**Exhibit10.1**

 

**EMPLOYMENTAGREEMENT**

 

This agreement is made asof the 25th day of May, 2004, by and between Nevada Security Bank (the “Bank”),having a principal place of business at 9990 Double R. Boulevard, Reno, Nevada,89521 and **John Donovan** (the “Executive”), whoseresidence address is Reno, Nevada, 89509.

 

**RECITALS**

 

**WHEREAS,**the Bank desires to employ the Executive as its Senior Vice President/CreditAdministrator and SBA Division Manager as well as Executive Vice President andChief Credit Officer of The Bank Holdings and to avail itself of his skill,knowledge and experience to ensure the successful management of its business;

 

**WHEREAS,**the Executive wishes to be employed by the Bank in the above mentioned capacityfor the Term hereinafter described;

 

**WHEREAS,**by execution of this Agreement the parties desire to specify the terms of theExecutive’s employment with the Bank.

 

**NOW,THEREFORE,** in consideration of the covenants and conditionscontained herein, it is agreed that the following terms and conditions shallapply to the Executive’s said employment:

 

**1.****                                      EMPLOYMENTTERM**:  The Bank herebyemploys the Executive and the Executive hereby accepts employment with the Bankfor a period of Three (3) years commencing with the Effective Date of thisagreement (the “Term), subject, however, to prior termination of this Agreementas hereinafter provided.   As used inthis Agreement, the word “Term” shall refer to the entire period of employmentof the Executive by the Bank hereunder, whether for the period providedhereunder, or

 

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whether terminatedearlier as hereinafter provided.  TheEmployment Term shall automatically renew for subsequent three-year (3)periods, subject, however, to prior termination of this Agreement ashereinafter provided.

 

**2.****                                      DUTIESOF THE EXECUTIVE:**

 

**Duties:** The Executive shall hold the office of Senior Vice President/CreditAdministrator and SBA Division Manager of the Bank as well as Executive VicePresident and Chief Credit Officer of The Bank Holdings and will perform theduties normally performed by such officer of a bank, including the generalsupervision and operation of the business and affairs of the Bank, subject tothe powers vested in the Board of Directors of the Bank and in the Bank’sshareholder pursuant to the Bank’s Charter and By-Laws, and by applicablelaw.  During the Term, the Executiveshall perform exclusively the services herein contemplated to be performed byhim under this Agreement faithfully, diligently to the best of his ability,consistent with the highest and best standards of the banking industry and incompliance with all applicable laws and the Bank’s Articles of Incorporationand By-Laws.

 

2.2.                              **Place of Performance:**  The Executive shall perform said dutiesthroughout the Bank’s service area and be located at the Bank’s principalexecutive offices.  Except as providedherein, the duties, positions and business location hereunder may only bechanged by written agreement of the parties.

 

2.3                                 **Conflict of Interest:**  Except with prior written consent of theBoard of Directors of the Bank, the Executive shall devote his entireproductive professional time, ability and attention to the business of the Bankduring the Term, and the Executive shall not directly or indirectly render anyservices of a business,

 

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commercial orprofessional nature to any other person, firm or corporation, whether forcompensation or otherwise, which are in conflict with the Bank’s interest.  Notwithstanding the foregoing, the Executivemay make investments of a passive nature in any business or venture; provided,however, that such business or venture shall not be in competition, directly orindirectly, in any manner with the Bank.

 

**3.****                                      COMPENSATION**

 

3.1                                 **Base Salary:**  For the Executive’s services hereunder, theBank shall pay or cause to be paid, as a base salary to the Executive a minimumof One Hundred and Fifteen Thousand Dollars ($115,000) per year each year ofthe Term, prorated for any portion of a year, in which this Agreement is ineffect.  The Executive’s salary shall bepayable in equal installments in conformity with the Bank’s normal payrollperiod.  Annual increases shall be madeat the recommendation of the Chief Executive Officer, subject to ratificationof the Board of Directors.

