<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NUMBER ONE
FORM 10-K
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1995.
OR
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
Commission file number 0-11008
C U BANCORP
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3657044
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
16030 VENTURA BOULEVARD
ENCINO, CALIFORNIA 91436
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (818) 907-9122
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 month (or for shorter periods that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 220.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K /x/
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of February 28, 1995: $ 53,134,221 Common Stock, no par value -
The number of shares outstanding of the issuer's classes of common stock as of
February 28, 1995: Common Stock no par value 5,285,333 shares
DOCUMENTS INCORPORATED BY REFERENCE
None
This document contains 20 pages.
1
<PAGE> 2
The undersigned hereby amends the following items, financial statements,
exhibits or other portions of its Annual Report on Form 10- K as set forth in
the pages attached hereto:
Form 10-K for the year ended December 31, 1995 is hereby amended to include Part
III, Items 10,11,12 and 13.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
CU BANCORP
(Registrant)
By: /s/ STEPHEN G. CARPENTER
---------------------------------------------------
Stephen G. Carpenter, Chief Executive Officer
By: /s/ PATRICK HARTMAN
---------------------------------------------------
Patrick Hartman, Chief Financial Officer
Date: April 25, 1996
2
<PAGE> 3
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information as of the April 8, 1996 with
respect to Director of the Company. See "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT" for information pertaining to stock ownership
of the directors.
<TABLE>
<CAPTION>
POSITION AND POSITION AND DIRECTOR OF
OFFICE WITH CU OFFICE WITH THE COMPANY AND
NAME AGE BANCORP BANK BANK SINCE:
- ---- --- -------------- --------------- -----------
<S> <C> <C> <C> <C>
Kenneth L. Bernstein 53 Director Director 1994
Stephen G. Carpenter 56 Chairman, Chief Chairman, Chief 1992
Executive Officer Executive Officer
Richard H. Close 51 Director, Secretary Director, Secretary 1981
Paul W. Glass 50 Director Director 1984
Ronald S. Parker 51 Director Director 1993
David I. Rainer 39 Director, President, Director, 1992
Chief Operating President, Chief
Officer Operating Officer
</TABLE>
None of the directors or officers of CU Bancorp or CU Bank were
selected pursuant to any arrangement or understanding other than with the
directors and officers of CU Bancorp and CU Bank acting in their capacities as
such. There are no family relationships between any two or more of the
directors, or officers and none serve as directors of any company required to
report under the Exchange Act, or any investment company registered under the
Investment Company Act of 1940, as amended.
Set forth below are brief summaries of the background and business
experience, including principal occupation, of the CU Board of Directors.
KENNETH L. BERNSTEIN, was elected to the Board of CU Bancorp and CU
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 services for both the
finance industry and clients of that industry.
STEPHEN G. CARPENTER, joined CU 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 additional role of Chairman of CU Bank in February, 1994 and
Chairman of CU Bancorp in 1995.
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
3
<PAGE> 4
Glass & Rosen, in Encino, California, since 1980.
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 CU Bank in
June 1992 and assumed the position of Chief Operating Officer in late 1992. He
assumed the additional title of President of CU Bank in February, 1994 and
President and Chief Operating Officer of CU Bancorp in 1994. He was elected to
the CU Board and Bank Board in 1993. 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 CU Bancorp or of CU Bank, no owner
of record or beneficially of more than five percent of any class of voting
securities of CU Bancorp or no associate of any such director, officer or
affiliate is a party adverse to CU Bancorp or CU Bank in any material pending
legal proceedings to which CU Bancorp or CU Bank is a party.
EXECUTIVE OFFICERS
Set forth below is certain information as of April 8, 1996 with respect
to each of the executive officers of CU Bancorp.
<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 56 Director, Chief Chairman, Chief 1992
Executive Officer Executive Officer
DAVID I. RAINER 39 Director, President, Director, President, 1992
Chief Operating Chief Operating
Officer Officer
PATRICK HARTMAN 45 Chief Financial Chief Financial 1992
Officer Officer
ANNE WILLIAMS 37 Chief Credit Officer Chief Credit Officer 1992
</TABLE>
Set forth below are brief summaries of the background and business
experience, including principal occupation, of the executive officers of CU
Bancorp who have not previously been discussed herein.
