SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Board of Governors Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 240.14a-12
PACIFIC STATE BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
_____________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
_____________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________
(5) Total fee paid:
_____________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:______________________________________________
(2) Form, Schedule or Registration Statement No.:________________________
(3) Filing Party:________________________________________________________
(4) Date Filed:__________________________________________________________
Explanatory Note: Pacific State Bancorp is filing this Amendment
No. 1 (the "Correct Proxy Statement") to correct a filing error with
respect to the Proxy Statement filed on April 5, 2004, with the
Commission (the "Proxy Statement"). After the filing of the Proxy
Statement, the Company discovered that, by inadvertence due in part
to computer malfunction, the wrong electronic file (consisting
substantially of a copy of the Company's definitive proxy statement
for the previous year) was sent to the Company's third party filing
service for Edgarizing and was subsequently filed with the
Commission. At the same time, the Correct Proxy Statement was being
mailed to the Company's stockholders. By this filing, the Company is
not revising or amending the Proxy Statement, but is substituting the
Correct Proxy Statement in its place. The Company regrets any
confusion that may be caused to users of the EDGAR system by this
error.
PACIFIC STATE BANCORP
1899 W. March Lane
Stockton, California 95207
NOTICE OF 2004 ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN TO SHAREHOLDERS that the 2004 Annual Meeting of
Shareholders of Pacific State Bancorp ("Bancorp") will be held Thursday, May 13,
2004, at the main office of Pacific State Bank, 6 South El Dorado, Stockton,
California, at 4:30 p.m. for the following purposes:
1. To elect ten (10) directors of Bancorp for the ensuing year.
See "PROPOSAL ONE: ELECTION OF DIRECTORS."
2. To transact any other business which may properly come before
the Annual Meeting and any postponement or adjournment thereof.
Section 16 of the By-Laws of Bancorp provides for the nomination of
Directors in the following manner:
"Nomination for election of members of the Board of Directors may be
made by the Board of Directors or by any stockholder of any outstanding class of
capital stock of the corporation entitled to vote for the election of directors.
Notice of intention to make any nominations shall be made in writing and shall
be delivered or mailed to the President of the corporation not less than 21 days
nor more than 60 days prior to any meeting of stockholders called for the
election of directors; provided however, that if less than 21 days notice of the
meeting is given to shareholders, such notice of intention to nominate shall be
mailed or delivered to the President of the corporation not later than the close
of business on the tenth day following the day on which the notice of meeting
was mailed; provided further, that if notice of such meeting is sent by
third-class mail as permitted by Section 6 of these By-Laws, no notice of
intention to make nominations shall be required. Such notification shall contain
the following information to the extent known to the notifying shareholder: (a)
the name and address of each proposed nominee; (b) the principal occupation of
each proposed nominee; (c) the number of shares of capital stock of the
corporation owned by each proposed nominee; (d) the name and residence address
of the notifying shareholder; and (e) the number of shares of capital stock of
the corporation owned by the notifying shareholder. Nominations not made in
accordance herewith may, in the discretion of the Chairman of the meeting, be
disregarded and upon the Chairman's instructions, the inspectors of election can
disregard all votes cast for each such nominee."
Only those shareholders of record at the close of business on March 15,
2004, will be entitled to notice of and to vote at the Annual Meeting.
Dated: April 5, 2004 By Order of the Board of Directors
Steven J. Kikuchi, Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POST-PAID ENVELOPE.
Mailed to shareholders on
or about April 5, 2004
PACIFIC STATE BANCORP
PROXY STATEMENT
1889 W. March Lane
Stockton, California 95207
Telephone (209) 870-3200
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is furnished to solicit proxies for use at the
2004 Annual Meeting of Shareholders (the "Meeting") of Pacific State Bancorp
("Bancorp"), to be held Thursday, May 13, 2004, at 4:30 p.m. at 6 South El
Dorado, Stockton, California, and at any and all adjournments thereof.
Revocability of Proxies
A form of proxy for voting your shares at the Meeting is enclosed. If
you execute and deliver this proxy, you will still have the right to and may
revoke it at any time before it is exercised by filing with the Secretary of
Bancorp a written revocation or a duly executed proxy bearing a later date. In
addition, you may revoke your proxy by attending the Meeting and voting in
person.
Subject to your revocation, all shares represented by your properly
executed proxy received in time for the Meeting will be voted by the proxy
holders in accordance with your instructions specified on the proxy. UNLESS YOU
OTHERWISE DIRECT IN THE ACCOMPANYING PROXY, THE SHARES REPRESENTED BY YOUR
EXECUTED PROXY WILL BE VOTED "FOR" THE NOMINEES FOR ELECTION OF DIRECTORS NAMED
HEREIN. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT THE MEETING, THE PROXY
WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.
