<PAGE> 1
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:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CU BANCORP
................................................................................
(Name of Registrant as Specified In Its Charter)
ANITA Y. WOLMAN, ESQ.
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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:
.............................................................................
(5) Total fee paid:
.............................................................................
[x] Fee paid previously with preliminary materials
[ ] 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 of Registration Statement No.:
.......................................................................
3) Filing Party:
.......................................................................
4) Date Filed:
.......................................................................
<PAGE> 2
[LOGO]
May 23, 1995
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 Hilton Hotel, 6360 Canoga Avenue, Woodland Hills, California on
Thursday, June 29, 1995 at 8:30 a.m. PLEASE NOTE THE NEW LOCATION.
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 1995 CU Bancorp-Restricted Stock 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.
/s/ PAUL W. GLASS
Paul W. 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 Hilton Hotel, 6360 Canoga Avenue,
Woodland Hills, California on Thursday, June 29, 1995 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 L. Bernstein
Stephen G. Carpenter
Richard H. Close
Paul W. Glass
David Nathanson
Ronald S. Parker
David I. Rainer
2. TO APPROVE THE CU BANCORP 1995 RESTRICTED STOCK 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 8, 1995
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 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
<PAGE> 4
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.
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
/s/ Richard H. Close
-----------------------------------
Richard H. Close
Secretary
Dated: May 23, 1995
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 Hilton Hotel, 6360 Canoga Avenue, Woodland Hills, California on
Thursday, June 29, 1995 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 23, 1995.
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 $5,000. 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 8, 1995 ("Record Date") will be entitled to notice of
and to vote at the Meeting. As of the Record Date, the Company had 4,602,342
shares of Common Stock outstanding.
All Common Stock figures throughout this Proxy Statement have been
adjusted to reflect stock splits and dividends.
1
<PAGE> 6
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 March 31,
1995 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
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER RELATIONSHIP WITH COMPANY OWNERSHIP(2)(3)(4) CLASS(1)
------------------------ ------------------------- ------------------ ----------
<S> <C> <C> <C>
Kenneth L. Bernstein Director, Nominee 29,114 .63%
Stephen G. Carpenter Director, Nominee, President, 72,953 1.56
Chief Executive Officer
Richard H. Close Director, Nominee 116,486 2.52
Paul W. Glass Chairman, Director Nominee 100,653(5) 2.17
M. David Nathanson Director 97,145 2.10
Ronald S. Parker Director, Nominee 7,250 .15
David I. Rainer Director, Nominee, Chief 68,558 1.47
Operating Officer
Dimensional Fund Advisors Inc. Beneficial Owner of More Than 240,396(10) 5.22
5%
ALL CURRENT EXECUTIVE OFFICERS 491,636(7) 10.72
AND DIRECTORS AS A GROUP (8 IN
NUMBER)(6)(9)
------------------------------------------------------------------------------------
</TABLE>
(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
options which are exercisable within 60 days.
<TABLE>
<CAPTION>
Director Options Exercisable Warrants Exercisable
-------- ------------------- --------------------
<S> <C> <C>
Bernstein 1,250 0
Carpenter 67,453 0
Close 16,370 0
Glass 16,995 0
Parker 1,250 0
Nathanson 16,370 0
Rainer 50,749 0
</TABLE>
(4) Shares issuable pursuant to options which may be exercised within 60
days 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 27,461 shares held by the Glass, and Rosen Profit Sharing
Plan 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 189,936 shares subject to
options held by directors and officers which are exercisable within 60
days from March 31, 1995.
(8) The address of all listed individuals, with the exception of
Dimensional Fund Advisers, Inc. is c/o CU Bancorp, 16030 Ventura
Boulevard, Encino, California 91436. The address of Dimensional Fund
Advisers, Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica,
California 90401.
(9) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered
investment advisor is deemed to have beneficial ownership of 240,396
shares of CU Bancorp stock as of December 31, 1994, all of which
shares are held in portfolios of DFA Investment Dimensions Group,
Inc., a registered open-end investment company or in a series of the
DFA Investment Trust Company, a Delaware business trust, or the DFA
Group Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, of which Dimensional Fund Advisors,
Inc. serves as an investment manager. Dimensional disclaims
beneficial ownership of all such shares.