PATRICK HARTMAN has been employed by CU 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.
4
<PAGE> 5
ANNE WILLIAMS joined CU 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.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following information is furnished with respect to (i) the chief
executive officer of CU Bancorp and (ii) each of the other executive officers of
CU Bancorp (including officers of CU Bank who may be deemed to be executive
officers of CU Bancorp), who served as executive officers during 1995 and earned
over $100,000 (the "Named Executives").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
--------------------------------------------- -----------------------------------------------------
Award Payouts
-------------------------- -------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Position Year Salary Bonus Compensation Award(s) Options/SAR's Payouts Compensation
--------------------------- ---- ------ ----- ------------ ---------- ------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(4)
Stephen G. Carpenter - Chief 1993 $250,000 $ 50,000 $12,000(2) 0 25,000 0 $1,882(3)
Executive Officer / Chief 1994 $256,250 $ 50,000 $13,440(2) 100,000 $2,250(3)
Executive Officer - CU 1995 $263,937 $100,000(5) $14,250(2) 0 $2,250(3)
Bank(1)
David I. Rainer - Chief 1993 $200,000 $100,000 $12,000(2) 0 25,000 0 $3,000(3)
Operating Officer / 1994 $205,000 $ 50,000 $12,330(2) 0 75,000 $2,250(3)
President and Chief 1995 $211,150 $100,000(5) $12,330(2) 0 0 $2,250(3)
Operating Officer - CU Bank
(1)
Patrick Hartman - Senior 1993 $138,000 $ 0 $ 8,450(2) 0 20,000 0 0
Vice President Chief 1994 $140,021 $ 13,000 $ 8,653(2) 0 10,000 0
Financial Officer / Chief 1995 $143,452 $ 25,000(5) $ 8,668(2) $14,595 12,500 $ 450(3)
Financial Officer - CU Bank
Anne Williams- Executive 1993 $103,400 $ 25,000 $ 7,800(2) 0 5,000 0 $1,439(3)
Vice President Chief Credit 1994 $124,000 $ 15,000 $ 8,092(2) 0 10,000 $2,085(3)
Officer / Chief Credit 1995 $128,960 $ 37,500(5) $ 8,095(2) $14,595 12,500 $2,250(3)
Officer - CU Bank
</TABLE>
(1) CU Bancorp provides memberships in certain clubs for certain executives,
the use of which primarily relates to CU Bancorp 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.
5
<PAGE> 6
(3) Consists of CU Bancorp's matching portion of 401-K Plan contributions.
(4) Grants pursuant to CU Bancorp 1995 Restricted Stock Plan. 25% of any grant
of Restricted Stock vests at the second anniversary of the grant. At each
anniversary thereafter, an additional 25% of the grant becomes vested.
Dividends are payable on the Restricted Stock, at the amount and times
payable to all holders of CU Stock. The Restricted Stock does not have any
preferential or special dividend provisions. At December 31, 1995, 19,000
shares of Restricted Stock had been granted at an aggregate market value at
December 31, 1995 of $194,750 or $10.25 per share and at date of grant at
an aggregate market value of $185,000 or $9.73 per share. The holders named
in the table above at December 31, 1995, held an aggregate of 3000 shares
of Restricted Stock at an aggregate market value of $30,750 or $10.25 per
share or $15,375 for each of Mr. Hartman and Ms. Williams. The vesting of
the Restricted Stock is not subject to performance based conditions, other
than lapse of time and continued service.
(5) In addition, discretionary bonuses paid in 1995 with regard to services in
1994 of Messrs. Carpenter, Rainer, and Hartman and Ms. Williams were
$60,000, $60,000, $25,000 and $30,000, respectively.