Persons Making the Solicitation
The Board of Directors of Bancorp is making this solicitation. All
associated expenses will be borne by Bancorp. Proxies will be solicited
principally by mail, but officers, directors, and employees of Bancorp may
solicit proxies personally or by telephone, without receiving special
compensation for such activities. Bancorp will reimburse banks, brokerage houses
and other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding these proxy materials to shareholders whose stock in Bancorp is held
of record by such entities. In addition, Bancorp may employ others to solicit
proxies if management deems it advisable.
Voting Securities
Bancorp is authorized to issue 24,000,000 shares of Common Stock, no
par value, of which 1,700,301 shares were issued and outstanding as of March 15,
2004 (the "Record Date"). All common shares are voting shares, but only
shareholders of record as of the Record Date are entitled to notice of and to
vote at the Meeting and at any and all postponements or adjournments of it. The
presence in person or by proxy of the holders of a majority of the outstanding
shares entitled to vote at the Meeting will constitute a quorum for the purpose
of transacting business.
Each common share is entitled to one vote at the Meeting, except in the
election of directors, in which case California law permits a shareholder or the
shareholder's proxy holder to cumulate votes. Cumulation of votes means that
each shareholder has a number of votes equal to the number of shares owned by
the shareholder, multiplied by the number of directors to be elected, and that a
shareholder may cumulate such votes for a single candidate or distribute them
among as many candidates as the shareholder deems appropriate. However, a
shareholder may cumulate votes only for a candidate or candidates whose names
have been placed in nomination prior to the voting, and only if the shareholder
(or another shareholder) has given notice at the Meeting, prior to the voting,
of the shareholder's intention to cumulate votes. Prior to voting, an
opportunity will be given for shareholders or their proxies at the Meeting to
announce their intention to cumulate their votes. The proxy holders are given
discretionary authority to cumulate votes represented by shares for which they
are named in the proxy.
In an election of directors, California law provides that the nominees
receiving the highest number of affirmative votes of the shares entitled to vote
for them, up to the number of directors to be elected by such shares, are
elected; votes against the director and votes withheld have no effect.
PRINCIPAL SHAREHOLDERS
Except as listed in the table below. management of Bancorp does not
know of any person who owned, as of the Record Date, beneficially or of record,
either individually or together with associates, five percent (5%) or more of
the outstanding shares of the Common Stock of Bancorp.
================================= ====================================== ===========================
Amount and Nature of Beneficial
Name and Address Ownership(1) Percentage of Ownership
================================= ====================================== ===========================
Maxwell M. Freeman 153,000 8.99%
1818 Grand Canal Boulevard
Stockton, CA 95207
- --------------------------------- -------------------------------------- ---------------------------
Hot Creek Capital, L.L.C. 144,796 8.51%
144 Summit Ridge Way
Gardnerville, Nevada 89410-3178
- --------------------------------- -------------------------------------- ---------------------------
Harold Hand, M.D. 137,704 8.09%
36 W. Yokuts, Suite 2
Stockton, CA 95207
- --------------------------------- -------------------------------------- ---------------------------
Steven A. Rosso 141,842 8.34%
1889 W. March Lane
Stockton, CA 95207
================================= ====================================== ===========================
(1) The first number in this column indicates the total number of shares
beneficially owned, including (if specified by the number in parenthesis)
the numbers of shares which could be acquired by options exercisable within
60 days of the Record Date.
PROPOSAL ONE:
ELECTION OF DIRECTORS
The Bylaws of Bancorp fix the number of directors of Bancorp within the
range of nine and seventeen; the exact number is set at ten (10) until changed
by resolution of the Board of Directors or Bylaw amendment duly adopted by
Bancorp's shareholders or the Board of Directors.
Information Concerning Directors
The table below provides information concerning the nominees of the
Board of Directors for election as directors of Bancorp. The persons named are
all current members of the Board of Directors, and will be nominated for
election as directors at the Meeting, to serve until the 2005 annual meeting of
shareholders and until their successors are elected and have qualified.
Unless otherwise directed, the proxy holders will cast votes so as to
effect, if possible, the election of the ten nominees. The ten nominees
receiving the most votes will be elected. If any nominee is unable to serve as a
director, the proxy will be voted to elect a substitute nominee designated by
the Board of Directors. The Board of Directors has no reason to believe that any
of the nominees will be unable to serve if elected. Additional nominations may
only be made by complying with the nomination procedures that are included in
the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.