 

3.2                                 **Bonuses:**  Such a plan shall be within the complete andsole discretion of the Board of Directors. The Executive shall be entitled toparticipate in the Bank’s Executive Compensation Plan (“Bonus Plan”) which willbe developed by the Bank’s Board of Directors. It is understood that the terms, conditions, eligibility, benefits,provisions and grants from such a plan shall be within the complete and solediscretion of the Board of Directors.

 

3.3                                 **Stock Options:**  Upon commencement of the Term, the Executiveshall be granted the option to purchase Five Thousand (5,000) shares of theBank’s Common Stock, at a purchase price of Fourteen Dollars and Fifty-SixCents ($14.56) per share, pursuant to the terms of the Bank’s stock optionplan.  Twenty Percent (20%) of

 

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said shares willimmediately fully vest upon commencement with the Term, with the remainingEighty Percent (80%) vesting in equal amounts Twenty Percent (20%) annuallythereafter.

 

**4.****                                      EXECUTIVEBENEFITS**

 

4.1                                 **Vacation:**  The Executive will be entitled to Four (4)weeks vacation during each year of the Term, prorated for any portion of ayear.  The Executive is required to andshall take at least Two (2) weeks of vacation annually (the “MandatoryVacation”) which shall be taken consecutively. Should Executive not take the entire Four (4) weeks vacation during eachyear, the unused vacation shall accrue and be taken the following year.  The Executive may accumulate Twenty (20) daysof vacation in excess of his current year’s entitlement.  Any vacation not used in excess of suchTwenty (20) days shall be paid out to the Executive in lieu of accruedvacation.

 

4.2                                 **Automobile Allowance:**  The Bank shall pay the Executive the sum ofFive Hundred Dollars ($500) per month as and for expenses to cover all costs ofuse, maintenance, repair, upkeep, fuel, cleaning and operation of hisautomobile (except mileage costs incurred to travel to locations outside of theBank’s serving area) used in the course and scope of his employment.

 

4.3                                 **Insurance Coverage:**  The Bank, at the Bank’s expense, shallprovide for the Executive and his dependent family, medical, dental, and visioncoverage, and, for the Executive himself, life, accident, disability and thelike insurance benefits equivalent to the maximum benefits available from timeto time under the Bank’s Group Insurance program for an employee of theExecutive’s salary level during the Term. Additionally, the Bank, at its expense, shall provide the Executive withterm life

 

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insurance benefits in theamount of not less that Five Hundred Thousand Dollars ($500,000) withbeneficiary to be of the Executive’s choice, provided that the Executive israted in the highest category by the Insurance Company.  If rated lower, the Bank will spend theamount it would have spent for the highest rating and purchase the maximumamount of insurance at the Executive’s lower rating.  Said coverage shall be in existence and takeeffect as of the Effective Date and shall continue throughout the Term.  The Bank shall provide the Executive withdisability insurance providing for monthly disability payments.

 

4.4                                 **Business Expenses:  **TheExecutive shall be entitled to reimbursement by the Bank for any ordinary andnecessary business expenses he incurs in the performance of his duties duringthe Term, including, but not limited to, entertainment, dues, and other expenses, meals, travel expenses,conventions, meetings,  seminars and thelike which are reasonable for the office of the Executive.

 

4.5                                 **  Club Memberships:**  The Executive shall be provided paidmembership in clubs selected by the Executive and approved by the ChiefExecutive Officer. 

 

4.6                                 **Retirement Benefits:**  The Executive shall be provided with medical,dental and vision insurance benefits for himself and eligible family members equivalent to the maximum benefits availablefrom time to time under the Bank’s Group Insurance program for an employee ofthe Executive’s salary level at the Bank’s expense upon retirement fromthe Bank.  Retirement age shall be at aminimum Sixty-two (62) years of age.

