Company Name: First Financial Bancorp
Public Availability Date: July 1, 2004

James M. Rocket
Direct Phone: (415) 393-2025

Our File No.: 2021879-0000303747

July 1, 2004

Via FedEx

U.S. Securities and Exchange Commission-
Division of Corporation Finance
Office of Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: First Financial Bancorp (0-12499)

Ladies and Gentlemen:

This firm represents First Financial Bancorp. (the "Company"), the holding company for Bank of Lodi, N.A. (the "Bank"), of Lodi, California. On or about November 21, 2003, the Company received the following shareholder proposals (see Exhibit A for original letters from proponents) from, respectively, Angelo Anagnos ("Anagnos") and Steven Coldani ("Coldani"), for inclusion in its proxy materials for its 2004 annual meeting of shareholders:

Anagnos Proposal

RESOLVED, that the Board conduct a comprehensive [sic] compensation of executive management and the Board of Directors through an independent third party company and publish a report of this review, omitting proprietary information and prepared at a reasonable cost. Tis report shall be available to all shareholders, upon request, by August 15, 2004. At a minimum, this review should consider the following:

1) Would shareholder value be enhanced if the Company established a policy limiting the aggregate concentration of bank owned life insurance among executive officers and directors and also limiting the amount of bank owned life insurance/or any individual director or executive officer?

2) Would shareholder value be enhanced if the Company granted executive officers and directors indexed stock options that would reward executives only if Company stock outperformed its peer group?

3) Would shareholder value be enhanced if the Company adopted an executive pay policy freezing executive officer bonuses during periods that the Company earns net income before executive officer bonuses (all calculated under

U.S. Securities and Exchange Commission
July 1, 2004
Page 2

GAAP)for a relevant year less than 1.0% of total assets at the beginning of that year?

4) Would shareholder value be enhanced the Company adopted a police, of seeking shareholder approval for any executive or director severance payments beyond the terms negotiated in any contracts?

5) Would shareholder value be enhanced if the Board of Directors through an independent third party conducted a thorough review of all compensation paid to executive officers and directors prior to modifying or creating any compensation program?

SUPPORTING STATEMENT: The Company's liberal director and executive compensation have significantly reduced shareholder returns in recent years. The Company's Proxy Statement for 2003 failed to include te SEC required Board Compensation Committee Report on Executive Compensation and the Stock Performance Graph. Could the reason for the omissions he that management of the Company does not want shareholders to see their compensation as compared to the Company's stock performance? Return of [sic] Average Equity and Return on Average Assets for the Company have been significant below peer group at the same time the Board recently granted themselves stock options. While executives have become rich, shareholders have suffered mediocre returns over the past several years. It is time for the Company to try a different approach. At least the shareholders should be fully informed as to amount of the entire compensation and benefits paid to the executive management and the directors.

Coldani Proposal

RESOLVED: That the shareholders of First Financial Bancorp (hereinafter "the Company") request the Board of Directors to redeem the Shareholder Rights Plan that was adopted in 2001 unless such plan is approved by a majority vote of shareholders to be held as soon as may be practicable.

SHAREHOLDER'S SUPPORTING STATEMENT: In 2001 the Company's Board of Directors adopted a shareholder rights plan, commonly known as a "poison pill", without shareholder approval. This plan was in addition to the requirement contained in the Articles of Incorporation of the Company that two- thirds of the outstanding shares of the Company must approve certain mergers of business combinations. This shareholders rights plan is an anti-takeover device that can adversely affect shareholder value hy discouraging takeovers that could be benificial to shareholders. Poison pills, according to the book "Power and Accountability" by Nell Minow and Robert Monks: "amount to major de facto shifts of voting rights away from shareholders to management on matters pertaining to the sale of the corporation. The give target boards of directors

U.S. Securities and Exchange Commission
July 1, 2004
Page 3

absolute veto power over any proposed business combination, no matter how beneficial it might be for the shareholders." Thus it is no surprise that the Shareholder Bill of Rights adopted by the Council of Institutional Investors, whose members represent nearly $2 trillion in benefit fund assets, calls for poison pills to be approved by shareholders before they take effect. At a minimum, the shareholders of our Company should have the right to vote on the necessity of adopting such a powerful anti-takeover weapon.  Therefore, your support for this proposal is respectfully sought.

On behalf of the Company, we hereby notify the Securities and Exchange Commission pursuant to Exchange Act Rule 14a-8(j) that the Company intends to omit the proposals from its proxy materials for its 2004 annual meeting of shareholders for the reasons stated below, on the following bases:

a) the proposals are excludable because the dissidents have violated the "one proposal" limit of Rule 14a-8(c)

b) the proposals are excludable because they relate to the redress of a personal claim or grievance against the company and its executive officers, and are designed to result in a benefit to, or to further a personal interest, which is not shared by the other shareholders at large, in violation of Rule 14a-8(i)(4); c) the proposals relate to an election and are excludable under Rule 14a- 8(i)(8);

d) the proposals are excludable because they are false and misleading and therefore violate Rule 14a-8(i)(3) and Rule 14a-9; and

e) the Anagnos proposal is excludable because it constitutes an improper mandate to the company's board of directors and is improper under the laws of the state of California and therefore violates Rule 14a-8(i)(1)

Enclosed are six copies of this opinion as well as six copies of the proposals. The Company's annual meeting is usually held in April, but has been postponed. The Company's current expectation is that the meeting will be rescheduled to occur sometime in the fall of 2004.

This opinion is submitted in support of the exclusion of these proposals from the Company's 2004 proxy materials, for the reasons set forth below.

Background and Circumstances Surrounding Submission of Proposals

In order to understand certain of the grounds for exclusion of the proposals argued in this opinion, a brief recap of the rather tortured history of an ongoing dispute between the Company and three of its directors is necessary.

U.S. Securities and Exchange Commission
July 1, 2004
Page 4

The proponents are members of the Company's board of directors. They were also members of the Bank's board of directors until June 31, 2003 when the Company, as sole shareholder of ihe Bank, removed them from office for cause, along with a third director Kevin Van Steenberge (Van Steenberge"), for misconduct and violation of their fiduciary duties as directors.

Since early March of 2003, the proponents and Van Steenbrge (the "Dissidents") have engaged in a pattern of conduct which can only be described as deliberate harassment of the Company and its board of directors and officers. On or about March 11, 2003, Benjamin Goehring, the Chairman of the Board of the Bank and of First Financial Bancorp, attended a breakfast meeting in Sacramento, California to which he and one other director had been invited by telephone the night before. The three Dissidents were present along with their attorney and consultant Gary Steven Findley ("Findley")1/. Findley proceeded to criticize the Bank's management and its performance in running the Bank, and argued that the Bank's performance trailed that of its competing banks in the same market. Mr. Goehring told the Dissidents and Findley that he would have nothing to do with their plan and believed that their entire goal was a personal vendetta against the CEO of the Bank and the Company, Leon J. Zimmermann. Findley alleged that management and the board had no strategy for running the Bank. Mr. Goehring became incensed at Findley's accusation and promptly left the meeting. Shortly thereafter, Mr. Goehring advised the remaining members of the Board of what had occurred.

At a meeting of the Company's board of directors held on the evening of March 27, 2003, the Dissidents presented to the board a memorandum in which they alleged a pattern of mismanagement and improper executive compensation that they alleged had adversely impacted the Bank's profitability. After the board excluded management and adjourned to an executive session, Coldani admitted that he, Anagnos and Van Steenberge had hired Findley as their attorney and consultant to review the Bank's growth and expansion. A heated confrontation ensued.

