EXECUTIVE SALARY CONTINUATION AGREEMENT

This Agreement is made and entered into this 23rd day of August, 2005, by and between Plumas Bank, a corporation organized under the laws of the State of California (the “Employer”), and Andrew J. Ryback, an individual residing in the State of California (hereinafter referred to as the “Executive”).

RECITALS

WHEREAS, the Executive is an employee of the Employer and is serving as its Executive Vice President/Chief Financial Officer;

WHEREAS, the Executive’s experience and knowledge of the affairs of the Employer and the banking industry are extensive and valuable;

WHEREAS, it is deemed to be in the best interests of the Employer to provide the Executive with certain salary continuation benefits, on the terms and conditions set forth herein, in order to reasonably induce the Executive to remain in the Employer’s employment; and

WHEREAS, the Executive and the Employer wish to specify in writing the terms and conditions upon which this additional compensatory incentive will be provided to the Executive.

NOW, THEREFORE, in consideration of the services to be performed in the future, as well as the mutual promises and covenants contained herein, the Executive and the Employer agree as follows:

AGREEMENT

1. Terms and Definitions.

1.1. Administrator. The Employer shall be the “Administrator” and, solely for the purposes of ERISA, the “fiduciary” of this Agreement where a fiduciary is required by ERISA.

1.2. Annual Benefit. The term “Annual Benefit” shall mean an annual sum of Sixty-two Thousand Dollars ($62,000) multiplied by the Applicable Percentage (defined below) and then reduced to the extent required: (i) under the other provisions of this Agreement; (ii) by reason of the lawful order of any regulatory agency or body having jurisdiction over the Employer; and (iii) in order for the Employer to properly comply with any and all applicable state and federal laws, including, but not limited to, income, employment and disability income tax laws (e.g., FICA, FUTA, SDI).

1.3 Applicable Percentage. The term “Applicable Percentage” shall mean that percentage listed on Schedule “A” attached hereto which is adjacent to the number of complete years (with a “year” being the performance of personal services for or on behalf of the Employer as an employee for a period of 365 days) which have elapsed starting from the Effective Date of this Agreement and ending on the date payments are to first begin under the terms of this Agreement. In the event that Executive’s employment with Employer is terminated other than by reason of disability, Normal Retirement, Retirement or voluntary termination on the part of Executive, Executive shall be deemed for purposes of determining the number of complete years to have completed a year of service in its entirety for any partial year of service after the last anniversary date of the Effective Date during which the Executive’s employment is terminated.

1.4. The Code. The “Code” shall mean the Internal Revenue Code of 1986, as amended (the “Code”).

1.5. Disability/Disabled. The term “Disability” or “Disabled” shall mean either that the Executive is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan sponsored by the Employer.

1.6. Early Retirement Date. The term “Early Retirement Date” shall mean the Retirement (as defined below) of the Executive on a date which occurs after the date Executive reaches age 60 and prior to the date Executive reaches age 65.

1.7. Effective Date. The term “Effective Date” shall mean the date upon which this Agreement was entered into by the parties, as first written above.

1.8. ERISA. The term “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

1.9 Plan Year. The term “Plan Year” shall mean the Employer’s calendar year.

1.10. Retirement. The term “Retirement” or “Retires” shall refer to the date which the Executive acknowledges in writing to Employer to be the last day he will provide any significant personal services, whether as an employee, director or independent consultant or contractor, to Employer or to, for, or on behalf of, any other business entity conducting, performing or making available to any person or entity banking or other financial services of any kind. For purposes of this Agreement, the phrase “significant personal services” shall mean more than ten (10) hours of personal services rendered to one or more individuals or entities in any thirty (30) day period.

2. Scope, Purpose and Effect.

2.1. Contract of Employment. Although this Agreement is intended to provide the Executive with an additional incentive to remain in the employ of the Employer, this Agreement shall not be deemed to constitute a contract of employment between the Executive and the Employer nor shall any provision of this Agreement restrict or expand the right of the Employer to terminate the Executive’s employment. This Agreement shall have no impact or effect upon any separate written Employment Agreement which the Executive may have with the Employer, it being the parties’ intention and agreement that unless this Agreement is specifically referenced in said Employment Agreement (or any modification thereto), this Agreement (and the Employer’s obligations hereunder) shall stand separate and apart and shall have no effect upon, nor be affected by, the terms and provisions of said Employment Agreement.