 

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**5****                                         TERMINATION**

 

5.1                                 **Termination for Cause:**  The Bank may terminate this Agreement at anytime by action of its Board of Directors, without further obligation orliability to the Executive, in the event that:

 

(a)                                  TheExecutive commits an act or acts of malfeasance or misfeasance in his duties;or

 

(b)                                 TheExecutive fails to abide by and/or enforce the Bank’s safety and soundnesspolicies; or

 

(c)                                  The Executive is convicted of a felony ormisdemeanor involving moral turpitude; or

 

(d)                                 Stateand/or Federal regulators request or order termination of this Agreement; or

 

(e)                                  TheExecutive commits any act, which could cause termination of Coverage under theBank’s Blanket Bond as to the Executive, as distinguished from termination ofsuch coverage as to the Bank as a whole; or

 

(f)                                    TheExecutive dies.

 

5.2                                 **Termination Without Cause:**  In the event the Board of Directors of theBank determines that either (i) the continued association of the Executive withthe Bank or (ii) the performance of his duties by the Executive is not in thebest interest of the Bank, then the Bank may terminate this Agreement by actionof its Board of Directors.   In the eventof such termination without cause, and subject to any limitation of payments toOfficers and Directors under applicable Federal and State law, the

 

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Executive shall be paidas and for severance payments and in lieu of any and all other Compensation,remedy or damages, a lump-sum equal to not less than Twelve (12) monthscompensation at the then current base salary of the Executive, plus any accruedbut unpaid Bonus Compensation described elsewhere in this Agreement.  In addition, the Bank, at its expense willprovide the Executive and his dependent family with insurance Coverage, asdescribed in Paragraph 4.3 above, for a period of not less than six (6) monthsfollowing the Executive’s termination. Upon such payment, any and all obligations of the Bank to the Executiveshall have been fully and completely satisfied and the Executive shall beentitled to no additional compensation, claim, right or benefit hereunder orotherwise.

 

5.3                                 **Action by Supervisory Authority:**  If the bank is closed or taken over by anybanking supervisory authority, such banking authority may immediately terminatethis Agreement without liability or obligation to the Executive.

 

5.4                                 **Merger or Corporate Dissolution:**  In the event of a merger where the Bank isnot the surviving corporation, in the event of a consolidation, in the event ofa transfer of all or substantially all of the assets of the Bank, in the eventof any other corporate reorganization where there is a change in ownership ofat least Twenty Five Percent (25%) except as may result from a transfer of theBank’s stock to another corporation in exchange for at least Sixty-Six andTwo-Thirds Percent (66 2/3%) control of that corporation, or in the event ofthe dissolution of the Bank, the Executive may terminate this Agreement.  In the event of such termination, and subjectto any limitation of payments to Officers and Directors under applicableFederal and State law, the Executive shall be paid, as and for severancepayments and in lieu of any and all other

 

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compensation remedy ordamages, a lump-sum equal to not less than Twenty Four (24) months compensationat the then current base salary of the Executive, plus any accrued but unpaidBonus Compensation described elsewhere in this Agreement.  In addition, the Bank, at its expense, willprovide the Executive and his dependent family with insurance coverage, asdescribed in Paragraph 4.3 above, for a period of not less than Twelve (12)months following the Executive’s termination. Upon such payment, any and all obligations of the Bank to the Executiveshall have been fully and completely satisfied and the Executive shall beentitled to no additional compensation, claim, right or benefit hereunder orotherwise.

 

5.5                                 **Termination by the Executive:**  The Executive may terminate his employmenthereunder at any time upon Thirty (30) days notice to the Bank.  In such event, the Executive shall beentitled to all salary, bonus and other benefits (accrued vacation, etc.),which have accrued prior to theeffective date of termination.  Allunvested options shall be forfeited and the Executive must exercise his vestedoptions within Sixty (60) days of termination. If not so exercised, those options shall also be forfeited.