6
<PAGE> 7
STOCK OPTIONS
The table on the following page contains information concerning the grant of
stock options during the fiscal year ended December 31, 1995 to the Named
Executives:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
INDIVIDUAL STOCK PRICE APPRECIATION FOR
GRANTS THE OPTION TERM
% OF TOTAL
OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
Name (1)(2)(3)(4) FISCAL YEAR ($ / SH) DATE 5% 10%
- ----------------- ------------ ------------ -------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Stephen Carpenter 0 0 -- -- -- --
David Rainer 0 0 -- -- -- --
Patrick Hartman 12,500 12.4% $7.125 2/28/05 $56,011 $141,943
Anne Williams 12,500 12.4% $7.125 2/28/05 $56,011 $141,943
</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 certain options shall vest fully
upon the occurrence of certain significant events that include
a merger or dissolution of CU Bancorp where CU Bancorp is not
the surviving corporation, or sale of substantially all CU
Bancorp's assets. As of April 8, 1996 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 CU 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 CU Bancorp are increased, decreased or changed into or
exchanged for, a different number or kind of shares or
securities of CU Bancorp, without receipt of consideration by
CU Bancorp, 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 CU Bancorp.
(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) 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 CU 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 CU
Stock underlying the option at December 31, 1995. These amounts
represent
7
<PAGE> 8
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 CU 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 CU Stock underlying the
options granted to the Named Executives during the year. Each
of the options was granted pursuant to CU Bancorp's 1985, or
1993 Plans.
No options were exercised during 1995 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 1995.
<TABLE>
<CAPTION>
AGGREGATED FISCAL YEAR END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/95 AT 12/31/95
--------------------------- ---------------------------
NAME EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
- --------------- --------------------------- ---------------------------
<S> <C> <C>
S. Carpenter 87,253 / 111,747 $409,142 / $466,983
D. Rainer 66,179 /88,821 $316,495 / $372,803
Patrick Hartman 10,499 / 32,001 $37,809 / $109,378
Anne Williams 13,500 / 29,000 $66,188 / $ 110,687
</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 CU Bank
or its parent company (including a change of more than 50% of the current
shareholders of CU Bancorp), Mr. Carpenter and Mr. Rainer will each be entitled
to any accrued but unpaid bonus at that time. THIS ARRANGEMENT WAS ENTERED INTO
IN 1992. Additionally, in the event of a Change of Control, if a position
commensurate with either of their current positions with CU Bank is not offered
and either elects to resign, CU Bank will pay the resigning party, subject to
non-disapproval by the regulators, 12 months' compensation.
During 1993, CU 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
CU 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 CU Bank concurrently with the sale of the mortgage
origination network, to be employed by the purchaser of the network.
8
<PAGE> 9
COMPENSATION OF DIRECTORS
Directors of CU Bancorp receive no compensation for attending meetings
of the CU Board. However, the directors of CU Bancorp also serve as directors of
CU Bank. CU Bank paid the sum of between $3,800 and $1,600 per month during 1995
to each director of CU Bank, depending on the number and type of meetings
attended by the director. The Director Compensation Plan ties director
compensation to board and committee meeting attendance and is also designed to
be substantially similar in total compensation to similar banking institutions.
Directors who are also salaried employees of CU 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 1995, director
compensation ranged from $23,400 at the highest to $22,000 at the least, for the
entire year, and totaled $100,400 in the aggregate for the year 1995. In
addition to attendance at Board and committee meetings, directors discharge
their responsibilities throughout the year by personal meetings and telephone
contact with CU Bancorp and CU Bank executive officers and others regarding the
business and affairs of CU Bancorp and CU Bank. Current Directors also
participate in the CU Bancorp 1994 Non-Employee Director Stock Option Plan as
more fully set forth below. The CU Board does not have a mandatory retirement
policy, nor are any retirement benefits paid.
ADDITIONAL DIRECTOR COMPENSATION
CU Bancorp has two director stock option plans, one of which has no
options available for grant. In addition, in the past, as more fully described
below, CU Bancorp has issued and sold warrants to purchase CU Stock to certain
directors.
