<PAGE> 1
PROXY COVER
SCHEDULE 14A
Information Required in Proxy Statement
Reg. sec. 240.14a-101.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
CU BANCORP
_____________________________________________________________________
(Name of Registrant as Specified in its Charter)
ANITA Y. WOLMAN, ESQ.
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_____________________________________________________________________
2) Form, Schedule or Registration Statement No.:
_____________________________________________________________________
3) Filing Party:
_____________________________________________________________________
4) Date Filed:
_____________________________________________________________________
<PAGE> 2
May __, 1994
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders of CU Bancorp (the "Company") which will be held at the Warner
Center Marriott Hotel, 21850 Oxnard Street, Woodland Hills, California on
Friday, June 30, 1994 at 8:30 a.m.
At the meeting, you will be asked to elect as directors the
seven individuals nominated by the Board of Directors. You will also be asked
to approve the 1994 CU Bancorp Non-Employee Director Stock Option Plan. More
detailed information about the nominees, the specified proposals and other
matters regarding the Annual Meeting is included in the attached Proxy
Statement.
Whether or not you plan to attend, please sign and return the
accompanying proxy card in the postage-paid envelope as soon as possible so
that your shares will be represented at the meeting. The Board of Directors
suggests that you vote "FOR" each proposal listed on the proxy card. If you
attend the meeting and ask to vote in person, you may withdraw your proxy then.
It is important that your stock be represented.
Paul Glass
Chairman of the Board
<PAGE> 3
CU BANCORP
16030 VENTURA BOULEVARD
ENCINO, CALIFORNIA 91436
(818) 907-9122
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of CU Bancorp (the
"Company") will be held at the Warner Center Marriott Hotel, 21850 Oxnard
Street, Woodland Hills, California on Thursday, June 30, 1994 at 8:30 a.m., for
the following purposes:
1. ELECTION OF DIRECTORS. To elect seven persons to
serve as directors of the Company until the next Annual Meeting of Shareholders
and until their respective successors shall be elected and qualified. The
following persons are the Board of Directors' nominees:
Kenneth Bernstein Stephen G. Carpenter
Richard H. Close Paul W. Glass
M. David Nathanson Ronald S. Parker
David I. Rainer
2. TO APPROVE THE 1994 CU BANCORP NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN.
3. OTHER BUSINESS. To consider and transact such other
business as may properly be brought before the meeting and any adjournment or
adjournments thereof.
Shareholders of record at the close of business on May 18,
1994 are entitled to notice of and to vote at the meeting.
___________________________________________________________________________
Provisions of the Bylaws of CU Bancorp govern nominations for
election of members of the Board of Directors as follows:
Section 2.11. NOMINATION OF DIRECTORS. Nominations for election of members of
the board of directors may be made by the board of directors or by any
shareholder of any outstanding class of capital stock of the corporation
entitled to vote for the election of directors. Notice of intention to make
any nominations (other than for persons named in the notice of the meeting at
which such nomination is to be made) shall be made in writing and shall be
delivered or mailed to the president of the corporation by the later of the
close of business twenty-one (21) days prior to any meeting of shareholders
called for the election of directors or ten (10) days after the date of mailing
notice of the meeting to shareholders. Such notification shall contain the
following information to the extent known to the notifying shareholder: (a) the
name and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the number of shares of capital stock of the corporation
owned by each proposed nominee; (d) the name and residence address of the
notifying shareholder; (e) the number of shares of capital stock of the
corporation owned by the notifying shareholder; (f) with the written consent of
the proposed nominee, a copy of which shall
<PAGE> 4
be furnished with the notification, whether the proposed nominee has
ever been convicted of or pleaded nolo contendere to any criminal offense
involving dishonesty or breach of trust, filed a petition in bankruptcy, or
been adjudged bankrupt. The notice shall be signed by the nominating
shareholder and by the nominee. Nominations not made in accordance herewith
shall be disregarded by the chairman of the meeting, and upon his instructions,
the inspectors of election shall disregard all votes cast for each such
nominee. The restrictions set forth in this paragraph shall not apply to
nomination of a person to replace a proposed nominee who has died or otherwise
become incapacitated to serve as a director between the last day for giving
notice hereunder and the date of election of directors if the procedure called
for in this paragraph was followed with respect to the nomination of the
proposed nominee.
Pursuant to Section 225.72 of Regulation Y, issued by the Board of
Governors of the Federal Reserve System, the Company is currently required to
provide the Federal Reserve Board with 30 days' written notice before adding
any person to its Board of Directors, and such person may begin service 30 days
after a complete notice is filed unless the Federal Reserve Board has issued a
notice of disapproval of the proposed addition before the expiration of such
period. A new director may begin service before the 30-day period if the
Federal Reserve Board waives the notice requirement or otherwise notifies the
Company of its intention not to disapprove the addition. Accordingly, it may
be appropriate for persons seeking to nominate any individual, other than those
nominated by the Board of Directors, to consult their own legal counsel
regarding the application and affect of Section 225.72 of Regulation Y.
YOU ARE REQUESTED TO DATE, EXECUTE AND RETURN THE ENCLOSED PROXY
WITHOUT DELAY, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOU MAY REVOKE
YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED, EITHER BY ATTENDING THE
MEETING AND ELECTING TO VOTE IN PERSON, OR BY FILING WITH THE SECRETARY OF THE
COMPANY, PRIOR TO THE MEETING, A WRITTEN NOTICE OF REVOCATION OR A DULY
EXECUTED PROXY BEARING A LATER DATE.
BY ORDER OF THE BOARD OF DIRECTORS
Richard H. Close
Secretary
Dated: ________, 1994
Encino, California
<PAGE> 5
CU BANCORP
16030 VENTURA BOULEVARD
ENCINO, CALIFORNIA 91436
(818) 907-9122
PROXY STATEMENT
INTRODUCTION
This proxy statement is furnished in connection with the
solicitation of proxies to be used by the Board of Directors of CU Bancorp (the
"Company") at the Annual Meeting of Shareholders of the Company to be held at
the Warner Center Marriott Hotel, 21850 Oxnard Street, Woodland Hills,
California on Thursday, June 30, 1994 at 8:30 a.m., and at any adjournments
thereof (the "Meeting").
This Proxy Statement and the accompanying form of proxy are
being mailed to shareholders on or about May 20, 1994.
REVOCABILITY OF PROXIES
A form of proxy for voting your shares at the Meeting is
enclosed. Any shareholder who executes and delivers a proxy has the right to
revoke it at any time before it is voted by filing with the Secretary of the
Company an instrument revoking it or a duly executed proxy bearing a later
date. In addition, the powers of the proxy holders will be revoked if the
person executing the proxy is present at the Meeting and advises the Chairman
of his or her election to vote in person. Unless revoked or the shareholder
directs otherwise, all shares represented by a properly executed proxy received
prior to the Meeting will be voted as provided therein.
The proxy also confers discretionary authority to vote the
shares represented thereby on any matter that was not known at the time this
Proxy Statement was mailed which may properly be presented for action at the
Meeting.
COSTS OF SOLICITATIONS OF PROXIES
The enclosed proxy is being solicited by the Company's Board
of Directors. The principal solicitation of proxies is being made by mail,
although additional solicitation may be made by telephone, telegraph or
personal visits by directors, officers and employees of the Company and its
subsidiary, California United Bank (the "Bank"). The Company has engaged the
services of D.F. King & Company to assist in the solicitation of proxies. It
is estimated that the total fees paid in connection with this solicitation will
be $4,000. The total expense of this solicitation will be borne by the
Company. Expenses may include reimbursement paid to brokerage firms and others
for their costs in forwarding soliciting material and such expenses as may be
paid to any proxy soliciting firm engaged by the Company.
VOTING SECURITIES
OUTSTANDING SHARES AND RECORD DATE
Only shareholders of record of the Company's Common Stock as
of the close of business on May 18, 1994 ("Record Date") will be entitled to
notice of and to vote at the Meeting. As of the Record Date, the Company had
________________ shares of Common Stock outstanding.
1
<PAGE> 6
All Common Stock figures throughout this Proxy Statement have
been adjusted to reflect stock splits and dividends.
VOTING RIGHTS
Each shareholder of record is entitled to one vote, in person
or by proxy, for each share held on all matters to come before the Meeting,
except that shareholders may have cumulative voting rights with respect to the
election of directors. Pursuant to California law, no shareholder can cumulate
votes unless prior to the voting at the Meeting, a shareholder has given notice
of the shareholder's intention to cumulate the shareholder's votes at such
Meeting. If any shareholder has given such notice, all shareholders may
cumulate their votes for candidates in nomination. The Board of Directors does
not, at this time, intend to give such notice or to cumulate the votes it may
hold pursuant to the proxies solicited herein unless the required notice by a
shareholder is given, in which event votes represented by proxies delivered
pursuant to this Proxy Statement may be cumulated in the discretion of the
proxy holders, in accordance with the recommendations of the Board of
Directors. Therefore, discretionary authority to cumulate votes in such event
is solicited in this Proxy Statement and return of the proxy shall grant such
authority, unless otherwise directed.
Cumulative voting allows a shareholder to cast a number of
votes equal to the number of directors to be elected multiplied by the number
of votes held in his or her name on the Record Date. This total number of
votes may be cast for one nominee or may be distributed among as many
candidates as the shareholder desires. The seven candidates receiving the
highest number of votes are elected.
2
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of May
1, 1994 pertaining to beneficial ownership of Common Stock by persons known to
the Company to own five percent or more of such stock, current directors of the
Company, all nominees to be directors of the Company and all directors and
officers of the Company as a group. The information contained herein has been
obtained from the Company's records, from information furnished directly by the
individual or entity to the Company, or from various filings made by the named
individuals with the Securities and Exchange Commission.