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.
4
<PAGE> 9
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.
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITION AND OFFICE DIRECTOR OF COMPANY
------------------- ------------------- -------------------
WITH THE COMPANY WITH THE BANK AND BANK SINCE:
---------------- ------------- ---------------
NAME AGE
---- ---
<S> <C> <C> <C> <C>
Kenneth L. Bernstein 52 Director Director 1994
Stephen G. Carpenter 55 Director, Chairman, Chief 1992
President, Chief Executive Officer
Executive Officer
Richard H. Close 50 Director, Secretary Director, Secretary 1981
Paul W. Glass 49 Chairman Director 1984
M. David Nathanson 65 Director Director 1981
Ronald S. Parker 50 Director Director 1993
David I. Rainer 38 Director, Chief Director, 1992
Operating Officer President, 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.
5
<PAGE> 10
Set forth below are brief summaries of the background and business
experience, including principal occupation, of the director nominees.
KENNETH L. BERNSTEIN, was elected to the Board of the Company and the
Bank in December 1993, and assumed the positions in February 1994. He is the
President of BFC Financial Corporation and has served in such capacity since
1965. BFC Financial Corporation performs a variety of service for both the
finance industry and clients of that industry.
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,
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.
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. Mr. Parker
resigned from the Board in December 1993. He was reappointed in 1994.
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.
6
<PAGE> 11
COMMITTEES OF THE BOARD OF DIRECTORS; DIRECTOR ATTENDANCE
The Board of Directors maintains the following committees, which
perform the functions and were comprised during 1994 of the members listed
below:
<TABLE>
<CAPTION>
NAME FUNCTIONS / NUMBER OF MEETINGS MEMBERS
---- ------------------------------ ---------------
<S> <C> <C>
Audit Committee Monitors significant accounting policies; Glass (Chair)
approves services rendered by the auditors; Close
reviews audit and management reports;
makes recommendations regarding the
appointment of independent auditors
and the fees payable for their services.
Met seven times during 1994.
Compensation Determines compensation of executive Glass
Committee officers. Met at least 4 times during 1994. Parker
See page 19 herein.
</TABLE>
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 1994, the Company's Board of Directors held 12 regularly
scheduled meetings and 28 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 THE OFFICES WITH OFFICER
NAME AGE COMPANY THE BANK SINCE
---- --- ------- --------- -----
<S> <C> <C> <C> <C>
STEPHEN G. CARPENTER 55 Director, Chief Chairman, Chief 1992
Executive Officer Executive Officer
DAVID I. RAINER 38 Director, Chief Director, President, 1992
Operating Officer Chief Operating
Officer
ANNE WILLIAMS 37 Chief Credit Officer Chief Credit Officer 1992
PATRICK HARTMAN 45 Chief Financial Chief Financial 1992
Officer Officer
</TABLE>
7
<PAGE> 12
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.
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, 1994 (the "Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Awards
Name and Principal Position Year Salary Bonus Other Annual Options LTIP All Other
--------------------------- ---- ------ ----- ------------ ------- ---- ---------
Compensation / Sar's Payouts Compensation
------------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen G. Carpenter - Chief 1992 $144,872 $50,000(3) $ 7,000(2) 74,000 0 0
Executive Officer / Chief 1993 $250,000 $50,000(3) $12,000(2) 25,000 $1,882(5)
Executive Officer - 1994 $256,250 $50,000 $13,440(2) 100,000 $2,250(5)
California United Bank
David I. Rainer - Chief 1992 $108,333 $ 50,000 $ 5,000(2) 55,000 0 0
Operating Officer / President 1993 $200,000 $100,000 $12,000(2) 25,000 $3,000(5)
and Chief Operating Officer - 1994 $205,000 $ 50,000 $12,330(2) 75,000 $2,250(5)
California United Bank
Patrick Hartman - Senior Vice 1993 $138,000 $ 0 $ 8,450(2) 20,000 0 0
President Chief Financial 1994 $140,021 $13,000 $ 8,653(2) 10,000 0
Officer / Chief Financial
Officer - California United
Bank
Anne Williams- Executive Vice 1993 $103,400 $25,000 $ 7,800(2) 5,000 0 $1,439(5)
President Chief Credit 1994 $124,000 $15,000 $ 8,092(2) 10,000 $2,085(5)
Officer / Chief Credit
Officer - California United
Bank
</TABLE>
(1) The Company provides memberships in certain clubs for certain
executives, the use of which primarily relates to Company business.