2
=================================== ======== =========== ===================================================
Director
Name Age Since Principal Occupation
=================================== ======== =========== ===================================================
Michael L. Dalton, C.P.A. 57 1987 Certified Public Accountant, Certified Financial
Planner and Registered Investment Adviser.
- ----------------------------------- -------- ----------- ---------------------------------------------------
Maxwell M. Freeman Attorney - Freeman, D'Aiuto, Pierce & Gurev,
66 2000 Stockton, California
- ----------------------------------- -------- ----------- ---------------------------------------------------
Harold Hand, M.D. 66 1987 Physician practicing ophthalmology. Owner and
operator of the Advanced Vision Institute, Inc.
Staff member of Dameron Hospital and St. Joseph's
Hospital of Stockton.
- ----------------------------------- -------- ----------- ---------------------------------------------------
Patricia A. Hatton, M.D 54 1988 Physician practicing obstetrics and gynecology.
- ----------------------------------- -------- ----------- ---------------------------------------------------
Steven J. Kikuchi 46 1987 Registered landscape architect, contractor and
certified nurseryman.
- ----------------------------------- -------- ----------- ---------------------------------------------------
Yoshikazu Mataga 61 1987 Owner and operator of Tracy Pontiac-Cadillac and
GMC Truck and Stockton Cadillac-Oldsmobile and
GMC dealerships.
- ----------------------------------- -------- ----------- ---------------------------------------------------
Steven A. Rosso 49 1990 President and Chief Executive Officer of Bancorp.
- ----------------------------------- -------- ----------- ---------------------------------------------------
Gary A. Stewart 54 1998 Executive Vice President and Chief Credit Officer
of Bancorp
- ----------------------------------- -------- ----------- ---------------------------------------------------
Kathleen M. Verner 61 1988 Co-owner and Vice President of Verner
Construction Company (residential and commercial
development firm).
- ----------------------------------- -------- ----------- ---------------------------------------------------
Philip B. Wallace 86 1987 Chairman of Western Empire Management Company.
=================================== ======== =========== ===================================================
Stock Ownership of Management
The following table lists, as of the Record Date, the number and
percentage of shares of Common Stock beneficially owned by each nominee and by
the directors and principal officers of Bancorp as a group. The table does not
include 42,786 shares held beneficially by Bancorp officers as administrators of
the Pacific State Bank Retirement 401(k) Plan.
3
============================= =============================================== ==============
Percent of
Beneficial Owner Amount and Nature of Beneficial Ownership(1) Class
============================= =============================================== ==============
Michael L. Dalton 57,600(5,750) 960 3.38%
- ----------------------------- ------------------------------------ ---------- --------------
Maxwell M. Freeman 153,000 8.99%
- ----------------------------- ------------------------------------ ---------- --------------
Harold Hand, M.D. 137,704 9840 8.09%
- ----------------------------- ------------------------------------ ---------- --------------
Patricia A. Hatton, M.D. 66,760 14,308 3.92%
- ----------------------------- ------------------------------------ ---------- --------------
Steven J. Kikuchi 39,438 -- 2.31%
- ----------------------------- ------------------------------------ ---------- --------------
Yoshikazu Mataga 48,634 -- 2.86%
- ----------------------------- ------------------------------------ ---------- --------------
Steven A. Rosso 141,842 2,604 8.32%
- ----------------------------- ------------------------------------ ---------- --------------
Gary A. Stewart 28,012 (13,400) -- 1.64%
- ----------------------------- ------------------------------------ ---------- --------------
Kathleen M. Verner 69,020 -- 4.05%
- ----------------------------- ------------------------------------ ---------- --------------
Philip B. Wallace 77,736 -- 4.57%
- ----------------------------- ------------------------------------ ---------- --------------
All directors, nominees and 819,746 (19,150) 27,712 48.21%
principal officers as a group
(11 in all) (2)
============================= =============================================== ==============
(1) The first number in the first subcolumn indicates the total number of
shares beneficially owned, including (as specified by the number in the
parenthesis) the number of shares that could be acquired pursuant to stock
options exercisable within 60 days of the Record Date. Numbers in the
second subcolumn indicate the number of shares (out of the total number of
shares beneficially owned) as to which the person or group shares voting
and/or investment power.
(2) Principal officers included are the President and Chief Executive Officer,
Executive Vice President and Chief Credit Officer, and Vice President and
Chief Financial Officer.
Options Outstanding and Available for Issuance at Year-End
The following table provides information as of December 31, 2003 with
respect to compensation plans (including individual compensation arrangements)
under which equity securities of the Company are authorized for issuance under
the Company's 1997 Stock Option Plan.