The Company is of the opinion that there is no person
who possesses, directly or indirectly, the power to direct or cause to direct
the management and policies of the Company, nor is it aware of the existence of
a group of persons formed for such purpose, whether through the ownership of
voting securities, by contract, or otherwise.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER RELATIONSHIP WITH COMPANY BENEFICIAL OWNERSHIP CLASS*
------------------------ ------------------------- -------------------- ------
<S> <C> <C> <C>
Kenneth L. Bernstein Director 16,730 0.38%
Stephen G. Carpenter Director, President, Chief 24,800 0.56
Executive Officer
Richard H. Close Director 115,136 2.58
Paul W. Glass Chairman 98,778 2.22
M. David Nathanson Director 95,895 0.02
Ronald S. Parker Director 4,000 2.15
David I. Rainer Director, Chief Operating Officer 16,929 0.38
Dimensional Fund Advisors Inc. Beneficial Owner of More Than 5% 278,496(8) 6.31
ALL CURRENT EXECUTIVE OFFICERS
AND DIRECTORS AS A GROUP (8 IN
NUMBER) 355,788 7.7
</TABLE>
*TO BE UPDATED CLOSER TO MEETING
________________
(1) Only Common Stock is outstanding.
(2) Includes shares beneficially owned, directly and indirectly, together
with associates. Subject to applicable community property laws and
shared voting and investment power with a spouse, the persons listed
have sole voting and investment power with respect to such shares unless
otherwise noted.
3
<PAGE> 8
(3) Includes as if currently outstanding the following shares
subject to warrants and subject to options which are
exercisable within 60 days.
<TABLE>
<CAPTION>
OPTIONS WARRANTS
DIRECTOR EXERCISABLE EXERCISABLE
-------- ----------- -----------
<S> <C> <C>
Bernstein 0 0
Carpenter 19,800 0
Close 15,120 30,006
Glass 15,120 30,006
Nathanson 15,120 30,006
Parker 0 0
Rainer 15,429 0
</TABLE>
(4) Shares issuable pursuant to options or warrants which may be
exercised within 60 days of the Record Date are deemed to be
issued and outstanding in calculating the percentage ownership
of those individuals possessing such interest, but not for any
other individuals.
(5) Includes 9,952 shares held by the Glass, and Rosen Money
Purchase and Profit Sharing Plans of which Mr. Glass is a
trustee.
(6) The listing of individuals as executive officers in this table
or elsewhere in this Proxy Statement should not be interpreted
as an indication that such individuals are considered to be
executive officers of the Company or the Bank for any other
purposes.
(7) Includes as if currently outstanding 173,607* shares subject
to warrants and options held by directors and officers which
are exercisable within 60 days from the Record Date.
(8) Information is based on filing with Securities and Exchange
Commission
*WILL BE UPDATED FOR RECORD DATE
4
<PAGE> 9
DIRECTORS AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS AND NOMINEES
The Bylaws of the Company provide that the number of
directors of the Company may be no less than seven and no more than thirteen,
with the exact number to be fixed by resolution of the Board of Directors or
the shareholders. The number of directors is presently fixed at seven.
The persons named below have been nominated for
election as directors to serve until the next Annual Meeting and until their
successors are duly elected and qualified. Votes will be cast in such a way as
to effect the election of all nominees or as many as possible under the rules
of cumulative voting. If any nominee should become unable or unwilling to serve
as a director, the proxies will be voted for such substitute nominee as shall
be designated by the Board of Directors or the number of nominees may be
reduced. The Board presently has no knowledge that any of the nominees will be
unable or unwilling to serve. The procedures for nominating directors, other
than by the Board, are set forth in the Bylaws and are included in the Notice
of Annual Meeting. This Bylaw provision is designed to give the Board of
Directors advance notice of competing nominations, if any, and the
qualifications of nominees, and may have the effect of precluding third-party
nominations if not followed. The seven nominees receiving the highest number of
votes at the Meeting shall be elected.
The following table provides information as of the
Record Date with respect to each person nominated and recommended to be elected
by the current Board of Directors of the Company. See "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" for information pertaining to stock
ownership of the nominees.
5
<PAGE> 10
<TABLE>
<CAPTION>
POSITION AND POSITION AND DIRECTOR OF
OFFICE WITH OFFICE WITH COMPANY AND
NAME AGE THE COMPANY THE BANK BANK SINCE
---- --- --------------- ------------ -----------
<S> <C> <C> <C> <C>
Kenneth L. Bernstein 51 Director Director 1994
Stephen G. Carpenter 54 Director, Chairman, 1992
President, Chief Chief Executive
Executive Officer Officer
Richard H. Close 49 Director, Secretary Director, Secretary 1981
Paul W. Glass 48 Chairman Director 1984
M. David Nathanson 64 Director Director 1981
Ronald S. Parker 49 Director Director 1992
David I. Rainer 37 Director, Chief Director, President, 1992
Operating Officer Chief Operating
Officer
</TABLE>
None of the directors or officers of the Company or the Bank
were selected pursuant to any arrangement or understanding other than with the
directors and officers of the Company and the Bank acting in their capacities
as such. There are no family relationships between any two or more of the
directors, officers, or persons nominated or chosen by the Board of Directors
to become a director or officer and none serve as directors of any company
required to report under the Securities Exchange Act of 1934, as amended, or
any investment company registered under the Investment Company Act of 1940, as
amended.
Set forth below are brief summaries of the background and
business experience, including principal occupation, of the director nominees.
STEPHEN G. CARPENTER, joined the Bank in 1992 from Security
Pacific National Bank where he was Vice Chairman in charge of middle market
lending from July 1989 to June 1992. Mr. Carpenter was previously employed at
Wells Fargo Bank from July 1980 to July 1989, where he was an Executive Vice
President. He assumed the role of Chairman of the Bank in February, 1994.
RICHARD H. CLOSE has been a principal in the law firm of
Shapiro, Posell, Rosenfeld & Close, a Professional Corporation, in Los Angeles,
California, since 1977.
PAUL W. GLASS is a certified public accountant and has been a
principal in the accountancy firm of Glass & Rosen, in Encino, California,
since 1980.
6
<PAGE> 11
M. DAVID NATHANSON was formerly President of Nathanson, Lewis
& Harris Advertising until 1989. He is currently retired.
RONALD S. PARKER has been the Chairman of Parker, Mulcahy &
Associates, a regional merchant banking firm, since May 1992. Prior to that he
was the Executive Vice President and Group Head of the Corporate Banking Group
of Security Pacific National Bank from March of 1991 to May of 1992. He held a
similar position at Wells Fargo National Bank from 1984 to 1991.
DAVID I. RAINER was appointed Executive Vice President of the
Bank in June 1992 and assumed the position of Chief Operating Officer in late
1992. He assumed the title of President of the Bank in February, 1994. From
July 1989 to June 1992, Mr. Rainer was employed by Bank of America (Security
Pacific National Bank) where he held the position of Senior Vice President.
From March 1989 to July 1989, Mr. Rainer was a Senior vice President at Faucet
& Company, where he co-managed a stock and bond portfolio. From July 1982 to
March 1989, Mr. Rainer was employed by Wells Fargo Bank, where he held the
positions of Vice President and Manager.
No director, officer or affiliate of the Company or of the
Bank, no owner of record or beneficially of more than five percent of any class
of voting securities of the Company or no associate of any such director,
officer or affiliate is a party adverse to the Company or the Bank in any
material pending legal proceedings to which the Company or the Bank is a party.
THE BOARD OF DIRECTORS INTENDS TO VOTE ALL PROXIES HELD BY IT
IN FAVOR OF ELECTION OF EACH OF THE NOMINEES. YOU ARE URGED TO VOTE FOR THE
SEVEN NOMINEES SET FORTH HEREIN TO SERVE UNTIL THE NEXT ANNUAL MEETING OF
SHAREHOLDERS AND UNTIL THEIR RESPECTIVE SUCCESSORS SHALL BE ELECTED AND
QUALIFIED: KENNETH L. BERNSTEIN, STEPHEN G. CARPENTER, RICHARD H. CLOSE, PAUL
W. GLASS, M. DAVID NATHANSON, RONALD S. PARKER AND DAVID I. RAINER.
COMMITTEES OF THE BOARD OF DIRECTORS; DIRECTOR ATTENDANCE
The Board of Directors maintains the following committees,
which perform the functions and were comprised during 1993 of the members
listed below:
<TABLE>
<CAPTION>
FUNCTIONS;
NAME NUMBER OF MEETINGS MEMBERS
<S> <C> <C>
Audit Committee Monitors significant accounting policies; Glass (Chair)
approves services rendered by the auditors; Goodman*
reviews audit and management reports; Nathanson**
makes recommendations regarding the Close
appointment of independent auditors
and the fees payable for their services.
Met 10 times during 1993.
Compensation Determines compensation of executive Goodman (Chair)*
Committee officers. See page 16 herein. Close**
Glass
Parker
</TABLE>
* Dr. Goodman resigned from the Board in January 1994.
** Member in 1993, not a member in 1994.
7
<PAGE> 12
The Company does not have a Nominating Committee. The Board of Directors
performs the functions of this committee. The Board of Directors will consider
nominees recommended by security holders, in accordance with the procedures set
forth in the Bylaws, which are set forth in this Proxy Statement. The Board of
Directors of the Bank maintains regular Audit, Executive, Loan, Compensation,
Investment and Community Reinvestment committees.
During 1993, the Company's Board of Directors held 12
regularly scheduled meetings and 13 special meetings. Each director attended
at least 75% of the aggregate of (1) the total number of meetings of the Board
of Directors and (2) the total number of meetings of committees of the Board on
which they served (during the period for which they served).
EXECUTIVE OFFICERS
Set forth below is certain information as of the Record Date
with respect to each of the executive officers of the Company as of the Record
Date.
