**Exhibit10.3**

 

**THEBANK HOLDINGSNONQUALIFIED STOCK OPTION AGREEMENT**

 

ThisNonqualified Stock Option Agreement (the “Agreement”) is made and entered intoas of the **25th** day of **May 25, 2004,** by and between The BankHoldings, a Nevada corporation (the “Company”), and **John Donovan** (“Optionee”);

 

WHEREAS,pursuant to The Bank Holdings 2002 Stock Option Plan (the “Plan”), a copy ofwhich is attached hereto, the Board of Directors of the Company has authorizedgranting to Optionee, a nonqualified stock option to purchase all or any partof **Five Thousand, (5,000)**authorized but unissued shares of the Company’s common stock for cash at theprice of **Fourteen** Dollars and **Fifty-Six** Cents **($14.56)** per share, such option to be for the term and uponthe terms and conditions hereinafter stated;

 

NOW,THEREFORE, it is hereby agreed:

 

**1.****                                     ****Grant of Option****.** Pursuant to said action of the Board ofDirectors and pursuant to authorizations granted by all appropriate regulatoryand governmental agencies, the Company hereby grants to Optionee the option topurchase, upon and subject to the terms and conditions of the Plan, which isincorporated in full herein by this reference, all or any part of **Five Thousand (5,000)** shares of theCompany’s common stock (hereinafter called “Common Stock”) at the price of **Fourteen** Dollars and **Fifty-Six** Cents **($14.56)** per share, which price is not less than one hundredpercent (100%) of the fair market value of the Common Stock as of the date ofaction of the Board of Directors granting this option.

 

**2.****                                     ****Exercisability****.**  Thisoption shall be exercisable as to:

 
| **1,000 Shares** | ** ** | **Upon Grant, May 25, 2004** |
|------------------|------------|------------------------------|
| **1,000 Shares** | ** ** | **After May 25, 2005**       |
| **1,000 Shares** | ** ** | **After May 25, 2006**       |
| **1,000 Shares** | ** ** | **After May 25, 2007**       |
| **1,000 Shares** | ** ** | **After May 25, 2008**       |

 

Thisoption shall remain exercisable as to all of such shares until **May 25, 2014** (but not later than ten (10)years from the date this option is granted) unless this option has expired or

 

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terminatedearlier in accordance with the provisions hereof.  Shares as to which this option becomesexercisable pursuant to the foregoing provision may be purchased at any timeprior to expiration of this option.

 

**3.****                                     ****Exercise of Option****.**  Thisoption may be exercised by written notice delivered to the Company stating thenumber of shares with respect to which this option is being exercised, togetherwith cash or qualifying shares of the Company’s stock, as applicable, in theamount of the purchase price of such shares. Not less than one (1) share may be purchased at any one time, and in noevent may the option be exercised with respect to fractional shares. Uponexercise, Optionee shall be responsible for providing Company with thatinformation necessary for the payment of any federal and state taxes then due,as provided in the Plan.  Notwithstanding the foregoing or anything to the contrary containedherein or in the Plan, benefits in the form of payment of taxes by the Companyshall not be payable under this section or under the Plan to the extentthe benefit would be an excess parachute payment under Section 280G of theInternal Revenue Code of 1986, as amended

 

**4.****                                     ****Cessation of Directorship orEmployment****.**  Except as provided in Paragraphs 2 and 5hereof, if Optionee shall cease to be a director or an employee of the Companyor a subsidiary corporation for any reason other than Optionee’s death ordisability [as defined in Section 22(e)(3) of the Internal Revenue Code of1986, as amended from time to time (the “Code”)], this option shall expirethree (3) months thereafter.  During thethree (3) month period this option shall be exercisable only as to thoseinstallments, if any, which had accrued as of the date when the Optionee ceasedto be a director or an employee of the Company or a subsidiary corporation.

