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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
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Xylan Corporation
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(Name of Issuer)
Common Stock, Par Value $0.001 Per Share
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(Title of Class of Securities)
984151 10 0
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(CUSIP Number)
Susan N. Cayley, Esq. Xylan Corporation, 26707 West Agoura Road, Calabasas, CA
91302, (818) 880-3500
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
March 31, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box ___.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP No. 984151 10 0 Page 2 of 6 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
STEVE YUN KIM (HELD IN THE STEVE Y. KIM LIVING TRUST)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_]
N/A (b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO (SEE ITEM 3)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(D) OR 2(E) [_]
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
2,348,500*
NUMBER OF
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SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 2,348,500*
PERSON -------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,348,500*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%*, **
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14 TYPE OF REPORTING PERSON
IN
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* Excludes 80,000 shares held by the Kim Blind Trust, as of March 10, 1998 and
905,000 shares held by the Kim Irrevocable Children's Trust. The Reporting
Person does not have voting or investment power with respect to these shares.
However, if Mr. Kim is deemed to have voting or investment power with respect to
these shares, the number of shares in Items 7, 9, and 11 will be 3,333,500, and
the percentage in Item 13 will be 7.7%. Includes 151,000 shares subject to
options granted to Mr. Kim that are exercisable by May 30, 1998.
** Calculated based on the 43,426,835 shares of the Issuer's Common Stock
outstanding as of March 31, 1998.
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SCHEDULE 13D
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CUSIP No. 984151 10 0 Page 3 of 6 Pages
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Item 1 - Security and Issuer
This statement on Schedule 13D relates to common stock, par value $0.001
per share ("Common Stock"), of Xylan Corporation ("Xylan" or the "Issuer"). The
principal executive offices of the Issuer are at 26707 West Agoura Road,
Calabasas, California 91302.
Item 2 - Identity and Background
(a) The name of the person filing this statement is Steve Yun Kim.
(b) The principal business address of Mr. Kim is 26707 W. Agoura Road,
Calabasas, CA 91302.
(c) Mr. Kim is the Chairman of the Board of Directors, Chief Executive
Officer, and President of Xylan Corporation, located at is 26707 W. Agoura Road,
Calabasas, CA 91302.
(d) During the past five years, Mr. Kim has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the past five years, Mr. Kim was not a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which he was or is subject to a judgment, decree or final order
enjoining future violations of or prohibiting or mandating activity subject to
Federal or State securities laws or finding any violations with respect to such
laws.
(f) Mr. Kim is a citizen of the U.S.A.
Item 3 - Source and Amount of Funds or Other Consideration
Mr. Kim co-founded the Company in 1993. In 1996, he and his then-wife,
Ms. Jung Sil Kim, transferred 5,430,000 shares of Xylan Corporation Common Stock
to the Kim Family Trust (the "Trust"). Pursuant to their property settlement in
1997, the Trust was dissolved on December 3, 1997. As of that date, the Trust
owned 4,930,000 shares of Xylan Corporation Common Stock. Of such shares,
2,402,500 shares of Xylan Corporation Common Stock were transferred to Mr. Kim,
and the remainder of the shares in the Trust were transferred to his ex-spouse,
Ms. Jung Sil Kim. On December 10, 1997 and March 10, 1998 Mr. Kim transferred
125,000 and 80,000 shares, respectively, to his Blind Trust. On March 31, 1998
Mr. Kim transferred the remainder of the shares in his name, 2,197,500 shares,
to the Steve Y. Kim Living Trust (the "Living Trust"). Mr. Kim also has 151,000
shares subject to option grants that are exercisable by May 30, 1998.
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Item 4 - Purpose of Transaction
Mr. Kim acquired the ownership of the shares of Xylan Corporation Common
Stock for investment purposes. Due to his position as the Chairman of the Board
of the Directors of the Company, Chief Executive Officer, and President of the
Company and his ownership of Xylan Corporation Common Stock, he has some
influence over the control of the Company. The transfer of the Shares to the
Steve Y. Kim Living Trust was for estate planning purposes. After the transfer,
Mr. Kim or the Steve Y. Kim Living Trust, does not have any plans or proposals
which relate to or would result in:
(a) The acquisition of additional securities of the Issuer, or the
disposition of any securities of the Issuer, other than sales or
other dispositions, from time to time, of the Common Stock of the
Issuer in accordance with the Securities Act of 1933, as amended
(the "Securities Act");
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or
of any of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, nor any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) A material change in the present capitalization or dividend policy
of the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Any change in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
(h) A class of securities of the Issuer being delisted from a national
securities exchange or ceasing to be authorized to be quoted in the
interdealer quotation system of a registered national securities
association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act;
or
(j) Any action similar to any of those enumerated above.
Item 5 - Interest in Securities of the Issuer
(a)-(b). As a result of the transfers to Mr. Kim's Blind Trust, Mr.
Kim through his Living Trust now owns 2,197,500 shares of Common Stock of the
Company. Mr. Kim also owns 151,000 shares subject to options that are
exercisable by May 30, 1998. As such, Mr. Kim through his Living Trust owns
approximately 5.1% of the issued and outstanding shares of Xylan Common Stock
(calculated based on the 43,426,835 shares of Xylan Common Stock outstanding as
of March 31).
