SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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SUN COMMUNITY BANCORP LIMITED
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number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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[LOGO]
April 12, 2001
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Sun Community Bancorp Limited to be held Friday, May 25, 2001 at 9:00 a.m.
Mountain Standard Non-Daylight Savings Time, at the Arizona Country Club, 5668
E. Orange Blossom Lane, Phoenix, Arizona.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. The meeting is for the purpose
of considering and acting upon the election of directors.
During the meeting, we will also report on Sun's operations. Directors and
officers of Sun will be present to respond to questions you may have.
Please sign, date and return the enclosed proxy card. If you attend the
meeting, you may withdraw your proxy and vote in person, even if you have
previously mailed a proxy card.
Sincerely,
/s/ Joseph D. Reid
JOSEPH D. REID
Chairman of the Board
and Chief Executive Officer
2777 E. Camelback Road
Suite 375
Phoenix, Arizona 85016
SUN COMMUNITY BANCORP LIMITED
2777 E. Camelback Road, Suite 375
Phoenix, Arizona 85016
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on Friday, May 25, 2001
The 2001 Annual Meeting of the Shareholders of Sun Community Bancorp
Limited will be held at the Arizona Country Club, 5668 E. Orange Blossom Lane,
Phoenix, Arizona, on Friday, May 25, 2001 at 9:00 a.m. Mountain Standard
Non-Daylight Savings Time.
A Proxy Card and a Proxy Statement for the meeting are enclosed.
The meeting is for the purpose of considering and acting upon:
1. The election of 11 directors of Sun to hold office for one year
and until their successors are elected and qualified; and
2. Such other matters as may properly come before the meeting or any
adjournments thereof.
The Board of Directors is not aware of any other business to come before
the meeting.
Action may be taken on the foregoing proposal at the meeting on the date
specified, or on any dates to which, by original or later adjournment, the
meeting may be adjourned. Shareholders of record at the close of business on
March 29, 2001, are entitled to vote at the meeting and any adjournments
thereof.
You are asked to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend the meeting, withdraw your
proxy and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Richard N. Flynn
RICHARD N. FLYNN
Secretary
Phoenix, Arizona
April 12, 2001
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE SUN THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. AN ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
SUN COMMUNITY BANCORP LIMITED
2777 E. Camelback Road, Suite 375
Phoenix, Arizona 85016
ANNUAL MEETING OF SHAREHOLDERS
May 25, 2001
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sun Community Bancorp Limited to be used at
Sun's 2001 Annual Meeting of Shareholders to be held at the Arizona Country
Club, 5668 E. Orange Blossom Lane, Phoenix, Arizona, on Friday, May 25, 2001 at
9:00 a.m. (Mountain Standard Non-Daylight Savings Time). The accompanying Notice
of Meeting and this Proxy Statement are being mailed to Shareholders on or about
April 12, 2001.
REVOCATION OF PROXIES
Shareholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of Sun or by the filing of a later proxy prior to a vote
being taken on a particular proposal at the meeting. A proxy will not be voted
if a particular Shareholder attends the meeting and revokes his or her proxy by
notifying the Secretary at the meeting of his or her intention to do so. Any
Shareholder who attends the meeting and revokes his/her proxy may vote in
person. Proxies solicited by Sun's Board of Directors will be voted according to
the directions given therein. Where no instructions are indicated, proxies will
be voted FOR the nominees for directors set forth below.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record as of the close of business on March 29, 2001 (the
record date), are entitled to one vote for each share then held. As of February
21, 2001, Sun had 5,809,317 shares of common stock issued and outstanding.
Directors are elected by a plurality and the eleven nominees who receive
the most votes will be elected. Abstentions and broker non-votes will not be
taken into account in determining the outcome of the election.
The following table sets forth, as of February 21, 2001, certain
information as to each person (including any group as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) who was known to be the
beneficial owner of more than 5% of Sun's common stock as of that date, and as
to the shares of common stock beneficially owned by named executives who are not
also directors and by all executive officers and directors of Sun as a group.