2.2. Fringe Benefit. The benefits provided by this Agreement are granted by the Employer as a fringe benefit to the Executive and are not a part of any salary reduction plan or any arrangement deferring a bonus or a salary increase. The Executive has no option to take any current payments or bonus in lieu of the benefits provided by this Agreement.

3. Payments Upon or After Retirement.

3.1. Payments Upon Retirement. If the Executive shall remain in the continuous employment of the Employer until attaining sixty- five (65) years of age, the Executive shall be entitled to be paid the Annual Benefit, as defined above, for a period of fifteen (15) years, in One Hundred Eighty (180) equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which the Executive Retires or upon such later date as may be mutually agreed upon by the Executive and the Employer in advance of said Retirement date. At the Employer’s sole and absolute discretion, the Employer may increase the Annual Benefit as and when the Employer determines the same to be appropriate in order to reflect a substantial change in the cost of living. Notwithstanding anything contained herein to the contrary, the Employer shall have no obligation hereunder to make any such cost-of-living adjustment.

3.2. Payments in the Event of Death After Retirement. In the event of Executive’s death following Retirement, no death benefit shall be provided under this Agreement.

4. Payments in the Event of Death or Disability Occurs Prior to Retirement.

4.1. Payments in the Event of Death Prior to Retirement. In the event of Executive’s death prior to Retirement, no death benefit shall be provided under this Agreement.

4.2. Payment in the Event of Disability Prior to Retirement. In the event the Executive becomes Disabled while actively employed by the Employer at any time after the date of this Agreement but prior to Retirement, the Executive shall:

(i)

continue to be treated during such period of Disability as being gainfully employed by the Employer but shall not add applicable years of service for the purpose of determining the Annual Benefit; and

(ii)

be entitled to be paid the Annual Benefit, as set forth on Schedule “A”, for fifteen (15) years, as determined by the applicable years of service at the time of disability, as defined above, in One Hundred Eighty (180) equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the earlier of (1) the month in which the Executive attains sixty-five (65) years of age; or (2) the date upon which the Executive is no longer entitled to receive Disability benefits under the Executive’s principal Disability insurance policy and does not, at such time, return to and thereafter fulfill the responsibilities associated with the employment position held with the Employer prior to becoming Disabled by reason of such Disability continuing. Upon Executive’s death, no further payments will be made under this section (4.2).

5. Payments in the Event Employment is Terminated Other than by Disability, Retirement or a Change in Control of the Employer.

5.1 Payments in the Event Employment is Terminated Other than by Death, Disability, Retirement or a Change of Control of the Employer. As indicated in Paragraph 2 above, the Employer reserves the right to terminate the Executive’s employment, with or without cause but subject to any written employment agreement which may then exist, at any time prior to the Executive’s Retirement. In the event that the employment of the Executive shall be terminated, for any reason, including voluntary termination by the Executive, but other than by reason of Disability, Retirement, or a change of control of the Employer as set forth in Paragraph 5.2, the Executive (or his legal representative, if the Executives dies prior to receiving all payments provided in this paragraph) shall be entitled to be paid the Annual Benefit, as set forth in Schedule A for a period of fifteen (15) years, as determined by the applicable years of service at the time of the Executive’s termination of employment with the Employer, in One Hundred Eighty (180) equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which the Executive terminates employment and attains sixty-five (65) years of age.

5.2 Termination of Employment in the Event of a Change of Control. A “Terminating Event” shall mean the earliest occurrence of one of the following events:

A.

A Change In Ownership of Plumas Bancorp (“Bancorp”), parent company of the Employer .

A change in ownership of the Bancorp occurs on the date that any person (or group of persons) acquires ownership of stock of the Bancorp that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Bancorp.

B.

A Change in Effective Control of the Bancorp .

A change in effective control of the Bancorp occurs on the date that:

1.

Any person (or group of persons) acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Bancorp possessing thirty-five percent (35%) or more of the total voting power of the stock of the Bancorp; or

2.

A majority of members of the Bancorp’s Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Bancorp’s Board prior to the date of the appointment or election.

C.

A Change in Ownership of a Substantial Portion of the Bancorp’s Assets .

