Exhibit 10.56





Exhibit 10.56




SECOND AMENDMENT

TO THE

PLUMAS BANK

EXECUTIVE SALARY CONTINUATION AGREEMENT

DATED JUNE 4, 2002

AND AMENDED SEPTEMBER 15, 2004

FOR

ROBERT T. HERR




This Second Amendment is adopted this 17th day of December, 2008, effective as of January 1, 2005,
by and between Plumas Bank, a state-chartered commercial bank located in Quincy, California (the
“Employer”), and Robert T. Herr (the “Executive”).



RECITALS




WHEREAS, the Executive is in the employ of the Employer, and has faithfully served the Employer for
many years. It is the consensus of the Board of Directors (Board) and its compensation committee
that the Executive’s services have been of exceptional merit and an invaluable contribution to the
profits and position of the Employer in its field of activity; and



WHEREAS, the Employer and the Executive are parties to that certain Executive Salary Continuation
Agreement, dated June 4, 2002, and amended September 15, 2004, (Grandfathered Agreement) which
provides for the payment of certain benefits; and



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, section 885 of the American Jobs Creation Act of 2004 amended the Internal Revenue Code
(Code) to add section 409A implementing detailed rules regarding deferred compensation; and



WHEREAS, Notice 2005-1 was subsequently issued by the Treasury Department providing additional
guidance on transitioning a plan of deferred compensation, such as this Agreement, into compliance
with Code section 409A. Notice 2005-1 announced that a deferred compensation plan subject to Code
section 409A must be operated in good faith compliance with the provisions of Code section
409A and Notice 2005-1 during the 2005 calendar year. Supplemental guidance from the IRS has
extended the good faith compliance period through December 31, 2008. Final Treasury Regulations
were issued on April 10, 2007 and are effective January 1, 2009; and


 


 









 





WHEREAS, pursuant to the Treasury regulations and other published IRS guidance, benefits vested
under the agreement between the Employer and the Executive as of December 31, 2004 (Grandfathered
Agreement) are eligible for grandfather treatment and shall not be subject to Code section 409A;
and



WHEREAS, as of December 31, 2004, Executive was vested in 30.00% of an Annual Benefit of $62,000
payable over 15 years upon the earlier of reaching age 65 or the Executive’s death; and



WHEREAS, the Grandfathered Agreement is being amended by this Second Amendment to the Executive
Salary Continuation Agreement for Robert T. Herr of even date herewith (Second Amendment) to attach
a notice of its grandfathered status and to clarify that the benefits vested under the
Grandfathered Agreement are not subject to Code section 409A; and



WHEREAS, since such Second Amendment is not a material modification of the Grandfathered Agreement
that would subject it to Code section 409A; and



WHEREAS, the terms of the Grandfathered Agreement in effect on December 31, 2004, as clarified by
this Second Amendment shall (i) remain in full force and effect, and (ii) govern all benefits
vested as of December 31, 2004. This Second Amendment shall in no way be construed to limit,
replace or abridge benefits payable under the Grandfathered Agreement.



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:



The undersigned hereby amends the Agreement for the purpose of clarifying that the Agreement is
grandfathered from having to comply with section 409A of the Internal Revenue Code unless it is
materially modified and to provide that it shall be materially modified. Therefore, the following
changes shall be made:



The Grandfathered Agreement shall be amended by adding the Notice attached hereto as Exhibit A to
the front thereof as a cover page.



CHANG

RUTHENBERG

& LONG PC



 


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IN WITNESS OF THE ABOVE, the Employer and the Executive hereby consent to this Second Amendment.



	 	 	 	 	 	 	 	 	 	 	 
	Executive:	 	 	 	Plumas Bank	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	/s/ Robert T. Herr	 	 	 	By:	 	/s/ Daniel E. West	 	 
	 	 	 	 	 	 	 	 	 
	Robert T. Herr

	 	 	 	 	 	Title:
	 	Chairman of the Board	 	 






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RUTHENBERG

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EXHIBIT A




NOTICE




THE BOARD OF DIRECTORS OF THE COMPANY (BOARD) HAS RESOLVED AND DIRECTED THAT THE DEFERRED
COMPENSATION CREDITED TO THE ACCOUNT OF ROBERT T. HERR (EXECUTIVE) UNDER THE ATTACHED EXECUTIVE
SALARY CONTINUATION AGREEMENT BETWEEN COMPANY AND EXECUTIVE DATED JUNE 4, 1994, AND AMENDED
SEPTEMBER 15, 2004 (GRANDFATHERED AGREEMENT), AND EARNED AND VESTED AS OF DECEMBER 31, 2004 BE
SEGREGATED FROZEN AND GRANDFATHERED UNDER THE PROVISIONS OF THE GRANDFATHERED AGREEMENT IN EFFECT
ON OCTOBER 3, 2004 AND THE INTERNAL REVENUE CODE OF 1986, AS AMENDED AND IN EFFECT PRIOR TO THE
EFFECTIVE DATE OF INTERNAL REVENUE CODE SECTION 409A AS ENACTED BY THE AMERICAN JOBS CREATION ACT
OF 2004; THAT TO PRESERVE SUCH GRANDFATHERING, THE PROVISIONS OF THE ORIGINAL AGREEMENT AS IN
EFFECT ON OCTOBER 3, 2004, SHALL NOT BE MATERIALLY MODIFIED (AS THAT TERM IS DEFINED IN INTERNAL
REVENUE SERVICE NOTICE 2005-1) AFTER OCTOBER 3, 2004 WITH RESPECT TO DEFERRED COMPENSATION THAT WAS
CREDITED TO EXECUTIVE’S ACCOUNT AND EARNED AND VESTED AS OF DECEMBER 31, 2004; AND THAT ANY ATTEMPT
TO SO MATERIALLY MODIFY THE ORIGINAL AGREEMENT AFTER THAT DATE SHALL BE NULL AND VOID.



CHANG

RUTHENBERG

& LONG PC





 


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