AMERICAN RIVER HOLDINGS/AMERICAN RIVER BANK



STOCK OPTIONS GROSS UP PLAN



           Our company encourages Board and management to be owners and as such
           we have minimums on Board members' shares, we have stock options as a
           method of increasing ownership, as well as a stock purchase plan for
           the employee base.

           One challenge for those exercising non-qualified stock options is
           that they pay an ordinary income tax on the difference between the
           fair market value and the option consideration. In some cases, this
           puts a financial burden upon the optionee whereby they are forced to
           sell their shares in order to pay the ordinary income tax. The
           company, however, is benefited upon the exercise. First, a real tax
           deduction is created upon the exercise, saving taxes for the company.
           Secondly, the exercise of the option provides significant new capital
           resources to be used in furthering our strategic plan.

           The Board of Directors, at their regular meeting held June 18, 1997
           has adopted a Stock Options Gross Up Plan whereby, upon exercising a
           non-qualified stock option, the optionee receives a gross up, in
           cash, equal to the result of multiplying the company's tax deduction
           by the company's effective tax rate. The optionees eligible are
           limited to those listed on Schedule A (see attached). The gross up
           payment is subject to executing an agreement whereby the optionee
           agrees to hold the shares for a period of not less than a year or
           they will be obligated to reimburse the company for the payment made.
           For example, 10,000 shares with an exercise price of $10.50 and a
           current market value of $18.50, assuming the options were fully
           vested would be $80,000 which is the income that accrues to the
           optionee and is the tax deduction for the company; therefore, the
           benefit to the company is $80,000 times 40% (our current tax rate)
           which equals $32,000.

           May 20, 1998

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                     GROSS UP PLAN ADOPTED ON JUNE 18, 1997

                              AMENDED: MAY 20, 1998



                      James O. Burpo
                      Robert H. Daneke
                      Charles D. Fite
                      Sam J. Gallina
                      Wayne C. Matthews, MD
                      David T. Taber
                      Marjorie G. Taylor
                      Roger J. Taylor, DDS
                      Stephen H. Waks
                      William L. Young
                      William Badham
                      Richard Borst
                      Mitchell Derenzo
                      Donald Sager
                      Kevin Bender
                      Mary Johnson
                      Adrian Jones
                      Michael O'Reilly
                      Patricia Thaxter

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AMERICAN RIVER HOLDINGS

STOCK OPTIONS GROSS UP AGREEMENT

The Board of Directors of American River Holdings (the Company), at their
regular meeting held June 18, 1997 has adopted a Stock Options Gross Up Plan
whereby, upon exercising a non-qualified stock option, as described in the 1995
AMERICAN RIVER HOLDINGS STOCK OPTION PLAN, the Optionee is entitled to receive a
gross up, subject to the provisions of this agreement, in cash, net of
applicable taxes, equal to the result of multiplying the Company's tax deduction
by the Company's effective tax rate, as calculated by the Company's Chief
Financial Officer.

The undersigned, ____________________________ (the Optionee) is desirous of
exercising non-qualified stock options per the Stock Option Agreement dated
____________and per the Stock Options Gross Up Plan dated June 18, 1997, and,
hereby agrees to retain these shares for 12 months from the date of exercise. As
an inducement to hold these shares, the Company agrees to pay the corresponding
gross up to the Optionee which is calculated by taking the difference between
the fair market value (as defined by the bid minus 10% due to the fact that they
are restricted shares) less the option price, and multiplying this figure by the
Company's current tax rate, as calculated by the Company's Chief Financial
Officer just prior to payment. Payment will be made by the Company to the
optionee between December 15th and December 31st of the same calendar year the
options are exercised.

The Optionee agrees also that the herein mentioned shares will be retained by
the Company for 12 months from the date of exercise.

Should the Optionee sell, transfer or otherwise assign these shares prior to 12
months from the date of the execution of this agreement, the Optionee must
reimburse the Company for the total amount of the gross up as defined herewith,
prior to the Company releasing said shares.

Should the Optionee die during the 12 month holding period and the shares be
transferred to the estate of the deceased no reimbursement of the gross up is
required.

Should the Company be acquired and the shares be transferred or sold, no
reimbursement of the gross up is required.

Number of fully-vested stock options exercised:_______________
Exercise price:_____________
Current market value (bid price):________________
Bid price minus 10%:_________________________
Company's tax deduction: __________________
Company's current tax rate:__________________
Gross Up amount paid to optionee:_____________________

Dated:                                     Dated:
For the Optionee:                          For the Company:



------------------------                   ----------------------
                                           David T. Taber
                                           President & CEO