A change in the ownership of a substantial portion of the Bancorp’s assets occurs on the date that any person (or group of persons) acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Bancorp that have a total gross fair market value equal to, or more than, forty percent (40%) of the total gross fair market value of all of the assets of the Bancorp immediately prior to such acquisition or acquisitions.

In the event of the consummation of a Terminating Event, the Executive (or his legal representative, if the Executives dies prior to receiving all payments provided in this paragraph) shall be entitled to be paid the Annual Benefit with the Applicable Percentage equal to 100 percent, for a period of fifteen (15) years, in One Hundred Eighty (180) equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which the Executive’s employment is terminated.

The Executive and Employer acknowledge that limitations on deductibility of the Annual Benefit for federal income tax purposes may be imposed under, but not limited to Section 280G of the Internal Revenue Code of 1986, as amended (“Code”), and any successor to Section 280G of the Code. The increase in the Applicable Percentage pursuant to the application of this Paragraph 5.2 shall be limited to such increase in the Applicable Percentage (which increase shall not result in the Applicable Percentage being greater than 100 percent) that results in the greatest amount of the Annual Benefit that is deductible by the Employer for federal income tax purposes after taking into account all other compensation payments to or for the benefit of the Executive that are included in determining the deductibility of such payments under Section 280G of the Code or any successor to Section 280G of the Code. In the event that prior to the application of this Paragraph 5.2, all other compensation payments to or for the benefit of Executive results in the limitation of the deductibility by Employer of such payments under Section 280G or any successor to Section 280G of the Code, then this Paragraph 5.2 shall not be applicable.

6. Payments in the Event the Executive Elects Early Retirement.

The Executive shall have the right to elect to receive the Annual Benefit prior to attaining sixty-five (65) years of age if he chooses to Retire on a date which constitutes an Early Retirement Date as defined in subparagraph 1.6 herein. In the event the Executive elects to Retire on a date which constitutes an. Early Retirement Date, the Executive shall be entitled to be paid the Annual Benefit for a period of fifteen (15) years, as set forth on Schedule “A” and determined by the applicable years of service at the time of early retirement, as defined above, in One Hundred Eighty (180) equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which Early Retirement Date occurs.

7. Right To Determine Funding Methods.

The Employer reserves the right to determine, in its sole and absolute discretion, whether, to what extent and by what method, if any, to provide for the payment of the amounts which may be payable to the Executive or the Executive’s beneficiaries under the terms of this Agreement. In the event that the Employer elects to fund this Agreement, in whole or in part, through the use of life insurance or annuities, or both, the Employer shall determine the ownership and beneficial interests of any such policy of life insurance or annuity. The Employer further reserves the right, in its sole and absolute discretion, to terminate any such policy, and any other device used to fund its obligations under this Agreement, at any time, in whole or in part. Consistent with Paragraph 9 below, neither the Executive, the Executive’s spouse nor the Executive’s beneficiaries shall have any right, title or interest in or to any funding source or amount utilized by the Employer pursuant to this Agreement, and any such funding source or amount shall not constitute security for the performance of the Employer’s obligations pursuant to this Agreement. In connection with the foregoing, the Executive agrees to execute such documents and undergo such medical examinations or tests which the Employer may request and which may be reasonably necessary to facilitate any funding for this Agreement including, without limitation, the Employer’s acquisition of any policy of insurance or annuity. Furthermore, a refusal by the Executive to consent to, participate in and undergo any such medical examinations or tests shall result in the immediate termination of this Agreement and the immediate forfeiture by the Executive and the Executive’s beneficiaries of any and all rights to payment hereunder.

8. Claims Procedure.

The Employer shall, but only to the extent necessary to comply with ERISA, be designated as the named fiduciary under this Agreement and shall have authority to control and manage the operation and administration of this Agreement. Consistent therewith, the Employer shall make all determinations as to the rights to benefits under this Agreement. Any decision by the Employer denying a claim by the Executive or the Executive’s beneficiary for benefits under this Agreement shall be stated in writing and delivered or mailed, via registered or certified mail, to the Executive, the Executive’s spouse or the Executive’s beneficiary, as the case may be. Such decision shall set forth the specific reasons for the denial of a claim. In addition, the Employer shall provide the Executive or the Executive’s beneficiary with a reasonable opportunity for a full and fair review of the decision denying such claim.