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(c) On December 10, 1997 and March 10, 1998 Mr. Kim transferred 125,000
and 80,000 shares, respectively, to his Blind Trust. On March 31, 1998 Mr. Kim
transferred the remainder of the shares in his name, 2,197,500 shares, to the
Living Trust.
(d) Not applicable.
(e) Not applicable.
Item 6 - Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
None.
Item 7 - Material to be Filed as Exhibits:
The following exhibit is being filed with this Schedule:
Exhibit 1 -- The Steve Y. Kim Living Trust
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SCHEDULE 13D
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CUSIP No. 984151 10 0 Page 6 of 6 Pages
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: April 9, 1998 _____________________
Steve Yun Kim
The original statement shall be signed by each person on whose behalf the
statement is filed or his authorized representative. If the statement is signed
on behalf of a person by his authorized representative (other than an executive
officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001)
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EXHIBIT 99.1
THE
STEVE Y. KIM LIVING TRUST
(Dated: January 12, 1998)
ARTICLE 1
DECLARATION OF TRUST
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1.1 Trust Establishment: STEVE Y. KIM (referred to herein as "Trustee")
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declares that STEVE Y. KIM (referred to herein as "Settlor") has or will
transfer, convey and deliver all of his right, title and interest in and to
certain property as a gift in trust and without consideration. Said property,
which together with any other property which may later become subject to this
Trust, shall constitute the Trust Estate, and shall be held, administered and
distributed as provided below.
1.2 Name of Trust: This Trust is established for the primary benefit of the
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Settlor, and the secondary benefit of the Settlor's wife, HWA JIN KIM, the
Settlor's mother, JUNG SOOK KIM, the Settlor's sisters, OAK HEE KROGFOSS, SOOK
HEE KIM, and JUNG HEE LEE, the Settlor's brother, HYON JONG KIM, and certain
charitable organizations. The Settlor has intentionally and with full knowledge
failed to provide herein for his children of a prior marriage, namely, ALBERT
YOUNG KIM and AMY YOUNG KIM, as they are already well provided for through other
trusts previously established by the Settlor. This Trust and any subsequent
trusts created hereunder may be collectively referred to and known as the STEVE
Y. KIM LIVING TRUST.
ARTICLE 2
POWER TO AMEND AND REVOKE
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2.1 Amendment During Settlor's Lifetime: During the lifetime of the Settlor,
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this Trust may be amended, but only with the written agreement of the Settlor
delivered to the Trustee.
2.2 Revocation During Settlor's Lifetime: During the lifetime of the
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Settlor, the Trust Estate may be revoked in whole or in part by the Settlor.
The power of revocation shall be exercised by written notice delivered to the
Trustee. In the event of such revocation, the Trust Estate or the revoked
portion shall revert to the Settlor.
2.3 Disability of Settlor: All of Settlor's power to amend and revoke are
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personal to the Settlor and, in the event of disability, may be exercised on
Settlor's behalf only by a conservator with Court approval or by an agent under
a valid Durable Power of Attorney which expressly authorizes
THE STEVE Y. KIM LIVING TRUST p. 1
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such action. Such disability shall be determined by a licensed physician who
has examined the Settlor, who is not related by blood or marriage to the Settlor
or any beneficiary of this Trust, and who certifies in writing that the Settlor
is unable to manage his financial affairs.
2.4 After Death of the Settlor: After the death of the Settlor, no trust
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established by this Declaration may be amended or revoked.
ARTICLE 3
DISTRIBUTION OF INCOME AND PRINCIPAL DURING
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SETTLOR'S LIFETIME
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3.1 Income and Principal to Settlor: During the lifetime of the Settlor, the
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Trustee shall pay to Settlor so much of the net income and principal of the
Trust Estate as Settlor shall request.
3.2 Disability of Settlor: If the Settlor is under a disability and unable
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to act in his own behalf, the Trustee may withhold any income payments that are
directed to be made by Paragraph 3.1 above, and the Trustee shall then make such
payments from the income and principal of the Trust as the Trustee deems
appropriate for the Settlor's health, education, support, maintenance, comfort
and general welfare. Any income not distributed shall be accumulated and added
to the principal of the Trust Estate.
ARTICLE 4
DIVISION AND DISTRIBUTION OF TRUST ESTATE
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4.1 Distribution of Tangible Personal Property: Upon the death of the
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Settlor, the Trustee shall distribute the Settlor's tangible personal property
in accordance with the provisions of a list prepared by the Settlor and attached
hereto as Exhibit A. The Settlor may update such list at any time, from time to
time. Such items shall be free of all death taxes. Any property not so
disposed of shall be distributed pursuant to the provisions below.