In the weeks and months ahead, the clash become more and more contentious, as briefly summarized below and in more detail in the attached Chronology of Events and the documents attached thereto:2/

1/ Gary Steven Findley & Associates is a law firm that specializes in representing independent financial institutions operating in the Western United States. They also provide financial consulting. See the firm's website at http://www.findley-reports.com/. It's publication "The Findley Reports" provides financial information regarding banks. The Findley group of companies also provide investment banking services. According to their website, one of their affiliated entities, Gerry Findley Incorporated, is an investment advisor registered with the Commission. See also Exhibit D.

2/ Exhibit C to this opinion contains a detailed Chronology of Events surrounding the conduct of the Dissidents which led to the submission of these proposals, along with copies of relevant documents and news articles which reflect the impassioned nature of

U.S. Securities and Exchange Commission
July 1, 2004
Page 5

*   At a shareholder question and answer period following the Company's April 22, 2003 annual meeting of shareholders, there was much discussion regarding the Dissidents and their activities. At one point, the following exchange occurred in response to a shareholder question:

Q. Jack McAuley (ESOP) - "When I was hired here three years ago, the business plan was laid out and the goals were clear. The train has left the station. Who are the board members who want to get off the train?

A. Chairman Zimmerman - "The board members are here tonight. It would not be appropriate for me to respond to that question. But if they wish,  would like to invite them to introduce themselves."

Comment:     Steve Coldani stood: "I am one of those and am open to              questions at any time"

 Kevin Van Steenberge stood: "As am I. And, am also open to questions."

 Angelo Anagnos stood: "I am also one of those board members."

(emphasis added).

* On April 24, 2003: the Company presents a draft letter to the Dissidents by which they fire Findley as their attorney and disavow his public statements which have caused embarrassment to the Company and the Bank and have prejudiced the institution in the eyes of the community and the shareholders. During a Board meeting, the Company requests that the Dissidents agree to this letter.

* On April 29, 2003, the Dissidents wrote to the Chairman of the Board of the Company and the Bank demanding the resignation of the President and CEO of the Company and the Bank as an officer and director, the freezing of all stock option grants and incentive compensation programs and that board fees be sliced in half.

* On May 21, 2003, the Dissidents (plus Raymond Coldani, father of one of the Dissidents) wrote to the Company stating that they jointly owned more than 5%

the controversy. The following text only summarizes some of the highlights set forth in more detail in the Chronology of Events and the documents attached thereto.

U.S. Securities and Exchange Commission
July 1, 2004
Page 6

of the Company's outstanding shares 3/ and demanding the Company's shareholders list, in preparation for sending a letter to the Company's shareholders. The Dissidents sent such a letter, dated June 23, 2003, alleging financial mismanagement of the Bank

* In a July 8, 2003 letter to shareholders, the Company's Chairman of the Board and its President and CEO responded to the Dissidents' 6/27/03 letter by saying that:

The [June 23 letter] is full of outright lies, half-truths, innuendo character assassination and deliberately misleading statements,

We remain uncertain of the true motives of the three dissident directors and their backers. However, it is noteworthy that directors Anagnos, Coldani, and Van Steenberge were the only directors who recently refused to sign the Company's Code of Conduct. Our Code of Conduct was adopted in response to the Sarbanes-Oxley Act of 2002, which ensures ethical corporate governance of the financial operations of American companies, a pledge that all of the other directors made freely and enthusiastically.

* At a Board meeting on July 31, 2003, the Dissidents refuse to approve the Board's newly-adopted Code of Conduct Policy. All other directors have signed.

* At a meeting of the Company's board on July 31, 2003, the board, acting as sole shareholder of the Bank, removed the Dissidents from the board of the Bank. At that same board meeting, Director Coldani delivered a letter to the board demanding to inspect and copy books and records of the Company and the Bank.

* August 11, 2003, letters from Chairman of the Board of the Company to each of the three Dissidents formally notifying them their removal from the board of Bank of Lodi for cause and of the imposition of certain disciplinary measures for violation of fiduciary duties as directors of the Company. Letter also requests that the Dissidents resign from Board of the Company.

* On August 20, 2003, the dissidents respond to the request for their resignations and refuse to resign.

* October 14, 2003: Dissidents send letter to shareholders of the Company in which they refer to the elimination of the shareholder rights plan, the subject of

3/ See Exhibit C(8). To our knowledge, the Dissidents have not made a Williams Act filing reporting the formation of a group.

U.S. Securities and Exchange Commission
July 1, 2004
Page 7

the Coldani proposal (which at this point hadn't yet been submitted to the Company):

We will be contacting the shareholders in the near term to talk about our plans for placing candidates in nomination for the Board of First Financial Bancorp as well as the elimination of the shareholders rights plan The shareholders rights plan is not in the best interests of the shareholders of First Financial Bancorp

(emphasis added).

* On November 17, 2003, the Dissidents write to the Company's board objecting to board actions. On the same day, they again write to shareholders questioning bank performance and executive compensation and announcing their intention to conduct a proxy contest. Among other things, the letter to shareholders states:

In California the electors recently recalled the Governor, maybe it's time that the shareholders, who are the constituents of First Financial Bancorp, stand up and recall this Board and Executive Management. We will be submitting a slate of capable directors who have the ability and inclination to create shareholder value instead of raiding the profits for the personal wealth of a select few.... You have the power with your vote to make a change. We saw a very powerful example of that in our state government. Please join with us to put a stop to what is clearly an unethical and arrogant attitude and practice on the part of the Board and Executive Management. (emphasis added).

On November 20, 2003, the Company's counsel writes to the Dissidents, responding to their November 17, 2003 memo objecting to board actions and conduct of board meetings. Among other things, the letter states:

Like your other communications about this subject, your memorandum is comprised of misstatements of fact and half truths. Therefore, to make sure that your falsehoods are corrected, I am responding to your memorandum.

***

You have persisted in seeking out the press and making deliberately false statements to the press. Through your advisors, have contacted other institutions to seek offers to acquire the Company.

***

Your actions ... have been examined and found to be in violation of your fiduciary duties by your fellow directors at its meeting held on July

U.S. Securities and Exchange Commission
July 1, 2004
Page 8

31, 2003. You were present at that meeting when that report was delivered debated and passed unanimously by the disinterested directors.

(emphasis added),

On November 21, 2003, Dissident directors Coldani and Anagnos submit the shareholder proposals that are the subject of this submission, Proposal was hand-delivered to the Company by Dissident Kevin Van Steenberge on or about this date.

* On March 5, 2004, the Dissidents meet with a group of 130 shareholders to attempt to garner support for a proxy contest.

* On March 22, 2004, the Dissidents send letter to the Company nominating an alternative slate of directors for election at the 2004 annual meeting

* On April 14, 2002, the Dissidents again meet with a group of shareholders to attempt to garner support for a proxy contest.

To say the least, the Dissidents' campaign against the Company and its management has become a cause celebre in the news media. Numerous articles (discussed in the Chronlology of Events and its attachments) have appeared in the local press reporting on this quarrel, several of which quote the Dissidents or their attorney Findley. Headlines such as "Bank of Lodi's Managers Facing Shareholder Revolt," "Bank Battle Becoming Bitter," "Directors' Letter Blasts Own Bank," (referencing the Dissident's June 23, 2003 to shareholders), "Bank of Lodi Disaffected Directors Trade New Salvos," "Bank Brouhaha" and "'Recall' Bank of Lodi Chiefs, Dissidents Say" have appeared time after time. The stories below those headlines have had a profoundly negative impact on the perception of the Bank and the Company in the communities in which they operate, as well as on the morale of the Bank's employees.