<TABLE>
<CAPTION>
POSITION AND POSITION AND
OFFICES WITH OFFICES WITH OFFICER
NAME AGE THE COMPANY THE BANK SINCE
---- --- ------------ ------------ -------
<S> <C> <C> <C> <C>
Stephen G. Carpenter 54 Director, Chief Chairman, 1992
Executive Officer Chief Executive Officer
David I. Rainer 37 Director, Chief Director, President, 1992
Operating Officer Chief Operating Officer
Anne Williams 36 Chief Credit Officer Chief Credit Officer 1992
Patrick Hartman 44 Chief Financial Chief Financial Officer 1992
Officer
</TABLE>
Set forth below are brief summaries of the background and
business experience, including principal occupation, of the executive officers
of the Company who have not previously been discussed herein.
PATRICK HARTMAN has been employed by the Bank since November,
1992. Prior to assuming his present positions he was Senior Vice
President/Chief Financial Officer for Cenfed Bank for a period during 1992.
Mr. Hartman held the post of Senior Vice President/Chief Financial Officer of
Community Bank, Pasadena, California, for thirteen years.
ANNE WILLIAMS joined the Bank in 1992 as Senior Loan Officer.
She was named to the position of Chief Credit Officer in July 1993. Prior to
that time she spent five years at Bank of America / Security Pacific National
Bank, where she was a credit administrator in asset based lending, for middle
market in the Los Angeles Area. Ms. Williams was trained at Chase Manhattan
Bank in New York, and was a commercial lender at Societe Generale in Los
Angeles and Boston Five Cents Savings Bank where she managed the corporate
lending group.
8
<PAGE> 13
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following information is furnished with respect to (i) the
chief executive officer of the Corporation and (ii) each of the other executive
officers of the Corporation (including officers of the Bank who may be deemed
to be executive officers of the Corporation), who were serving as executive
officers at December 31, 1993 (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term
Compensation Awards
- ---------------------------------------------------------------------- --------------------------------
Name and Other Annual Options/ LTIP All Other
Principal Position Year Salary Bonus Compensation SARs# Payouts Compensation
------------------ ---- ------ ----- ------------ -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen G. Carpenter, 1992 $144,872 $50,000(3) $ 7,000(2) 74,000 0 0
Chief Executive Officer 1993 $250,000 $50,000(3) $12,000(2) 25,000 0 0
David I. Rainer, 1992 $108,333 $ 50,000(3) $ 5,000(2) 55,000 0 0
Chief Operating Officer 1993 $200,000 $100,000(4) $12,000(2) 25,000 0 0
Patrick Hartman 1993 $138,000 $0 $ 8,450(2) 20,000 0 0
Senior Vice President
Chief Financial Officer
Anne Williams 1993 $103,400 $25,000 $ 7,800(2) 5,000 0 0
Executive Vice President
Chief Credit Officer
</TABLE>
(1) The Company provides memberships in certain clubs for certain
executives, the use of which primarily relates to Company business.
The value of the personal use, if any, of all such benefits cannot
be specifically determined and is not reported in the table.
(2) Consists of amounts paid for automobile allowances.
(3) These amounts were signing bonuses, as more fully discussed
herein in the section entitled "Other Compensation".
(4) One half of this amount was a signing bonus, see above. The
remainder was a merit bonus.
9
<PAGE> 14
STOCK OPTIONS
The following table contains information concerning the grant of stock options
during the fiscal year ended December 31, 1993 to the Named Executives:
OPTION / SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
- ------------------------------------------------------------------------ --------------------------
% OF
TOTAL
OPTIONS/
SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE EXPIR-
GRANTED IN FISCAL PRICE ATION
NAME (#) YEAR ($/SH) DATE 5% ($) 10%($)
- ---- --- ----- ------ ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
S. CARPENTER* 25,000 20.62% $4.88 2/16/99 $41,449 $ 94,034
DAVID RAINER* 22,149 18.27 $4.88 2/16/99 $36,722 $ 83,310
2,851 2.35 $6.88 4/8/99 $ 6,666 $ 15,123
----- ------- --------
20.62% $43,388 $ 98,433
PATRICK HARTMAN 15,000 12.37 $6.88 4/8/99 $35,073 $ 79,567
5,000 4.12 $6.00 8/4/99 $10,202 $ 23,147
----- ------- --------
16.49% $45,275 $102,714
ANNE WILLIAMS 2,500 2.06 $6.88 4/8/99 $ 5,845 $ 13,261
2,500 2.06 $6.00 8/4/99 $ 5,101 $ 11,573
----- ------- --------
4.12% $10,947 $ 24,835
------ ----- ------- --------
TOTALS 75,000 61.86% $141,060 $320,016
------ ------ -------- --------
</TABLE>
(1) The options are exercisable in 20% increments commencing one year
subsequent to grant and are exercisable over a six year period, provided
however, that the options shall vest fully upon the occurrence of certain
significant events that include a merger or dissolution of the Company or sale
of substantially all the Company's assets. As of December 31, 1993 options
equal to the amounts set forth in the section herein entitled "Security
Ownership of Certain Beneficial Owners and Management", above were vested. The
vested portion of each option may be exercised at any time prior to its
expiration by tendering the exercise price in cash, check or in Shares of
Common Stock, valued at fair market value on the date of exercise. Each option
will terminate three months after termination of employment for any reason
other than death or disability. In the event of termination due to death or
disability, the option will terminate no later than one year after such
termination. Each option is not transferable other than by will or the laws of
distribution and is not exercisable by anyone other than the optionee during
his lifetime. If the outstanding shares of stock of the Company are increased,
decreased or changed into or exchanged for, a different number or kind of
shares or securities of the Company, without receipt of consideration by the
Company, a corresponding adjustment changing the number or kind of shares and
the exercise price per share allocated to unexercised options shall be made.
Subject to certain limitations in the Plan, each option may be amended by
mutual agreement of the optionee and the Company.
(2) The exercise price of all options is adjustable in connection with stock
dividends, stock splits and similar events.
(3) The Potential Realizable Value is the product of (a) the difference
between (i) and the product of the closing market price per share at the
grant date and the sum of (A) 1 plus (B) the assumed rate of appreciation of
the Common Stock compounded annually over the term of the option and (ii) the
per share exercise price of the option and (b) the number of shares of Common
Stock underlying the option at December 31, 1993. These amounts represent
certain assumed rates of appreciation only. Actual
10
<PAGE> 15
gains, if any, on stock option exercises are dependent on a variety of factors,
including market conditions and the price performance of the Common Stock.
There can be no assurance that the rate of appreciation presented in this table
will be achieved.
(4) Reflects the number of shares of Common Stock underlying the options
granted to the Named Executives during the year. Each of the options was
granted pursuant to the Company's 1983 or 1985 Stock Option Plans.
No options were exercised during 1993 by any of the named parties in the
Compensation Table.
No exercise price of any option previously granted to any executive officer was
adjusted or amended ("repriced") during 1993.
______________________________________________________________________________
AGGREGATED FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-money Options
Options at 12/31/93 at 12/31/93
--------------------- --------------------
Name Exercisable / Unexercisable Exercisable / Unexercisable
- ---- --------------------------- ---------------------------
<S> <C> <C>
S. Carpenter 14,800 / 84,200 $20,350 / $122,025
D. Rainer 11,000 / 69,000 $16,500 / $101,992
Patrick Hartman 0 / 20,000 $0 / $ 2,500
Anne Williams 3,000 / 17,000 $ 5,250 / $ 22,250
</TABLE>
DEFERRED COMPENSATION PLAN
In December of 1992, the Bank terminated its deferred
compensation plan whereby eligible senior officers and directors of the Bank
were entitled to defer certain amounts of compensation and received limited
matching amounts from the Bank. All participants were paid in full. No
compensation was received by the parties named in the Summary Compensation
Table.
OTHER MATTERS RELATED TO COMPENSATION
OTHER COMPENSATION
Mr. Carpenter was hired by the Bank as Chief Executive Officer
on June 2, 1992, at an annual base salary of $250,000. Mr. Carpenter was
granted a $100,000 "signing bonus" (payable $50,000 upon commencing employment,
and $50,000 on January 2, 1993) and received options to purchase 74,000 shares
of the Company's stock at $5.125 per share. In connection with his employment,
Mr. Carpenter receives an auto allowance of $1,000 per month and the use of a
country club membership for business purposes.
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<PAGE> 16
In the event that there is a change in control ("Change of
Control) of the Bank or its parent company (including a change of more than 50%
of the current shareholders of the Company), Mr. Carpenter will be entitled to
any accrued but unpaid bonus at that time. Additionally, in the event of a
Change of Control, if Mr. Carpenter is not offered a position commensurate with
his position with the Bank, and elects to resign, the Bank will pay him,
subject to non-disapproval by the regulators, 12 months' compensation.
Mr. Rainer commenced employment with the Bank on June 15,
1992, as Executive Vice President. Mr. Rainer's annual compensation is
$200,000. Mr. Rainer was granted a $100,000 "signing bonus" (payable $50,000
on commencement of employment and $50,000 on January 2, 1993) and received
options to purchase 55,000 shares of the Company's common stock at $5.00 per
share. In addition, Mr. Rainer received a guaranteed $50,000 bonus at the
expiration of one year from the commencement of his employment. This was
applied to the $100,000 incentive bonus paid to Mr. Rainer at such one year
anniversary. Mr. Rainer receives an auto allowance of $1,000 per month and the
use of a country club membership for business purposes.
In the event of a Change of Control, Mr. Rainer would be
entitled to any accrued but unpaid bonus at that time. Additionally, in the
event of a Change of Control, if Mr. Rainer is not offered a position
commensurate with his position with the Bank, and elects to resign, the Bank
will pay him, subject to non-disapproval by the regulators, 12 months'
compensation.