4.2 Distribution of Remaining Trust Estate: Upon the death of the Settlor,
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and after payment of the Settlor's debts, last illness, funeral, and
administration expenses, as well as any death or estate taxes, as provided in
Article 5, the remaining Trust Estate shall be distributed as follows:
(a) Thirty percent (30%) shall be distributed outright and free of trust
to Settlor's wife, HWA JIN KIM, if she is then living and she and the
Settlor are then married and, if she is not then living, to HWA JIN
KIM'S mother, MYOUNG AE KIM. In the event neither of them is then
living, this gift shall lapse. In
THE STEVE Y. KIM LIVING TRUST p. 2
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the event the Settlor and HWA JIN KIM were not married at the time of
the Settlor's death, this gift shall lapse;
(b) Five percent (5%) shall be distributed to the Settlor's mother, JUNG
SOOK KIM, if she is then living and, if not, such five percent (5%)
shall be distributed to the Settlor's brother, HYON JONG KIM if he is
then living and, if not, this gift shall lapse;
(c) Five percent (5%) shall be distributed to the Settlor's sister,
OAK HEE KROGGFOSS, if she is then living and, if not, this gift shall
lapse;
(d) Five percent (5%) shall be distributed to Settlor's sister, SOOK
HEE KIM, if she is then living and, if not, this gift shall lapse;
(e) Five percent (5%) shall be distributed to the Settlor's sister,
JUNG HEE LEE, if she is then living and, if not, this gift shall lapse;
(f) Five percent (5%) shall be distributed to the Settlor's brother, HYON
JONG KIM, if he is then living and, if not, to his then living issue,
by right of representation. This gift shall be in addition to the gift
to HYON JONG KIM under (b) above, in the event JUNG SOOK KIM
predeceases the Settlor; and
(g) Forty-five percent (45%) shall be distributed to one (1) or more
charitable organizations as described in Sections 170(c) and 2055(a) of
the Internal Revenue Code as the Settlor shall designate in a written
instrument signed by him and delivered to the Trustee during his
lifetime. In the event the Settlor fails to designate any such
charitable organizations, such designation shall be made by HWA JIN KIM
in a written instrument signed by her and delivered to the Trustee
within six (6) months following the date of the Settlor's death. In the
event HWA JIN KIM predeceases the Settlor, or for some other reason
fails to designate one (1) or more qualified charitable organizations,
such amount shall be distributed to the CALIFORNIA COMMUNITY FOUNDATION
located in Los Angeles, California.
4.3 Preventing Outright Distribution to Young Beneficiary: If any
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beneficiary entitled to outright distribution of a trust or of a portion of a
trust is under age of twenty-five (25) years the Trustees shall hold and
administer the beneficiary's portion of the Trust Estate for his or
THE STEVE Y. KIM LIVING TRUST p. 3
<PAGE>
her benefit. Income of the property retained in trust shall be added to
principal, and the Trustees shall pay to or apply for the benefit of the
beneficiary as much of the beneficiary's trust as the Trustees in the Trustees'
discretion consider necessary for the beneficiary's proper health, education,
support, and maintenance. When the beneficiary attains the age of twenty-five
(25) years, the Trustees shall distribute to the beneficiary all property
retained in trust for his or her benefit.
ARTICLE 5
PAYMENTS OF DEBTS AND TAXES
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5.1 Upon Death of Settlor: The Settlor directs the Trustee to pay the
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Settlor's debts, last illness, funeral, and administration expenses out of the
Settlor's Trust and to charge and collect all federal and state death taxes for
assets passing under the Settlor's Will and outside the Settlor's Will from
those persons sharing in the Settlor's taxable estate in accordance with
California Probate Code provisions for death tax apportionment and allocations.
These tax directions shall not apply to any gifts passing under the Settlor's
Will or under this trust designated as "free of all death taxes", and the
Trustee shall pay all such death taxes out of the residue of the Settlor's
taxable estate.
ARTICLE 6
OFFICE OF TRUSTEE
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6.1 Appointment and Succession: During the lifetime of the Settlor, she
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shall serve as Trustee. Upon the death, inability or unwillingness of STEVE Y.
KIM to act as Trustee, WHITTIER TRUST COMPANY shall act as Trustee. If all
Trustees for any reason fail to qualify or cease to act as Trustee, then a
majority of the current income beneficiaries (or their guardians, if minors) of
any trusts created hereunder shall elect one or more Successor Trustees or Co-
Trustees.
6.2 Power to Appoint Co-Trustee and Successor Trustee: Any individual serving
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as sole Trustee shall have the power to appoint one or more individuals or
institutions to act as Co-Trustee or Successor Trustee. If all of the named
Successor Trustees are unable or unwilling to act, and such Trustees have failed
to appoint a Successor, a majority of the adult beneficiaries entitled to
current income distributions hereunder shall have the power to appoint one or
more such Successor Trustees.
6.3 Liability of Trustee: Except in the case of his or her own bad faith or
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gross negligence, each Trustee shall be responsible only for his or her own acts
or omissions and shall not be responsible for the acts or omissions of a Co-
Trustee, or for allowing a Co-Trustee to have custody or control of trust
assets. Notwithstanding anything herein to the contrary, the primary and
Successor Trustees named to act or appointed hereunder (excluding a corporate
Trustee) shall not
THE STEVE Y. KIM LIVING TRUST p. 4
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be liable to any beneficiary of any trust hereunder or to any other person or
entity for his or her own acts or omissions or for the acts or omissions of any
other person, unless resulting from his or her own bad faith or gross
negligence; provided, however, that in no event shall any Trustee (including a
corporate Trustee) be liable to any such beneficiary or to any other person or
entity for any action or non-action of the Trustee pursuant to provisions with
respect to which the Trustee has sole and absolute discretion.