The dispute between the Dissidents and the Company is currently ongoing--no resolution is in sight. As the Dissident's own attorney, Findley, rather colorfully described his clients in one article:

"My guys are bulldogs ona pork chop right now," said the dissident's attorney, Findley.

"They are not going to let go" 4/

(emphasis added)

4/ See full article behind Exhibit C(35).

U.S. Securities and Exchange Commission
July 1, 2004
Page 9

I.    The Proposals are Excludable Because the Dissidents Have Violated the "One Proposal" Limit of Rule 14a-8(c)

Rule 14a-8(c) provides that "Each shareholder may submit no more than one proposal to a company for a particular shareholders' meeting."

In Release 34-12999 (11/22/76), amending Rule 14a-8 in certain respects, the Commission wrned that exceeding the one proposal limit through the use of straw men was a abuse of the proxy process and would not be tolerated:

The Commission, however, has noted that in recent years several proponents have exceeded the bounds of reasonableness either by submitting excessive numbers of proposals to issuers or by submitting proposals that are extreme in their length. Such practices are inappropriate under Rule 14a-8 not only because they constitute an unreasonable exercise of the right to submit proposals at the expense of other shareholders but also because they tend to obscure other material matters in the proxy statements of issuers, thereby reducing the effectiveness of such documents. Accordingly, the Commission has added a new subparagraph (a)(4) to the rule limiting a proponent to a maximum of two [subsequently changed by the Commission to one] proposals of not more than 300 words each to an issuer. These limitations will apply collectively to all persons having an interest in the same securities (e.g, the record owner and the beneficial owner, and joint tenants).

In connection with the above, the Commission is aware of the possibility that some proponents may attempt to evade the new limitations through various maneuvers, such as having other persons whose securities they control submit two proposals each in their own names. The Commission wishes to make it clear that such tactics may result in measures such as the granting of request by the affected managements for a "no-action" letter concerning the omission from their proxy materials of the proposals at issue. (footnote omitted).

In numerous instances, the Commission has demonstrated that it will protect the proxy process from such abuses. See, e.g., Dominion Resources, Inc. (February 24, 1993) (no- action position taken where three proposals were submitted by three nominal proponents coordinated by a single proponent held excludable on this basis); Weyerhaeuser Company (12/20/95 )(proposals submitted on behalf of, under the control of or alter ego of the Committee for Asserting Unalienable Rights" held excludable); TPI Enterprises, Inc. (July 15, 1987) (no-action position taken where several proposals were "master minded" by a single proponent held excludable on this basis) Pacific Enterprises (2/12/96) (proposal submitted by several union members at the behest of the union itself held excludable on this basis); Jefferson-Pilot Corporation (3/12/92) (proposals submitted by a shareholder and a corporation controlled by the shareholder and her family held

U.S. Securities and Exchange Commission
July 1, 2004
Page 10

excludable on this basis); Int'l Business Machines Corp 1/26/98) (several suspiciously similar proposals held excludable due to violation of the one-proposal limit); Drexler Technology Corporation (7/14/99)(several proposals submitted through relatives and neighbors represented by the same attorney and submitted where surrounding circumstances suggested collusion held excludable).

Under the Commission's rules, the presence of influence, not control, domination, or the ability to rule proponents, is a prerequisite to omission of multiple proposals submitted by nominal proponents as part of an orchestrated scheme. See, e.g., Stone & Webster (March 3, 1995) (several proposals omitted because nominal proponents were acting on behalf of, under the control of, or as the alter ego of Ram Trust Services Inc. using the same counsel); Bane One Corp. (February 2, 1993) (no-action position taken with respect to omission of proposals submitted by nominal proponents who were recruited, but not controlled, by a single proponent); TPI Enterprises, nc. (July 15, 1987) (no-action position taken with respect to proposals apparently orchestrated by a single proponent); BankAmerica Corp. (February 8, 1996) (no-action position taken no-action position taken with respect to proposals orchestrated by proponent with long-standing dispute with issuer). As stayed in Stone & Webster, Inc. (March 3, 1995), there are numerous instances in which the Commission Staff has expressed a no-action position based, not on the existence of "control," but on a finding that there was evidence that proponents acted in a coordinated, arranged, masterminded or other fashion so as to constitute "acting in concert" within the meaning of the one-proposal limitation.

Regulation 13-DG governs the disclosure required under Section 13(d) of the Exchange Act, and requires the filing of Schedules 13D or 13G by parties who beneficially own over 5% of a company's registered equity securities. Rule 13d-5 of the Regulation provides that any group of shareholders who agree together to acquire, hold, vote or dispose of stock have beneficial ownership of the stock held by each other and must file if their joint ownership exceeds 5%. The Dissidents constitute a group under Rule 13d-5. 5/

5/ See SEC v. Savoy Industries, Inc., 587 F.2d 1149 (D.C.Cir.) cert den. 440 U.S 913 (1979): (". . . [A] combination is the key to a finding of a section 13(d)(3) group.... Any arrangements may be formal or informal. (citations omitted) .... [W]hatever meeting of the minds, understanding, or arrangement that may exist need not he written. It is possible, indeed commonplace, for two or more to take concerted action informally."); GAF v. Milstein, 453 F.2d 709 (2nd Cir.) cert. den. 406 U.S. 910 (1972) (shareholders who were family members and who were rebuffed in their effort to seek management and board positions thereafter undertook concerted action to disparage management and depress the stock price in order to facilitate acquisition of additional shares. The court found that the shareholders concerted action constituted the formation of group: ("The alleged conspiracy on the part of the Milsteins is one clearly intended to be encompassed within the reach of section 13(d). We have before us four shareholders who together own 10.25% of an outstanding class of securities and allegedly agreed to pool their holdings to effect a takeover of GAF, his certainly posed as great a threat to the stability of the corporate structure as the individual shareholder who buys 10.25%" of the equity security in one transaction. A shift in the loci of corporate power and influence is hardly dependent on an actual transfer of legal title to shares, and the statute and history are clear on this.") (footnotes omitted); Portsmouth Square Inc.

U.S. Securities and Exchange Commission
July 1, 2004
Page 11

From the above summary of events, and the more detailed recitation in the attached Chronology of Events, it is beyond question that the Dissidents have conspired together to take concerted action against the Company. There are numerous memos and letters which are either signed by the Dissidents 6/ or by their attorney in which the attorney admits that he is their representative.7/  A number of press articles either quote the Dissidents referring to each other or quote their attorney in contexts in which it is clear that they are acting in concert. Although Anagnos and Coldani are the nominal "proponents," it is clear that these proposals were submitted by the Dissidents as a group. These so-called shareholder proposals are nothing more than another tactic being used by the Dissident group in their ongoing crusade, and the staff should recognize them for what they are. If there could be any doubt of this conclusion, it is completely dispelled by this salient fact--both the Coldani and Anagnos proposals were simultaneously hand-delivered to the Company by Dissident Van Steenberg.

The Proposals Repeat the Same Issues That Underlie the Dissidents' Dispute with the Company

Further, it can hardly be a coincidence that the subject matter of the proposals embodies the executive compensation and business combination issues that are at the very heart of the dispute, as demonstrated below.

