE TAX LAW CHANGES AFFECTING THE TRUST PREFERRED SECURITIES
Congress and the Clinton Administration have recently considered proposals
that would deny an issuer a deduction for United States income tax purposes for
the payment of interest on instruments with characteristics similar to the
Junior Subordinated Debentures. While no such adverse legislation has been
enacted, there can be no assurance that similar legislation enacted after the
date hereof would not adversely affect the tax treatment of the Junior
Subordinated Debentures. Such a change would give rise to a Tax Event which may
permit Pacific Crest to cause a redemption of the Trust Preferred Securities by
electing to prepay the Junior Subordinated Debentures. See "Description of the
Trust Preferred Securities--Redemption"; "Description of Junior Subordinated
Debentures--Redemption"; and "Certain Federal Income Tax Consequences."
POSSIBLE DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF TRUST
PREFERRED SECURITIES
Pacific Crest will have the right at any time to dissolve PCC Capital and,
after satisfaction of liabilities to creditors of PCC Capital as required by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Preferred Securities in liquidation of PCC Capital.
Because holders of the Trust Preferred Securities may receive Junior
Subordinated Debentures in liquidation of PCC Capital and because Distributions
are otherwise limited to payments on the Junior Subordinated Debentures,
prospective purchasers of the Trust Preferred Securities are also making an
investment decision with regard to the Junior Subordinated Debentures and should
carefully review all the information regarding the Junior Subordinated
Debentures contained herein. See "Description of the Trust Preferred
Securities--Liquidation Distribution Upon Dissolution" and "Description of
Junior Subordinated Debentures."
Under current United States federal income tax law and interpretations and
assuming, as expected, PCC Capital is classified as a grantor trust for such
purposes, a distribution of the Junior Subordinated Debentures upon a
liquidation of PCC Capital should not be a taxable event to holders of the Trust
Preferred Securities. However, if a Tax Event were to occur which would cause
PCC Capital 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 PCC Capital could be a taxable event to
PCC Capital and the holders of the Trust Preferred Securities. See "Certain
Federal Income Tax Consequences--Distribution of Junior Subordinated Debentures
to Holders of Trust Preferred Securities."
SHORTENING OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES
Pacific Crest will have the right at any time to shorten the maturity of the
Junior Subordinated Debentures to a date not earlier than five years from the
date of issuance and thereby cause the Trust
18
<PAGE>
Preferred Securities to be redeemed on such earlier date. The exercise of such
right is subject to Pacific Crest having received prior approval of the primary
federal regulator of Pacific Crest if then required under applicable capital
guidelines or policies of such primary regulator. See "Description of Junior
Subordinated Debentures--Redemption."
LIMITATIONS ON DIRECT ACTIONS AGAINST PACIFIC CREST AND ON RIGHTS UNDER THE
GUARANTEE
The Guarantee guarantees to the holders of the Trust Preferred Securities
the following payments, to the extent not paid by PCC Capital: (i) any
accumulated and unpaid Distributions required to be paid on the Trust Preferred
Securities, to the extent that PCC Capital has funds on hand available therefor
at such time, (ii) the redemption price with respect to any Trust Preferred
Securities called for redemption, to the extent that PCC Capital has funds on
hand available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of PCC Capital (unless the Junior
Subordinated Debentures are distributed to holders of the Trust Preferred
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
PCC Capital has funds on hand available therefor at such time (the "Liquidation
Distribution") and (b) the amount of assets of PCC Capital remaining available
for distribution to holders of the Trust Preferred Securities after satisfaction
of liabilities to creditors of PCC Capital as required by applicable law. The
holders of not less than a majority in aggregate liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee Agreement. Any holder of the
Trust Preferred Securities may institute a legal proceeding directly against
Pacific Crest to enforce its rights under the Guarantee without first
instituting a legal proceeding against PCC Capital, the Guarantee Trustee or any
other person or entity. If Pacific Crest were to default on its obligation to
pay amounts payable under the Junior Subordinated Debentures, PCC Capital would
lack funds for the payment of Distributions or amounts payable on redemption of
the Trust Preferred Securities or otherwise, and, in such event, holders of the
Trust Preferred Securities would not be able to rely upon the 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 Pacific Crest to pay interest on or principal of the Junior
Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Trust Preferred Securities may institute a legal
proceeding directly against Pacific Crest for enforcement of payment to such
holder of the principal of or interest on such Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the Trust
Preferred Securities of such holder (a "Direct Action"). In connection with such
Direct Action, Pacific Crest will have a right of set-off under the Indenture to
the extent of any payment made by Pacific Crest to such holder of Trust
Preferred Securities in the Direct Action. Except as described herein, holders
of Trust Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debentures or assert
directly any other rights in respect of the Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures--Enforcement of Certain Rights by
Holders of Trust Preferred Securities" and "Description of Guarantee." The Trust
Agreement provides that each holder of Trust Preferred Securities by acceptance
thereof agrees to the provisions of the Guarantee Agreement and the Indenture.
ABILITY TO MAKE PAYMENTS ON THE TRUST PREFERRED SECURITIES AND JUNIOR
SUBORDINATED DEBENTURES
Pacific Crest is a legal entity separate and distinct from its subsidiaries,
including Pacific Crest Bank. The ability of PCC Capital to pay amounts due on
the Trust Preferred Securities is solely dependent upon Pacific Crest making
payments on the Junior Subordinated Debentures as and when required. As a
holding company without significant assets other than its equity interest in
Pacific Crest Bank, Pacific Crest's ability to pay interest on the Junior
Subordinated Debentures to PCC Capital (and consequently, PCC Capital's ability
to pay distributions on the Trust Preferred Securities and Pacific Crest's
ability to pay its obligations under the Guarantee) depends primarily on cash
and liquid investments at Pacific Crest and upon cash
19
<PAGE>
dividends Pacific Crest may receive in the future from Pacific Crest Bank.
Pacific Crest Bank's ability to pay dividends to Pacific Crest is restricted by
California state law, which requires that retained earnings are available to pay
such dividends. Pacific Crest Bank had retained earnings of $1.5 million at June
30, 1997, which amount of retained earnings is unrestricted and available for
dividend payments to Pacific Crest. At June 30, 1997, Pacific Crest had cash and
liquid investments of approximately $243,000. See "Use of Proceeds."
LIMITED COVENANTS
The covenants in the Indenture are limited, and there are no covenants
relating to Pacific Crest in the Trust Agreement. As a result, neither the
Indenture nor the Trust Agreement protects holders of Junior Subordinated
Debentures, or Trust Preferred Securities, respectively, in the event of a
material adverse change in Pacific Crest's or the Company's financial condition
or results of operations or limits the ability of Pacific Crest or any
subsidiary to incur additional indebtedness. Therefore, the provisions of these
governing instruments should not be considered a significant factor in
evaluating whether Pacific Crest will be able to comply with its obligations
under the Junior Subordinated Debentures or the Guarantee.
LIMITED VOTING RIGHTS
Holders of Trust Preferred Securities will generally have limited voting
rights relating only to the modification of the Trust Preferred Securities, the
dissolution, winding-up or liquidation of PCC Capital, and the exercise of PCC
Capital's rights as holder of Junior Subordinated Debentures. Holders of Trust
Preferred 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 Trust
Preferred Securities have the right to vote to appoint, remove or replace the
Administrative Trustees; such voting rights are vested exclusively in the holder
of the Common Securities. The Property Trustee, the Administrative Trustees and
Pacific Crest may amend the Trust Agreement without the consent of holders of
Trust Preferred Securities to ensure that PCC Capital will be classified for
United States federal income tax purposes as a grantor trust or to ensure that
PCC Capital will not be required to register as an "investment company," even if
such action adversely affects the interests of such holders. See "Description of
the Trust Preferred Securities--Voting Rights; Amendment of the Trust Agreement"
and "--Removal of Trustees."
ABSENCE OF EXISTING PUBLIC MARKET; MARKET PRICES
There is no existing market for the Trust Preferred Securities. The Trust
Preferred Securities have been approved for listing on the Nasdaq National
Market, subject to official notice of issuance. There can be no assurance that
an active and liquid trading market for the Trust Preferred Securities will
develop or that a continued listing of the Trust Preferred Securities will be
available on the Nasdaq National Market. Although the Underwriters have informed
PCC Capital and the Company that the Underwriters intend to make a market in the
Trust Preferred Securities offered hereby, the Underwriters are not obligated to
do so and any such market making activity may be terminated at any time without
notice to the holders of the Trust Preferred Securities. Future trading prices
of the Trust Preferred Securities will depend on many factors including, among
other things, prevailing interest rates, the operating results and financial
condition of the Company, and the market for similar securities. As a result of
the existence of Pacific Crest's right to defer interest payments on or shorten
the Stated Maturity of the Junior Subordinated Debentures, the market price of
the Trust Preferred Securities may be more volatile than the market prices of
debt securities that are not subject to such optional deferrals or reduction in
maturity. There can be no assurance as to the market prices for the Trust
Preferred Securities or the Junior Subordinated Debentures that may be
distributed in exchange for the Trust Preferred Securities if Pacific Crest
exercises its right to terminate PCC Capital. Accordingly, the Trust Preferred
Securities that an investor may purchase, or the
20
<PAGE>
Junior Subordinated Debentures that a holder of the Trust Preferred Securities
may receive in liquidation of PCC Capital, may trade at a discount from the
price that the investor paid to purchase the Trust Preferred Securities offered
hereby.
FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this
Prospectus, including, without limitation, statements containing the words
"believes," "anticipates," "intends," "expects" and words of similar import,
constitute "forward-looking statements" within the meaning of the Reform Act.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Company to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economics and business
conditions in those areas in which the Company operates; demographic changes;
competition; fluctuations in interest rates; changes in business strategy or
development plans; changes in governmental regulation; credit quality; the
availability of capital to fund the expansion of the Company's business; and
other factors referenced in this Prospectus or incorporated by reference herein,
including, without limitation, under the captions "Prospectus Summary" and "Risk
Factors." Given these uncertainties, prospective investors are cautioned not to
place undue reliance on such forward-looking statements. The Company disclaims
any obligation to update any such factors or to publicly announce the results of
any revisions to any of the forward-looking statements contained or incorporated
by reference herein to reflect future events or developments.
21
<PAGE>
USE OF PROCEEDS
All of the proceeds from the sale of Trust Preferred Securities will be
invested by PCC Capital in the Junior Subordinated Debentures. The net proceeds
to Pacific Crest from the sale of the Junior Subordinated Debentures are
estimated to be $ ($ if the Underwriters' over-allotment option
is exercised in full), net of estimated underwriting commission and other
estimated offering expenses. Pacific Crest intends to invest $5.0 million of the
net proceeds in Pacific Crest Bank to increase its capital level to support
future growth. Pacific Crest intends to use the remaining net proceeds for
general corporate purposes, which may include without limitation, funding
additional investments in, or extensions of credit to, Pacific Crest Bank and
possible future acquisitions if and when suitable opportunities arise. The
Company is not currently engaged in negotiations with respect to any
acquisitions. Pending their application, the net proceeds may be invested in
investment grade financial securities.
ACCOUNTING TREATMENT
For financial reporting purposes, PCC Capital will be treated as a
subsidiary of Pacific Crest and, accordingly, the accounts of PCC Capital will
be included in the consolidated financial statements of the Company. The Trust
Preferred Securities will be presented as a separate line item in the
consolidated balance sheet of the Company under the caption "Company Obligated
Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely
Junior Subordinated Debentures," and appropriate disclosures about the Trust
Preferred Securities, the Guarantee and the Junior Subordinated Debentures will
be included in the notes to consolidated financial statements. For financial
reporting purposes, the Company will record Distributions payable on the Trust
Preferred Securities as an interest expense in the consolidated statements of
operations.
Future reports of Pacific Crest filed under the Securities Exchange Act of
1934, as amended ("the Exchange Act"), will include a footnote to the financial
statements stating that (i) PCC Capital is wholly owned, (ii) the sole assets of
PCC Capital 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 Pacific Crest of the obligations of PCC Capital under
the Trust Preferred Securities. PCC Capital will not provide separate reports
under the Exchange Act.
22
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 30, 1997 and as adjusted to give effect to the issuance of the
Trust Preferred Securities offered by PCC Capital and receipt by Pacific Crest
of the proceeds from the corresponding sale of the Junior Subordinated
Debentures to PCC Capital and assuming the Underwriters' over-allotment option
was not exercised.
<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT:
Company obligated mandatorily redeemable trust preferred securities of
subsidiary trust holding solely junior subordinated debentures(1)... $ -- $ 15,000
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value: 2,000,000 shares authorized, none
issued............................................................ -- --
Common stock, $.01 par value: 10,000,000 shares authorized,
2,968,449 outstanding............................................. 27,910 27,910
Accumulated deficit................................................. (1,129) (1,129)
Net unrealized loss on securities, available for sale............... (238) (238)
Common stock in treasury, at cost, 30,000 shares.................... (255) (255)
--------- -----------
Total shareholders' equity........................................ $ 26,288 $ 26,288
--------- -----------
Total capitalization................................................ $ 26,288 $ 41,288
--------- -----------
--------- -----------
</TABLE>
- ------------------------
(1) The subsidiary trust is PCC Capital, which will hold the Junior Subordinated
Debentures as its sole asset. The Trust Preferred Securities are issued by
PCC Capital. The sole assets of PCC Capital consist of the Junior
Subordinated Debentures issued by Pacific Crest to PCC Capital. The Junior
Subordinated Debentures will bear interest at the rate of % per annum and
will mature on , 2027 which date may be shortened to a date not
earlier than , 2002 if certain conditions are met. The Junior
Subordinated Debentures are redeemable prior to maturity at the option of
Pacific Crest, subject to Pacific Crest having received prior approval of
the primary federal regulator of Pacific Crest if then required under
applicable capital guidelines or policies of such primary regulator, (i) on
or after , 2002, in whole at any time or in part from time to time,
or (ii) at any time, in whole (but not in part), within 90 days following
the occurrence and continuation of a Tax Event, an Investment Company Event
or a Capital Treatment Event (each as defined herein). See "Description of
Junior Subordinated Debentures--Redemption." Pacific Crest owns all of the
Common Securities of PCC Capital.
23
<PAGE>
MANAGEMENT
The table below sets forth certain information for the directors and certain
executive officers of the Company, as of June 30, 1997.
<TABLE>
<CAPTION>
NAME POSITION(S) AGE
- ------------------------------ --------------------------------------------------------------------------- ---
<S> <C> <C>
Gary L. Wehrle................ Chairman of the Board, President and Chief Executive Officer of the Company 54
and Pacific Crest Bank
Rudolph I. Estrada............ Director 49
Martin J. Frank............... Director 60
Richard S. Orfalea............ Director 55
Steven J. Orlando............. Director 45
Barry L. Otelsberg............ Executive Vice President of the Company, Executive Vice President of 46
Pacific Crest Bank
Lyle C. Lodwick............... Executive Vice President of the Company and Pacific Crest Bank 43
Gonzalo Fernandez............. Executive Vice President of the Company and Pacific Crest Bank 54
Robert J. Dennen.............. Vice President and Chief Financial Officer of the Company and Pacific Crest 44
Bank
Joseph Finci.................. Senior Vice President of the Company and Pacific Crest Bank 39
</TABLE>
GARY L. WEHRLE, Chairman of the Board and Chief Executive Officer of Pacific
Crest. Mr. Wehrle has served as Chairman of the Board of Pacific Crest since
October 1993, and President and Chief Executive Officer of Pacific Crest since
September 1993. Mr. Wehrle has served as President and Chief Executive Officer
of Pacific Crest Bank since 1984. Mr. Wehrle served as Executive Vice President
of The Foothill Group, Inc. from 1980 to 1993.
RUDOLPH I. ESTRADA, Director of Pacific Crest since October 1993. Mr.
Estrada has served as President and Chief Executive Officer of The Summit Group,
a banking and business consulting company, since 1988, as Chairman of the
California Small Business Roundtable since 1995, and as Professor (Adjunct) of
Finance and Management and Director of the Small Business Institute at
California State University since 1986. Mr. Estrada served as Presidential
appointee to the White House Commission on Small Business in 1993, as Corporate
Lending Manager, Tokai Bank, from 1982 to 1987, and as Los Angeles District
Director, U.S. Small Business Administration, from 1980 to 1982.
MARTIN J. FRANK, Director of Pacific Crest since October 1993. Mr. Frank is
self-employed in movie development and currently serves as a Managing Member of
Cadillac LLC, a movie production company. Mr. Frank has also served as Chairman
of Moonshadow Entertainment, a movie production company, since January 1995. Mr.
Frank served as Chairman of A. Frank Productions, a movie production company,
from February 1992 to December 1993. Mr. Frank was the owner of Martin J. Frank
Consulting, a management consulting company, from February 1992 to December
1996, and served as Managing Director of Towers, Perrin, Forster & Crosby, Inc.
from 1969 to 1992.
RICHARD S. ORFALEA, Director of Pacific Crest since October 1993. Mr.
Orfalea has served as Director of Mergers and Acquisitions and Director of
International Expansion at Kinko's Graphics Corp., from 1990 to present. Mr.
Orfalea served as Manager of the Merchant Banking Unit in the Los Angeles
Commercial Banking Office of California Federal Bank from 1983 to 1990.
24
<PAGE>
STEVEN J. ORLANDO, Director of Pacific Crest since May 1995. Mr. Orlando is
a Certified Public Accountant and currently serves as Chief Financial Officer of
Java Centrale, Inc., a gourmet coffee franchiser which has a class of securities
registered under Section 12 of the Exchange Act. Mr. Orlando also has served as
Director and President of RJN Enterprises, a private investment company, from
July 1988 to present, as Director of Bel Foods, a company supplying products to
ice cream manufacturers, from 1988 to present, and as Director and a consultant
to Southwest Products Company, an aerospace specialty bearing manufacturer, from
1988 to present. Mr. Orlando served as a Director and consulting Chief Financial
Officer of FRS, Inc. from 1988 to 1994, and was self-employed as a financial
advisor and consultant from 1988 to 1994.
BARRY L. OTELSBERG, Executive Vice President of the Company since 1993;
Executive Vice President of Pacific Crest Bank since 1985.
LYLE C. LODWICK, Executive Vice President of the Company since 1993;
Executive Vice President of Pacific Crest Bank since 1992.
GONZALO FERNANDEZ, Executive Vice President of the Company since 1994;
Executive Vice President of Pacific Crest Bank since 1994.
ROBERT J. DENNEN, Vice President and Chief Financial Officer of the Company
since 1993; Vice President and Chief Financial Officer of Pacific Crest Bank
since 1993.
JOSEPH FINCI, Senior Vice President of the Company since 1995; Senior Vice
President of Pacific Crest Bank since 1995.
25
<PAGE>
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be issued pursuant to the terms of the
Trust Agreement. The Trust Agreement will be qualified as an indenture under the
Trust Indenture Act. Initially, Wilmington Trust Company will be the Delaware
Trustee and the Property Trustee and will act as trustee for the purpose of
complying with the Trust Indenture Act. The terms of the Trust Preferred
Securities will include those stated in the Trust Agreement and those made part
of the Trust Agreement by the Trust Indenture Act. This summary of certain terms
and provisions of the Trust Preferred 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, and the Trust Indenture Act. Wherever
particular defined terms of the Trust Agreement (as amended or supplemented from
time to time) are referred to herein, such defined terms are incorporated
herein. The form of the Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
GENERAL
Pursuant to the terms of the Trust Agreement, the Administrative Trustees on
behalf of PCC Capital will issue the Trust Preferred Securities and the Common
Securities (collectively, the "Trust Securities"). The Trust Preferred
Securities will represent preferred undivided beneficial interests in the assets
of PCC Capital and the holders thereof will be entitled to a preference over the
Common Securities of PCC Capital (which will be held by Pacific Crest) in
certain circumstances with respect to Distributions and amounts payable on
redemption or liquidation, as well as other benefits as described in the Trust
Agreement.
The Trust Preferred Securities will rank PARI PASSU, and payments will be
made thereon pro rata, with the Common Securities of PCC Capital except as
described under "Subordination of Common Securities of PCC Capital Held by
Pacific Crest" below. Legal title to the Junior Subordinated Debentures will be
held by the Property Trustee in trust for the benefit of the holders of the
Trust Securities. The Guarantee executed by Pacific Crest for the benefit of the
holders of the Trust Preferred Securities (the "Guarantee") will be a guarantee
on a subordinated basis with respect to the Trust Preferred Securities but will
not guarantee payment of Distributions or amounts payable on redemption or on
liquidation of the Trust Preferred Securities if PCC Capital does not have funds
on hand available to make such payments. See "Description of Guarantee."
DISTRIBUTIONS
PAYMENT OF DISTRIBUTIONS. Distributions on the Trust Preferred Securities
will be payable at the annual rate of % of the stated Liquidation Amount of
$10, payable quarterly in arrears on the 15th day of March, June, September and
December in each year to the holders of the Trust Preferred Securities on the
relevant record dates (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). The amount of each
Distribution due with respect to the Trust Preferred Securities will include
amounts accrued through the date the Distribution payment is due. Distributions
on the Trust Preferred Securities will be payable to the holders thereof as they
appear on the register of PCC Capital on the relevant record date which, for so
long as the Trust Preferred Securities remain in book-entry form, will be one
Business Day (as defined below) prior to the relevant Distribution Date and, in
the event the Trust Preferred Securities are not in book-entry form, will be the
first day of the month in which the relevant Distribution Date occurs.
Distributions will accumulate from the date of original issuance. The first
Distribution Date for the Trust Preferred Securities will be , 1997.
The amount of Distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which Distributions are payable on the Trust Preferred Securities is not a
Business Day, payment of the Distribution payable on such date will be made on
the next Business Day (and without any interest or other payment in respect to
any such delay), with the same force
26
<PAGE>
and effect as if made on the date such payment was originally payable. As used
in this Prospectus, 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 California are
authorized or required by law or executive order to remain closed or a day on
which the corporate trust office of the Property Trustee or the Indenture
Trustee is closed for business.
The funds of PCC Capital available for distribution to holders of its Trust
Preferred Securities will be limited to payments by Pacific Crest under the
Junior Subordinated Debentures in which PCC Capital will invest the proceeds
from the issuance and sale of its Trust Preferred Securities. See "Description
of Junior Subordinated Debentures." If Pacific Crest does not make interest
payments on the Junior Subordinated Debentures, the Property Trustee will not
have funds available to pay Distributions on the Trust Preferred Securities. The
payment of Distributions (if and to the extent PCC Capital has funds legally
available for the payment of such Distributions and cash sufficient to make such
payments) is guaranteed by Pacific Crest. See "Description of Guarantee."
EXTENSION PERIOD. So long as no Debenture Event of Default has occurred and
is continuing, Pacific Crest has the right under the Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarters with respect to
each such period (each, an "Extension Period"), provided that no Extension
Period may extend beyond the Stated Maturity of the Junior Subordinated
Debentures. As a consequence of any such election, quarterly Distributions on
the Trust Preferred Securities will be deferred by PCC Capital during any such
Extension Period. Distributions to which holders of Trust Preferred Securities
are entitled will accumulate additional amounts thereon at the rate per annum of
% thereof, compounded quarterly from the relevant Distribution Date, to the
extent permitted under applicable law. The term "Distributions" as used herein
shall include any such additional accumulated amounts. During any such Extension
Period, Pacific Crest 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 Pacific Crest's capital stock (which includes common and preferred
stock), (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of Pacific Crest that rank PARI
PASSU with or junior in interest to the Junior Subordinated Debentures or make
any guarantee payments with respect to any guarantee by Pacific Crest of the
debt securities of any subsidiary of Pacific Crest if such guarantee ranks PARI
PASSU with or junior in interest to the Junior Subordinated Debentures (other
than (a) dividends or distributions in common stock of Pacific Crest, (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 and (d) purchases of common stock for issuance of
common stock or rights under any of Pacific Crest's benefit plans for its
directors, officers or employees) or (iii) redeem, purchase or acquire less than
all of the Junior Subordinated Debentures or any of the Trust Preferred
Securities. Prior to the termination of any such Extension Period, Pacific Crest
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 20 consecutive quarters or extend beyond
the Stated Maturity. Upon the termination of any such Extension Period and the
payment of all amounts then due, and subject to the foregoing limitations,
Pacific Crest may elect to begin a new Extension Period. Subject to the
foregoing, there is no limitation on the number of times that Pacific Crest may
elect to begin an Extension Period. Pacific Crest has no current intention of
exercising its right to defer payments of interest by extending the interest
payment period on the Junior Subordinated Debentures.
REDEMPTION
MANDATORY REDEMPTION. Upon the repayment or redemption at any time, in
whole or in part, of any Junior Subordinated Debentures, the proceeds from such
repayment or redemption 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 Redemption Price (as defined below). See "Description of Junior
Subordinated Debentures--Redemption." If less than
27
<PAGE>
all of the Junior Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption of the Trust Securities PRO RATA. The amount of
premium, if any, paid by Pacific Crest upon the redemption of all or any part of
the Junior Subordinated Debentures to be repaid or redeemed on a Redemption Date
shall be allocated to the redemption pro rata of the Trust Securities.
OPTIONAL REDEMPTION. Pacific Crest will have the right to redeem the Junior
Subordinated Debentures (i) on or after , 2002, in whole at any time or
in part from time to time at a redemption price equal to the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof, or (ii) at any time, in
whole (but not in part), upon the occurrence of a Tax Event, an Investment
Company Event or a Capital Treatment Event at a redemption price equal to the
accrued and unpaid interest on the Junior Subordinated Debentures so redeemed to
the date fixed for redemption, plus 100% of the principal amount thereof, in
each case subject to Pacific Crest having received prior approval of the primary
federal regulator of Pacific Crest if then required under applicable capital
guidelines or policies of such primary regulator. See "Description of Junior
Subordinated Debentures--Redemption."
TAX EVENT REDEMPTION, INVESTMENT COMPANY EVENT REDEMPTION, CAPITAL TREATMENT
EVENT REDEMPTION OR DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES. If a Tax
Event, a Capital Treatment Event or an Investment Company Event shall occur and
be continuing, Pacific Crest has the right to redeem the Junior Subordinated
Debentures in whole (but not in part) and thereby cause a mandatory redemption
of the Trust Securities in whole (but not in part) at the Redemption Price (as
defined below) within 90 days following the occurrence of such Tax Event,
Capital Treatment Event or Investment Company Event. If a Tax Event, Capital
Treatment Event or an Investment Company Event has occurred and is continuing
and Pacific Crest does not elect to redeem the Junior Subordinated Debentures
and thereby cause a mandatory redemption of the Trust Securities or to liquidate
PCC Capital and cause the Junior Subordinated Debentures to be distributed to
holders of the Trust Securities in liquidation of PCC Capital as described
below, such Trust Securities will remain outstanding and Additional Sums (as
defined below) may be payable on the Junior Subordinated Debentures.
DEFINITIONS
"Additional Sums" means the additional amounts as may be necessary to be
paid by Pacific Crest with respect to the Junior Subordinated Debentures in
order that the amount of Distributions then due and payable by PCC Capital on
the outstanding Trust Securities of PCC Capital shall not be reduced as a result
of any additional taxes, duties and other governmental charges to which PCC
Capital has become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Trust Preferred Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities in
connection with a dissolution or liquidation of PCC Capital, Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the holder to whom such Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $10 per Trust Security.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, allocated on a pro rata basis (based on
Liquidation Amounts) among the Trust Securities.
28
<PAGE>
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Subject to Pacific Crest and PCC Capital having received an opinion of
counsel to the effect that such distribution will not be a taxable event to the
holders of the Trust Preferred Securities, Pacific Crest will have the right at
any time to dissolve PCC Capital and, after satisfaction of the liabilities of
creditors of PCC Capital as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of Trust Securities in
liquidation of PCC Capital. After the liquidation date fixed for any
distribution of Junior Subordinated Debentures for Trust Preferred Securities
(i) such Trust Preferred Securities will no longer be deemed to be outstanding,
(ii) the Depositary or its nominee, as the record holder of the Trust Preferred
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution and (iii) any certificates representing Trust Preferred Securities
not held by the Depositary or its nominee will be deemed to represent the Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of such Trust Preferred Securities, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on the Trust
Preferred Securities until such certificates are presented to the Administrative
Trustees or their agent for transfer or reissuance.
There can be no assurance as to the market prices for the Trust Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Trust Preferred Securities if a dissolution and liquidation of
PCC Capital were to occur. Accordingly, the Trust Preferred Securities that an
investor may purchase, or the Junior Subordinated Debentures that the investor
may receive on dissolution and liquidation of PCC Capital, may trade at a
discount to the price that the investor paid to purchase the Trust Preferred
Securities offered hereby.
REDEMPTION PROCEDURES
Trust Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Junior Subordinated Debentures. Redemptions of
the Trust Preferred Securities shall be made and the Redemption Price shall be
payable on each Redemption Date only to the extent that PCC Capital has funds on
hand available for the payment of such Redemption Price. See "--Subordination of
Common Securities of PCC Capital Held by Pacific Crest" herein and "Description
of Guarantee."
If PCC Capital gives a notice of redemption in respect of the Trust
Preferred Securities, then, by 12:00 noon, Eastern time on the Redemption Date,
to the extent funds are available, the Property Trustee will deposit with the
Depositary funds sufficient to pay the aggregate Redemption Price and will give
the Depositary irrevocable instructions and authority to pay the Redemption
Price to the holders of such Trust Preferred Securities. See "Book-Entry
Issuance." If such Trust Preferred Securities are no longer in book-entry form,
the Property Trustee, to the extent funds are available, will deposit with the
paying agent for such Trust Preferred Securities funds sufficient to pay the
aggregate Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Trust Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date shall be payable to the holders of such Trust Preferred
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required, then
upon the date of such deposit, all rights of the holders of the Trust Preferred
Securities will cease, except the right of the holders of the Trust Preferred
Securities to receive the applicable Redemption Price, but without interest on
such Redemption Price, and such Trust Preferred Securities will cease to be
outstanding. In the event that any date fixed for redemption of such Trust
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding Business Day (and
without any interest or other payment in respect of any such delay), with the
same force and effect as if made on the date such payment was originally
payable. In the event that payment of the Redemption Price in respect of Trust
Preferred Securities called for redemption is improperly withheld or refused and
not paid either by PCC
29
<PAGE>
Capital or by Pacific Crest pursuant to the Guarantee, Distributions on such
Trust Preferred Securities will continue to accrue at the then applicable rate,
from the Redemption Date originally established by PCC Capital for such Trust
Preferred Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price. See "Description of Guarantee."
Subject to applicable law (including, without limitation, United States
federal securities law), and further provided that Pacific Crest is not then
exercising its right to defer interest payments on the Junior Subordinated
Debentures, the Company (other than PCC Capital) may at any time and from time
to time purchase outstanding Trust Preferred Securities by tender, in the open
market or by private agreement.
Payment of the Redemption Price on the Trust Preferred Securities and any
distribution of Junior Subordinated Debentures to holders of Trust Preferred
Securities shall be made to the applicable recordholders thereof as they appear
on the register of such Trust Preferred Securities on the relevant record date,
which date shall be one Business Day prior to the relevant Redemption Date or
Liquidation Date, as applicable; provided, however, that in the event that any
Trust Preferred Securities are not in book-entry form, the relevant record date
for such Trust Preferred Securities shall be a date at least 15 days prior to
the Redemption Date or Liquidation Date, as applicable. In the case of a
liquidation, the record date shall be no more than 45 days before the
Liquidation Date.
If less than all of the Trust Securities issued by PCC Capital are to be
redeemed on a Redemption Date, then the aggregate Redemption Price for such
Trust Securities to be redeemed shall be allocated pro rata to the Trust
Preferred Securities and Common Securities based upon the relative Liquidation
Amounts of such classes. The particular Trust Preferred Securities to be
redeemed shall be selected by the Property Trustee from the outstanding Trust
Preferred Securities not previously called for redemption, by such method as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $10 or an integral multiple
thereof) of the Liquidation Amount of Trust Preferred Securities. The Property
Trustee shall promptly notify the Security registrar in writing of the Trust
Preferred Securities selected for redemption and, in the case of any Trust
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of Trust
Preferred Securities shall relate to the portion of the aggregate Liquidation
Amount of Trust Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities at such
holder's registered address. Unless PCC Capital defaults in payment of the
applicable Redemption Price, on and after the Redemption Date, Distributions
will cease to accrue on such Trust Preferred Securities called for redemption.
SUBORDINATION OF COMMON SECURITIES OF PCC CAPITAL HELD BY PACIFIC CREST
Payment of Distributions on, and the Redemption Price of, the Trust
Preferred Securities and Common Securities, as applicable, shall be made PRO
RATA based on the Liquidation Amounts of the Trust Preferred Securities and
Common 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 Trust Preferred 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 on all of
the outstanding Trust Preferred Securities then called for redemption, shall
have been made or provided for, and all funds available to the Property Trustee
shall first be applied to the payment in full in cash of all Distributions on,
or Redemption Price of, the Trust Preferred Securities then due and payable.
30
<PAGE>
In the case of any Event of Default under the Trust Agreement resulting from
a Debenture Event of Default, Pacific Crest as holder of the Common Securities
will be deemed to have waived any right to act with respect to any such Event of
Default until the effect of all such Events of Default have been cured, waived
or otherwise eliminated. Until any such Events of Default have been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on behalf
of the holders of the Trust Preferred Securities and not on behalf of Pacific
Crest as holder of the Common Securities, and only the holders of the Trust
Preferred Securities will have the right to direct the Property Trustee to act
on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pacific Crest will have the right at any time to dissolve PCC Capital and,
after satisfaction of liabilities to creditors of PCC Capital as required by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Preferred Securities. Such right is subject to Pacific
Crest having received prior approval of the primary federal regulator of Pacific
Crest if then required under applicable capital guidelines or policies of such
primary regulator. See "-- Distribution of Junior Subordinated Debentures"
above.
In addition, pursuant to the Trust Agreement, PCC Capital shall
automatically dissolve upon expiration of its term and shall earlier dissolve on
the first to occur of: (i) certain events of bankruptcy, dissolution or
liquidation of Pacific Crest; (ii) the distribution of a Like Amount of the
Junior Subordinated Debentures to the holder of its Trust Securities, if Pacific
Crest, as Depositor, has delivered written direction to the Property Trustee to
dissolve PCC Capital (which direction is optional and, except as described
above, wholly within the discretion of Pacific Crest, as Depositor); (iii)
redemption of all of the Trust Preferred Securities as described under
"--Redemption--Mandatory Redemption"; and (iv) the entry of an order for the
dissolution of PCC Capital by a court of competent jurisdiction.
If an early dissolution occurs as described in clause (i), (ii), or (iv)
above, PCC Capital shall be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of PCC Capital as provided by applicable law, to the
holders of such Trust Securities a Like Amount of the Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practical, in which event such holders will be entitled to receive out of
the assets of PCC Capital available for distribution to holders, after
satisfaction of liabilities to creditors of PCC Capital as provided by
applicable law, an amount equal to, in the case of holders of Trust Preferred
Securities, the aggregate of the Liquidation Amount plus accrued 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 PCC Capital has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by PCC
Capital on the Trust Preferred Securities shall be paid on a pro rata basis. The
holder(s) of the Common Securities will be entitled to receive distributions
upon any such liquidation pro rata with the holders of the Trust Preferred
Securities, except that if a Debenture Event of Default has occurred and is
continuing, the Trust Preferred Securities shall have a priority over the Common
Securities.
Under current United States federal income tax law and interpretations and
assuming, as expected, PCC Capital is treated as a grantor trust, a distribution
of the Junior Subordinated Debentures should not be a taxable event to holders
of the Trust Preferred Securities. Should there be a change in law, a change in
legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Trust Preferred
Securities. See "Certain Federal Income Tax Consequences." If Pacific Crest
elects neither to redeem the Junior Subordinated Debentures prior to maturity
nor to liquidate PCC Capital and distribute the Junior Subordinated Debentures
to holders of the Trust Preferred Securities, the Trust Preferred Securities
will remain outstanding until the repayment of the Junior Subordinated
Debentures.
If Pacific Crest elects to dissolve PCC Capital and thereby causes the
Junior Subordinated Debentures to be distributed to holders of the Trust
Preferred Securities in liquidation of PCC Capital, Pacific Crest
31
<PAGE>
shall continue to have the right to shorten the maturity of such Junior
Subordinated Debentures, subject to certain conditions. See "Description of
Junior Subordinated Debentures--General."
EVENTS OF DEFAULT; NOTICE
Any one of the following events that has occurred and is continuing
constitutes an "Event of Default" under the Trust Agreement (an "Event of
Default") with respect to the Trust Preferred Securities (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(i) the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures--Debenture Events of Default"); or
(ii) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Property Trustee in the Trust Agreement
(other than a default or breach in the performance of a covenant or warranty
which is addressed in clause (ii) or (iii) above), and continuation of such
default or breach, for a period of 60 days after there has been given, by
registered or certified mail, to the defaulting Property Trustee by the
holders of at least 25% in aggregate Liquidation Amount of the outstanding
Trust Preferred Securities, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by Pacific Crest to appoint
a successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Trust Preferred
Securities, the Administrative Trustees and Pacific Crest, as Depositor, unless
such Event of Default shall have been cured or waived. Pacific Crest as
Depositor, and the Administrative Trustees are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under the Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing, the Trust
Preferred Securities shall have a preference over the Common Securities upon
termination of PCC Capital as described above. See "--Liquidation Distribution
upon Dissolution" herein. Upon a Debenture Event of Default, unless the
principal of all the Junior Subordinated Debentures has already become due and
payable, either the Property Trustee or the holders of not less than 25% in
aggregate principal amount of the Junior Subordinated Debentures then
outstanding may declare all of the Junior Subordinated Debentures to be due and
payable immediately by giving notice in writing to Pacific Crest (and to the
Property Trustee, if notice is given by holders of the Junior Subordinated
Debentures). If the Property Trustee or the holders of the Junior Subordinated
Debentures fail to declare the principal of all of the Junior Subordinated
Debentures due and payable upon a Debenture Event of Default, the holders of at
least 25% in Liquidation Amount of the Trust Preferred Securities then
outstanding shall have the right to declare the Junior Subordinated Debentures
immediately due and payable. In either event, payment of principal and interest
on the Junior Subordinated Debentures shall remain subordinated to the extent
provided in the Indenture. In addition, holders of the Trust Preferred
Securities have the right in certain circumstances to bring a Direct Action (as
hereinafter defined). See "Description of Junior Subordinated Debentures--
Enforcement of Certain Rights by Holders of Trust Preferred Securities."