Name and Address of Shares of Percent of
Beneficial Owner Common Stock Common Stock
- ---------------- ------------ ------------
Capitol Bancorp Ltd. 2,815,521 48.47%
200 Washington Square North
Lansing, Michigan 48933
Joseph D. Reid 3,135,296 (a) 51.53%
Sun Community Bancorp Limited
2777 E. Camelback Road
Suite 375
Phoenix, Arizona 85016
David J. Dutton 21,000 (b) <1%
Executive Vice President
Gary W. Hickel 26,787 (c) <1%
President, Valley First Community Bank
All Directors and Executive 4,016,393 (d) 61.42%
Officers as a group (20 persons)
- ----------
(a) Includes 2,815,521 shares owned by Capitol Bancorp Ltd. of which he has the
authority to vote, and 334,012 options.
(b) Includes 21,000 options.
(c) Includes 17,000 options.
(d) Includes 2,815,521 shares owned by Capitol Bancorp Ltd. of which they have
the authority to vote, and 729,360 options.
1
ELECTION OF DIRECTORS
Sun's bylaws establish that the number of directors shall be not less than
five nor more than twenty-five.
The persons named in the enclosed proxy intend to vote for the nominees
named in this proxy statement unless it contains instructions to the contrary.
All nominees are willing to be elected and to serve in such capacity for one
year and until their successors are elected and qualified. If any of the
nominees becomes unavailable for election, which is not anticipated, the persons
named in the proxy will vote for such other nominee, if any, as may be proposed
by the Board of Directors. A majority of the common stock voting at the meeting
is required for the election of nominees to the Board of Directors.
Each of the nominees for election to the Board of Directors is currently a
member of Sun's Board of Directors and has been since the year shown in the
table below except for Mr. Miller.
The table below sets forth information as of February 21, 2001 regarding
the nominees based on the data furnished by them. They have held the principal
occupations shown for at least the past five years unless otherwise indicated.
The Board has nominated the eleven directors named below to serve terms as
directors of Sun until the next annual meeting. The election of the nominees
requires a plurality of the votes cast with a quorum present.
The Board of Directors recommends a vote FOR all the recommended nominees
for election as a director.
NOMINEES FOR ELECTION TO SERVE UNTIL THE ANNUAL MEETING OF SHAREHOLDERS IN 2002
Year First Shares of
Became A Common Stock Percent
Name and Principal Positions Age Director Owned (a) Outstanding
- ---------------------------- --- -------- --------- -----------
Joseph D. Reid
Chairman of the Board and Chief Executive 58 1996 3,135,296(b) 51.53%
Officer of Sun; Chairman of the Board,
President and CEO of Capitol Bancorp Limited
Michael L. Kasten
Managing Partner, Kasten Investments, 55 1996 117,903(c) 2.03%
LLC; Director and Vice Chairman of
Sun; Director of Capitol Bancorp Ltd.
Richard N. Flynn
Secretary and a director of Sun; President, 57 1996 80,779(d) 1.39%
Flynn & Associates (Corporate Consultant, Tax
Appeals)
John S. Lewis
Vice Chairman (formerly President) of Sun; 47 1999 198,135(e) 3.30%
President of Micro Age Integration Group from
1997- 1999; Chairman and CEO for Southwest
Region, First Interstate Bank
Michael J. Devine 59 1997 14,467(d) <1%
Attorney at Law
Michael F. Hannley
Executive Vice President and a director of Sun 52 1996 102,592(f) 1.74%
and President and CEO of Bank of Tucson since
1996; Senior Vice President and director of
professional banking and administration for
National Bank of Arizona from 1986-January 1996.
Richard F. Imwalle 51 2000 7,985 <1%
President, University of Arizona Foundation
2
Year First Shares of
Became A Common Stock Percent
Name and Principal Positions Age Director Owned (a) Outstanding
- ---------------------------- --- -------- --------- -----------
Humberto S. Lopez
President, HSL Properties, LLC 55 1996 186,802(d) 3.22%
Lyle Miller
President, SERVCO, Inc.; Director, Capitol
Bancorp Limited 57 (g) -0- N/A
Kathryn L. Munro
Partner, Tahoma Venture Fund since 1998; Bank
of America from 1980 to 1998 52 1999 5,357(h) <1%
Ronald K. Sable
CEO, Concord Solutions, LLC in 2000; Senior 59 1997 35,758(d) <1%
Vice President, The Aerospace Corporation
1997-1999; 1994-1997 Vice President, Space
Technology Applications
- ----------
(a) Includes all shares as to which the nominee has voting power and/or
investment power, including shares held by entities owned and controlled,
and shares held by children residing in the same household or jointly with
spouse.
(b) Includes 2,815,521 shares owned by Capitol Bancorp Ltd. and 275,194
options.
