Employment Agreement
Bancorp’s
employment agreement with its president and chief executive officer Steven A.
Rosso dated October 20, 2005 includes the following principal terms:
·
The
term of employment is five years ending September 30, 2010, with an automatic
one-year renewal unless either party gives written notice of renewal prior to
the end of the term. In the event of prior termination without cause, Mr. Rosso
is entitled to a severance payment of one year’s salary plus continuation of
all health and welfare benefits for one year.
·
Starting
annual salary is $223,084, with annual adjustments in the discretion of the
board of directors. Annual Salary for
2007 is included in the Summary Compensation Table.
·
Additional
benefits include use of a company automobile, membership in country club and
other service clubs, participation in all employment benefits and plans
generally available to Company and Bank employees, and reimbursement for
Company-related expenses.
·
If
Mr. Rosso becomes temporarily or permanently disabled other than as a result of
his intentional act, he is to be paid the difference between his contracted
rate of compensation and the amounts paid by state disability insurance for a
maximum of six months.
·
Incentive
compensation is payable tied to certain Bank performance goals.
·
In
the event of a change in control of the Company, a pool of five percent (5%) of
the total sale value will be established at the close of a transaction above
the book value of the Company. Mr. Rosso will be entitled to receive at least
sixty percent (60%) of this pool.
·
Five
weeks annual vacation.
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 officers of the
Company, including two of the named executive officers listed on the Summary
Compensation Table, Steven A. Rosso and Gary A. Stewart. A similar agreement with JoAnne Roberts was
executed on March 20, 2007.
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 $8,025,000 at December 31, 2007. 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.
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 the case
10
of Mr. Rosso or Mr. Stewart, 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 named executive officers in the Summary Compensation Table.
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Name
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Annual
Benefit
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Present
Value of
Accumulated
Benefit
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Payments
During
Last Fiscal
Year
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Years
Required
For Full
Benefit
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Years
of
Accredited
Service
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Year
Annual
Benefit
Commences
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Retirement
Age
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Steven A. Rosso
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$
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134,587
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$
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262,695
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—
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10
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4
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September 2019
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65
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Gary A. Stewart
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$
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93,253
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$
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329,451
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—
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10
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4
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September 2015
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65
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JoAnne C. Roberts
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$
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86,237
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$
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29,388
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—
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10
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1
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July 2022
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65
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Employment
Contracts, Termination of Employment and Change-in-Control Arrangements
Except
for Mr. Rosso, no named executive officer has an employment contract. Mr.
Rosso’s employment contract is discussed above under the heading “Employment
Agreement.” All named executive officers have salary continuation agreements and
severance agreements as also discussed above under the heading “Salary
Continuation Agreements.”
The
table below shows the maximum incremental amounts that could be paid to the
named executive officers upon a change in control or for termination without
cause. The following information is based on (i) the executive’s salary at
December 31, 2007; and (ii) assumes the triggering event was on December 31,
2007.
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Change
in Control
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Severance
Benefit
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Vesting
of
Options
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Salary
Continuation
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Total
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Steven A. Rosso
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$
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375,505
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$
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13,822
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$
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243,223
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$
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632,550
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Gary A. Stewart
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$
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—
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$
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7,916
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$
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404,373
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$
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412,289
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JoAnne C.
Roberts
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$
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—
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$
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1,508
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$
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243,215
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$
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244,723
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Termination
Without Cause
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Salary
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Vesting
of
Options
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Salary
Continuation
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Total
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Steven A. Rosso
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$
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280,500
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$
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13,822
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$
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676,518
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$
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970,840
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Gary A. Stewart
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$
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—
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$
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7,916
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$
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583,252
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$
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591,168
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JoAnne C. Roberts
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$
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—
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$
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1,508
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$
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443,294
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$
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444,802
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11
Board
of Directors Compensation Table for 2007
Non-employee directors receive a monthly cash retainer
for service as a director A Director who is an officer of the Company or of a
subsidiary is not compensated for his or her membership on the Board.
The following table provides compensation information
for the one year period ended December 31, 2007 for each non-employee member of
the Company’s Board of Directors. Compensation information regarding the two
management directors is included in the Summary Compensation Table.