During 1993, the Bank sold its mortgage origination network
and certain related loan production offices. In connection with that
transaction, compensation was required by prior agreement to be paid to the two
officers who had founded the mortgage banking division and who managed that
business with regard to the value of the mortgage servicing portfolio (which
was retained by the Bank) and related to the profitability of the division. As
a result, each of Messrs. Douglas Jones and Daniel LuVisi received total
compensation of $900,507 for the period January 1, 1993 through the sale date,
November 10, 1993, including $714,126 related to bonuses and other
payments based on profitability and value of the mortgage servicing portfolio.
Messrs. Jones and LuVisi resigned from their positions with the Bank
concurrently with the sale of the mortgage origination network, to be employed
by the purchaser of the network.
COMPENSATION OF DIRECTORS
Directors of the Company receive no compensation for attending
meetings of the Board of Directors. However, the directors of the Company also
serve as directors of the Bank. The Bank paid the sum of between $3,800 and
$1,600 per month during 1993 to each director of the Bank, depending on the
number and type of meetings attended by the director. The Director Compensation
Plan ties director compensation to board and committee meeting attendance and
is also designed to be substantially similar in total compensation to similar
banking institutions. Directors who are also salaried employees of the Bank do
not receive any additional compensation for activities as directors. Eligible
directors receive: (i) $1,000 per board meeting; and (ii) $200 per committee
meeting (for committees for which they are members). During 1993, director
compensation ranged from $34,600 at the highest to $27,400 at the least, for
the entire year, and totalled $145,400 in the aggregate for the year 1993.
SPECIAL STOCK OPTION PLAN
On October 20, 1987, the shareholders of the Company approved
the 1987 Special Stock Option Plan ("Special Plan") for the Company's
directors, to encourage them to continue as directors, give them additional
incentive as directors and reward them for past services. This Special Plan is
limited to directors of the Company and the Bank and provides for the issuance
of 120,960 authorized but previously unissued shares of Common Stock. Only
options which do not qualify as "incentive stock options" ("Nonstatutory Stock
Options") under Section 422A of the Internal Revenue Code of 1986, as amended
(the "Code"), may
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<PAGE> 17
be issued. Pursuant to the shareholders' approval of the Special Plan, each
then current director received options to purchase 15,120 shares. THERE ARE NO
ADDITIONAL OPTIONS CURRENTLY AVAILABLE FOR GRANT UNDER THE SPECIAL PLAN. The
majority of the current directors do not have any special options, although
Messrs. Carpenter and Rainer have employee stock options. Options terminate 90
days after a director ceases being a director.
The Special Plan provides that the exercise price shall not be
less than 100% of the fair market value of the shares on the day the options
are granted. On October 20, 1987, when the shareholders approved the Special
Plan, the directors received such options with an exercise price of $5.791 per
share. The options have an exercise period of ten years and are currently fully
vested.
Options granted under the Special Plan are nontransferable
(other than by the laws of descent and distribution) and may not be exercised
more than three months after termination of directorship, except in the case of
the death or disability of an optionee. In such event, the option remains
exercisable for one year to the extent it was exercisable at the date of death
or disability.
Pursuant to the Special Plan, payment for the exercise of
options must be received in full prior to the issuance of shares. Payment may
be made (a) in cash, (b) by delivery of shares of Common Stock previously owned
by the optionee (to the extent legally permissible), or (c) in a combination of
common Stock and cash. The Special Plan also enables an optionee the
possibility to satisfy tax withholding amounts due upon exercise with shares of
Common Stock rather than cash, by either delivering already owned shares of
Common Stock or withholding from the shares of Common Stock to be issued upon
exercise that number of shares which, based on the value of the Common Stock,
would satisfy the tax withholding amounts due. Since the Common Stock is
listed on NASDAQ, the value of the Common Stock delivered as payment or
withheld is deemed to be the closing price of the stock on the date of exercise
or, if no sale occurred on such date, the nearest preceding day on which a sale
of Common Stock occurred.
DIRECTOR WARRANTS
In May 1985, the shareholders ratified the grant to certain
directors at that time, of warrants to purchase 30,006 shares each, a total of
330,066 shares of Common Stock, over a ten-year period as compensation for the
personal guarantees of a capital note of the Company in the amount of
$1,250,000 from First Interstate Bank of California. Director Glass received
an identical warrant to purchase 30,006 shares, at a later date. To comply
with regulatory capital requirements by supporting the Company's additional
asset growth, the Company issued the capital note, for which the lender
required the guarantees by the directors in connection with the purchase of
such capital note. The exercise price of such warrants of $4.17 per share was
the weighted average price of the Common Stock for the 60 days prior to April
2, 1984, the date on which First Interstate Bank of California approved the
purchase of the capital note. The purchase price of each warrant to purchase
30,006 shares was $750. No warrants were exercised during 1992. Based on the
required repayment of the capital note subsequent to the Company's public
offering of June 30, 1987, all these warrants are currently exercisable.
153,030 warrants remain outstanding and eligible for exercise.
In January 1994, the board of directors awarded former
chairman of the board Dr. Jon P. Goodman warrants to purchase 7,500 shares of
stock at fair market value on date of grant which was $7.00, in recognition of
her services to the Company, in view of the fact that she was the only long
term director without such incentive, and in connection with her resignation.
Dr. Goodman also received special compensation of $30,000 at the same time.
EMPLOYEE STOCK OPTION PLAN (1983)
In April 1983, the Company adopted the Employee Stock Option
Plan (1983) ("1983 Plan") which the shareholders approved in May 1983. The
1983 Plan provides for the issuance of both "incentive stock
13
<PAGE> 18
options" within the meaning of Section 422A of the Code ("Incentive Stock
Options") and Nonstatutory Stock Options. The number of shares of Common Stock
reserved for issuance under the 1983 Plan is 400,075. As of May 1, 1994, there
were 49,030 shares subject to outstanding options. NO SHARES REMAIN AVAILABLE
FOR FUTURE GRANTS. THE 1983 PLAN HAS EXPIRED BY ITS TERMS, ALTHOUGH
OUTSTANDING OPTIONS REMAIN AND ARE EXERCISABLE OVER THE PERIOD DESIGNATED IN
THE 1983 PLAN.
Only full time employees of the Company or the Bank were
eligible to participate in the 1983 Plan. No director of the Company who is not
an officer was eligible for a grant of options under the 1983 Plan. Options are
exercisable in installments as provided in individual stock option agreements.
The exercise price of options under the 1983 Plan was equal to
at least 100% of the fair market value of the Common Stock as of the date of
grant. The exercise price is due in full upon exercise and may be paid (a) in
cash, (b) by delivering shares of Common Stock equal in value to the exercise
price, subject to certain limitations for shares of stock previously acquired
upon exercise of an incentive stock option, or (c) by a combination of cash and
Common Stock. Since the Common Stock is listed on NASDAQ, the value of the
Common Stock delivered as payment is deemed to be the closing price of such
stock as the date of exercise or, if no sale occurred on such date, the nearest
preceding day on which a sale of Common Stock occurred.
No option granted under the 1983 Plan is transferable by the
optionee other than by will or the laws of descent and distribution. Each
option is exercisable only while the optionee is employed by the Company,
except that if the optionee's employment is terminated for any reason, the
option is exercisable for a period of three months thereafter. Upon the
disability or death of an optionee, such option is exercisable within one year
from the date of disability or death. Information as to grants of options
under the 1983 Plan during 1992 is set forth in the section entitled
"Compensation of Executive Officers and Directors".
FIRST AMENDED AND RESTATED 1985 EMPLOYEE STOCK OPTION PLAN
In October 1985 the shareholders approved the adoption of, and
in October 1987 the shareholders approved the amendment to, the First Amended
and Restated 1985 Employee Stock Option Plan ("1985 Plan") which provides for
the issuance of incentive or nonstatutory stock options. The 1985 Plan
provides for the issuance of options to purchase 350,000 shares of Common
Stock. As of May 1, 1994, there were 261,516 shares subject to outstanding
options, 61,828 shares had been issued upon exercise of options, and 26,656
shares were available for future grants.
As the 1985 Plan is presently drafted, the Board of Directors,
or a Stock Option Committee appointed by the Board of Directors, may administer
the plan.
Only full time employees and directors are eligible to
participate in the 1985 Plan. However, no options have been issued to any
director who is not a full-time employee under the 1985 Plan and there is no
intention to do so. Options are exercisable in installments as provided in
individual stock option agreements. The 1985 Plan terminates in 1995.
The Board of Directors has the authority to determine the
exercise price for all stock options granted under the 1985 Plan; provided,
however, such exercise price must be equal to at least 100% of the fair market
value of the Common Stock as of the date of grant, and provided further, the
exercise price for an incentive stock option granted to a Ten Percent
Shareholder may not be less than 110% of the fair market value of the Common
Stock on the date of grant. The exercise price is due in full upon exercise
and may be paid (a) in cash, (b) by delivering shares of Common Stock equal in
value to the exercise price, subject to certain limitations for shares of stock
previously acquired upon exercise of an incentive stock option, or (c) a
combination of cash and Common Stock. Since the Common Stock is listed on
NASDAQ, the value of the Common Stock delivered as payment is deemed to be the
closing price of such stock as
14
<PAGE> 19
the date of exercise or, if no sale occurred on such date, the nearest
preceding day on which a sale of Common Stock occurred.
The term during which an option granted under the 1985 Plan is
exercisable may not exceed ten years from the date of grant; provided, however,
an option granted to a Ten Percent Shareholder may not have a term in excess of
five years. The aggregate fair market value of the Common Stock (determined at
the date of grant) for which any employee may be granted incentive stock
options in any fiscal year may not exceed $100,000. No option granted under
the 1985 Plan is transferable by the optionee other than by will or the laws of
descent and distribution. Each option is exercisable only while the optionee
is employed by the Company, except that if the optionee's employment is
terminated for any reason, the option is exercisable for a period of three
months thereafter. Upon the disability or death of an optionee, such option is
exercisable within one year from the date of disability or death.