(c) Includes 17,558 options.
(d) Includes 8,779 options.
(e) Includes 192,635 options.
(f) Includes 85,646 options.
(g) First year standing for election to the Board of Directors.
(h) Includes 2,357 options.
Rules and regulations promulgated by the Securities and Exchange Commission
require periodic reporting of the beneficial ownership of and transactions
involving Sun's securities relating to directors, officers and beneficial owners
of 10% or more of Sun's securities. Under those rules and regulations, certain
acquisitions and divestitures of Sun's securities are required to be disclosed
via reports filed within prescribed time limits. Based on Sun's review of
filings made during the year ended December 31, 2000 there were fifteen
transactions which were not reported timely pursuant to the filing requirements.
Humberto S. Lopez purchased 15,600 shares in eleven transactions in
February 2000 which were not reported on original reports of holdings and should
have been reported thereon. Michael L. Kasten purchased 500 shares in August
1999, 1,934 shares in December 1999, and 225 shares in May 2000, which were not
reported on original reports of holdings for the months in which they occurred,
and should have been reported thereon. Richard F. Imwalle purchased 285 shares
in December 2000 which were not reported on original reports of holdings and
should have been reported thereon.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
and its committees. During 2000, the Board of Directors held four meetings. No
director of Sun attended fewer than 75% of the meetings of the Board of
Directors and committee meetings on which that Board member served during this
period.
Directors who are not employees of Sun or its subsidiaries are entitled to
receive a directors' fee of $750 per meeting for in-state directors and $1,050
for out-of-state directors. Members of Sun's Audit Committee and Compensation
Committee receive a fee of $200 for each committee meeting attended.
COMMITTEES OF THE BOARD OF DIRECTORS
Sun's Board of Directors has several committees, including an executive
committee, an audit committee and a compensation committee.
EXECUTIVE COMMITTEE
The Executive Committee is composed of Messrs. Reid, Lopez, and Kasten.
During 2000, the Executive Committee met four times. The Executive Committee
meets for the purpose of monitoring current operating strategy and
implementation of Sun's business plan.
3
REPORT OF AUDIT COMMITTEE
OVERVIEW
The Audit Committee is comprised of three directors, appointed by Sun's
Board of Directors. The Audit Committee reviews the results of the independent
auditors' audit of Sun's consolidated financial statements; evaluates policies,
procedures and results relating to the internal audit function; and recommends
to the Board of Directors the selection of independent auditors. The scope and
purpose of the Audit Committee is described more fully in its Audit Committee
Charter which was adopted in 2000 and is attached as an Appendix to this Proxy
Statement. During 2000, the Audit Committee met four times.
INDEPENDENCE OF AUDIT COMMITTEE MEMBERS
The composition of Sun's Audit Committee is in compliance with the current
independence requirements as set forth in the applicable listing standards and
related rules of the Nasdaq Stock Market. One Audit Committee member, Mr. Sable,
is a brother-in-law of one of Sun's executive officers.
2000 AUDIT OF SUN'S CONSOLIDATED FINANCIAL STATEMENTS
Regarding Sun's audited consolidated financial statements as of and for the
year ended December 31, 2000, Sun's Audit Committee has:
- reviewed and discussed the financial statements with management;
- discussed with the independent auditors the matters required to be
discussed by Statement of Auditing Standards No. 61 (as may be
modified or amended); and
- received from the auditors disclosures regarding the auditors'
independence required by Independence Standards Board Statement No. 1
(as may be modified or amended), and discussed with the auditors the
auditors' independence.
Based on the review and discussion above, the Audit Committee recommended
to Sun's Board of Directors that the audited consolidated financial statements
be included in Sun's annual report on Form 10-K for 2000 to be filed with the
Securities and Exchange Commission.
AUDIT FEES AND INDEPENDENT AUDITORS' INDEPENDENCE
The aggregate fee for audit of Sun's consolidated financial statements
(including review of Sun's quarterly financial statements which are part of Form
10-Q filed with the Securities and Exchange Commission and out-of-pocket
expenses relating to the audit and quarterly reviews) was $106,713 for 2000.
That amount includes fees paid by Sun and its consolidated subsidiaries.
In addition to audit fees, Sun and its subsidiaries paid fees to its
independent auditors for non-audit services for 2000 in the aggregate amount of
$34,447. Those non-audit services consisted primarily of preparation of tax
returns for Sun and its subsidiaries and post-report review procedures
associated with a registration statement filed with the Securities and Exchange
Commission. There were no fees regarding financial information systems design
and implementation services.
