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.

         
If to the Employer:
  Plumas Bank

 
  35 S. Lindan Ave.
 
  Quincy, CA 95971

 
  Attn: Mr. Jerry V. Kehr

If to the Executive:
  Andrew J. Ryback

 
  5026 Chandler Road
 
  Quincy CA 95971

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.

     
THE EMPLOYER:
  THE EXECUTIVE:
PLUMAS BANK
A California Corporation
 

 
   
/s/ Jerry V. Kehr
  /s/ Andrew Ryback
 
   
Jerry V. Kehr,
Chairman of the Board
 
Andrew J. Ryback
 
   

1

SCHEDULE A

         
NUMBER OF COMPLETED YEARS OF SERVICE
  APPLICABLE

WHICH HAVE ELAPSED
  PERCENTAGE

1
    4.5 %
2
    9.0 %
3
    13.5 %
4
    18.0 %
5
    22.5 %
6
    27.0 %
7
    31.5 %
8
    36.0 %
9
    41.5 %
10
    45.0 %
11
    49.5 %
12
    54.0 %
13
    58.5 %
14
    63.0 %
15
    67.5 %
16
    72.0 %
17
    76.5 %
18
    81.0 %
19
    85.5 %
20
    90.0 %
21
    92.0 %
22
    94.0 %
23
    96.0 %
24
    98.0 %
25 or more years
    100 %

2