1987 SPECIAL (DIRECTOR) STOCK OPTION PLAN
On October 20, 1987, the shareholders of CU Bancorp approved the 1987
Special Stock Option Plan ("Special Plan") for CU Bancorp's directors, to
encourage them to continue as directors, give them additional incentive as
directors and reward them for past services. This Special Plan was limited to
directors of CU Bancorp and CU Bank and provided for the issuance of 120,960
authorized but previously unissued shares of CU Stock. Only options which do not
qualify as "incentive stock options" ("Non- qualified 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 options, pursuant to the
Special Plan. Options terminate 90 days after a director ceases being a
director.
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
which was not less than fair market value on such date. The options have an
exercise period of ten years and are currently fully vested.
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 CU Stock previously owned by the optionee (to
the extent legally permissible), or (c) in a combination of CU Stock and cash.
The Special Plan also enables an optionee the possibility to satisfy tax
withholding amounts due upon exercise with shares of CU Stock rather than cash,
by either delivering already owned shares of CU Stock or withholding from the
shares of CU Stock to be issued upon exercise that number of shares which, based
on the value of the CU Stock, would satisfy the tax withholding amounts due.
Since CU Stock is listed on NASDAQ, the value of the CU Stock delivered as
payment
9
<PAGE> 10
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 CU Stock occurred.
Directors hold options under the Special Plan at December 31, 1995 as
follows:
<TABLE>
<CAPTION>
Number of Shares Termination
Director Number of Shares Exercisable Price Date
- -------- ---------------- ---------------- ----- -----------
<S> <C> <C> <C> <C>
Close 15,120 15,120 $5,791 10/20/97
Glass 15,120 15,120 $5,791 10/20/97
</TABLE>
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 CU Stock, over a ten-year period as compensation for the personal
guarantees of a capital note of CU Bancorp 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 CU Bancorp's additional asset growth, CU
Bancorp 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
CU Stock for the 60 days prior to April 2, 1984, the date on which First
Interstate Bank of California approved the purchase of the capital note. The
purchase price of each warrant to purchase 30,006 shares was $750. As of March
31, 1995, all of these warrants had been exercised and there are currently no
warrants from this program outstanding.
In January 1994, the CU Board 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 CU Bancorp,
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.
CU BANCORP 1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On April 27, 1994, the CU Board adopted and approved, subject to
shareholder approval, the 1994 Plan, which was approved by the shareholders of
CU Bancorp 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 CU Bancorp are eligible to participate in the 1994 Non-Employee
Director Plan. The following discussion summarizes the principal features of the
1994 Plan. This description is qualified in its entirety by reference to the
full text of the 1994 Plan, copies of which are available for review at CU
Bancorp's principal office.
The 1994 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 Exchange Act. The CU Board 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
10
<PAGE> 11
Plan. Options issued under the 1994 Plan are Non-Qualified Stock Options.
Under the 1994 Plan, non-employee directors of CU Bancorp on the date
of each annual meeting receives Non-Qualified Stock Options. The 1994 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: (i)
each person who was a director of CU Bancorp on July 1, 1994 received
Non-Qualified Stock Options to acquire 5,000 shares of CU stock. The Chairman of
the Board on July 1, 1994 received options to purchase an additional 2,500
shares of CU Stock; (ii) each person who is a director of CU Bancorp on the day
following an Annual Meeting of Shareholders after 1994 receives Non-Qualified
options to acquire 5,000 shares of CU Stock, provided that the person who is
then the Chairman of the Board receives options to purchase an additional 2,500
shares of CU Stock (in the event the shares available under the 1994 Plan are
insufficient to make any such grant, all grants made thereunder on such date
shall be prorated); (iii) none of the options will be exercisable until the
March 31 next following the date of grant. Each option becomes 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;
(iv) subject to earlier termination as provided elsewhere in the 1994 Plan, each
option shall expire ten (10) years from the date the option was granted or
twelve months following the termination of directorship (except for termination
for cause), whichever is first; and (v) 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.
The exercise price of CU Stock acquired pursuant to an option shall be
paid in cash, in whole shares of CU Stock 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, equal in the aggregate to
the option price of the shares being purchased.