The Audit Committee considered the compatibility of the non-audit services
Sun received from its auditors and the independence of the independent auditors.
AUDIT COMMITTEE
Michael J. Devine, Chairman
Richard N. Flynn
Ronald K. Sable
4
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee consists of three directors, Mr. Lopez, Ms.
Munro and its Chairman, Mr. Kasten, who are not employed by Sun and are not
eligible to participate in any of Sun's benefit plans other than Sun's
Directors' Stock Options Plan.
The Compensation Committee meets for the purpose of reviewing compensation
and benefit levels for Sun's management and making related recommendations to
Sun's Board of Directors. During 2000, two meetings of the Compensation
Committee were held.
The Compensation Committee is responsible for developing and making
recommendations to the Board of Directors with respect to Sun's executive
compensation program. The compensation program has been developed to help Sun
attract and retain quality talent, which is critical to both the short-term and
long-term success of Sun. The Committee has endeavored to develop a compensation
program that:
1) provides incentives and rewards for superior performance, both on an
individual and corporate basis,
2) aligns the interests of the executive officers with the interest of
the shareholders, and
3) provides long-term incentive for retention of its key officers.
In its review of the total compensation package, the Committee has reviewed
various compensation surveys and examines the compensation practices of peers as
well as the consideration of individual efforts for the benefit of Sun and
various subjective measures in determining the adequacy and appropriateness of
the compensation of executives at Sun. The Committee also considers the increase
in the cost of living that impacts its executive officers that are required to
spend certain periods of time at subsidiary offices.
Sun offers various forms of compensation which include base salary,
incentive compensation, and benefits.
BASE SALARIES
In determining the base salary amounts for the executives, the Committee
considers individual performance, experience, expertise, and tenure as well as
the compensation levels established by peers. The compensation of the executives
is recommended by the CEO and reviewed and approved by the Committee. The CEO's
compensation is set by the Committee and presented to the full Board of
Directors for approval.
Total salary information for the CEO and the next four most highly
compensated executive officers for the year 2000 is set forth on page 8. Such
amounts include compensation paid to the executives by subsidiaries of Sun which
are not wholly-owned. Compensation paid by those affiliates is set by the
respective affiliates' Boards of Directors. The Committee considers affiliated
compensation in its review of the executive's pay level. Base salary at Sun
(exclusive of the non-bank subsidiaries) in 2000 was $222,576 for Mr. Reid.
INCENTIVE COMPENSATION
Sun has developed an incentive compensation program which is performance
driven. It is divided into two parts, one subjective, the other based strictly
on ROE targets. The subjective test evaluates executives based on their
contribution to the safety and soundness of the organization including such
factors as; credit quality, capital management, personnel management and
regulatory compliance. The second subjective factor is the contribution to
long-term shareholder value.
The incentive compensation program seeks to align the interests of the
executives with the shareholders by setting aggressive performance targets that
enhance the value of Sun. The incentive compensation is paid in part in cash and
in part in stock options. The options awarded pursuant to the program have a
vesting period which incents the executive to remain with Sun in order to
realize the full value of the compensation. This incentive compensation program
was put in place at Sun and all of its affiliated subsidiaries to align the
interests of all of the executives in the affiliated subsidiaries with the
shareholders of Sun.
DISCRETIONARY AWARDS OF STOCK OPTIONS
Sun has used the discretionary award of stock options primarily as a tool
in its recruitment of executive officers. None of the top five most highly
compensated executives were given a discretionary award of stock options in the
year 2000, other than as part of the incentive compensation program outlined
above.
5
EXECUTIVE SUPPLEMENTAL INCOME PROGRAM
In an effort to retain the long-term services of its executives, Sun has
put in place an executive supplemental income program. It provides for the
payment to certain senior officers or designated beneficiary an annual benefit
which is approximately equal to the annual base salary, for a period of fifteen
years in the event of either the employee's retirement or the death of the
employee before attaining retirement age. In the event of a change of control of
Sun (as defined in the agreements) which is not approved by Sun's Board of
Directors, the agreements provide for a lump sum distribution. In certain
circumstances early retirement may be permitted providing a reduced benefit to
the employee. The benefit liabilities under the agreements are covered by funded
insurance contracts by Sun and/or its subsidiaries. Messrs. Hannley and Hickel
have entered into executive supplemental income agreements with Sun.