Information as to options granted pursuant to the 1985 Plan to
executive officers is contained in the section "Compensation of Executive
Officers and Directors".
15
<PAGE> 20
1993 EMPLOYEE STOCK OPTION PLAN
In November, 1993, the Board of Directors adopted and
approved, subject to shareholder approval, the CU Bancorp 1993 Employee Stock
Option Plan (the "1993 Plan"). The 1993 Plan was approved by requisite vote
of the shareholders on December 17, 1993.
The 1993 Plan supplements the Company's other stock option
plans provides an additional vehicle through which the Company can continue to
grant options to key employees. The Board of Directors believes that the
Company's long-standing policy of encouraging stock ownership by its key
employees in part through the granting of stock options has enhanced the
Company's ability to retain and attract such persons.
PURPOSE
The purpose of the 1993 Plan is to strengthen the Company by
providing to participating employees added incentives for high levels of
performance and to encourage stock ownership in the Company. The 1993 Plan
seeks to accomplish these goals by providing a means whereby such employees of
the Company and its subsidiaries may be given an opportunity to purchase, by
way of option, Common Stock of the Company. The 1993 Plan is also intended to
enable the Company and its subsidiaries to compete effectively for and retain
the services of such persons and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its subsidiaries.
Options issued under the 1993 Employee Plan shall, in the
discretion of a committee appointed by the Board of Directors (as described
below), be either incentive stock options ("Incentive Stock Options") as that
term is used in Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any successor thereto, or options which do not qualify as
incentive stock options ("Non-Qualified Stock Options").
ADMINISTRATION
The 1993 Plan is administered by a committee (the "Committee")
appointed by the Board of Directors, which shall consist of not less than two
members of the Board of Directors. Each member of the Committee shall be a
disinterested person as provided in Rule 16b-3(c)(2) promulgated pursuant to
the Securities Exchange Act of 1934, as amended. The Committee shall have full
power and authority in its discretion to take any and all action required or
permitted to be taken under the 1993 Plan. At the present time the
Compensation Committee serves as the Stock Option Committee.
SHARES RESERVED
The number of shares of Common Stock reserved for issuance
upon exercise of options granted under the 1993 Employee Plan is 400,000. If
any option granted under the 1993 Plan shall for any reason expire, be
cancelled or otherwise terminate without having been exercised in full, the
shares not purchased under such option shall again become available for grant
under the 1993 Plan.
ELIGIBILITY
All employees of the Company or its subsidiaries are eligible
to participate in the 1993 Employee Plan.
GRANTS, VESTING AND EXERCISE PRICE OF OPTIONS UNDER THE 1993 EMPLOYEE PLAN
16
<PAGE> 21
Under the 1993 Employee Plan, the Committee shall select the
eligible participants to whom options will be granted, the type of option to be
granted, the exercise price of each option, the number of shares covered by
such option and the other terms and conditions of each option. The eligible
employees are able to receive Incentive and Non-Qualified Stock Options;
provided, however, that the aggregate fair market value (determined at the time
the Incentive Stock Option is granted) of the stock with respect to which
Incentive Stock Options are exercisable for the first time by the optionee
during any calendar year (under all Incentive Stock Option plans of the
Company) shall not exceed One Hundred Thousand Dollars ($100,000). Should it
be determined that any Incentive Stock Option granted exceeds such maximum,
such Incentive Stock Option shall be considered to be a Non-Qualified Stock
Option to the extent, but only to the extent, of such excess.
None of the options will be exercisable within the first 12
months from the date of the grant. Each option shall become exercisable in the
following four cumulative annual installments: 25% on the first anniversary
date of the grant; an additional 25% on the second anniversary date of the
grant; an additional 25% on the third anniversary date of the grant; and the
last 25% on the fourth anniversary date of the grant. From time to time during
each of such installment periods, the option may be exercised with respect to
some or all of the shares allotted to that period and/or with respect to some
or all of the shares allotted to any prior period as to which the option was
not fully exercised. During the remainder of the term of the option (if its
term extends beyond the end of the installment periods), the option may be
exercised from time to time with respect to any shares then remaining subject
to the option.
The exercise price of each option granted pursuant to the 1993
Employee Plan shall be not less than one hundred percent (100%) of the fair
market value of the stock subject to the option on the date the option is
granted; provided, however, that the purchase price of the stock subject to an
Incentive Stock Option may not be less than one hundred ten percent (110%) of
such fair market value (without regard to any restriction other than a
restriction which by its terms will never lapse) where the optionee owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company.
The exercise price of Common Stock acquired pursuant to an
option granted under the 1993 Employee Plan shall be paid in cash or check
payable at the time the option is exercised, in whole shares of stock of the
Company owned by the optionee having a fair market value on the exercise date
(determined by the Committee in accordance with any reasonable evaluation
method including the evaluation method) equal to the option price of the shares
being purchased, or a combination of stock and cash or check, equal in the
aggregate to the option price of the shares being purchased.
ADJUSTMENTS UPON CHANGES IN STOCK
If the outstanding shares of the stock of the Company are
increased, decreased or changed into, or exchanged for a different number or
kind of shares or securities of the Company, without receipt of consideration
by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, an appropriate and proportionate adjustment shall be made in the
number and kind of shares as to which options may be granted. A corresponding
adjustment changing the number or kind of shares and the exercise price per
share allocated to unexercised options, or portions thereof, which shall have
been granted prior to any such change shall likewise be made. Any such
adjustment, however, in an outstanding option shall be made without change in
the total price application to the unexercised portion of the option but with a
corresponding adjustment in the price for each share subject to the option.
Adjustments under this section shall be made by the Committee whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final and conclusive. No fractional shares of stock shall be issued
under the 1993 Plan on account of any such adjustment.
EXPIRATION, TERMINATION AND TRANSFER OF OPTIONS
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<PAGE> 22
Under the 1993 Employee Plan, no option may extend more than
ten (10) years from the date of grant. For purposes of the 1993 Plan, the
date of grant of an option shall be the date on which the Committee takes final
action approving the award of the option, notwithstanding the date the optionee
accepts the option, the date of execution of the option agreement, or any other
date with respect to such option. Except in the event of termination of
employment due to death, disability or termination for cause, options will
terminate three (3) months after an employee optionee ceases to be employed by
the Company or its subsidiaries, unless the options by their terms were
scheduled to terminate earlier. During that three (3) month period after the
employee optionee ceases to be employed by the Company or its subsidiaries,
such options shall be exercisable only as to those shares with respect to which
installments, if any, had accrued as of the date of which the optionee ceased
to be employed by the Company or its subsidiaries. If such termination was due
to such optionees' permanent and total disability, or such optionee's death,
the option, by its terms, may be exercisable for one year after such
termination of employment. If the employee optionee's employment is terminated
for cause, the option terminates immediately, unless such termination is waived
by the Committee. An option by its terms may only be transferred by will or by
laws of descent and distribution upon the death of the optionee, shall not be
transferable during the optionee's lifetime and shall be exercisable during the
lifetime of the person to whom the option is granted only by such person.
TERMINATION AND AMENDMENT OF THE 1993 PLAN
The 1993 Plan will terminate upon the occurrence of a
terminating event, including, but not limited to, liquidation, reorganization,
merger or consolidation of the Company with another corporation in which the
Company is not the surviving corporation or resulting corporation, or a sale of
substantially all the assets of the Company to another person, or a reverse
merger in which the Company is the surviving corporation but the shares of the
Company's stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property (a "Terminating Event"). The
Committee shall notify each optionee not less than thirty (30) days prior
thereto of the pendency of a Terminating Event. Upon delivery of such notice,
any option outstanding shall be exercisable in full and not only as to those
shares with respect to which installments, if any, have then accrued, subject,
however, to earlier expiration or termination as provided elsewhere in each of
the 1993 Plan. The Committee may also suspend or terminate the 1993 Plan at
any time. Unless sooner terminated, the 1993 Plan shall terminate ten (10)
years from the effective date, October 27, 1993, of the 1993 Plan. No options
may be granted under the 1993 Plan while the 1993 Plan is suspended or after
the 1993 Plan is terminated. Rights and obligations under any option granted
pursuant to the 1993 Plan, while in effect, shall not be altered or impaired by
suspension or termination of the 1993 Plan, except with the consent of the
person to whom the stock option was granted.
The 1993 Plan may be amended by the Committee at any time.
However, except as otherwise provided in the 1993 Plan relating to adjustments
upon changes in stock (e.g., stock splits or stock dividends), no amendment
shall be effective unless approved by the affirmative vote of a majority of the
shares of the Company present, or represented, and entitled to vote at a duly
held meeting at which a quorum is present or by the unanimous written consent
of the holders of all outstanding shares of the Company entitled to vote, if
the amendment will: (a) increase the number of shares reserved for options
under the 1993 Plan; (b) materially modify the requirements as to eligibility
for participation in the 1993 Plan; or (c) materially increase the benefits
accruing to participants under the 1993 Plan. Notwithstanding the foregoing,
shareholder approval need not be obtained to effect any such amendment if the
Committee determines that such approval is not otherwise required under
applicable law and that the failure to obtain such approval will not adversely
affect the 1993 Plan under the Code.
NO OPTIONS PURSUANT TO THE 1993 PLAN WERE GRANTED DURING 1993.