The 1994 Plan will terminate upon the occurrence of a terminating
event, including, but not limited to, liquidation, reorganization, merger or
consolidation of CU Bancorp with another corporation in which CU Bancorp is not
the surviving corporation or resulting corporation, or a sale of substantially
all the assets of CU Bancorp to another person, or a reverse merger in which CU
Bancorp is the surviving corporation but the shares of CU Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property (a "Terminating Event"). The CU Board 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 1994
Plan. The CU Board or the Committee (as the case may be) may also suspend or
terminate the 1994 Plan at any time. Unless sooner terminated, the 1994 Plan
shall terminate ten (10) years from the effective date, of the 1994 Plan. No
options may be granted under the 1994 Plan while the 1994 Plan is suspended or
after the 1994 Plan is terminated. Rights and obligations under any option
granted pursuant to the 1994 Plan, while in effect, shall not be altered or
impaired by suspension or termination of the 1994 Plan, except with the consent
of the person to whom the stock option was granted.
11
<PAGE> 12
Directors hold options under the 1994 Plan at December 31, 1995 as
follows:
<TABLE>
<CAPTION>
Number of Shares Termination
Director Number of Shares Exercisable Price Date
- --------- ---------------- ---------------- ----- -----------
<S> <C> <C> <C> <C>
$6.25- 7/1/04-
Bernstein 10,000 1,250 $6.88 6/30/05
$6.25- 7/1/04-
Close 10,000 1,250 $6.88 6/30/05
$6.25- 7/1/04-
Glass 15,000 1,875 $6.88 6/30/05
$6.25- 7/1/04-
Parker 10,000 1,250 $6.88 6/30/05
</TABLE>
EMPLOYEE STOCK OPTION AND RESTRICTED STOCK PLANS
CU Bancorp has three stock option plans, pursuant to which options have
in the past been granted to employees. Two of the plans have terminated and no
further grants may be made pursuant to these plans, although options granted
under such plans continue to vest and are eligible to be exercised over the
period specified in the stock option agreements. Each of the plans is
substantially similar as to the material provisions thereof, as described below.
The three plans were adopted at intervals of two and eight years and were
designed to augment options available after substantial depletion of the prior
plan through grants and exercises of options.
1983 EMPLOYEE STOCK OPTION PLAN
In April 1983, CU Bancorp adopted the CU Bancorp 1983 Employee Stock
Option Plan ("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
Non-Qualified Stock Options. The number of shares of CU Stock reserved for
issuance under the 1983 Plan was 400,075. As of December 1, 1995, there were
49,030 shares subject to outstanding options under the 1983 Plan . 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 AND IN INDIVIDUAL STOCK OPTION AGREEMENTS. Options
are generally exercisable in equal increments over a five year period and are
outstanding for a total of ten years.
The exercise price of options under the 1983 Plan was equal to at least
100% of the fair market value of the CU 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 CU 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 CU Stock. The value
of the CU 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 CU Stock occurred.
Upon the occurrence of a terminating event, including, but not limited
to, liquidation, reorganization, merger or consolidation of CU Bancorp with
another corporation in which CU Bancorp is not the surviving corporation or
12
<PAGE> 13
resulting corporation, or a sale of substantially all the assets of CU Bancorp
to another person, or a reverse merger in which CU Bancorp is the surviving
corporation but the shares of CU Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property (a "Terminating
Event"), 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 1983 Plan.
The sole holder of options under the 1988 Plan is David Rainer,
Director and President of CU Bancorp who holds options to purchase 49,030
shares, of which 29,418 are currently exercisable at a purchase price of $5.00.
This option will expire in June 2002.
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 CU Bancorp 1985 Employee Stock Option Plan ("1985 Plan") which provides
for the issuance of Incentive Options or Non-Qualified Stock Options to full
time employees of CU Bancorp and its subsidiaries. The 1985 Plan provides for
the issuance of options to purchase 350,000 shares of CU Stock. As of December
31, 1995, there were 243,250 shares subject to outstanding options, 62,828
shares had been issued upon exercise of options, and no shares were available
for future grants. The 1985 Plan expired during 1995, although options granted
pursuant to the 1995 Plan continue to be outstanding and options continue to be
exercisable pursuant to the provisions of the 1985 Plan and individual stock
option agreements.