BENEFIT PLANS
The company has established a 401(k) plan, health insurance and other
programs that are usual and customary to encourage retention of Sun's employees.
CEO COMPENSATION
The compensation of the CEO is set based on the Committee's review of
performance objectives for Sun which include asset and revenue growth,
development of additional banking subsidiaries, asset quality, identification of
strategic opportunities, development and maturation of the existing
subsidiaries, and core earnings performance.
Joseph D. Reid has been the CEO of Sun since its inception and is relied on
by the Board of Directors to provide effective leadership and execute a
successful strategic plan for the entire organization. Sun has grown over the
past 4 years from a one-bank holding company to a publicly-traded bank
development company with 3 bank development subsidiaries and 14 banks operating
in 4 states. Mr. Reid has been responsible for the oversight and development of
each of the subsidiary companies and the development of their respective boards
of directors and executive management teams. Mr. Reid is responsible for the
continued performance of the banks as they mature to ensure they reach
acceptable levels of performance.
In evaluating the compensation level of the CEO, the Committee has
considered among the other factors set forth above the overall contribution by
Mr. Reid to Sun and its development and his tenure with the organization. During
the course of 2000, Sun developed 4 new banking subsidiaries, increased earnings
by $2.4 million from the previous year loss and had a 75% increase in the total
assets of the company under his leadership and guidance. During this period,
asset quality of the company has been consistently maintained within
satisfactory levels.
Sun and certain of its affiliates have separately entered into employment
agreements with Mr. Reid. These agreements are separately approved and
authorized by the affiliate's independent boards of directors. The agreements
may provide for annual salary, discretionary bonuses and/or stock options. The
agreements automatically renew for successive year periods unless either the
employer or Mr. Reid gives written notice to the contrary. The agreement with
Sun grants Mr. Reid stock options equal to 5% of the total outstanding shares of
Sun stock and are non-dilutive in the event any additional shares of Sun's stock
are issued. The compensation table presented on page 8 discloses total salary
and bonus paid to Mr. Reid at Sun and its consolidated subsidiaries.
COMPENSATION COMMITTEE
Michael L. Kasten, Chairman
Humberto S. Lopez
Kathryn L. Munro
6
STOCK PERFORMANCE
COMPARISON OF SIX MONTH CUMULATIVE TOTAL RETURN AMONG
SUN COMMUNITY BANCORP LIMITED, NASDAQ MARKET INDEX,
AND SNL <$500M BANK ASSET-SIZE INDEX
Below is a graph which summarizes the cumulative return experienced by
Sun's shareholders during the period since its initial public offering compared
to the SNL <$500M Bank Asset-Size Index, and the cumulative total return on the
NASDAQ Market Value Index. (Broad Market Index). This presentation assumes that
the value of the investment in Sun's common stock and each index was $100 on
July 2, 1999.
[PERFORMANCE GRAPH]
PERIOD ENDING
-----------------------------------------------------------------------------
INDEX 07/02/99 09/30/99 12/31/99 03/31/00 06/30/00 09/30/00 12/31/00
- ----- -------- -------- -------- -------- -------- -------- --------
Sun Community Bancorp Limited 100.00 68.99 55.81 46.51 64.34 46.13 45.74
NASDAQ - Total US* 100.00 100.36 148.33 166.49 144.76 133.22 89.27
SNL <$500M Bank Index 100.00 99.62 93.60 82.38 85.92 90.68 90.30
7
EXECUTIVE COMPENSATION
The following table sets forth compensation paid to the CEO and the next
four most highly compensated executive officers of Sun for each of the three
years in the period ended December 31, 2000. Sun has entered into written
employment agreements with Joseph D. Reid and certain officers of Sun and its
subsidiaries.