- ----------------------------- -------------------------- --------------------- ------------------------------------
Plan category Number of securities to Weighted-average Number of securities remaining
be issued upon exercise exercise price of available for future issuance under
of outstanding options, outstanding equity compensation plans (excluding
warrants and rights options, warrants securities reflected in column (a))
and rights
(a) (b) (c)
- ----------------------------- -------------------------- --------------------- ------------------------------------
Equity compensation plans 499,958 $9.66 952
approved by security holders
- ----------------------------- -------------------------- --------------------- ------------------------------------
Equity compensation plans NA NA NA
not approved by security
holders
- ----------------------------- -------------------------- --------------------- ------------------------------------
Total 499,958 $9.66 952
- ----------------------------- -------------------------- --------------------- ------------------------------------
4
The Board of Directors and Committees
Bancorp's Board of Directors held 14 meetings during 2003. In addition
to meeting as a group to review Bancorp's business, members of the board of
directors served on certain standing committees. During 2003, no nominee for
director of Bancorp attended less than 75% of the aggregate of the number of
meetings held by the board of directors and of all committee meetings on which
he or she served.
The Personnel Committee held 3 meetings during 2003. Its members
include Dr. Harold Hand, Michael L. Dalton, Steven Kikuchi, Steven A. Rosso and
Kathleen M. Verner. The Personnel Committee is responsible for determining
and/or recommending to the Board the compensation of officers of Bancorp.
Nominating Procedures and Policies
Bancorp has no standing nominating committee, and the full board of
directors meets annually as a nominating committee to discuss nominations for
the board of directors. The board accordingly has no written document or charter
to guide its procedures or deliberations in this matter. A majority of the
members of the board are "independent" within the meaning of the Marketplace
Rule 4200(A)(15) of the NASD, including Michael L. Dalton, Harold Hand, Patricia
Hatton, Yosh Mataga, Kathleen Verner and Philip Wallace. Under this definition,
an independent director is a person other than an officer or employee of the
company or its subsidiaries or any other individual having a relationship that,
in the opinion of the company's board of directors, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director. Types of persons deemed not to be independent include (but are not
limited to) employees of Bancorp or the Bank; persons (or their family members
or affiliate entities) compensated for services other than as a director; and
persons (or their family members) who are partners or employees of Bancorp's
independent auditors.
Bancorp's bylaws prescribe the procedures for direct shareholder
nominations of directors. These procedures are reprinted in the Notice of Annual
Meeting that accompanies this proxy statement. In his discretion, the chairman
of the Annual Meeting may disregard nominations not made in accordance with
these procedures and instruct the inspector of elections to disregard all votes
cast for such nominees. As a matter of policy, the board of directors will
consider for inclusion in Bancorp's proxy statement nominees made in accordance
with these procedures and submitted to Bancorp on or before the deadline
specified for inclusion of shareholder proposals. For purposes of the 2005
Annual Meeting, that date will be December 7, 2004.
The board of directors identifies nominees by first evaluating the
current members of the board willing to continue in service. Current members of
the board who are willing to continue in service are first considered for
re-nomination, balancing the value of continuity of service by existing members
of the board with that of obtaining new perspectives. Should any member of the
board not wish to continue in service, or if the board should decide not to
re-nominate a member for re-election, or if the size of the board were
increased, the board would solicit suggestions for director candidates from all
board members. The board would seek to identify candidates who at a minimum
possess the following characteristics:
o High personal and professional ethics and integrity, and values
compatible with those of Bancorp.
o Success in a business or occupation relevant to the business or
operations of Bancorp and the Bank.
o Good business judgment.
o Willingness and ability to devote the necessary time to the work of the
board and its committees.
o Familiarity with the communities in which the Bank operates and active
engagement in community activities.
o No activities or interests that could create a conflict with
responsibilities to Bancorp and its stockholders.
o Capacity and desire to represent the balanced, best interests of the
stockholders of Bancorp as a group, and not primarily a special
interest group or constituency.
Shareholder Communications
Any shareholder who wishes to communicate with the board or with any
committee or individual member may write to the President and Chief Executive
Officer at 1899 W. March Lane, Stockton, California 95207, Attention: Board
Administration. The letter should indicate that the author is a shareholder and,
if shares are not held of record, should include appropriate evidence of stock
ownership. Depending on the subject matter, management will:
5
o Forward the communication to the board or the director or committee to
whom it is addressed;
o Attempt to handle the inquiry directly, for example, if it is a request
for information about Bancorp or concerns a stock-related matter; or
o Not forward the communication if it is primarily commercial in nature,
relates to an improper or irrelevant topic, is hostile, threatening,
illegal or otherwise inappropriate, or is otherwise unrelated to the
activities, functions and responsibilities of the board.