32
<PAGE>
REMOVAL OF TRUSTEES
Unless a Debenture Event of Default has occurred and is continuing, any of
the Property Trustee, the Depositary Trustee or the Administrative Trustees 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 Trust Preferred Securities. In no event
will the holders of the Trust Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees, which voting rights are
vested exclusively in Pacific Crest 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 Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of Trust Property may at
the time be located, Pacific Crest, as the holder 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 such Trust Property, or to act as separate trustee of any such property,
in either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. In case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any Person (as defined in the Trust Agreement) 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
corporation shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF PCC CAPITAL
PCC Capital 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 corporation or other Person, except as
described below or as described in "--Liquidation Distribution Upon
Dissolution." PCC Capital may, at the request of Pacific Crest, with the consent
of the Administrative Trustees and without the consent of the holders of the
Trust Preferred Securities, merge with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to a trust organized as such under the laws of any State;
provided, that (i) such successor entity either (a) expressly assumes all of the
obligations of PCC Capital with respect to the Trust Preferred Securities or (b)
substitutes for the Trust Preferred Securities other securities having
substantially the same terms as the Trust Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Trust
Preferred Securities rank in priority with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) Pacific Crest expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the 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 Preferred
Securities are then listed, if any, (iv) such merger, consolidation,
amalgamation, conveyance, transfer or lease does not cause the Trust Preferred
Securities to be downgraded by any nationally recognized statistical rating
33
<PAGE>
organization which gives ratings to the Trust Preferred Securities; (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 Preferred Securities (including any Successor Securities) in any
material respect, (vi) such successor entity has a purpose substantially
identical to that of PCC Capital, (vii) the Successor Securities will be listed
or traded on any national securities exchange or other organization on which the
Trust Preferred Securities may then be listed, (viii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, Pacific
Crest has received an opinion from independent counsel to PCC Capital
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
Preferred Securities (including any Successor Securities) in any material
respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither PCC Capital nor such
successor entity will be required to register as an investment company under the
Investment Company Act and (ix) Pacific Crest or any permitted successor or
designee 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 Guarantee. Notwithstanding the
foregoing, PCC Capital shall not, except with the consent of holders of 100% in
Liquidation Amount of the Trust Preferred Securities, consolidate, amalgamate,
merge with or into, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it
if such consolidation, amalgamation, merger, replacement, conveyance, transfer
or lease would cause PCC Capital or the successor entity to be classified as
other than a grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Trust Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by Pacific Crest, 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, or (ii) to modify, eliminate
or add to any provisions of the Trust Agreement to such extent as shall be
necessary to ensure that PCC Capital 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 PCC Capital will not be required to
register as an "investment company" under the Investment Company Act; provided,
however, that in the case of clause (i), such action shall not adversely affect
in any material respect the interests of any holder of Trust Securities, and any
such amendments of the Trust Agreement 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 the Company with (i) the consent of
holders representing not less than a majority of the aggregate Liquidation
Amount of the outstanding Trust Securities, and (ii) receipt by the Issuer
Trustees of an opinion of counsel 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 PCC Capital's status as a grantor trust for United
States federal income tax purposes or PCC Capital'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.
34
<PAGE>
So long as any 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 Indenture Trustee, or
executing any trust or power conferred on the Property Trustee with respect to
the Junior Subordinated Debentures, (ii) waive any past default that is waivable
under the Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Junior Subordinated Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in aggregate Liquidation Amount of all outstanding the Trust
Preferred Securities; provided, however, that where a consent under the
Indenture would require the consent of each holder of Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior consent of each holder of the Trust Preferred
Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Trust Preferred
Securities except by subsequent vote of the holders of the Trust Preferred
Securities. The Property Trustee shall notify each holder of the Trust Preferred
Securities of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of such holders of
the Trust Preferred 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 PCC Capital will not be classified as other than a
grantor trust for United States federal income tax purposes.
Any required approval of holders of the Trust Preferred Securities may be
given at a meeting of holders of Trust Preferred Securities convened for such
purpose or pursuant to written consent. The Property Trustee will cause a notice
of any meeting at which holders of the Trust Preferred Securities are entitled
to vote, or of any matter upon which action by written consent of such holders
is to be taken, to be given to each holder of record of the Trust Preferred
Securities in the manner set forth in the Trust Agreement.
No vote or consent of the holders of the Trust Preferred Securities will be
required for PCC Capital to redeem and cancel the Trust Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Trust Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Trust Preferred Securities that are owned by Pacific Crest, the Trustees or any
affiliate of Pacific Crest or any Trustees, shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
GLOBAL TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be represented by one or more global
certificates registered in the name of the Depositary or its nominee ("Global
Trust Preferred Security"). Beneficial interests in the Trust Preferred
Securities will be shown on, and transfers thereof will be effected only
through, records maintained by participants in the Depositary. Except as
described below, Trust Preferred Securities in certificated form will not be
issued in exchange for the global certificates. See "Book-Entry Issuance."
A global security shall be exchangeable for Trust Preferred Securities
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies Pacific Crest that it is unwilling or unable to
continue as a depositary for such global security and no successor depositary
shall have been appointed, or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the Depositary
is required to be so registered to act as such depositary, (ii) Pacific Crest in
its sole discretion determines that such global security shall be so
exchangeable, or (iii) there shall have occurred and be continuing an Event of
Default under the Indenture. Any global security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for definitive certificates
registered in such names as the Depositary shall direct. It is expected that
such instructions will be based upon directions received by the Depositary with
respect to ownership of beneficial interests in such global security. In the
event that Trust Preferred Securities are issued in definitive form, such Trust
35
<PAGE>
Preferred Securities will be in denominations of $10 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Unless and until it is exchanged in whole or in part for the individual
Trust Preferred Securities represented thereby, a Global Trust Preferred
Security may not be transferred except as a whole by the Depositary to a nominee
of such the Depositary or by a nominee of such the Depositary to such Depositary
or another nominee of such Depositary or by the Depositary or any nominee to a
successor Depositary or any nominee of such successor.
Payments on Trust Preferred Securities represented by a global security will
be made to the Depositary, as the depositary for the Trust Preferred Securities.
In the event the Trust Preferred Securities are issued in definitive form,
Distributions will be payable, the transfer of the Trust Preferred Securities
will be registrable, and Trust Preferred Securities will be exchangeable for
Trust Preferred Securities of other denominations of a like aggregate
Liquidation Amount, at the corporate office of the Property Trustee, or at the
offices of any paying agent or transfer agent appointed by the Administrative
Trustees, provided that payment of any Distribution may be made at the option of
the Administrative Trustees by check mailed to the address of the persons
entitled thereto or by wire transfer. In addition, if the Trust Preferred
Securities are issued in certificated form, the record dates for payment of
Distributions will be the first day of the month in which the relevant
Distribution Date occurs. For a description of the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other matters, see "Book-Entry Issuance."
Upon the issuance of a Global Trust Preferred Security, and the deposit of
such Global Trust Preferred Security with or on behalf of the Depositary, the
Depositary for such Global Trust Preferred Security or its nominee will credit,
on its book-entry registration and transfer system, the respective aggregate
Liquidation Amounts of the individual Trust Preferred Securities represented by
such Global Trust Preferred Securities to the accounts of Participants. Such
accounts shall be designated by the dealers, underwriters or agents with respect
to such Trust Preferred Securities. Ownership of beneficial interests in a
Global Trust Preferred Security will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in
such Global Trust Preferred Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Trust Preferred Security.
So long as the Depositary for a Global Trust Preferred Security, or its
nominee, is the registered owner of such Global Trust Preferred Security, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Trust Preferred Securities represented by such Global
Trust Preferred Security for all purposes under the Trust Agreement governing
such Trust Preferred Securities. Except as provided below, owners of beneficial
interests in a Global Trust Preferred Security will not be entitled to have any
of the individual Trust Preferred Securities represented by such Global Trust
Preferred Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Trust Preferred Securities in definitive
form and will not be considered the owners or holders thereof under the Trust
Agreement.
None of Pacific Crest, the Property Trustee, any Paying Agent, or the
Securities Registrar (defined below) for such Trust Preferred Securities will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of the Global
Trust Preferred Security representing such Trust Preferred Securities or for
maintaining supervising or reviewing any records relating to such beneficial
ownership interests.
Pacific Crest expects that the Depositary for Trust Preferred Securities or
its nominee, upon receipt of any payment of the Liquidation Amount or
Distributions in respect of a permanent Global Trust Preferred
36
<PAGE>
Security immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the aggregate
Liquidation Amount of such Global Trust Preferred Security as shown on the
records of such Depositary or its nominee. Pacific Crest also expects that
payments by Participants to owners of beneficial interests in such Global Trust
Preferred Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
If the Depositary for the Trust Preferred Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by Pacific Crest within 90 days, PCC Capital will
issue individual Trust Preferred Securities in exchange for the Global Trust
Preferred Security. In addition, PCC Capital may at any time and in its sole
discretion, subject to any limitations described herein relating to such Trust
Preferred Securities, determine not to have any Trust Preferred Securities
represented by one or more Global Trust Preferred Securities and, in such event,
will issue individual Trust Preferred Securities in exchange for the Global
Trust Preferred Security or Securities representing the Trust Preferred
Securities. Further, if PCC Capital so specifies with respect to the Trust
Preferred Securities, an owner of a beneficial interest in a Global Trust
Preferred Security representing Trust Preferred Securities may, on terms
acceptable to Pacific Crest, the Property Trustee and the Depositary for such
Global Trust Preferred Security, receive individual Trust Preferred Securities
in exchange for such beneficial interests, subject to any limitations described
herein. In any such instance, an owner of a beneficial interest in a Global
Trust Preferred Security will be entitled to physical delivery of individual
Trust Preferred Securities represented by such Global Trust Preferred Security
equal in Liquidation Amount to such beneficial interest and to have such Trust
Preferred Securities registered in its name. Individual Trust Preferred
Securities so issued will be issued in denominations, unless otherwise specified
by PCC Capital, of $10 and integral multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Trust Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any of the Trust Preferred Securities 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 Pacific Crest. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the Property
Trustee and Trust Preferred. 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 Pacific Crest) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the Trust
Preferred Securities. Registration of transfers of the Trust Preferred
Securities will be effected without charge by or on behalf of PCC Capital, but
upon payment of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. PCC Capital will not be required to
register or cause to be registered the transfer of the Trust Preferred
Securities after such Trust Preferred Securities have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, after such Event of
Default, must exercise the same degree of care and skill as a prudent person
would
37
<PAGE>
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
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the Trust Agreement or is unsure of the application of any provision of the
Trust Agreement, and the matter is not one on which holders of the Trust
Preferred Securities are entitled under the Trust Agreement to vote, then the
Property Trustee shall take such action as is directed by Pacific Crest 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 PCC Capital in such a way that PCC Capital will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or fail to be classified as a grantor trust for United
States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of Pacific Crest for United States
federal income tax purposes. In this connection, Pacific Crest and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of PCC Capital or the Trust Agreement,
that Pacific Crest 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 Preferred
Securities. Holders of the Trust Preferred Securities have no preemptive or
similar rights.
PCC Capital may not borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
Concurrently with the issuance of the Trust Preferred Securities, PCC
Capital will invest the proceeds thereof, together with the consideration paid
by Pacific Crest for the Common Securities, in Junior Subordinated Debentures
issued by Pacific Crest. The Junior Subordinated Debentures will be issued as
unsecured debt under the Junior Subordinated Indenture, dated as of ,
1997 (the "Indenture"), between Pacific Crest and the Indenture Trustee. The
following summary of the terms and provisions of the Junior Subordinated
Debentures and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Indenture, which has been
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part, and to the Trust Indenture Act. The Indenture is qualified under the
Trust Indenture Act. Whenever particular defined terms of the Indenture are
referred to herein, such defined terms are incorporated herein or therein by
reference.
GENERAL
The Junior Subordinated Debentures will bear interest at the annual rate of
% of the principal amount thereof, payable quarterly in arrears on the 15th
day of March, June, September and December of each year (each, an "Interest
Payment Date"), commencing , 1997, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment Date.
Notwithstanding the above, in the event that either the (i) Junior Subordinated
Debentures are held by the Property Trustee and the Trust Preferred Securities
are no longer in book-entry only form or (ii) the Junior Subordinated Debentures
are not represented by a Global Subordinated Debenture (as defined herein), the
record date for such payment shall be the first day of the month in which such
payment is made. The amount of each interest payment due with respect to the
Junior Subordinated Debentures will include amounts accrued through the date the
interest payment is due. It is anticipated that, until the liquidation, if any,
of PCC Capital, each Junior Subordinated Debenture will be held in the name of
the Property Trustee in trust for the benefit of the
38
<PAGE>
holders of the Trust Preferred 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. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next Business Day (and without any
interest or other payment in respect of any such delay), in each case with the
same force and effect as if made on the date such payment was originally
payable. Accrued interest that is not paid on the applicable Interest Payment
Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of % thereof, compounded quarterly.
The term "interest" as used herein shall include quarterly interest payments,
interest on quarterly interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined below), as applicable.
The Junior Subordinated Debentures will mature on , 2027 (such
date, as it may be shortened as hereinafter described, the "Stated Maturity").
Such date may be shortened at any time by Pacific Crest to any date not earlier
than , 2002, subject to prior regulatory approval, if then required.
In the event that Pacific Crest elects to shorten the Stated Maturity of the
Junior Subordinated Debentures, it shall give notice to the Indenture Trustee,
and the Indenture Trustee shall give notice of such shortening to the holders of
the Junior Subordinated Debentures no less than 90 days prior to the
effectiveness thereof.
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior and Subordinated Debt of
Pacific Crest. Because Pacific Crest is a holding company, the right of Pacific
Crest to participate in any distribution of assets of any subsidiaries,
including Pacific Crest Bank, upon any such subsidiaries' liquidation or
reorganization or otherwise (and thus the ability of holders of the Trust
Preferred Securities to benefit indirectly from such distribution), is subject
to the prior claims of creditors of that subsidiary, except to the extent that
Pacific Crest may itself be recognized as a creditor of that subsidiary.
Accordingly, the Junior Subordinated Debentures will be effectively subordinated
to all existing and future liabilities of Pacific Crest Bank, and holders of
Junior Subordinated Debentures should look only to the assets of Pacific Crest
for payments on the Junior Subordinated Debentures. The Indenture does not limit
the incurrence or issuance of other secured or unsecured debt of Pacific Crest,
including Senior and Subordinated Debt, whether under the Indenture or any
existing or other indenture that Pacific Crest may enter into in the future or
otherwise. See "-- Subordination" below.
OPTION TO DEFER INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing,
Pacific Crest has the right under the Indenture at any time during the term of
the Junior Subordinated Debentures to defer the payment of interest at any time
or from time to time for a period not exceeding 20 consecutive quarters (each
such period an "Extension Period"), provided that no Extension Period may extend
beyond the Stated Maturity. At the end of such Extension Period, Pacific Crest
must pay all interest then accrued and unpaid (together with interest thereon at
the annual rate of %, compounded quarterly, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Junior Subordinated Debentures will be required to accrue
interest income for United States federal income tax purposes. See "Certain
Federal Income Tax Consequences--Interest Income and Original Issue Discount."
During any such Extension Period, Pacific Crest 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 Pacific Crest's capital stock or
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of Pacific Crest (including other
Junior Subordinated Debentures) that rank PARI PASSU with or junior in interest
to the Junior Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by Pacific Crest of the debt securities of any
subsidiary of Pacific Crest if such guarantee ranks PARI PASSU with or junior in
interest to the Junior
39
<PAGE>
Subordinated Debentures (other than (a) dividends or distributions in common
stock of Pacific Crest, (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, and (d) purchases of common
stock related to the issuance of common stock or rights under any of Pacific
Crest's benefit plans for its directors, officers or employees) or (iv) redeem,
purchase or acquire less than all of the Junior Subordinated Debentures or any
of the Trust Preferred Securities. Prior to the termination of any such
Extension Period, Pacific Crest may further extend such Extension Period,
provided that such extension does not cause such Extension Period to exceed 20
consecutive quarters or extend beyond the Stated Maturity. Upon the termination
of any such Extension Period and the payment of all amounts then due on any
Interest Payment Date, Pacific Crest 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. Pacific Crest must give the
Property Trustee, the Administrative Trustees and the Indenture Trustee notice
of its election of any Extension Period at least one Business Day prior to the
earlier of (i) the date the Distributions on the Trust Preferred 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 the New York Stock Exchange, the Nasdaq National Market or any
applicable stock exchange or automated quotation system on which the Trust
Preferred Securities are then listed or quoted or to the holders of the Trust
Preferred Securities of the record date or the date such Distributions are
payable, but in any event not less than one Business Day prior to such record
date. The Indenture Trustee shall give notice of Pacific Crest's election to
begin or extend a new Extension Period the holders of the Trust Preferred
Securities. There is no limitation on the number of times that Pacific Crest may
elect to begin an Extension Period.
Distributions on the Trust Preferred Securities will be deferred by PCC
Capital during any such Extension Period. See "Description of the Trust
Preferred Securities--Distributions." For a description of certain federal
income tax consequences and special considerations applicable to any such Junior
Subordinated Debentures, see "Certain Federal Income Tax Consequences."
ADDITIONAL SUMS
If PCC Capital is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, Pacific Crest will pay as
additional amounts on the Junior Subordinated Debentures such amounts
("Additional Sums") as shall be required so that the Distributions payable by
PCC Capital shall not be reduced as a result of any such additional taxes,
duties or other governmental charges.
REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of Pacific Crest (i) on or after , 2002, in whole at any time
or in part from time to time, or (ii) at any time in whole (but not in part),
within 90 days upon the occurrence of a Tax Event, a Capital Treatment Event or
an Investment Company Event, in each case at a redemption price equal to the
accrued and unpaid interest on the Junior Subordinated Debentures so redeemed to
the date fixed for redemption, plus 100% of the principal amount thereof.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at such holder's registered address. Unless Pacific
Crest defaults in payment of the redemption price, on and after the redemption
date interest ceases to accrue on such Junior Subordinated Debentures or
portions thereof called for redemption.
If PCC Capital is required to pay additional taxes, duties or other
governmental charges as a result of a Tax Event, Pacific Crest will pay as
additional amounts on the Junior Subordinated Debentures the Additional Sums (as
defined herein).
40
<PAGE>
The Junior Subordinated Debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Trust Preferred
Securities--Liquidation Distribution Upon Dissolution," under certain
circumstances involving the dissolution of PCC Capital, the Junior Subordinated
Debentures may be distributed to the holders of the Trust Preferred Securities
in liquidation of PCC Capital after satisfaction of liabilities to creditors of
PCC Capital as provided by applicable law and subject to prior regulatory
approval, if then required. If distributed to holders of the Trust Preferred
Securities in liquidation, the Junior Subordinated Debentures will initially be
issued in the form of one or more global securities and the Depositary, or any
successor depositary for the Trust Preferred Securities, will act as depositary
for the Junior Subordinated Debentures. It is anticipated that the depositary
arrangements for the Junior Subordinated Debentures would be substantially
identical to those in effect for the Trust Preferred Securities. If the Junior
Subordinated Debentures are distributed to the holders of Trust Preferred
Securities upon the liquidation of PCC Capital, Pacific Crest will use its best
efforts to list the Junior Subordinated Debentures on the Nasdaq National Market
or such other stock exchanges or automated quotation system, if any, on which
the Trust Preferred Securities are then listed or quoted. There can be no
assurance as to the market price of any Junior Subordinated Debentures that may
be distributed to the holders of Trust Preferred Securities.
RESTRICTIONS ON CERTAIN PAYMENTS
If at any time (i) there shall have occurred a Debenture Event of Default,
(ii) Pacific Crest shall have given notice of its election of an Extension
Period as provided in the Indenture with respect to the Junior Subordinated
Debentures and shall not have rescinded such notice, or such Extension Period,
or any extension thereof, shall be continuing, or (iii) while the Junior
Subordinated Debentures are held by PCC Capital, Pacific Crest shall be in
default with respect to its payment of any obligation under the Guarantee, then
Pacific Crest will not (1) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
Pacific Crest's capital stock, (2) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of
Pacific Crest (including other Junior Subordinated Debt) that rank PARI PASSU
with or junior in interest to the Junior Subordinated Debentures or make any
guarantee payments with respect to any guarantee by Pacific Crest of the debt
securities of any subsidiary of Pacific Crest if such guarantee ranks PARI PASSU
with or junior in interest to the Junior Subordinated Debentures (other than (a)
dividends or distributions in common stock of Pacific Crest, (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 and (d) purchases of common stock related to issuance of common
stock or rights under any of Pacific Crest's benefit plans for its directors,
officers or employees) or (3) redeem, purchase or acquire less than all of the
Junior Subordinated Debentures or any of the Trust Preferred Securities.
SUBORDINATION
In the Indenture, Pacific Crest has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior and Subordinated Debt 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 Pacific Crest, the holders of Senior and Subordinated
Debt will first be entitled to receive payment in full of principal of all
Allocable Amounts (as defined below) on such Senior and Subordinated Debt before
the holders of Junior Subordinated Debentures will be entitled to receive or
retain any payment in respect thereof.
41
<PAGE>
In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Senior and Subordinated Debt outstanding at the
time of such acceleration will first be entitled to receive payment in full of
all amounts due thereon (including any amounts due upon acceleration) before the
holders of 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 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 and Subordinated Debt
or an event of default with respect to any Senior and Subordinated Debt
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Allocable Amounts," when used with respect to any Senior and Subordinated
Debt, means all amounts due or to become due on such Senior and Subordinated
Debt less, if applicable, any amount which would have been paid to, and retained
by, the holders of such Senior and Subordinated Debt (whether as a result of the
receipt of payments by the holders of such Senior and Subordinated Debt from
Pacific Crest or any other obligor thereon or from any holders of, or trustee in
respect of, other indebtedness that is subordinate and junior in right of
payment to such Senior and Subordinated Debt pursuant to any provision of such
indebtedness for the payment over of amounts received on account of such
indebtedness to the holders of such Senior and Subordinated Debt or otherwise)
but for the fact that such Senior and Subordinated Debt is subordinated or
junior in right of payment to (or subject to a requirement that amounts received
on such Senior and Subordinated Debt be paid over to obligees on) trade accounts
payable or accrued liabilities arising in the ordinary course of business.
"Debt" means with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent: (i) every
obligation of such person for money borrowed; (ii) every obligation of such
person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (iv) every obligation of such person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such person; (vi) all
indebtedness of such person 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, such person has
guaranteed or is responsible or liable, directly or indirectly, as obligor or
otherwise.
"Senior and Subordinated Debt" means the principal of (and premium, if any)
and interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to Pacific Crest whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt of Pacific Crest whether incurred on or prior to the date of the Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Junior Subordinated
Debentures or to other Debt which is PARI PASSU with, or subordinated to, the
Junior Subordinated Debentures; provided, however, that Senior and Subordinated
Debt shall not be deemed to include (i) any Debt of Pacific Crest which when
incurred and without respect to any election under section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to Pacific
Crest, (ii) any Debt of Pacific Crest to any of its subsidiaries, (iii) Debt to
any employee of Pacific Crest, and (iv) any other debt securities issued
pursuant to the Indenture.
The Indenture places no limitation on the amount of additional Senior and
Subordinated Debt that may be incurred by Pacific Crest. Pacific Crest expects
from time to time to incur additional indebtedness constituting Senior and
Subordinated Debt.
42
<PAGE>
DENOMINATIONS, REGISTRATION AND TRANSFER
The Junior Subordinated Debentures will be represented by global
certificates registered in the name of the Depositary or its nominee ("Global
Subordinated Debenture"). Beneficial interests in the Junior Subordinated
Debentures will be shown on, and transfers thereof will be effected only
through, records maintained by the Depositary. Except as described below, Junior
Subordinated Debentures in certificated form will not be issued in exchange for
the global certificates. See "Book-Entry Issuance."
Unless and until a Global Subordinated Debenture is exchanged in whole or in
part for the individual Junior Subordinated Debentures represented thereby, it
may not be transferred except as a whole by the Depositary for such Global
Subordinated Debenture to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any nominee to a successor Depositary or any nominee of such
successor.
A global security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies Pacific Crest that it is unwilling or unable to
continue as a depositary for such global security and no successor depositary
shall have been appointed, or if at any time the Depositary ceases to be a
clearing agency registered under the Securities Exchange Act, at a time when the
Depositary is required to be so registered to act as such depositary, (ii)
Pacific Crest in its sole discretion determines that such global security shall
be so exchangeable or (iii) there shall have occurred and be continuing a
Debenture Event of Default with respect to such global security. Any global
security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as the
Depositary shall direct. It is expected that such instructions will be based
upon directions received by the Depositary from its Participants with respect to
ownership of beneficial interests in such global security. In the event that
Junior Subordinated Debentures are issued in definitive form, such Junior
Subordinated Debentures will be in denominations of $10 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Payments on Junior Subordinated Debentures represented by a global security
will be made to the Depositary, as the depositary for the Junior Subordinated
Debentures. In the event Junior Subordinated Debentures are issued in definitive
form, principal and interest will be payable, the transfer of the Junior
Subordinated Debentures will be registrable, and Junior Subordinated Debentures
will be exchangeable for Junior Subordinated Debentures of other denominations
of a like aggregate principal amount, at the corporate office of the Indenture
Trustee, or at the offices of any paying agent or transfer agent appointed by
Pacific Crest, provided that payment of interest may be made at the option of
Pacific Crest by check mailed to the address of the persons entitled thereto or
by wire transfer. In addition, if the Junior Subordinated Debentures are issued
in certificated form, the record dates for payment of interest will be the first
day of the month in which such payment is to be made. For a description of the
Depositary and the terms of the depositary arrangements relating to payments,
transfers, voting rights, redemptions and other notices and other matters, see
"Book-Entry Issuance."
Pacific Crest will appoint the Indenture Trustee as securities registrar
under the Indenture (the "Securities Registrar"). Junior Subordinated Debentures
may be presented for exchange as provided above, and may be presented for
registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), at the office of
the Securities Registrar. Pacific Crest may at any time rescind the designation
of any such transfer agent or approve a change in the location through which any
such transfer agent acts, provided that Pacific Crest maintains a transfer agent
in the place of payment. Pacific Crest may at any time designate additional
transfer agents with respect to the Junior Subordinated Debentures.
In the event of any redemption, neither Pacific Crest nor the Indenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of Junior
Subordinated
43
<PAGE>
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption or (ii) transfer or exchange any Junior
Subordinated Debentures so selected for redemption, except, in the case of any
Junior Subordinated Debentures being redeemed in part, any portion thereof not
to be redeemed.
GLOBAL SUBORDINATED DEBENTURES
Upon the issuance of the Global Subordinated Debenture, and the deposit of
such Global Subordinated Debenture with or on behalf of the Depositary, the
Depositary for such Global Subordinated Debenture or its nominee will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the individual Junior Subordinated Debentures represented by such
Global Subordinated Debenture to the accounts of persons that have accounts with
such Depositary ("Participants"). Ownership of beneficial interests in a Global
Subordinated Debenture will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in such Global
Subordinated Debenture will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Subordinated Debenture.
So long as the Depositary for a Global Subordinated Debenture, or its
nominee, is the registered owner of such Global Subordinated Debenture, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Junior Subordinated Debentures represented by such Global
Subordinated Debenture for all purposes under the Indenture governing such
Junior Subordinated Debentures. Except as provided below, owners of beneficial
interests in a Global Subordinated Debenture will not be entitled to have any of
the individual Junior Subordinated Debentures represented by such Global
Subordinated Debenture registered in their names, will not receive or be
entitled to receive physical delivery of any such Junior Subordinated Debentures
in definitive form and will not be considered the owners or holders thereof
under the Indenture.
Payments of principal of and interest on individual Junior Subordinated
Debentures represented by a Global Subordinated Debenture registered in the name
of the Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the registered owner of the Global Subordinated Debenture
representing such Junior Subordinated Debentures. None of Pacific Crest, the
Indenture Trustee, any Paying Agent, or the Securities Registrar for such Junior
Subordinated Debentures will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Global Subordinated Debenture representing such Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Pacific Crest expects that the Depositary or its nominee, upon receipt of
any payment of principal or interest in respect of a permanent Global
Subordinated Debenture representing the Junior Subordinated Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
the Global Subordinated Debenture as shown on the records of such Depositary or
its nominee. Pacific Crest also expects that payments by Participants to owners
of beneficial interests in such Global Subordinated Debenture held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility of
such Participants.
If the Depositary is at any time unwilling, unable or ineligible to continue
as depositary and a successor depositary is not appointed by Pacific Crest
within 90 days, Pacific Crest will issue individual
44
<PAGE>
Junior Subordinated Debentures in exchange for the Global Subordinated
Debenture. In addition, Pacific Crest may at any time and in its sole
discretion, determine not to have the Junior Subordinated Debentures represented
by one or more Global Junior Subordinated Debentures and, in such event, will
issue individual Junior Subordinated Debentures in exchange for the Global
Subordinated Debenture. Further, if Pacific Crest so specifies with respect to
the Junior Subordinated Debentures, an owner of a beneficial interest in a
Global Subordinated Debenture representing Junior Subordinated Debentures may,
on terms acceptable to Pacific Crest, the Indenture Trustee and the Depositary
for such Global Subordinated Debenture, receive individual Junior Subordinated
Debentures in exchange for such beneficial interests. In any such instance, an
owner of a beneficial interest in a Global Subordinated Debenture will be
entitled to physical delivery of individual Junior Subordinated Debentures equal
in principal amount to such beneficial interest and to have such Junior
Subordinated Debentures registered in its name. Individual Junior Subordinated
Debentures so issued will be issued in denominations, unless otherwise specified
by Pacific Crest, of $10 and integral multiples thereof.
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on the Junior Subordinated
Debentures will be made at the office of the Indenture Trustee, except that at
the option of Pacific Crest payment of any interest may be made (i) except in
the case of Global Junior Subordinated Debentures, by check mailed to the
address of the person entitled thereto as such address shall appear in the
securities register or (ii) by transfer to an account maintained by the person
entitled thereto as specified in the securities register, provided that proper
transfer instructions have been received by the regular record date. Payment of
any interest on Junior Subordinated Debentures will be made to the person in
whose name such Junior Subordinated Debenture is registered at the close of
business on the regular record date for such interest. Pacific Crest may at any
time designate additional Paying Agents or rescind the designation of any Paying
Agent; however Pacific Crest will at all times be required to maintain a Paying
Agent in each place of payment for the Junior Subordinated Debentures. Any
moneys deposited with the Indenture Trustee or any Paying Agent, or then held by
Pacific Crest in trust, for the payment of the principal of or interest on the
Junior Subordinated Debentures and remaining unclaimed for two years after such
principal or interest has become due and payable shall, at the request of
Pacific Crest, be repaid to Pacific Crest and the holder of such Junior
Subordinated Debenture shall thereafter look, as a general unsecured creditor,
only to Pacific Crest for payment thereof.
MODIFICATION OF INDENTURE
From time to time Pacific Crest and the Indenture Trustee may, without the
consent of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interests of the holders of the Junior
Subordinated Debentures or the Trust Preferred Securities so long as they remain
outstanding) and qualifying, or maintaining the qualification of, the Indenture
under the Trust Indenture Act. The Indenture contains provisions permitting
Pacific Crest and the Indenture Trustee, with the consent of the holders of not
less than a majority in principal amount of the outstanding Junior Subordinated
Debentures, to modify the Indenture in a manner affecting the rights of the
holders of the Junior Subordinated Debentures; provided, that no such
modification may, without the consent of the holder of each outstanding
Subordinated Debenture, (i) change the Stated Maturity of the Junior
Subordinated Debentures, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon 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,
provided that so long as any of the Trust Preferred Securities remain
outstanding, no such modification may be made that adversely affects the holders
of such Trust Preferred Securities in any material respect, and no termination
of the Indenture may occur, and no waiver of any Debenture Event of Default or
compliance with any covenant under the Indenture may be effective,
45
<PAGE>
without the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the Trust Preferred Securities unless and until the
principal of the Junior Subordinated Debentures and all accrued and unpaid
interest thereon have been paid in full and certain other conditions are
satisfied. Where a consent under the Indenture would require the consent of each
holder of Junior Subordinated Debentures, no such consent shall be given by the
Property Trustee without the prior consent of each holder of Trust Preferred
Securities. In addition, Pacific Crest and the Indenture Trustee may execute,
without the consent of any holder of Junior Subordinated Debentures, any
supplemental Indenture for the purpose of creating any new series of Junior
Subordinated Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes a "Debenture Event of Default" with respect to the
Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures, when due (subject to the deferral of any due date in the case of
an Extension Period); or
(ii) failure to pay any principal on the Junior Subordinated Debentures
when due whether at maturity, upon redemption by declaration or otherwise;
or
(iii) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to
Pacific Crest from the Indenture Trustee or to Pacific Crest and the
Indenture Trustee by the holders of at least 25% in aggregate outstanding
principal amount of the Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of
Pacific Crest.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture 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. If
the Indenture Trustee or such holders of such Junior Subordinated Debentures
fail to make such declaration, the holders of at least 25% in aggregate
Liquidation Amount of the Trust Preferred Securities shall have such right. 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 Indenture Trustee.
Should the holders of the Junior Subordinated Debentures fail to annul such
declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Trust Preferred Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of
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 interest (unless such default has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture 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.
In case a Debenture Event of Default shall occur and be continuing as to the
Junior Subordinated Debentures, the Property Trustee will have the right to
declare the principal of and the interest on such Junior Subordinated
Debentures, and any other amounts payable under the Indenture, to be forthwith
due
46
<PAGE>
and payable and to enforce its other rights as a creditor with respect to such
Junior Subordinated Debentures.
Pacific Crest is required to file annually with the Indenture Trustee a
certificate as to whether or not Pacific Crest is in compliance with all the
conditions and covenants applicable to it under the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of Pacific Crest to pay interest or
principal on the Junior Subordinated Debentures on the date such interest or
principal is otherwise payable, a holder of Trust Preferred Securities may
institute a legal proceeding directly against Pacific Crest for enforcement of
payment to such holder of the principal of or interest on such Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Trust Preferred Securities of such holder ("Direct
Action"). Pacific Crest 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 Trust Preferred Securities outstanding. If the right to bring a
Direct Action is removed, PCC Capital may become subject to the reporting
obligations under the Exchange Act. Pacific Crest shall have the right under the
Indenture to set-off any payment made to such holder of Trust Preferred
Securities by Pacific Crest in connection with a Direct Action.
The holders of the Trust Preferred Securities would not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an Event of Default under the Trust Agreement. See "Description
of the Trust Preferred Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that Pacific Crest shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into Pacific Crest or convey, transfer or lease its
properties and assets substantially as an entirety to Pacific Crest, unless (i)
in case Pacific Crest consolidates with or merges into another Person or conveys
or transfers its properties and assets substantially as an entirety to any
Person, the successor Person is organized under the laws of the United States or
any state or the District of Columbia, and such successor Person expressly
assumes Pacific Crest's obligations on the Junior Subordinated Debentures issued
under the Indenture; (ii) immediately after giving effect thereto, no Debenture
Event of Default, and no event which, after notice or lapse of time or both,
would become a Debenture Event of Default, shall have occurred and be
continuing; and (iii) certain other conditions as prescribed in the Indenture
are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving Pacific Crest that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Indenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and Pacific Crest deposits or causes
to be deposited with the Indenture Trustee trust funds, in trust, for the
purpose and in an amount in the currency or currencies in which the Junior
Subordinated Debentures are payable sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Indenture Trustee for cancellation, for the principal and interest to the
date of the deposit or to the Stated Maturity, as the case may be, then the
Indenture will cease to be of further effect (except as to Pacific Crest's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers'
47
<PAGE>
certificates and opinions of counsel described therein), and Pacific Crest will
be deemed to have satisfied and discharged the Indenture.
COVENANTS OF PACIFIC CREST
Pacific Crest will covenant in the Indenture, as to the Junior Subordinated
Debentures, that if and so long as (i) PCC Capital is the holder of all such
Junior Subordinated Debentures, (ii) a Tax Event in respect of PCC Capital has
occurred and is continuing and (iii) Pacific Crest has elected, and has not
revoked such election, to pay Additional Sums (as defined under "Description of
the Trust Preferred Securities--Redemption") in respect of the Trust Preferred
Securities, Pacific Crest will pay to PCC Capital such Additional Sums. Pacific
Crest will also covenant, as to the Junior Subordinated Debentures, (i) to
maintain directly or indirectly 100% ownership of the Common Securities of PCC
Capital to which Junior Subordinated Debentures have been issued, provided that
certain successors which are permitted pursuant to the Indenture may succeed to
Pacific Crest's ownership of the Common Securities, (ii) not to voluntarily
dissolve, wind up or liquidate PCC Capital, without prior approval of the
primary federal regulator of Pacific Crest if then so required under applicable
capital guidelines or policies of such primary regulator, and except (a) in
connection with a distribution of Junior Subordinated Debentures to the holders
of the Trust Preferred Securities in liquidation of PCC Capital or (b) in
connection with certain mergers, consolidations, or amalgamations permitted by
the Trust Agreement and (iii) to use its reasonable efforts, consistent with the
terms and provisions of the Trust Agreement, to cause PCC Capital to remain
classified as a grantor trust and not as an association taxable as a corporation
for United States federal income tax purposes.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of California, except that
the immunities and standard of care of the Indenture Trustee will be governed by
Delaware law.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture 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 Indenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Indenture 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 Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
BOOK-ENTRY ISSUANCE
The Depositary will act as securities depositary for all of the Trust
Preferred Securities and the Junior Subordinated Debentures. The Trust Preferred
Securities and the Junior Subordinated Debentures will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global certificates will be
issued for the Trust Preferred Securities and the Junior Subordinated Debentures
and will be deposited with the Depositary.