9. Status of an Unsecured General Creditor.

Notwithstanding anything contained herein to the contrary: (i) neither the Executive, the Executive’s spouse or the Executive’s beneficiary shall have any legal or equitable rights, interests or claims in or to any specific property or assets of the Employer; (ii) none of the Employer’s assets shall be held in or under any trust for the benefit of the Executive or the Executive’s beneficiary or held in any way as security for the fulfillment of the obligations of the Employer under this Agreement; (iii) all of the Employer’s assets shall be and remain the general unpledged and unrestricted assets of the Employer; (iv) the Employer’s obligation under this Agreement shall be that of an unfunded and unsecured promise by the Employer to pay money in the future; and (v) the Executive and the Executive’s beneficiary shall be unsecured general creditors with respect to any benefits which may be payable under the terms of this Agreement.

10. Covenant Not to Interfere.

The Executive agrees not to take any action which prevents the Employer from collecting the proceeds of any life insurance policy which the Employer may happen to own at the time of the Executive’s death and of which the Employer is the designated beneficiary.

11. Miscellaneous.

11.1. Opportunity to Consult with Independent Counsel. The Executive acknowledges that he has been afforded the opportunity to consult with independent counsel of his choosing regarding both the benefits granted to him under the terms of this Agreement and the terms and conditions which may affect the Executive’s right to these benefits. The Executive further acknowledges that he has read, understands and consents to all of the terms and conditions of this Agreement, and that he enters into this Agreement with a full understanding of its terms and conditions.

11.2. Arbitration of Disputes. All claims, disputes and other matters in question arising out of or relating to this Agreement or the breach or interpretation thereof, other than those matters which are to be determined by the Employer in its sole and absolute discretion, shall be resolved by binding arbitration before a representative member, selected by the mutual agreement of the parties, of the Judicial Arbitration and Mediation Services, Inc. (“JAMS”), presently located at 111 Pine Street, Suite 710, in San Francisco, California. In the event JAMS is unable or unwilling to conduct the arbitration provided for under the terms of this Paragraph, or has discontinued its business, the parties agree that a representative member, selected by the mutual agreement of the parties, of the American Arbitration Association (“AAA”), presently located at 417 Montgomery Street, in San Francisco, California, shall conduct the binding arbitration referred to in this Paragraph. Notice of the demand for arbitration shall be filed in writing with the other party to this Agreement and with JAMS (or AAA, if necessary). In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations. The arbitration shall be subject to such rules of procedure used or established by JAMS, or if there are none, the rules of procedure used or established by AAA. Any award rendered by JAMS or AAA shall be final and binding upon the parties, and as applicable, their respective heirs, beneficiaries, legal representatives, agents, successors and assigns, and may be entered in any court having jurisdiction thereof. The obligation of the parties to arbitrate pursuant to this clause shall be specifically enforceable in accordance with, and shall be conducted consistently with, the provisions of Title 9 of Part 3 of the California Code of Civil Procedure. Any arbitration hereunder shall be conducted in Northern California, unless otherwise agreed to by the parties.

11.3. Attorneys’ Fees. In the event of any arbitration or litigation concerning any controversy, claim or dispute between the parties hereto, arising out of or relating to this Agreement or the breach hereof, or the interpretation hereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, attorneys’ fees and costs incurred in connection therewith or in the enforcement or collection of any judgment or award rendered therein. The “prevailing party” means the party determined by the arbitrator(s) or court, as the case may be, to have most nearly prevailed, even if such party did not prevail in all matters, not necessarily the one in whose favor a judgment is rendered.

11.4. Notice. Any notice required or permitted of either the Executive or the Employer under this Agreement shall be deemed to have been duly given, if by personal delivery, upon the date received by the party or its authorized representative; if by facsimile, upon transmission to a telephone number previously provided by the party to whom the facsimile is transmitted as reflected in the records of the party transmitting the facsimile and upon reasonable confirmation of such transmission; and if by mail, on the third day after mailing via U.S. first class mail, registered or certified, postage prepaid and return receipt requested, and addressed to the party at the address given below for the receipt of notices, or such changed address as may be requested in writing by a party.

