PLUMAS BANCORP
EXHIBIT 10.20
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<TYPE>EX-10.20
<SEQUENCE>3
<FILENAME>a01916exv10w20.txt
<DESCRIPTION>EXHIBIT 10.20
<TEXT>
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                                                                   EXHIBIT 10.20

                                  PLUMAS BANK

                             SPLIT DOLLAR AGREEMENT

THIS AGREEMENT is made and entered into this 15th day of September, 2004, by and
between PLUMAS BANK, a corporation organized under the laws of the State of
California located in Quincy, California (the "Employer"), and ROBERT T. HERR
(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 Salary Continuation Agreement,
dated June 4, 2002, 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 Jefferson Pilot Life Insurance Company and Union Central
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 JP5242577, issued by the Jefferson
Pilot Life Insurance Company, and U200002247, issued by Union Central 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.
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                                    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 an amount equal to the greater of
(i) Executive's vested Accrual Balance under the Salary Continuation Agreement,
dated June 4, 2002, 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
Executive's Salary Continuation Agreement being paid for fifteen years on a
monthly basis beginning with the month after the Executive's death, provided
that in no event shall such amount exceed the greater of (i) Net Death Proceeds
or (ii) premiums paid by the Employer. The aforementioned present value shall be
computed using the long term monthly Applicable Federal Rate at the time of the
Executive's death. The Executive shall also have the right to elect and change
settlement options that may be permitted.

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 an amount equal to the greater of
(i) Executive's Accrual Balance under the Salary Continuation Agreement, dated
June 4, 2002, calculated as of the date of Executive's death 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 Executive's Salary Continuation
Agreement assuming Executive had survived to the date of the last salary
continuation payment pursuant to Section 3.1 of Executive's Salary Continuation
Agreement, provided that in no event shall such amount, exceed the greater of
(i) Net Death Proceeds or (ii) premiums paid by the Employer. The aforementioned
present value shall be computed using the long term monthly Applicable Federal
Rate at the time of the Executive's death Executive shall continue to have the
right to elect and change settlement options that may be permitted.

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 elects to receive payments under Section 5.2 of Salary Continuation
Agreement (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:
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      (1) Disability (as defined in the Executive Salary Continuation Agreement,
dated June 4, 2002) 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 Executive Salary
Continuation Agreement, dated June 4, 2002);

    (3) a leave of absence approved by the Employer; or

    (4) Executive's involuntary Termination of Employment without cause.

                                    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 in an
amount equal to the current term rate for the Executive's age multiplied by the
aggregate death benefit payable to the Executive's beneficiary. The "current
term rate" is the minimum amount required to be imputed under Revenue Rulings
64-328 and 66-110, or any subsequent applicable authority.

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.
<PAGE>
                                    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 entitle
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.
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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.

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.

EXECUTIVE:                            EMPLOYER:
                                      PLUMAS BANK

/s/ Robert T. Herr                    By  /s/ Jerry V. Kehr
---------------------------               -------------------------------
  Robert T. Herr                      Title  Chairman of Board

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