The Depositary is a limited purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary holds securities that its Participants deposit with the
Depositary. The Depositary also facilitates
48
<PAGE>
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. "Direct Participants" include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. The Depositary is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the Depositary system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants are
on file with the Commission.
Purchases of Trust Preferred Securities or Junior Subordinated Debentures
within the Depositary system must be made by or through Direct Participants,
which will receive a credit for the Trust Preferred Securities or Junior
Subordinated Debentures on the Depositary's records. The ownership interest of
each actual purchaser of each Trust Preferred Securities and each Junior
Subordinated Debenture ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from the Depositary of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased Trust
Preferred Securities or Junior Subordinated Debentures. Transfers of ownership
interests in the Trust Preferred Securities or Junior Subordinated Debentures
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Trust Preferred Securities or Junior
Subordinated Debentures, except in the event that use of the book-entry system
for the or Junior Subordinated Debentures is discontinued.
The Depositary has no knowledge of the actual Beneficial Owners of the Trust
Preferred Securities or Junior Subordinated Debentures; the Depositary's records
reflect only the identity of the Direct Participants to whose accounts such
Trust Preferred Securities or Junior Subordinated Debentures are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Trust Preferred Securities or Junior Subordinated Debentures. If less than
all of the Trust Preferred Securities or the Junior Subordinated Debentures are
being redeemed, the Depositary will determine by lot or PRO RATA the amount of
the Trust Preferred Securities of each Direct Participant to be redeemed.
Although voting with respect to the Trust Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Trust
Preferred Securities or Junior Subordinated Debentures, as applicable, in those
instances in which a vote is required, neither the Depositary nor Cede & Co.
will itself consent or vote with respect to Trust Preferred Securities or Junior
Subordinated Debentures. Under its usual procedures, the Depositary would mail
an omnibus proxy (the "Omnibus Proxy") to the relevant Trustee as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts such
Trust Preferred Securities or Junior Subordinated Debentures are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
49
<PAGE>
Distribution payments on the Trust Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to the Depositary.
The Depositary's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings shown on the
Depositary's records unless the Depositary has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of the
Depositary, the relevant Trustee, PCC Capital or Pacific Crest, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of Distributions to the Depositary is the responsibility of the relevant
Trustee, disbursement of such payments to Direct Participants is the
responsibility of the Depositary, and disbursements of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Participants.
The Depositary may discontinue providing its services as securities
depositary with respect to any of the Trust Preferred Securities or the Junior
Subordinated Debentures at any time by giving reasonable notice to the relevant
Trustee and Pacific Crest. In the event that a successor securities depositary
is not obtained, definitive Trust Preferred Securities or Subordinated Debenture
certificates representing such Trust Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. Pacific Crest, at its
option, may decide to discontinue use of the system of book-entry transfers
through the Depositary (or a successor depositary). After a Debenture Event of
Default, the holders of a majority in liquidation preference of Trust Preferred
Securities or aggregate principal amount of Junior Subordinated Debentures may
determine to discontinue the system of book-entry transfers through the
Depositary. In any such event, definitive certificates for such Trust Preferred
Securities or Junior Subordinated Debentures will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that PCC Capital
and Pacific Crest believe to be accurate, but PCC Capital and Pacific Crest
assume no responsibility for the accuracy thereof. Neither PCC Capital nor
Pacific Crest has any responsibility for the performance by the Depositary or
its Participants of their respective obligations as described herein or under
the rules and procedures governing their respective operations.
DESCRIPTION OF GUARANTEE
The Guarantee Agreement will be executed and delivered by Pacific Crest
concurrently with the issuance of the Trust Preferred Securities for the benefit
of the holders of the Trust Preferred Securities. Wilmington Trust Company will
act as Guarantee Trustee under the Guarantee Agreement for the purposes of
compliance with the Trust Indenture Act, and the Guarantee will be qualified as
an Indenture under the Trust Indenture Act. The following summary of certain
provisions of the 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 Agreement, including the definitions therein of certain terms, and the
Trust Indenture Act. The form of the Guarantee has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. The Guarantee
Trustee will hold the Guarantee for the benefit of the holders of the Trust
Preferred Securities.
GENERAL
The Guarantee will be an irrevocable guarantee on a subordinated basis of
PCC Capital's obligations under the Trust Preferred Securities, but will apply
only to the extent that PCC Capital has funds sufficient to make such payments,
and is not a guarantee of collection.
Pacific Crest 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 Trust Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that PCC Capital may have or assert
other than the defense of payment. The following payments with respect to the
Trust Preferred Securities, to the
50
<PAGE>
extent not paid by or on behalf of PCC Capital (the "Guarantee Payments"), will
be subject to the Guarantee: (i) any accumulated and unpaid Distributions
required to be paid on the Trust Preferred Securities, to the extent that PCC
Capital has funds on hand available therefor at such time, (ii) the redemption
price with respect to any Trust Preferred Securities called for redemption, to
the extent that PCC Capital has funds on hand available therefor at such time,
and (iii) upon a voluntary or involuntary dissolution, winding up or liquidation
of PCC Capital (unless the Junior Subordinated Debentures are distributed to
holders of the Trust Preferred Securities), the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of PCC Capital remaining available for
distribution to holders of Trust Preferred Securities after satisfaction of
liabilities to creditors of PCC Capital as required by law. Pacific Crest's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by Pacific Crest to the holders of the Trust Preferred
Securities or by causing PCC Capital to pay such amounts to such holders.
If Pacific Crest does not make interest payments on the Junior Subordinated
Debentures held by PCC Capital, PCC Capital will not be able to pay
Distributions on the Trust Preferred Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior and Subordinated Debt of Pacific Crest. See "Status of the
Guarantee" below. Because Pacific Crest is a holding company, the right of
Pacific Crest 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 Pacific
Crest may itself be recognized as a creditor of that subsidiary. Accordingly,
Pacific Crest's obligations under the Guarantee will be effectively subordinated
to all existing and future liabilities of Pacific Crest's subsidiaries, and
claimants should look only to the assets of Pacific Crest for payments
thereunder. Except as otherwise described herein, the Guarantee does not limit
the incurrence or issuance of other secured or unsecured debt of Pacific Crest,
including Senior and Subordinated Debt whether under the Indenture, any other
indenture that Pacific Crest may enter into in the future, or otherwise.
Pacific Crest has, through the Guarantee, the Guarantee Agreement, the Trust
Agreement, the Junior Subordinated Debentures, the Indenture and the Expense
Agreement, taken together, fully, irrevocably and unconditionally guaranteed all
of PCC Capital's obligations under the Trust Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of PCC Capital's obligations under the Trust Preferred
Securities. See "Relationship Among the Trust Preferred Securities, the Junior
Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of Pacific Crest and
will rank subordinate and junior in right of payment to all Senior and
Subordinated Debt in the same manner as the Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of collection.
For example, the guaranteed party may institute a legal proceeding directly
against Pacific Crest to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity. The Guarantee
will be held for the benefit of the holders of the Trust Preferred Securities.
The Guarantee will not be discharged except by payment of the Guarantee Payments
in full to the extent not paid by PCC Capital or upon distribution to the
holders of the Trust Preferred Securities of the Junior Subordinated Debentures
to the holders of the Trust Preferred Securities. The Guarantee does not place a
limitation on the amount of additional Senior and Subordinated Debt that may be
incurred by Pacific Crest. Pacific Crest expects from time to time to incur
additional indebtedness constituting Senior and Subordinated Debt.
51
<PAGE>
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), the Guarantee Agreement may not be amended without the prior
approval of the holders of not less than a majority of the aggregate Liquidation
Amount of such outstanding Trust Preferred Securities. See "Description of the
Trust Preferred Securities--Voting Rights; Amendment of the Trust Agreement."
All guarantees and agreements contained in the Guarantee Agreement shall bind
the successors, assigns, receivers, trustees and representatives of Pacific
Crest and shall inure to the benefit of the holders of the Trust Preferred
Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee Agreement will occur upon the
failure of Pacific Crest to perform any of its payment or other obligations
thereunder. The holders of not less than a majority in aggregate Liquidation
Amount of the Trust Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee
Agreement. Any holder of the Trust Preferred Securities may institute a legal
proceeding directly against Pacific Crest to enforce its rights under the
Guarantee without first instituting a legal proceeding against PCC Capital, the
Guarantee Trustee or any other person or entity.
Pacific Crest, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not Pacific Crest is in compliance with
all the conditions and covenants applicable to it under the Guarantee Agreement.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by Pacific Crest in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee Agreement and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee Agreement
at the request of any holder of the Trust Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the Redemption Price of the Trust Preferred Securities, upon full
payment of the amounts payable upon liquidation of PCC Capital or upon
distribution of Junior Subordinated Debentures to the holders of the Trust
Preferred Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Trust Preferred
Securities must restore payment of any sums paid under the Trust Preferred
Securities or the Guarantee.
GOVERNING LAW
The Guarantee Agreement will be governed by and construed in accordance with
the laws of the State of California.
52
<PAGE>
EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by Pacific Crest under the
Trust Agreement, Pacific Crest will irrevocably and unconditionally guarantee to
each person or entity to whom PCC Capital becomes indebted or liable, the full
payment of any costs, expenses or liabilities of PCC Capital, other than
obligations of PCC Capital to pay to the holders of the Trust Preferred
Securities or other similar interests in PCC Capital of the amounts due such
holders pursuant to the terms of the Trust Preferred Securities or such other
similar interests, as the case may be.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent PCC Capital has funds available for the payment of
such Distributions) are irrevocably guaranteed by Pacific Crest as and to the
extent set forth under "Description of Guarantee." Taken together, Pacific
Crest's obligations under the Junior Subordinated Debentures, the Indenture, the
Trust Agreement, the Expense Agreement, the Guarantee Agreement and the
Guarantee provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of distributions and other amounts due on the Trust
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of those documents that has the
effect of providing a full, irrevocable and unconditional guarantee of PCC
Capital's obligations under the Trust Preferred Securities. If and to the extent
that Pacific Crest does not make payments on the Junior Subordinated Debentures,
PCC Capital will not pay Distributions or other amounts due on the Trust
Preferred Securities. The Guarantee does not cover payment of Distributions when
PCC Capital does not have sufficient funds to pay such Distributions. In such
event, the remedy of a holder of the Trust Preferred Securities is to institute
a legal proceeding directly against Pacific Crest for enforcement of payment of
such Distributions to such holder. The obligations of Pacific Crest under the
Guarantee are subordinate and junior in right of payment to all Senior and
Subordinated Debt.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Trust Preferred Securities,
primarily because: (i) the aggregate principal amount of the Junior Subordinated
Debentures will be equal to the sum of the aggregate Liquidation Amount of the
Trust Preferred Securities and Common Securities; (ii) the interest rate and
interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate and Distribution and other payment dates for the
Trust Preferred Securities; (iii) Pacific Crest shall pay for all and any costs,
expenses and liabilities of PCC Capital except PCC Capital's obligations to
holders of Trust Preferred Securities; and (iv) the Trust Agreement further
provides that PCC Capital will not engage in any activity that is not consistent
with its limited purposes.
Notwithstanding anything to the contrary in the Indenture, Pacific Crest has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent Pacific Crest has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF THE TRUST PREFERRED SECURITIES UNDER THE
GUARANTEE
A holder of any the Trust Preferred Securities may institute a legal
proceeding directly against Pacific Crest to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, PCC Capital or any other person or entity.
53
<PAGE>
A default or event of default under any Senior and Subordinated Debt would
not constitute a default or Event of Default. However, in the event of payment
defaults under, or acceleration of, Senior and Subordinated Debt, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the Junior Subordinated Debentures until such Senior and
Subordinated Debt has been paid in full or any payment default thereunder has
been cured or waived. Failure to make required payments on Junior Subordinated
Debentures would constitute an Event of Default.
LIMITED PURPOSE OF PCC CAPITAL
The Trust Preferred Securities evidence a beneficial interest in PCC
Capital, and PCC Capital exists for the sole purpose of issuing the Trust
Securities and investing the proceeds thereof in Junior Subordinated Debentures.
A principal difference between the rights of a holder of the Trust Preferred
Securities and a holder of a Junior Subordinated Debenture is that a holder of a
Junior Subordinated Debenture is entitled to receive from Pacific Crest the
principal amount of and interest accrued on Junior Subordinated Debentures held,
while a holder of the Trust Preferred Securities is entitled to receive
Distributions from PCC Capital (or from Pacific Crest under the Guarantee) if
and to the extent PCC Capital has funds available for the payment of such
Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
PCC Capital involving the liquidation of the Junior Subordinated Debentures,
after satisfaction of liabilities to creditors of PCC Capital as provided by
applicable law, the holders of Trust Preferred Securities will be entitled to
receive, out of assets held by PCC Capital, the Liquidation Distribution in
cash. See "Description of the Trust Preferred Securities--Liquidation
Distribution Upon Dissolution." Upon any voluntary or involuntary liquidation or
bankruptcy of Pacific Crest, the Property Trustee, as holder of the Junior
Subordinated Debentures, would be a subordinated creditor of Pacific Crest,
subordinated in right of payment to all Senior and Subordinated Debt as set
forth in the Indenture, but entitled to receive payment in full of principal and
interest, before any stockholders of Pacific Crest receive payments or
distributions. Since Pacific Crest is the guarantor under the Guarantee and has
agreed to pay for all costs, expenses and liabilities of PCC Capital (other than
PCC Capital's obligations to the holders of its Trust Preferred Securities), the
positions of a holder of the Trust Preferred Securities and a holder of Junior
Subordinated Debentures relative to other creditors and to stockholders of
Pacific Crest in the event of liquidation or bankruptcy of Pacific Crest are
expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Manatt, Phelps & Phillips, LLP, counsel to the Company
("Counsel"), the following summary accurately describes the material United
States federal income tax consequences that may be relevant to the purchase,
ownership and disposition of Trust Preferred Securities. Unless otherwise
stated, this summary deals only with Trust Preferred Securities held as capital
assets by United States Persons (defined below) who purchase the Trust Preferred
Securities upon original issuance at their original offering price. As used
herein, a "United States Person" means a person that is (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
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 subject to United
States federal income taxation regardless of its source, or (iv) a trust the
income of which is subject to United States federal income taxation regardless
of its source; provided, however, that for taxable years beginning after
December 31, 1996 (or, if a trustee so elects, for taxable years ending after
August 20, 1996), a "United States Person" shall include any trust if a court is
able to exercise primary supervision over the administration of such trust and
one or more United States fiduciaries have the authority to control all
substantial decisions of such trust. The tax treatment of holders may vary
depending on their particular situation. This summary does not address all the
tax consequences that may be relevant to a
54
<PAGE>
particular holder or to holders who may be subject to special tax treatment,
such as banks, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors,
or foreign investors. In addition, this summary does not include any description
of any alternative minimum tax consequences or the tax laws of any state, local
or foreign government that may be applicable to a holder of Trust Preferred
Securities. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury regulations promulgated thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis.
The following discussion does not discuss the tax consequences that might be
relevant to persons that are not United States Persons ("non-United States
Persons"). Non-United States Persons should consult their own tax advisors as to
the specific United States federal income tax consequences of the purchase,
ownership and disposition of Trust Preferred Securities.
The authorities on which this summary is based are subject to various
interpretations and the opinions of Counsel are not binding on the Internal
Revenue Service ("Service") or the courts, either of which could take a contrary
position. Moreover, no rulings have been or will be sought from the Service with
respect to the transactions described herein. Accordingly, there can be no
assurance that the Service will not challenge the opinions expressed herein or
that a court would not sustain such a challenge. Nevertheless, Counsel has
advised that it is of the view that, if challenged, the opinions expressed
herein more likely than not would be sustained by a court with jurisdiction in a
properly presented case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST
PREFERRED 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. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE
TRUST PREFERRED SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS, SEE
"DESCRIPTION OF THE TRUST PREFERRED SECURITIES--REDEMPTION."
CLASSIFICATION OF PCC CAPITAL
In connection with the issuance of the Trust Preferred Securities, Counsel
is of the opinion that, under current law and assuming compliance with the terms
of the Trust Agreement, and based on certain facts and assumptions contained in
such opinion, PCC Capital will be classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes. As a result, each beneficial owner of the Trust Preferred Securities
(a "Securityholder") will be treated as owning an undivided beneficial interest
in the Junior Subordinated Debentures. Accordingly, each Securityholder will be
required to include in its gross income its pro rata share of the interest
income or original issue discount that is paid or accrued on the Junior
Subordinated Debentures. See "--Interest Income and Original Issue Discount"
herein. No amount included in income with respect to the Trust Preferred
Securities will be eligible for the dividends received deduction.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The Company intends to take the position that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company under current law, and, by acceptance of a Trust
Preferred Security, each holder covenants to treat the Junior Subordinated
Debentures as indebtedness and the Trust Preferred Securities as evidence of an
indirect beneficial ownership interest in the Junior Subordinated Debentures. No
assurance can be given, however, that such position of the Company will not be
challenged by the Internal Revenue Service or, if challenged, that such a
challenge will not be successful. The remainder of this discussion assumes that
the Junior Subordinated Debentures will be classified for United States federal
income tax purposes as indebtedness of the Company. See "Risk Factors--Possible
Tax Law Changes Affecting the Trust Preferred Securities."
55
<PAGE>
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Except as set forth below, stated interest on the Junior Subordinated
Debentures generally will be included in income by a Securityholder at the time
such interest income is paid or accrued in accordance with such Securityholder's
regular method of tax accounting.
Pacific Crest believes that, under the applicable Treasury regulations, the
Junior Subordinated Debentures will not be considered to have been issued with
"original issue discount" ("OID") within the meaning of Section 1273(a) of the
Code. If, however, Pacific Crest exercises its right to defer payments of
interest on the Junior Subordinated Debentures, the Junior Subordinated
Debentures will become OID instruments at such time and all Securityholders will
be required to accrue the stated interest on the Junior Subordinated Debentures
on a daily basis during the Extension Period, even though Pacific Crest will not
pay such interest until the end of the Extension Period, and even though some
Securityholders may use the cash method of tax accounting. Moreover, thereafter
the Junior Subordinated Debentures will be taxed as OID instruments for as long
as they remain outstanding. Thus, even after the end of the Extension Period,
all Securityholders would be required to continue to include the stated interest
on the Junior Subordinated Debentures in income on a daily economic accrual
basis, regardless of their method of tax accounting and in advance of receipt of
the cash attributable to such interest income. Under the OID economic accrual
rules, a Securityholder would accrue an amount of interest income each year that
approximates the stated interest payments called for under the Junior
Subordinated Debentures, and actual cash payments of interest on the Junior
Subordinated Debentures would not be reported separately as taxable income.
The Treasury regulations described above have not yet been addressed in any
definitive interpretations by the Service, and it is possible that the Service
could take a contrary position. If the Service were to assert successfully that
the stated interest on the Junior Subordinated Debentures was OID regardless of
whether Pacific Crest exercises its right to defer payments of interest on such
debentures, all Securityholders would be required to include such stated
interest in income on a daily economic accrual basis as described above.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF TRUST PREFERRED
SECURITIES
Under current law, a distribution by PCC Capital of the Junior Subordinated
Debentures as described under the caption "Description of the Trust Preferred
Securities--Liquidation Distribution Upon Dissolution" will be non-taxable and
will result in the Securityholder receiving directly its pro rata share of the
Junior Subordinated Debentures previously held indirectly through PCC Capital,
with a holding period and aggregate tax basis equal to the holding period and
aggregate tax basis such Securityholder had in its Trust Preferred Securities
before such distribution. If, however, the liquidation of PCC Capital were to
occur because PCC Capital is subject to United States federal income tax with
respect to income accrued or received on the Junior Subordinated Debentures as a
result of a Tax Event or otherwise, the distribution of Junior Subordinated
Debentures to Securityholders by PCC Capital could be a taxable event to PCC
Capital and each Securityholder, and a Securityholder would recognize gain or
loss as if the Securityholder had exchanged its Trust Preferred Securities for
the Junior Subordinated Debentures it received upon the liquidation of PCC
Capital. A Securityholder would recognize interest income in respect of Junior
Subordinated Debentures received from PCC Capital in the manner described above
under "--Interest Income and Original Issue Discount" herein.
SALES OR REDEMPTION OF TRUST PREFERRED SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Trust
Preferred Securities (including a redemption for cash) in an amount equal to the
difference between the amount realized (which for this purpose, will exclude
amounts attributable to accrued interest or OID not previously included in
income) and the Securityholder's adjusted tax basis in the Trust Preferred
Securities sold or so redeemed. Gain or loss recognized by a Securityholder on
Trust Preferred Securities held for more than one year will generally
56
<PAGE>
be taxable as long-term capital gain or loss. Under recent tax legislation, the
maximum federal income tax rate applicable to net long term capital gains will
depend upon whether the capital asset sold or exchanged had a holding period in
excess of one year or a holding period in excess of 18 months. Amounts
attributable to accrued interest with respect to a Securityholder's pro rata
share of the Junior Subordinated Debentures not previously included in income
will be taxable as ordinary income.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of OID accrued on the Trust Preferred Securities held of record
by United States Persons (other than corporations and other exempt
Securityholders), if any, will be reported to the Service. "Backup" withholding
at a rate of 31% will apply to payments of interest to non-exempt United States
Persons unless the Securityholder furnishes its taxpayer identification number
in the manner prescribed in applicable Treasury Regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions. Any amounts withheld from a Securityholder
under the backup withholding rules will be allowed as a refund or a credit
against such Securityholder's United States federal income tax liability,
provided the required information is furnished to the Service.
POSSIBLE TAX LAW CHANGES AFFECTING THE TRUST PREFERRED SECURITIES
There can be no assurance that future legislative proposals or final
legislation will not affect the ability of the Company to deduct interest on the
Junior Subordinated Debentures. Such a change could give rise to a Tax Event,
which may permit Pacific Crest to cause a redemption of the Trust Preferred
Securities. See "Description of the Trust Preferred Securities--Redemption--Tax
Event Redemption" and "Description of Junior Subordinated
Debentures--Redemption."
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans"), generally may purchase Trust Preferred Securities subject to the
investing fiduciary's determination that the investment in Trust Preferred
Securities satisfies ERISA's fiduciary standards and other requirements
applicable to investments by the Plan.
In any case, the Company and/or any of its affiliates 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 certain Plans
(generally, those Plans maintained or sponsored by, or contributed to by, any
such persons with respect to which the Company or an affiliate is a fiduciary or
Plans for which the Company or an affiliate provide services). The acquisition
and ownership of Trust Preferred Securities by a Plan (or by an individual
retirement arrangement or other Plans described in Section 4975(e)(1) of the
Code ) with respect to which the Company or any of its affiliates is considered
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
Trust Preferred Securities are acquired pursuant to and in accordance with an
applicable exemption.
As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Trust Preferred Securities unless such Trust Preferred Securities are acquired
pursuant to and in accordance with an applicable exemption. Any other Plans or
other entities whose assets include Plan assets subject to ERISA or Section 4975
of the Code proposing to acquire Trust Preferred Securities should consult with
their own counsel.
57
<PAGE>
UNDERWRITING
The Underwriters named below, represented by Sandler O'Neill & Partners,
L.P. and Sutro & Co. Incorporated (the "Representatives"), have severally
agreed, subject to the terms and conditions set forth in the Underwriting
Agreement, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, to purchase from PCC Capital
the number of Trust Preferred Securities set forth opposite their respective
names below. The several Underwriters have agreed in the Underwriting Agreement,
subject to the terms and conditions set forth therein, to purchase all the Trust
Preferred Securities offered hereby if any of the Trust Preferred Securities are
purchased. In the event of default by an Underwriter, the Underwriting Agreement
provides that, in certain circumstances, purchase commitments of the
nondefaulting Underwriters may be increased or the Underwriting Agreement may be
terminated.
<TABLE>
<CAPTION>
NUMBER OF TRUST
PREFERRED
UNDERWRITER SECURITIES
- -------------------------------------------------------------------------- ------------------
<S> <C>
Sandler O'Neill & Partners, L.P...........................................
Sutro & Co. Incorporated..................................................
----------
Total................................................................. 1,500,000
----------
----------
</TABLE>
The Representatives have advised Pacific Crest and PCC Capital that they
propose initially to offer the Trust Preferred Securities to the public at the
public offering price set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of $ per Trust
Preferred Security. The Underwriters may allow, and such dealers may reallow, a
discount not in excess of $ per Trust Preferred Security to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be used to purchase the Junior Subordinated Debentures of the
Company, the Underwriting Agreement provides that Pacific Crest will pay as
compensation to the Underwriters arranging the investment therein of such
proceeds, an amount in immediately available funds of $ per Trust
Preferred Security (or $ in the aggregate) for the accounts of the several
Underwriters.
PCC Capital has granted the Underwriters an option to purchase up to an
additional 225,000 Trust Preferred Securities at the public offering price Such
option, which expires 30 days from the date of this Prospectus, may be exercised
solely to cover over-allotments. To the extent that the Underwriters exercise
such option, each of the Underwriters will have a firm commitment, subject to
certain conditions, to purchase approximately the same percentage of the
additional Trust Preferred Securities that the number of Trust Preferred
Securities to be purchased initially by the Underwriter is of the 1,500,000
Trust Preferred Securities initially purchased by the Underwriters.
To the extent that the Underwriters exercise their option to purchase
additional Trust Preferred Securities, PCC Capital will issue and sell to
Pacific Crest additional Common Securities in such aggregate Liquidation Amount
as is required for Pacific Crest to continue to hold Common Securities in an
aggregate Liquidation Amount equal to at least 3% of the total capital of PCC
Capital and Pacific Crest will issue and sell to PCC Capital Junior Subordinated
Debentures in an aggregate principal amount equal to the total aggregate
Liquidation Amount of the additional Trust Preferred Securities being purchased
pursuant to the option and the additional Common Securities.
In connection with the offering of the Trust Preferred Securities, the
Underwriters and any selling group members and their respective affiliates may
engage in transactions effected in accordance with Rule 104 of the Securities
and Exchange Commission's Regulation M that are intended to stabilize, maintain
or otherwise affect the market price of the Trust Preferred Securities. Such
transactions may include over-allotment transactions in which the Underwriters
create a short position for their own account
58
<PAGE>
by selling more Trust Preferred Securities than they are committed to purchase
from PCC Capital. In such case, to cover all or part of the short position, the
Underwriters may exercise the over-allotment option described above or may
purchase Trust Preferred Securities in the open market following completion of
the initial offering of the Trust Preferred Securities. The Underwriters may
also engage in stabilizing transactions in which they bid for, and purchase,
shares of the Trust Preferred Securities at a level above that which might
otherwise prevail in the open market for the purpose of preventing or retarding
a decline in the market price of the Trust Preferred Securities. The
Underwriters also may reclaim any selling concession allowed to an Underwriter
or dealer if the Underwriters repurchase shares distributed by that Underwriter
or dealer. Any of the foregoing transactions may result in the maintenance of a
price for the Trust Preferred Securities at a level above that which might
otherwise prevail in the open market. Neither the Company nor any of the
Underwriters makes any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the Trust Preferred Securities. The Underwriters are not required to
engage in any of the foregoing transactions and, if commenced, such transactions
may be discontinued at any time without notice.
During a period of 180 day from the date of this Prospectus, neither PCC
Capital nor the Company will, subject to certain exceptions, without the prior
written consent of the Representatives, directly or indirectly, sell, offer to
sell, grant any option for sale of, or otherwise dispose of, any Trust Preferred
Securities, any security convertible into or exchangeable into or exercisable
for Trust Preferred Securities or Junior Subordinated Debentures or any debt
securities substantially similar to the Junior Subordinated Debentures or equity
securities substantially similar to the Trust Preferred Securities (except for
Junior Subordinated Debentures and the Trust Preferred Securities offered
hereby).
Because the National Association of Securities Dealer, Inc. ("NASD") is
expected to view the Trust Preferred Securities as interests in a direct
participation program, the offering of the Trust Preferred Securities is being
made in compliance with the applicable provisions of Rule 2810 of the NASD's
Conduct Rules.
The Trust Preferred Securities are a new issue of securities with no
established trading market. The Trust Preferred Securities have been approved
for listing on the Nasdaq National Market, subject to official notice of
issuance. The Representatives have advised PCC Capital that they presently
intend to make a market in the Trust Preferred Securities after the commencement
of trading on the Nasdaq National Market, but no assurances can be made as to
the liquidity of such Trust Preferred Securities or that an active and liquid
trading market will develop or, if developed, that it will continue. The
offering price and distribution rate have been determined by negotiations among
representatives of the Company and the Underwriters, and the offering price of
the Trust Preferred Securities may not be indicative of the market price
following the Offering. The Representatives will have no obligation to make a
market in the Trust Preferred Securities, however, and may cease market-making
activities, if commenced, at any time.
PCC Capital and Pacific Crest have agreed to indemnify the Underwriters
against, or contribute to payments that the Underwriters may be required to make
in respect of, certain liabilities, including liabilities under the Securities
Act.
Sandler O'Neill & Partners, L.P. engages in transactions with, and, from
time to time, has performed services for, the Company in the ordinary course of
business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities, the enforceability of the Trust Agreement and the creation
of PCC Capital will be passed upon by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special counsel to Pacific Crest and PCC Capital. The
validity of the Guarantee and the Junior Subordinated Debentures will be passed
upon for the Company by Manatt, Phelps & Phillips, LLP, Los Angeles, California,
counsel to the Company. Certain legal matters in connection with this Offering
will be passed upon for the Underwriters by Elias, Matz, Tiernan &
59
<PAGE>
Herrick L.L.P. Manatt, Phelps & Phillips, LLP and Elias, Matz, Tiernan & Herrick
L.L.P. 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 Manatt, Phelps
& Phillips, LLP.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996, and for the year ended December 31, 1996, included and incorporated by
reference in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports which are included and
incorporated by reference herein, and have been so included and incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The 1995 and 1994 consolidated financial statements of the Company included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1996, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
60
<PAGE>
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE
CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO 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.
------------------------
TABLE OF CONTENTS
------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 5
Incorporation of Certain Documents by Reference........................... 5
Prospectus Summary........................................................ 7
Summary Consolidated Financial Data....................................... 13
Risk Factors.............................................................. 16
Use of Proceeds........................................................... 22
Accounting Treatment...................................................... 22
Capitalization............................................................ 23
Management................................................................ 24
Description of the Trust Preferred Securities............................. 26
Description of Junior Subordinated Debentures . 38
Book-Entry Issuance....................................................... 48
Description of Guarantee.................................................. 50
Expense Agreement......................................................... 53
Relationship Among the Trust Preferred Securities, the Junior Subordinated
Debentures and the Guarantee............................................ 53
Certain Federal Income Tax Consequences................................... 54
ERISA Considerations...................................................... 57
Underwriting.............................................................. 58
Legal Matters............................................................. 59
Experts................................................................... 60
Appendix A--Annual Report on Form 10-K for the Fiscal Year Ended December
31, 1996
Appendix B--Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1997
</TABLE>
------------------------
1,500,000 TRUST
PREFERRED SECURITIES
PCC CAPITAL I
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER
TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
PACIFIC CREST CAPITAL, INC.
---------------------
PROSPECTUS
---------------------
SANDLER O'NEILL & PARTNERS, L.P.
SUTRO & CO. INCORPORATED
, 1997
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............... $ 5,228
NASD fee.......................................................... 2,225
Nasdaq fees....................................................... 7,750
Trustees' fees and expenses....................................... 16,000
Legal fees and expenses........................................... 135,000*
Blue Sky fees and expenses........................................ 10,000*
Accounting fees and expenses...................................... 43,000*
Printing expenses................................................. 50,000*
Miscellaneous expenses............................................ 30,797*
---------
Total......................................................... $ 300,000*
---------
---------
</TABLE>
- ------------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware permits the
indemnification of directors, officers, employees and agents of Delaware
corporations.
Article Seventeenth of the Registrant's Restated Certificate of
Incorporation provides as follows:
"A director of the 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, as the same exists or hereafter may be amended, or
(iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law hereafter is
amended to authorize the further elimination or limitation of the liability
of directors, then the liability of a director of the Corporation, in
addition to the limitation on personal liability provides herein, shall be
limited to the fullest extent permitted by the amended Delaware General
Corporation Law. No amendment to or repeal of this Article Seventeenth shall
apply to or have an effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
Article VI of the Registrant's Amended and Restated Bylaws provides as
follows:
"Section 6.1 RIGHT TO INDEMNIFICATION. Each person who was or is made
a party or is threatened to be made a party to or is 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, or a
person of whom he or she is the legal representative, is or was a director
or officer of the Corporation, 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 employee benefit plans, or was a director, officer,
employee or agent of a foreign or domestic corporation which was a
predecessor of the Corporation or of another enterprise at the request of
such predecessor corporation, 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
II-1
<PAGE>
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 said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorney's
fees, judgments, fines, ERISA excise taxes of penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators; provided,
however, that, except as provided in Section 6.2 of this Article VI, the
Corporation shall indemnify and such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation. The right to indemnification conferred in this
Section 6.1 shall be a contract right and shall include the right to be paid
by the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that if the Delaware
General Corporation Law requires the payment of such expenses incurred by a
director or officer 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 person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or
on behalf of such director or officer, to repay, all amounts so advanced if
it shall ultimately be determined that such director or officer is not
entitled to be indemnified under this Section or otherwise. The Corporation
may by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as
the foregoing indemnification of directors and officers. This Article VI
shall create a right of indemnification for each such indemnifiable party
whether or not the proceeding to which the indemnification relates arose in
whole or in part prior to adoption of this Article VI (or the adoption of
the comparable provisions of the Bylaws of the Corporation's predecessor
corporation).
Section 6.2 RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 6.1
of this Article VI is not paid in full by the Corporation within thirty days
after a written claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. 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
action that indemnification of the claimant is proper to the circumstances
because he or she 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 claimant has not met such applicable standard or conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 6.3 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article VI shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 6.4 INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation
II-2
<PAGE>
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law., in pertinent part, that each
person who 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 or agent of another foreign or domestic corporation or other entity,
shall be indemnified by the Registrant to the full extent permitted by the
General Corporation Law of the State of California or any other applicable laws.
Article IX also authorizes the Registrant to enter into one or more agreements
with any person which provides for indemnification greater or different than
that provided for in that Article.
The Registrant has entered into indemnification agreements with its officers
and directors in the form incorporated by reference as Exhibit 10 to this
Registration Statement.
Under the Trust Agreement, Pacific Crest will agree to indemnify each of the
Trustees of PCC Capital I or any predecessor Trustee for PCC Capital I, and to
hold each Trustee harmless against any loss, damage, claims, 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 Trust Agreement,
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 Agreement.
Pacific Crest and PCC Capital I have agreed to indemnify the Underwriter,
and the Underwriter has agreed to indemnify PCC Capital I and Pacific Crest
against certain liabilities, including liabilities under the Securities Act of
1933, as amended. Reference is made to the Underwriting Agreement filed as
Exhibit 1.1 herewith.
ITEM 16. EXHIBITS
(a) Exhibits
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement.
4.1 Form of Subordinated Indenture dated , 1997 to be entered into
between Pacific Crest Capital, Inc. and Wilmington Trust Company, as
Indenture Trustee.*
4.2 Form of Officers' Certificate and Company Order, dated , 1997.*
4.3 Certificate of Trust of PCC Trust I dated August 18, 1997.*
4.4 Trust Agreement of PCC Trust I dated as of August 18, 1997.*
4.5 Certificate of Amendment to Certificate of Trust of PCC Trust I dated August
20, 1997.*
4.6 Form of Amended and Restated Trust Agreement of PCC Capital I, dated ,
1997.
4.7 Form of Trust Preferred Certificate of PCC Capital I (included as an exhibit
to Exhibit 4.6).
4.8 Form of Common Securities Certificate of PCC Capital I (included as an exhibit
to Exhibit 4.6).
4.9 Form of Guarantee Agreement dated , 1997.*
4.10 Form of Agreement as to Expenses and Liabilities (included as an exhibit to
Exhibit 4.6).
5.1 Opinion of Manatt, Phelps & Phillips, LLP.
5.2 Opinion and Consent of Richards, Layton & Finger, P.A.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
8.1 Opinion and Consent of Manatt, Phelps & Phillips, LLP, counsel to Pacific
Crest Capital, Inc., as to certain federal income tax matters.
10.1 Form of Indemnification Agreement(2)**
10.2 Pacific Crest Capital, Inc. 1993 Equity Incentive Plan(4)(5)**
10.3 Pacific Crest Capital, Inc. Retirement Plan and Trust(2)**
10.4 1993 Employee Stock Purchase Plan(2)(6)**
10.5 Form of Split Dollar Agreement(2)**
10.6 Pacific Crest Capital, Inc. Supplemental Executive Retirement Plan(2)**
10.7 Form of Distribution Agreement(1)
10.8 Form of Tax Sharing Agreement between Pacific Crest Capital, Inc. and The
Foothill Group, Inc.(2)
10.9 Office Lease by and between Wilshire Masterpiece, Inc. and Pacific Crest
Investment and Loan, dated October 31, 1990 (Beverly Hills Branch)(3)
10.10 Office Lease between Fifth and Beech Associates and Pacific Crest Investment
and Loan (San Diego Branch)(3)
10.11.1 Shopping Center Lease dated April 18, 1978, between Frances Sarno and Robert
Sarno, as Trustees, and Le Chateau Boutiques, Inc. (Encino Branch)(3)
10.11.2 Assignment, Assumption and Consent to Assignment of Lease dated October 16,
1980, between Pacific Crest Investment and Loan, Frances Sarno and Robert
Sarno, as Trustees, and Le Chateau Boutiques, Inc.(3)
10.11.3 Exercise of Option to Renew Lease dated January 23, 1990(3)
10.12 Lease dated April 22, 1992 between The Klussman Family Trust and Pacific Crest
Investment and Loan (Agoura Hills office)(3)
10.14.1 Employment Agreement between the Company and Gary Wehrle(4)**
10.14.2 Employment Agreement between the Company and Barry Otelsberg(4)**
10.14.3 Employment Agreement between the Company and Lyle Lodwick(4)**
10.14.4 Employment Agreement between the Company and Robert J. Dennen(4)**
10.14.5 Employment Agreement between the Company and Gonzalo Fernandez(7)**
10.15 1996 Non-Employee Directors' Stock Plan(8)*
11.1 Statement re Computation of Ratios.*
13.1 Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1996.*
13.2 Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1997.*
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
23.6 Consent of Manatt, Phelps & Phillips, LLP (included in Exhibit 5.1 above).
23.7 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2 above).