SUMMARY COMPENSATION TABLE
Long-term Compensation
Annual Compensation --------------------------------
--------------------------------- Awards Payouts
Other ----------------------- -------
Name and Annual Restricted Number of
Principal Compen- Stock Options/ LTIP All Other
Position/Year Salary Bonus sation (a) Award(s) SARs Payouts Compensation
- ------------- ------ ----- ---------- -------- ---- ------- ------------
Joseph D. Reid
Chairman and CEO of Sun:
2000 $ 346,769(b) $ -0- -0- -0- $ -0-
1999 232,033(b) -0- -0- -0- -0-
1998 101,392(b) -0- -0- -0- -0-
John S. Lewis
Vice Chairman of Sun:
2000 191,923 -0- -0- -0- 4,835
1999 147,011 -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0-
Michael F. Hannley
Executive Vice President
of Sun; President and
CEO of Bank of Tucson:
2000 184,657 10,000 -0- -0- 5,100
1999 177,250 12,000 -0- -0- 4,046
1998 148,089 -0- -0- -0- 3,287
Gary W. Hickel
Executive Vice President
of Sun and President of
Valley First Community
Bank:
2000 158,608 -0- -0- -0- 4,747
1999 155,615 6,317 -0- -0- 4,398
1998 134,522 -0- -0- -0- 3,814
David Dutton
Executive Vice President
of Sun:
2000 146,538 -0- -0- -0- -0-
1999 21,538 -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0-
- ----------
(a) No amounts greater than $50,000, or 10% of stated salary amount.
(b) Includes amounts paid by subsidiaries of Sun's which are not wholly-owned.
Amounts of salary and other compensation, as shown, have not been reduced
pro rata to reflect Sun's ownership percentage of subsidiaries. Excludes
compensation paid by Capitol Bancorp, Sun's parent, of which Mr. Reid is
also its Chairman, President and CEO.
Sun employs Joseph D. Reid under an employment agreement. See "COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION: CEO COMPENSATION."
8
John S. Lewis was compensated as Sun's president pursuant to an employment
agreement dated November 23, 1998. The agreement provides for base salary,
discretionary bonuses, car allowance and certain other fringe benefits. The
agreement grants Mr. Lewis stock options equal to 3.5% of the total outstanding
shares of Sun's stock and gives him the right to receive additional options
equal to 3.5% of any additional issuances of Sun's common stock, having an
exercise price equal to fair market value at the time of the grant.
Sun employs Michael Hannley, Gary Hickel and David Dutton under employment
agreements with a term of 3 years that automatically renew for successive
one-year periods unless either party gives written notice to the contrary.
Except for the salaries, the terms of the agreements are substantially
identical. In addition to their salaries, each employee is entitled to various
fringe benefits and discretionary bonuses. All employees are entitled to
disability benefits under prescribed circumstances.
Aggregated Options/SARs Exercised in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
-----------------------------------------------------
Number of Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End Fiscal Year-End
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable(a) Unexercisable(a)(b)
- ---- ----------- -------------- ---------------- -------------------
Joseph D. Reid -- -- 275,194 $ 325,000
Michael F. Hannley -- -- 77,000 295,800
Gary W. Hickel -- -- 17,000 36,000
John S. Lewis -- -- 192,635 -0-
David Dutton -- -- 20,000 -0-
- ----------
(a) All outstanding options are currently exercisable.
(b) Sun's common stock is traded on The Nasdaq Stock Market (SM) under the
symbol "SCBL". Value is based on December 31, 2000 closing price of $ 7.375
per share as reported by Nasdaq.
Option/SAR Grants in Last Fiscal Year
-----------------------------------------------------
Number of
Securities % of Total Options/
Underlying SARs Granted to Grant Date
Options/SARs Employees in Exercise or Base Expiration Present
Name Granted (#) Fiscal Year Price ($/Sh) Date Value (a)
- ---- ----------- ----------- ------------ ---- ---------
Joseph D. Reid 16,076 29.82% 10.15 2009 $63,339
John S. Lewis 11,078 20.55% 10.15 2009 43,647
Michael F. Hannley 8,646 16.04% 10.15 2009 34,065
David J. Dutton 1,000 1.86% 10.15 2009 3,940
(a) Value estimated using a version of the Black-Scholes option pricing model
based on information included in the table above as well as dividend yield
and stock price information, and certain assumptions relating to the
volatility of Sun's stock and a risk-free interest rate.
9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Sun's banking subsidiaries have, in the normal course of business, made
loans to certain directors and officers of Sun and its subsidiaries, and to
organizations in which certain directors and officers have an interest. As of
December 31, 2000, the outstanding principal balance of such loans approximated
$12 million representing approximately 23% of shareholders' equity. In the
opinion of management, such loans were made in the ordinary course of business
and were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unrelated parties and did not involve more than the normal risk of
collectibility or present other unfavorable features. Sun has a written policy
that all loans to, and all transactions with, Sun's officers, directors,
affiliates and/or shareholders holding 10% or more of Sun's common stock will be
made or entered into for bona fide business purposes, on terms no less favorable
than could be made to, or obtained from, unaffiliated parties, and shall be
approved by a majority of the directors of Sun, including a majority of the
independent disinterested directors of Sun.