The Anagnos' Proposals points regarding limitations on bank owned life insurance, stock options, executive compensation, and independent third party review of compensation policies all have previously been raised in the Dissident's various memoranda and correspondence.8/

v. Shareholders Protective Committee 770 F.2d 866 (9th Cir. 1985) ("Rule 13d-5(b)(1) provides that persons who "agree to act together for the purpose of acquiring, holding, voting, or disposing of" securities shall be deemed to have acquired beneficial ownership,' as of the date of their agreement, of all securities owned by each of them. A beneficial owner of a security is one who has either the power to vote the security, or the power to invest it or dispose of it. 17 C.F.R. § 240.13d-3. It follows that Rule 13d-5(b)(1) applies to shareholders who have agreed to combine their voting power or investment power in pursuit of common goals. The courts and the SEC have recognized that shareholders can accumulate corporate shares without actually purchasing them. Rule 13d-5(b)(1) applies section 13(d) to groups of shareholders who have 'accumulated shares only in the sense that they have agreed to combine their existing shares in an concerted effort to influence the corporation").

6/ See Exhibits C(6, (8), (9) and (11).

7/ See Exhibits C(9), (18), (30) and (34).

8/ See Exhibits C(2), ( 1), (18), (25), (26), (27) and (51) (bank owned life insurance); Exhibits C(11), (26), (36), (38), (39), and (49) (stock options); Exhibits C(11), (18), (26), (36), and (39) (compensation); and Exhibits C(2), (11), (18), (25), (26), (36), (39), and (53) independent review of compensation)

U.S. Securities and Exchange Commission
July 1, 2004
Page 12

The Coldani proposal requests redemption of the Company's shareholder rights plan, which was put in place in 2001 to help protect the interests of the Company's shareholders in the event of a hostile acquisition. The question of whether the Company should remain independent or engage in a business combination is also at the heart of the dispute.9/

In fact, in some of their correspondence with shareholders the Dissidents encourage the shareholders to vote in favor of the two proposals, and indicate the substance of the proposals. For example, in their March 3, 2004 PowerPoint presentation materials apparently used at their "Town Hall" meeting for shareholders held on that date, they state as follows:

What Can Shareholders Do?

***

Vote to Have Comensation Review Completed and Reported to Shareholders

Vote to Eliminate Shareholder Rights Plan

What is the Plan (cont.)

***

Conduct Independent Third Party Review of All Compensation Programs and Reduce/Eliminate All Non Basic Compensation to Executive Management and Board

*  Reduce Bank Owned Life Insurance and Accurately Reflect the Liability

*   Eliminate Shareholder Rights Plan

(See Exhibit C(53))

Also, in their March 15, 2004 letter to shareholders, the Dissidents state as follows:

9/ "See Exhibits C(9), (11), (25), (26), (34), (59), (53), and (57).

U.S. Securities and Exchange Commission
July 1, 2004
Page 13

We want to thank the shareholders who attended the Town Hall meeting on Wednesday, March 3, 2004. Over 130 shareholders were in attendance to talk about First Financial Bancorp and Bank of Lodi, N.A.

At the Town Hall meeting we also emphasized, "What can shareholders do?"

***

Vote to have total compensation review completed and reported to shareholders

* Vote to eliminate shareholder rights plans

***

We are placing in nomination for directorship ten individuals who have the best interest of shareholders as well as our customers in mind. These ten individuals are shareholders or banking experts. We will be sending a letter out in the near term to inform you of these individuals and their backgrounds....

By their own admission the shareholder proposals are nothing more than part of the Dissidents' ongoing campaign.

The facts here are strangely similar to those in TPI Enterprises, Inc. (7/15/87). There, a group of related nominal proponents, represented by the same law firm, submitted nine proposals whih were strikingly similar to issues raised in pending litigation brought against the issuer by one of the proponents. The staff upheld omission of the proposals on the basis of violation of the one-proposal limit.

The Dissidents are not so much interested in good corporate governance as in effecting a change in control of the Company. They have already announced their intention to wage a proxy contest for the election of an alternate slate of directors of the Company at the next annual meeting, and they recently submitted to the Company their alternative slate of directors whom they intend to nominate at that meeting. These "proposals" are simply another in a long line of attacks by the Dissidents on the Company in an attempt to further their own interests instead of those of the Company to which they owe fiduciary duties as directors. If the Dissidents wish to submit shareholder proposals, they should do so in their own proxy materials which they will need to prepare in order to wage their proxy contest, rather than burdening the Company's proxy materials. The staff has seen through similar attempts by other shareholders in the past. For example, in Drexler

U.S. Securities and Exchange Commission
July 1, 2004
Page 14

Technology Corporation (7/14/99) a shareholder whose suggestions regarding bringing more press and investor attention to the issuer's stock were rejected by management. The shareholder then responded by submitting several shareholder proposals through relatives and neighbors under circumstances indicating collusion. he company's request letter stated that the proponent:

... started out by suggesting a variety of techniques by which Drexler could bring more press and investor attention to its stock. Finding that Drexler would not agree to implement his suggestions, he then attempted to achieve the same result by submitting to Drexler proposals for consideration at the Annual Meeting (including his original suggestion that an investor relations firm be hired) which, when publicly announced by Drexler, would have the inevitable result of drawing the same investor attention that has been his goal all along. When he was told that under the Commissions Rules he would not be allowed to sponsor more than one of these proposals, he attempted to circumvent the Rule by using friends and family members as the ostensible proponents, assisting them not only by orchestrating the substance, text, and timing of their submissions but also (apparently) by providing them with the very submittal letters and Proposals they   signed and sent on to Drexler on his behalf.

In Jefferson-Pilot Corporation (3/12/92), the company was confronted with two proposals, one by an individual shareholder and one submitted by a corporation 100% owned by her family members. The company said it intended to exclude the proposals because:

... Mrs. Parsons [the individual proponent] and RPC [the family corporation], by virtue of family and other relationships and the concerted nature of their activities as members of the Jefferson-Pilot Shareholders Committee (the "Committee") are in reality a single proponent who has submitted more than one proposal....

The company highlighted specifically the following factors, all of which are present in the instant case:

The Committee, of which Mrs. Parsons is Chairman, and its members have made it clear in their 14B filings and subsequent press releases that they intend to wage proxy contest in respect of this year's upcoming election of directors. he Committee is not so interested in specific corporate governance proposals as it is in effecting a change of control.

***

The fees and expenses incurred by the Committee before July 24, 1991 ($500,000) were paid by Mrs. Parsons, Chairman of the Committee. RPC is primarily responsible for all fees and expenses incurred by the Committee after July 24, 1991, including the fees and expenses of the Firemark Group, which was

U.S. Securities and Exchange Commission
July 1, 2004
Page 15

retained to provide advisory and other services to RPO and the Committee in connection with sponsoring director nominees for election at the 1992 Meeting.

The [Committee's] Statement of Purpose details the Committee's common objectives: [they] are presently evaluating a lumber of possible alternatives ... including, among others, (i) sponsoring certain corporate governance proposals (ii) suggesting nominees for election as Directors and (ii) soliciting proxies in support of the election of Directors sponsored by the Commmittee members.

(emphasis added).

The staff held all of the proposals excludable for violation of the one-proposal limit, noting especially that:

In reaching a position, we further note that the one-proposal limitation applies in those instances where a person attempts to evade the one-proposal limitation through maneuvers, such as having persons they control submit a proposals [sic]. See Securities Exchange Act Release No. 12999 (November 22, 1976). Based on the facts, your representations, and particularly noting the expense provisions made by the respective Proponents as well as the singular composition of the "Jefferson-Pilot Shareholders Committee," there appears to be some basis for your review that their submission violates the one-proposal limitation (emphasis added).