The value of the personal use, if any, of all such benefits cannot
be specifically determined and is not reported in the table.
(2) Consists of amounts paid for automobile allowances and term life
insurance.
(3) These amounts were signing bonuses, as more fully discussed herein in
the section entitled "Other Compensation".
(4) One half of this amount was a signing bonus, see above. The remainder
was a merit bonus.
(5) Consists of the Company's matching portion of 401-K Plan
contributions.
8
<PAGE> 13
STOCK OPTIONS
The table on the following page contains information concerning the grant of
stock options during the fiscal year ended December 31, 1994 to the Named
Executives:
OPTION / SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES
OF STOCK PRICE
APPRECIATION FOR
THE OPTION TERM
Name OPTIONS/SARS % OF TOTAL EXERCISE OR EXPIRATION 5%($) 10%($)
GRANTED OPTIONS/SARS GRANTED BASE PRICE DATE
# (1)(2)(3)(4) TO EMPLOYEES IN FISCAL ($ / SH)
YEAR
<S> <C> <C> <C> <C> <C> <C>
Stephen Carpenter 100,000 36.45% $6.625 3/29/04 $416,642.69 $1,055,854.38
David Rainer 75,000 28.09% $6.625 3/29/04 $312,482.02 $ 791,890.78
Patrick Hartman 10,000 3.75% $6.625 3/29/04 $ 41,664.27 $ 105,585.44
Anne Williams 10,000 3.75% $6.625 3/29/04 $ 41,664.27 $ 105,585.44
</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 March 31, 1995 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, 1994. These amounts represent
certain assumed rates of appreciation only. Actual 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, 1985, or 1993 Stock Option Plans.
No options were exercised during 1994 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 1994.
9
<PAGE> 14
AGGREGATED FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Options at 12/31/94 ` Value of Unexercised
-----------------------------------------
In-the-money Options
at 12/31/94
-----------
Name Exercisable / Unexercisable Exercisable / Unexercisable
---- --------------------------- ---------------------------
<S> <C> <C>
S. Carpenter 39,600 / 159,400 $66,850 / $112,775
D. Rainer 31,429 / 123,571 $55,111 / $ 92,044
Patrick Hartman 3,999 / 26,001 $ 750 / $ 5,000
Anne Williams 7,000 / 23,000 $12,375 / $ 20,750
</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 / GOLDEN PARACHUTES
Mr. Carpenter and Mr. Rainer do not have employment contracts,
However, 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 and Mr. Rainer will each be
entitled to any accrued but unpaid bonus at that time. Additionally, in the
event of a Change of Control, if a position commensurate with either of their
current positions with the Bank is not offered and either elects to resign, the
Bank will pay the resigning party, 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 of 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
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<PAGE> 15
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 regular monthly board meeting; and (ii) $200 per
committee meeting (for committees for which they are members). During 1994,
director compensation ranged from $22,600 at the highest to $15,600 at the
least, for the entire year, and totalled $130,200 in the aggregate for the
year 1994.
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 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
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<PAGE> 16
approved the purchase of the capital note. The purchase price of each warrant
to purchase 30,006 shares was $750. As of March 31, 1995, all of the warrants
had been exercised and there are no warrants outstanding.
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 provided for the issuance of both "incentive stock 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 was 400,075. As of April 1, 1995, 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
March 31, 1995, there were 248,440 shares subject to outstanding options,
62,828 shares had been issued upon exercise of options, and 38,732 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
12
<PAGE> 17
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 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 to be first exercisable 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".