18
<PAGE> 23
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee"), which consists
solely of non-officer directors, determines and administers the compensation of
the Bank's executive officers. The present membership of the Committee consists
of Paul Glass and Ronald Parker. The Company does not pay any direct
compensation to its executive officers, except pursuant to the stock option
plans. The executive officers of the Corporation are compensated by the Bank
for their services to the Bank, and receive benefits under various Bank
employee benefit plans. The Compensation Committee oversees the compensation
programs of the officers of the Bank and also serves as a Compensation
Committee for the Bank. This report is presented by the Committee as the
Compensation Committee for the Company and the Bank. None of the members of
the committee is an employee of the Bank or the Corporation. The Committee
provides the following report on executive compensation.
Notwithstanding anything to the contrary set forth in the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Report, and the performance graph on page ___ , shall not be incorporated by
reference into any such filings.
OVERALL PHILOSOPHY
In view of the recent history of the Company and the resulting
changes at the Company over the past two years, the compensation committee has
reviewed the emphasis of the program to distinguish the current policies from
those of the prior periods, and to accentuate long term profitability over
short term compensation. As a result, the executive compensation program has
gone through redevelopment over the past two years and it is expected that
development of a compensation strategy is a dynamic process that will continue.
The Committee views the executive compensation program as a major factor in the
competitive strategy of the Bank. The program's goal is to attract, provide
incentive to and retain competent managers whose goals are aligned with those
of the Bank's shareholders. To this end, it is the ongoing responsibility of
the Committee to establish and administer an executive compensation program
that fosters competency in management, provides high caliber executive talent
and both recognizes and motivates performance.
The Compensation Policy of the Company is threefold. First it
seeks to align compensation with profitability of the Company and enhancement
of shareholder value. Second, it seeks to serve to attract, motivate and
retain the most qualified professionals to the Company as employees by
providing competitive compensation packages and seeking employees with diverse
and sophisticated experience. Finally, it is designed to put a substantial
portion of employee compensation "at risk", by designing long term compensation
and option plans the value of which is dependent on long term profitability of
the Company.
Acquisition of Management Team
With the formation of a new management team in June 1992, the
Bank began the process with new management of establishing performance and
compensation programs that would allow the Bank to realize its new strategic
vision and provide realistic goals and expectations for its employees. In
seeking executive officers, it is the Company's strategy to seek highly
credentialed, experienced bankers and other professionals, with proven skills.
The Committee acknowledges that these requirements may result in recruitment of
individuals whose primary experience is in much larger and more sophisticated
institutions, with concomitant compensation requirements. It is the philosophy
of the Company to command the best
19
<PAGE> 24
talent available at all levels, to allow the Company to return to profitability
and be positioned to take advantage of growth and other opportunities in the
future, which may require such a sophisticated management group. The Committee
believes that the Bank's current Chief Executive Officer (CEO) and top
executive group reflects the successful satisfaction of the Board's recruitment
objective.
20
<PAGE> 25
Base Salary
During 1992, the Committee began a thorough review of the
compensation levels and programs at comparable companies. This review included
the Bank's commissioning of compensation studies by outside consultants to
compare existing salaries with the salaries of similarly placed executives at
financial institutions deemed similar by the Committee and the Consultant.
The Committee has completed its analysis of the information gathered during
this review, and has in place a performance-driven executive incentive plan to
reflect the philosophy set forth above, in tandem with a new executive
performance evaluation system. The Company's goal is to be competitive with
those financial institutions which the Committee deems to be similar, and in
this manner to attract and retain top financial institution executives. Surveys
of such institutions will be conducted on a periodic basis.
The philosophy of the Compensation Committee is oriented
toward compensation and performance systems that merge the interests of the
shareholders and management by placing emphasis on rewards tied to various
financial measures. The goal of all compensation and the evaluation system is
to motivate and monitor the exceptional executive performances that will be
required for the Bank to achieve its strategic business objectives.
The compensation and performance system rewards employees
based on the achievement of corporate and individual objectives. The corporate
objectives are outlined in the strategic plan of the Company, and include the
attainment of specific levels or return on equity and return on assets. This
system was not entirely in place during 1993, as the Bank's performance was
still strongly impacted by losses related to the severe economic downturn,
regulatory criticism and related matters. However the Committee believes that
the CEO base salary (and total compensation package) is in line with both the
goals of the Company discussed above and is in the top quartile of similarly
situated executive salaries. The Committee believes that such level of
compensation is acceptable based on the background, experience and
sophistication of the CEO, which is in line with the standards discussed above.
Based on this information, and providing no substantial change in the data, the
Committee would expect base salary increases for the CEO and executive officers
to be related primarily to changes in the cost of living, unless the survey
material suggests adjustments are in order.
Bonuses
Bonuses will be related to achievement of corporate and
individual goals, some of which will be established as part of the review
process and some of which will relate to the Company's strategic planning. The
goal of bonuses is to motivate the exceptional executive performances which
will be required in order for the Bank to achieve its strategic business
objectives, to monitor the achievement of these objectives, and to reward
extraordinary effort. The general pool available for bonuses will be
determined after review of the Company's profitability, and thereafter the
individual benchmarks will be reviewed. It is expected that bonuses will
constitute the primary cash compensation increases in the near term.
Long Term Compensation / Stock Options
The long-term plan will make awards based upon the achievement
of corporate and individual objectives which will enable the Bank to reach the
financial goals set forth in its Strategic Plan dated June 22, 1993. The
financial goals include the return to profitability, the attainment of specific
levels of return on equity and return on assets. The magnitude of awards under
the plan will be determined by increases in the value of the Bank's common
stock, thus increasing the plan participants' incentive to achieve the goals of
shareholders. It is the philosophy of the Committee to provide the potential
for long term incentives to all employees of the Bank.
21
<PAGE> 26
Stock Options will also be utilized to encourage executive
officers to have a stake in the Company, encourage them remain with the Company
and to align their interests more fully with those of the other stockholders.
Special Deduction Limit
Section 162 (m) of the Internal Revenue Code limits federal
income tax deductions for compensation paid after 1993 to the Company's Chief
Executive Officer and its four other most highly compensated officers to $1
Million per year per individual, but includes an exception for performance
based compensation that satisfies certain conditions. Because final
regulations have not yet been adopted interpreting Section 162 (m) the Company
has not taken steps to review its compensation programs in light of the new
provisions. It is the intent of the Company to retain the deduction for
compensation, to the extent possible. Based on the current level of
compensation to executives of the Company and the level contemplated for the
immediate future, it is believed that this limitation will not materially
affect the Company, except for some unforeseen circumstance.
22
<PAGE> 27
SHAREHOLDER RETURN GRAPH
The following line graph compares the total cumulative shareholder return on
the Corporation's common stock, based upon quarterly reinvestment of all
dividends, to the cumulative total returns of the Standard & Poors 500, and the
Montgomery Securities Southern Western Bank Monitor Southern California Proxy
Index of selected bank stocks. The graph assumes $100 invested on December 31,
1988, in the Corporation's common stock and each of the indices.
Source: Montgomery Securities Western Bank Monitor
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
CU BANCORP 100 130.56 84.89 47.96 31.17 62.35
S&P 500 100 131.59 127.49 166.17 178.81 196.75
SO. CALIF.
PROXY 100 134.71 106.73 99.79 91.84 100.61
</TABLE>
SOURCE: Montgomery Securities Western Bank Monitor
23
<PAGE> 28
INDEBTEDNESS OF MANAGEMENT
Some of the Company's directors and executive officers, as
well as their immediate family and associates, are customers of, and have had
banking transactions with, the Bank in the ordinary course of the Bank's
business, and the Bank expects to have limited such ordinary banking
transactions with such persons in the future. The Bank has adopted a policy
that it generally will not make new loans to Directors, with the exception of
loans fully secured by cash, and first mortgage loans for which there is a
binding commitment on the part of another party to purchase, prior to inception
of the loan. In the opinion of the management of the Bank and except as
provided below, all loans and commitments to lend included in such transactions
were made in compliance with applicable laws, and on substantially the same
terms, including interest rates and collateral, as those prevailing for
comparable transactions with other persons of similar credit worthiness, and
did not involve more than a normal risk of collectibility or present other
unfavorable features. Although the Bank does not have any limits on the
aggregate amount it would be willing to lend to directors and officers as a
group, loans to individual directors and officers must comply with the Bank's
respective lending policies and statutory lending limits, and prior approval of
the Board of Directors is required for these loans.
All related party loans were current as to principal and
interest payments as of December 31, 1993. In management's opinion, these
loans were made in the ordinary course of business at prevailing rates and
terms. There were no loans to executive officers at December 31, 1993 and
1992, or at any time during the years then ended.
In addition to the amounts noted above, at December 31, 1992,
the Bank had charged off loans, and a letter of credit totalling $1,300,000 and
$650,000 respectively, to a former director and another party.
During 1992 and 1993, the Bank initiated legal actions to
recover these amounts on which the obligors are a former director and another
unaffiliated person. In addition, the Bank sued certain former officers and
directors of the Bank in connection with this matter. While the Bank is
continuing to pursue the unaffiliated party, it has entered into a settlement
of the litigation with the former director and officers which resulted in
recovery of $766 thousand (some of which will be applied to legal costs in
collection and to accrued interest) during 1993. Another $325 thousand was
received during the first quarter of 1994. In addition, the settlement included
potential long term payments of up to an additional $500 thousand subject to
offset for certain payments. While this long term payment is secured by
certain collateral, because an unrelated financial institution holds a trust
deed and has commenced foreclosure proceedings on the underlying property, the
Bank considers this to be unsecured and there is no assurance that the full
amount will actually be recovered.
OTHER MATERIAL TRANSACTIONS
Except as set forth below, there are no other existing or
proposed material transactions between the Company and the Bank and any of the
Company's directors, executive officers, or beneficial owners of five percent
or more of the Common Stock, or the immediate family or associates of any of
the foregoing persons.