24.1 Power of attorney.*
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Subordinated Indenture.*
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C>
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Amended and Restated Trust Agreement.*
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Trust Preferred Securities Guarantee Agreement.*
27.1 Financial Data Schedule of Pacific Crest Capital, Inc.*
27.2 Financial Data Schedule of PCC Capital I.*
</TABLE>
- ------------------------
* Previously filed.
**Management contracts and compensatory plan or arrangements.
(1) Incorporated herein by reference from Registrant's Amendment No. 2 to Form
S-1 Registration Statement No. 33-68718, filed December 3, 1993.
(2) Incorporated herein by reference from Registrant's Amendment No. 1 to Form
S-1 Registration Statement No. 33-68718, filed October 28, 1993.
(3) Incorporated herein by reference from Registrant's Form S-1 Registration
Statement No. 33-68717, filed September 13, 1993.
(4) Incorporated herein by reference from Registrant's Annual Report on Form
10-K dated December 31, 1993, filed March 31, 1994.
(5) Incorporated herein by reference from Registrant's Form S-8 Registration
Statement No. 33-87990 filed December 27, 1994. Pacific Crest Capital, Inc.
1993 Equity Incentive Plan.
(6) Incorporated herein by reference from Registrant's Form S-8 Registration
Statement No. 33-87988 filed December 27, 1994. Pacific Crest Capital, Inc.
1995 Employee Stock Purchase Plan.
(7) Incorporated herein by reference from Registrant's Annual Report on Form 10K
dated December 31, 1994 filed March 30, 1995.
(8) Incorporated herein by reference from Registrant's Form S-8 Registration
Statement No. 333-23849, filed March 23, 1997. Pacific Crest Capital, Inc.
1996 Non-Employee Directors' Stock Plan.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, 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 director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction
II-5
<PAGE>
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(c) The Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certificates that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Agoura Hills, State of California, on September
15, 1997.
<TABLE>
<S> <C> <C>
PACIFIC CREST CAPITAL, INC.
By: *
-----------------------------------------
Gary L. Wehrle
CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the Requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below on the 15th day of
September, 1997, by the following persons in the capacities indicated.
SIGNATURE TITLE
- ------------------------------ --------------------------
*
- ------------------------------ Chairman of the Board and
Gary L. Wehrle Chief Executive Officer
Vice President, Chief
/s/ ROBERT J. DENNEN Financial Officer and
- ------------------------------ Secretary (Chief
Robert J. Dennen Accounting Officer)
- ------------------------------ Director
Rudolph I. Estrada
*
- ------------------------------ Director
Martin J. Frank
*
- ------------------------------ Director
Richard S. Orfalea
*
- ------------------------------ Director
Steven J. Orlando
<TABLE>
<S> <C>
By: /s/ ROBERT J. DENNEN
---------------------------------------
Robert J. Dennen,
Attorney-in-fact
</TABLE>
II-7
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the registrant
certificates that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Agoura Hills, State of California, on September
15, 1997.
<TABLE>
<S> <C> <C>
PCC CAPITAL I
By: *
-----------------------------------------
Gary L. Wehrle
TRUSTEE
By: /s/ ROBERT J. DENNEN
-----------------------------------------
Robert J. Dennen
TRUSTEE
By: *
-----------------------------------------
Lyle C. Lodwick
TRUSTEE
</TABLE>
<TABLE>
<S> <C>
By: /s/ ROBERT J. DENNEN
-----------------------------------------
Robert J. Dennen,
Attorney-in-fact
</TABLE>
II-8
<PAGE>
1,500,000 Preferred Securities
PCC Capital I
____% Cumulative Trust Preferred Securities
(Liquidation Amount of $10 per Preferred Security)
UNDERWRITING AGREEMENT
September __, 1997
SANDLER O'NEILL & PARTNERS, L.P.
SUTRO & CO. INCORPORATED
c/o Sandler O'Neill & Partners, L.P.
Two World Trade Center, 104th Floor
New York, New York 10048
Ladies and Gentlemen:
Pacific Crest Capital, Inc., a Delaware corporation (the "Company")
and its financing subsidiary, PCC Capital I, a Delaware business trust (the
"Trust", and hereinafter together with the Company, the "Offerors"), propose
that the Trust issue and sell to the several underwriters listed on Schedule I
hereto (the "Underwriters"), pursuant to the terms of this Agreement, 1,500,000
of the Trust's ____% Cumulative Trust Preferred Securities, with a liquidation
amount of $10 per preferred security (the "Preferred Securities"), to be issued
under the Trust Agreement (as hereinafter defined), the terms of which are more
fully described in the Prospectus (as hereinafter defined). The aforementioned
1,500,000 Preferred Securities to be sold to the Underwriters are herein called
the "Firm Preferred Securities". Solely for the purpose of covering
over-allotments in the sale of the Firm Preferred Securities, the Offerors
further propose that the Trust issue and sell to the Underwriters, at the
Underwriters' option, up to an additional 225,000 Preferred Securities (the
"Option Preferred Securities") upon exercise of the over-allotment option
granted in Section 1 hereof. The Firm Preferred Securities and any Option
Preferred Securities are herein collectively referred to as the "Designated
Preferred Securities". Sandler O'Neill & Partners, L.P. and Sutro & Co.
Incorporated are acting as representatives of the Underwriters and in such
capacity are sometimes herein referred to as the "Representatives."
The Offerors hereby confirm as follows their agreement with each of
the Underwriters in connection with the proposed purchase of the Designated
Preferred Securities. The terms, conditions, covenants and agreements set forth
in this Agreement supersede and preempt the terms, conditions, covenants and
agreements of the parties set forth in any and all other agreements among the
parties hereto relating to the issuance of the Preferred Securities.
<PAGE>
1. SALE, PURCHASE AND DELIVERY OF DESIGNATED PREFERRED SECURITIES;
DESCRIPTION OF DESIGNATED PREFERRED SECURITIES.
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth, the
Offerors hereby agree that the Trust shall issue and sell to each of the
Underwriters and each of the Underwriters agrees, severally and not jointly, to
purchase from the Trust, at a purchase price of $10 per share (the "Purchase
Price"), the respective number of Firm Preferred Securities set forth opposite
the name of such Underwriter in Schedule I hereto. Because the proceeds from
the sale of the Firm Preferred Securities will be used to purchase from the
Company its Debentures (as hereinafter defined and as described in the
Prospectus), the Company shall pay to each Underwriter a commission of $0.45 per
Firm Preferred Security purchased (the "Firm Preferred Securities Commission").
The Representatives may by notice to the Company amend Schedule I to add,
eliminate or substitute names set forth therein (other than to eliminate the
name of the Representatives) and to amend the number of firm Preferred
Securities to be purchased by any firm or corporation listed thereon, provided
that the total number of Firm Preferred Securities listed on Schedule I shall
equal 1,500,000.
In addition, on the basis of the representations, warranties and
agreements herein contained and subject to the terms and conditions herein set
forth, the Trust hereby grants to the Underwriters, severally and not jointly,
an option to purchase all or any portion of the 225,000 Option Preferred
Securities, and upon the exercise of such option in accordance with this
Section 1, the Offerors hereby agree that the Trust shall issue and sell to the
Underwriters, severally and not jointly, all or any portion of the Option
Preferred Securities at the same Purchase Price per share paid for the Firm
Preferred Securities. If any Option Preferred Securities are to be purchased,
each Underwriter, severally and not jointly, agrees to purchase from the Trust
that proportion (subject to adjustment as you may determine to avoid fractional
shares) of the number of Option Preferred Securities to be purchased that the
number of Firm Preferred Securities set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to 1,500,000. Because the proceeds from the sale of the
Option Preferred Securities will be used to purchase from the Company its
Subordinated Debentures, the Company shall pay to the Underwriters a commission
of $0.45 per Option Preferred Security for each Option Preferred Security
purchased (the "Option Preferred Securities Commission"). The option hereby
granted (the "Option") shall expire 30 days after the date upon which the
Registration Statement (as hereinafter defined) becomes effective and may be
exercised only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Firm Preferred Securities.
The Option may be exercised in whole or in part at any time (but not more than
once) by you giving notice (confirmed in writing) to the Trust setting forth the
number of Option Preferred Securities as to which the Underwriters are
exercising the Option and the time, date and place for payment and delivery of
certificates for such Option Preferred Securities. Such time and date of
payment and delivery for the Option Preferred Securities (the "Option
2
<PAGE>
Closing Date") shall be determined by you, but shall not be earlier than two nor
later than five full business days after the exercise of such Option, nor in any
event prior to the Closing Date (as hereinafter defined). The Option Closing
Date may be the same as the Closing Date.
Payment of the Purchase Price and the Firm Preferred Securities
Commission for the Firm Preferred Securities shall be made at the offices of
Manatt, Phelps & Phillips, LLP, Los Angeles, California 90064, or such other
place as shall be agreed to by you and the Offerors, at 8:00 a.m., Los Angeles
time, on the third (or if the Designated Preferred Securities are priced, as
contemplated by Rule 15c6-1(c) under the 1934 Act (as defined herein), after
4:30 p.m. Eastern Time, on the fourth) full business day following the date
hereof, or at such other time and date as the Representatives and the Offerors
determine pursuant to Rule 15c6-1(a) under the 1934 Act (the "Closing Date").
If the Underwriters exercise the option to purchase any or all of the Option
Preferred Securities, payment of the Purchase Price and Option Preferred
Securities Commission and delivery of certificates for such Option Preferred
Securities shall be made on the Option Closing Date at the offices of Manatt,
Phelps & Phillips, LLP, Los Angeles, California, or at such other place as the
Offerors and you shall determine. Such payments shall be made to an account
designated by the Trust by wire transfer or certified or bank cashier's check,
in same day funds, in the amount of the Purchase Price therefor, against
delivery by or on behalf of the Trust to you for the respective accounts of the
several Underwriters of certificates for the Designated Preferred Securities to
be purchased by the Underwriters.
The Agreement contained herein with respect to the timing of the
Closing Date and Option Closing Date is intended to, and does, constitute an
express agreement, as described in Rule 15c6-1(a) and (d) promulgated under the
1934 Act, for a settlement date other than three business days after the date of
the contract.
The Designated Preferred Securities to be purchased by each
Underwriter in book-entry form and in authorized denominations and registered in
the name of the nominee of The Depository Trust Company, shall be delivered by
or on behalf of the Offerors through the facilities of The Depository Trust
Company for the account of such Underwriter, against payment by such Underwriter
or on its behalf of the purchase price therefor by certified or official bank
check or checks or wire transfer of same day funds payable to the order of the
Offerors at the offices of Manatt, Phelps & Phillips, LLP, Los Angeles,
California, at 8:00 a.m., California time, on the Closing Date, and, if
applicable, the Option Closing Date. The place of the closing and the Closing
Date may be varied by agreement among the Underwriters and the Company.
Delivery of the Designated Preferred Securities may be made by credit through
full fast transfer to the accounts at The Depository Trust Company designated by
the Underwriters.
Time shall be of the essence, and delivery of the certificates for the
Designated Preferred Securities at the time and place specified pursuant to this
Agreement is a further condition of the obligations of each Underwriter
hereunder.
3
<PAGE>
(b) The Offerors propose that the Trust issue the Designated
Preferred Securities pursuant to an Amended and Restated Trust Agreement among
Wilmington Trust Company, as Property Trustee, Wilmington Trust Company, as
Delaware Trustee, the Administrative Trustees named therein (collectively, the
"Trustees"), the Company and the holders, from time to time, of undivided
beneficial interests in the assets of the Trust, in substantially the form
heretofore delivered to the Underwriters, said Agreement being hereinafter
referred to as the "Trust Agreement". In connection with the issuance of the
Designated Preferred Securities, the Company proposes (i) to issue its Junior
Subordinated Deferrable Interest Debentures (the "Debentures") pursuant to an
Indenture, dated as of September __, 1997, between the Company and Wilmington
Trust Company, as Trustee (the "Indenture") and (ii) to guarantee certain
payments on the Designated Preferred Securities pursuant to a Guarantee
Agreement between the Company and Wilmington Trust Company, as guarantee trustee
(the "Guarantee"), to the extent described therein.
2. REPRESENTATIONS AND WARRANTIES.
(a) The Offerors jointly and severally represent and warrant to each
of the Underwriters that:
(i) The reports filed with the Securities and Exchange
Commission (the "Commission") by the Company under the Securities Exchange
Act of 1934, as amended (the "1934 Act") and the rules and regulations
thereunder (the "1934 Act Regulations") during the two year period ending
on the date hereof, at the time they were filed with the Commission,
complied as to form in all material respects with the requirements of the
1934 Act and the 1934 Act Regulations and did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading.
(ii) The Offerors have prepared and filed with the Commission a
registration statement on Form S-2 (File Numbers 333-34257 and
333-34257-01) for the registration of the Designated Preferred Securities,
the Guarantee and $17,250,000 aggregate principal amount of Debentures
under the Securities Act of 1933, as amended (the "1933 Act"), including
the related prospectus subject to completion, and one or more amendments to
such registration statement may have been so filed, in each case in
conformity in all material respects with the requirements of the 1933 Act,
the rules and regulations promulgated thereunder (the "1933 Act
Regulations") and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations thereunder. Copies of such
registration statement, including any amendments thereto, each Preliminary
Prospectus (as defined herein) contained therein and the exhibits,
financial statements and schedules to such registration statement, as
finally amended and revised, have heretofore been delivered by the Offerors
to the Representatives. After the execution of this Agreement, the
Offerors will file with the Commission (A) if such registration
4
<PAGE>
statement, as it may have been amended, has been declared by the Commission
to be effective under the 1933 Act, a prospectus in the form most recently
included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A of the 1933 Act
Regulations ("Rule 430A") or permitted by Rule 424(b) of the 1933 Act
Regulations ("Rule 424(b)") and as have been provided to and not objected
to by the Representatives prior to (or as are agreed to by the
Representatives subsequent to) the execution of this Agreement, or (B) if
such registration statement, as it may have been amended, has not been
declared by the Commission to be effective under the 1933 Act, an amendment
to such registration statement, including a form of final prospectus,
necessary to permit such registration statement to become effective, a copy
of which amendment has been furnished to and not objected to by the
Representatives prior to (or is agreed to by the Representatives subsequent
to) the execution of this Agreement. As used in this Agreement, the term
"Registration Statement" means such registration statement, as amended at
the time when it was or is declared effective under the 1933 Act, including
(1) all financial schedules and exhibits thereto, (2) all documents (or
portions thereof) incorporated by reference therein filed under the 1934
Act, and (3) any information omitted therefrom pursuant to Rule 430A and
included in the Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each prospectus subject to completion filed with such
registration statement or any amendment thereto including all documents (or
portions thereof) incorporated by reference therein under the 1934 Act
(including the prospectus subject to completion, if any, included in the
Registration Statement and each prospectus filed pursuant to Rule 424(a)
under the 1933 Act); and the term "Prospectus" means the prospectus first
filed with the Commission pursuant to Rule 424(b) or, if no prospectus is
required to be filed pursuant to Rule 424(b), the prospectus included in
the Registration Statement, in each case including the financial schedules
and all documents (or portions thereof) incorporated by reference therein
under the 1934 Act. The date on which the Registration Statement becomes
effective is hereinafter referred to as the "Effective Date."
(iii) The documents incorporated by reference in the
Preliminary Prospectus or Prospectus or from which information is so
incorporated by reference, when they became effective or were filed with
the Commission, as the case may be, complied in all material respects with
the requirements of the 1934 Act and the 1934 Act Regulations, and when
read together and with the other information in the Preliminary Prospectus
or Prospectus, as the case may be, at the time the Registration Statement
became or becomes effective and at the Closing Date and any Option Closing
Date, did not or will not, as the case may be, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5
<PAGE>
(iv) No order preventing or suspending the use of any Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) has been issued by the Commission, nor has the Commission, to
the knowledge of the Offerors, threatened to issue such an order or
instituted proceedings for that purpose. Each Preliminary Prospectus, at
the time of filing thereof, (A) complied in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and (B) did not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that this representation and
warranty does not apply to statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Offerors by
any of the Underwriters expressly for inclusion in the Prospectus beneath
the heading "Underwriting" (such information referred to herein as the
"Underwriters' Information").
(v) At the Effective Date and at all times subsequent thereto,
up to and including the Closing Date and, if applicable, the Option Closing
Date, the Registration Statement and any post-effective amendment thereto
(A) complied and will comply in all material respects with the requirements
of the 1933 Act, the 1933 Act Regulations and the Trust Indenture Act (and
the rules and regulations thereunder) and (B) did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
not misleading. At the Effective Date and at all times when the Prospectus
is required to be delivered in connection with offers and sales of
Designated Preferred Securities, including, without limitation, the Closing
Date and, if applicable, the Option Closing Date, the Prospectus, as
amended or supplemented, (A) complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
and the Trust Indenture Act (and the rules and regulations thereunder) and
(B) did not contain and will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; PROVIDED, HOWEVER, that this
representation and warranty does not apply to the Underwriters' Information
or to the Statements of Eligibility of the Trustee on Form T-1 filed as
exhibits to the Registration Statement.
(vi) (A) The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with full corporate
and other power and authority to own, lease and operate its properties and
conduct its business as described in and contemplated by the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) and as currently being conducted.
6
<PAGE>
(B) The Trust has been duly created and is validly existing
as a statutory business trust in good standing under the Delaware Business
Trust Act with the power and authority (trust and other) to own its
property and conduct its business as described in the Registration
Statement and Prospectus, to issue and sell its common securities (the
"Common Securities") to the Company pursuant to the Trust Agreement, to
issue and sell the Designated Preferred Securities, to enter into and
perform its obligations under this Agreement and to consummate the
transactions herein contemplated; the Trust has no subsidiaries and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or the ownership of its property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect
on the Trust; the Trust has conducted and will conduct no business other
than the transactions contemplated by this Agreement and described in the
Prospectus; the Trust is not a party to or bound by any agreement or
instrument other than this Agreement, the Trust Agreement and the
agreements and instruments contemplated by the Trust Agreement and
described in the Prospectus; the Trust has no liabilities or obligations
other than those arising out of the transactions contemplated by this
Agreement and the Trust Agreement and described in the Prospectus; the
Trust is not a party to or subject to any action, suit or proceeding of any
nature; the Trust is not, and at the Closing Date or any Option Closing
Date will not be, to the knowledge of the Offerors, classified as an
association taxable as a corporation for United States federal income tax
purposes; and the Trust is, and as of the Closing Date or any Option
Closing Date will be, treated as a consolidated subsidiary of the Company
pursuant to generally accepted accounting principles.
(vii) (A) Pacific Crest Bank (the "Bank") has been duly
organized and is validly existing as an industrial loan company in good
standing under the laws of the State of California. The Bank has full
corporate and other power and authority to own, lease and operate its
properties and to conduct its business as described in and contemplated by
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) and as currently
being conducted. The deposit accounts of the Bank are insured by the Bank
Insurance Fund administered by the Federal Deposit Insurance Corporation up
to the maximum amount provided by law; and no proceedings for the
modification, termination or revocation of any such insurance are pending
or, to the knowledge of the Offerors, threatened.
(B) There are no "significant subsidiaries" of the Company
(as such term is defined in Rule 1-02 of Regulation S-X) other than the
Bank. The subsidiaries of the Company other than the Bank, considered in
the aggregate as a single subsidiary, do not constitute a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X.
7
<PAGE>
(viii) Each of the Company and the Bank is duly qualified to
transact business as a foreign corporation and is in good standing in each
other jurisdiction in which it owns or leases property or conducts its
business so as to require such qualification and in which the failure to so
qualify would, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of the Company and the Bank on a
consolidated basis. All of the issued and outstanding shares of capital
stock of the Bank (A) have been duly authorized and are validly issued, (B)
are fully paid and nonassessable, and (C) except as disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), are directly owned by the Company free and clear
of any security interest, mortgage, pledge, lien, encumbrance, restriction
upon voting or transfer, preemptive rights, claim or equity. Except as
disclosed in the Prospectus, there are no outstanding rights, warrants or
options to acquire or instruments convertible into or exchangeable for any
capital stock or equity securities of the Offerors or the Bank.
(ix) The equity securities of the Trust conform to the
description thereof contained in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus). The equity
securities of the Trust have been duly authorized and validly issued and
are fully paid and nonassessable, and no such securities were issued in
violation of the preemptive or similar rights of any security holder of the
Trust; no person has any preemptive or similar right to purchase any equity
securities of the Trust. Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
there are no outstanding rights, options or warrants to acquire any
securities of the Offerors, and there are no outstanding securities
convertible into or exchangeable for any such securities and no
restrictions upon the voting or transfer of any capital stock of the
Company or equity securities of the Trust pursuant to the Company's
corporate charter or bylaws, the Trust Agreement or any agreement or other
instrument to which an Offeror is a party or by which an Offeror is bound.
(x) (A) All corporate and trust action required to be taken by
the Offerors for the authorization, issuance, sale and delivery of the
Designated Preferred Securities in accordance with such terms and
conditions has been validly and sufficiently taken. The Designated
Preferred Securities, when delivered in accordance with this Agreement
against payment of the consideration set forth herein, will be duly and
validly issued and outstanding, will be fully paid and nonassessable
undivided beneficial interests in the assets of the Trust, will be entitled
to the benefits of the Trust Agreement, will not be issued in violation of
or subject to any preemptive or similar rights, and will conform in all
material respects to the description thereof in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) and the Trust Agreement. None of the
Designated Preferred Securities, immediately prior to delivery, will be
subject to any security interest, lien, mortgage, pledge, encumbrance,
8
<PAGE>
restriction upon voting or transfer, preemptive rights, claim, equity or
other title defect.
(B) The Debentures have been duly and validly authorized by
the Company, and, when duly and validly executed, authenticated and issued
as provided in the Indenture and delivered to the Trust pursuant to the
Trust Agreement against payment therefore as described in the Registration
Statement, will constitute valid and legally binding obligations of the
Company entitled to the benefits of the Indenture and will conform in all
material respects to the description thereof contained in the Prospectus.
(C) The Guarantee has been duly and validly authorized by
the Company, and, when duly and validly executed and delivered to the
guarantee trustee for the benefit of the Trust, will constitute a valid and
legally binding obligation of the Company and will conform in all material
respects to the description thereof contained in the Prospectus.
(D) The Expense Agreement (the "Expense Agreement") has
been duly and validly authorized by the Company, and, when duly and validly
executed and delivered to the Company, will constitute a valid and legally
binding obligation of the Company and will conform in all material respects
to the description thereof contained in the Prospectus.
(xi) The Offerors and the Bank have complied with all
federal, state and local statutes, regulations, ordinances and rules
applicable to the ownership and operation of their properties or the
conduct of their businesses as described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and as currently being
conducted except where the failure to so comply would not have a material
adverse effect on the condition, financial or otherwise, earnings, affairs,
business, prospects or results of operations of the Offerors and the Bank
on a consolidated basis.
(xii) The Offerors and the Bank have all permits, easements,
consents, licenses, franchises and other governmental and regulatory
authorizations from all appropriate federal, state, local or other public
authorities ("Permits") as are necessary to own and lease their properties
and conduct their businesses in the manner described in and contemplated by
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) and as currently
being conducted, except where the failure to have such Permits would not
have a material adverse effect on the condition, financial or otherwise,
earnings, affairs, business, prospects or results of operations of the
Offerors and the Bank on a consolidated basis. All such Permits are in
full force and effect and each of the Offerors and the Bank are in all
material respects complying therewith, and no event has occurred that
allows, or after notice or lapse of time
9
<PAGE>
would allow, revocation or termination thereof or will result in any other
material impairment of the rights of the holder of any such Permit, subject
in each case to such qualification as may be adequately disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), except where the failure of such Permits to be in
full force and effect or the lack of such compliance would not have a
material adverse effect on the condition, financial or otherwise, earnings,
affairs, business, prospects or results of operations of the Offerors and
the Bank on a consolidated basis. Such Permits contain no restrictions
that would materially impair the ability of the Company or the Bank to
conduct their businesses in the manner consistent with their past
practices. Neither the Offerors nor any of the Bank has received notice or
otherwise has knowledge of any proceeding or action relating to the
revocation or modification of any such Permit.
(xiii) Neither of the Offerors nor the Bank is in breach or
violation of their corporate charter, by-laws or other governing documents
(including without limitation, the Trust Agreement). Neither of the
Offerors nor the Bank is, and to the knowledge of the Offerors no other
party is, in violation, breach or default (with or without notice or lapse
of time or both) in the performance or observance of any term, covenant,
agreement, obligation, representation, warranty or condition contained in
(A) any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease, franchise, license, Permit or any other agreement
or instrument to which it is a party or by which it or any of its
properties may be bound, except where such breach, violation or default
would not have a material adverse effect on the condition, financial or
otherwise, earnings, affairs, business, prospects, or results of operations
of the Offerors and the Bank on a consolidated basis, and to the knowledge
of the Offerors, no other party has asserted that the Offerors or the Bank
is in such violation, breach or default (provided that the foregoing shall
not apply to defaults by borrowers from the Bank), or (B) except as
disclosed in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), any order, decree, judgment, rule or
regulation of any court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, having jurisdiction over the Offerors
or the Bank or any of their respective properties the breach, violation or
default of which could have a material adverse effect on the condition,
financial or otherwise, earnings, affairs, business, prospects, or results
of operations of the Offerors and the Bank on a consolidated basis.
(xiv) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement, the Trust Agreement, the Registration Statement and the
Prospectus (or, if the Prospectus in not in existence, the most recent
Preliminary Prospectus) do not and will not conflict with, result in the
creation or imposition of any material lien, claim, charge, encumbrance or
restriction upon any property or assets of the Offerors or the Bank or the
Designated Preferred Securities pursuant to, constitute a breach or
violation of, or constitute a default under, with or without notice or
lapse of time or both, any
10
<PAGE>
of the terms, provisions or conditions of the charter or by-laws of the
Company or the Bank, the Trust Agreement, the Guarantee, the Indenture, any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease, franchise, license, permit or any other agreement or
instrument to which the Offerors or the Bank is a party or by which any of
them or any of their respective properties may be bound or any order,
decree, judgment, rule or regulation of any court, arbitrator, government,
or governmental agency or instrumentality, domestic or foreign, having
jurisdiction over the Offerors or the Bank or any of their respective
properties which conflict, creation, imposition, breach, violation or
default would have either singly or in the aggregate a material adverse
effect on the condition, financial or otherwise, earnings, affairs,
business, prospects or results of operations of the Offerors and the Bank
on a consolidated basis. No authorization, approval, consent or order of,
or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required
to be obtained by the Offerors in connection with the transactions
contemplated by this Agreement, the Trust Agreement, the Indenture, the
Guarantee, the Registration Statement and the Prospectus (or such
Preliminary Prospectus), except such as may be required under the 1933 Act,
the Trust Indenture Act or the Nasdaq National Market and such as may be
required under state securities laws in connection with the purchase and
distribution of the Designated Preferred Securities by the Underwriters.
(xv) The Offerors have all requisite corporate power and
authority to enter into this Agreement and this Agreement has been duly and
validly authorized, executed and delivered by the Offerors and constitutes
the legal, valid and binding agreement of the Offerors, enforceable against
the Offerors in accordance with its terms, except as the enforcement
thereof may be limited by general principles of equity and by bankruptcy or
other laws relating to or affecting creditors' rights generally and except
as any indemnification or contribution provisions thereof may be limited
under applicable securities laws. Each of the Indenture, the Trust
Agreement, the Guarantee and the Expense Agreement has been duly authorized
by the Company, and, when executed and delivered by the Company on the
Closing Date, each of said agreements will constitute a valid and legally
binding obligation of the Company and will be enforceable against the
Company in accordance with its terms, except as the enforcement thereof may
be limited by general principles of equity and by bankruptcy or other laws
relating to or affecting creditors' rights generally and except as any
indemnification or contribution provisions thereof may be limited under
applicable securities laws. Each of the Indenture, the Trust Agreement and
the Guarantee has been duly qualified under the Trust Indenture Act and
will conform in all material respects to the description thereof contained
in the Prospectus.
(xvi) The Company and the Bank have good and marketable title
in fee simple to all real property and good title to all personal property
owned by them and material to their business, in each case free and clear
of all security interests,
11
<PAGE>
liens, mortgages, pledges, encumbrances, restrictions, claims, equities and
other defects except such as are referred to in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) or
such as do not materially affect the value of such property in the
aggregate and do not materially interfere with the use made or proposed to
be made of such property; and all of the leases under which the Company or
the Bank hold real or personal property are valid, existing and enforceable
leases and in full force and effect with such exceptions as are not
material and do not materially interfere with the use made or proposed to
be made of such real or personal property, and neither the Company nor the
Bank is in default in any material respect of any of the terms or
provisions of any leases.
(xvii) Deloitte & Touche LLP, who have certified the
consolidated financial statements of the Company and the Bank including the
notes thereto, included in the Registration Statement and Prospectus, are
independent public accountants with respect to the Company and the Bank, as
required by the 1933 Act and the 1933 Act Regulations.
(xviii) The consolidated financial statements including the
notes thereto, included by incorporation or otherwise in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) with respect to the Company and the
Bank comply in all material respects with the 1933 Act and the 1933 Act
Regulations and present fairly the consolidated financial position of the
Company and the Bank as of the dates indicated and the consolidated results
of operations, cash flows and shareholders' equity of the Company and the
Bank for the periods specified and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis.
The selected and summary consolidated financial data concerning the Company
and the Bank included in the Registration Statement and the Prospectus (or
such Preliminary Prospectus) comply in all material respects with the 1933
Act and the 1933 Act Regulations, present fairly the information set forth
therein, and have been compiled on a basis consistent with that of the
consolidated financial statements of the Company and the Bank in the
Registration Statement and the Prospectus (or such Preliminary Prospectus).
The other financial, statistical and numerical information included in the
Registration Statement and the Prospectus (or such Preliminary Prospectus)
comply in all material respects with the 1933 Act and the 1933 Act
Regulations, present fairly the information shown therein, and to the
extent applicable have been compiled on a basis consistent with the
consolidated financial statements of the Company and the Bank included in
the Registration Statement and the Prospectus (or such Preliminary
Prospectus).
(xix) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
except as otherwise stated therein:
12
<PAGE>
(A) neither of the Offerors nor the Bank have sustained any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree which is
material to the condition (financial or otherwise), earnings,
business, prospects or results of operations of the Offerors and the
Bank on a consolidated basis;
(B) there has not been any material adverse change in, or
any development which is reasonably likely to have a material adverse
effect on, the condition (financial or otherwise), earnings, business,
prospects or results of operations of the Offerors and the Bank on a
consolidated basis, whether or not arising in the ordinary course of
business;
(C) neither of the Offerors nor the Bank have incurred any
liabilities or obligations, direct or contingent, or entered into any
material transactions, other than in the ordinary course of business
which is material to the condition (financial or otherwise), earnings,
business, prospects or results of operations of the Offerors and the
Bank on a consolidated basis;
(D) neither of the Offerors have declared or paid any
dividend, and neither of the Offerors nor the Bank have become
delinquent in the payment of principal or interest on any outstanding
borrowings; and
(E) there has not been any change in the capital stock,
equity securities, long-term debt, obligations under capital leases
or, other than in the ordinary course of business, short-term
borrowings of the Offerors or the Bank.
(xx) Except as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), no charge, investigation, action, suit or
proceeding is pending or, to the knowledge of the Offerors, threatened,
against or involving the property or assets of the Offerors or the Bank or
any of their respective properties before or by any court or any
regulatory, administrative or governmental official, commission, board,
agency or other authority or body, or any arbitrator, wherein an
unfavorable decision, ruling or finding could reasonably be expected to
have a material adverse effect on the consummation of this Agreement or the
transactions contemplated herein or the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the
Offerors and the Bank on a consolidated basis or which is required to be
disclosed in the Registration Statement or the Prospectus (or such
Preliminary Prospectus) and is not so disclosed.
(xxi) There are no contracts or other documents required to
be filed as exhibits to the Registration Statement by the 1933 Act or the
1933 Act
13
<PAGE>
Regulations or the Trust Indenture Act (or any rules or regulations
thereunder) which have not been filed as exhibits or incorporated by
reference to the Registration Statement, or that are required to be
summarized in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) that are not so summarized.
(xxii) Neither of the Offerors has taken, directly or
indirectly, any action designed to result in or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Offerors to facilitate the
sale or resale of the Designated Preferred Securities, and neither of the
Offerors is aware of any such action taken or to be taken by any officer,
director, trustee or 5% or more shareholder of the Offerors.
(xxiii) The Offerors and the Bank own, or possess adequate
rights to use, all patents, copyrights, trademarks, service marks, trade
names and other rights necessary to conduct the businesses now conducted by
them in all material respects or as described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and
neither the Offerors nor the Bank have received any notice of infringement
or conflict with asserted rights of others with respect to any patents,
copyrights, trademarks, service marks, trade names or other rights which,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, business, prospects
or results of operations of the Offerors and the Bank on a consolidated
basis, and the Offerors do not know of any basis for any such infringement
or conflict.
(xxiv) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), no
labor dispute involving the Company or the Bank exists or, to the knowledge
of the Offerors, is imminent which might be expected to have a material
adverse effect on the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Offerors and
the Bank on a consolidated basis or which is required to be disclosed in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Neither the Company nor the Bank have received
notice of any existing or threatened labor dispute by the employees of any
of its principal suppliers, customers or contractors which might be
expected to have a material adverse effect on the condition (financial or
otherwise), earnings, affairs, business, prospects or results of operations
of the Company and the Bank on a consolidated basis.
(xxv) The Offerors and the Bank have properly prepared and
timely filed all necessary federal, state, local and foreign tax returns
which are required to be filed and have paid all taxes shown as due thereon
and have paid all other taxes and assessments to the extent that the same
shall have become due, except such as
14
<PAGE>
are being contested in good faith or where the failure to so timely and
properly prepare and file would not have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, business, prospects
or results of operations of the Offerors and the Bank on a consolidated
basis. The Offerors have no knowledge of any tax deficiency which has been
or might be assessed against the Offerors or the Bank which, if the subject
of an unfavorable decision, ruling or finding, would have a material
adverse effect on the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Offerors and
the Bank on a consolidated basis.
(xxvi) Each of the material contracts, agreements and
instruments described or referred to in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and each contract, agreement and instrument filed
as an exhibit to the Registration Statement is in full force and effect and
is the legal, valid and binding agreement of the Offerors or the Bank,
enforceable in accordance with its terms, except as the enforcement thereof
may be limited by general principles of equity and by bankruptcy or other
laws relating to or affecting creditors' rights generally. Except as
disclosed in the Prospectus (or such Preliminary Prospectus), to the
knowledge of the Offerors, no other party to any such agreement is (with or
without notice or lapse of time or both) in breach or default in any
material respect thereunder.
(xxvii) No relationship, direct or indirect, exists between or
among the Offerors or the Bank, on the one hand, and the directors,
officers, trustees, shareholders, customers or suppliers of the Offerors or
the Bank, on the other hand, which is required to be described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) which is not adequately
described therein.
(xxviii) No person has the right to request or require the
Offerors or the Bank to register any securities for offering and sale under
the 1933 Act by reason of the filing of the Registration Statement with the
Commission or the issuance and sale of the Designated Preferred Securities
except as disclosed in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(xxix) The Designated Preferred Securities have been approved
for quotation on the Nasdaq National Market subject to official notice of
issuance.
(xxx) Except as described (or referred to) in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no contractual encumbrances or restrictions or
material legal restrictions, on the ability of the Bank (A) to pay
dividends or make any other distributions on its capital stock or to pay
any indebtedness owed to the Offerors, (B) to make any loans or advances
15
<PAGE>
to, or investments in, the Offerors or (C) to transfer any of its property
or assets to the Offerors.
(xxxi) Neither of the Offerors is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(xxxii) The Offerors have not distributed and will not distribute
prior to the Closing Date any prospectus in connection with the Offering,
other than a Preliminary Prospectus, the Prospectus, the Registration
Statement and the other materials permitted by the 1933 Act and the 1933
Act Regulations and reviewed by the Representatives.
3. OFFERING BY THE UNDERWRITERS. After the Registration Statement
becomes effective or, if the Registration Statement is already effective, after
this Agreement becomes effective, the Underwriters propose to offer the Firm
Preferred Securities for sale to the public upon the terms and conditions set
forth in the Prospectus. Because the NASD is expected to view the Preferred
Securities as interests in a direct participation program, the offering of the
Preferred Securities is being made in compliance with the applicable provisions
of Rule 2810 of the NASD's Conduct Rules. The Underwriters may from time to
time thereafter reduce the public offering price and change the other selling
terms, provided the proceeds to the Trust shall not be reduced as a result of
such reduction or change.