Attendance at Annual Meetings
All of the Company's directors are expected and encouraged to attend
annual meetings to the extent possible consistent with their other obligations.
All of the directors attended the 2003 Annual Meeting.
AUDIT COMMITTEE REPORT
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF BANCORP'S
PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE THIS PROXY STATEMENT OR FUTURE
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM, IN WHOLE OR IN PART, THE FOLLOWING REPORT SHALL NOT
BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILING.
The Audit Committee held 4 meetings during 2003. The Audit Committee
consists of the following members of Bancorp's Board of Directors: Michael A.
Dalton, Chairman, Dr. Harold Hand, Steven Kikuchi and Yoshikazu Mataga. Each of
the members of the Committee is independent as defined under the National
Association of Securities Dealers' listing standards, and each member of the
committee is free of any relationship that, in the opinion of the Board of
Directors, would interfere with his individual exercise of independent judgment.
The Board has not adopted a written charter to govern the Committee's
operations.
The Committee's responsibilities include providing advice with respect
to Bancorp's financial matters and assisting the Board of Directors in
discharging its responsibilities regarding corporate accounting. The Committee's
primary responsibilities are to: (1) serve as an independent and objective party
to monitor Bancorp's financial reporting process and internal control system;
(2) review and evaluate the audit efforts of Bancorp's independent accountants
and internal auditor; (3) evaluate Bancorp's quarterly financial performance as
well as its compliance with laws and regulations; (4) oversee management's
establishment and enforcement of financial policies and business practices; and
(5) facilitate communication among the independent accountants, financial and
senior management, counsel, the internal auditor and the Board of Directors.
The Committee has reviewed and discussed the audited financial
statements of Bancorp for the fiscal year ended December 31, 2003 with Bancorp's
management. The Committee has discussed with Perry-Smith LLP, Bancorp's
independent public accountants ("Perry-Smith"), the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The Committee has also received the written disclosures and the
letter from Perry-Smith required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees) and the Committee has discussed
the independence of Perry-Smith with that firm.
Based on the Committee's review and discussions noted above, the
Committee recommended to the Board of Directors that Bancorp's audited financial
statements be included in Bancorp's Annual Report on Form 10-K for the fiscal
year ended December 31, 2003 for filing with the Securities and Exchange
Commission.
Submitted by:
Michael A. Dalton, Chairman
Dr. Harold Hand
Steven Kikuchi
Yoshikazu Mataga
6
COMPENSATION AND CERTAIN TRANSACTIONS
Summary Compensation Table
The following table lists the compensation of executive officers of
Bancorp who received, during any of the periods indicated, annual salary and
bonus exceeding $100,000.
================================================================================================================
Annual Compensation
------------------- Other Annual All Other
Year Salary Bonus Compensation Compensation(2)
---- -------- --------- ------------ ---------------
Steven A. Rosso 2003 $174,750 $ -0- (1) $ 16,830
2002 $162,203 $ 9,333 (1) $ 8,343
2001 $142,667 $ 16,000 (1) $ 9,439
================================================================================================================
================================================================================================================
Annual Compensation
------------------- Other Annual All Other
Year Salary Bonus Compensation Compensation(2)
---- -------- --------- ------------ ---------------
Gary A. Stewart 2003 $117,500 $ 1,000 (1) $ 7,919
2002 $114,179 $ -0- (1) $ 5,747
2001 $106,527 $ 10,000 (1) $ 7,333
================================================================================================================
(1) Includes calculated value of personal use of bank automobile and personal
benefit derived from club memberships. The total dollar value of such
benefits to Mr. Rosso and Mr. Stewart did not exceed ten percent of the
reported annual salary in any one year.
(2) Includes matching contributions to Bancorp's Retirement Plan.
Mr. Rosso currently serves under an employment agreement dated October
26, 1999, at an annual salary of $129,000 (plus a minimum of $5,000 which must
be deferred), for a term extending through September 1, 2005. The agreement also
provides for five weeks annual vacation (non-use of which may not be carried
over), use of a Bank automobile, and payment by Bancorp of various service and
social club memberships. Mr. Rosso's employment may be terminated at will by
Bancorp, in which case he is entitled to severance pay equal to one year's
annual salary, continuation of all health and welfare benefits for a period of
one year following termination, and distribution of all deferred salary items
within six months of termination. The agreement provides for payments in the
event of disability and for the payment of incentive compensation as determined
in the discretion of the Board of Directors. In the event of a change of control
of Bancorp in which Bancorp is not the surviving corporation, and provided Mr.
