EXECUTIVE RETENTION AGREEMENT

Exhibit 10.1

EXECUTIVE RETENTION AGREEMENT

          THIS EXECUTIVE RETENTION AGREEMENT (this “Agreement”) is made and entered into as of this _________ day of __________ 2009, by and between PACIFIC STATE BANK, a California corporation (“PSB”), and RICKY DEAN SIMAS, whose address is ________________, ____________, CA _______ (“Executive”).

W I T N E S S E T H:

          WHEREAS, Executive is currently employed by PSB as President of PSB, and the parties wish to continue Executive’s employment on the terms and conditions set forth in this Agreement; and

          WHEREAS, it is in the best interest of PSB to offer the compensation set forth in this Agreement to Executive.

          NOW, THEREFORE, in consideration of the promises and the mutual covenants hereinafter set forth, and intending to be legally bound hereby, it is hereby agreed as follows:

          Executive agrees to and shall diligently and conscientiously devote Executive’s full business time, attention, energy, knowledge, skill, and diligent efforts to the business of PSB and the discharge of Executive’s duties hereunder. Executive will abide by all policies and decisions made by PSB, as well as all applicable federal, state, and local laws, regulations, and ordinances. Executive’s duties under this Agreement shall be to serve as President of PSB, with the responsibilities, rights, authority and duties customarily pertaining to such office and as may be established from time to time by or under the direction of the Board of Directors of PSB (the “Board”) or its designees. Executive shall report to the Board. As an exempt, salaried employee, Executive shall work such hours as required by the nature of Executive’s work assignments. PSB reserves the right to modify Executive’s position and duties at any time in its sole discretion.

          Executive shall not engage in any activity that conflicts with or adversely affects Executive’s performance of Executive’s duties under this Agreement; accept any other employment, whether as an executive, as a consultant, or in any other capacity, whether or not Executive is compensated therefore, or violate any of the polices described in PSB’s then applicable Policy Manual, Employee Handbook, or other PSB materials.

          Executive is currently employed by PSB and, subject to the provisions of Section 3, the parties agree that Executive’s employment shall continue until terminated (“Employment Term”).

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          Executive acknowledges and understands that at all times Executive’s employment with PSB is “at-will,” which means that at all times, Executive’s employment may be terminated or changed for any reason, or for no reason, with or without cause or notice.

          It is PSB’s policy that all Executives are at-will employees. This at-will employment policy is not modified by this Agreement and may not be modified by any statements contained in PSB’s handbook or any other handbooks, employment applications, employee handbook, or other materials provided to applicants and/or employees in connection with their employment. None of these documents, whether singly or combined, are to create an express or implied contract of employment for a definite period, nor an express or implied contract concerning any terms or conditions of employment. Similarly, PSB policies and practices with respect to any matter are not to be considered as creating any contractual obligation on PSB’s part or as stating in any way that termination will occur only for “just cause.” Statements of specific grounds for termination set forth in PSB’s handbook or in any other PSB documents are examples only, not all inclusive lists, and are not intended to restrict PSB’s right to terminate employment.

          Completion of an introductory period or conferral of regular status does not change an Executive’s status as an at-will employee nor in any way restricts PSB’s right to terminate such an employee or change the terms or conditions of Executive’s employment.

          From time to time, PSB may change its name or corporate structure. Such changes shall not in any way alter the “at will” nature or unalterable fact that Executive’s employment is “at will.”

          Executive’s performance of services under this Agreement shall be rendered at PSB’s principal executive offices in Stockton, California, subject to the necessary travel requirements of Executive’s position and duties hereunder.

          PSB shall pay to Executive during the Employment Term, base salary compensation at an annual rate of not less than Two Hundred Thousand and 00/100 Dollars ($200,000.00). Upon the sale by PSB of a thirty percent (30%) or greater shareholder interest in PSB stock or the sale of PSB stock through a public offering, Executive’s annual salary shall be increased to Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00). The Board shall regularly review Executive’s base salary in light of the performance of Executive and PSB, may, in its sole discretion, maintain or increase (but not decrease) such base salary by an amount PSB determines to be appropriate. Executive’s annual base salary payable hereunder, as it may be maintained or increased from time to time, is referred to herein as “Base Salary.” Base Salary shall be paid in equal installments in accordance with PSB’s payroll practices in effect from time to time for executive officers, but in no event less frequently than monthly. In addition to the Base Salary, Executive shall be eligible to earn an annual cash performance bonus (an “Annual Bonus”) as determined by the Board.

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          Executive shall be eligible to participate in all employee benefit programs of PSB offered from time to time during the Employment Term by PSB to employees or executive officers of Executive’s rank, to the extent that Executive qualifies under the eligibility provisions of the applicable plan or plans, in each case consistent with PSB’s then-current practice as approved by the Board from time to time. The foregoing shall not be construed to require PSB to establish such plans or to prevent the modification or termination of such plans once established, and no such action or failure thereof shall affect this Agreement. Executive recognizes that PSB has the right, in its sole discretion, to amend, modify, or terminate its benefit plans without creating any rights in Executive. This Agreement shall not amend any rights of PSB or Executive under the Salary Continuation Agreement dated September 30, 2003.

          Executive shall be entitled to paid vacation and sick time (“PTO”) consistent with the PTO offered from time to time during the Employment Term by PSB to employees.

          PSB shall promptly reimburse Executive for Executive’s reasonable and necessary expenditures for travel, entertainment, and similar items made in furtherance of Executive’s duties under this Agreement consistent with the policies of PSB as applied to all executive officers. Executive shall document and substantiate such expenditures as required by the policies of PSB as applied to all executive officers, including an itemized list of all expenses incurred, the business purposes for which such expenses were incurred, and such receipts as Executive reasonably has been able to obtain.

          a.           In the event that during the Employment Term there is a sale by PSB of a thirty percent (30%) or greater shareholder interest in PSB stock, and then prior to December 31, 2010 Executive is terminated by PSB, except for termination pursuant to Section 9 (b), then Executive shall be paid a monthly cash payment of Twenty Thousand Eight Hundred Thirty-Three and 00/100 Dollars ($20,833.00) until the earlier of either:

          (1)          Executive finds new employment paying a gross salary of no less than Twenty Thousand Eight Hundred Thirty-Three and 00/100 Dollars ($20,833.00) per month; or

          (2)          Twelve months after termination of Executive by PSB.

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