6.4 Resignation, Disability, and Removal of Trustee: A Trustee may resign at
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any time by delivering written notice of his or her resignation to adult
beneficiaries and to the guardians or parents of any minor or incompetent
beneficiaries, or by giving written notice to the next Successor Trustee. Any
individual Trustee shall be deemed to have automatically resigned, without
further act on his or her part, immediately upon receipt by the remaining
Trustee or Trustees, or the next Successor Trustee, of an acknowledged written
instrument executed by a licensed physician who represents that he or she is
certified by a recognized Medical Specialty Board and not related by blood or
marriage to a Settlor, Trustee, or beneficiary herein, that he or she has
examined such Trustee and that he or she has concluded, based upon such
examination, that by reason of accident, physical or mental illness, progressive
or intermittent physical or mental deterioration, or other similar cause, such
Trustee has become unable to prudently exercise his or her powers as Trustee in
the best interests of the beneficiaries of any trust created hereunder. The
expenses of any such examination shall be paid out of the Trust Estate. Such
physician shall not be liable or responsible to any such Trustee, to any
beneficiary under this instrument or to any other person or entity for the
consequences of his or her conclusions, as aforesaid, or for executing such
instrument.
6.5 Successor Trustees Succeed to all Powers: Any Successor Trustee shall
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succeed as such with like effect as though originally named in this instrument.
All authorities, titles and powers conferred upon the original Trustee shall
pass to any Successor Trustee without further act or deed. Notwithstanding
anything herein to the contrary, no Successor Trustee under this instrument
shall be liable for any act or omission of his or her Predecessor nor shall he
or she be obligated to inquire into the validity or propriety of any such act or
omission. Any such Successor shall be entitled to accept as conclusive any
accounting and statement of assets furnished to such Successor by his or her
Predecessor.
6.6 Compensation: Any individual Trustee shall be entitled to reasonable
------------
compensation for his or her services as Trustee. Any corporate Trustee shall be
entitled to compensation in accordance with such Trustee's regularly published
fee schedule in effect from time to time. A Trustee who is an attorney,
accountant, investment advisor or other professional shall not be disqualified
from rendering professional services to any trust created under this instrument
and being compensated on a reasonable basis therefore in addition to any
compensation which he or she is otherwise entitled to receive as a Trustee;
neither shall a firm with which a Trustee is associated as a partner, officer,
principal, employee or in any other capacity be disqualified from dealing with,
THE STEVE Y. KIM LIVING TRUST p. 5
<PAGE>
rendering services to or discharging duties for any such trust and being
compensated therefore on a reasonable basis. A Trustee who performs services in
connection with the regular operations of any business, partnership, firm or
corporation in which the trust is financially interested, may be compensated for
such services independently of his or her services as a Trustee hereunder. A
firm with which a Trustee is associated, as aforesaid, may also be compensated
for services performed in connection with such operations.
6.7 Bond Waiver: No bond or other security shall be required of any Trustee
-----------
or Special Trustee named herein for the faithful performance of such Trustee's
duties in any state or jurisdiction.
6.8 Trustee Self-Dealing; Loan, Buy, and Sell: The Trustee shall have the
-----------------------------------------
power to loan or advance the Trustee's own funds to the Trust for any Trust
purpose, with interest at current rates, to receive security for such loans in
the form of a mortgage, pledge, deed of trust, or other encumbrance of any
assets of the Trust, to purchase or exchange assets of the Trust at their fair-
market-value as determined by an independent appraiser, to sell property to the
Trust at a price not in excess of its fair-market-value and to lease assets to
or from the Trust for fair-rental-value.
6.9 Trustee and Executor Transactions; Self-Dealing Permitted: The Trustee
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and the Executor of a Settlor's estate may freely contract financial
transactions between themselves, such as the purchase and sale of assets and the
making of loans, secured and unsecured, notwithstanding each office being held
by the same person and apparent conflicts of interest.
6.10 Transactions in Which Trustee is Interested: Except as otherwise
-------------------------------------------
provided herein, the general rule of law whereby actions, decisions or
transactions are held to be void or voidable if a Trustee is directly or
indirectly interested therein in a non-fiduciary capacity shall not be
applicable to actions, decisions or transactions involving any trust under this
instrument and any non-corporate Trustee who is directly or indirectly
interested therein in a non-fiduciary capacity. Notwithstanding the foregoing,
all such actions, decisions or transactions shall be fair and reasonable as to
the Trust Estate, and the power of each Trustee hereunder shall be exercised in
good faith for the benefit of the Trust Estate and in accordance with the
Trustee's fiduciary obligations, except that the rule against self-dealing shall
not be applicable as provided in this paragraph.
6.11 Transactions With Other Trusts: The Trustee may enter into
------------------------------
transactions, including, without limitation, acquisitions or sale of trust
assets and loans of money, between himself as Trustee of trusts hereunder and
himself as the fiduciary of any other trusts or estates for which he is acting
which involve one or more of the same beneficiaries under this instrument. Any
purchase or sale made hereunder shall be at the fair market value of the asset
at the time of the purchase or sale, and any loans shall bear reasonable
interest and, in the Trustee's discretion, may be adequately
THE STEVE Y. KIM LIVING TRUST p. 6
<PAGE>
secured. This provision shall include, without limitation, purchases, sales or
loans between the trusts hereunder.