Rosso does not assume the post of president and chief executive office of the
new or reorganized entity, the employment agreement terminates, Mr. Rosso's
outstanding options to purchase shares of common stock of Bancorp become fully
exercisable, and Mr. Rosso is entitled to be paid one year's salary upon the
closing of the sale or transfer of control of Bancorp. Also in the event of a
sale of control of Bancorp, Bancorp is required by the agreement to create a
pool equal to five percent of the total sale price of Bancorp in excess of book
value and consisting of cash or stock of the acquiring entity, to be distributed
among Bancorp's senior management with not less than 60% of the pool to be
distributed to Mr. Rosso. Disputes under the agreement are required to be
arbitrated under the California Arbitration Act, with the cost of arbitration to
be apportioned as the arbitrators shall decide.
Salary Continuation Agreements
In order to provide long-term incentive to selected senior executive
officers, effective September 30, 2003, the Bank entered into Executive Salary
Continuation Agreements (each an "SCA") with six current senior executive
officers of the Company, including the two named executive officers listed on
the Summary Compensation Table.
Benefits payable under the SCAs are intended by the Bank to be funded
by single-premium life insurance policies that were purchased in connection with
entering into the SCAs and of which the Bank is the owner and beneficiary. The
cash surrender value of those policies was $4,000,000 at December 31, 2003.
Notwithstanding the existence of such policies of insurance, however, the SCAs
create no rights or interests in the property or assets of the Bank, the sole
obligation of the Bank under the SCAs is an unfunded and unsecured promise to
pay money in the future, and the status of any person who may assert a claim
pursuant to an SCA is that of an unsecured general creditor of the Bank.
7
Generally, each SCA provides the named executive officer with a
specified annual money benefit (the "Annual Benefit") payable to the executive
or to his named beneficiary or surviving spouse or estate, in that order, for a
period of up to 20 years following the executive's retirement upon or after a
specified retirement age. If the executive should die or become disabled prior
to such specified retirement age, a percentage of the Annual Benefit (on a
sliding upward scale depending upon the number of years which elapse between
execution of the SCA and the executive's early death or disability) would be
payable.
No Annual Benefit is payable if the executive's employment is
terminated for cause or the executive voluntarily terminates his employment with
the Company prior to his specified retirement age, but the full Annual Benefit
is payable if the executive's employment with the Company is terminated by the
Company without cause or in connection with a change in control of the Company.
The amount of the Annual Benefit also is subject to reduction if in any year it
exceeds the compensation expense which (with respect to the payment of such
Annual Benefit) the Company may deduct under the Internal Revenue Code of 1986,
as amended (the "Code"), or if any portion of the Annual Benefit not waived by
the executive constitutes an "excess parachute" payment under the Code.
Subject to such contingencies, the following table sets forth
information regarding benefits payable under the SCAs which are currently in
effect between the Company and the executive officers named in the Summary
Compensation Table:
- ----------------------- ----------- ------------------ -------------------- --------------
Name Annual Years Required Year Annual Retirement
Benefit For Full Benefit Benefit Commences Age
- ----------------------- ----------- ------------------ -------------------- --------------
Steven A. Rosso $ 134,587 10 September 2019 65
- ----------------------- ----------- ------------------ -------------------- --------------
Gary A. Stewart $ 93,253 10 September 2015 65
- ----------------------- ----------- ------------------ -------------------- --------------
Stock Option Plans
As of December 31, 2003, options for a total of 499,958 shares granted
to employees, officers and directors of Bancorp were outstanding under the
Bancorp's 1997 Stock Option Plan. As of March 31, 2004, options included in this
total had been exercised for 12,716 shares. The number of shares currently
reserved for issuance of additional options under the 1997 plan is 952.
Please see the tables below for information concerning options held as
of December 31, 2003, or exercised during 2003 by the executive officers named
in the Summary Compensation Table above and for options granted to these
officers during 2003.
Option Exercises and Year-End Values for 2003
The following table sets forth, with respect to the executive officers
named in the Summary Compensation Table above, the estimated value of options
exercised during 2002, and the estimated 2002 year-end value of all unexercised
in-the-money options held by such executive officers.
8
======================= ============= =========== ============================ ============================
Number of Value of
Securities Underlying Unexercised
Shares Unexercised In-the-Money
Acquired on Value Options (FY-End) Options (FY-End)
Name Exercise Realized(1) (Exercisable/Unexercisable) (Exercisable/Unexercisable)
======================= ============= =========== ============================ ============================
Steven A. Rosso 34,972 $ 195,483 6,848/ 55,000 $ 94,400/$63,250
Gary A. Stewart 1,500 $ 15,450 13,200/ 61,355 $151,825/$90,200
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(1) Represents the difference between the market value and the exercise price
of the shares acquired by exercise.