The Underwriters may reserve and sell such of the Designated Preferred
Securities purchased by the Underwriters as the Underwriters may elect to
dealers chosen by it (the "Selected Dealers") at the public offering price set
forth in the Prospectus less the applicable Selected Dealers' concessions set
forth therein, for re-offering by Selected Dealers to the public at the public
offering price. The Underwriters may allow, and Selected Dealers may re-allow,
a concession set forth in the Prospectus to certain other brokers and dealers.
4. CERTAIN COVENANTS OF THE OFFERORS. The Offerors jointly and
severally covenant with the Underwriters as follows:
(a) The Offerors shall use their best efforts to cause the
Registration Statement and any amendments thereto, if not effective at the time
of execution of this Agreement, to become effective as promptly as possible. If
the Registration Statement has become or becomes effective pursuant to Rule 430A
and information has been omitted therefrom in reliance on Rule 430A, then, the
Offerors will prepare and file in accordance with Rule 430A and Rule 424(b)
copies of the Prospectus or, if required by Rule 430A, a post-effective
amendment to the Registration Statement (including the Prospectus) containing
all information so omitted and will provide evidence satisfactory to the
Representatives of such timely filing.
16
<PAGE>
(b) The Offerors shall notify you immediately, and confirm such
notice in writing:
(i) when the Registration Statement, or any post-effective
amendment to the Registration Statement, has become effective, or when the
Prospectus or any supplement to the Prospectus or any amended Prospectus
has been filed;
(ii) of the receipt of any comments or requests from the
Commission;
(iii) of any request of the Commission to amend or supplement
the Registration Statement, any Preliminary Prospectus or the Prospectus or
for additional information; and
(iv) of the issuance by the Commission or any state or other
regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement, preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, or suspending the
qualification of any of the Designated Preferred Securities for offering or
sale in any jurisdiction or the institution or threat of institution of any
proceedings for any of such purposes. The Offerors shall use their best
efforts to prevent the issuance of any such stop order or of any other such
order and if any such order is issued, to cause such order to be withdrawn
or lifted as soon as possible.
(c) The Offerors shall furnish to the Underwriters, from time to time
without charge, as soon as available, as many copies as the Underwriters may
reasonably request of (i) the registration statement as originally filed and of
all amendments thereto, in executed form, including exhibits, whether filed
before or after the Registration Statement becomes effective, (ii) all exhibits
and documents incorporated therein or filed therewith, (iii) all consents and
certificates of experts in executed form, (iv) each Preliminary Prospectus and
all amendments and supplements thereto, and (v) the Prospectus, and all
amendments and supplements thereto.
(d) During the time when a prospectus is required to be delivered
under the 1933 Act, the Offerors shall comply to the best of their ability with
the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Designated
Preferred Securities as contemplated herein and in the Trust Agreement and the
Prospectus. The Offerors shall not file any amendment to the registration
statement as originally filed or to the Registration Statement and shall not
file any amendment thereto or make any amendment or supplement to any
Preliminary Prospectus or to the Prospectus of which you shall not previously
have been advised in writing and provided a copy a reasonable time prior to the
proposed filings thereof or to which you or counsel to the Underwriters shall
object. If it is necessary, in the Company's
17
<PAGE>
reasonable opinion or in the reasonable opinion of the Company's counsel to
amend or supplement the Registration Statement or the Prospectus in connection
with the distribution of the Designated Preferred Securities, the Offerors shall
forthwith amend or supplement the Registration Statement or the Prospectus, as
the case may be, by preparing and filing with the Commission (provided you or
counsel to the Underwriters does not reasonably object), and furnishing to you,
such number of copies as you may reasonably request of an amendment or
amendments of, or a supplement or supplements to, the Registration Statement or
the Prospectus, as the case may be (in form and substance reasonably
satisfactory to you and counsel to the Underwriters). If any event shall occur
as a result of which it is necessary to amend or supplement the Prospectus to
correct an untrue statement of a material fact or to include a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if for any reason it is necessary at
any time to amend or supplement the Prospectus to comply with the 1933 Act and
the 1933 Act Regulations, the Offerors shall, subject to the second sentence of
this subsection (d), forthwith amend or supplement the Prospectus by preparing
and filing with the Commission, and furnishing to you, such number of copies as
you may reasonably request of an amendment or amendments of, or a supplement or
supplements to, the Prospectus (in form and substance satisfactory to you and
counsel to the Underwriters) so that, as so amended or supplemented, the
Prospectus shall not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) The Offerors shall cooperate with you and counsel to the
Underwriters in order to qualify the Designated Preferred Securities for
offering and sale under the securities or blue sky laws of such jurisdictions as
you may reasonably request and shall continue such qualifications in effect so
long as may be advisable for distribution of the Designated Preferred
Securities; provided, however, that the Offerors shall not be required to
qualify to do business as a foreign corporation or file a general consent to
service of process in any jurisdiction in connection with the foregoing. The
Offerors shall file such statements and reports as may be required by the laws
of each jurisdiction in which the Designated Preferred Securities have been
qualified as above. The Offerors will notify you immediately of, and confirm in
writing, the suspension of qualification of the Designated Preferred Securities
or threat thereof in any jurisdiction.
(f) The Offerors shall make generally available to their security
holders in the manner contemplated by Rule 158 of the 1933 Act Regulations and
furnish to you as soon as practicable, but in any event not later than 16 months
after the Effective Date, a consolidated earnings statement of the Offerors
conforming with the requirements of Section 11(a) of the 1933 Act and Rule 158.
(g) The Offerors shall use the proceeds from the sale of the
Designated Preferred Securities to be sold by the Trust hereunder in the manner
specified in the Prospectus under the caption "Use of Proceeds."
18
<PAGE>
(h) For five years from the Effective Date, the Offerors shall
furnish to the Representatives copies of all reports and communications
(financial or otherwise) furnished by the Offerors to the holders of the
Designated Preferred Securities as a class, copies of all reports and financial
statements filed with or furnished to the Commission (other than portions for
which confidential treatment has been obtained from the Commission) or with any
national securities exchange or the Nasdaq National Market.
(i) For a period of 180 days from the Effective Date, the Offerors
shall not, directly or indirectly, offer for sale, sell or agree to sell or
otherwise dispose of any Designated Preferred Securities other than pursuant to
this Agreement, any other beneficial interests in the assets of the Trust or any
securities of the Trust or the Company that are substantially similar to the
Designated Preferred Securities or the Debentures, including any guarantee of
such beneficial interests or substantially similar securities, or securities
convertible into or exchangeable for or that represent the right to receive any
such beneficial interest or substantially similar securities, without the prior
written consent of the Representatives.
(j) The Offerors shall use their best efforts to cause the Designated
Preferred Securities to become quoted on the Nasdaq National Market and to
remain so quoted for at least five years from the Effective Date or for such
shorter period as may be specified in a written consent of the Representatives,
provided this shall not prevent the Company from redeeming the Designated
Preferred Securities pursuant to the terms of the Trust Agreement. If the
Designated Preferred Securities are exchanged for Debentures, the Company will
use its best efforts to have the Debentures promptly listed on the Nasdaq
National Market or other organization on which the Designated Preferred
Securities are then listed, and to have the Debentures promptly registered under
the Exchange Act.
(k) Subsequent to the date of this Agreement and through the date
which is the later of (i) the day following the date on which the Underwriters'
option to purchase the Option Preferred Securities shall expire or (ii) the day
following the Option Closing Date with respect to any Option Preferred
Securities that the Underwriters shall elect to purchase, except as described in
or contemplated by the Prospectus, neither the Offerors nor the Bank shall take
any action (or refrain from taking any action) which will result in the Offerors
or the Bank incurring any material liability or obligation, direct or
contingent, or enter into any material transaction, except in the ordinary
course of business, and there will not be any material change in the capital
stock, or any material increase in long-term debt, obligations under capital
leases or short-term borrowings of the Offerors and the Bank on a consolidated
basis.
(l) The Offerors shall not, for a period of 180 days after the date
hereof, without the prior written consent of the Representatives, purchase,
redeem or call for
19
<PAGE>
redemption, or prepay or give notice of prepayment (or announce any redemption
or call for redemption, or any repayment or notice of prepayment) of any of the
Designated Preferred Securities, except for a redemption following a Tax Event,
Capital Treatment Event or Investment Company Event as described in the
Registration Statement.
(m) The Offerors shall not take, directly or indirectly, any action
designed to result in or which has constituted or which might reasonably be
expected to cause or result in a violation of the Commission's Regulation M and
the Offerors are not aware of any such action taken or to be taken by any
affiliate of the Offerors.
(n) Prior to the Closing Date (and, if applicable, the Option Closing
Date), the Offerors will not issue any press release or other communication
directly or indirectly or hold any press conference with respect to the
Offerors, the Bank or the offering of the Designated Preferred Securities (the
"Offering") without your prior consent.
5. PAYMENT OF EXPENSES. Whether or not this Agreement is terminated or
the sale of the Designated Preferred Securities to the Underwriters is
consummated, the Company covenants and agrees that it will pay or cause to be
paid (directly or by reimbursement) all costs and expenses incident to the
performance of the obligations of the Offerors under this Agreement, including:
(a) the preparation, printing, filing, delivery and shipping of the
initial registration statement, the Preliminary Prospectus or Prospectuses, the
Registration Statement and the Prospectus and any amendments or supplements
thereto, and the printing, delivery and shipping of this Agreement and any other
underwriting documents (including, without limitation, selected dealers
agreements), the certificates for the Designated Preferred Securities and the
Preliminary and Final Blue Sky Memoranda and any legal investment surveys and
any supplements thereto, provided that notwithstanding the foregoing, the
Company shall not be responsible for the fees of counsel to the Underwriters;
(b) all fees, expenses and disbursements of the Offerors' counsel and
accountants;
(c) all fees and expenses incurred in connection with the
qualification of the Designated Preferred Securities, Debentures and the
Guarantee under the securities or blue sky laws of such jurisdictions as you may
request, including all filing fees and fees and disbursements of counsel to the
Company in connection therewith, including, without limitation, in connection
with the preparation of the Preliminary and Final Blue Sky Memoranda;
(d) all fees and expenses incurred in connection with filings made
with the NASD;
20
<PAGE>
(e) any applicable fees and other expenses incurred in connection
with the listing of the Designated Preferred Securities and, if applicable, the
Guarantee and the Debentures on the Nasdaq National Market;
(f) the cost of furnishing to you copies of the initial registration
statements, any Preliminary Prospectus, the Registration Statement and the
Prospectus and all amendments or supplements thereto;
(g) the costs and charges of any transfer agent or registrar and the
fees and disbursements of counsel to any transfer agent or registrar;
(h) all costs and expenses (including stock transfer taxes) incurred
in connection with the printing, issuance and delivery of the Designated
Preferred Securities to the Underwriters;
(i) all expenses incident to the preparation, execution and delivery
of the Trust Agreement, the Indenture and the Guarantee; and
(j) all other costs and expenses incident to the performance of the
obligations of the Company hereunder and under the Trust Agreement that are not
otherwise specifically provided for in this Section 5.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Firm Preferred Securities and,
following exercise of the option granted by the Offerors in Section 1 of this
Agreement, the Option Preferred Securities, are subject, in your sole
discretion, to the accuracy of and compliance with the representations and
warranties and agreements of the Offerors herein as of the date hereof and as of
the Closing Date (or in the case of the Option Preferred Securities, if any, as
of the Option Closing Date), to the accuracy of the written statements of the
Offerors made pursuant to the provisions hereof, to the performance by the
Offerors of their covenants and obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not been declared effective
prior to the time of execution hereof, the Registration Statement shall become
effective not later than 11:00 a.m., New York time, on the first business day
following the time of execution of this Agreement, or at such later time and
date as you may agree to in writing. If required, the Prospectus and any
amendment or supplement thereto shall have been timely filed in accordance with
Rule 424(b) and Rule 430A under the 1933 Act and Section 4(a) hereof. No stop
order suspending the effectiveness of the Registration Statement or any
amendment or supplement thereto shall have been issued under the 1933 Act or any
applicable state securities laws and no proceedings for that purpose shall have
been instituted or shall be pending, or, to the knowledge of the Offerors or the
Representatives, shall be contemplated by the Commission or any state authority.
Any request on the part of the Commission or any state authority for additional
information (to be included in the
21
<PAGE>
Registration Statement or Prospectus or otherwise) shall have been disclosed to
you and complied with to your satisfaction and to the satisfaction of counsel to
the Underwriters.
(b) No Underwriter shall have advised the Company at or before the
Closing Date (and, if applicable, the Option Closing Date) that the Registration
Statement or any post-effective amendment thereto, or the Prospectus or any
amendment or supplement thereto, contains an untrue statement of a fact which,
in your opinion, is material or omits to state a fact which, in your opinion, is
material and is required to be stated therein or is necessary to make statements
therein (in the case of the Prospectus or any amendment or supplement thereto,
in light of the circumstances under which they were made) not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Trust Agreement, and the
Designated Preferred Securities, and the authorization and form of the
Registration Statement and Prospectus, other than financial statements and other
financial data, and all other legal matters relating to this Agreement and the
transactions contemplated hereby or by the Trust Agreement shall be reasonably
satisfactory in all respects to counsel to the Underwriters, and the Offerors
and the Bank shall have furnished to such counsel all documents and information
relating thereto that they may reasonably request to enable them to pass upon
such matters.
(d) Manatt, Phelps & Phillips, LLP counsel to the Offerors, shall
have furnished to you their signed opinion, dated the Closing Date or the Option
Closing Date, as the case may be, in form and substance reasonably satisfactory
to counsel to the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware. The
Bank is duly incorporated, validly existing and in good standing under the
laws of the State of California. Each of the Company and the Bank has full
corporate power and authority to own or lease its properties and to conduct
its business as such business is described in the Prospectus and is
currently conducted in all material respects. All outstanding shares of
capital stock of the Bank have been duly authorized and validly issued and
are fully paid and nonassessable and, to the best of such counsel's
knowledge, except as disclosed in the Prospectus, there are no outstanding
rights, options or warrants to purchase any such shares or securities
convertible into or exchangeable for any such shares.
(ii) The Debentures and Guarantee of the Company and the equity
securities of the Trust conform to the description thereof contained in the
Prospectus, or incorporated by reference therein, in all material respects.
The capital stock of the Company authorized and issued as of June 30, 1997
is as set forth under the caption "Capitalization" in the Prospectus, has
been duly authorized and validly
22
<PAGE>
issued, and is fully paid and nonassessable. To the best of such counsel's
knowledge, there are no outstanding rights, options or warrants to
purchase, no other outstanding securities convertible into or exchangeable
for, and no commitments, plans or arrangements to issue, any equity
securities of the Trust, except as described in the Prospectus.
(iii) The issuance, sale and delivery of the Debentures in
accordance with the terms and conditions of this Agreement and the
Indenture have been duly authorized by all necessary actions of the
Company. The Designated Preferred Securities have been approved for
quotation on the Nasdaq National Market subject to official notice of
issuance.
(iv) The Company has all requisite corporate power to enter into
and perform their obligations under this Agreement, and this Agreement has
been duly and validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as the enforcement hereof
or thereof may be limited by general principles of equity and by bankruptcy
or other laws relating to or affecting creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and except as the indemnification and contribution
provisions hereof may be limited under applicable laws and certain remedies
may not be available in the case of a non-material breach.
(v) Each of the Indenture, the Trust Agreement and the Guarantee
has been duly qualified under the Trust Indenture Act, has been duly
authorized, executed and delivered by the Company, and is a valid and
legally binding obligation of the Company enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and remedies
of creditors generally and of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
(vi) The Debentures have been duly authorized, executed and
delivered by the Company, and when authenticated by the Indenture Trustee
in the manner provided for in the Indenture and delivered against payment
therefore will be entitled to the benefits of the Indenture and are legal,
valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and other
laws affecting the rights and remedies of creditors generally and of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(vii) The Expense Agreement has been duly authorized,
executed and delivered by the Company, and is a valid and legally binding
obligation of the
23
<PAGE>
Company enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and other
laws affecting the rights and remedies of creditors generally and of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(viii) To the best of such counsel's knowledge, neither of the
Offerors nor the Bank is in breach or violation of, or default under, with
or without notice or lapse of time or both, its corporate charter, by-laws
or governing document (including without limitation, the Trust Agreement).
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement and the
Trust Agreement do not and will not conflict with, result in the creation
or imposition of any material lien, claim, charge, encumbrance or
restriction upon any property or assets of the Offerors or the Bank or the
Designated Preferred Securities pursuant to, or constitute a material
breach or violation of, or constitute a material default under, with or
without notice or lapse of time or both, any of the terms, provisions or
conditions of the charter, by-laws or governing document (including without
limitation, the Trust Agreement) of the Offerors or the Bank, or to the
best of such counsel's knowledge, any material contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease, franchise,
license or any other agreement or instrument to which either Offeror or the
Bank is a party or, to the best of such counsel's knowledge, any order,
decree, judgment, franchise, license, Permit, rule or regulation of any
court, arbitrator, government, or governmental agency or instrumentality
known to such counsel having jurisdiction over the Offerors or the Bank
which, in each case, is material to the Offerors and the Bank on a
consolidated basis. No authorization, approval, consent or order of, or
filing, registration or qualification with, any person, any court or
governmental body or authority is required in connection with the
transactions contemplated by this Agreement, the Trust Agreement, the
Registration Statement and the Prospectus, except such as have been
obtained under the 1933 Act, the Trust Indenture Act and the applicable
rules and regulations thereunder, and state securities laws, and except
such as may be required under Interpretations or Rules of the NASD in
connection with the purchase and distribution of the Designated Preferred
Securities by the Underwriters, as to which no opinion need be rendered.
(ix) To the best of such counsel's knowledge, holders of
securities of the Offerors either do not have any right that, if exercised,
would require the Offerors to cause such securities to be included in the
Registration Statement or have waived such right. To the best of such
counsel's knowledge, neither the Offerors nor the Bank is a party to any
agreement or other instrument which grants rights for or relating to the
registration of any securities of the Offerors.
(x) Except as set forth in the Registration Statement and the
Prospectus, to the best of such counsel's knowledge, no action, suit or
proceeding is
24
<PAGE>
pending or threatened in writing against or affecting the Offerors or the
Bank or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or
body, or any arbitrator, wherein an unfavorable decision, ruling or finding
could reasonably be expected to have a material adverse effect on the
consummation of this Agreement or the issuance and sale of the Designated
Preferred Securities as contemplated herein or the condition (financial or
otherwise), earnings, affairs, business, or results of operations of the
Offerors and the Bank on a consolidated basis or which is required to be
disclosed in the Registration Statement or the Prospectus and is not so
disclosed.
(xi) The Registration Statement and the Prospectus and any
amendments or supplements thereto (other than the financial statements or
other financial or statistical data included therein or omitted therefrom,
Underwriters' Information and the Statements of Eligibility of the Trustee
on Form T-1 filed as exhibits to the Registration Statement, as to which
such counsel need express no opinion) comply as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
as of their respective dates of effectiveness.
(xii) To the best of such counsel's knowledge, there are no
contracts, agreements, leases or other documents of a character required to
be disclosed in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not so disclosed or filed.
(xiii) The statements in the Prospectus under the captions,
"Description of the Trust Preferred Securities", "Description of Junior
Subordinated Debentures", "Description of the Guarantee", "Expense
Agreement" and "Relationship Among the Trust Preferred Securities, the
Junior Subordinated Debentures and the Guarantee" insofar as such
statements constitute matters of law applicable to the Offerors or
summaries of documents fairly present the information required to be
included therein in all material respects.
(xiv) The statements set forth in the Prospectus under the
captions "Certain Federal Income Tax Consequences" and "ERISA
Considerations" constitute fair and accurate summaries of the matters
addressed therein, based upon current law and the assumptions stated or
referred to therein.
(xv) Such counsel has been advised by the staff of the Commission
that the Registration Statement has become effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been made
within the time period required by Rule 424(b); to the best of such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for a stop order
are pending or threatened by the Commission.
25
<PAGE>
(xvi) Except as set forth (or referred to) in the Prospectus,
or incorporated by reference therein, to the best of such counsel's
knowledge, there are no contractual encumbrances or restrictions, or
material legal restrictions on the ability of the Bank (A) to pay dividends
or make any other distributions on its capital stock or to pay indebtedness
owed to the Offerors, (B) to make any loans or advances to, or investments
in, the Offerors or (C) to transfer any of its property or assets to the
Offerors.
In giving the above opinion, such counsel may state that, insofar as
such opinion involves factual matters, they have relied upon certificates of
officers of the Offerors including, without limitation, certificates as to the
identity of any and all material contracts, indentures, mortgages, deeds of
trust, loans or credit agreements, notes, leases, franchises, licenses or other
agreements or instruments, and all material permits, easements, consents,
licenses, franchises and government regulatory authorizations, for purposes of
paragraphs (viii), (xiii) and (xvii) hereof and certificates of public
officials. In giving such opinion, other than paragraph (i), such counsel may
rely as to matters of Delaware law upon the opinion of Richards, Layton & Finger
described herein. In giving the opinion in paragraph (iv), such counsel may
assume that the laws of California are the same as the laws of New York and that
the substantive laws of California would be applied to the interpretation of
this Agreement.
Such counsel shall also confirm that, in connection with the
preparation of the Registration Statement and Prospectus, such counsel has
participated in conferences with officers and representative of the Offerors
and with their independent public accountants and with you and your counsel,
at which conferences such counsel made inquiries of such officers,
representative and accountants and discussed in detail the contents of the
Registration Statement and Prospectus and such counsel has no reason to
believe (A) that the Registration Statement or any amendment thereto (except
for the financial statements and related schedules and statistical data
included therein or omitted therefrom or Underwriters' Information or the
Statements of Eligibility of the Trustee on Form T-1 filed as exhibits to the
Registration Statement, as to which such counsel need express no opinion), at
the time the Registration Statement or any such amendment became effective,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (B) that the Prospectus or any amendment or
supplement thereto (except for the financial statements and related schedules
and statistical data included therein or omitted therefrom or Underwriters'
Information or the
26
<PAGE>
Statements of Eligibility of the Trustee on Form T-1 filed as exhibits to the
Registration Statement, as to which such counsel need express no opinion), at
the time the Registration Statement became effective (or, if the term
"Prospectus" refers to the prospectus first filed pursuant to Rule 424(b) of the
1933 Act Regulations, at the time the Prospectus was issued), at the time any
such amended or supplemented Prospectus was issued, at the Closing Date and, if
applicable, the Option Closing Date, contained or contains any untrue statement
of a material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or (C)
that there is any amendment to the Registration Statement required to be filed
that has not already been filed.
(e) Richards, Layton & Finger, special Delaware counsel to the
Offerors, shall have furnished to you their signed opinion, dated as of Closing
Date or the Option Closing Date, as the case may be, in form and substance
satisfactory to such counsel, to the effect that:
(i) 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. Sections 3801 ET SEQ. (the "Delaware Act"), with the trust power
and authority to (a) own its property and conduct its business as described
in the Prospectus, (b) execute and deliver, and perform its obligations
under, this Agreement, and (c) issue and perform its obligations under the
Preferred Securities.
(ii) The Trust Agreement constitutes a valid and binding
obligation of the Company and the trustees of the Trust, and is enforceable
against the Company and the trustees of the Trust, in accordance with its
terms.
(iii) Under the Trust Agreement and the Delaware Act, all
necessary trust action has been taken on the part of the Trust to duly
authorize the execution and delivery of this Agreement by the Trust and the
performance of its obligations hereunder.
(iv) The Preferred Securities have been duly authorized for
issuance by the Trust Agreement and, when issued and delivered in
accordance with the terms of the Trust Agreement and this Agreement and as
described in the Prospectus, will be validly issued and (subject to
paragraph (v) below) fully paid and non-assessable undivided beneficial
interests in the assets of the Trust. The holders of the Preferred
Securities will be entitled to the benefits of the Trust Agreement (subject
to the limitations set forth in paragraph (ii) above).
(v) The holders of Preferred Securities in their capacity as
such, will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under
the Delaware General Corporation Law. Such opinion may note that the
holders of the Preferred Securities may be
27
<PAGE>
required to make payment or provide indemnity or security as set forth in
the Trust Agreement.
(vi) Under the Trust Agreement and the Delaware Act, the issuance
of the Preferred Securities is not subject to preemptive rights.
(vii) The issuance and sale by the Trust of the Preferred
Securities and the Common Securities, the execution, delivery and
performance by the Trust of this Agreement, and the consummation by the
Trust of the transactions contemplated by this Agreement do not (a) violate
any of the provisions of the Certificate of Trust or the Trust Agreement or
(b) violate any applicable Delaware law or administrative regulation.
(viii) Assuming that the Trust derives no income from or
connected with services provided within the State of Delaware and has no
assets, activities (other than having a Delaware trustee as required by the
Delaware Act and the filing of documents with the Secretary of State of the
State of Delaware) or employees in the State of Delaware, no filing with,
or authorization, approval, consent, license, order, registration,
qualification or decree of, any Delaware court or Delaware governmental
authority or agency (other than as may be required under the securities or
blue sky laws of the State of Delaware as to which such counsel may express
no opinion) is necessary or required to be obtained by the Trust solely in
connection with the due authorization, execution and delivery of this
Agreement by the Trust or the offering, issuance, sale or delivery of the
Preferred Securities by the Trust in accordance with the Trust Agreement
and the Prospectus.
(ix) After due inquiry on September __, 1997, limited to, and
solely to the extent disclosed thereupon, court dockets for active cases in
the Court of Chancery of the State of Delaware in and for New Castle
County, Delaware, of the Superior Court of the State of Delaware in and for
New Castle County, Delaware, and of the United State District Court sitting
in the State of Delaware, we are not aware of any legal or governmental
proceeding pending against the Trust.
Such opinion may state that it is limited to the laws of the State of
Delaware and that the opinion expressed in paragraph (ii) above is subject to
the effect upon the Trust Agreement of (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance, transfer and
other similar laws relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in a proceeding
in equity or at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution.
(f) Elias, Matz, Tiernan & Herrick, L.L.P., counsel to the
Underwriters, shall have furnished you their signed opinion, dated the Closing
Date or the Option Closing Date, as
28
<PAGE>
the case may be, with respect to the sufficiency of all corporate procedures and
other legal matters relating to this Agreement, the validity of the Designated
Preferred Securities, the Registration Statement, the Prospectus and such other
related matters as you may reasonably request and there shall have been
furnished to such counsel such documents and other information as they may
request to enable them to pass on such matters. In giving such opinion, Elias,
Matz, Tiernan & Herrick L.L.P. may rely as to matters of fact upon statements
and certifications of officers of the Offerors and of other appropriate persons
and may rely as to matters of law, other than law of the United States, and upon
the opinions of Manatt, Phelps & Phillips, LLP and Richards, Layton & Finger.
(g) On the date of this Agreement and on the Closing Date (and, if
applicable, any Option Closing Date), the Representatives shall have received
from Deloitte & Touche LLP a letter, dated the date of this Agreement and the
Closing Date (and, if applicable, the Option Closing Date), respectively, in
form and substance satisfactory to the Representatives, confirming that they are
independent public accountants with respect to Company, within the meaning of
the 1933 Act and the 1933 Act Regulations, and stating in effect that:
(i) In their opinion, the consolidated financial statements of
the Company audited by them and included in the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations.
(ii) On the basis of the procedures specified by the American
Institute of Certified Public Accountants as described in SAS No. 71,
"Interim Financial Information", inquiries of officials of the Company
responsible for financial and accounting matters, and such other inquiries
and procedures as may be specified in such letter, which procedures do not
constitute an audit in accordance with U.S. generally accepted auditing
standards, nothing came to their attention that caused them to believe
that, if applicable, the unaudited interim consolidated financial
statements of the Company included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and 1933 Act Regulations or are not in
conformity with U.S. generally accepted accounting principles applied on a
basis substantially consistent, except as noted in the Registration
Statement, with the basis for the audited consolidated financial statements
of the Company included in the Registration Statement.
(iii) On the basis of limited procedures, not constituting an
audit in accordance with U.S. generally accepted auditing standards,
consisting of a reading of the unaudited interim financial statements and
other information referred to below, a reading of the latest available
unaudited condensed consolidated financial statements of the Company,
inspection of the minute books of the Company since the date of the latest
audited financial statements of the Company included in the Registration
Statement, inquiries of officials of the Company responsible for financial
and accounting matters and
29
<PAGE>
such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) as of a specified date not more than five business days
prior to the date of such letter, there have been any changes in the
consolidated capital stock of the Company, any increase in the
consolidated debt of the Company, any decreases in consolidated total
assets or shareholders equity of the Company, or any changes,
decreases or increases in other items specified by the Underwriters,
in each case as compared with amounts shown in the latest unaudited
interim consolidated statement of financial condition of the Company
included in the Registration Statement except in each case for
changes, increases or decreases which the Registration Statement
specifically discloses, have occurred or may occur or which are
described in such letter; and
(B) for the period from the date of the latest unaudited
interim consolidated financial statements included in the Registration
Statement to the specified date referred to in Clause (iii)(A), there
were any decreases in the consolidated interest income, net interest
income, or net income of the Company or in the per share amount of net
income of the Company, or any changes, decreases or increases in any
other items specified by the Representatives, in each case as compared
with the comparable period of the preceding year and with any other
period of corresponding length specified by the Underwriters, except
in each case for increases or decreases which the Registration
Statement discloses have occurred or may occur, or which are described
in such letter.
(iv) In addition to the audit referred to in their report
included in the Registration Statement and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (ii) and (iii) above, they have carried out certain specified
procedures, not constituting an audit in accordance with U.S. generally
accepted auditing standards, with respect to certain amounts, percentages
and financial information specified by the Underwriters which are derived
from the general accounting records and consolidated financial statements
of the Company which appear in the Registration Statement specified by the
Underwriters in the Registration Statement, and have compared such amounts,
percentages and financial information with the accounting records and the
material derived from such records and consolidated financial statements of
the Company have found them to be in agreement.
In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases as specified in Clauses (iii)(A)
or (iii)(B) above, or any exceptions from such agreement specified in Clause
(iv) above, it shall be a further condition to the obligations of the
Underwriters that the Representatives shall have determined, after discussions
with officers of the Company responsible for financial and accounting matters,
that such changes, decreases, increases or exceptions as are set forth in such
letters do not (x) reflect a material adverse change in the items specified in
Clause (iii)(A) above as compared with the amounts
30
<PAGE>
shown in the latest unaudited consolidated statement of financial condition of
the Company included in the Registration Statement, (y) reflect a material
adverse change in the items specified in Clause (iii)(B) above as compared with
the corresponding periods of the prior year or other period specified by the
Representatives, or (z) reflect a material change in items specified in Clause
(iv) above from the amounts shown in the Preliminary Prospectus distributed by
the Underwriters in connection with the offering contemplated hereby or from the
amounts shown in the Prospectus.
(h) At the Closing Date and, if applicable, the Option Closing Date,
you shall have received certificates of the chief executive officer and the
chief financial and accounting officer of the Company, which certificates shall
be deemed to be made on behalf of the Company dated as of the Closing Date and,
if applicable, the Option Closing Date, evidencing satisfaction of the
conditions of Section 6(a) and stating that (i) the representations and
warranties of the Company set forth in Section 2(a) hereof are accurate as of
the Closing Date and, if applicable, the Option Closing Date, and that the
Offerors have complied with all agreements and satisfied all conditions on their
part to be performed or satisfied at or prior to such Closing Date; (ii) since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any material adverse change in
the condition (financial or otherwise), earnings, affairs, business, prospects
or results of operations of the Offerors and the Bank on a consolidated basis;
(iii) since such dates, except as otherwise disclosed in the Registration
Statement and the Prospectus, there has not been any material transaction
entered into by the Offerors or the Bank other than transactions in the ordinary
course of business; and (iv) they have carefully examined the Registration
Statement and the Prospectus as amended or supplemented and nothing has come to
their attention that would lead them to believe that either the Registration
Statement or the Prospectus, or any amendment or supplement thereto as of their
respective effective or issue dates, contained, and the Prospectus as amended or
supplemented at such Closing Date (and, if applicable, the Option Closing Date),
contains any untrue statement of a material fact, or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(i) At the Closing Date and, if applicable, the Option Closing Date,
you shall have received a certificate of an authorized representative of the
Trust to the effect that to the best of his or her knowledge based upon a
reasonable investigation, the representations and warranties of the Trust in
this Agreement are true and correct as though made on and as of the Closing Date
(and, if applicable, the Option Closing Date); the Trust has complied with all
the agreements and satisfied all the conditions required by this Agreement to be
performed or satisfied by the Trust on or prior to the Closing Date and since
the most recent date as of which information is given in the Prospectus, except
as contemplated by the Prospectus, the Trust has not incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions not in the ordinary course of business and there has not been any
material adverse change in the condition (financial or otherwise) of the Trust.
31
<PAGE>
(j) On the Closing Date, you shall have received duly executed
counterparts of the Trust Agreement, the Guarantee, the Indenture and the
Expense Agreement.
(k) The NASD, upon review of the terms of the public offering of the
Designated Preferred Securities, shall not have objected to the Underwriters'
participation in such offering.
(l) Prior to the Closing Date and, if applicable, the Option Closing
Date, the Offerors shall have furnished to you and counsel to the Underwriters
all such other documents and certificates as they have reasonably requested.
All opinions, certificates, letters and other documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you. The Offerors shall furnish you with conformed
copies of such opinions, certificates, letters and other documents as you shall
reasonably request.
If any of the conditions referred to in this Section 6 shall not have
been fulfilled when and as required by this Agreement, this Agreement and all of
the Underwriters' obligations hereunder may be terminated by you on notice to
the Company at, or at any time before, the Closing Date or the Option Closing
Date, as applicable. Any such termination shall be without liability of the
Underwriters to the Offerors.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Offerors jointly and severally agree to indemnify and hold
harmless each Underwriter, each of its directors, partners, officers and agents,
and each person, if any, who controls any Underwriter within the meaning of the
1933 Act, against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and reasonable attorney fees and
expenses), joint or several, arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact made by the Company or
the Trust contained in the Registration Statement, any Preliminary Prospectus or
the Prospectus, or in any amendment or supplement thereto, (ii) any blue sky
application or other document executed by the Company or the Trust specifically
for that purpose or based upon written information furnished by the Company or
the Trust filed in any state or other jurisdiction in order to qualify any of
the Designated Preferred Securities under the securities laws thereof (any such
application, document or information being hereinafter referred to as a "Blue
Sky Application"), (iii) any omission or alleged omission to state a material
fact in the registration statement as originally filed or the Registration
Statement, any Preliminary Prospectus or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application required to be stated therein
or necessary to make the statements therein not misleading, and against any and
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and attorney fees), joint or several, arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus, or in any amendment
or supplement thereto, or arising out of or based upon any omission or alleged
omission to state
32
<PAGE>
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (iv) the enforcement of this indemnification provision
or the contribution provisions of Section 7(d); and shall reimburse each such
indemnified party for any reasonable legal or other expenses as incurred, but in
no event less frequently than 30 days after each invoice is submitted, incurred
by them in connection with investigating or defending against or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action, notwithstanding the possibility that payments for such expenses might
later be held to be improper, in which case such payments shall be promptly
refunded; PROVIDED, HOWEVER, that the Offerors shall not be liable in any such
case to the extent, but only to the extent, that any such losses, claims,
damages, liabilities and expenses arise out of or are based upon any untrue
statement or omission or allegation thereof that has been made or omitted in
reliance upon and in conformity with the Underwriters' Information; PROVIDED,
that the indemnification contained in this paragraph with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or of
any person controlling any Underwriter) to the extent any such losses, claims,
damages, liabilities or expenses directly results from the fact that such
Underwriter sold Designated Preferred 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 Prospectus (as amended or supplemented if any amendments or supplements
thereto shall have been furnished to you in sufficient time to distribute same
with or prior to the written confirmation of the sale involved), if required by
law, and if such loss, claim, damage, liability or expense would not have arisen
but for the failure to give or send such person such document. The foregoing
indemnity agreement is in addition to any liability the Company or the Trust may
otherwise have to any such indemnified party.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless each Offeror, each of its directors, each of its officers and
trustees who signed the Registration Statement and each person, if any, who
controls an Offeror within the meaning of the 1933 Act, to the same extent as
required by the foregoing indemnity from the Company to each Underwriter, but
only with respect to the Underwriters' Information or information relating to
such Underwriter furnished in writing to an Offeror through such Underwriter by
or on behalf of it expressly for use in a Blue Sky Application. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to any such indemnified party.
(c) If any action or claim shall be brought or asserted against any
indemnified party or any person controlling an indemnified party in respect of
which indemnity may be sought from the indemnifying party, such indemnified
party or controlling person shall promptly notify the indemnifying party in
writing, and the indemnifying party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all expenses; PROVIDED, HOWEVER, that the failure so to notify
the indemnifying party shall not relieve it from any liability which it may have
to an indemnified party otherwise than under such paragraph, and further, shall
only relieve it from liability under such paragraph to the extent prejudiced
thereby. Any indemnified party or any such controlling person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof,
33
<PAGE>
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or such controlling person unless (i) the employment thereof
has been specifically authorized by the indemnifying party in writing, (ii) the
indemnifying party has failed to assume the defense or to employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both such indemnified
party or such controlling person and the indemnifying party and such indemnified
party or such controlling person shall have been advised by counsel that there
may be one or more legal defenses available to it that are different from or in
addition to those available to the indemnifying party (in which case, if such
indemnified party or controlling person notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party or such
controlling person); it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) separate from their own counsel at any time and for all such
indemnified parties and controlling persons, which firm shall be designated in
writing by the indemnified party (and, if such indemnified parties are
Underwriters, by you, as Representatives). Each indemnified party and each
controlling person, as a condition of such indemnity, shall use reasonable
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. The indemnifying party shall not be liable for any settlement
of any such action effected without its written consent, but if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
An indemnifying party shall not, without the prior written consent of
each indemnified party, settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnity may be sought hereunder (whether or not such
indemnified party or any person who controls such indemnified party within the
meaning of the 1933 Act is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes a release of each such
indemnified party reasonably satisfactory to each such indemnified party and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding or unless the indemnifying party shall confirm in a
written agreement with each indemnified party, that notwithstanding any federal,
state or common law, such settlement, compromise or consent shall not alter the
right of any indemnified party or controlling person to indemnification or
contribution as provided in this Agreement.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities
34
<PAGE>
or expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Offerors on the one hand and the Underwriters on the
other from the offering of the Designated Preferred Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Offerors on the one hand and the Underwriters on the other in connection with
the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Offerors on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Designated
Preferred Securities (before deducting expenses) received by the Offerors
bear to the total underwriting discounts, commissions and compensation
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Offerors on the one
hand and of the Underwriters on the other 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 Offerors or by the Underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
Offerors and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this paragraph (d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in the first sentence of this paragraph
(d) shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph (d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
received by it. 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 who was not guilty of such fraudulent misrepresentation.