11.5. Assignment. Neither the Executive nor any other beneficiary under this Agreement shall have any power or right to transfer, assign, hypothecate, modify or otherwise encumber any part or all of the amounts payable hereunder, nor, prior to payment in accordance with the terms of this Agreement, shall any portion of such amounts be: (i) subject to seizure by any creditor of any such beneficiary, by a proceeding at law or in equity, for the payment of any debts, judgments, alimony or separate maintenance obligations which may be owed by the Executive, the Executive’s spouse, or any designated beneficiary; or (ii) transferable by operation of law in the event of bankruptcy, insolvency or otherwise. Any such attempted assignment or transfer shall be void and shall terminate this Agreement, and the Employer shall thereupon have no further liability hereunder.

11.6. Binding Effect/Merger or Reorganization. This Agreement shall be binding upon and inure to the benefit of the Executive and the Employer and, as applicable, their respective heirs, beneficiaries, legal representatives, agents, successors and assigns. Accordingly, the Employer shall not merge or consolidate into or with another corporation, or reorganize or sell substantially all of its assets to another corporation, firm or person, unless and until such succeeding or continuing corporation, firm or person agrees to assume and discharge the obligations of the Employer under this Agreement. Upon the occurrence of such event, the term “Employer” as used in this Agreement shall be deemed to refer to such surviving or successor firm, person, entity or corporation.

11.7. Nonwaiver. The failure of either party to enforce at any time or for any period of time anyone or more of the terms or conditions of this Agreement shall not be a waiver of such term(s) or condition(s) or of that party’s right thereafter to enforce each and every term and condition of this Agreement.

11.8. Partial Invalidity. If any term, provision, covenant or condition of this Agreement is determined by an arbitrator or a court, as the case may be, to be invalid, void, or unenforceable, such determination shall not render any other term, provision, covenant or condition invalid, void or unenforceable, and the Agreement shall remain in full force and effect notwithstanding such partial invalidity.

11.9. Entire Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties with respect to the subject matter of this Agreement and contains all of the covenants and agreements between the parties with respect thereto. Each party to this Agreement acknowledges that no other representations, inducements, promises or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not set forth herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding on either party.

11.10. Modifications. Any modification of this Agreement shall be effective only if it is in writing and signed by each party or such party’s authorized representative.

11.11. Paragraph Headings. The paragraph headings used in this Agreement are included solely for the convenience of the parties and shall not affect or be used in connection with the interpretation of this Agreement.

11.12. No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person.

11.13. Governing Law. The laws of the State of California, other than those laws denominated choice of law rules, and, where applicable, the rules and regulations of: (i) the California Department of Financial Institutions; (ii) the Board of Governors of Federal Reserve System; (iii) the Federal Deposit Insurance Corporation; or (iv) any other regulatory agency or governmental authority having jurisdiction over the Employer, shall govern the validity, interpretation, construction and effect of this Agreement.

IN WITNESS WHEREOF, the Employer and the Executive have executed this Agreement on the date first above-written in the City of Quincy, Plumas County, California.

1

SCHEDULE A

2

PLUMAS BANK

SPLIT DOLLAR AGREEMENT

THIS AGREEMENT is made and entered into this 23 ^rd day of August, 2005, by and between PLUMAS BANK, a corporation organized under the laws of the State of California located in Quincy, California (the “Employer”), and Andrew J. Ryback (the “Executive”). This Agreement shall append the Split Dollar Endorsement entered into on even date herewith, or as subsequently amended, by and between the aforementioned parties.

INTRODUCTION

To encourage the Executive to remain an employee of the Employer, the Employer is willing to divide the Net Death Proceeds of a life insurance policy(ies) on the Executive’s life. The Employer will pay life insurance premiums from its general assets.

Article 1

General Definitions

The following terms shall have the meanings specified:

1.1 “ Accrual Balance ” means the liability that should be accrued by the Employer, under Generally Accepted Accounting Principles (“GAAP”), for the Employer’s obligation to the Executive under the Executive’s Salary Continuation Agreement, dated July       , 2005, and any amendments thereto, by applying Accounting Principles Board Opinion Number 12 (“APB 12”) as amended by Statement of Financial Accounting Standards Number 106 (“FAS 106”) and the Discount Rate. Any one of a variety of amortization methods may be used to determine the Accrual Balance. However, once chosen, the method must be consistently applied.