East Valley Community Bank, has a lease agreement with Chandler Properties
Group, LLC. The lease is at a market rate, $7,748 per month, and for an initial
term of ten years. The principals of Chandler Properties Group, LLC include
Messrs. Kasten, Lopez, Flynn and Devine, members of the board of directors of
Sun and certain of its banks.
Cristin Reid English is Sun's Executive Vice President and also serves as
Executive Vice President of Capitol Bancorp Ltd., Nevada Community Bancorp
Limited, Sunrise Capital Corporation and Indiana Community Bancorp Limited. Ms.
English is Mr. Reid's daughter. In 2000, Ms. English received salaries,
excluding expense allowances, totaling $85,435 from Sun and its non-bank
subsidiaries.
Sun and certain of its affiliates utilized the services of attorney Brian
K. English in the year 2000. Mr. English served as counsel to the entities
providing contract review, transactional assistance, leasing and other legal
services. Mr. English was paid a total of $78,158 by the affiliated entities.
Mr. English is the husband of Cristin Reid English and the son-in-law of Joseph
D. Reid.
Messrs. Sable and Hannley are brothers-in-law.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of BDO Seidman, LLP served as independent auditors for Sun for the
year ended December 31, 2000. Representatives of BDO Seidman, LLP will be
present at the meeting to respond to appropriate questions and will have the
opportunity to make a statement if they desire to do so.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the meeting, including
matters relating to the conduct of the meeting, it is intended that proxies in
the accompanying form will be voted in respect thereof in accordance with the
judgment of those voting the proxies.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by Sun. In addition to
solicitations by mail, directors, officers and regular employees of Sun may
solicit proxies personally or by telephone without additional compensation.
Sun's 2000 Annual Report to Shareholders ("Annual Report") is being
provided herewith. Any Shareholder who does not receive a copy of the Annual
Report may obtain a copy by writing Sun. The Annual Report is not to be treated
as a part of the proxy solicitation material nor as having been incorporated
herein by reference.
FORM 10-K
A copy of Sun's 2000 Form 10-K, without exhibits, is available to
Shareholders without charge upon written request to: Sun Community Bancorp
Limited, 2777 E. Camelback Road, Suite 375, Phoenix, Arizona 85016, Attention:
Investor Relations.
10
Form 10-K, and certain other periodic filings, are filed with the
Securities and Exchange Commission. The SEC maintains an Internet web site that
contains reports, proxy and information statements and other information
regarding companies which file electronically (which includes Sun). The SEC's
web site address is http:\\www.sec.gov. Sun's filings with the SEC can also be
accessed through Sun's web site, http:\\www.suncommunity.com.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in Sun's proxy material for next
year's Annual Meeting of Shareholders, any Shareholder proposal to take action
at such meeting must be received at Sun's main office at 2777 E. Camelback Road,
Suite 375, Phoenix, Arizona 85016, no later than November 23, 2001. Any such
proposal shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Joseph D. Reid
JOSEPH D. REID
CHAIRMAN OF THE BOARD
PHOENIX, ARIZONA
APRIL 12, 2001
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APPENDIX
AUDIT COMMITTEE CHARTER
Sun Community Bancorp Limited
MAY 2000 REVISION
PREFACE
This Audit Committee Charter has been drafted in accordance with requirements of
the NASDAQ stock market, as it applies to Sun Community Bancorp Limited. In
accordance with the NASDAQ rules, this charter will be reviewed and reassessed
by the Audit Committee annually. This charter has been reviewed and approved by
Sun's Board of Directors at its May 2000 meeting. Any future revisions to the
charter shall be subject to review and approval by Sun's Board of Directors.
PURPOSE OF THE AUDIT COMMITTEE
The Audit Committee is responsible for various matters relating to auditing of
the Corporation and its subsidiaries. This includes:
* Recommending to the Board of Directors the selection, evaluation and
replacement of a qualified firm to perform an annual audit of the
Corporation's consolidated financial statements,
* Reviewing the results of the independent auditors' audit of the
Corporation's consolidated financial statements,
* Obtaining a periodic statement from the independent auditors confirming
that firm's independence,
* Monitoring disclosed relationships or services which may impact audit
objectivity and independence, and
* Evaluating policies and procedures and reviewing results of the
Corporation's internal audit function.