Neither party shall be liable for contribution for claims settled
without such party's consent, provided such consent shall not be unreasonably
withheld, conditioned or delayed.
For purposes of this paragraph (d), each person who controls an
Underwriter within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as such Underwriter, and each person who controls an
Offeror within the meaning of Section 15 of the 1933 Act, each officer and
trustee of an Offeror who shall have signed the Registration Statement and each
director of an Offeror shall have the same rights to contribution as the
Offerors subject in each case to the preceding sentence. The obligations of the
Offerors under this paragraph (d) shall be in addition to any liability which
the Offerors may otherwise have and the obligations of the Underwriters under
this paragraph (d) shall be in addition to any liability that the Underwriters
may otherwise have.
35
<PAGE>
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Offerors set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Underwriter or any person
controlling an Underwriter or by or on behalf of the Offerors, or their
directors, trustees or officers (or any person controlling an Offeror),
(ii) acceptance of any Designated Preferred Securities and payment therefor
hereunder and (iii) any termination of this Agreement. A successor of any
Underwriter or of an Offeror, or its directors, trustees or officers (or of any
person controlling an Underwriter or an Offeror) shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 7.
(f) The Company agrees to indemnify the Trust against any and all
losses, claims, damages or liabilities that may become due from the Trust under
this Section 7.
8. TERMINATION. You shall have the right to terminate this Agreement at
any time at or prior to the Closing Date or, with respect to the Underwriters'
obligation to purchase the Option Preferred Securities, at any time at or prior
to the Option Closing Date, without liability on the part of the Underwriters to
the Offerors, if:
(a) Either Offeror shall have failed, refused, or been unable to
perform any agreement on its part to be performed under this Agreement, or any
of the conditions referred to in Section 6 shall not have been fulfilled, when
and as required by this Agreement;
(b) The Offerors or the Bank shall have sustained any material loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree which in the judgment of the
Representatives materially impairs the investment quality of the Designated
Preferred Securities;
(c) There has been since the respective dates as of which information
is given in the Registration Statement or the Prospectus, any materially adverse
change in, or any development which is reasonably likely to have a material
adverse effect on, the condition (financial or otherwise), earnings, affairs,
business, prospects or results of operations of the Offerors and the Bank on a
consolidated basis, whether or not arising in the ordinary course of business;
(d) There has occurred any outbreak of hostilities or other calamity
or crisis or material change in general economic, political or financial
conditions, or internal conditions, the effect of which on the financial markets
of the United States is such as to make it, in your reasonable judgment,
impracticable to market the Designated Preferred Securities or enforce contracts
for the sale of the Designated Preferred Securities;
(e) Trading generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have
36
<PAGE>
been required, by any of said exchanges or market system or by the Commission or
any other governmental authority; or
(f) A banking moratorium shall have been declared by either federal
or California authorities.
If this Agreement shall be terminated pursuant to this Section 8, the
Offerors shall not then be under any liability to the Underwriters except that
the provisions of Sections 5 and 7 hereof shall survive any termination of this
Agreement.
9. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase Designated Preferred Securities
hereunder, the other Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Designated Preferred
Securities which such defaulting Underwriter or Underwriters agreed but failed
to purchase; PROVIDED, HOWEVER, that the non-defaulting Underwriters shall be
under no obligation to purchase such Designated Preferred Securities if the
aggregate number of Designated Preferred Securities to be purchased by such
non-defaulting Underwriters shall exceed 110% of the aggregate underwriting
commitments set forth in SCHEDULE I hereto, and PROVIDED FURTHER, that no
non-defaulting Underwriter shall be obligated to purchase Designated Preferred
Securities to the extent that the number of such Designated Preferred Securities
is more than 110% of such Underwriter's underwriting commitment set forth in
SCHEDULE I hereto.
In the event that the non-defaulting Underwriters are not obligated
under the above paragraph to purchase the Designated Preferred Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase, the
Representatives may in their discretion arrange for one or more of the
Underwriters or for another party or parties to purchase such Designated
Preferred Securities on the terms contained herein. If within one business day
after such default the Representatives do not arrange for the purchase of such
Designated Preferred Securities, then the Company shall be entitled to a further
period of one business day within which to procure another party or parties
satisfactory to the Representatives to purchase such Designated Preferred
Securities on such terms.
In the event that the Representatives or the Company does not arrange
for the purchase of any Designated Preferred Securities to which a default
relates as provided above, this Agreement shall be terminated unless the parties
otherwise agree.
If the remaining Underwriters or substituted underwriters are required
hereby or agree to take up all or a part of the Designated Preferred Securities
of a defaulting Underwriter or Underwriters as provided in this Section 9, (i)
you shall have the right to postpone the Closing Date for a period of not more
than five full business days, in order to effect any changes that, in the
reasonable opinion of counsel to the Underwriters or the Company, may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or agreements, and the Company agrees promptly to file any amendments
to the Registration
37
<PAGE>
Statement or supplements to the Prospectus which, in its reasonable opinion, may
thereby be made necessary and (ii) the respective numbers of Designated
Preferred Securities to be purchased by the remaining Underwriters or
substituted underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of any liability it may have for damages
occasioned by its default hereunder. Any termination of this Agreement pursuant
to this Section 9 shall be without liability on the part of any non-defaulting
Underwriter or the Company, except that the provisions of Section 5 and Section
7 hereof shall survive any termination of this Agreement.
10. EFFECTIVE DATE OF AGREEMENT. If the Registration Statement is not
effective at the time of execution of this Agreement, this Agreement shall
become effective on the Effective Date at the time the Commission declares the
Registration Statement effective. The Company shall immediately notify the
Underwriters when the Registration Statement becomes effective.
If the Registration Statement is effective at the time of execution of
this Agreement, this Agreement shall become effective at the earlier of 11:00
a.m. New York time, on the first full business day following the day on which
this Agreement is executed, or at such earlier time as the Representatives shall
release the Designated Preferred Securities for initial public offering. The
Representatives shall notify the Offerors immediately after they have taken any
action which causes this Agreement to become effective.
Until such time as this Agreement shall have become effective, it may
be terminated by the Offerors, by notifying the Representatives, or by you, as
Representatives of the several Underwriters, by notifying either Offeror, except
that the provisions of Sections 5 and 7 shall at all times be effective.
11. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
representations, warranties, indemnities, agreements and other statements of the
Offerors and their officers and trustees set forth in or made pursuant to this
Agreement and the agreements of the Underwriters contained in Section 7 hereof
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Offerors or controlling persons of
either Offeror, or by or on behalf of the Underwriters or controlling persons of
the Underwriters or any termination or cancellation of this Agreement and shall
survive delivery of and payment for the Designated Preferred Securities.
12. NOTICES. Except as otherwise provided in this Agreement, all notices
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if delivered by hand, mailed by registered or certified
mail, return receipt requested, or transmitted by any standard form of
telecommunication and confirmed. Notices to either Offeror shall be sent to
30343 Canwood Street, Agoura Hills, California 90064, Attention: Gary L. Wehrle
(with a copy to Manatt, Phelps & Phillips, LLP, 11355 West Olympic Boulevard,
Los Angeles, California 90064, Attention: William T. Quicksilver); and notices
to the Underwriters shall be sent to Sandler O'Neill & Partners, L.P., Two World
Trade Center, 104th Floor, New York, New York 10048, Attention: Thomas N.
Killian (with a copy to Elias, Matz, Tiernan & Herrick
38
<PAGE>
L.L.P., 734 15th Street, N.W., Washington, D.C. 20005, Attention: Kevin M.
Houlihan, Esq.). In all dealings with the Company under this Agreement, Sandler
O'Neill & Partners, L.P. shall act as representative of and on behalf of the
several Underwriters, and the Company shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of the Underwriters, made or
given by Sandler O'Neill & Partners, L.P. on behalf of the Underwriters, as if
the same shall have been made or given in writing by the Underwriters.
13. PARTIES. The Agreement herein set forth is made solely for the
benefit of the Underwriters and the Offerors and, to the extent expressed,
directors, trustees and officers of the Offerors, any person controlling the
Offerors or the Underwriters, and their respective successors and assigns. No
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser,
in his or her status as such purchaser, from the Underwriters of the Designated
Preferred Securities.
14. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York, without giving effect to the choice of law or conflicts of
law principles thereof.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and when a counterpart has been executed by each party hereto all
such counterparts taken together shall constitute one and the same Agreement.
[Remainder of page intentionally left blank]
39
<PAGE>
If the foregoing is in accordance with the your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
shall become a binding agreement between the Company, the Trust and you in
accordance with its terms.
Very truly yours,
PACIFIC CREST CAPITAL, INC.
By:
Name:
Title:
PCC CAPITAL I
By:
Name:
Title: Administrative Trustee
CONFIRMED AND ACCEPTED,
as of September __, 1997.
SANDLER O'NEILL & PARTNERS, L.P.
SUTRO & CO. INCORPORATED
By: Sandler O'Neill & Partners, L.P.
By: Sandler O'Neill & Partners Corp.,
the sole general partner
By:
Name:
Title:
For itself and as a Representative of the several Underwriters named in Schedule
I hereto.
40
<PAGE>
SCHEDULE I
Underwriter No. of Preferred Securities
- ----------- ---------------------------
Sandler O'Neill & Partners, L.P. . . . . . . . . . . . _______
Sutro & Co., Incorporated. . . . . . . . . . . . . . . _______
Total . . . . . . . . . . . . . . . . . . . . . . 1,500,000
41
e<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
among
Pacific Crest Capital, Inc., as Depositor,
Wilmington Trust Company,
as Property Trustee,
Wilmington Trust Company,
as Delaware Trustee,
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF SEPTEMBER __, 1997
PCC CAPITAL I
<PAGE>
PCC Capital I
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Trust Agreement
Act Section Section
--------------- ---------------
(Section) 310 (a) (1) 8.7
(a) (2) 8.7
(a) (3) 8.7
(a) (4) 2.7 (a) (ii)
(b)
(Section) 311 (a) 8.13
(b) 8.13
(Section) 312 (a) 5.7
(b) 5.7
(c) 5.7
(Section) 313 (a) 8.14 (a)
(a) (4) 8.14 (b)
(b) 8.14 (b)
(c) 10.8
(d) 8.14 (c)
(Section) 314 (a) 8.15
(b) Not Applicable
(c) (1) 8.16
(c) (2) 8.16
(c) (3) Not Applicable
(d) Not Applicable
(e) 1.1, 8.16
(Section) 315 (a) 8.1 (a), 8.3 (a)
(b) 8.2, 10.8
(c) 8.1 (a)
(d) 8.1, 8.3
(e) Not Applicable
(Section) 316 (a) Not Applicable
(a) (1) (A) Not Applicable
(a) (1) (B) Not Applicable
(a) (2) Not Applicable
(b) 5.14
(c) 6.7
(Section) 317 (a) (1) Not Applicable
(a) (2) Not Applicable
(b) 5.9
(Section) 318 (a) 10.10
- ------------
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to
be a part of the Trust Agreement.
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT (this "Trust Agreement"), dated as
of September __, 1997, among (i) Pacific Crest Capital, Inc., a Delaware
corporation (including any successors or assigns, the "Depositor"), (ii)
Wilmington Trust Company, a Delaware banking corporation duly organized and
existing under the laws of the State of Delaware, as property trustee, (in
such capacity, the "Property Trustee" and, in its separate corporate capacity
and not in its capacity as Property Trustee, the "Bank"), (iii) Wilmington
Trust Company, a Delaware banking corporation organized under the laws of the
State of Delaware, as Delaware trustee (the "Delaware Trustee"), (iv) Gary L.
Wehrle, an individual, Robert J. Dennen, an individual, and Lyle C. Lodwick,
an individual, each of whose address is c/o Pacific Crest Capital, Inc.,
30343 Canwood Street, Agoura Hills, California, 91301 (each an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees are
referred to collectively herein as the "Trustees") and (v) the several
Holders, as hereinafter defined.
WITNESSETH
WHEREAS, the Depositor, the Delaware Trustee and Gary L. Wehrle and Robert
J. Dennen, and Lyle C. Lodwick, each as an Administrative Trustee, have
heretofore duly declared and established a business trust pursuant to the
Delaware Business Trust Act by the entering into that certain Trust Agreement,
dated as of August 18, 1997 (the "Original Trust Agreement"), and by the
execution and filing by the Delaware Trustee with the Secretary of State of the
State of Delaware of the Certificate of Trust, filed on August 18, 1997,
attached as Exhibit A, as amended; and
WHEREAS, the Depositor and the Trustees desire to amend and restate the
Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the issuance of the Common Securities by the Trust to
the Depositor, (ii) the issuance and sale of the Preferred Securities by the
Trust pursuant to the Underwriting Agreement, (iii) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Debentures and
(iv) the appointment of the Administrative Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, each party, for the benefit of the other parties and for
the benefit of the Securityholders, hereby amends and restates the Original
Trust Agreement in its entirety and agrees as follows:
ARTICLE I.
DEFINED TERMS
SECTION 1.1 DEFINITIONS.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
1
<PAGE>
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"ACT" has the meaning specified in Section 6.8.
"ADDITIONAL AMOUNT" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"ADDITIONAL SUMS" has the meaning specified in Section 10.6 of the
Indenture.
"ADMINISTRATIVE TRUSTEE" means each of the Persons identified as an
"Administrative Trustee" in the preamble to this Trust Agreement solely in such
Person's capacity as Administrative Trustee of the Trust formed and continued
hereunder and not in such Person's individual capacity, or such Administrative
Trustee's successor in interest in such capacity, or any successor trustee
appointed as herein provided.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"BANK" has the meaning specified in the preamble to this Trust Agreement.
"BANKRUPTCY EVENT" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the
premises judging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable Bankruptcy Law,
or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of such Person or of any substantial part of its property or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 90 consecutive
days; or
2
<PAGE>
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Bankruptcy Law,
or the consent by it to the filing of any such petition or to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"BANKRUPTCY LAW" means any Federal or state bankruptcy, insolvency,
reorganization or similar law.
"BOARD RESOLUTION" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of the Board of Directors or
officers of the Depositor to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the appropriate Trustees.
"BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES" means a beneficial interest
in the Preferred Securities Certificates, ownership and transfers of which shall
be made through book entries by a Clearing Agency as described in Section 5.11.
"BUSINESS DAY" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the State of California are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"CERTIFICATE DEPOSITORY AGREEMENT" means the agreement among the Trust, the
Depositor and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Preferred Securities Certificates,
substantially in the form attached as Exhibit B, as the same may be amended and
supplemented from time to time.
"CERTIFICATE OF TRUST" means the certificate of trust filed with the
Secretary of State of the State of Delaware with Respect to the Trust, as
amended or restated from time to time.
"CLEARING AGENCY" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act. The Depository Trust Company will
be the initial Clearing Agency.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"CLOSING DATE" means the date of execution and delivery of this Trust
Agreement.
3
<PAGE>
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, as amended, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"COMMON SECURITY" means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount of $10 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"COMMON SECURITIES CERTIFICATE" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"CORPORATE TRUST OFFICE" means (i) when used with respect to the Property
Trustee, the principal office of the Property Trustee located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration, and (ii) when used with respect to the Debenture
Trustee, the principal office of the Debenture Trustee located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
"DEBENTURE EVENT OF DEFAULT" means an "Event of Default" as defined in the
Indenture.
"DEBENTURE REDEMPTION DATE" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the Indenture.
"DEBENTURE TAX EVENT" means a "Tax Event" as defined in the Indenture.
"DEBENTURE TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation organized under the laws of the State of Delaware and any successor
thereto, as trustee under the Indenture.
"DEBENTURES" means the aggregate principal amount of the Depositor's ____%
Junior Subordinated Deferrable Interest Debentures, issued pursuant to the
Indenture.
"DEFINITIVE PREFERRED SECURITIES CERTIFICATES" means either or both (as the
context requires) of (a) Preferred Securities Certificates issued as Book-Entry
Preferred Securities Certificate as provided in Section 5.11(a) and (b)
Preferred Securities Certificates issued in certificated, fully registered form
as provided in Section 5.13.
"DELAWARE BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. (Section) 3801, ET SEQ., as it may be amended from time to
time.
"DELAWARE TRUSTEE" means the Person identified as the "Delaware Trustee" in
the preamble to this Trust Agreement solely in its capacity as Delaware Trustee
of the Trust formed and continued
4
<PAGE>
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor trustee appointed as herein provided.
"DEPOSITOR" has the meaning specified in the preamble to this Trust
Agreement.
"DISTRIBUTION DATE" has the meaning specified in Section 4.1(a).
"DISTRIBUTIONS" means amounts payable in respect of the Trust Preferred
Securities as provided in Section 4.1.
"EARLY DISSOLUTION EVENT" has the meaning specified in Section 9.2.
"EVENT OF DEFAULT" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of 30
days; or
(c) default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Property Trustee in this Trust Agreement (other
than a covenant or warranty a default in the performance or breach of which is
dealt with in clause (b) or (c) above) and continuation of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the defaulting Property Trustee by the Holders of at least
25% in aggregate liquidation preference of the Outstanding Preferred Securities
a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and the failure by the Depositor to appoint a successor Property Trustee
within 60 days thereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPENSE AGREEMENT" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit D, as amended from time to time.
"EXPIRATION DATE" has the meaning specified in Section 9.1.
5
<PAGE>
"GUARANTEE" means the Guarantee Agreement executed and delivered by the
Depositor and Wilmington Trust Company, as trustee, contemporaneously with the
execution and delivery of this Trust Agreement, for the benefit of the holders
of the Preferred Securities, as amended from time to time.
"HOLDER" means a Securityholder.
"INDENTURE" means the Junior Subordinated Indenture, dated as of
September __, 1997, between the Depositor and the Debenture Trustee, as
trustee, as amended or supplemented from time to time.
"INVESTMENT COMPANY EVENT" means the receipt by the Depositor and the Trust
of an Opinion of Counsel experienced in such matters to the effect that, as a
result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in Investment
Company Act Law"), the Trust is or will be considered an "investment company"
that is required to be registered under the Investment Company Act, which Change
in Investment Company Act Law becomes effective on or after the date or original
issuance of the Preferred Securities under this Trust Agreement.
"LIEN" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, adverse claim, hypothecation, assignment,
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever.
"LIKE AMOUNT" means (a) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to the principal amount of
Debentures to be contemporaneously redeemed in accordance with the Indenture the
proceeds of which will be used to pay the Redemption Price of such Trust
Securities, and (b) with respect to a distribution of Debentures to Holders of
Trust Securities in connection with a dissolution or liquidation of the Trust,
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the Holder to whom such Debentures are distributed.
"LIQUIDATION AMOUNT" means the stated amount of $10 per Trust Security.
"LIQUIDATION DATE" means the date on which Debentures are to be distributed
to Holders of Trust Securities in connection with a dissolution and liquidation
of the Trust pursuant to Section 9.4(a).
"LIQUIDATION DISTRIBUTION" has the meaning specified in Section 9.4(d).
"1940 ACT" means the Investment Company Act of 1940, as amended.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman and
Chief Executive Officer, President or a Vice President, and by the Chief
Financial Officer, the Secretary or an Assistant Secretary, of the Depositor,
and delivered to the appropriate Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 8.16 shall be the principal
executive,
6
<PAGE>
financial or accounting officer of the Depositor. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Trust Agreement 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 brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' 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 counsel
for the Trust, the Property Trustee, the Delaware Trustee or the Depositor, but
not an employee of any thereof, and who shall be reasonably acceptable to the
Property Trustee.
"OPTION CLOSING DATE" means the date of payment and delivery for any
Preferred Securities issued pursuant to the exercise by Sandler O'Neill &
Partners, L.P. and Sutro & Co. Incorporated of the over-allotment option
granted to such Persons by the Underwriting Agreement.
"ORIGINAL TRUST AGREEMENT" has the meaning specified in the recitals to
this Trust Agreement.
"OUTSTANDING", when used with respect to Trust Securities, means, as of the
date of determination, all Trust Securities theretofore executed and delivered
under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Trust Securities; PROVIDED that, if such
Trust Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Trust Agreement; and
(c) Trust Securities which have been paid or in exchange for or in lieu
of which other Trust Securities have been executed and delivered pursuant to
Sections 5.4, 5.5, 5.11 and 5.13; PROVIDED, HOWEVER, that in determining whether
the Holders of the requisite Liquidation Amount of the Outstanding Preferred
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Preferred Securities owned by the Depositor, any
Trustee or any Affiliate of the Depositor or any Trustee shall be disregarded
and deemed not to be Outstanding, except that (a) in determining whether any
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Preferred Securities
that such Trustee knows to be so owned shall be so disregarded and (b) the
foregoing shall not apply at any time when all of the outstanding Preferred
Securities are owned by the Depositor, one or more of the Trustees and/or any
such Affiliate. Preferred Securities so owned which have been pledged
7
<PAGE>
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Administrative Trustees the pledgee's right so to act with
respect to such Preferred Securities and that the pledgee is not the Depositor
or any Affiliate of the Depositor.
"OWNER" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as reflected
in the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).
"PAYING AGENT" means any paying agent or co-paying agent appointed pursuant
to Section 5.9 and shall initially be the Bank.
"PAYMENT ACCOUNT" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust department
for the benefit of the Securityholders in which all amounts paid in respect of
the Debentures will be held and from which the Property Trustee, through the
Paying Agent, shall make payments to the Securityholders in accordance with
Sections 4.1 and 4.2.
"PERSON" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"PREFERRED SECURITY" means an undivided beneficial interest in the assets
of the Trust designated "___% Cumulative Trust Preferred Securities", having a
Liquidation Amount of $10 and having the rights provided therefor in this Trust
Agreement, including the right to receive Distributions and a Liquidation
Distribution as provided herein.
"PREFERRED SECURITIES CERTIFICATE" means a certificate evidencing ownership
of Preferred Securities, substantially in the form attached as Exhibit E.
"PROPERTY TRUSTEE" means the Person identified as the "Property Trustee" in
the preamble to this Trust Agreement solely in its capacity as Property Trustee
of the Trust heretofore formed and continued hereunder and not in its individual
capacity, or its successor in interest in such capacity, or any successor
property trustee appointed as herein provided.
"REDEMPTION DATE" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
PROVIDED that each Debenture Redemption Date and the stated maturity of the
Debentures shall be a Redemption Date for a Like Amount of Trust Preferred
Securities.
"REDEMPTION PRICE" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures, allocated on a pro rata basis (based on Liquidation Amounts) among
the Trust Preferred Securities.
8
<PAGE>
"RELEVANT TRUSTEE" shall have the meaning specified in Section 8.10.
"SECURITIES REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings specified in Section 5.4.
"SECURITYHOLDER" means a Person in whose name a Trust Security is
registered in the Securities Register; any such Person shall be deemed to be a
beneficial owner within the meaning of the Delaware Business Trust Act.
"TAX EVENT" means the receipt by 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 which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under this Trust Agreement, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days after the
date of such Opinion of Counsel, subject to United States Federal income tax
with respect to income received or accrued on the Debentures, (ii) interest
payable by the Depositor on the Debentures is not, or within 90 days after the
date of such Opinion of Counsel, will not be, deductible by the Depositor, in
whole or in part, for United States Federal income tax purposes or (iii) the
Trust is, or will be within 90 days after the date of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties, assessments or
other governmental charges.
"TRUST" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.
"TRUST AGREEMENT" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including (i) all exhibits hereto and (ii) for all purposes
of this Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this Trust Agreement and any such modification, amendment or supplement,
respectively.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; PROVIDED, HOWEVER, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"TRUST PROPERTY" means (a) the Debentures, (b) the rights of the Property
Trustee under the Guarantee, (c) any cash on deposit in, or owing to, the
Payment Account and (d) all proceeds and rights in respect of the foregoing and
any other property and assets for the time being held or deemed to be held by
the Property Trustee pursuant to the trusts of this Trust Agreement.
"TRUST SECURITY" means any one of the Common Securities or the Preferred
Securities.
9
<PAGE>
"TRUST SECURITIES CERTIFICATE" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"TRUSTEES" means, collectively, the Property Trustee, the Delaware Trustee
and the Administrative Trustees.
"UNDERWRITING AGREEMENT" means that certain Underwriting Agreement dated as
of _________, 1997, among the Trust, the Depositor, Sandler O'Neill & Partners,
L.P. and Sutro & Co., Incorporated.
ARTICLE II.
ESTABLISHMENT OF THE TRUST
SECTION 2.1 NAME.
The Trust continued hereby shall be known as "PCC Capital I," as such name
may be modified from time to time by the Administrative Trustees following
written notice to the Holders of Trust Securities and the other Trustees, in
which name the Trustees may engage in the transactions contemplated hereby, make
and execute contracts and other instruments on behalf of the Trust and sue and
be sued.
SECTION 2.2 OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS.
The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration, or such other address in
the State of Delaware as the Delaware Trustee may designate by written notice to
the Securityholders and the Depositor. The principal executive office of the
Trust is c/o Pacific Crest Capital, Inc., 30343 Canwood Street, Agoura Hills,
California, 91301.
SECTION 2.3 INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES.
The Trustees acknowledges receipt in trust from the Depositor in connection
with the Original Trust Agreement of the sum of $10, which constituted the
initial Trust Property. The Depositor shall pay organizational expenses of the
Trust as they arise or shall, upon request of any Trustee, promptly reimburse
such Trustee for any such expenses paid by such Trustee. The Depositor shall
make no claim upon the Trust Property for the payment of such expenses.
SECTION 2.4 ISSUANCE OF THE PREFERRED SECURITIES.
On ________, 1997 the Depositor and an Administrative Trustee, on behalf of
the Trust and pursuant to the Original Trust Agreement, executed and delivered
the Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 5.2 and deliver to the
10
<PAGE>
Underwriter named in the Underwriting Agreement, Preferred Securities
Certificates, registered in the name of the nominee of the initial Clearing
Agency, in an aggregate amount of 1,500,000 Preferred Securities having an
aggregate Liquidation Amount of $15,000,000 plus on either of the Closing
Date or the Option Closing Date, up to an additional 225,000 Preferred
Securities having an aggregate Liquidation Amount of $2,250,000 solely to
cover over-allotments, as provided for in the Underwriting Agreement (the
"Additional Preferred Securities"), against receipt of such aggregate
purchase price of such Preferred Securities of $15,000,000 (or in the event
that Additional Preferred Securities are issued, up to $17,758,510), which
amount the Administrative Trustee shall promptly deliver to the Property
Trustee.
SECTION 2.5. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE
OF DEBENTURES.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute
in accordance with Section 5.2 and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of 46,392 Common Securities having an aggregate Liquidation Amount of
$463,920, plus on either of the Closing Date or the Option Closing Date, up
to an additional 6,959 Common Securities having an aggregate Liquidation
Amount of $69,590 (the "Additional Common Securities") to meet the capital
requirements of the Trust in the event that Additional Preferred Securities
are issued, against payment by the Depositor of such amount, which amount
such Administrative Trustee shall promptly deliver to the Property Trustee.
Contemporaneously therewith, an Administrative Trustee, on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Trust and having an aggregate principal amount
equal to $15,463,920 (or, in the event that Additional Preferred Securities
and Additional Common Securities are issued, up to $17,758,510), and, in
satisfaction of the purchase price for such Debentures, the Property Trustee,
on behalf of the Trust, shall deliver to the Depositor the sum of $15,463,920
(or, in the event that Additional Preferred Securities and Additional Common
Securities are issued, up to $17,758,510), such amount being the sum of the
amounts delivered to the Property Trustee pursuant to (i) the second sentence
of Section 2.4 and (ii) the first sentence of this Section 2.5.
SECTION 2.6. DECLARATION OF TRUST.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Trust Securities and use the proceeds from such sale to acquire the Debentures,
and (b) to engage in those activities necessary, advisable or incidental
thereto. The Depositor hereby appoints the Trustees as trustees of the Trust,
to have all the rights, powers and duties to the extent set forth herein, and
the Trustees hereby accept such appointment. The Property Trustee hereby
declares that it will hold the Trust Property in trust upon and subject to the
conditions set forth herein for the benefit of the Trust and the
Securityholders. The Administrative Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. 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 Property Trustee or the Administrative
Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of
the Trust for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Delaware Business Trust Act.
SECTION 2.7. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.
(a) The Trustees shall conduct the affairs of the Trust in accordance
with the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section and Section 2.6, and in accordance with the
following provisions (i) and (ii), the Trustees shall have the authority to
enter into all transactions and agreements determined by the Trustees to be
appropriate in exercising the authority, express or implied, otherwise granted
to the Trustees under this Trust
11
<PAGE>
Agreement, and to perform all acts in furtherance thereof, including without
limitation, the following:
(i) As among the Trustees, each Administrative Trustee shall
have the power and authority to act on behalf of the Trust with respect to
the following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Expense Agreement
and the Certificate Depository Agreement and such other agreements
as may be necessary or desirable in connection with the purposes and
function of the Trust;
(C) assisting in the registration (including the
execution of a registration statement on the appropriate form) of
the Preferred Securities under the Securities Act of 1933, as
amended, and under state securities or blue sky laws, and the
qualification of this Trust Agreement as a trust indenture under
the Trust Indenture Act;
(D) assisting in the listing of the Preferred Securities
upon such securities exchange or exchanges as shall be determined by
the Depositor and the registration of the Preferred Securities under
the Securities Exchange Act of 1934, as amended, and the preparation
and filing of all periodic and other reports and other documents
pursuant to the foregoing;
(E) the sending of notices (other than notices of
default) and other information regarding the Trust Securities and
the Debentures to the Securityholders in accordance with this Trust
Agreement;
(F) the appointment of a Paying Agent, authenticating
agent and Securities Registrar in accordance with this Trust
Agreement;
(G) registering transfer of the Trust Securities in
accordance with this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust and the
preparation, execution and filing of the certificate of cancellation
with the Secretary of State of the State of Delaware;
(I) unless otherwise determined by the Depositor, the
Property Trustee or the Administrative Trustees, or as otherwise
required by the Delaware Business Trust Act or the Trust Indenture
Act, to execute on behalf of the Trust (either acting alone or
together with any or all of the Administrative Trustees) any
documents that the Administrative Trustees have the power to execute
pursuant to this Trust Agreement; and
12
<PAGE>
(J) the taking of any action incidental to the foregoing as
the Trustees may from time to time determine is necessary or advisable
to give effect to the terms of this Trust Agreement for the benefit of
the Securityholders (without consideration of the effect of any such
action on any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the following
matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Payment Account;
(D) the distribution through the Paying Agent of amounts owed
to the Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and privileges
of a holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with
the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust and the
preparation, execution and filing of the certificate of cancellation
with the Secretary of State of the State of Delaware;
(I) after an Event of Default (other than under paragraph (b),
(c), (d) or (e) of the definition of such term if such Event of
Default is by or with respect to the Property Trustee) the taking of
any action incidental to the foregoing as the Property Trustee may
from time to time determine is necessary or advisable to give effect
to the terms of this Trust Agreement and protect and conserve the
Trust Property for the benefit of the Securityholders (without
consideration of the effect of any such action on any particular
Securityholder); and
(J) so long as the Property Trustee is the Securities
Registrar, registering transfers of the Trust Securities in accordance
with this Trust Agreement; and
(K) except as otherwise provided in this Section 2.7(a)(ii),
the Property Trustee shall have none of the duties, liabilities,
powers or the authority of the Administrative Trustees set forth in
Section 2.7(a)(i).
13
<PAGE>
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" for United States Federal
income tax purposes, (iv) incur any indebtedness for borrowed money or issue any
other debt or (v) take or consent to any action that would result in the
placement of a Lien on any of the Trust Property. The Administrative Trustees
shall defend all claims and demands of all Persons at any time claiming any Lien
on any of the Trust Property adverse to the interest of the Trust or the
Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of this
Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Trust with the Commission
of a registration statement on the appropriate form in relation to the
Preferred Securities, including any amendments thereto;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and the determination of any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and the advice to
the Trustees of actions they must take on behalf of the Trust, and the
preparation for execution and filing of any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor deems
necessary or advisable in order to comply with the applicable laws of any
such States;
(iii) the preparation for filing by the Trust and execution on behalf
of the Trust of an application to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National Market for listing upon
notice of issuance of any Preferred Securities;
(iv) the preparation for filing by the Trust with the Commission and
the execution on behalf of the Trust of a registration statement on Form
8-A relating to the registration of the Preferred Securities under Section
12(b) or 12(g) of the Exchange Act, including any amendments thereto;
(v) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the Preferred
Securities; and
(vi) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
14
<PAGE>
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act, or fail to be classified
as a grantor trust for United States Federal income tax purposes and so that the
Debentures will be treated as indebtedness of the Depositor for United States
Federal income tax purposes. In this connection, the Depositor and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the Certificate of Trust or this Trust Agreement, that each of
the Depositor and any Administrative Trustee determines in its discretion to be
necessary or desirable for such purposes, as long as such action does not
adversely affect in any material respect the interests of the holders of the
Preferred Securities.
SECTION 2.8. ASSETS OF TRUST.
The assets of the Trust shall consist of the Trust Property.
SECTION 2.9. TITLE TO TRUST PROPERTY.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Trust and the Securityholders in
accordance with this Trust Agreement.
ARTICLE III.
PAYMENT ACCOUNT
SECTION 3.1. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property Trustee
shall have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits in and withdrawals from the
Payment Account in accordance with this Trust Agreement. All monies and other
property deposited or held from time to time in the Payment Account shall be
held by the Property Trustee in the Payment Account for the exclusive benefit of
the Securityholders and for distribution as herein provided, including (and
subject to) any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
15
<PAGE>
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION 4.1. DISTRIBUTIONS.
(a) The Trust Securities represent undivided beneficial interests in the
Trust Property, and Distributions (including of Additional Amounts) will be made
on the Trust Securities at the rate and on the dates that payments of interest
(including of Additional Interest, as defined in the Indenture) are made on the
Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative, and
will accumulate whether or not there are funds of the Trust available for
the payment of Distributions. Distributions shall accrue from the date of
original issuance of the Trust Securities, and, except in the event (and to
the extent) that the Depositor exercises its right to defer the payment of
interest on the Debentures pursuant to the Indenture, shall be payable
quarterly in arrears on March 15, June 15, September 15 and December 15 of
each year, commencing on __________. If any date on which a Distribution
is otherwise payable on the Trust Securities is not a Business Day, then
the payment of such Distribution shall 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) with the same force and effect as if made on
such date (each date on which distributions are payable in accordance with
this Section 4.1(a), a "Distribution Date").
(ii) Assuming payments of interest on the Debentures are made when
due (and before giving effect to Additional Amounts, if applicable),
Distributions on the Trust Securities shall be payable at a rate of _____%
per annum of the Liquidation Amount of the Trust Securities. The amount of
Distributions payable for any full period shall be computed on the basis of
a 360-day year of twelve 30-day months. The amount of Distributions for
any partial period shall be computed on the basis of the number of days
elapsed in a 360-day year of twelve 30-day months. The amount of
Distributions payable for any period shall include the Additional Amounts,
if any.
(iii) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Distributions.
(b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall be
one Business Day prior to such Distribution Date; PROVIDED, HOWEVER, that in the
event that the Preferred Securities do not remain in book-entry-only form, the
relevant record date shall be the date 15 days prior to the relevant
Distribution Date.
16
<PAGE>
SECTION 4.2. REDEMPTION.
(a) On each Debenture Redemption Date and on the stated maturity of the
Debentures, the Trust will be required to redeem, subject to Section 4.3, a Like
Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the total Liquidation Amount of the
particular Trust Securities to be redeemed; and
(v) that on the Redemption Date the Redemption Price will become due
and payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accrue on and after said date.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made and
the Redemption Price shall be payable on each Redemption Date only to the extent
that the Trust has funds then on hand and available in the Payment Account for
the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then, by 12:00 noon, Eastern time, on the Redemption Date,
subject to Section 4.2(c), with respect to Preferred Securities held in
book-entry form, the Property Trustee will irrevocably deposit with the Clearing
Agency for the Preferred Securities funds sufficient to pay the applicable
Redemption Price and will give such Clearing Agency irrevocable instructions and
authority to pay the Redemption Price to the holders thereof. With respect to
Preferred Securities held in certificated form, the Property Trustee, subject to
Section 4.2(c), will irrevocably deposit with the Paying Agent funds sufficient
to pay the applicable Redemption Price and will give the Paying Agent
irrevocable instructions and authority to pay the Redemption Price to the
Holders thereof upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Trust Securities called for redemption shall be payable
to the Holders of such Trust Securities as they appear on the Register for the
Trust 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 Securityholders
holding Trust Securities so called for redemption will cease, except the right
of such
17
<PAGE>
Securityholders to receive the Redemption Price and any Distribution payable on
or prior to the Redemption Date, but without interest, and such Securities will
cease to be outstanding. In the event that any date on which any Redemption
Price is payable 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),
with the same force and effect as if made on such date. In the event that
payment of the Redemption Price in respect of any Trust Securities called for
redemption is improperly withheld or refused and not paid either by the Trust or
by the Depositor pursuant to the Guarantee, Distributions on such Trust
Securities will continue to accrue, at the then applicable rate, from the
Redemption Date originally established by the Trust for such Trust Securities to
the date such Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating
the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities shall be made
to the recordholders thereof as they appear on the Securities Register for the
Trust Securities on the relevant record date, which shall be one Business Day
prior to the relevant Redemption Date; PROVIDED, HOWEVER, that in the event that
the Preferred Securities do not remain in book-entry-only form, the relevant
record date shall be the date fifteen days prior to the relevant Redemption
Date.