1.2 “Insurer(s)” means Midland National Life Insurance Company.

1.3 “ Net Death Proceeds ” means the total death proceeds of the Policy minus the cash surrender value.

1.4 “Policy(ies)” means insurance policies No. 688931, issued by the Midland National Life Insurance Company.

1.5 “Insured” means the Executive.

1.6 “Normal Retirement Age” means the Executive’s 65th birthday.

1.7 “Termination of Employment” means the Executive ceasing to be employed by the Employer for any reason whatsoever, voluntarily or involuntarily, other than by reason of an approved leave of absence. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive’s Termination of Employment, the Employer shall have the sole and absolute right to determine the termination date.

Article 2
Policy Ownership/Interests

2.1 Employer Ownership. The Employer is the sole owner of the Policy(ies) and shall have the right to exercise all incidents of ownership. The Employer shall be the beneficiary of the Net Death Proceeds remaining after the Executive’s interest has been paid pursuant to Article 2.2 and 2.3 below. This Agreement may be amended or terminated only by a written agreement signed by the Employer and the Executive.

2.2 Executive’s Interest – Prior to Normal Retirement Age. Prior to Normal Retirement Age, and subject to Sections 2.5 and 2.6 herein, Executive’s designated beneficiary shall have the right to a death benefit (“DB”) in an amount equal to the greater of (i) Executive’s vested Accrual Balance under the SCA less any amount paid pursuant to Section 4.2 of the SCA, calculated as of the date of Executive’s death or (ii) the present value as of the date of Executive’s death of the stream of payments equal to the Annual Benefit (with the Applicable Percentage based on the Executive’s years of service as of the time of Executive’s death) as defined in the SCA being paid for fifteen years on a monthly basis beginning with the month after the Executive’s death less any amount paid pursuant to Section 4.2 of the SCA, provided that in no event shall the DB exceed the greater of (i) Net Death Proceeds or (ii) premiums paid by the Employer for the Policy(ies). The aforementioned present value shall be computed using the long term monthly Applicable Federal Rate at the time of the Executive’s death.

2.3 Executive’s Interest – After Reaching Normal Retirement Age. Upon reaching Normal Retirement Age, and subject to Sections 2.5 and 2.6 herein, Executive’s designated beneficiary shall have the right to a DB in an amount equal to the greater of (i) Executive’s Accrual Balance under the SCA, calculated as of the date of Executive’s death less any amount paid pursuant to Section 4.2 of the SCA or (ii) the present value as of the date of Executive death of the stream of payments remaining to be paid to Executive pursuant to Section 3.1 of the SCA assuming Executive had survived to the date of the last salary continuation payment pursuant to Section 3.1 of the SCA less any amount paid pursuant to Section 4.2 of the SCA, provided that in no event shall the DB exceed the greater of (i) Net Death Proceeds or (ii) premiums paid by the Employer for the Policy(ies). The aforementioned present value shall be computed using the long term monthly Applicable Federal Rate at the time of the Executive’s death.

2.4 Option to Purchase. The Employer shall not sell, surrender or transfer ownership of the Policy(ies) while this Agreement is in effect without first giving the Executive or the Executive’s transferee the option to purchase the Policy(ies) for a period of 60 days from written notice of such intention. The purchase price shall be an amount equal to the cash surrender value of the Policy(ies). This provision shall not impair the right of the Employer to terminate this Agreement.

2.5 Termination of Participation In Event of Corporate Change of Control . If Executive receives any payment under Section 5.2 of the SCA (Termination of Employment in Event of Change of Control) all Executive rights under this Agreement shall automatically cease and his participation in this Agreement shall automatically terminate.

2.6 Termination of Participation. Notwithstanding the provisions of Sections 2.2 and 2.3, the Executive’s rights under this Agreement shall automatically cease, and his or her participation in this Agreement shall automatically terminate, if the Executive’s employment with the Employer is terminated prior to Normal Retirement Age for reasons other than:

(1) Disability (as defined in the SCA) provided Executive remains disabled until Early Retirement or returns to active employment with Plumas Bank or its successor;

(2) Executive’s Early Retirement (as defined in the SCA); or

(3) a leave of absence approved by the Employer.