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. There were 400,000 shares reserved for
option issuances under the 1993 Plan. At March 31, 1995 options for 262,000
shares had been granted under the 1993 Plan, there were 258,000 shares
outstanding under the 1993 Plan and there were 142,000 shares available for
grant under the 1993 Plan. All full time employees of the Company and its
subsidiary are eligible to participate.
The 1993 Plan supplements the Company's other stock option plans and
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.
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
13
<PAGE> 18
required or permitted to be taken under the 1993 Plan. At the present time
the Compensation Committee serves as the Stock Option Committee.
GRANTS, VESTING AND EXERCISE PRICE OF OPTIONS UNDER THE 1993 EMPLOYEE PLAN
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 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
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
14
<PAGE> 19
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 optionee's 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.
1994 NON EMPLOYEE DIRECTOR 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"), which was approved
by the shareholders of the Company at the 1994 Annual Meeting of Shareholders.
200,000 shares were reserved for options under the 1994 Non-Employee Director
Plan. All non-employee directors of the Company are eligible to participate in
the 1994 Non-Employee Director Plan.
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
15
<PAGE> 20
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.
The Company intends that options issued under the 1994 Non-Employee
Directors plan shall be Non-Qualified Stock Options.
The 1994 Non-Employee Director Plan is 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.
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 was a director of the Company on July 1,
1994 (the "Effective Date") received Non-Qualified Stock Options to acquire
5,000 shares of stock of the Company, subject to adjustment, on the Effective
Date, and such options shall be deemed to have been granted on the Effective
Date. The Chairman of the Board on the Effective Date received options to
purchase an additional 2,500 shares of the Company's Common Stock.
(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 non-qualified 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
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<PAGE> 21
the stock of the Company is admitted to trading or listed, or if not listed or
admitted to trading on any national securities exchange, 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.
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
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 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 PLAN
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
17
<PAGE> 22
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 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.
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 CU Bancorp 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 22, 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 three 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 three 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.
18
<PAGE> 23
RECRUITMENT OF MANAGEMENT PERSONNEL
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 talent available at all
levels, to position the Company to take advantage of growth, strategic
acquisition 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 objectives.
BASE SALARY
The Committee believes it has in place a performance-driven executive
incentive plan to reflect the philosophy set forth above, in tandem with an
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 or reviewed 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 part, in the strategic plan of the Company, and include the
attainment of specific levels or return on equity and return on assets which
are for future periods. While the Company may not have reached all the specific
levels targeted for future performance, 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 and changes in duties or
responsibilities, 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
19
<PAGE> 24
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.
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.
20
<PAGE> 25
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 Western Bank Monitor Southern California Proxy Index of
selected bank stocks. The graph assumes $100 invested on December 31, 1989, in
the Corporation's common stock and each of the indices.
[GRAPH]
Source: Montgomery Securities Western Bank Monitor
The following table sets forth the data points for the performance graph.
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CU BANCORP
100 65.12 36.18 23.93 47.86 49.70
S&P 500 100 93.44 118.02 123.29 131.99 129.96
SO. CALIF. 100 87.13 72.95 71.41 84.59 95.48
PROXY
</TABLE>
SOURCE: Montgomery Securities Western Bank Monitor
21
<PAGE> 26
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. 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.
There were no loans to directors, executive officers or their
immediate family or associates as of December 31, 1994.
During 1992, the Bank charged off loans, and a letter of credit
totalling $1,300,000 and $650,000 respectively, to a former director and
another party. As a result of Bank initiated legal actions against the
obligors and certain former officers and directors of the Bank settlements were
entered into which resulted in recovery of approximately $1.1 Million. In
addition, the settlement included potential long term payments of additional
amounts, which have not yet commenced. The Collateral for this long term
obligation which was not given specific value by the Bank, has been
substantially diminished or extinguished by the exercise of foreclosure powers
under a deed of trust by an unaffiliated financial institution. The Bank has
charged off all amounts related to these transactions and there is no assurance
of further recovery.
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.
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.
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 termination of the MOU was taken in recognition of the
Company's compliance with these requirements.
22
<PAGE> 27
PROPOSAL 2. APPROVAL OF THE CU BANCORP 1995 RESTRICTED STOCK PLAN
EXISTING RESTRICTED STOCK PLANS
The Company does not currently have any restricted stock or restricted
stock plans.