The exercise price of options under the 1985 Plan is due in full upon
exercise and may be paid (a) in cash, (b) by delivering shares of CU 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 CU Stock. The value of the CU 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 CU
Stock occurred.
Upon the occurrence of a terminating event, including, but not limited
to, liquidation, reorganization, merger or consolidation of CU Bancorp with
another corporation in which CU Bancorp is not the surviving corporation or
resulting corporation, or a sale of substantially all the assets of CU Bancorp
to another person, or a reverse merger in which CU Bancorp is the surviving
corporation but the shares of CU Stock outstanding under the 1985 Plan
immediately preceding the merger are converted by virtue of the merger into
other property (a "Terminating Event"), any option outstanding under the 1985
Plan 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 1985 Plan.
13
<PAGE> 14
Information as to options granted pursuant to the 1985 Plan to
executive officers is contained in the section "Compensation of Directors and
Executive Officers". At December 31, 1995 the following options issued under the
1985 Plan were outstanding:
<TABLE>
<CAPTION>
Number of Shares
Director Number of Shares Exercisable Price Term
- ----------------- ---------------- ---------------- ----- ----
<S> <C> <C> <C> <C>
$4.88- 6/2/02-
Stephen Carpenter 99,000 54,000 $5.13 2/16/03
$6.00- 4/8/03-
Patrick Hartman 20,000 8,000 $6.88 8/4/03
$5.00- 6/16/02-
David Rainer 30,970 13,581 $6.88 4/8/03
$4.75- 8/31/02-
Anne Williams 20,000 11,000 $6.00 8/4/03
All employees as 8/90-
a group 243,250 139,690 $5.42* 4/8/03
* Average Price
</TABLE>
1993 EMPLOYEE STOCK OPTION PLAN
In October, 1993, the CU Board 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 December 31, 1995 options for 360,000 shares had been granted
under the 1993 Plan, there were 354,000 shares outstanding under the 1993 Plan
and there were 46,000 shares available for grant under the 1993 Plan. All full
time employees of CU Bancorp and its subsidiary are eligible to participate.
Options issued under the 1993 Plan shall, in the discretion of a
committee appointed by the CU Board (as described below), be either Incentive
Stock Options or options which do not qualify as incentive stock options
("Non-Qualified Stock Options").
The 1993 Plan is administered by a committee (the "Committee")
appointed by the CU Board, which shall consist of not less than two members of
the CU Board. Each member of the Committee shall be a disinterested person as
provided in Rule 16b-3(c)(2) promulgated pursuant to the Exchange Act. The
Committee shall have full power and authority in its discretion to take any and
all action required or permitted to be taken under the 1993 Plan. At the present
time the Compensation Committee serves as the Stock Option Committee.
Under the 1993 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 CU Bancorp) shall
14
<PAGE> 15
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 are exercisable within the first 12 months from the
date of the grant. Each option becomes 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 CU Stock acquired pursuant to an option granted
under the 1993 Plan shall be paid in cash, in whole shares of CU Stock owned by
the optionee having a fair market value on the exercise date equal to the option
price of the shares being purchased, or a combination of stock and cash.
Under the 1993 Plan, no option may extend more than ten (10) years from
the date of grant. Except in the event of termination of employment due to
death, disability or termination for cause, options will terminate three (3)
months after an employee optionee ceases to be employed by CU Bancorp or its
subsidiaries, unless the options by their terms were scheduled to terminate
earlier.
The 1993 Plan will terminate upon the occurrence of a terminating
event, including, but not limited to, liquidation, reorganization, merger or
consolidation of CU Bancorp with another corporation in which CU Bancorp is not
the surviving corporation or resulting corporation, or a sale of substantially
all the assets of CU Bancorp to another person, or a reverse merger in which CU
Bancorp is the surviving corporation but the shares of CU 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.
1995 RESTRICTED STOCK PLAN
In March 1995 the CU Board adopted, and the shareholders approved on
June 29, 1995, the CU Bancorp Restricted 1995 Stock Plan (the "1995 Restricted
Stock Plan"). During 1995, 19,000 shares in the aggregate of the 75,000 shares
subject to the 1995 Restricted Stock Plan were issued to 26 of CU Bank's
employees.