6.12 Guarantee of Obligations: In addition to their general and specific
------------------------
powers as Trustee hereunder, during the lifetime of the Settlor, the Trustees
shall have the power to enter into agreements as guarantor of the obligations of
the Settlor or of any corporation, partnership or other business entity in which
the Settlor is a shareholder or principal, whether as accommodation guarantor or
for compensation, and to encumber any trust or its property as security for such
guarantee or for a guarantee of such obligation entered into in the name of the
Settlor. Notwithstanding the foregoing, during the Settlor's lifetime, Settlor's
property may not be encumbered without Settlor's consent except with respect to
guarantees relating to any business entities that are the property of the
Settlor. The Trustee shall not be liable to any beneficiary of any trust
hereunder or to any other person or entity for losses of any kind resulting from
exercising or not exercising the powers under this paragraph.
6.13 Authority of Trustees: Except as otherwise provided in this instrument,
---------------------
if there are two or more Trustees acting, the exercise of all discretions,
elections and powers of the Trustees and actions taken by the Trustees shall be
effected by a majority of the Trustees and shall be binding upon the trusts
hereunder and upon all entities and persons dealing with or interested in the
trusts.
ARTICLE 7
TRUSTEE MANAGEMENT POWERS
-------------------------
7.1 Introduction: For all trusts under this instrument, the Trustee shall
------------
have the management powers set forth below in addition to those powers now or
hereafter conferred by law.
7.2 Retain or Abandon Property: The Trustee shall have the power to continue
--------------------------
to hold any property, including shares of the Trustee's own stock, or to abandon
any property that the Trustee receives or acquires.
7.3 Unproductive Property: Except when specifically restricted, the Trustee
---------------------
shall have the power to retain, purchase, or otherwise acquire unproductive
property.
7.4 Sell, Exchange, Repair: The Trustee shall have the power to manage,
----------------------
control, grant options on, sell (for cash or on deferred payments with or
without security), convey, exchange, partition, divide, improve, and repair
trust property.
THE STEVE Y. KIM LIVING TRUST p. 7
<PAGE>
7.5 Lease: The Trustee shall have the power to lease trust property for terms
-----
within or beyond the terms of the trust and for any purpose, including
exploration for and removal of gas, oil, and other minerals and to enter into
community oil leases, pooling, and utilization agreements.
7.6 Investments - General Power: To invest and reinvest the principal, and
---------------------------
income if accumulated, and to purchase or acquire therewith (and/or with
borrowed funds) every kind of property, real, personal or mixed, and every kind
of investment, specifically including, but not by way of limitation, corporate
obligations of every kind, stocks, preferred or common, interests in oil, gas
and other mineral property, interests in joint ventures, interests in general or
limited partnerships, and operating business, all on such terms and conditions
as the Trustees in their absolute discretion may deem proper; and to guarantee
the obligations of any corporation, partnership or joint venture in which the
trust may own an interest. The Trustees are specifically authorized to invest
in any common trust funds or other collective accounts maintained by a Trustee
and to become a limited partner in any limited partnership administered by a
Trustee and/or a general partner in a general partnership, and to acquire, hold
and possess such partnership interest as a part or all of the assets of the
Trust Estate for the entire term of the trust, and to continue to invest the
principal of the Trust Estate, and income if accumulated, in such partnerships,
all on such terms and conditions as the Trustees in their absolute discretion
may deem proper. The Trustees shall not be liable in any manner for any loss,
should any loss occur, resulting from the purchase or retention of any
investment, including without limitation interests in general partnerships, as a
part or all of the assets of the Trust Estate. The Trustees shall have the
foregoing powers notwithstanding anything to the contrary contained in this
Trust or in any rule or law or equity relating to the investment of trust funds,
including any rule or law requiring diversification of assets, prohibiting
investment in general partnerships, prohibiting the purchase of any active
business, or prohibiting delegation of authority. Additionally, the foregoing
powers shall not be limited by the fact that a Trustee shall be at the time of
the exercise of any said powers, stockholder, employee, officer, director,
Trustee, partner or administrator of any entity in which the trust invests.
This section, however, shall in no way limit the rights of the Trustee to sell
off any investment if in their absolute discretion such sale is deemed
advisable.
7.7 Securities: The Trustee shall have all the rights, powers, and privileges
----------
of an owner of the securities held in trust, including, but not by way of
limitation, the power to vote, give proxies, and pay assessments; to participate
in voting trusts and pooling agreements (whether or not extending beyond the
term of the trust); to enter into shareholders' agreements; to consent to
foreclosure, reorganizations, consolidations, merger liquidations, sales, and
leases, and, incident to any such action, to deposit securities with and
transfer title to any protective or other committee on such terms as the trustee
may deem advisable; and to exercise or sell stock subscription or conversion
rights.
THE STEVE Y. KIM LIVING TRUST p. 8
<PAGE>
7.8 Investment Funds: The Trustee shall have the power to invest in mortgage
----------------
participations, in shares of investment trusts and regulated investment
companies, including any under the control of any investment counsel employed by
the trustee, in mutual funds, money market funds, and index funds that investors
of prudence, discretion, and intelligence acquire for their own account.
7.9 Nominee's Name: The Trustee shall have the power to hold securities or
--------------
other property in the Trustee's name as Trustee under this Trust, or in the
Trustee's own name, or in the name of a nominee, or the Trustee may hold
securities unregistered in such condition that ownership will pass by delivery.
