PACIFIC STATE BANK SPLIT DOLLAR LIFE INSURANCE AGREEMENT

Whenever used in this Agreement, the following terms shall have the meanings specified:

1.1

“ Accrued Liability Balance ” shall mean the amount accrued by the Bank to fund the future benefit expense associated with the Executive Supplemental Compensation Agreement

1.2

“ Bank’s Interest ” means the benefit set forth in Section 2.1.

1.3

“ Beneficiary ” means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive.

1.4

“ Beneficiary Designation Form ” means the form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate one or more Beneficiaries.

1.5

“ Board ” means the Board of Directors of the Bank as from time to time constituted.

1.6

“ Executive’s Interest ” means the benefit set forth in Section 2.2.

1.7

“ Insurer ” means the insurance company issuing the Policy on the life of the Executive.

1.8

“ Net Death Proceeds ” means the total death proceeds of the Policy minus the greater of (i) the cash surrender value or (ii) the aggregate premiums paid by the Bank.

1.9

“ Normal Retirement Age ” means the Executive attaining age 65.

1.10

“ Policy ” or “ Policies ” means the individual insurance policy or policies adopted by the Bank for purposes of insuring the Executive’s life under this Agreement.

2.1

Bank’s Interest . The Bank shall own the Policies and shall have the right to exercise all incidents of ownership, including the right to terminate the Policy(ies) without the consent of the Executive. The Bank shall be the beneficiary of the remaining death proceeds of the Policies after the Executive’s Interest is determined according to Section 2.2 below.

2.2

Executive’s Interest . The Executive shall have the right to designate the beneficiary of the death proceeds. The Executive shall also have the right to elect and change settlement options that may be permitted. Upon the termination of this Agreement according to Article 7 herein, the Executive, the Executive’s transferee or the Executive’s beneficiary shall have no rights or interests in the Policy and no death benefit shall be paid under this Section 2.2.

2.2.1 Death During Active Service . If the Executive dies while in the active service of the Bank, the Bank shall pay to the Executive’s beneficiary One Million, One Hundred Fifty Three Thousand, Two Hundred Twenty One Dollars ($1,153,221), upon the death of the Executive.

2.2.2 Death During Payment of a Benefit under the Executive Supplemental Compensation Agreement . If the Executive dies after any benefit payments have commenced under Article 2 of the Executive Supplemental Compensation Agreement, dated ______________________, but before receiving all such payments, the Bank shall cease paying the remaining benefit, if any, and shall then pay to the Executive’s beneficiary a split dollar death benefit equal to the remaining Accrued Liability Balance under the Executive Supplemental Compensation Agreement.

2.2.3 Death After Termination of Employment But Before Commencement of Payment under the Executive Supplemental Compensation Plan . If the Executive is entitled to a benefit under Article 2 of the Executive Supplemental Compensation Agreement, but dies prior to the commencement of said benefit payments, the Bank shall pay no benefit under the Executive Supplemental Compensation Agreement but shall pay to the Executive’s beneficiary the split dollar death benefit described in Section 2.2.1 of this Agreement.

2.3

Offer to Purchase . If the Bank discontinues a Policy during the course of this Agreement, the Bank shall give the Executive at least thirty (30) days to purchase such Policy. The purchase price shall be the fair market value of the Policy, as determined under Treasury Reg. §1.61-22(g)(2) or any subsequent applicable authority. Such notification shall be in writing. Upon discontinuation of a policy, this Agreement shall also terminate.

2.4

Insurer . The Insurer shall be bound only by the terms of the Policy. Any payments the Insurer makes or actions it takes in accordance with the Policy shall fully discharge it from all claims, suits and demands of all entities or persons. The Insurer shall not be bound by or be deemed to have notice of the provisions of this Agreement.

2.5

Assignment . The Executive may assign without consideration all of the Executive’s interests in the Policy and in this Agreement to any person, entity or trust. In the event the Executive transfers all of the Executive’s interest in the Policy, then all of the Executive’s interest in the Policy and in the Agreement shall be vested in the Executive’s transferee, who shall be substituted as a party hereunder and the Executive shall have no further interest in the Policy or in this Agreement.

3.1

Premium Payment . The Bank shall pay all premiums due on all Policies.

3.2

Economic Benefit . The Bank shall determine the economic benefit attributable to the Executive based on the life insurance premium factor for the Executive’s age multiplied by the aggregate death benefit payable to the Beneficiary. The “life insurance premium factor” is the minimum factor applicable under guidance published pursuant to Treasury Reg. § 1.61-22(d)(3)(ii) or any subsequent authority.

3.3

Imputed Income . The Bank shall impute the economic benefit to the Executive on an annual basis, by adding the economic benefit to the Executive’s W-2, or if applicable, Form 1099.

4.1

Termination for Cause . Notwithstanding any provision of this Agreement to the contrary, the Executive shall forfeit any right to a benefit under this Agreement if the Bank terminates the Executive’s employment for cause. Termination of the Executive’s employment for “Cause” shall mean termination because of personal dishonesty, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order or material breach of any provision of the Agreement. For purposes of this paragraph, no act or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Bank.

4.2

Removal . Notwithstanding any provision of this Agreement to the contrary, the Executive’s rights in the Agreement shall terminate if the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act (“FDIA