Option Grants in Last Fiscal Year
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% of Total Potential Realizable
Number of Options Value at Assumed
Securities Granted to Exercise Annual Rates of Stock
Underlying Employees Price Price Appreciation for
Options in Fiscal Per Expiration Option Term
Name Granted Year Share) Date 5% 10%
- ----------------------- ------------ ------------- --------- ------------- ----------- ------------
Steven A. Rosso 55,000 28% $15.00 10/16/13 $89,590 $142,656
Gary A. Stewart 40,000 21% $15.00 10/16/13 $65,156 $103,750
======================= ============ ============= ========= ============= ========================
Retirement Plan
The Pacific State Bank Retirement 401(k) Plan (the "Retirement Plan")
is a qualified plan under the Internal Revenue Code which provides
profit-sharing benefits to eligible Bank employees at least 18 years of age with
not less than 3 months of service. Participating employees may elect to defer up
to 15% of salary each pay period as a contribution to the Retirement Plan, and
may make voluntary non-deductible contributions in amounts not to exceed 10% of
the employee's aggregate compensation since the employee's date of entry into
the Retirement Plan. Federal law limits the amounts which can be contributed
annually by individual participants; the Bank is required by the Retirement Plan
to make matching contributions equal to one-half of employee deferrals up to the
first 6% of such deferrals, and in addition may declare year-end bonus and
certain other discretionary contributions to all eligible participants. During
2003, the Bank's contributions to the Retirement Plan totaled approximately
$41,000. Bank contributions pursuant to the Retirement Plan in 2003 for the
benefit of the named individual executive officers of Bancorp are included in
the Summary Compensation Table above.
Director Compensation
Members of the Board of Directors of Bancorp accrued attendance fees of
$650 per Board meeting and $250 per committee meeting attended through March
2003. Effective, April 2003 the Members of the Board of Directors were paid
$2,000 per month. A total of $176,700 in directors' fees was paid during 2003.
Bancorp's current practice is to pay directors' monthly.
Transactions with Management
Some of the directors and officers of Bancorp and the companies with
which those directors and officers are associated are customers of, and have had
banking transactions with, Bancorp in the ordinary course of Bancorp's business,
and Bancorp expects to have banking transactions with such persons in the
future. In the opinion of Bancorp's management, all loans and commitments to
lend 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
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creditworthiness and did not involve more than a normal risk of collectibility
or present other unfavorable features.
During 2003, the law firm of Freeman, D'Aiuto, Pierce and Gurev of
which director Maxwell Freeman is a partner was paid $6,400 for legal services
provided to the bank. In addition, companies in which director Steven Kikuchi is
part owner were paid $139,000 and $11,000 for goods and services in connection
with the construction of the Bancorp's new administrative headquarters. All of
these transactions were reviewed and approved by the Board of Directors. The
services and goods were all provide at current market rates.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Bancorp's
directors, executive officers and ten percent or more shareholders of Bancorp's
equity securities, to file with the Securities and Exchange Commission ("SEC")
reports of ownership and reports of changes of ownership of Bancorp's equity
securities. Officers, directors and ten percent or more shareholders are
required by regulation to furnish Bancorp with copies of all Section 16(a) forms
they file. To Bancorp's knowledge, based solely on review of the copies of such
reports furnished to Bancorp and written representations that no other reports
were required, during the fiscal year ended December 31, 2003, all Section 16(a)
filing requirements applicable to Bancorp's directors, executive officers, and
beneficial owners of 10% or more of Bancorp's equity securities appear to have
been met.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Perry-Smith LLP ("Perry-Smith"), certified
public accountants, serves Bancorp as its auditors at the direction of the board
of directors and Audit Committee of Bancorp. It is anticipated that a
representative of Perry-Smith will be present at the Annual Meeting with the
opportunity to make a statement if he or she desires to do so and will be
available to answer appropriate questions.
Audit Fees
The aggregate fees billed by Perry-Smith for professional services
rendered for the audit of Bancorp's annual financial statements for the fiscal
year ended December 31, 2003 and for the reviews of the financial statements
included in Bancorp's Quarterly Reports on Form 10-Q for that fiscal year were
$86,400; related fees for the year ended December 31, 2002 were $72,500. These
amounts represented 81% and 64%, respectively, of the total fee paid to
Perry-Smith during these years
Tax Fees
The aggregate fees billed by Perry-Smith for professional services
rendered to Bancorp, including tax preparation and advice for the fiscal year
ended December 31, 2003 were $17,000; related fees for the year ended December
31, 2002 were $10,000. These amounts represented 16% and 8%, respectively, of
the total fee paid to Perry-Smith during these years
All Other Fees
The aggregate fees billed by Perry-Smith for services rendered to
Bancorp, other than the audit services and tax services described above, for the
fiscal years ended December 31, 2003 and December 31, 2002 were $3,800 and
$31,500, respectfully. Those amount represented 4% and 28%, respectively of the
total fees paid o Perry-Smith during these years. The audit committee has
considered whether the provision of non-audit services is compatible with
maintaining the principal accountant's independence.