In 1993, prior to his election as a director of the Company,
Kenneth Bernstein entered into an agreement with the Bank to assist in
collection of a large charged off credit. In exchange for Mr. Bernstein's
assistance, the Bank agreed to pay him 50% of amounts recovered on such credit
(after deduction of legal fees). Although the Bank, with Mr. Bernstein's
assistance, located the debtor, the debtor subsequently filed bankruptcy and no
amounts have been recovered.
24
<PAGE> 29
REGULATORY AGREEMENT
In November 1993, the Bank was informed by the Office of the
Comptroller of the Currency ("OCC"), that the OCC had terminated the formal
written agreement (the "Agreement") with the OCC entered into in June 1992,
based upon the Bank's compliance with the provisions of the Agreement.
Under the terms of the Agreement, the Bank committed to take
certain actions, including the following: (i) ensure that the Bank has a
full-time and capable President and Chief Executive Officer with technical
competence experience and integrity; (ii) maintain Tier 1 Capital at least
equal to 10.5% of risk-weighted assets and 6% of adjusted total assets; (iii)
refrain from paying any dividends unless the Bank is in compliance with its
newly developed capital program and 12 U.S.C. Section Section 55 and 60 and has
received the prior written approval of the OCC; (iv) develop a variety of
programs, including programs designed to (A) provide effective Board
supervision; (B) improve the Bank's loan administration; (C) ensure the timely
identification of problem loans and other assets; and (D) eliminate the basis
of the criticism of assets criticized in the ROE or by the Bank's internal loan
review system; (v) review the adequacy of the Bank's "Allowance for Loan and
Lease Losses" at least quarterly and maintain adequate reserves in each
quarter; (vi) develop and implement a written real estate appraisal policy;
(vii) develop a strategic plan establishing objectives for, among other things,
the Bank's earnings, growth, liability structure and capital adequacy; (viii)
review, revise and implement a written liquidity, asset and liability
management policy; (ix) document and support management and director fees; (x)
correct each violation of law, rule or regulation cited in any Report of
Examination; and (xi) submit monthly written reports to the Board of Directors
and the OCC regarding compliance with the Agreement. The OCC released the Bank
from this Agreement in November 1993.
In November 1993, the Federal Reserve Bank of San Francisco
terminated a Memorandum of Understanding with the Company, originally entered
into in August, 1992. The MOU had required: 1) a plan to improve the financial
condition of CUB Bancorp and the Bank; 2) development of a formal policy
regarding the relationship of CU Bancorp and the Bank, with regard to
dividends, intercompany transactions tax allocation and management or service
fees; 3) a plan to assure that CU Bancorp has sufficient cash to pay its
expenses; 4) accurate and timely regulatory reporting; 5) prior approval of the
Federal Reserve Bank prior to the payment of dividends; 6) prior approval of
the Federal Reserve Bank prior to CU Bancorp incurring any debt and 7)
quarterly reporting regarding the condition of the Company and steps taken
regarding the Memorandum of Understanding. The termination of the MOU was
taken in recognition of the Company's compliance with these requirements.
PROPOSAL 2. APPROVAL OF THE 1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
EXISTING STOCK OPTION PLANS
The Company does not currently have any stock option plans
under which new options may be granted to non-employee directors of the
Company.
SUMMARY OF THE NEW STOCK OPTION PLAN
On April 27, 1994, the Board of Directors adopted and
approved, subject to shareholder approval, the CU Bancorp 1994 Non-Employee
Director Stock Option Plan (the "1994 Non-Employee Director Plan") (the
"Plan"). The Plan is being submitted for shareholder approval. Approval of
the Plan requires the affirmative vote of a majority of the shares
of the Company present, or represented, and entitled to vote at a duly held
meeting at which a quorum is present.
25
<PAGE> 30
The Plan is intended to provide a vehicle through
which the Company can reward directors for the risks of directorship, encourage
their continued service and encourage their stock ownership in the Company. The
following discussion summarizes the principal features of the Plan. This
description is qualified in its entirety by reference to the full text of the
Plan, copies of which are available for review at the Company's principal
office.
PURPOSE
The purpose of the Plan is to strengthen the Company
by providing to non-employee directors added incentives for high levels of
performance and to encourage stock ownership in the Company. The Plan seeks to
accomplish these goals by providing a means whereby such non-employee directors
of the Company may be given an opportunity to purchase, by way of option,
Common Stock of the Company. The Plan is also intended to enable the Company
and its subsidiaries to compete effectively for and retain the services of such
persons and to provide incentives for such persons to exert maximum efforts for
the success of the Company and its subsidiaries.
The Company intends that options issued under the
1994 Non-Employee Directors plan shall be Non-Qualified Stock Options.
ADMINISTRATION
The 1994 Non-Employee Director Plan will be
administered by a Committee, to the extent possible under applicable law. The
Committee will not have any discretion in the amount of options to be granted
to any party, the price of any option or the term and exercisability of any
option. Option grants shall be automatic as described herein and shall not be
variable by the Committee. Each member of a Committee shall be a disinterested
person as provided in Rule 16b-3(c)(2) promulgated pursuant to the Securities
Exchange Act of 1934, as amended. The Board of Directors or the Committee (as
the case shall be) shall have full power and authority in its discretion to
take any and all action required or permitted to be taken under the Plan.
SHARES RESERVED
The number of shares of Common Stock reserved for
issuance upon exercise of options granted under the 1994 Non-Employee Director
Plan is 200,000. If any option granted under the 1994 Plan shall for any
reason expire, be cancelled or otherwise terminate without having been
exercised in full, the shares not purchased under such option shall again
become available for the plan.
ELIGIBILITY
All non-employee directors of the Company are
eligible to participate in the 1994 Non-Employee Director Plan.
GRANTS, VESTING AND EXERCISE PRICE OF OPTIONS UNDER THE 1994 NON-EMPLOYEE
DIRECTOR PLAN
Under the 1994 Non-Employee Director Plan, the
non-employee directors of the Company are eligible to receive Non-Qualified
Stock Options. The 1994 Non-Employee Director Plan provides for the grant of
options to non-employee directors, without any action on the part of the
Committee, only upon the following terms and conditions:
(A) Each such person who is a director
of the Company on July 1, 1994 (the "Effective Date")
shall receive Non-Qualified Stock Options to acquire
5,000 shares of stock of the Company, subject to
26
<PAGE> 31
adjustment, on the Effective Date, and such options
shall be deemed to have been granted on the Effective
Date.
(B) Each such person who is a director
of the Company on the day following an Annual Meeting
of Shareholders in years commencing in 1995, shall
receive nonqualified options to acquire 5,000 shares
of stock of the Company, subject to adjustment,
provided that the person who is then the Chairman of
the Board shall receive additional nonqualified
options to acquire 2,500 shares of stock of the
Company, subject to adjustment; provided, however,
that in the event the shares available under the 1994
Non-Employee Director Plan are insufficient to make
any such grant, all grants made thereunder on such
date shall be prorated.
(C) None of the options will be
exercisable until the March 31 next following the
date of grant. Each option shall become exercisable
in the following four cumulative annual installments:
25% on the first March 31 following the date of the
grant; an additional 25% on the second March 31
following the date of the grant; an additional 25% on
the third March 31 following the date of the grant;
and the last 25% on the fourth March 31 following the
date of the grant. From time to time during each of
such installment periods, the option may be exercised
with respect to some or all of the shares allotted to
that period, and/or with respect to some or all of
the shares allotted to any prior period as to which
the option was not fully exercised. During the
remainder of the term of the option (if its term
extends beyond the end of the installment periods),
the option may be exercised from time to time with
respect to any shares then remaining subject to the
option.
(D) Subject to earlier termination as
provided elsewhere in the 1994 Non-Employee Director
Plan, each option shall expire ten (10) years from
the date the option was granted.
(E) The exercise price of each option
shall be equal to one hundred percent (100%) of the
fair market value of the stock subject to the option
on the date the option is granted, which shall be the
closing price for the stock of the Company on the
date of such grant or if the date of such grant is
not a trading day, the first immediately preceding
trading day. The closing price for any day shall be
the last reported sale price regular way or, in case
no such reported sale takes place on such date, the
average of the last reported bid and asked prices
regular way, in either case on the principal national
securities exchange registered under the 1934 Act on
which the stock of the Company is admitted to trading
or listed, or if not listed or admitted to trading on
any national securities ex change, the last sale
price of the stock of the Company on the National
Association of Securities Dealers National Market
System ("NMS") or, if not quoted in the NMS, the
average of the closing bid and asked prices of the
stock of the Company on the National Association of
Securities Dealers Automated Quotation System
("NASDAQ") or any comparable system, or if the stock
of the Company is not listed on NASDAQ or any
comparable system, the closing bid and asked prices
as furnished by any member of the National
Association of Securities Dealers, Inc. selected from
time to time by the Company for that purpose.
27
<PAGE> 32
The exercise price of Common Stock acquired
pursuant to an option shall be paid in cash or check payable to the order
of the Company at the time the option is exercised, in whole shares of
stock of the Company owned by the optionee having a fair market value on the
exercise date (determined by the Committee in accordance with any reasonable
evaluation method) equal to the option price of the shares being purchased, or
a combination of stock and cash or check payable to the order to the Company,
equal in the aggregate to the option price of the shares being purchased.
ADJUSTMENTS UPON CHANGES IN STOCK
If the outstanding shares of the stock of the Company
are increased, decreased or changed into, or exchanged for a different number
or kind of shares or securities of the Company, without receipt of
consideration by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, an appropriate and proportionate adjustment shall be made in the
number and kind of shares as to which options may be granted. A corresponding
adjustment changing the number or kind of shares and the exercise price per
share allocated to unexercised options, or portions thereof, which shall have
been granted prior to any such change shall likewise be made. Any such
adjustment, however, in an outstanding option shall be made without change in
the total price application to the unexercised portion of the option but with a
corresponding adjustment in the price for each share subject to the option.