7.10 Insurance: The Trustee shall have the power to carry, at the expense of
---------
the Trust, insurance of such kinds and in such amounts as the Trustee deems
advisable to protect the Trust Estate against any damage or loss and to protect
the Trustee against liability with respect to third parties.
7.11 Borrow - General: The Trustee shall have the power to borrow money and
----------------
to encumber or hypothecate trust property by mortgage, deed of trust, pledge, or
by otherwise securing the indebtedness of the trust or the joint indebtedness of
the Trust and a co-owner of trust property.
7.12 Loan: The Trustee shall have the power to loan money to any person,
----
including a trust beneficiary or the estate of a trust beneficiary, at
prevailing interest rates and with or without security as the Trustee deems
advisable.
7.13 Invest in Life Insurance: The Trustee shall have the power to acquire
------------------------
and maintain life insurance policies on the life of any person, including a
trust beneficiary, and to exercise all rights of ownership granted to such
policies.
7.14 Trade Options and Commodities: The Trustee shall have the power to buy,
-----------------------------
sell and trade in securities of any nature (including "short" sales), to buy,
sell and trade in commodities and commodity options, to buy and sell (covered or
uncovered) equity and index options and otherwise deal in puts and calls, and to
maintain and operate margin accounts and other accounts with brokers as security
for loans and advances made to the Trustee. It is the Settlors intention that
the Trustee be able to operate with respect to securities of any nature,
commodities, puts and calls, equity and index options as any individual account
could be so operated. The Trustees are allowed to appoint a third party
fiduciary regarding the investment account.
7.15 Closely-Held Enterprises: It is anticipated that a major portion of the
------------------------
Trust Estate may consist of the common stock of XYLAN CORPORATION and that
additional contributions may be made to the Trust of additional interests in
said corporation or in other closely-held
THE STEVE Y. KIM LIVING TRUST p. 9
<PAGE>
enterprises. In addition to the powers otherwise set forth herein, and not by
way of limitation, the Trustee is specifically authorized to own, hold and
possess such stock and/or other interests as a part of all of the assets of the
Trust Estate for the entire term of the trust, and to continue to invest the
principal of the Trust Estate, and income if accumulated, in any such stock
and/or interest. The Trustee, or an employee or other representative of the
Trustee, is further authorized, but shall not be required, to serve on the board
of directors or as an office of any such enterprise. The Trustee shall not be
liable in any manner for any loss, should any loss occur, resulting from the
retention or purchase of such stock and/or interests as part or all of the
assets of the Trust Estate. The Trustee shall have the foregoing powers with
respect to the retention or purchase of such stock and/or interests
notwithstanding anything to the contrary contained in this Trust or contained in
any rule of law or equity relating to the investment of trust funds, including
any rule or law requiring diversification of assets. The foregoing powers shall
not be limited by the fact that the Trustee, or a director, officer or employee
of a corporate trustee, shall be at the time of the exercise of any of said
powers, a stockholder, employee, officer, director, trustee, partner or
administrator of any entity in which the trust invests. This Paragraph,
however, shall not be deemed to be a limitation upon the rights of the Trustee
to sell any property of the Trust Estate or to cease operation of any property
or business if in its sole discretion such sale or ceasing of operations is
deemed advisable.
7.16 Litigation: The Trustee shall have the power to prosecute, defend,
----------
contest or otherwise litigate legal actions or other proceedings for the
protection or benefit of a trust or trusts or the Trustees.
7.17 Compromise Claims: The Trustee shall have the power to pay, compromise,
-----------------
release, adjust or submit to arbitration any debt, claim or controversy against
or in favor of the trust.
7.18 Additions to Trusts: The Trustee shall have the power to accept
-------------------
additional gifts, bequests and devises from any person who desires to contribute
to the principal of any of the respective trusts herein created, including,
without limitation, proceeds of insurance and proceeds of an employee benefit
plan. Such acceptance of any additional gifts shall be in the sole and absolute
discretion of the Trustee.
7.19 Employment of Professionals: The Trustee shall have the power to
---------------------------
employ, discharge and compensate from the Trust Estate, accountants, lawyers,
investment and tax advisors, agents and others to aid or assist in the
management, administration and protection of the Trust Estate.
THE STEVE Y. KIM LIVING TRUST p. 10
<PAGE>
ARTICLE 8
ACCOUNTING BY TRUSTEE
---------------------
8.1 Private Accounting: During the Settlor's lifetime and while the Settlor
------------------
is acting as a Trustee, no accounting shall be required. After the death of the
Settlor, or in the event Settlor is not acting as a Trustee, in lieu of any
other accountings that may be required by law, the Trustee, including the legal
representative of a Trustee after a Trustee's death, may render an accounting
from time to time regarding the transactions of any trust by delivering a
written accounting to each competent adult beneficiary who is entitled to
receive current income distributions from such trust. Said adult beneficiary or
beneficiaries, as to the trust, shall have full power and authority on behalf of
all persons interested therein to finally settle such account. Upon the
settlement of such account, it shall be final and conclusive upon each and every
person (whether or not then-living or ascertainable) who shall then or
thereafter be interested in the principal or income of the trust with the same
force and effect as the judicial settlement of such account. The settlement of
such account, as aforesaid, shall constitute a full and complete discharge and
release of the Trustee and his or her estate from all further liability,
responsibility and accountability for or with respect to the acts and
transactions of the Trustee as disclosed in such account. The Trustee shall not
be required to render an annual accounting as to any trust hereunder, unless
requested to do so in writing by the beneficiary or beneficiaries of such trust
who are entitled to accountings under this article.