(f) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected on a pro rata basis (based upon Liquidation Amounts) not more
than 60 days prior to the Redemption Date by the Property Trustee from the
Outstanding Preferred Securities not previously called for redemption, by such
method (including, without limitation, by lot) as the Property Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to $10 or an integral multiple of $10 in excess thereof) of
the Liquidation Amount of Preferred Securities of a denomination larger than
$10. The Property Trustee shall promptly notify the Security Registrar in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of this Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the Liquidation
Amount of Preferred Securities that has been or is to be redeemed.
SECTION 4.3. SUBORDINATION OF COMMON SECURITIES.
(a) Payment of Distributions (including Additional Amounts, if applicable)
on, and the Redemption Price of, the Trust Securities, as applicable, shall be
made, subject to Section 4.2(f), pro rata among the Common Securities and the
Preferred Securities based on the Liquidation Amount of the Trust Securities;
PROVIDED, HOWEVER, that if on any Distribution Date or Redemption Date any Event
of Default resulting from a Debenture Event of Default shall have occurred and
be continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all
18
<PAGE>
accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all Outstanding Preferred
Securities, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including Additional Amounts, if applicable) on,
or the Redemption Price of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting from
any Debenture Event of Default, the Holder of Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
this Trust Agreement until the effect of all such Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated.
Until any such Event of Default under this Trust Agreement with respect to the
Preferred Securities has been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the Holders of the Preferred
Securities and not the Holder of the Common Securities, and only the Holders of
the Preferred Securities will have the right to direct the Property Trustee to
act on their behalf.
SECTION 4.4. PAYMENT PROCEDURES.
Payments of Distributions (including Additional Amounts, if applicable) in
respect of the Preferred Securities shall be made by check mailed to the address
of the Person entitled thereto as such address shall appear on the Securities
Register or, if the Preferred Securities are held by a Clearing Agency, such
Distributions shall be made to the Clearing Agency in immediately available
funds, which shall credit the relevant Persons' accounts at such Clearing Agency
on the applicable Distribution Dates. Payments in respect of the Common
Securities shall be made in such manner as shall be mutually agreed between the
Property Trustee and the Common Securityholder.
SECTION 4.5. TAX RETURNS AND REPORTS.
The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
form required to be filed in respect of the Trust in each taxable year of the
Trust and (b) prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the appropriate Internal Revenue Service form required to be
provided on such form. The Administrative Trustees shall provide the Depositor
and the Property Trustee with a copy of all such returns and reports promptly
after such filing or furnishing. The Trustees shall comply with United States
Federal withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Securityholders under the Trust
Securities.
19
<PAGE>
SECTION 4.6. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.
Upon receipt under the Debentures of Additional Sums, the Property Trustee
shall promptly pay any taxes, duties or governmental charges of whatsoever
nature (other than withholding taxes) imposed on the Trust by the United States
or any other taxing authority.
SECTION 4.7. PAYMENTS UNDER INDENTURE OR PURSUANT TO DIRECT ACTIONS.
Any amount payable hereunder to any Holder of Preferred Securities (and any
Owner with respect thereto) shall be reduced by the amount of any corresponding
payment such Holder (and Owner) has directly received pursuant to Section 5.8 of
the Indenture or Section 5.14 of this Trust Agreement.
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. INITIAL OWNERSHIP.
Upon the formation of the Trust and the contribution by the Depositor
pursuant to Section 2.3 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are outstanding, the Depositor shall
be the sole beneficial owner of the Trust.
SECTION 5.2. THE TRUST SECURITIES CERTIFICATES.
The Preferred Securities Certificates shall be issued in minimum
denominations of $10 Liquidation Amount and integral multiples of $10 in excess
thereof, and the Common Securities Certificates shall be issued in denominations
of $10 Liquidation Amount and integral multiples thereof. The Trust Securities
Certificates shall be executed on behalf of the Trust by manual signature of at
least one Administrative Trustee. Trust Securities Certificates bearing the
manual signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Trust, shall be
validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 5.4, 5.11
and 5.13.
SECTION 5.3. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES.
At the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Section 2.4, to be executed on behalf of the Trust and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
20
<PAGE>
president, any executive vice president or any vice president, treasurer or
assistant treasurer or controller without further corporate action by the
Depositor, in authorized denominations.
SECTION 5.4. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES.
The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 5.8, a register or registers for the purpose of
registering Trust Securities Certificates and transfers and exchanges of
Preferred Securities Certificates (the "Securities Register") in which, the
registrar designated by the Depositor (the "Securities Registrar"), subject to
such reasonable regulations as it may prescribe, shall provide for the
registration of Preferred Securities Certificates and Common Securities
Certificates (subject to Section 5.10 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. The Property Trustee shall be the
initial Securities Registrar.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.8, the
Administrative Trustees or any one of them shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of a like aggregate
Liquidation Amount dated the date of execution by such Administrative Trustee or
Trustees.
The Securities Registrar shall not be required to register the transfer of
any Preferred Securities that have been called for redemption. At the option of
a Holder, Preferred Securities Certificates may be exchanged for other Preferred
Securities Certificates in authorized denominations of the same class and of a
like aggregate Liquidation Amount upon surrender of the Preferred Securities
Certificates to be exchanged at the office or agency maintained pursuant to
Section 5.8.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to an Administrative Trustee and the
Securities Registrar duly executed by the Holder or his attorney duly authorized
in writing. Each Preferred Securities Certificate surrendered for registration
of transfer or exchange shall be canceled and subsequently disposed of by an
Administrative Trustee in accordance with such Person's customary practice. The
Trust shall not be required to (i) issue, register the transfer of, or exchange
any Preferred Securities during a period beginning at the opening of business 15
calendar days before the date of mailing of a notice of redemption of any
Preferred Securities called for redemption and ending at the close business on
the day of such mailing or (ii) register the transfer of or exchange any
Preferred Securities so selected for redemption, in whole or in part, except the
unredeemed portion of any such Preferred Securities being redeemed in part.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
21
<PAGE>
SECTION 5.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES.
If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and the
Administrative Trustees such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such Trust
Securities Certificate shall have been acquired by a bona fide purchaser, the
Administrative Trustees, or any one of them, on behalf of the Trust shall
execute and make available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In connection
with the issuance of any new Trust Securities Certificate under this Section,
the Administrative Trustees or the Securities Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Trust Securities Certificate
issued pursuant to this Section shall constitute conclusive evidence of an
undivided beneficial interest in the assets of the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
SECTION 5.6. PERSONS DEEMED SECURITYHOLDERS.
The Trustees or the Securities Registrar shall treat the Person in whose
name any Trust Securities Certificate shall be registered in the Securities
Register as the owner of such Trust Securities Certificate for the purpose of
receiving Distributions and for all other purposes whatsoever, and neither the
Trustees nor the Securities Registrar shall be bound by any notice to the
contrary.
SECTION 5.7. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.
At any time when the Property Trustee is not also acting as the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or cause
to be furnished to the Property Trustee (a) semi-annually on or before January 1
and July 1 in each year, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Securityholders as of the
most recent Record Date and (b) promptly after receipt by any Administrative
Trustee or the Depositor of a request therefor from the Property Trustee, such
other information as the Property Trustee may reasonably require in order to
enable the Property Trustee to discharge its obligations under this Trust
Agreement, in each case to the extent such information is in the possession or
control of the Administrative Trustees or the Depositor and is not identical to
a previously supplied list or has not otherwise been received by the Property
Trustee in its capacity as Securities Registrar. The rights of Securityholders
to communicate with other Securityholders with respect to their rights under
this Trust Agreement or under the Trust Securities, and the corresponding rights
of the Trustee shall be as provided in the Trust Indenture Act. Each
Securityholder, by receiving and holding a Trust Securities Certificate, and
each Owner shall be deemed to have agreed not to hold the Depositor, the
Property Trustee or the Administrative Trustees accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
22
<PAGE>
SECTION 5.8. MAINTENANCE OF OFFICE OR AGENCY.
The Administrative Trustees shall maintain an office or offices or agency
or agencies where Preferred Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustees in respect of the Trust Securities Certificates may be served. The
Administrative Trustees initially designate the principal corporate trust office
of the Property Trustee, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, as
the principal corporate trust office for such purposes. The Administrative
Trustees shall give prompt written notice to the Depositor and to the
Securityholders of any change in the location of the Securities Register or any
such office or agency.
SECTION 5.9. APPOINTMENT OF PAYING AGENT.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making the Distributions referred to above. The Administrative Trustees may
revoke such power and remove the Paying Agent if such Trustees determine in
their sole discretion that the Paying Agent shall have failed to perform its
obligations under this Trust Agreement in any material respect. 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 the
Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees, the
Property Trustee and the Depositor. In the event that the Property Trustee shall
no longer be the Paying Agent or a successor Paying Agent shall resign or its
authority to act be revoked, the Administrative Trustees shall appoint a
successor that is acceptable to the Property Trustee and the Depositor to act as
Paying Agent (which shall be a bank or trust company). The Administrative
Trustees shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Administrative Trustees to execute and deliver to the Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment to
the Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. The Paying Agent
shall return all unclaimed funds to the Property Trustee and upon removal of a
Paying Agent such Paying Agent shall also return all funds in its possession to
the Property Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall
apply to the Property Trustee also in its role as Paying Agent, for so long as
the Property Trustee shall act as Paying Agent and, to the extent applicable, to
any other paying agent appointed hereunder. Any reference in this Agreement to
the Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 5.10 OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.
At the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, other than a transfer in connection with a consolidation or merger of the
Depositor into another corporation, or any conveyance, transfer or lease by the
Depositor of its properties and assets substantially as an entirety to any
23
<PAGE>
Person, pursuant to Section 8.1 of the Indenture, any attempted transfer of the
Common Securities shall be void. The Administrative Trustees shall cause each
Common Securities Certificate issued to the Depositor to contain a legend
stating "THIS CERTIFICATE IS NOT TRANSFERABLE".
SECTION 5.11. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON
SECURITIES CERTIFICATE.
(a) The Preferred Securities Certificates, upon original issuance, will be
issued in the form of a typewritten Preferred Securities Certificate or
Certificates representing Book-Entry Preferred Securities Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust. Such Preferred Securities Certificate or Certificates
shall initially be registered on the Securities Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Owner will receive a
Definitive Preferred Securities Certificate representing such Owner's interest
in such Preferred Securities, except as provided in Section 5.13. Unless and
until Definitive Preferred Securities Certificates have been issued to Owners
pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be in full force
and effect;
(ii) the Securities Registrar, the Paying Agent and the Trustees
shall be entitled to deal with the Clearing Agency for all purposes of this
Trust Agreement relating to the Book-Entry Preferred Securities
Certificates (including the payment of the Liquidation Amount of and
Distributions on the Preferred Securities evidenced by Book-Entry Preferred
Securities Certificates) the Book-Entry Preferred Securities Certificates
and shall have no obligations to the Owners thereof;
(iii) to the extent that the provisions of this Section 5.11
conflict with any other provisions of this Trust Agreement, the provisions
of this Section 5.11 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates shall be exercised only through the Clearing Agency
and shall be limited to those established by law and agreements between
such Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Certificate Depository Agreement, unless and
until Definitive Preferred Securities Certificates are issued pursuant to
Section 5.13, the initial Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit payments on
the Preferred Securities to such Clearing Agency Participants. Any
Clearing Agency designated pursuant here to will not be deemed an agent of
the Trustee for any purpose.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
SECTION 5.12. NOTICES TO CLEARING AGENCY.
To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Preferred
Securities Certificates shall have been issued to Owners pursuant to Section
5.13, the Trustees shall give all such notices and communications
24
<PAGE>
specified herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners.
SECTION 5.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES.
If (a) the Depositor advises the Trustees in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
with respect to the Preferred Securities Certificates, and the Depositor is
unable to locate a qualified successor, (b) the Depositor at its option advises
the Trustees in writing that it elects to terminate the book-entry system
through the Clearing Agency or (c) after the occurrence of a Debenture Event of
Default, Owners of Preferred Securities Certificates representing beneficial
interests aggregating at least a majority of the Liquidation Amount advise the
Property Trustee in writing that the continuation of a book-entry system through
the Clearing Agency is no longer in the best interest of the Owners of Preferred
Securities Certificates, then the Property Trustee shall notify the Clearing
Agency and the Clearing Agency shall notify all Owners of Preferred Securities
Certificates and the other Trustees of the occurrence of any such event and of
the availability of the Definitive Preferred Securities Certificates to Owners
of such class or classes, as applicable, requesting the same. Upon surrender to
the Property Trustee of the typewritten Preferred Securities Certificate or
Certificates representing the Book Entry Preferred Securities Certificates by
the Clearing Agency, accompanied by registration instructions, the
Administrative Trustees, or any one of them, shall execute the Definitive
Preferred Securities Certificates in accordance with the instructions of the
Clearing Agency. Neither the Securities Registrar nor the Trustees shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Preferred Securities Certificates, the Trustees shall recognize
the Holders of the Definitive Preferred Securities Certificates as
Securityholders. The Definitive Preferred Securities Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrative Trustees, as evidenced by the
execution thereof by the Administrative Trustees or any one of them.
SECTION 5.14. RIGHTS OF SECURITYHOLDERS.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Securityholders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights and when issued and
delivered to Securityholders against payment of the purchase price therefor will
be fully paid and nonassessable by the Trust. The Holders of the Trust
Securities, in their capacities as such, 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.
(b) or so long as any Preferred Securities remain Outstanding, if, upon a
Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately
25
<PAGE>
due and payable, the Holders of at least 25% in Liquidation Amount of the
Preferred Securities then Outstanding shall have such right by a notice in
writing to the Depositor and the Debenture Trustee; and upon any such
declaration such principal amount of and the accrued interest on all of the
Debentures shall become immediately due and payable, provided that the payment
of principal and interest on such Debentures shall remain subordinated to the
extent provided in the Indenture.
At any time after such a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as in the Indenture
provided, the Holders of a majority in Liquidation Amount of the Preferred
Securities, by written notice to the Property Trustee, the Depositor and the
Debenture Trustee, may rescind and annul such declaration and its consequences
if:
(i) the Depositor has paid or deposited with the Debenture Trustee
a sum sufficient to pay
(A) all overdue installments of interest (including any
Additional Interest (as defined in the Indenture)) on all of the
Debentures,
(B) the principal of (and premium, if any, on) any
Debentures which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Debentures,
and
(C) all sums paid or advanced by the Debenture Trustee
under the Indenture and the reasonable compensation, expenses,
disbursements and advances of the Debenture Trustee and the Property
Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Debentures, other
than the non-payment of the principal of the Debentures which has become
due solely by such acceleration, have been cured or waived as provided in
Section 5.13 of the Indenture.
The holders of a majority in aggregate Liquidation Amount of the Preferred
Securities may, on behalf of the Holders of all the Preferred Securities, waive
any past default under the Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of the Preferred
Securities all or part of which is represented by Book-Entry Preferred
Securities Certificates, a record date shall be established for determining
Holders of Outstanding Preferred Securities entitled to join in such notice,
which record date shall be at the close of business on the day the Property
Trustee receives such notice. The Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to join in such
notice, whether or not such Holders remain Holders after such record date;
26
<PAGE>
provided, that, unless such declaration of acceleration, or rescission and
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day which is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice which has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 5.14(b).
(c) For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1)
or 5.1(2) of the Indenture, any Holder of Preferred Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.8 of the Indenture, for enforcement of payment to such Holder of the
principal amount of or interest on Debentures having a principal amount equal to
the Liquidation Amount of the Preferred Securities of such Holder (a "Direct
Action"). Except as set forth in Section 5.14(b) and this Section 5.14(c), the
Holders of Preferred Securities shall have no right to exercise directly any
right or remedy available to the holders of, or in respect of, the Debentures.
ARTICLE VI.
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.1. LIMITATIONS ON VOTING RIGHTS.
(a) Except as provided in this Section, in Sections 5.14, 8.10 and 10.2
and in the Indenture and as otherwise required by law, no Holder of Preferred
Securities shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Trust or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Trust Securities Certificates, be construed so as to constitute the
Securityholders from time to time as partners or members of an association.
(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 the Debenture Trustee with respect to such
Debentures, (ii) waive any past default which is waivable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable 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 at least a majority in Liquidation Amount of all
Outstanding Preferred 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 written consent of each Holder of Preferred Securities. The Trustees
shall not revoke any action previously authorized or approved by a vote
27
<PAGE>
of the Holders of Preferred Securities, except by a subsequent vote of the
Holders of Preferred Securities. The Property Trustee shall notify all Holders
of the Preferred Securities of any notice of default received from the Debenture
Trustee with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Preferred Securities, prior to taking any of the
foregoing actions, the Trustees shall, at the expense of the Depositor, obtain
an Opinion of Counsel experienced in such matters to the effect that such action
shall not cause the Trust to fail to be classified as a grantor trust for United
States Federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a majority in Liquidation
Amount of the Outstanding Preferred Securities. Notwithstanding any other
provision of this Trust Agreement, no amendment to this Trust Agreement may be
made if, as a result of such amendment, it would cause the Trust to fail to be
classified as a grantor trust for United States Federal income tax purposes.
SECTION 6.2. NOTICE OF MEETINGS.
Notice of all meetings of the Preferred Securityholders, stating the time,
place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 10.8 to each Preferred Securityholder of record, at his
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be
so considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.
SECTION 6.3. MEETINGS OF PREFERRED SECURITYHOLDERS.
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Preferred
Securityholders to vote on any matter upon the written request of Holders of
record of 25% of the Outstanding Preferred Securities (based upon their
Liquidation Amount) and the Administrative Trustees or the Property Trustee may,
at any time in their discretion, call a meeting of Preferred Securityholders to
vote on any matters as to which Preferred Securityholders are entitled to vote.
Holders of record of 50% of the Outstanding Preferred Securities (based
upon their Liquidation Amount), present in person or by proxy, shall constitute
a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the Preferred
Securityholders of record present, in person or by proxy, holding more than a
majority of the Preferred Securities (based upon their Liquidation Amount) held
by the Preferred Securityholders of record present,
28
<PAGE>
either in person or by proxy, at such meeting shall constitute the action of the
Preferred Securityholders, unless this Trust Agreement requires a greater number
of affirmative votes.
SECTION 6.4. VOTING RIGHTS.
Securityholders shall be entitled to one vote for each $10 of Liquidation
Amount represented by their Trust Securities in respect of any matter as to
which such Securityholders are entitled to vote.
SECTION 6.5. PROXIES, ETC.
At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a resolution of the Property Trustee, proxies may be solicited in
the name of the Property Trustee or one or more officers of the Property
Trustee. Only Securityholders of record shall be entitled to vote. When Trust
Securities are held jointly by several persons, any one of them may vote at any
meeting in person or by proxy in respect of such Trust Securities, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Trust Securities. A
proxy purporting to be executed by or on behalf of a Securityholder shall be
deemed valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger. No proxy shall be valid more
than three years after its date of execution.
SECTION 6.6. SECURITYHOLDER ACTION BY WRITTEN CONSENT.
Any action which may be taken by Securityholders at a meeting may be taken
without a meeting if Securityholders holding more than a majority of all
Outstanding Trust Securities (based upon their aggregate Liquidation Amount)
entitled to vote in respect of such action (or such larger proportion thereof as
shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing (based upon their aggregate Liquidation
Amount).
SECTION 6.7. RECORD DATE FOR VOTING AND OTHER PURPOSES.
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrative Trustees may from time to time fix a date, not
more than 90 days prior to the date of any meeting of Securityholders or the
payment of a Distribution or other action, as the case may be, as a record date
for the determination of the identity of the Securityholders of record for such
purposes.
29
<PAGE>
SECTION 6.8. ACTS OF SECURITYHOLDERS.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Trust Agreement to be given, made or
taken by Securityholders or Owners may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Securityholders
or Owners in person or by an agent duly appointed in writing; and, except as
otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders or
Owners signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Trust Agreement and (subject to Section 8.1) conclusive in favor
of the Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee receiving the same deems sufficient.
The ownership of Preferred Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to take
any action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such liquidation amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder or
Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
30
<PAGE>
A Securityholder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee (as defined
in the Guarantee), the Trust or any Person.
SECTION 6.9. INSPECTION OF RECORDS.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by Securityholders
during normal business hours for any purpose reasonably related to such
Securityholder's interest as a Securityholder.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF THE BANK.
The Bank hereby represents and warrants for the benefit of the Depositor
and the Securityholders that:
(a) the Bank is a Delaware banking corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) the Bank has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and delivered
by the Bank and constitutes the valid and legally binding agreement of the Bank
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
(d) the execution, delivery and performance of this Trust Agreement has
been duly authorized by all necessary corporate or other action on the part of
the Bank and does not require any approval of stockholders of the Bank and such
execution, delivery and performance will not (i) violate the charter or bylaws
of the Bank, (ii) violate any provision of, or constitute, with or without
notice or lapse of time, a default under, or result in the creation or
imposition of, any Lien on any properties included in the Trust Property
pursuant to the provisions of, any indenture, mortgage, credit agreement,
license or other agreement or instrument to which the Bank is a party or by
which it is bound, or (iii) violate any law, governmental rule or regulation of
the United States or the State of Delaware, as the case may be, governing the
banking, trust or general powers of the Bank or any order, judgment or decree
applicable to the Bank;
(e) neither the authorization, execution or delivery by the Bank of this
Trust Agreement nor the consummation of any of the transactions by the Property
Trustee or the Delaware Trustee
31
<PAGE>
(as appropriate in context) contemplated herein or therein requires the consent
or approval of, the giving of notice to, the registration with or the taking of
any other action with respect to any governmental authority or agency under any
existing Federal law governing the banking, trust or general powers of the Bank,
as the case may be, under the laws of the United States or the State of
Delaware;
(f) there are no proceedings pending or, to the best the Bank's knowledge,
threatened against or affecting the Property Trustee or the Delaware Trustee in
any court or before any governmental authority, agency or arbitration board or
tribunal which, individually or in the aggregate, would materially and adversely
affect the Trust or would question the right, power and authority of the Bank to
enter into or perform its obligations as one of the Trustees under this Trust
Agreement.
SECTION 7.2. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued at the Closing Date on behalf
of the Trust have been duly authorized and will have been, duly and validly
executed, issued and delivered by the Trustees pursuant to the terms and
provisions of, and in accordance with the requirements of, this Trust Agreement
and the Securityholders will be, as of each such date, entitled to the benefits
of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State of
Delaware or any political subdivision thereof in connection with the execution,
delivery and performance by the Bank, the Property Trustee or the Delaware
Trustee, as the case may be, of Bank, this Trust Agreement.
ARTICLE VIII
THE TRUSTEES
SECTION 8.1. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be as provided
by this Trust Agreement and, in the case of the Property Trustee, by the Trust
Indenture Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. Whether or not therein expressly so provided, every provision of this Trust
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustees shall be subject to the provisions of this Section.
No Administrative Trustee or the Delaware Trustee shall be subject to any
liability under this Trust Agreement except for its own grossly negligent
action, its own grossly negligent failure to act, or its own willful misconduct.
To the
32
<PAGE>
extent that, at law or in equity, an Administrative Trustee or the Delaware
Trustee has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to the Securityholders, such Administrative Trustee or the
Delaware Trustee shall not be liable to the Trust or to any Securityholder for
such Trustee's good faith reliance on the provisions of this Trust Agreement.
The provisions of this Trust Agreement, to the extent that they restrict the
duties and liabilities of the Administrative Trustees or the Delaware Trustee
otherwise existing at law or in equity, are agreed by the Depositor and the
Securityholders to replace such other duties and liabilities of the
Administrative Trustees or the Delaware Trustee.
(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each
Securityholder, by its acceptance of a Trust Security, agrees that it will look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
(c) No provision of this Trust Agreement 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) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(ii) 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 the Trust Securities given in accordance
with this Trust Agreement 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 Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Payment
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 Trust Agreement and the Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with the
Depositor; and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 3.1 and except to
the extent otherwise required by law; and
33
<PAGE>
(v) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall the Property
Trustee be liable for the default or misconduct of the Administrative
Trustees or the Depositor.
SECTION 8.2. CERTAIN NOTICES.
(a) Within 5 Business Days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Property Trustee, the Property
Trustee shall transmit, in the manner and to the extent provided in Section
10.9, notice of such Event of Default to the Securityholders, the Administrative
Trustees and the Depositor, unless the Event of Default shall have been cured or
waived. For purposes of this Section the term "Event of Default" means any
event that is, or after notice or lapse of time or both would become, and Event
of Default.
(b) The Administrative Trustees shall transmit, to the Securityholders in
the manner and to the extent provided in Section 10.9, notice of the Depositor's
election to begin or further extend an Extension Period on the Debentures
(unless such election shall have been revoked) within the time specified for
transmitting such notice to the holders of the Debentures pursuant to the
Indenture as originally executed.
SECTION 8.3. CERTAIN RIGHTS OF PROPERTY TRUSTEE.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness 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) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action or
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with any other provisions
contained herein or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to which
the Preferred Securityholders are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; PROVIDED, HOWEVER, that if the
Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the
34
<PAGE>
Securityholders, in which event the Property Trustee shall have no liability
except for its own bad faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative Trustees
contemplated by this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
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 rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Depositor or the Administrative
Trustees;
(e) 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;
(f) the Property Trustee may consult with counsel (which counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees) and the advice of such counsel 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 reliance thereon and in accordance with
such advice, such counsel may be counsel to the Depositor 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 Trust Agreement from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(h) 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, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Securityholders, but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents or
attorneys, provided that the Property Trustee shall be responsible for its own
negligence or recklessness with respect to selection of any agent or attorney
appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement 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 of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under
35
<PAGE>
the terms of the Trust 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 acting in
accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement 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 8.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Depositor of the proceeds of the Debentures.
SECTION 8.5. MAY HOLD SECURITIES.
Except as provided in the definition of the term "Outstanding" in Article
I, any Trustee or any other agent of any Trustee or the Trust, in its individual
or any other capacity, may become the owner or pledgee of Trust Securities and,
subject to Sections 8.8 and 8.13, may otherwise deal with the Trust with the
same rights it would have if it were not a Trustee or such other agent.
SECTION 8.6. COMPENSATION; INDEMNITY; FEES.
The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable compensation for
all services rendered by them hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust) as specified in a separate agreement between any of the Trustees and the
Depositor;
(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 Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence, bad faith or willfulness;
and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee, (iii) any
officer, director, shareholder, employee,
36
<PAGE>
representative or agent of any Trustee, and (iv) any employee or agent of the
Trust or its Affiliates, (referred to herein as an "Indemnified Person") from
and against any loss, damage, liability, tax, penalty, expense or claim of any
kind or nature whatsoever incurred by such Indemnified Person by reason of the
creation, operation or dissolution of the Trust or 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 authority conferred on such Indemnified Person by this Trust Agreement,
except that no Indemnified Person shall be entitled to be indemnified in respect
of any loss, damage or claim incurred by such Indemnified Person by reason of
gross negligence (or ordinary negligence in the case of the Property Trustee),
bad faith or willful misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of this
Trust Agreement.
No Trustee may claim any lien or charge on any Trust Property as a result
of any amount due pursuant to this Section 8.6.
The Depositor and any Trustee 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 of Trust Securities shall have no rights by virtue of this Trust
Agreement 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. Neither the
Depositor, nor any 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 the
Depositor or any 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 Trustee may engage or be
interested in any financial or other transaction with the Depositor or any
Affiliate of the Depositor, or may act as depository for, trustee or agent for,
or act on any committee or body of holders of, securities or other obligations
of the Depositor or its Affiliates.
SECTION 8.7. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES.
(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person 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 the Property Trustee with respect to the
Trust Securities shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative 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 persons authorized to bind that
entity.
37
<PAGE>
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
SECTION 8.8 CONFLICTING INTERESTS.
If the Property Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
SECTION 8.9. CO-TRUSTEES AND SEPARATE TRUSTEE.
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property may
at the time be located, the Depositor and the Administrative Trustees, by agreed
action of the majority of such Trustees, shall have power to appoint, and upon
the written request of the Administrative Trustees, the Depositor shall for such
purpose join with the Administrative Trustees in the execution, delivery, and
performance of all instruments and agreements necessary or proper to appoint,
one or more Persons approved by the Property Trustee either to act as
co-trustee, jointly with the Property Trustee, of all or any part of such Trust
Property, or to the extent required by law 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 the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section. If the Depositor does not join
in such appointment within 15 days after the receipt by it of a request so to
do, or in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee alone shall have power to make such appointment. Any
co-trustee or separate trustee appointed pursuant to this Section shall either
be (i) a natural person who is at least 21 years of age and a resident of the
United States or (ii) a legal entity with its principal place of business in the
United States that shall act through one or more persons authorized to bind such
entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms, namely:
(a) The Trust Securities shall be executed and delivered and all rights,
powers, duties, and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder shall be exercised
solely by such Trustees and not by such co-trustee or separate trustee.
38
<PAGE>
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing executed
by it, with the written concurrence of the Depositor, may accept the resignation
of or remove any co-trustee or separate trustee appointed under this Section,
and, in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee shall have power to accept the resignation of, or remove, any
such co-trustee or separate trustee without the concurrence of the Depositor.
Upon the written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally liable
by reason of any act or omission of the Property Trustee or any other trustee
hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.
SECTION 8.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
No resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time by giving written notice thereof to the Common
Securityholder. If the instrument of acceptance by the successor Trustee
required by Section 8.11 shall not have been delivered to the Relevant Trustee
within 30 days after the giving of such notice of resignation, the Relevant
Trustee may petition, at the expense of the Trust, any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by Act of the Common Securityholder. If
a Debenture Event of Default shall have occurred and be continuing, the Property
Trustee or the Delaware Trustee, or both of them, may be removed at such time by
Act of the Holders of a majority in Liquidation Amount of
39
<PAGE>
the Preferred Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Trust). In no event will the Holders of the
Preferred Securities have the right to vote to appoint, remove or replace the
Administrative Trustee. An Administrative Trustee may be removed by the Common
Securityholder at any time.
If any Trustee shall resign, be removed or become incapable of acting as
Trustee, or if a vacancy shall occur in the office of any Trustee for any cause,
at a time when no Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees, and the retiring Trustee shall comply with the applicable requirements
of Section 8.11. If the Property Trustee or the Delaware Trustee shall resign,
be removed or become incapable of continuing to act as the Property Trustee or
the Delaware Trustee, as the case may be, at a time when a Debenture Event of
Default shall have occurred and be continuing, the Preferred Securityholders, by
Act of the Securityholders of a majority in Liquidation Amount of the Preferred
Securities then Outstanding delivered to the retiring Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees, and such successor
Trustee shall comply with the applicable requirements of Section 8.11. If an
Administrative Trustee shall resign, be removed or become incapable of acting as
Administrative Trustee, at a time when a Debenture Event of Default shall have
occurred and be continuing, the Common Securityholder by Act of the Common
Securityholder delivered to the Administrative Trustee shall promptly appoint a
successor Administrative Trustee or Administrative Trustees and such successor
Administrative Trustee or Trustees shall comply with the applicable requirements
of Section 8.11. If no successor Relevant Trustee shall have been so appointed
by the Common Securityholder or the Preferred Securityholders and accepted
appointment in the manner required by Section 8.11, any Securityholder who has
been a Securityholder of Trust Securities for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
The Property Trustee shall give notice of each resignation and each removal
of a Trustee and each appointment of a successor Trustee to all Securityholders
in the manner provided in Section 10.8 and shall give notice to the Depositor.
Each notice shall include the name of the successor Relevant Trustee and the
address of its Corporate Trust Office if it is the Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of the remaining Administrative Trustees
if there are at least two of them or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees or Delaware Trustee, as the case may be, set forth
in Section 8.7).
SECTION 8.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
In case of the appointment hereunder of a successor Trustee such successor
Trustee so appointed shall execute, acknowledge and deliver to the Trust and to
the retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or
40
<PAGE>
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Depositor or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and if the Property Trustee is the
resigning Trustee shall duly assign, transfer and deliver to the successor
Trustee all property and money held by such retiring Property Trustee hereunder.
In case of the appointment hereunder of a successor Relevant Trustee, the
retiring Relevant Trustee and each successor Relevant Trustee with respect to
the Trust Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Trust by more than one Relevant Trustee, it
being understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Trust or any successor Relevant Trustee such retiring Relevant
Trustee shall duly assign, transfer and deliver to such successor Relevant
Trustee all Trust Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the Trust Securities and the Trust.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.
SECTION 8.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Property Trustee or the Delaware 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 such Relevant
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of such Relevant Trustee, shall be the
successor of such Relevant Trustee hereunder, provided such corporation 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.
SECTION 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative
41
<PAGE>
to the Trust or any other obligor upon the Trust Securities or the property of
the Trust or of such other obligor or their creditors, the Property Trustee
(irrespective of whether any Distributions on the Trust Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Property Trustee shall have made any demand on the
Trust for the payment of any past due Distributions) shall be entitled and
empowered, to the fullest extent permitted by law, by intervention in such
proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Property Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Property Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Property Trustee and, in the event the Property Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Property Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and counsel, and
any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement adjustment or compensation affecting the Trust
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 8.14. REPORTS BY PROPERTY TRUSTEE.
(a) Not later than March 31 of each year commencing with the year
commencing January 1, 1998, the Property Trustee shall transmit to all
Securityholders in accordance with Section 10.8, and to the Depositor, a brief
report dated as of the immediately preceding December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if to
the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with all of
its obligations under this Trust Agreement during the twelve-month period
(or, in the case of the initial report, the period since the Closing Date)
ending with such December 31 or, if the Property Trustee has not complied
in any material respect with such obligations, a description of such
noncompliance; and
(iii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken by
the Property Trustee in the
42
<PAGE>
performance of its duties hereunder which it has not previously reported
and which in its opinion materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Securityholders
such reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with each national stock exchange, the
Nasdaq National Market or such other interdealer quotation system or
self-regulatory organization upon which the Trust Securities are listed or
traded, with the Commission and with the Depositor.
SECTION 8.15. REPORTS TO THE PROPERTY TRUSTEE.
The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act.
SECTION 8.16. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Depositor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement 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) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
SECTION 8.17. NUMBER OF TRUSTEES.
(a) The number of Trustees shall be five (5) provided that the Holder of
all of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware Trustee
may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to 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 8.10, the Administrative Trustees in office, regardless
of their number (and notwithstanding any other provision of this Agreement),
shall have all the powers granted to the Administrative Trustees and shall
discharge all the duties imposed upon the Administrative Trustees by this Trust
Agreement.
43
<PAGE>
SECTION 8.18. 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
2.7(a), 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 the Depositor 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 this Trust Agreement, as set forth herein.
SECTION 8.19. VOTING.
Except as otherwise provided in this Trust Agreement, the consent or
approval of the Administrative Trustees shall require consent or approval by not
less than a majority of the Administrative Trustees, unless there are only two,
in which case both must consent.
ARTICLE IX.
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. DISSOLUTION UPON EXPIRATION DATE.
Unless dissolved earlier, the Trust shall automatically dissolve on
December 31, 2028 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 9.4.
SECTION 9.2. EARLY DISSOLUTION.
The first to occur of any of the following events is an "Early Dissolution
Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from the Depositor at
any time to dissolve the Trust and distribute Debentures to Securityholders in
exchange for a Like Amount of the Preferred Securities (which direction is
optional and wholly within the discretion of the Depositor);
(c) the redemption of all of the Preferred Securities in connection with
the redemption of all the Debentures; and
(d) the entry of an order for dissolution of the Trust by a court of
competent jurisdiction.
44
<PAGE>
SECTION 9.3. DISSOLUTION.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall dissolve upon the latest to occur of
the following: (a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 9.4, or upon the
redemption of all of the Trust Securities pursuant to Section 4.2, of all
amounts required to be distributed hereunder upon the final payment of the Trust
Securities; (b) the payment of any expenses owed by the Trust; and (c) the
discharge of all administrative duties of the Administrative Trustees, including
the performance of any tax reporting obligations with respect to the Trust or
the Securityholders, and (d) the filing of a Certificate of Cancellation by the
Administrative Trustee under the Business Trust Act.
SECTION 9.4. LIQUIDATION.
(a) If an Early Dissolution Event specified in clause (a), (b) or (d) of
Section 9.2 occurs or upon the Expiration Date, the Trust shall be liquidated by
the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each Securityholder a Like Amount of Debentures,
subject to Section 9.4(d). Notice of liquidation shall be given by the Property
Trustee by first-class mail, postage prepaid mailed not later than 30 nor more
than 60 days prior to the Liquidation Date to each Holder of Trust Securities at
such Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for certificates
representing the Like Amount of the Debentures, or if Section 9.4(d)
applies receive a Liquidation Distribution, as the Administrative Trustees
or the Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to Securityholders,
the Administrative Trustees shall establish a record date for such distribution
(which shall be not more than 45 days prior to the Liquidation Date) and, either
itself acting as exchange agent or through the appointment of a separate
exchange agent, shall establish such procedures as it shall deem appropriate to
effect the distribution of Debentures in exchange for the Outstanding Trust
Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
certificates representing a Like Amount of Debentures will be issued to holders
of Trust Securities Certificates, upon surrender of such certificates to the
Administrative Trustees or their agent for exchange, (iii) the Depositor shall
use its best efforts to have the Debentures listed on the Nasdaq National Market
or on such other
45
<PAGE>
exchange, interdealer quotation system or self-regulatory organization as the
Preferred Securities are then listed, (iv) any Trust Securities Certificates not
so surrendered for exchange will be deemed to represent a Like Amount of
Debentures, accruing interest at the rate provided for in the Debentures from
the last Distribution Date on which a Distribution was made on such Trust
Securities Certificates until such certificates are so surrendered (and until
such certificates are so surrendered, no payments of interest or principal will
be made to Holders of Debentures represented by such certificates) and (v) all
rights of Securityholders holding Trust Securities will cease, except the right
of such Securityholders to receive a Like Amount of Debentures upon surrender of
Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this
Section 9.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as the
Property Trustee determines. In such event, on the date of the dissolution,
winding-up or other termination of the Trust, Securityholders will be entitled
to receive out of the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Liquidation Amount per Trust
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
dissolution, winding up or termination, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be paid
on a pro rata basis (based upon Liquidation Amounts). The holder of the Common
Securities will be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if a Debenture Event of Default
has occurred and is continuing, Holders of the Preferred Securities shall have a
priority over the Holders of Common Securities.