As in Jefferson-Pilot, the three Dissidents have admitted:

* hiring Findley at their own expense as their attorney and representative to advise them in their campaign (see Exhibit C(11)).

* that their intent is to wage a proxy contest against the Company (see Exhibits C(33), (35), (36), (39), (44), (47), (53), (57) and (59)); and

* that they are personally absorbing the expenses of their campaign. (see Exhibits C(11) and (44))

The tact that these shareholder proposals arrived right in the middle of this ongoing campaign is no accident but simply a part of the Dissidents' plan. As in the Jefferson- Pilot letter,

All of the members of the [Dissident group] have acted in concert.... It is impossible to separate any one member of the Committee from the Committee as a whole because their public positions justify treating them as a unified entity seeking to change control of the Company.

U.S. Securities and Exchange Commission
July 1, 2004
Pag 16

The staff should treat these proposals as it did the ones in Jefferson-Pilot and for the exact same reasons.

The Proposals Are Physically Identical

The similarity in form of the two proposals could not be more obvious (see Exhibit A). Visual comparison clearly demonstrates that they were prepared by the same word processor or typewriter:

* they use the same type font;
* they're dated the same day, November 21, 2003;
* the date on each is centered;
* the inside address appears exactly the same in each, including the placement of the Company's CEO's title on the same line as his name;
* each proposal begins with the exact same lead-in paragraphs:

U.S. Securities and Exchange Commission
July 1, 2004
Page 17

*  each proposal and supporting statement is italicized;
*  the margins in each are left justified; and
*  the paragraphs are not indented.

Such similarities have been cited before by companies to expose the common origin of proposals (see Int'l Business Machines Corp 1/26/98) (several suspiciously similar proposals held excludable due to violation of the one-proposal limit); Drexler Technology Corporation (7/14/99)(several proposals submitted through relatives and neighbors represented by the same attorney and submitted where surrounding circumstances suggested collusion held excludable).

The nominal proponents were given an opportunity to withdraw one of the proposals, but they both refused (see Exhibit B).

Therefore, the Dissidents should be treated as one proponent and the proposals excluded because they violate the "One Proposal" Limit of Rule 14a-8(c).

II. The Proposals are Excludable Because They Relate to the Redress of a Personal Claim or Grievance Against the Company and its Executive Officers, and Are Designed to Result in a Benefit to, or to Further a Personal Interest, Which Is Not Shared by the Other Shareholders at Large, in Violation Of Rule 14a-8(I)(4)

Rule 14a-8(i)(4) allows a company to exclude a proposal "if the proposal relates to the redress of a personal claim or grievance against the company or any other person, or if it is designed to result in a benefit to you, or to further a personal interest, which is not shared by the other shareholders at large ...." As the Commission stated in Release 34- 19135 (10/14/82):

Rule 14a-8 is ... not intended to provide a means or a person to air or remedy some personal claim or grievance or to further some personal interest. Such use of the security holder proposal procedures is an abuse of the security holder proposal process, and the cost and time involved in dealing with these situations do a disservice to the interests of the issuer and its security holders at large. Thus, Rule 14a-8(c)(4) specifically permits the omission of proposals that relate to the enforcement of personal claim or the redress of a personal grievance,

U.S. Securities and Exchange Commission
July 1, 2004
Page 18

See US West, Inc. (2/22/99)(proposal to censure the company's board due to proponent's dissatisfaction with transfer agent held excludable on personal claim or grievance basis); BankAmerica Corp. (/22/98)(proposal to tic increases in director compensation to rate of increases in dividends submitted by shareholder with longstanding dispute with company held excludable on personal claim or grievance basis): US West, Inc. (12/2/98)(proposal to advise management of shareholder dissatisfaction with payments of cash in lieu of fractional shares held excludable on personal claim or grievance basis); Crown Central Petroleum Corporation (3/4/99)(proposal requesting study of relationship between company and one of the company's officers held excludable on personal claim or grievance basis where there was longstanding battle between union of which proponent was a member and proponent involved in ongoing litigation with company, held excludable on personal claim or grievance basis).

The Proponents are Aggrieved Due to Their Dissatisfaction with the Performance of the Company and its Management and with Director and Executive Compensation

As is evident from the attached Chronology of Events and the above discussion, the Dissidents are engaged in an ongoing crusade to drive out the Company's current management. They have singled out the three most senior officers to bear the brunt of their attack.10/ They have vowed to stop at nothing until their goal is achieved. As noted above, the subject matter of the proposals are at the very heart of the struggle. It would be foolish to conclude that the proposals were somehow conceived of independently from the battle which the Dissidents have been waging. Indeed, they simply constitute additional overt acts in their continuing conspiracy to harass the Company.

This matter is factually similar to Computer Network Corporation (6/16/83). There, two proponents submitted three proposals, including The staff upheld exclusion of three proposals, relating to an amendment of the Company's by-laws to eliminate a classified board, to change the manner in which certain shares issued by the Company in connection with an acquisition and held in a voting trust are to be voted by the company's board, and a request that the Board to engage independent counsel to conduct an investigation of certain compensation agreements.

The staff noted that the three proponents had admitted in their 13D filings with the Commission the formation of a group and their intent to seek control of through a proxy contest. The three proponents has also filed litigation against the company accusing the

10/ See letter from Dissidents to Bank employees dated July 16, 2003 (Exhibit 20):

In communications to shareholders, we have expressed our concern as to action of the Board and Management. We wanted to express to the employees as well as middle level managers that wc did not mean all Management but rather the Executive Management comprised of the three top individuals. (emphasis added).

U.S. Securities and Exchange Commission
July 1, 2004
Page 19

directors and certain officers of breach of fiduciary duties by causing the Company: to enter into certain compensation agreements with key employees; to amend the by-laws to provide for staggered terms for directors; and to acquire a certain business for cash and stock and to place such stock in a voting trust. The three proponents admitted in their Schedule 13D their intention to propose a rival slate of candidates for election at the next stockholders meeting. The staff held the proposals excludable both on personal grievance and election grounds:

After consideration of the information contained in your letter and the material attached as exhibits thereto, this Division believes that there may be some basis for your view that the Proponents arc using the proposals as one of the many tactics designed to enforce a personal claim or redress a personal grievance against the Company and its management. In addition, there appears to be some basis for your view that the proposals may be omitted under Rule 14a-8(c)(8), since it appears that the proposals relate to the election of the Company's Board of Directors. In this regard, it should be noted that the Commission adopted Rule 14a-8(c)(8) because it was of the view that the shareholder proposal process was not the proper means for conducting election contests, since other sections of the proxy rules, particularly Rule 14a-11, were specifically designed to handle such matters. Under the circumstances, this Division will not recommend any enforcement action to the Commission if management omits these proposals from the Company's proxy material.

The Proposals Are Excludable on Grievance Grounds Even If the Staff Concludes it Does Not Reflect the Proponents' Grievance on Its Face

As we argue above under Point , the text of these proposals keenly reflects the specific claims or grievances that the proponents have against the Company and are excludable under Rule l4a-8(i)(4) on their face. But even if the staff deems the proposals to be stated in more general terms which on their face might seem to be beneficial to the Company's shareholders as a whole, we still believe that they were motivated by the undeniable dispute between the Dissidents and the Company and are nevertheless excludable. As the Commission stated in Release 34-19135 (10/14/82):

... a proposal, despite its being drafted in such a way that it might relate to matters which may be of general interest to all security holders, properly may be excluded under paragraph (c)(4), if it is clear from the facts presented by the issuer that the proponent is using the proposal as a tactic designed to redress a personal grievance or further a personal interest. (emphasis added).