8.2 Beneficiaries Under Disability: If there is no competent beneficiary of
------------------------------
a trust to whom an accounting can be made, the Trustee may render an accounting
to each beneficiary of such trust under disability, by delivering a written
accounting to the natural or legal guardian of his or her person or estate, his
or her attorney-in-fact or personal representative. The settlement of an
account by said guardian, attorney-in-fact or personal representative shall have
the same force and effect with respect to all persons and with respect to
discharge and liability of the Trustee and his or her estate as provided
hereinabove.
8.3 Failure to Approve: If any beneficiary or a person entitled to settle an
------------------
account for him or her fails to give a written approval to an accounting, such
accounting shall be deemed settled and approved, and the Trustee and his or her
estate shall be discharged and released from all liability, as provided
hereinabove, unless such beneficiary or such person shall deliver a written
objection to the Trustee or the Trustee's legal representative within ninety
(90) days of receipt of the Trustee's account.
THE STEVE Y. KIM LIVING TRUST p. 11
<PAGE>
ARTICLE 9
TRUST ADMINISTRATION PROVISIONS
-------------------------------
9.1 Introduction: The following additional trust provisions shall apply under
------------
this instrument.
9.2 Spendthrift Clause: The interests of Trust beneficiaries under this
------------------
Trust Declaration shall not be transferable by voluntary assignment and, to the
extent permissible by law, shall be free from execution, attachment, bankruptcy
and other procedures for the satisfaction of creditor's claims.
9.3 Notice of Events: Until the Trustee shall receive written notice of any
----------------
birth, marriage, death, or other event upon which the rights to payments from
the Trust Estate may depend, the Trustee shall incur no liability for
disbursements made in good faith to persons whose interests may have been
affected by that event as though such event had not occurred.
9.4 Discretion to Select Payee: Where the Trustee is authorized hereunder to
--------------------------
distribute any income or principal to or use or expend any income or principal
for a minor, or an incompetent person, such distribution may, at the sole
discretion for the Trustee, be made to such beneficiary directly or to any
person having actual custody of such beneficiary, without intervention of a
guardian or conservator, or the Trustee may expend the income or principal for
the benefit of such beneficiary or distribute it to a guardian or conservator.
9.5 Principal and Income Determination: Except as otherwise provided in this
----------------------------------
trust instrument, the Trustee shall have the power, exercisable in the Trustee's
discretion, to determine what is principal or income of the Trust Estate and to
apportion and allocate receipts and expenses and other charges between these
accounts.
9.6 Guidelines for Discretionary Distributions: In making discretionary
------------------------------------------
distributions, the Trustee may consider any other income or resources of the
beneficiary, including the beneficiary's ability to obtain gainful employment
and the obligation of others to support the beneficiary, known to the Trustee
and reasonably available for the purposes stated herein. Notwithstanding
anything herein to the contrary, a Trustee who is under a legal obligation to
support and educate a beneficiary shall not have the power to make any payments
of income or principal to or for the benefit of such beneficiary in satisfaction
of such legal obligation of support and education.
9.7 Termination When Share is Small: If the Trustee determines, in its
-------------------------------
discretion, that the size of a trust does not warrant the cost of continuing
that trust or that continued administration of any trust would be impractical
for any reason, the Trustee, without further responsibility or liability, may
transfer such trust property outright to the person or persons then entitled to
the income from it, in the proportions in which income would have been held for
or distributed to them.
THE STEVE Y. KIM LIVING TRUST p. 12
<PAGE>
9.9 Ultimate Distribution: If at any time before full distribution of the
---------------------
Trust Estate, Settlor and all the Settlor's issue are deceased and no other
disposition of the Trust Estate is directed by this instrument, the remaining
portion of the Trust Estate shall be distributed to the legal heirs of the
Settlor. The identity and shares of such legal heirs shall be determined in
accordance with the laws of succession of the State of California.
9.10 Power Regarding Distributions: Upon any division or partial or final
-----------------------------
distribution of the Trust Estate, to partition, allot and distribute the Trust
Estate in undivided interests or in kind, or partly in money and partly in kind,
at valuations determined by the Trustees and to sell such property as the
Trustees may deem necessary to make division or distribution. In this regard,
the Trustee may, but shall not be required to, (1) purchase and deliver to the
beneficiary receiving the distribution on or more of the following: a
restricted savings account, certificate of deposit, annuity, endowment or other
asset which restricts the beneficiary's ability to convert the asset into cash,
(2) distribute the assets to a custodian for the benefit of a minor beneficiary
under the Uniform transfer to Minors Act and/or (3) distribute the assets to a
Trustee of a trust for the benefit of the beneficiary containing terms of
distribution of income and principal which are substantially similar to the
terms thereof.
9.11 Power to Merge Trusts: Trusts for the benefit of Settlor's issue may be
---------------------
established under Wills or trusts created by him. Provided that the terms of
such trusts are substantially identical, in order to lessen the cost of trust
administration, the Trustees are authorized to merge the trusts established
under this instrument for the benefit of such issue with and into the assets of
corresponding trusts established by Settlor or, conversely, to permit the assets
of said trusts to merge with and into the assets of such trusts established
under this instrument.