SECTION 9.5. 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
substantially as an entirety to any corporation or other body, except pursuant
to this Section 9.5. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the Holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, the Trust may merge
with or into, consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any State; PROVIDED, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Depositor expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the Debentures,
(iii) the Successor Securities are listed or traded, or any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or other organization on
46
<PAGE>
which the Preferred Securities are then listed or traded, if any, (iv) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not cause the Preferred Securities (including any Successor Securities) to
be downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Preferred 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, the Depositor has received an Opinion of Counsel
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 Preferred Securities (including any
Successor Securities) in any material respect, 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 1940 Act and (viii) the Depositor 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 Guarantee. Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100% in Liquidation Amount of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the successor entity to be classified as other than a grantor trust for
United States Federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. LIMITATION OF RIGHTS OF SECURITYHOLDERS.
The death or incapacity of any person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such person or any
Securityholder for such person, to claim an accounting, take any action or bring
any proceeding in any court for a partition or winding up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
SECTION 10.2. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by the Property
Trustee, the Administrative Trustees and the Depositor, without the consent of
any Securityholders, (i) to cure any ambiguity, correct or supplement any
provision herein which may be inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement, which shall not be inconsistent with the other provisions
of this Trust Agreement, or (ii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that the
Trust will be classified for United States Federal
47
<PAGE>
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 1940 Act; PROVIDED, HOWEVER, that in the case of
clause (i), such action shall not adversely affect in any material respect the
interests of any Securityholder, and any amendments of this Trust Agreement
shall become effective when notice thereof is given to the Securityholders.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Administrative Trustees and the Property
Trustee with (i) the consent of Trust Securityholders representing not less than
a majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding 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 of an investment company under the 1940 Act.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such consent
being obtained in accordance with Section 6.3 or 6.6 hereof), this 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 Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this
paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Administrative Trustee shall enter into or consent to any amendment to this
Trust Agreement which would cause the Trust to fail or cease to qualify for the
exemption from status of an investment company under the 1940 Act or fail or
cease to be classified as a grantor trust for United States Federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Delaware Trustee or the Depositor, as the case may
be, this Trust Agreement may not be amended in a manner which imposes any
additional obligation on the Depositor or the Delaware Trustee.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
48
<PAGE>
SECTION 10.3. COUNTERPARTS.
This Trust Agreement may be executed in one or more counterparts, each of
which shall be an original and all of which shall constitute one and the same
instrument.
SECTION 10.4. SEPARABILITY.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 10.5. GOVERNING LAW.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES).
SECTION 10.6. PAYMENTS DUE ON NON-BUSINESS DAY.
If the date fixed for any payment on any Trust Security shall be a day that
is not a Business Day, then such payment need not be made on such date but may
be made on the next succeeding day that is a Business Day (except as otherwise
provided in Sections 4.1(a) and 4.2(d)), with the same force and effect as
though made on the date fixed for such payment, and no interest shall accrue
thereon for the period after such date.
SECTION 10.7. SUCCESSORS.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust or the Relevant Trustee, including
any successor by operation of law. Except in connection with a consolidation,
merger or sale involving the Depositor that is permitted under Article Eight of
the Indenture and pursuant to which the assignee agrees in writing to perform
the Depositor's obligations hereunder, the Depositor shall not assign its
obligations hereunder.
SECTION 10.8. HEADINGS.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
SECTION 10.9. REPORTS, NOTICES AND DEMANDS.
Any report, notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
any Securityholder or the Depositor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case
49
<PAGE>
of a Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and (b)
in the case of the Common Securityholder or the Depositor, to Pacific Crest
Capital, Inc., 30343 Canwood Street, Agoura Hills, California, 91301, Attention:
Gary L. Wehrle, facsimile number: (818) 865-3260. Any notice to Preferred
Securityholders shall also be given to such owners as have, within two years
preceding the giving of such notice, filed their names and addresses with the
Property Trustee for that purpose. Such notice, demand or other communication
to or upon a Securityholder shall be deemed to have been sufficiently given or
made, for all purposes, upon hand delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Trust, the Property Trustee, the Delaware Trustee or the Administrative Trustees
shall be given in writing addressed (until another address is published by the
Trust) as follows: (a) with respect to the Property Trustee to Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington , Delaware
19890-0001; (b) with respect to the Delaware Trustee, to Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration; and (c) with respect to
the Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention Administrative Trustees of PCC Capital I." Such
notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.
SECTION 10.10. AGREEMENT NOT TO PETITION.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any Bankruptcy Laws or
otherwise join in the commencement of any proceeding against the Trust under any
Bankruptcy Law. In the event the Depositor takes action in violation of this
Section 10.10, the Property Trustee agrees, for the benefit of Securityholders,
that at the expense of the Depositor, it shall file an answer with the
bankruptcy court or otherwise properly contest the filing of such petition by
the Depositor against the Trust or the commencement of such action and raise the
defense that the Depositor has agreed in writing not to take such action and
should be stopped and precluded therefrom and such other defenses, if any, as
counsel for the Trustee or the Trust may assert. The provisions of this Section
10.9 shall survive the termination of this Trust Agreement.
SECTION 10.11. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement 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.
50
<PAGE>
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 10.12. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE
OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.
PACIFIC CREST CAPITAL, INC.
By:
-------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Property Trustee
By:
-------------------------------------
Name:
Title:
51
<PAGE>
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By:
-------------------------------------
Name:
Title:
-------------------------------------
Gary L. Wehrle,
as Administrative Trustee
-------------------------------------
Robert J. Dennen,
as Administrative Trustee
-------------------------------------
Lyle C. Lodwick,
as Administrative Trustee
52
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
PCC CAPITAL I
This Certificate of Trust of PCC Capital I (the "Trust"), dated __________,
1997, is being duly executed and filed by the undersigned, as trustees, to form
a business trust under the Delaware Business Trust Act (12 Del. C. (Section )
3801 et seq.).
1. NAME. The name of the business trust being formed hereby is PCC Capital
I.
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 Administration.
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:
------------------------------------
Name:
Title:
------------------------------------
Gary L. Wehrle,
Administrative Trustee
------------------------------------
Robert J. Dennen,
Administrative Trustee
------------------------------------
Lyle C. Lodwick,
Administrative Trustee
53
<PAGE>
EXHIBIT B
The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York 10041-0099
, 1997
- ----------
Attention:
---------------
General Counsel's Office
Re: PCC CAPITAL I ____% CUMULATIVE TRUST PREFERRED SECURITIES
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to the
issuance and deposit with The Depository Trust Company ("DTC") of the PCC
Capital I ____% Cumulative Trust Preferred Securities, (the "Trust Preferred
Securities"), of PCC Capital I, a Delaware business trust (the "Issuer"), formed
pursuant to a Trust Agreement between Pacific Crest Capital, Inc. ("Pacific
Crest") and Wilmington Trust Company, as Property Trustee, Wilmington Trust
Company, as Delaware Trustee, and the Administrative Trustees named therein.
The payment of distributions on the Trust Preferred Securities, and payments due
upon liquidation of the Issuer or redemption of the Trust Preferred Securities,
to the extent the Issuer has funds available for the payment thereof are
guaranteed by Pacific Crest to the extent set forth in a Guarantee Agreement
dated ____________, 1997 by Pacific Crest with respect to the Trust Preferred
Securities. Pacific Crest and the Issuer propose to sell the Trust Preferred
Securities to certain Underwriters (the "Underwriters") pursuant to a
Underwriting Agreement dated ____________, 1997 by and among the Underwriters,
the Issuer and Pacific Crest, and the Underwriters wish to take delivery of the
Trust Preferred Securities through DTC. Wilmington Trust Company is acting as
transfer agent and registrar with respect to the Trust Preferred Securities (the
"Transfer Agent and Registrar").
To induce DTC to accept the Trust Preferred Securities as eligible for
deposit at DTC, and to act in accordance with DTC's rules with respect to the
Trust Preferred Securities, the Issuer, the Transfer Agent and Registrar and DTC
agree among each other as follows:
1. Prior to the closing of the sale of the Trust Preferred Securities to
the Underwriters, which is expected to occur on or about ____________, 1997,
there shall be deposited with DTC one or more global certificates (individually
and collectively, the "Global Certificate") registered in the
54
<PAGE>
name of DTC's Trust Preferred Securities nominee, Cede & Co., representing an
aggregate of ____________ Trust Preferred Securities and bearing the following
legend:
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to
the Issuer or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede
& Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
2. The Amended and Restated Trust Agreement of the Issuer provides for the
voting by holders of the Trust Preferred Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes and
shall, to the extent possible, give DTC notice of such record date not less than
15 calendar days in advance of such record date.
3. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation of
all or any part of the Trust Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice of such event at least 5
business days prior to the effective date of such event.
4. In the event of distribution on, or an offering or issuance of rights
with respect to, the Trust Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice specifying: (a) the amount
of and conditions, if any, applicable to the payment of any such distribution or
any such offering or issuance of rights; (b) any applicable expiration or
deadline date, or any date by which any action on the part of the holders of
Trust Preferred Securities is required; and (c) the date any required notice is
to be mailed by or on behalf of the Issuer to holders of Trust Preferred
Securities or published by or on behalf of the Issuer (whether by mail or
publication, the "Publication Date"). Such notice shall be sent to DTC by a
secure means (e.g., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before the
Publication Date. The Issuer or the Transfer Agent and Registrar will forward
such notice either in a separate secure transmission for each CUSIP number or in
a secure transmission of multiple CUSIP numbers (if applicable) that includes a
manifest or list of each CUSIP number submitted in that transmission. (The
party sending such notice shall have a method to verify subsequently the use of
such means and the timeliness of such notice.) The Publication Date shall be not
less than 30 calendar days nor more than 60 calendar days prior to the payment
of any such distribution or any such offering or issuance of rights with respect
to the Trust Preferred Securities. After establishing the amount of payment to
be made on the Trust Preferred Securities, the Issuer or the Transfer Agent and
Registrar will notify DTC's Dividend Department of such payment 5 business days
prior to payment date. Notices to DTC's Dividend Department by telecopy shall
be sent to (212) 709-1723. Such notices by mail or by any other means shall be
sent to:
55
<PAGE>
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
The Issuer or the Transfer Agent and Registrar shall confirm DTC's receipt
of such telecopy by telephoning the Dividend Department at (212) 709-1270.
5. In the event of a redemption by the Issuer of the Trust Preferred
Securities, notice specifying the terms of the redemption and the Publication
Date of such notice shall be sent by the Issuer or the Transfer Agent and
Registrar to DTC not less than 30 calendar days prior to such event by a secure
means in the manner set forth in paragraph 4. Such redemption notice shall be
sent to DTC's Call Notification Department at (516) 227-4164 or (516) 227-4190,
and receipt of such notice shall be confirmed by telephoning (516) 227-4070.
Notice by mail or by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Trust Preferred Securities,
notice specifying the terms of the tender and the Publication Date of such
notice shall be sent by the Issuer or the Transfer Agent and Registrar to DTC by
a secure means and in a timely manner as described in paragraph 4. Notices to
DTC pursuant to this paragraph and notices of other corporate actions (including
mandatory tenders, exchanges and capital changes) shall be sent, unless
notification to another department is expressly provided for herein, by telecopy
to DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094 and
receipt of such notice shall be confirmed by telephoning (212) 709-6884, or by
mail or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advices sent to DTC shall contain the CUSIP
number or numbers of the Trust Preferred Securities and the accompanying
designation of the Trust Preferred Securities, which, as of the date of this
letter, is "PCC Capital I ____% Cumulative Trust Preferred Securities.
8. Distribution payments or other cash payments with respect to the Trust
Preferred Securities evidenced by the Global Certificate shall be received by
Cede & Co., as nominee of DTC, or its registered assigns in next day funds on
each payment date (or in accordance with existing arrangements between the
Issuer or the Transfer Agent and Registrar and DTC). Such payments shall be
made payable to the order of Cede & Co., and shall be addressed as follows:
56
<PAGE>
NDFS Redemption Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
9. DTC may by prior written notice direct the Issuer and the Transfer Agent
and Registrar to use any other telecopy number or address of DTC as the number
or address to which notices or payments may be sent.
10. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or the
Transfer Agent and Registrar's invitation) necessitating a reduction in the
aggregate number of Trust Preferred Securities outstanding evidenced by Global
Certificates, DTC, in its discretion: (a) may request the Issuer or the Transfer
Agent and Registrar to issue and countersign a new Global Certificate; or (b)
may make an appropriate notation on the Global Certificate indicating the date
and amount of such reduction.
11. DTC may discontinue its services as a securities depositary with
respect to the Trust Preferred Securities at any time by giving at least 90
days' prior written notice to the Issuer and the Transfer Agent and Registrar
(at which time DTC will confirm with the Issuer or the Transfer Agent and
Registrar the aggregate number of Trust Preferred Securities deposited with it)
and discharging its responsibilities with respect thereto under applicable law.
Under such circumstances, the Issuer may determine to make alternative
arrangements for book-entry settlement for the Trust Preferred Securities, make
available one or more separate global certificates evidencing Trust Preferred
Securities to any Participant having Trust Preferred Securities credited to its
DTC account, or issue definitive Trust Preferred Securities to the beneficial
holders thereof, and in any such case, DTC agrees to cooperate fully with the
Issuer and the Transfer Agent and Registrar, and to return the Global
Certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
12. In the event that the Issuer determines that beneficial owners of Trust
Preferred Securities shall be able to obtain definitive Trust Preferred
Securities, the Issuer or the Transfer Agent and Registrar shall notify DTC of
the availability of certificates. In such event, the Issuer or the Transfer
Agent and Registrar shall issue, transfer and exchange certificates in
appropriate amounts, as required by DTC and others, and DTC agrees to cooperate
fully with the Issuer and the Transfer Agent and Registrar and to return the
Global Certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
13. This letter may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
57
<PAGE>
Nothing herein shall be deemed to require the Transfer Agent and Registrar
to advance funds on behalf of PCC Capital I.
Very truly yours,
PCC CAPITAL I
(as Issuer)
By:
------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee, Paying Agent and Registrar
By:
------------------------------------
Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By:
------------------------------------
AUTHORIZED OFFICER
58
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER C-1 NUMBER OF COMMON SECURITIES ____
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
PCC CAPITAL I
____% COMMON SECURITIES
(LIQUIDATION AMOUNT $10 PER COMMON SECURITY)
PCC Capital I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that Pacific Crest Capital,
Inc. (the "Holder") is the registered owner of ________ common securities of
the Trust representing beneficial interests of the Trust and designated the
____% Common Securities (liquidation amount $10 per Common Security) (the
"Common Securities"). In accordance with Section 5.10 of the Trust Agreement
(as defined below) the Common Securities are not transferable and any attempted
transfer hereof shall be void. The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Trust dated
as of ___________,1997, as the same may be amended from time to time (the "Trust
Agreement") including the designation of the terms of the Common Securities as
set forth therein. The Trust will furnish a copy of the Trust Agreement to the
Holder without charge upon written request to the Trust at its principal place
of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ____ day of ______________,1997.
PCC CAPITAL I
By:
-----------------------------------------
Name:
ADMINISTRATIVE TRUSTEE
59
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement"), dated as of
____________, 1997, between Pacific Crest Capital, Inc., a Delaware corporation
("Pacific"), and PCC Capital I, a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Debentures from Pacific and to issue and sell ____%
Cumulative Trust Preferred Securities (the "Trust Preferred Securities") with
such powers, preferences and special rights and restrictions as are set forth in
the Amended and Restated Trust Agreement of the Trust dated as of _________,
1997 as the same may be amended from time to time (the "Trust Agreement");
WHEREAS, Pacific will directly or indirectly own all of the Common
Securities of the Trust and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Trust Preferred Securities, which purchase Pacific hereby agrees shall benefit
Pacific and which purchase Pacific acknowledges will be made in reliance upon
the execution and delivery of this Agreement, Pacific and the Trust hereby agree
as follows:
ARTICLE I
SECTION 1.1. GUARANTEE BY PACIFIC.
Subject to the terms and conditions hereof, Pacific hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment,
when and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust, other than obligations of the Trust to pay to holders
of any Trust Preferred Securities or other similar interests in the Trust the
amounts due such holders pursuant to the terms of the Trust Preferred Securities
or such other similar interests, as the case may be. This Agreement is intended
to be for the benefit of, and to be enforceable by, all such Beneficiaries,
whether or not such Beneficiaries have received notice hereof.
SECTION 1.2. TERM OF AGREEMENT.
This Agreement shall terminate and be of no further force and effect upon
the later of (a) the date on which full payment has been made of all amounts
payable to all holders of all the Trust Preferred Securities (whether upon
redemption, liquidation, exchange or otherwise) and (b) the date on which there
are no Beneficiaries remaining; PROVIDED, HOWEVER, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Trust Preferred Securities or any Beneficiary must restore
payment of any sums paid under the Trust Preferred Securities, under any
Obligation, under the Guarantee Agreement dated the date hereof
60
<PAGE>
by Pacific and Wilmington Trust Company, a Delaware banking corporation, as
guarantee trustee or under this Agreement for any reason whatsoever. This
Agreement is continuing, irrevocable, unconditional and absolute.
SECTION 1.3. WAIVER OF NOTICE.
Pacific hereby waives notice of acceptance of this Agreement and of any
Obligation to which it applies or may apply, and Pacific hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 1.4. NO IMPAIRMENT.
The obligations, covenants, agreements and duties of Pacific under this
Agreement shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation under,
arising out of, or in connection with, the obligations;
(b) any failure, omission, delay or lack of diligence on the part of the
Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Trust granting indulgence or extension of any kind;
or
(c) 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 Trust or any of the assets of the
Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, Pacific with respect to the happening of any of the foregoing.
SECTION 1.5. ENFORCEMENT.
A Beneficiary may enforce this Agreement directly against Pacific and
Pacific waives any right or remedy to require that any action be brought against
the Trust or any other person or entity before proceeding against Pacific.
SECTION 1.6. SUBROGATION.
Pacific shall be subrogated to all (if any) rights of the Trust in respect
of any amounts paid to the Beneficiaries by Pacific under this Agreement;
PROVIDED, HOWEVER, that Pacific shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Agreement, if, at the
time of any such payment, any amounts are due and unpaid under this Agreement.
61
<PAGE>
ARTICLE II
SECTION 2.1. BINDING EFFECT.
All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of Pacific and
shall inure to the benefit of the Beneficiaries.
SECTION 2.2. AMENDMENT.
So long as there remains any Beneficiary or any Trust Preferred Securities
of any series are outstanding, this Agreement shall not be modified or amended
in any manner adverse to such Beneficiary or to the holders of the Trust
Preferred Securities.
SECTION 2.3. NOTICES.
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), telex or by registered
or certified mail, addressed as follows (and if so given, shall be deemed given
when mailed or upon receipt of an answer-back, if sent by telex):
PCC Capital I
c/o Pacific Crest Capital, Inc.
30343 Canwood Street
Agoura Hills, California 91301
Facsimile No.: (818) 865-3260
Attention: Gary L. Wehrle
Pacific Crest Capital, Inc.
30343 Canwood Street
Agoura Hills, California 91301
Facsimile No.: (818) 865-3260
Attention: Gary L. Wehrle
SECTION 2.4. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES).
62
<PAGE>
THIS AGREEMENT is executed as of the day and year first above written.
PACIFIC CREST CAPITAL, INC.
By:
---------------------------------------
Name:
Title:
PCC CAPITAL I
By:
---------------------------------------
Name:
ADMINISTRATIVE TRUSTEE
63
<PAGE>
EXHIBIT E
This Preferred Security is a Global Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository.
This Preferred Security is exchangeable for Trust Preferred Securities
registered in the name of a person other than the Depository or its nominee only
in the limited circumstances described in the Trust Agreement and no transfer of
this Preferred Security (other than a transfer of this Preferred Security as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York) to PCC Capital I or its
agent for registration of transfer, exchange or payment, and any Preferred
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 inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
CERTIFICATE NUMBER P-__ NUMBER OF TRUST PREFERRED SECURITIES _______
CUSIP NO.
----------
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
OF
PCC CAPITAL I
____% CUMULATIVE TRUST PREFERRED SECURITIES,
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
PCC Capital I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that ________________ (the
"Holder") is the registered owner of ________ ( ) Trust Preferred Securities
of the Trust representing an undivided beneficial interest in the assets of the
Trust and designated the PCC Capital I ____% Cumulative Trust Preferred
Securities, (liquidation amount $10 per Preferred Security) (the "Trust
Preferred Securities"). The Trust Preferred 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 as
provided in Section 5.4 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Trust Preferred Securities are set forth in, and this
certificate and the Trust Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
64
<PAGE>
Restated Trust Agreement of the Trust dated as of __________, 1997, as the same
may be amended from time to time (the "Trust Agreement") including the
designation of the terms of Trust Preferred Securities as set forth therein.
The Holder is entitled to the benefits of the Guarantee Agreement entered into
by Pacific Crest Capital, Inc., a Delaware corporation, and [insert name of
Guarantee Trustee], as guarantee trustee, dated as of ___________, 1997, (the
"Guarantee"), to the extent provided therein. The Trust will furnish a copy of
the Trust Agreement and the Guarantee to the Holder without charge upon written
request to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ___ day of ___________, 1997.
PCC Capital I
By:
---------------------------------------
Name:
ADMINISTRATIVE TRUSTEE
65
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Preferred 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 Preferred
Security Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
SEC Rule 17Ad-15.
66
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINED TERMS......................................................1
Section 1.1. DEFINITIONS.................................................1
ARTICLE II. ESTABLISHMENT OF THE TRUST.......................................10
Section 2.1. NAME.......................................................10
Section 2.2. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF
BUSINESS...................................................10
Section 2.3. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES...................................................10
Section 2.4. ISSUANCE OF THE PREFERRED SECURITIES.......................10
Section 2.5. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND
PURCHASE OF DEBENTURES.....................................11
Section 2.6. DECLARATION OF TRUST.......................................11
Section 2.7. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS...........11
Section 2.8. ASSETS OF TRUST............................................15
Section 2.9. TITLE TO TRUST PROPERTY....................................15
ARTICLE III. PAYMENT ACCOUNT.................................................15
Section 3.1. PAYMENT ACCOUNT............................................15
ARTICLE IV. DISTRIBUTIONS; REDEMPTION.......................................16
Section 4.1. DISTRIBUTIONS..............................................16
Section 4.2. REDEMPTION.................................................17
Section 4.3. SUBORDINATION OF COMMON SECURITIES.........................18
Section 4.4. PAYMENT PROCEDURES.........................................19
Section 4.5. TAX RETURNS AND REPORTS....................................19
Section 4.6. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST................20
Section 4.7. PAYMENTS UNDER INDENTURE OR PURSUANT TO DIRECT ACTIONS.....20
ARTICLE V. TRUST SECURITIES CERTIFICATES.....................................20
Section 5.1. INITIAL OWNERSHIP..........................................20
Section 5.2. THE TRUST SECURITIES CERTIFICATES..........................20
Section 5.3. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES....20
Section 5.4. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED
SECURITIES CERTIFICATES....................................21
Section 5.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES...............................................22
Section 5.6. PERSONS DEEMED SECURITYHOLDERS.............................22
Section 5.7. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.....22
Section 5.8. MAINTENANCE OF OFFICE OR AGENCY............................23
i
<PAGE>
Section 5.9. APPOINTMENT OF PAYING AGENT...............................23
Section 5.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR...............23
Section 5.11. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON
SECURITIES CERTIFICATE....................................24
Section 5.12. NOTICES TO CLEARING AGENCY................................24
Section 5.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES..............25
Section 5.14. RIGHTS OF SECURITYHOLDERS.................................25
ARTICLE VI. ACTS OF SECURITYHOLDERS; MEETINGS; VOTING.......................27
Section 6.1. LIMITATIONS ON VOTING RIGHTS..............................27
Section 6.2. NOTICE OF MEETINGS........................................28
Section 6.3. MEETINGS OF PREFERRED SECURITYHOLDERS.....................28
Section 6.4. VOTING RIGHTS.............................................29
Section 6.5. PROXIES, ETC..............................................29
Section 6.6. SECURITYHOLDER ACTION BY WRITTEN CONSENT..................29
Section 6.7. RECORD DATE FOR VOTING AND OTHER PURPOSES.................29
Section 6.8. ACTS OF SECURITYHOLDERS...................................30
Section 6.9. INSPECTION OF RECORDS.....................................31
ARTICLE VII. REPRESENTATIONS AND WARRANTIES................................31
Section 7.1. REPRESENTATIONS AND WARRANTIES OF THE BANK................31
Section 7.2. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR...............32
ARTICLE VIII. THE TRUSTEES..................................................32
Section 8.1. CERTAIN DUTIES AND RESPONSIBILITIES.......................32
Section 8.2. CERTAIN NOTICES...........................................34
Section 8.3. CERTAIN RIGHTS OF PROPERTY TRUSTEE........................34
Section 8.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES....36
Section 8.5. MAY HOLD SECURITIES.......................................36
Section 8.6. COMPENSATION; INDEMNITY; FEES.............................36
Section 8.7. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF
TRUSTEES..................................................37
Section 8.8. CONFLICTING INTERESTS.....................................38
Section 8.9. CO-TRUSTEES AND SEPARATE TRUSTEE..........................38
Section 8.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.........39
Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR....................40
Section 8.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS..................................................41
Section 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR
TRUST.....................................................41
Section 8.14. REPORTS BY PROPERTY TRUSTEE...............................42
Section 8.15. REPORTS TO THE PROPERTY TRUSTEE...........................43
Section 8.16. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT..........43
Section 8.17. NUMBER OF TRUSTEES........................................43
ii
<PAGE>
Section 8.18. DELEGATION OF POWER.......................................44
Section 8.19. VOTING....................................................44
ARTICLE IX. DISSOLUTION, LIQUIDATION AND MERGER.............................44
Section 9.1. DISSOLUTION UPON EXPIRATION DATE..........................44
Section 9.2. EARLY DISSOLUTION.........................................44
Section 9.3. DISSOLUTION...............................................45
Section 9.4. LIQUIDATION...............................................45
Section 9.5. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS
OF THE TRUST..............................................46
ARTICLE X. MISCELLANEOUS PROVISIONS.........................................47
Section 10.1. LIMITATION OF RIGHTS OF SECURITYHOLDERS...................47
Section 10.2. AMENDMENT.................................................47
Section 10.3. COUNTERPARTS..............................................49
Section 10.4. SEPARABILITY..............................................49
Section 10.5. GOVERNING LAW.............................................49
Section 10.6. PAYMENTS DUE ON NON-BUSINESS DAY..........................49
Section 10.7. SUCCESSORS................................................49
Section 10.8. HEADINGS..................................................49
Section 10.9. REPORTS, NOTICES AND DEMANDS..............................49
Section 10.10. AGREEMENT NOT TO PETITION.................................50
Section 10.11. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT....50
Section 10.12. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE
AND INDENTURE.............................................51
EXHIBIT A....................................................................53
EXHIBIT B ...................................................................54
EXHIBIT C ...................................................................59
EXHIBIT D....................................................................60
EXHIBIT E ...................................................................64
iii
<PAGE>
[Letterhead]
September15, 1997
File No: 10269-035
Pacific Crest Capital, Inc.
30343 Canwood Street
Agoura Hills, California 91301
RE: REGISTRATION STATEMENT ON FORM S-2
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-2 filed by
Pacific Crest Capital, Inc. ("Pacific Crest") and PCC Capital I ("PCC Capital")
with the Securities and Exchange Commission on August 22, 1997 (Registration
Nos. 333-34257 and 333-34257-01) and Amendment No. 1 thereto proposed to be
filed on or about September 12, 1997 (as so amended, the "Registration
Statement") relating to the public offering by PCC Capital of 1,725,000 __%
Cumulative Trust Preferred Securities (the "Trust Preferred Securities"). As
counsel to Pacific Crest in connection with this transaction, we have examined
such corporate documents and records as we have deemed necessary or advisable
for the purposes of this opinion. Based on these examinations, it is our
opinion that:
1. Pacific Crest has been duly incorporated and is validly existing as a
corporation under the laws of the State of Delaware.
2. The Guarantee, when executed and delivered as contemplated by the
Registration Statement, and the Junior Subordinated Debentures, when
issued and paid for as contemplated by the Registration Statement,
will be validly issued obligations of Pacific Crest enforceable in
accordance with their terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity.
Capitalized terms used herein have the meanings ascribed to such terms in the
Registration Statement. We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and further consent to the use of our
name, whenever appearing in the Registration Statement, including the Prospectus
constituting a part thereof, and any amendments thereto. This opinion is
furnished to Pacific Crest in connection with the registration of the Guarantee
and the Junior Subordinated Debentures, is solely for the benefit of Pacific
Crest and may not be relied upon by, nor copies delivered to, any other person
without our prior written consent.
Very truly yours,
MANATT, PHELPS & PHILLIPS, LLP
<PAGE>
[Letterhead of Richards, Layton & Finger]
September 12, 1997
PCC Capital I
c/o Pacific Crest Capital, Inc.
30343 Canwood Street
Agoura Hills, California 91301
Re: PCC CAPITAL I
Ladies and Gentlemen:
We have acted as special Delaware counsel for Pacific Crest
Capital, Inc., a Delaware corporation (the "Company"), and PCC Capital I, 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, dated August 18, 1997
(the "Original Certificate"), as filed in the office of the Secretary of State
of the State of Delaware (the "Secretary of State") on August 18, 1997;
(b) The Trust Agreement of the Trust, dated as of August 18, 1997,
among the Company, as Depositor, and the trustees of the Trust named therein;
<PAGE>
Page 2
(c) The Certificate of Amendment to the Original Certificate,
dated August 20, 1997 (the "Certificate of Amendment"), as filed in the
office of the Secretary of State on August 20, 1997 (the Original Certificate
as amended by the Certificate of Amendment being hereinafter referred to as
the "Certificate");
(d) Amendment No. 1 to the Registration Statement (the
"Registration Statement") on Form S-2, including a preliminary prospectus
(the "Prospectus"), relating to the Trust Preferred Securities of the Trust
representing preferred undivided beneficial interests in the assets of the
Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), as proposed to be filed by the Company and the Trust with the
Securities and Exchange Commission on or about September 12, 1997;
(e) A form of Amended and Restated Trust Agreement of the Trust
(including Exhibits A, C and E), to be entered into among the Company, as
Depositor, the trustees of the Trust named therein, and the holders, from
time to time, of undivided beneficial interests in the assets of the Trust
(the "Trust Agreement"), attached as an exhibit to the Registration
Statement; and
(f) A Certificate of Good Standing for the Trust, dated
September 12, 1997, 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 in paragraphs (a) through (f) above. In
particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (f) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that
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.
<PAGE>
Page 3
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 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 Preferred Security is to be
issued by the Trust (collectively, the "Preferred Security Holders") of a
Preferred Securities Certificate for such Preferred Security and the payment
for the Preferred Security acquired by it, in accordance with the Trust
Agreement and the Registration Statement, and (vii) that the Preferred
Securities are issued and sold to the Preferred Security Holders in
accordance with the Trust Agreement and the Registration Statement. 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 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 that are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes 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.
2. The Preferred 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 Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended
to stockholders of private
<PAGE>
Page 4
corporations for profit organized under the General Corporation Law of the
State of Delaware. We note that the Preferred 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,
RICHARDS, LAYTON & FINGER, P.A.
BJK/dgw
<PAGE>
[Letterhead]
September 15, 1997
Pacific Crest Capital, Inc.
30343 Canwood Street
Agoura Hills, California 91303
PCC Capital I
c/o Pacific Crest Capital, Inc.
30343 Canwood Street
Agoura Hills, California 91303
RE: CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE PURCHASE AND OWNERSHIP OF CUMULATIVE
TRUST PREFERRED SECURITIES ISSUED BY PCC CAPITAL I
Ladies and Gentlemen:
We have acted as counsel to Pacific Crest Capital, Inc.
("Pacific Crest"), in connection with the preparation and filing with
the Securities and Exchange Commission under the Securities Act of 1933,
as amended (the "Act"), of a Registration Statement on Form S-2, as
amended, originally filed with the Securities and Exchange Commission on
August 22, 1997 (the "Registration Statement"). The Registration
Statement relates to the offer for sale of shares of Cumulative Trust
Preferred Securities (the "Trust Preferred Securities") of PCC Capital I
("PCC Capital I"), a statutory business trust formed at the direction of
Pacific Crest under the laws of the State of Delaware, and the Junior
Subordinated Debentures to be issued by Pacific Crest to PCC Capital I
in connection with the sale of the Trust Preferred Securities.
This opinion letter relates to the material federal income tax
consequences of the purchase and ownership of the Trust Preferred
Securities by investors. All capitalized terms used in this opinion
letter and not otherwise defined herein have the same meaning as set
forth in the Registration Statement.
We have examined the Registration Statement, the Amended and
Restated Trust Agreement of PCC Capital I, and such other documents as
we have deemed necessary to render our opinions expressed below. In our
examination of such material, we have relied upon the current and
continued accuracy of the factual matters we have considered, and we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to original
documents of all copies of documents submitted to us. Our opinion is
<PAGE>
[Letterhead]
Pacific Crest Capital, Inc.
PCC Capital I
September 15, 1997
Page 2
also based on certain representations from Pacific Crest in a letter to
us of even date herewith. In addition, we also have assumed that the
transactions related to the issuance of the Junior Subordinated
Debentures and the Trust Preferred Securities will be consummated in
accordance with the terms and forms of such documents.
Based on the foregoing, and assuming that PCC Capital I was
formed and will be maintained in compliance with the terms of the
Amended and Restated Trust Agreement of PCC Capital I, it is our opinion
that:
(1) PCC Capital I will be classified for United States
federal income tax purposes as a grantor trust and a unit investment
trust and not as an association taxable as a corporation and, as a
result, each beneficial owner of Trust Preferred Securities will be
treated as owning an undivided beneficial interest in the Junior
Subordinated Debentures held by PCC Capital I.
(2) Except in the case of the occurrence of an Extension
Period, stated interest on the Junior Subordinated Debentures generally
will be included in income by a holder of Trust Preferred Securities at
the time such interest income is paid or accrued in accordance with the
holder's regular method of tax accounting. If Pacific Crest exercises
its right to defer payments of interest on the Junior Subordinated
Debentures during an Extension Period, beneficial owners of Trust
Preferred Securities will commence reporting interest income with
respect to the Junior Subordinated Debentures under the original issue
discount rules of the Internal Revenue Code of 1986, as amended.
(3) Gain or loss will be recognized by a holder of Trust
Preferred Securities on a sale of Trust Preferred Securities (including
a redemption for cash) in an amount equal to the difference between the
amount realized (which for this purpose, will exclude amounts
attributable to accrued interest or original issue discount not
previously included in income) and the holder's adjusted tax basis in
the Trust Preferred Securities sold or so redeemed. Gain or loss
recognized by the holder on a sale of Trust Preferred Securities held
for more than one year will generally be taxable as long-term capital
gain or loss.
(4) The discussion of "Certain Federal Income Tax
Consequences" in the Registration Statement accurately describes the
material federal income tax consequences concerning the Trust Preferred
Securities.
This opinion is based upon the Code, the Treasury Regulations
promulgated thereunder and other relevant authorities and law, all as in
effect on the date hereof. Future changes in the law or interpretations
of the law may cause the tax treatment of the transactions
<PAGE>
[Letterhead]
Pacific Crest Capital, Inc.
PCC Capital I
September 15, 1997
Page 3
referred to herein to be materially different from that described above.
We have undertaken no obligation to update this opinion in such event.
Other than the specific tax opinions set forth in this letter,
no other opinion has been requested of us or rendered by us with respect
to the tax treatment of the proposed issuance and sale of the Junior
Subordinated Debentures or the Trust Preferred Securities, including,
but not limited to, the tax treatment of the proposed transactions under
other provisions of the Code and the Treasury Regulations or the tax
treatment of the proposed transactions under state, local, foreign or
any other tax laws.
We hereby consent to the filing of this letter as an exhibit
to the Registration Statement and the use of our name in the
Registration Statement under the caption "Certain Federal Income Tax
Consequences." In giving such consent, we do not concede that this
consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
MANATT, PHELPS & PHILLIPS, L.P.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and Stockholders
Pacific Crest Capital, Inc.
We consent to the use in this Amendment No. 1 to Registration Statement (No.
333-34257) of Pacific Crest Capital, Inc. (the "Company" and registrant), and
PCC Capital I (the co-registrant), on Form S-2 of our report dated February 5,
1997 included in the Annual Report on Form 10-K of the Company for the year
ended December 31, 1996, incorporated by reference in the Prospectus, which is a
part of this Registration Statement. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
September 15, 1997
Los Angeles, California
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-2 No. 333-34257) and
related Prospectus of Pacific Crest Capital, Inc. for the registration of
1,725,000 shares of trust preferred securities and to the incorporation by
reference therein of our report dated February 1, 1996, with respect to the
consolidated financial statements of Pacific Crest Capital, Inc. included in its
Form 10-K for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Los Angeles, California
September 15, 1997