In the language of 34-19135, wc believe that "it is clear from the facts presented [here]...that the proponent is using the proposal as a tactic designed to redress a personal grievance or further a personal interest."

U.S. Securities and Exchange Commission
July 1, 2004
Page 20

The staff has previously allowed a proposal to be excluded which does not on its face evidence a personal claim or grievance, but appears from the surrounding circumstances to be part of a campaign designed to redress an existing personal grievance, some of which are cited above. See also Texaco, Inc. (March 18, 1993) (a proposal regarding limits on executive and consultant compensation); Station Casinos, Inc. (October 15, 1997), Baroid Corporation (February 8, 1993).

The Proponents are Also Aggrieved Due to Having Been Discharged as Directors of the Bank

In addition, the Dissidents are undoubtedly still smarting from the Company's recent decision to discharge thern fom their posts as directors of the Bank, an action that received significant press coverage in the community in which the Dissidents live. (See, e.g., Exhibits C(5), (21) and (22)). a grievance sufficient on its own to prompt the submission of a shareholder proposals, as the staff has experienced numerous times over the years. The Board's demand that the Dissidents resign as directors of the Company (See, e.g., Exhibits C(17) and (32)), which has received similar press coverage, must have caused similar consternation among the Dissident group.

A proponent's resentment arising from an adverse employment decision has been ound by the staff many times to support exclusion of a proposal on the grounds of personal claim or grievance. The facts here are similar to those in Southeastern Michigan Gas Enterprises, Inc. (1/16/96). There, the proponent was a former officer and general counsel of the company who alleged he was forced to resign. The proponent sued the company for breach of employment contract, unpaid compensation and other charges, and during the pendency of the litigation, submitted a shareholder proposal. As with the Anagnos proposal, the proponent requested a review and report regarding the propriety of certain compensatory arrangements for senior executives. The staff upheld exclusion on the basis of personal claim or grievance.

In Sigma-Aldrich Corporation (3/4/94), the staff upheld exclusion of a proposal recommending limitations on CEO compensation and company severance agreements, due to the proponent's personal grievances which arose from his having been fired as chairman emeritus and consultant, and not renominated as a director. The proponent's reaction was quite similar to that of the Dissidents. According to the company's letter, the proponent distributed letters to a large number of publications and scientists, including customers of the company, criticizing the company's decisions with a view to pressuring the company to reverse its decisions. He also gave statements and interviews to a number of publications, seeking to redress a perceived wrong by attempting to embarrass the company. The company pointed out that the proponent's various letters and statements in interviews "'clearly demonstrate that the Proponent holds a grudge against management aid, in particular, the Chief Executive Officer of the Company. The Proposals stem directly from his personal grievance against the Chief Executive Officer and the Company."

U.S. Securities and Exchange Commission
July 1, 2004
Page 21

In Pfizer, Inc. (1/31/95), the staff upheld exclusion of a proposal relating to disclosure of executive compensation due to the proponent's personal grievances against the company, The proponent, unhappy with the circumstances surrounding his retirement from Pfizer, submitted his proposal while his age-discrimination complaint against the company was still pending. n its no-action letter, the staff pointed out that the grievance related to termination of employment, was of longstanding duration and that the proposal was excluded ever though it did not on its face reflect the grievance:

There appears to be some basis for your view that the proposal may be omitted from the Company's proxy material under rule 14a-8(c)(4) insofar as the proposal was submitted in furtherance of the proponent's position in a grievance against the Company involving the termination of his employment. In arriving at this position, the staff has particularly noted that the proposal, while drafted to address other considerations, appears to involve one in a series of steps relating to the longstanding grievance against the Company by the proponent. Under these circumstances, the Division will [not] recommend enforcement action to the Commission if the Company omits the proposal from its proxy material.

In Pyramid Technology Corporation (12/4/92), the proponent, a terminated sales executive, proposed that Pyramid adopt a policy against entering into any agreements with officers or directors which provided or compensation contingent upon a change in control, unless ratified by shareholder vote. Before submitting his proposal, the proponent had made numerous written allegations against Pyramid and threatened legal recourse against Pyramid for his alleged wrongful termination. In taking the position that Pyramid could omit the proposal from its proxy material pursuant to Rule 14a-8(c)(4), the staff noted that the "proposal, while drafted to address other considerations, appears to involve one in a series of steps relating to the longstanding grievance against the Company by the proponent."

In AmVestors Financial Corporation (3/31/92), the proponent submitted a proposal requesting that the company's board of directors seek potential buyers for a sale or merger. The facts are dramatically similar to the instant case. The AmVestors proponent, who held 3.4% of the outstanding shares of common stock and was one of the largest individual shareholders, had been terminated as an employee and chairman emeritus and removed from the boards of directors of the company's three subsidiaries, after an investigation found that he:

* had engaged in divisive conduct in an effort to undermine the management of the Company and to undercut the effectiveness of its management;

* failed to perform his duties with the utmost good faith, loyalty, and fidelity to the Company, its officers and directors;

* used his position in a threatening and coercive manner to intimidate other employees of the Company;

U.S. Securities and Exchange Commission
July 1, 2004
Page 22

*   used his time inefficiently and ineffectively by directing his efforts to matters outside the scope of his duties and responsibilities assigned him by the Board of Directors;

*   prepared and circulated memoranda to officers or directors during the (approximately) last twelve months which ". . . taken as a whole,. . . are disruptive, divisive and in many cases self-serving and not in the best interest of shareholders and policyholders";

*   failed to promote the policies established by the Board of Directors in a cooperative and positive manner;

*    interested [interfered] with the duties and responsibilities delegated to other management officials by the Board of Directors;

*   used his position and stature with the Company to achieve his own self interests, disregarding the goals and objectives of the Company's Board of Directors; and

*   disclosed confidential information to other persons.

The proponent commenced litigation against the Company and its subsidiaries in federal and state court in an attempt to redress his personal grievances. He also submitted a written request to the company demanding to inspect its records. The proponent employed counsel to advise him how to conduct a proxy contest for election of directors.

The staff's response noted the statements in the company's request letter that:

... [T]he proposal was submitted as part of tile continued efforts by the Proponent to pursue his claims against the Company and against its management. This Division will not recommend enforcement action to the Commission if the proposal is excluded for the Company's proxy materials.

There are numerous other examples where the staff has upheld exclusion of proposals submitted after termination of employment, on the basis of personal grievance. See IBM (11/22/95) employeee terminated for substandard performance submitted proposal to mandate that he former Chairman and CEO of the company re reduced to $1.00 per year in pension payments held excludable on grievance grounds); The Southern Company (1/21/03)(laid-off employee who sent the company more than 40 letters, faxes, electronic mail messages, requests and other communications and submitted proposal that would require the company to form a shareholder committee to investigate complaints against management held excludable on grievance grounds); Morgan Stanley (1/14/04)(employee terminated for misconduct who submitted proposal regarding adoption of a new personnel policy held excludable on grievance grounds); Merck & Co., nc. (l/22/03)(terminated Ph.D. scientist submitted proposal that company provide certain

U.S. Securities and Exchange Commission
July 1, 2004
Page 23

in formation to shareholders, appoint council to review disputes regarding filling research and development positions, and review corrective measures in cases of incompetence and professional misconduct held excludable on grievance grounds); Phillips Petroleum Company terminated employee engaged in longstanding campaign of harassment of company followed by submission of proposal to make permanent the company's midyear shareholders report held excludable on grievance grounds); Texaco, Inc. (service station owner whose gasoline lease with Texaco was terminated for low volume submitted proposal on limiting executive compensation, held excludable on grievance grounds).