Article 3
Premiums

3.1 Premium Payment. The Employer shall pay any premiums due on the Policy(ies).

3.2 Imputed Income. The Employer shall impute income to the Executive for the benefits provided by this Agreement as required under federal and state income tax laws.

3.3 Cash Payment. The Employer shall annually pay to the Executive an amount necessary to pay the federal and state income taxes attributable to the imputed income and to the additional cash payments under this section. In calculating the cash payments due from the Employer, the Employer shall use the Executive’s actual marginal income tax bracket for the calendar year immediately preceding the payment to the Executive. In the event the Executive retires prior to the Normal Retirement Age or ceases to be employed by the Employer prior to such age, the cash payments shall cease as of the date of such occurrence.

Article 4
Assignment

The Executive may assign without consideration all interests in the Policy(ies) 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(ies), then all of the Executive’s interest in the Policy(ies) 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(ies) or in this Agreement.

Article 5
Insurer

The Insurer shall be bound only by the terms of the Policy(ies). Any payments the Insurer makes or actions it takes in accordance with the Policy(ies) 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.

Article 6
Claims Procedure

6.1 Claims Procedure. The Employer shall notify any person or entity that makes a claim under this Agreement (the “Claimant’) in writing, within 90 days of Claimant’s written application for benefits, of his or her eligibility or ineligibility for benefits under this Agreement. If the Employer determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of this Agreement on which the denial is based, (3) a description of any additional information or material necessary for the Claimant to perfect his or her claim, and a description of why it is needed, and (4) an explanation of this Agreement’s claims review procedure and other appropriate information as to the steps to be taken if the Claimant wishes to have the claim reviewed. If the Employer determines that there are special circumstances requiring additional time to make a decision, the Employer shall notify the Claimant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90 days.

6.2 Review Procedure. If the Claimant is determined by the Employer not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different benefits, the Claimant shall have the opportunity to have such claim reviewed by the Employer by filing a petition for review with the Employer within 60 days after receipt of the notice issued by the Employer. Said petition shall state the specific reasons which the Claimant believes entitles him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Employer of the petition, the Employer shall afford the Claimant (and counsel, if any) an opportunity to present his or her position to the Employer verbally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Employer shall notify the Claimant of its decision in writing within the sixty-day period, stating specifically the basis of its decision, written in a manner to be understood by the Claimant and the specific provisions of this Agreement on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Employer, but notice of this deferral shall be given to the Claimant.

Article 7
Amendments and Termination

This Agreement may be amended or terminated only by a written agreement signed by the Employer and the Executive.

Article 8
Miscellaneous

8.1 Binding Effect. This Agreement shall bind the Executive and the Employer and their beneficiaries, survivors, executors, administrators and transferees, and any Policy(ies) beneficiary.

8.2 No Guarantee of Employment. This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Employer, nor does it interfere with the Employer’s right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

8.3 Applicable Law. The Agreement and all rights hereunder shall be governed by and construed according to the laws of California, except to the extent preempted by the laws of the United States of America.

8.4 Reorganization. The Employer shall not merge or consolidate into or with another company, or reorganize, or sell substantially all of its assets to another company, firm or person unless such succeeding or continuing company, firm or person agrees to assume and discharge the obligations of the Employer.

8.5 Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Split Dollar Agreement by one party to another shall be in writing, shall be signed by the party giving or making the same, and may be given either by delivering the same to such other party personally, or by mailing the same, by United States certified mail, postage prepaid, to such party, addressed to his or her last known address as shown on the records of the Employer. The date of such mailing shall be deemed the date of such mailed notice, consent or demand.

8.6 Entire Agreement. This Agreement constitutes the entire agreement between the Employer and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

8.7 Administration. The Employer shall have powers which are necessary to administer this Agreement, including but not limited to:

(a) Interpreting the provisions of the Agreement;

(b) Establishing and revising the method of accounting for the Agreement;

(c) Maintaining a record of benefit payments; and

(d) Establishing rules and prescribing any forms necessary or desirable to administer the Agreement.

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8.8 Named Fiduciary. The Employer shall be the named fiduciary and plan administrator under the Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals

IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written.