The only executive officers to receive Restricted Stock were Ms.
Williams and Mr. Hartman who each received 1,500 shares.
15
<PAGE> 16
The issuance of restricted stock is intended to provide a vehicle
through which CU Bancorp can reward employees for their past service and
encourage their continued service and their stock ownership in CU Bancorp.
Restricted Stock is common stock issued by CU Bancorp, subject to restrictions
on sale or transfer (more fully described below) which continue until such time
as may be specified in the 1995 Restricted Stock 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 1995 Restricted Stock Plan or the granting documents are satisfied,
the restrictions lapse. The primary conditions set forth in the 1995 Restricted
Stock Plan are the lapse of time and continued employment by or its
subsidiaries. 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
CU Bancorp.
The number of shares of CU Stock reserved for issuance under the 1995
Restricted Stock Plan is 75,000. All employees of CU Bancorp and its
subsidiaries are eligible to participate in the Plan.
Under the 1995 Restricted Stock Plan, the employees of CU Bancorp 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 1995 Restricted
Stock Plan, each grant shall conform to the following:
Restrictions with regard to 25% of any award shall expire and terminate
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.
The restrictions on the common stock issued pursuant to the 1995
Restricted Stock Plan will terminate upon the occurrence of a terminating event,
including, but not limited to, liquidation, reorganization, merger or
consolidation of CU Bancorp (or its principal subsidiary) with another
corporation in which CU Bancorp (or its principal subsidiary) is not the
surviving corporation or resulting corporation, or a sale of substantially all
the assets of CU Bancorp to another person, or a reverse merger in which CU
Bancorp is the surviving corporation but the shares of CU 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 CU Board or the
Committee (as the case may be) may also suspend or terminate the 1995 Restricted
Stock Plan at any time. No grants may be made under the 1995 Restricted Stock
Plan after the third anniversary of the date of adoption of the 1995 Restricted
Stock Plan. Rights and obligations under any Restricted Stock granted pursuant
to the 1995 Restricted Stock Plan, while in effect, shall not be altered or
impaired by suspension or termination of the 1995 Restricted Stock Plan, except
with the consent of the person to whom the Restricted Stock was granted.
16
<PAGE> 17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of the April 8,
1996 pertaining to beneficial ownership of CU Bancorp Common Stock ("CU Stock")
by persons known to CU Bancorp to own five percent or more of such stock,
current directors of CU Bancorp, and all directors and officers of CU Bancorp as
a group. The information contained herein has been obtained from CU Bancorp's
records, from information furnished directly by the individual or entity to CU
Bancorp, or from various filings made by the named individuals with the
Commission.
CU Bancorp 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 CU Bancorp, 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(1)(2)(3) CLASS(4)
------------------------ ------------------------- -------------------- ----------
<S> <C> <C> <C>
Kenneth L. Bernstein Director, Nominee 25,980 0.49
Stephen G. Carpenter Director, Nominee, President, 93,253 1.73
Chief Executive Officer
Richard H. Close Director, Nominee 118,913 2.24
Paul W. Glass Chairman, Director Nominee 100,653 1.89
Ronald S. Parker Director, Nominee 7,250 0.14
David I. Rainer Director, Nominee, Chief 66,179 1.27
Operating Officer
Anne Williams Chief Credit Officer 16,500 0.31
Patrick Hartman Chief Financial Officer 13,499 0.25
FBL Investment Advisory Beneficial Owner of More Than 5% 536,100 11.6
Services, Inc.
Dimensional Fund Advisors Inc.(6) Beneficial Owner of More Than 5% 262,796(6) 4.97
All directors and nominees as a
group (6 in number) Directors/Nominees 414,228 7.55
ALL CURRENT EXECUTIVE OFFICERS
AND DIRECTORS AS A GROUP
(8 IN NUMBER)(7)(8)(9) 447,227 8.00
- -------------------------------------- --------
</TABLE>
(1) 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.
17
<PAGE> 18
(2) Includes as if currently outstanding the following shares subject to
options which are exercisable within 60 days.