As noted above, if there could be any doubt of the fact that the proposals were prompted by the Dissidents' joint grievance against the Company, it is completely dispelled by this salient fact--both the Coldani and Anagnos proposals were simultaneously hand- delivered to the Company by Dissident Van Steenberge.

Therefore, the Anagnos proposal and the Coldani proposal violate Rule 14a-8(i)(4) and should be excluded.

III. The Proposals Relate to an Election and Are Excludable Under Rule 14a-8(i)(8)

Rule 14a-8(i)(8) provides that a proposal is excludable "if the proposal relates to an election for membership on the company's board of directors.... "

The Dissidents' scheme involves effecting a change in control of the Company. In numerous of the Dissidents' communications and public statements, including statements made on their website Exhibit E), they acknowledge that their intent is to propose an alternative slate of candidates, including themselves, for election to the Company's board at thc next annual meeting and in their letter of March 22, 2004 they did propose their alternative slate. In document after document, the Dissidents slam the Company's existing board and management, alleging mismanagement of the Company and improper and excessive director and executive officer compensation. These recurrent themes are platforms in their campaign to gain seats on the Company's board. The Anagnos Proposal and the Coldani Proposals arc simply an attempt by the Dissidents to "condition the market" by increasing their visibility among the shareholders and providing yet another avenue for them to bring their message to the shareholders. The Dissidents' website and other materials circulated to shareholders, not to mention the press they have generated, are simply steps in their quest to install themselves and their cohorts as directors of the Company. The staff should see through this ploy and prevent it from going forward. See Citigroup Inc. (2/24/00)(proposal to hire a proxy advisory firm to be chosen by shareholder vote to give proxy voting advice to shareholders held excludable on 14a-8(c)(8) grounds, where proposal stated "many shareowners lack the time and expertise to make the best voting decisions, yet prefer not to always follow management's recommendations" and company's request letter stated "Undoubtedly, from time to the the advice will include a recommendation to vote against one or more of management's candidates").

U.S. Securities and Exchange Commission
July 1, 2004
Page 24

As noted above under Point II, in Computer Network Corporation (6/16/83), the staff allowed several proposals to be excluded where the two proponents had publicized their intention to wage a proxy contest and subsequently submitted three shareholder proposals. The staff held the proposals excludable both on personal grievance and election grounds, noting:

After consideration of the information contained in your letter and the material attached as exhibits thereto, this Division believes that there may be some basis for your view that the Proponents are using the proposals as one of the many tactics designed to enforce a personal claim or redress a personal grievance against the Company and its management. In addition, there appears o be some basis for your view that the proposals may be omitted under Rule 14a-8(c)(8), since it appears that the proposals relate to the election of the Company's Board of Directors. In this regard, it should be noted that the Commission adopted Rule 14a-8(c)(8) because it was of the view that the shareholder proposal process was not the proper means for conducting election contests, since other sections of the proxy rules, particularly Rulc 14a-11, were specifically designed to handle such matters. Under the circumstances, this Division will not recommend any enforcement action to the Commission if management omits these proposals from the Company's proxy material.

As the Commission stated in Release 34-12598 (7/7/76) (cited by the staff in Computer Network):

. . with respcct to corporate elections, that Rule 14a-8 is not the proper means for conducting campaigns or effecting reforms in elections of that nature, since other proxy rules... are applicable thereto.

See also In the Matter of Union Electric Co. (Public Utility Holding Company Act Release No. 13962 (3/26/59) (proposal requesting shareholders declare directors disqualified from office held excludable: "The submission of this proposal of necessity would constitute an attempt to dissuade stockholders from voting in favor of management's nominees. Accordingly, we find that the proposal involves elections to office, that Rule 14a-8 therefore does not apply to the proposal and that management may omit it from its proxy material.")

Therefore, the Anagnos proposal and the Coldani proposal violate Rule 14a-8(i)(8) and should be excluded.

U.S. Securities and Exchange Commission
July 1, 2004
Page 25

IV.    The Proposals Are Excludable Because They Are False and Misleading and
Therefore Violate Rule 14a-8(i)(3) and Rule 14a-9

Under Rule l4a-8(i)(3), a proposal is excludable if the proposal or its supporting statement is contrary to any of the Commission's proxy rules, including 14a-9 which prohibits materially false or misleading statements in proxy soliciting materials. On numerous occasions, the staff has supported exclusion on this basis. See FirstEnergy Corp (2/18/04); Dean Foods Company (2/25/04); Safescript Pharmacies, Inc. (2/27/04); Avista Corporation (2/19/04).

The Anagnos Proposal and the Coldani proposals are excludable under Rule 14a-8(i)(3) and Rule 14a-9) because they contains several provisions which are false or misleading or which impugn the integrity of the Company's management, and other provisions which are vague and ambiguous.

Rule 14a-9 states in part that:

No solicitation subject to this regulation shall be made by means of any proxy statement, form of proxy, notice of meeting or other communication, written or oral, containing any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading.

Anagnos Proposal
False and Misleading

The notes to Rule 14a-9 state that:

Material which directly or indirectly impugns character, integrity or personal reputation, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation would violate the rule.

There are several provisions in the proposal's supporting statement that violate Rule 14a- 9. The statement that "The Company's liberal director and executive compensation have significantly reduced shareholder returns in recent years" is made completely without foundation or support. There is no indication of what is meant by "liberal" compensation or any support for the characterization of the Company's executive compensation as "liberal." Nor is there any proof provided as to the assertion that this supposedly "liberal" compensation "significantly reduced shareholder returns." Further, the implication is that the Company's directors, who establish compensation for directors and executive

U.S. Securities and Exchange Commission
July 1, 2004
Page 26

management, have failed in their duties, an implication which impugns their integrity. The staff has upheld exclusion on this basis in the past. See Visteon Corporation (2/19/04); Alaska Air Group, Inc. (3/1/04).

The supporting statement says that:

The Company's Proxy Statement for 2003 failed o include the SEC required Board Compensation Committee Report on Executive Compensation and the Stock Performance Graph. Could the reason for the omissions be that management of the Company does not want shareholders to see their compensation as compared to the Company's stock performance?

This statement, too, is also false and misleading and impugns the integrity of the Company and its management. The Company prepared its proxy statement for 2003 as a small business issuer. Under Item 404 of Regulation S-B, there is no requirement for a small business issuer to include a compensation committee report or a performance graph in its proxy statement. The Company fulfilled the definition of small business issuer in 34 Act Rule 12b-2 because it had revenue of less than $25,000,000, both for the fiscal year ended December 31, 2002 (total revenues of $18,380,000) and 2001 ($17,686,000). Therefore, there was no need for such disclosure in the 2003 proxy statement. To state or even suggest otherwise simply twists the facts and the law in an attempt to mislead shareholders ito believing that the Company and its management have something to hide and have acted illegally. The staff should not permit the shareholders to be so misled.

The supporting statement also says that:

While executives have become rich, shareholders have suffered mediocre returns over the past several years.