Adjustments under this section shall be made by the Committee whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final and conclusive. No fractional shares of stock shall be issued
under the Plan on account of any such adjustment.
EXPIRATION, TERMINATION AND TRANSFER OF OPTIONS
Each option granted under the 1994 Non-Employee
Director Plan shall, except as discussed below, expire ten (10) years from the
date of the grant. Except in the event of termination of directorship due to
death, or termination for cause, options will terminate twelve (12) months
after an employee optionee ceases to be a director of the Company, unless the
options by their terms were scheduled to terminate earlier. During that twelve
(12) month period after the non-employee director optionee ceases to serve as a
director of the Company, such options shall be exercisable only as to those
shares with respect to which installments, if any, had accrued as of the date
of which the optionee ceased to be a director of the Company or its
subsidiaries. If such termination was due to such optionees' optionee's death
while a director or in the twelve month period following termination of the
directorship, the option, by its terms, may be exercisable for one year after
death. If the non-employee director optionee is removed from the Board of
Directors of the Company for cause, the option terminates immediately on the
date of such removal. Removal for cause shall include removal of a director
who has been declared of unsound mind by an order of court or convicted of a
felony. An option by its terms may only be transferred by will or by laws of
descent and distribution upon the death of the optionee, shall not be
transferable during the optionee's lifetime, and shall be exercisable during
the lifetime of the person to whom the option is granted only by such person.
TERMINATION AND AMENDMENT OF THE PLANS
The Plan will terminate upon the occurrence of a
terminating event, including, but not limited to, liquidation, reorganization,
merger or consolidation of the Company with another corporation in which the
Company is not the surviving corporation or resulting corporation, or a sale of
substantially all the assets of the Company to another person, or a reverse
merger in which the Company is the surviving corporation but the shares of the
Company's stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property (a "Terminating Event"). The Board of
Directors or the Committee (as the case may be) shall notify each optionee not
less than thirty (30) days prior thereto of the pendency of a Terminating
Event. Upon delivery of such notice, any option outstanding shall be
exercisable in full and not only as to those shares with respect to which
installments, if any, have then
28
<PAGE> 33
accrued, subject, however, to earlier expiration or termination as provided
elsewhere in the Plan. The Board of Directors or the Committee (as the case
may be) may also suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate ten (10) years from the effective date, of
the Plan. No options may be granted under the Plan while the Plan is suspended
or after the Plan is terminated. Rights and obligations under any option
granted pursuant to the Plan, while in effect, shall not be altered or impaired
by suspension or termination of the Plan, except with the consent of the person
to whom the stock option was granted.
The Plan may be amended by the Board of Directors or
the Committee (as the case may be) at any time; however provisions (a) through
(e) of Section 4 of the 1994 Non-Employee Director Plan, summarized above (see
"Grants, Vesting and Exercise Price of Options Under the 1994 Non-Employee
Director Plan"), may not be amended more than once every six (6) months other
than to comport with changes to the Code, the Employee Retirement Income
Security Act or the regulations promulgated thereunder. However, except as
otherwise provided in the Plan relating to adjustments upon changes in stock
(e.g., stock splits or stock dividends), no amendment shall be effective unless
approved by the affirmative vote of a majority of the shares of the Company
present, or represented, and entitled to vote at a duly held meeting at which a
quorum is present or by the unanimous written consent of the holders of all
outstanding shares of the Company entitled to vote, if the amendment will: (a)
increase the number of shares reserved for options under the Plan; (b)
materially modify the requirements as to eligibility for participation in the
Plan; or (c) materially increase the benefits accruing to participants under
the Plan. Notwithstanding the foregoing, shareholder approval need not be
obtained to effect any such amendment if the Board of Directors or the
Committee (as the case may be) determines that such approval is not otherwise
required under applicable law and that the failure to obtain such approval will
not adversely affect the Plan under the Code.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is only a summary of the principal
federal income tax consequences of the options and rights to be granted under
the Plan, and is based on existing federal law (including administrative
regulations and rulings) which is subject to change, in some cases
retroactively. This discussion is also qualified by the particular
circumstances of individual optionees, which may substantially alter or modify
the federal income tax consequences herein discussed.
In the case of stock options which do not qualify as an
Incentive Stock Option (Non-Qualified Stock Options), no income generally is
recognized by the optionee at the time of the grant of the option. Under
present law the optionee generally will recognize ordinary income at the time
the Non-Qualified Stock Option is exercised equal to the aggregate fair market
value of the shares acquired less the option price. Ordinary income from a
Non-Qualified Stock Option will constitute compensation for which withholding
may be required under federal and state law.
Subject to special rules applicable when an optionee uses
stock of the Company to exercise an option, shares acquired upon exercise of a
Non-Qualified Stock Option will have a tax basis equal to their fair market
value on the exercise date or other relevant date on which ordinary income is
recognized and the holding period for the shares generally will begin on the
date of exercise or such other relevant date. Upon subsequent disposition of
the shares, the optionee generally will recognize capital gain or loss.
Provided the shares are held by the optionee for more than one year prior to
disposition, such gain or loss will be long-term capital gain or loss.
The Company will generally be entitled to a deduction equal to
the ordinary income (i.e., compensation) portion of the gain recognized by the
optionee in connection with the exercise of a Non-Qualified Stock Option
provided the Company complies with any withholding requirements of federal and
state law.
29
<PAGE> 34
GRANT OF OPTIONS
Grants under the 1994 Non-Employee Director Plan are
automatic as set forth above. On the Effective Date, each director then in
office shall receive options to purchase 5,000 shares of the Company's common
stock.
Shareholders are being asked to approve the 1994
Non-Employee Directors Plan. Approval of the Plan requires the affirmative
vote of a majority of the shares of the Company present, or represented, and
entitled to vote at a duly held meeting at which a quorum is present. Each
plan will be considered and voted on separately.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" APPROVAL OF THE 1994 NON-EMPLOYEE DIRECTOR PLAN.
30
<PAGE> 35
INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors of the
Corporation selected Arthur Andersen & Co. to serve as independent accountants
of the Corporation for its fiscal year ending December 31, 1993 and 1994.
Arthur Andersen & Co. has no direct or material financial interest in the
Corporation. Arthur Andersen & Co. has served as the Corporation's independent
accountants for more than five years prior to this date. A representative of
Arthur Andersen & Co. is expected to attend the 1994 Annual Meeting of
Shareholders, with the opportunity to make a statement and respond to
appropriate questions.
31
<PAGE> 36
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for
action at the 1995 Annual Meeting of Shareholders which is desired to be
presented in the Company's Proxy Statement with respect to such meeting, should
submit such proposal to the Company at its principal place of business no later
than December 15, 1994, which is 120 days prior to the anticipated mailing date
of the proxy materials for the 1995 Annual Meeting.
OTHER MATTERS
Management is not aware of any other matters to come
before the Meeting. If any other matter not mentioned in this Proxy Statement
is brought before the Meeting, the persons named in the enclosed form of proxy
will have discretionary authority to vote all proxies with respect thereto in
accordance with their judgment.
THE COMPANY WILL SUPPLY TO SHAREHOLDERS WITHOUT COST,
UPON WRITTEN REQUEST, A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM
10-K INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBITS TO THE FORM 10-K WILL BE FURNISHED UPON PAYMENT OF REASONABLE CHARGES.
WRITTEN REQUESTS SHOULD BE DIRECTED TO PATRICK HARTMAN, CHIEF FINANCIAL
OFFICER, CU BANCORP, 16030 VENTURA BOULEVARD, ENCINO, CALIFORNIA 91436.
CU Bancorp
Paul Glass, Chairman of the Board
Dated: ________________, 1994
Encino, California
32
<PAGE> 37
PROXY
CU BANCORP
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Stephen G. Carpenter, Ronald Parker
and Paul Glass, as proxies, each with the power to appoint his substitute, and
authorizes them to represent and to vote as designated below, all the shares of
common stock of CU Bancorp held of record by the undersigned as of May 18,
1994, at the 1994 Annual Meeting of Shareholders of CU Bancorp (the "Meeting")
to be held on June 30, 1994, and any adjournment thereof.
1. TO ELECT AS DIRECTORS THE NOMINEES SET FORTH BELOW:
<TABLE>
<S> <C>
/ / FOR ALL NOMINEES LISTED / / WITHHOLD AUTHORITY
(except as marked to the contrary). Discretionary TO VOTE FOR ALL NOMINEES.
authority to cumulate votes is granted.
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, CROSS OUT THE NOMINEE'S NAME).
KENNETH BERNSTEIN, STEPHEN G. CARPENTER, RICHARD H. CLOSE, PAUL W. GLASS,
M. DAVID NATHANSON, RONALD S. PARKER AND DAVID I. RAINER.
2. TO APPROVE THE 1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(REVERSE OF CARD)
33
<PAGE> 38
THE UNDERSIGNED HEREBY RATIFIES AND CONFIRMS ALL THAT SAID
PROXIES, OR ANY OF THEM, OR THEIR SUBSTITUTES, SHALL LAWFULLY DO OR CAUSE TO BE
DONE BY VIRTUE HEREOF, AND HEREBY REVOKES ANY AND ALL PROXIES HERETOFORE GIVEN
BY THE UNDERSIGNED TO VOTE AT THE MEETING. THE UNDERSIGNED ACKNOWLEDGES RECEIPT
OF THE NOTICE OF THE MEETING AND THE PROXY STATEMENT ACCOMPANYING SAID NOTICE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
__________________________________
NUMBER OF SHARES DATED: ________________________, 1994
_____________________________________
(SIGNATURE OF SHAREHOLDER(S)
_____________________________________
(SIGNATURE OF SHAREHOLDER(S)
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
34