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Name
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Fees
Earned or
Paid in Cash
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Total
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Michael L. Dalton
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$
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37,000
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$
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37,000
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Maxwell M. Freeman
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$
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37,000
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$
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37,000
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Harold Hand
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$
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37,000
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$
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37,000
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Patricia Ann Hatton
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$
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37,000
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$
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37,000
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Steven J. Kikuchi
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$
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37,000
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$
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37,000
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Yoshikazu Mataga
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$
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37,000
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$
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37,000
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Russell G. Munson
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$
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37,000
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$
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37,000
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Kathleen Verner
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$
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37,000
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$
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37,000
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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
creditworthiness and did not involve more than a normal risk of collectability
or present other unfavorable features.
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, 2007, 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
REGISTERED PUBLIC ACCOUNTING FIRM
The
accounting firm of Perry-Smith LLP (“Perry-Smith”), registered 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.
12
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, 2007 and for the reviews of the financial statements included in
Bancorp’s Quarterly Reports on Form 10-Q for that fiscal year were $118,700;
related fees for the year ended December 31, 2006 were $112,675. These amounts represented 76% and 74%,
respectively, of the total fee paid to Perry-Smith during these years.
Audit-Related
Fees
The
aggregate fees billed by Perry-Smith for audit related services rendered for
technical accounting, consulting and research were $0 for the year ended
December 31, 2007; related fees for the year ended December 31, 2006 were
$1,000. These amounts represented 0%
and 0.6%, respectively, of the total fee paid to Perry-Smith during these
years.
Tax Fees
The
aggregate fees billed by Perry-Smith for all tax services rendered to Bancorp
for the fiscal years ended December 31, 2007 and December 31, 2006 were $37,570
and $32,390 respectively. Those amounts
represented 24% and 21.4%, respectively of the total fees paid to Perry-Smith
during these years.
All
Other Fees
The
aggregate fees billed by Perry-Smith for all other services rendered to
Bancorp, other than the services described above, for the fiscal years ended
December 31, 2007 and December 31, 2006 were $0 and $5,000, respectively. Those amounts represented 0% and 4%,
respectively of the total fees paid to Perry-Smith during these years. The fees paid in 2006 were related to an
interest rate risk review. 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.
13
SHAREHOLDER PROPOSALS
Next
year’s Annual Meeting of Shareholders of Bancorp is scheduled be held on May 7,
2008. Any shareholder desiring to
submit a proposal for action at the 2008 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 14, 2008. Management of
Bancorp will have discretionary authority to vote proxies obtained by it in
connection with any shareholder proposal not submitted on or before the
December 14, 2008 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 7, 2008
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.
14
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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:
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Please Mark Here for Address
Change or Comments
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SEE REVERSE SIDE
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1.
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To elect
as Directors the nominees set forth below.
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FOR ALL
nominees listed to the
left
(except as marked to the contrary as instructed below).
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WITHHOLD AUTHORITY
to vote for all nominees listed.
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2. In their discretion, to
transact such other business as
may properly come before the meeting.
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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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01
Michael L. Dalton
02 Maxwell M. Freeman
03 Harold Hand
04 Patricia Ann Hatton
05 Steven J. Kikuchi
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06
Yosh Mataga
07 Steven A. Rosso
08 Gary A. Stewart
09 Kathleen Verner
10 Russel G. Munson
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o
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o
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I/we do
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or do not
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expect to
attend this meeting.
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INSTRUCTION: To withhold
authority to vote for any individual nominee, strike a line through the
nominee’s name.
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SHAREHOLDER(S)
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Number. of
Common Shares
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Signature _______________________________ Signature _______________________________ Date _______________
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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.
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Choose
MLink
SM
for fast, easy and secure 24/7 online access to your future
proxy materials, investment plan statements, tax documents and more. Simply log
on to
Investor ServiceDirect
®
at
www.bnymellon.com/shareowner/isd
where step-by-step instructions will prompt you through enrollment.
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REVOCABLE PROXY
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PACIFIC STATE BANCORP
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SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS MAY 8, 2008
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The
undersigned holder of Common Stock, revoking any Proxy heretofore given,
hereby constitutes and appoints Steven A. Rosso and Russel G. Munson 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
8, 2008, 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.
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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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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.
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(Continued
and to be marked, dated and signed, on the other side)
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Address Change/Comments
(Mark the corresponding box on
the reverse side)
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Pacific State Bancorp (CE) (USOTC:PSBC)
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De May 2024 a Jun 2024
Pacific State Bancorp (CE) (USOTC:PSBC)
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De Jun 2023 a Jun 2024