This proponent offers no basis whatsoever for this scurrilous personal accusation against the Company's executives. The only purpose of such an allegation is to continue the Dissident's ongoing efforts to embarrass the Company's executives, assassinate their character and impugn their integrity.

The supporting statement also says that:

At least the shareholders should be fully informed as to amount of the entire compensation and benefits paid to the executive management and the directors.

This statement is plainly false. The Company's proxy statements contain the information that the SEC has set forth in Schedule 14A as information which shareholders should be given in the annual meeting proxy statement. That disclosure included a summary compensation table, stock option grant table, option exercise table, a description of employment agreements of named executive officers, a description of director compensation, equity compensation plan disclosure and other information regarding "the

U.S. Securities and Exchange Commission
July 1, 2004
Page 27

entire compensation and benefits paid to the executive management and the directors," in the language of the proposal, all in compliance with SEC rules. In addition, the Company's 10-K includes as exhibits the management contracts or compensatory plans or arrangements that. Item 601 of Regulation S-B require be filed.

Again, we have a statement which nonchalantly twists both the facts and the law in an attempt to mislead shareholders into believing that the Company and its management have something to hide and have engaged in illegality. Such attempts should be halted in their tracks.

In short, the entire supporting statement is shot through with inaccuracies, false and misleading statements, baseless accusations and character assassination and is essentially beyond salvation. As the staff said in Staff Legal Bulletin 14:

... when a proposal and supporting statement will require detailed and extensive editing in order to bring them into compliance with the proxy rules, we may find it appropriate for companies to exclude the entire proposal, supporting statement, or both, as materially false or misleading.

The entire supporting statement should be omitted on this basis, as well as the proposal itself. See FirstEnergy Corp (2/18/04); Dean Foods Company (2/25/04); Safescript Pharmacies, Inc. (2/27/04); Avista Corporation (2/19/04).

Vague and Ambiguous

The first paragraph of the proposal directs that "the Board conduct a comprehensive compensation of executive management...." Although presumably the proponent meant for the Board to conduct a "review" or "study," shareholders voting on the proposal would have to guess that this is the intent.

Further, the paragraph directs the board to omit "proprietary information." It is unclear what the proposal means by "proprietary information." Any information regarding the Company's compensation of its management and board of directors is in some sense "proprietary." It is unclear what information would be omitted unless the entire amount of information that would be needed to prepare the report itself.

The staff has held that proposals which contain vague statements will be confusing to shareholders and should be omitted. Safescript Pharmacies, Inc. (2/27/04); Avista Corporation (2/19/04).

U.S. Securities and Exchange Commission
July 1, 2004
Page 28

Coldani Proposal

The Coldani proposal also makes certain statements that are "false or misleading with respect to any material fact, or which omit ... to state any material fact necessary in order to make the statements" within the language of Rule 14a-9.

Their proposal states that the Comnpany's shareholder rights plan was adopted "without shareholder approval," leaving the inaccurate suggestion in the shareholder's mind that shareholder approval was required. No such approval was required under the California Corporations Code. The shareholder is left with the impression that management did something improper by proceeding without shareholder vote.

Further, the proposal states that a shareholder rights plan "can adversely affect shareholder value by discouraging takeovers that could be beneficial to shareholders" without citing any support for this factual statement.

In addition, the proponent includes a quotation to a book without citing the exact location in the book where the quote may be found.

Finally, the proponent omits to state a material fact. He notes that "the Company's Board of Directors" adopted the plan but he fails to note that he, as a member of the Board when the plan was adopted at the May 31, 2001 board meeting, voted in favor of adoption of the plan. In fact, so did Anagnos and Van Steenberge. He fails to indicate to shareholders why he has had a reversal of opinion as to the efficacy of the plan. The shareholders deserve to know why Coldani voted for the proposal if he did not believe it to be in their best interests; or, if he has had a chance of heart since voting for the proposal, the shareholders deserve to know what prompted him to change his mind.

Therefore, both the Anagnos proposal and the Coldani proposal violate Rule 14a-8(i)(3) and 14a-9 and should both be excluded.

V. The Anagnos Proposal is Excludable Because It Constitutes an Improper Mandate to the Company's Board of Directors and Is Improper Under the Laws of the State of California and Therefore Violates Rule 14a- 8(i)(1)

The undersigned is admitted to practice law in the State of California. The Company is incorporated under the laws of the state of California.

Section 300(a) of the California General Corporation Law (the "CGCL"), provides that:

300. a) Subject to the provisions of this division and any limitations in the articles relating to action required to be approved by the shareholders (Section

U.S. Securities and Exchange Commission
July 1, 2004
Page 29

153) or by the outstanding shares (Section 152), or by a less than majority vote of a class or series of preferred shares (Section 402.5 ), the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board. The board may delegate the management of the day to day operation of the business of the corporation to a management company or other person provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board.

As noted by the SEC in Release No. 34-12999 (11/22/76):

...[I]t is the Commission's understanding that the laws of most states do not, for the most part, explicitly indicate those matters which are proper for security holders to act upon but instead provide only that "the business and affairs of every corporation organized under this law shall be managed by its board of directors," or words to that effect. Under such a statute, the board may be considered to have exclusive discretion in corporate matter s. absent a specific provision to the contrary in the statute itself, or the corporation's charter or bylaws. Accordingly, proposals by security holders that mandate or direct the board to take certain action may constitute an unlawful intrusion on the board's discretionary authority under the typical statue.

The Anagnos proposal involves a matter that is reserved under the CGCL for the hoard of directors of the Company unless otherwise stated in the CGCL or in the Articles of Incorporation of a corporation. There is no provision of California law which would place the matters which are the subject of the proposal in the hands of the shareholders The Company's Articles of Incorporation do not delegate any of the matters covered by Anagnos proposal to the shareholders. The proposals is an unlawful demand to the board to take certain action. which is in direct conflict with the board's sole authority under the CGCL to manage the Company. See Pacific Gas and Electric Company (1/16/97) (proposal held improper subject for shareholder action under the CGCL); Mail Boxes Etc. (4/26/94) (proposal held improper subject for shareholder action under the CGCL).

Therefore, the Anagnos proposal is an improper subject for action by shareholders under the law of Cal fornia in violation of Rule 14a-8(i)(1) and should be excluded.

V. Conclusion

In light of the above it is our opinion that that the proposals are excludable from the Company's proxy statement for its 2004 annual meeting of shareholders.

U.S. Securities and Exchange Commission
July 1, 2004
Page 30

If the staff has any questions regarding this submission, please contact the undersigned at (415) 393-2025 or Vennce R. Palmer of this firm at (415) 393 2036.

Kindly date stamp the enclosed photocopy of this letter and return it to the undersigned in the enclosed, stamped, self-addressed envelope to acknowledge receipt of this submission.

Sincerely,

James M. Rockeit

Enclosures:

Exhibit A     Anagnos and Coldani Proposals
Exhibit B:    Correspondence with proponents regarding one proposal limit
Exhibit C:    Chronology of Events and related documents and press items
Exhibit D:    Download from certain materials on website of The Findsley Companies http://www.findley-reports.com
Exhibit E:    Download from certain materials on Dissident's website http://www.savethebank.com/

 cc:    Angelo Anagnos
(by certified mail)

Steven Coldani
(by certified mail)

Gary Steven Findley
(by certified mail)

Leon J. Zimmerman
(by FedEx)

Allen R. Christenson
(by FedEx)

Venrice R. Palmer
(by hand)