<TABLE>
<CAPTION>
OPTIONS
DIRECTOR EXERCISABLE
----------------- -----------
<S> <C>
Kenneth Bernstein 1,250
Stephen Carpenter 87,253
Richard Close 16,370
Paul Glass 16,995
Ronald Parker 1,250
David Rainer 66,179
Anne Williams 15,000
Patrick Hartman 11,999
</TABLE>
(3) 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.
(4) Only common stock is outstanding.
(5) FBL Investment Advisory Services, Inc. 5400 University Avenue, West Des
Moines, IA is an Investment Advisor registered under the Investment
Advisors Act of 1940 and was deemed to have beneficial ownership of
536,100 shares or (11.86%) of CU Stock as of December 31, 1995.
According to a Schedule 13-g, the shares are owned on behalf various
investment advisory clients of the reporting person which have the
right to receive or the power to direct the receipt of dividends from,
or the proceeds from a sale of such securities. None of such clients
individually own more than five percent except for FBL Series Fund,
Inc. - Growth Common Stock Portfolio, Md. Corp.; which through
ownership of 251,000 common shares had a pecuniary interest of 5.47 at
December 31, 1995.
(6) Dimensional Fund Advisors, Inc., a registered investment advisor is
deemed to have sole voting power over 203,356 shares and sole
dispositive power over 262,796 shares of CU Stock as of December 31,
1995. Persons who are officers of Dimensional Fund Advisors, Inc. also
serve as officers of DFA Investment Dimensions Group Inc. (the "Fund")
and The DFA Investment Trust Company (the "Trust") each an open-end
management investment company registered under the Investment Company
Act of 1940. In their capacities as officers of the Fund and the Trust,
these persons vote 38,000 additional shares which are owned by the Fund
and 21,440 shares which are owned by the Trust. All Securities are
owned by advisory clients of Dimensional Fund Advisors, Inc., no one to
the knowledge of DFA owns more than 5%. Dimensional Fund Advisors, Inc.
disclaims beneficial ownership of all such shares.
(7) The listing of individuals as executive officers in this table or
elsewhere in this Joint Proxy Statement/Prospectus should not be
interpreted as an indication that such individuals are considered to be
executive officers of CU Bancorp or CU Bank for any other purposes.
(8) Includes as if currently outstanding 216,296 shares subject to options
held by directors and executive officers which are exercisable within
60 days from the CU Record Date.
18
<PAGE> 19
(9) The address of all listed individuals, with the exception of
Dimensional Fund Advisers, Inc. and FBL Investment 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. The address of FBL Investment Advisory
Securities, Inc. is 5400 University Avenue, West Des Moines, IA.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INDEBTEDNESS OF MANAGEMENT
Some of CU Bancorp's directors and executive officers, as well as their
immediate family and associates, are customers of, and have had banking
transactions with, CU Bank in the ordinary course of CU Bank's business, and CU
Bank expects to have such limited ordinary banking transactions with such
persons in the future. CU 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 CU 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 CU
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 CU Bank's respective lending policies and statutory
lending limits, and prior approval of the CU Board is required for these loans.
There were no loans to directors, executive officers or their immediate
family or associates as of December 31, 1995.
OTHER MATERIAL TRANSACTIONS
Except as set forth below, there are no other existing or proposed
material transactions between CU Bancorp and CU Bank and any of CU Bancorp's
directors, executive officers, or beneficial owners of five percent or more of
CU Stock, or the immediate family or associates of any of the foregoing persons.
In 1993, prior to his election as a director of CU Bancorp, Kenneth
Bernstein entered into an agreement with CU Bank to assist in collection of a
large charged off credit. In exchange for Mr. Bernstein's assistance, CU Bank
agreed to pay him 50% of amounts recovered on such credit (after deduction of
legal fees). Although CU Bank, with Mr. Bernstein's assistance, located the
debtor, the debtor subsequently filed bankruptcy and no amounts have been
recovered.
REGULATORY AGREEMENTS
In November 1993, CU 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
CU 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 CU Bancorp, originally entered into In
August, 1992. The termination of the MOU was taken
19
<PAGE> 20
in recognition of CU Bancorp's compliance with these requirements.
20