Before each professional service provided by Perry-Smith was rendered
to Bancorp, such service was approved by, and its effect upon Perry-Smith's
independence was considered by, the Audit Committee.
SHAREHOLDER PROPOSALS
Next year's Annual Meeting of Shareholders of Bancorp is scheduled be
held on May 12, 2005. Any shareholder desiring to submit a proposal for action
at the 2005 Annual Meeting of Shareholders which is desired to be presented in
Bancorp's Proxy Statement with respect to such meeting, should mail such
proposal by certified mail, return receipt requested, to Pacific State Bancorp,
1899 W. March Lane, Stockton, California 95207, Attention: Dr. Harold Hand,
Chairman of the Board. All such proposals must be received by Bancorp not later
than December 7, 2004. Management of Bancorp will have discretionary authority
to vote proxies obtained by it in connection with any shareholder proposal not
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submitted on or before the deadline. Matters pertaining to such proposals,
including the number and length thereof, eligibility of persons entitled to have
such proposals included, and other aspects, are regulated by the Securities
Exchange Act of 1934, and regulations adopted there under.
OTHER MATTERS
Management is not aware of any other matters to come before the
Meeting. If any other matter not mentioned in this Proxy Statement is brought
before the Meeting, the persons named in this enclosed form of proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with the recommendations of management.
Stockton, California
April 5, 2004 PACIFIC STATE BANCORP
A COPY OF BANCORP'S ANNUAL REPORT ON FORM 10-K WILL BE MAILED FREE OF
CHARGE TO ANY SHAREHOLDER UPON REQUEST. REQUESTS MAY BE MADE BY TELEPHONE AT
(209) 870-3200 OR BY LETTER ADDRESSED TO PACIFIC STATE BANCORP, 1899 W. MARCH
LANE, STOCKTON, CALIFORNIA 95207.
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REVOCABLE PROXY
PACIFIC STATE BANCORP
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 13, 2004
The undersigned holder of Common Stock, revoking any Proxy heretofore
given, hereby constitutes and appoints Steven A. Rosso and Steven J. Kikuchi and
each of them, with full power of substitution, as attorneys and proxies to
appear and vote all of the shares of Common Stock of Pacific State Bancorp, a
California corporation, standing in the name of the undersigned which the
undersigned could vote if personally present and acting at the Annual Meeting of
Shareholders of Pacific State Bancorp, to be held Thursday, May 13, 2004, at 6
South El Dorado Street, Stockton, California, at 4:30 p.m. or at any
adjournments thereof, upon the following items and to vote according to their
discretion on all other matters which may be properly presented for action at
the meeting or any postponements or adjournments thereof.
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF
DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. UNLESS OTHERWISE DIRECTED BY THE SHAREHOLDER, THIS PROXY WILL BE
VOTED "FOR" THE FOLLOWING ITEMS:
1. To elect as Directors the nominees set forth below.
[ ] FOR ALL nominees listed to the left (except as marked
to the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed.
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below:
Michael L. Dalton Yosh Mataga
Maxwell M. Freeman Steven A. Rosso
Harold Hand Gary A. Stewart
Patricia Ann Hatton Kathleen Verner
Steven J. Kikuchi Philip B. Wallace
[ ] Yes [ ] No [ ] Abstain
2. In their discretion, to transact such other business as may
properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS. THE PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE VOTED
"FOR" THE ELECTION OF DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS.
SHAREHOLDER(S) Number. of Common Shares
_______________________________ ___________________________________
_______________________________ ___________________________________
Date: ________________________ Please date and sign exactly as
your name(s) appears. When signing
as attorney, executor,
administrator, trustee, or
guardian, please give full title.
If more than one trustee, all
should sign. All joint owners
should sign. WHETHER OR NOT YOU
PLAN TO ATTEND THIS MEETING, PLEASE
SIGN AND RETURN THIS PROXY AS
PROMPTLY AS POSSIBLE IN THE
ENCLOSED POST-PAID ENVELOPE.
I/we do [ ] or do not [ ] expect to
attend this meeting.
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF
DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
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