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BENEFICIARY DESIGNATION FORM
SPLIT DOLLAR PLAN AGREEMENT

All sums payable under the Life Insurance Agreement by reason of my death shall be paid to the Primary Beneficiary, if he or she survives me, and if no Primary Beneficiary shall survive me, then to the Secondary (Contingent) Beneficiary.

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CONSENT OF THE EXECUTIVE’S SPOUSE

TO THE ABOVE BENEFICIARY DESIGNATION:

I,       , being the spouse of Andrew J. Ryback, after being afforded the opportunity to consult with independent counsel of my choosing, do hereby acknowledge that I have read, agree and consent to the foregoing Beneficiary Designation which relates to the split dollar agreement entered into by my spouse on       , 2005. I understand that the above Beneficiary Designation adversely affects my community property interest in the benefits provided for under the terms of the such agreement. I understand that I have been advised to consult with an attorney of my choice prior to executing this consent, so that such attorney can explain the effects of this consent.

(Notarization required if the Executive’s spouse is not the sole primary beneficiary)

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SPLIT DOLLAR POLICY ENDORSEMENT

PLUMAS BANK SPLIT DOLLAR AGREEMENT

Policy. No. 688931 (Midland National Life Insurance Company)
Insured: Andrew J. Ryback

Supplementing and amending the application for insurance to Midland National Life Insurance Company (“Insurer”) on August 18, 2005, the applicant requests and directs that:

BENEFICIARIES

1. PLUMAS BANK, a California banking corporation located in Quincy, California (the “Employer”), shall be the beneficiary of Net Death Proceeds remaining after the Insured’s interest has been paid pursuant to paragraph (2) below.

2. The beneficiary of death benefit (“DB”) in the amount specified in Sections 2.2 or 2.3 of the Executive’s Split Dollar Agreement, dated August 23, 2005 (“SDA”), shall be designated by the Insured or the Insured’s transferee, subject to the provisions of paragraph (5) below.

OWNERSHIP

3. The Owner of the Policy(ies) shall be the Employer. The Owner shall have all ownership rights in the Policy(ies) except as may be specifically granted to the Insured or the Insured’s transferee in paragraph (4) of this endorsement.

4. The Insured or the Insured’s transferee shall have the right to assign his or her rights and interests in the Policy(ies) with respect to the DB and to exercise all related settlement options.

5. Notwithstanding the provisions of paragraph (4) above, the Insured or the Insured’s transferee shall have no rights or interests in the Policy(ies) with respect to that portion of the Net Death Proceeds designated in paragraph (2) of this endorsement if (i) Executive receives any payment pursuant to Section 5.2 of the Executive’s Salary Continuation Agreement dated August 23, 2005 (“SCA”) or (ii) Executive’s employment with the Employer is terminated prior to Normal Retirement Age for reasons other than:

(1)

Disability, as defined in the SCA provided Executive remains disabled until Early Retirement or returns to active employment with Plumas Bank or its successor;

(2)

Executive’s Early Retirement, as defined in the SCA; or

(3) a leave of absence approved by the Employer.

MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY(IES)

Upon the death of the Insured, the interest of any collateral assignee of the Owner of the Policy(ies) designated in paragraph (3) above shall be limited to the portion of the proceeds described in paragraph (1) above.

OWNERS AUTHORITY

The Insurer is hereby authorized to recognize the Owner’s claim to rights hereunder without investigating the reason for any action taken by the Owner, including its statement of the amount of premiums it has paid on the Policy(ies). The signature of the Owner shall be sufficient for the exercise of any rights under this Endorsement and the receipt of the Owner for any sums received by it shall be a full discharge and release therefore to the Insurer.

Any transferee’s rights shall be subject to this Endorsement.

The owner accepts and agrees to this split dollar endorsement.

Signed at Quincy, California, this 12 ^th day of October, 2005

PLUMAS BANK

By /s/ Jerry V. Kehr
Its Chairman of Board

The Insured accepts and agrees to the foregoing and, subject to the rights of the Owner as stated above, designates       , (relationship:       ) as primary beneficiary(s) and       relationship: ) as secondary beneficiary of the portion of the proceeds described in (2) above.

Signed at town of Quincy, Plumas County, California, this 12 ^th day of October, 2005

THE INSURED :

/s/ Andrew Ryback
Andrew J. Ryback

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