ACCOUNTABILITY OF INDEPENDENT AUDITORS
The independent auditors are accountable to the Corporation's Board of Directors
and its Audit Committee.
A-1
AUDIT COMMITTEE COMPOSITION
The Audit Committee membership is based on the following:
* There must be a minimum of three independent directors, appointed by the
Corporation's Board of Directors,
* All Audit Committee members must be able to read and understand fundamental
financial statements, including a balance sheet, income statement and cash
flow statement or will become able to do so within a reasonable period of
time after his or her appointment to the Audit Committee, and
* At least one member must have past employment experience in finance or
accounting, requisite professional certification in accounting or any other
comparable experience or background which results in the individual's
financial sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
OTHER MATTERS
The Audit Committee shall meet at least two times per calendar year. Meetings of
the Audit Committee may be requested by the Audit Committee Chairperson, the
Corporation's independent auditors, the Corporation's internal auditor or by the
Chairman of the Board of Directors. The Audit Committee will meet from time to
time with the Corporation's independent auditors, including a portion of such
meetings without management present. The Audit Committee or its Chairperson (in
the absence of a meeting of the Audit Committee) may discuss matters relating to
the Corporation's interim financial statements or results of operations with
management and the results of any interim reviews of such interim financial
information performed by the Corporation's independent auditors. The Audit
Committee may prepare an annual report of its activities for submission to the
Corporation's Board of Directors and for inclusion in the Corporation's annual
meeting/proxy materials.
A-2
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Sun Community Bancorp Limited
2001 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON Friday, May 25, 2001
APPOINTMENT FORM / PROXY CARD
I, the undersigned stockholder of Sun Community Bancorp Limited, do hereby
constitute and appoint the Secretary, Richard N. Flynn and/or Joseph D. Reid,
Chairman of the Board of Directors, with power of substitution at the Annual
Meeting of Shareholders to be held on Friday, May 25, 2001 at 9:00 a.m. Mountain
Standard Time, at the Arizona Country Club, 5668 E. Orange Blossom Lane,
Phoenix, Arizona, and at any adjournment or adjournments thereof and/or to vote
at any subsequent balloting on any matter considered at the aforementioned
meeting, as fully and with the same effect as if I might or could do were I
personally present, with full power of substitution and revocation, hereby
ratifying and confirming all that my appointees or their substitutes shall
lawfully do or cause to be done by virtue hereof; and I hereby revoke any proxy
or proxies heretofore given by me to any person or persons whatsoever for the
above purposes.
1. ELECTION OF DIRECTORS:
Number of votes entitled to cast for directors (equals number of shares
multiplied by 11):_______
CHOOSE A OR B
A ________ Vote for eleven of the nominees listed, in such
manner in accordance with cumulative voting as will
assure the election of eleven of the listed
nominees, with the number of votes to be allocated
among eleven nominees to be determined by the proxy
holders.
B ________ Distribute my votes among the nominees for director
only as indicated. (Print a number in the blank
opposite the name of each nominee for whom you wish
the proxy to vote in order to specify the number of
votes to be cast for each nominee; the sum of all
votes must be equal to the number of shares
multiplied by eleven. You are entitled to vote for
eleven nominees.)
_____ Michael J. Devine _____ Michael L. Kasten _____ Kathryn L. Munro
_____ Richard N. Flynn _____ John S. Lewis _____ Joseph D. Reid
_____ Michael F. Hannley _____ Humberto S. Lopez _____ Ronald K. Sable
_____ Richard F. Imwalle _____ Lyle W. Miller
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, IT SHALL BE
VOTED FOR ITEM A FOR PROPOSAL 1.
IMPORTANT: Please sign this proxy exactly as your name or names appear on your
share certificates. If shares are held by more than one owner, each owner must
sign. Executors, administrators, trustees, guardians and other signing in a
representative capacity should give their full titles.
In witness whereof, I have executed this proxy on _______________________, 2001.
(BE SURE TO DATE THIS PROXY)
Signature:____________________________ Signature:_____________________________
(if jointly owned)
Print:________________________________ Print:_________________________________
Please indicate whether you plan to attend the Annual Meeting of Shareholders:
[ ] WILL ATTEND ______ NUMBER OF PERSONS [ ] WILL NOT ATTEND