9.12 Termination of Trusts: Each trust created under this instrument shall
---------------------
terminate, in no event, no later than the date of death of the Settlor and all
of the Settlor's issue living at the date of death of the Settlor. Upon
termination, the Trustee shall distribute the remaining trust assets to those
individuals, and in the same proportion, who are entitled to receive current
income distributions from the trust.
ARTICLE 10
NO-CONTEST CLAUSE
-----------------
10.1 Forfeiture of Interest: If any beneficiary or beneficiaries of this
----------------------
Declaration of Trust shall contest this Declaration or in any manner attempt to
have it or any of the trusts or beneficial interests created by it declared
invalid, such person or persons shall receive no benefits from, or interests
under, this Declaration, and the trusts herein established shall be administered
and distributed as if such person or persons had died before Settlor; provided,
however, that nothing in
THE STEVE Y. KIM LIVING TRUST p. 13
<PAGE>
this paragraph shall apply to the Settlor. The Trustee is hereby authorized to
defend, at the expense of the trusts, any contest or other attack of any nature
on these trusts or any of their provisions.
ARTICLE 11
MISCELLANEOUS PROVISIONS
------------------------
11.1 Governing Law: California law shall govern the validity, construction,
-------------
interpretation and administration of all trusts created under this instrument.
Provided, however, that the Trustee shall have the discretion, exercisable at
any time, and from time to time, to administer any trust created herein pursuant
to the laws of any jurisdiction in which the Trustee may be domiciled, or the
Trust Estate may be sitused by executing and acknowledging a written instrument
to that effect, and, if the Trustee so exercises its discretion, as provided
above, the Trust Estate so effected shall be governed by the laws of the
jurisdiction so selected.
11.2 Severability: If any provision of this Declaration is declared invalid
------------
or unenforceable, the remaining provisions shall nevertheless be carried into
effect.
11.3 Titles, Gender, Plural: The titles designating the articles herein
----------------------
shall not be used in interpretation hereof and shall have no impact on the
actual provisions or directions contained herein. All references to the
singular are to the plural, and vice versa, where appropriate, and all
references to the masculine include the feminine and neuter, and vice versa, as
appropriate.
11.4 Child and Issue Defined: The term "child" as used in this instrument
-----------------------
shall mean ALBERT YOUNG KIM and AMY YOUNG KIM. The term "issue" as used in this
instrument shall mean the above named children and their lineal descendants,
whether by blood or by adoption, provided such adoptee is under age eighteen
(18) at the time of adoption.
11.5 Definition of "Education": The term "education", if profitably pursued
-------------------------
in the discretion of the Trustee, shall include, without limitation, private
primary and secondary schooling, vocational training, study at an institution of
higher learning and graduate and professional education, and shall encompass not
only tuition, but also costs incidental to education, including, without
limitation, books, travel, suitable clothing, and room and board.
(This space intentionally left blank)
THE STEVE Y. KIM LIVING TRUST p. 14
<PAGE>
ARTICLE 12
EXECUTION AND DECLARATION
-------------------------
Executed at Calabasas, California, this 12 day of January, 1998.
/s/ STEVE KIM
---------------------
STEVE Y. KIM, TRUSTEE
DECLARATION OF SETTLOR
-----------------------
I hereby certify that I have read the foregoing Declaration of Trust
and that it correctly states the terms and conditions under which the Trust
Estate is to be held, managed and disposed of by the Trustee. I approve the
Declaration of Trust in all particulars, and the Trustee has executed and
accepted this Trust at my request.
DATED: /s/ STEVE KIM
---------------------
STEVE Y. KIM, SETTLOR
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )
On January 12, 1998, before me, a Notary Public in and for said County and
State, personally appeared STEVE Y. KIM, personally known to me or proved to me
on the basis of satisfactory evidence to be the persons whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
authorized capacities and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
/s/ IMELDA LARA
---------------
Notary Public
[SEAL OF NOTARY PUBLIC]
THE STEVE Y. KIM LIVING TRUST p. 15
<PAGE>
ASSIGNMENT OF PERSONAL PROPERTY
STEVE Y. KIM hereby assigns all his right, title and interest in and
to all of his personal property, including, but not limited to, all furniture
and furnishings, fine arts, antiques and jewelry, to STEVE Y. KIM as Trustee of
the STEVE Y. KIM LIVING TRUST, effective January 12, 1998.
/s/ STEVE KIM
-----------------------
STEVE Y. KIM
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )
On January 12, 1998, before me, a Notary Public in and for said County
and State, personally appeared STEVE Y. KIM, personally known to me or proved to
me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS, my hand and official seal.
/s/ IMELDA LARA
---------------------
Notary Public
[SEAL OF NOTARY PUBLIC]
THE STEVE Y. KIM LIVING TRUST p. 16
<PAGE>
EXHIBIT A
THE STEVE Y. KIM LIVING TRUST
(annexed to Trust dated January 12, 1998)
Upon the death of the Settlor, the following items of tangible personal property
shall be distributed to the designated beneficiary:
Item Beneficiary Date Settlor Initials
- ---- ----------- ---- ----------------
kim\steve.trt
THE STEVE Y. KIM LIVING TRUST p. 17