SUMMARY OF THE RESTRICTED STOCK PLAN
On March 28, 1995, the Board of Directors adopted and approved,
subject to shareholder approval, the CU Bancorp 1995 Restricted Stock 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.
The Plan is intended to provide a vehicle through which the Company
can reward employees for their past service and encourage their continued
service and 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.
Restricted Stock is common stock issued by the Company, subject to
restrictions on sale or transfer (more fully described below) which continue
until such time as may be specified in the Plan or the granting documents. An
employee holding Restricted Stock is entitled to receive cash dividends when
and as declared, and to vote the shares. At such time as the conditions set
forth in the Plan or the granting documents are satisfied, the restrictions
lapse. The primary conditions set forth in the Plan are the lapse of time and
continued employment by the Company. If the employee's employment is
terminated before the restrictions lapse, or if any conditions are not
fulfilled, the restricted stock ( or that portion of it as to which the
restrictions have not lapsed) must be returned to the Company.
PURPOSE
The purpose of the Plan is to strengthen the Company by providing to
employees 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 employee of the Company may be given an
opportunity to benefit from increase of stock value and growth in the value of
the Common Stock of the Company without the necessity of additional payment to
realize the benefits of the stock. 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.
ADMINISTRATION
The Plan will be administered by a Committee, to the extent possible
under applicable law. The Committee will have discretion in the amount of
shares to be granted to any party, the restrictions applicable to the shares
and other matters under the Plan. 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 under the
Plan is 75,000. If any an employee is required under the terms of the Plan to
return the Restricted Shares to the Company (or if such shares automatically
are cancelled ), such shares shall again become available for the Plan.
23
<PAGE> 28
ELIGIBILITY
All employees of the Company are eligible to participate in the Plan.
GRANTS, VESTING AND RESTRICTIONS UNDER THE RESTRICTED STOCK PLAN
Under the Plan, the employees of the Company are eligible to receive
Restricted Stock. The Committee will determine which employees and the amount
of Restricted Stock to be granted to each. Subject to the rights of the
Committee to vary the restrictions under the Plan, each grant shall conform to
the following:
Restrictions with regard to 25% shall expire and terminated upon the
second anniversary of the grant. Thereafter restrictions shall expire and
terminate as to an additional 25% of such award on each anniversary of the
grant thereof.
If a Participant ceases to be an employee of the Company (for any
reason other than death disability or retirement (as defined in the Company's
401-K Plan) prior to the expiration and termination of any restrictions on a
grant of Restricted Stock, such Restricted Stock shall be automatically
forfeited and returned to the Company. In the event of death, retirement or
disability of an employee then any Restricted Shares shall become free and
clear of any restrictions and all restrictions shall automatically expire and
terminate. In the event that a Participant elects to retire before the normal
retirement age (as defined in the Company's 401-K Plan) the Committee, in its
discretion, shall determine whether all or any portion of the Restricted Stock
then owned by such Participant shall be forfeited or become free of such
restrictions.
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 of
Restricted Stock available under the Plan or previously granted. 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.
TRANSFER OF RESTRICTED STOCK
Restricted Stock by its terms may only be transferred by will or by
laws of descent and distribution upon the death of the optionee, and shall not
be transferable during the optionee's lifetime.
TERMINATION AND AMENDMENT OF THE PLAN
The restrictions on the common stock issued pursuant to the Plan will
terminate upon the occurrence of a terminating event, including, but not
limited to, liquidation, reorganization, merger or consolidation of the Company
(or its principal subsidiary) with another corporation in which the Company (or
its principal subsidiary) 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
or any other transaction in which more than 50% of the ownership of the
Corporation is transferred (a "Terminating Event"). The Board of Directors or
the Committee (as the case may be) may also suspend or terminate the Plan at
any time. No grants may be made under the Plan after the third anniversary of
the date of adoption of the Plan. Rights and obligations under any
Restricted Stock 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 Restricted Stock was granted.