 

**6.****                                      GENERAL PROVISIONS:**

 

6.1                                 **Indemnification:**  To the extent permitted by law, applicablestatutes, the Articles of Incorporation, the By-Laws and resolutions of theBank in effect from time to time, the Bank shall indemnify the Executiveagainst liability or loss arising out of the Executive’s actual or assertedmisfeasance of malfeasance in the performance of the Executive’s duties or outof any actual or asserted wrongful act against, or by, the Bank including butnot limited to judgments, fines, settlements and expenses incurred in

 

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the defense of actions,proceedings and appeals therefrom.  TheBank shall provide Directors and Officers Liability Insurance to indemnify andinsure the Bank and the Executive from and against the aforementionedliabilities.  The provisions of thisparagraph shall apply to the estate, executor, administrator, heirs, legateesor devisees of the Executive.

 

6.2                                 **Notices:**  Any notice, request, demand or othercommunication required or permitted hereunder shall be deemed to be properlygiven when personally served in writing, when deposited in the United Statesmail, postage prepaid, or when communicated to public telegraph company fortransmittal, addressed to the party at the address appearing below thesignatures of each party at the end of this Agreement. Either party may changeaddress by written notice in accordance with this paragraph.

 

6.3                                 **Benefits of Agreement:**  This Agreement will inure to the benefits ofand be binding upon its parties and their respective executors, administrators,successors and assigns.

 

6.4                                 **Applicable Law: **This Agreement is to be governed by andconstrued under the laws of the State of Nevada.

 

6.5                                 **Captions and Headings:**  Captions and headings are used in thisAgreement for convenience only, are not a part of this Agreement between theparties and shall not be used in construing it.

 

6.6                                 **Invalid Provision:**  Should any portion or provision of thisAgreement for any reasons be declared invalid, void, or unenforceable by acourt of competent jurisdiction, the validity and binding effect of allremaining portions or provisions shall not be affected; and the remainder ofthis Agreement shall remain in

 

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full force and effect asif this Agreement had been executed with said portion or provision eliminated.

 

6.7                                 **Entire Agreement:**  This Agreement contains the entire agreementof the parties and supersedes all other agreements, either oral or in writing,between the parties hereto with respect to the employment of the Executive bythe Bank.  Each party to this Agreementacknowledges that no representations, inducements, promises or agreements, oralor otherwise, have been made by any party or anyone acting on behalf of anyparty which are not embodied herein and that no other agreement, statement orpromise not contained in this Agreement shall be valid or binding.  This Agreement may not be modified or amendedby oral agreement but only by an agreement in writing signed by the Bank andthe Executive.

 

6.8                                 **Arbitration:**Any controversy or claim arising out ofor relating to this Agreement, or the breach thereof, shall be submitted toarbitration in accordance with the rules of the American ArbitrationAssociation, and judgment upon the award rendered by the arbitrator(s) may beentered into any court having jurisdiction thereof.

 

6.9                                 **Attorney’s Fees:**  If any action, including arbitration, isbrought to enforce this Agreement or to determine the relative rights andobligations for either of its parties, the prevailing party shall be entitledto reasonable attorney’s fees.

 

6.10                           **Receipt of Agreement:**  Each of the parties hereto acknowledge thathe has read this Agreement in its entirety and does hereby acknowledge receiptof a fully-executed copy thereof.  Afully-executed copy shall be an original for all purposes and is a duplicateoriginal.

 

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**INWITNESS WHEREOF,** the parties hereto have executed thisAgreement as of 25th day of May, 2004.

 

 
| **The “Bank”**                 | **The “Executive”** |   |
|------------------------------------------|-------------------------------|--------|
| **Nevada Security Bank**                 | **John Donovan**              |   |
| ** **                               | ** **                    |   |
| By:                                      |   /s/Hal  Giomi     |   | By: |   /s/John  Donovan |   |
| **Hal Giomi**                            | **Reno, NV  89509**      |   |
| **Chief Executive Officer of**           | ** **                    |   |
| **Nevada Security Bank and**             | ** **                    |   |
| **Chairman/Chief Executive  Officer of** | ** **                    |   |
| **The Bank Holdings**                    | ** **                    |   |
| **9990 Double R. Boulevard**             | ** **                    |   |
| **Reno, NV  89521**                 |                          |   |
|                                          |                               |        |  |  |  |  |

 

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