 

**5.****                                     ****Termination of Employmentfor Cause****.**  If Optionee is an employee of the Company ora subsidiary corporation and Optionee’s employment with the Company or asubsidiary corporation is terminated for cause, this option shall expire immediately,unless reinstated by the Board of Directors within thirty (30) days of suchtermination by giving written notice of such reinstatement to Optionee at hisor her last known address.  In the eventof such

 

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reinstatement,Optionee may exercise this option only to such extent, for such time, and uponsuch terms and conditions as if Optionee had ceased to be an employee of theCompany or a subsidiary corporation upon the date of such termination for a reasonother than cause, death or disability. Termination for cause shall include, but not be limited to, terminationfor malfeasance or gross misfeasance in the performance of duties or convictionof a crime involving moral turpitude, and, in any event, the determination ofthe Board of Directors with respect thereto shall be final and conclusive.

 

**6.****                                     ****Nontransferability; Death orDisability of Optionee****.**  This option shall not be transferable exceptby will or by the applicable laws of descent and distribution and shall beexercisable during Optionee’s lifetime only by Optionee.  If Optionee dies while serving as a directoror an employee of the Company or a subsidiary corporation, or during the three(3) month period referred to in Paragraph 4 hereof, this option shall expireone (1) year after the date of Optionee’s death or on the day specified inParagraph 2 hereof, whichever is earlier. After Optionee’s death but before such expiration, the persons to whomOptionee’s rights under this option shall have passed by will or by theapplicable laws of descent and distribution or the executor or administrator ofOptionee’s estate shall have the right to exercise this option as to thoseshares for which installments had accrued under Paragraph 2 hereof as of thedate on which Optionee ceased to be a director or an employee of the Company ora subsidiary corporation.

 

IfOptionee terminates his or her directorship or employment because ofdisability, Optionee may exercise this option to the extent he or she is entitledto do so at the date of termination, at any time within one (1) year of thedate of termination, or before the expiration date specified in Paragraph 2hereof, whichever is earlier.

 

**7.****                                     ****Employment****.**  ThisAgreement shall not obligate the Company or a subsidiary corporation to employOptionee for any period, nor shall it interfere in any way with the right ofthe Company or a subsidiary corporation to reduce Optionee’s compensation.

 

**8.****                                     ****Privileges of StockOwnership****.**  Optionee shall have no rights as ashareholder with respect to the Common Stock subject to this option until thedate of issuance of stock

 

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certificatesto Optionee.  Except as provided in thePlan, no adjustment will be made for dividends or other rights for which therecord date is prior to the date such stock certificates are issued.

 

**9.****                                     ****Modification and Termination****.**  Therights of Optionee are subject to modification and termination upon theoccurrence of certain events as provided in Sections 13 and 14 of the Plan.

 

**10.****                              ****Notification of Sale****.** Optionee agrees that Optionee, or any person acquiring shares uponexercise of this option, will notify the Company not more than five (5) daysafter any sale or other disposition of such shares.  No shares issuable upon the exercise of thisoption shall be issued and delivered unless and until the Company has fullycomplied with all applicable requirements of any regulatory agency havingjurisdiction over the Company, and all applicable requirements of any exchangeupon which the Common Stock of the Company may be listed.

 

**11.****                              ****Notices****.**  Anynotice to the Company provided for in this Agreement shall be addressed to itin care of its Chairman at its main office and any notice to Optionee shall beaddressed to Optionee’s address on file with the Company or a subsidiarycorporation, or to such other address as either may designate to the other inwriting.  Any notice shall be deemed tobe duly given if and when enclosed in a properly sealed envelope and addressedas stated above and deposited, postage prepaid, with the United States PostalService.  In lieu of giving notice bymail as aforesaid, any written notice under this Agreement may be given toOptionee in person, and to the Company by personal delivery to its Chairman.

 

INWITNESS WHEREOF, the parties hereto have executed this Agreement as of the dayand year first above written.

 

 
| **OPTIONEE** | ** **       | **THE BANK HOLDINGS** |
|--------------|------------------|-----------------------|
|         |             |
|         |             |
| By           | /s/ John Donovan |                  | By | /s/  Hal Giomi |   |
|         | **John Donovan** |                  |   | ** Hal Giomi, Chairman &  CEO** |   |
|         | ** **       | ** **            |

 

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