24
<PAGE> 29
The Plan may be amended by the Board of Directors or the Committee (as
the case may be) at any time. 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 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
Participants, which may substantially alter or modify the federal income tax
consequences herein discussed.
During the period of restrictions, and as long as Restricted Stock
remains both nontransferable and subject to a substantial risk of forfeiture,
there are generally no tax consequences resulting from the award of Restricted
Stock for either the recipient or the Company. At such time as the Restricted
Stock either becomes transferable or is no longer subject to a substantial risk
of forfeiture, the recipient will recognize ordinary income in an amount equal
to the excess of the fair market value of the stock over the amount the
recipient paid for it, if any. However the recipient may elect, within 30 days
after receipt of the award of Restricted Stock, to report the fair market value
of the restricted stock subject to the award (valued as if it were
unrestricted) as ordinary income at the time of receipt.
The Company will receive a compensation deduction equal to the
ordinary income recognized by the recipient when so recognized. If such an
election is made and the restrictions on the stock fail to lapse for any
reason, the recipient will not be entitled to a deduction. For accounting
purposes, the company recognizes a compensation expense during the period of
vesting according the rules of FASB.
When stock that was formerly restricted stock is sold or otherwise
disposed of, the tax treatment will depend on whether the recipient made the
election described above. If the recipient did not make the election,
disposition of the stock will result in a long or short term capital gain or
loss, depending on the length of time from the date the restrictions lapsed to
the date of the sale or other disposition, in an amount equal to the difference
between the amount received on disposition and the greater of the amount the
recipient paid for the stock or the fair market value of the stock on the date
the restrictions lapsed. If the recipient made the election, disposition of
the stock will result in a long or short term capital gain or loss, depending
on the length of time from the Award to the date of disposition, in an amount
equal to the difference between the amount received on disposition and the sum
of any amount paid by the recipient for the Restricted Stock, if any, and the
amount recognized by the recipient as ordinary income at the time of the Award.
If, as a result of a Terminating Event (see above) an employee's
Restricted Stock vests free of restrictions, the additional economic value
attributable to the acceleration, if any, may be deemed a "parachute payment"
if such value, when combined with all other payments resulting from the change
of control (if any), equals or exceeds 300% of the employee's average annual
taxable compensation over the five preceding calendar years. In such case, the
excess of the total parachute payment over such average annual taxable
compensation is subject to a 20% non deductible excise tax, in addition to any
income tax payable, the Company is not entitled to deduct the portion of the
parachute payment that is subject to such excise tax. In such an event or in
the event of changes
25
<PAGE> 30
in applicable law, if the aggregate compensation of the executive officer
would exceed such limit, the deductibility of awards of Restricted Stock cannot
be assured.
REQUIRED VOTE
Shareholders are being asked to approve the CU Bancorp 1995 Restricted
Stock 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). Under applicable
California law, an abstention will be counted in determining the presence of a
quorum and will have the same effect as a vote against the proposal and a
broker non vote will not be counted in determining the presence of a quorum and
will have no effect on the outcome of the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE CU BANCORP 1995
RESTRICTED STOCK PLAN. Proxies solicited by the Board of Directors will be
voted "FOR" unless a vote against the proposal or an abstention is specifically
indicated.
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 1995 Annual Meeting of Shareholders,
with the opportunity to make a statement and respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for action at the 1996
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, 1995, which is 120 days prior to the anticipated mailing date of
the proxy materials for the 1996 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
/s/ PAUL W. GLASS
Paul Glass, Chairman of the Board
Dated: May 23, 1995
Encino, California
26
<PAGE> 31
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 8, 1995, at the 1995
Annual Meeting of Shareholders of CU Bancorp (the "Meeting") to be held on June
29, 1995, 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). to vote for all nominees.
Discretionary authority to cumulate
votes is granted.
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee, cross
out the nominee's name.)
Kenneth L. Bernstein, Stephen G. Carpenter, Richard H. Close, Paul W. Glass,
M. David Nathanson, Ronald S. Parker and David I. Rainer.
2. TO APPROVE THE CU BANCORP 1995 RESTRICTED STOCK 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.
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.
Dated: , 1995
----------------- --------------
Number of
Shares
--------------------------
(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.
