**Exhibit 10.1**

 

**THE BANK HOLDINGS**

 

**STOCK OPTION PLAN**

 

**1.****             Purpose**

 

The purpose ofThe Bank Holdings Stock Option Plan (the “Plan”) is to strengthen The BankHoldings (the “Holding Company”) and those corporations which are or hereafterbecome subsidiary corporations [as that term is defined in Section 424(f) ofthe Internal Revenue Code of 1986, as amended from time to time  (the “Code”)] of the Holding Company byproviding an additional means of attracting and retaining competent directors**,**officers, and key employees and by providing to such persons added incentivefor high levels of performance.  Theplan also rewards founders and incorporators for their financial commitment tothe organization. The Plan seeks to accomplish these purposes and achieve theseresults by providing a means whereby such persons may purchase shares of thecommon stock of the Holding Company pursuant to options granted in accordancewith the Plan.

 

Optionsgranted pursuant to the Plan are intended to be either “incentive stock options”within the meaning of Section 422 of the Code, or “nonqualified stock options”,as shall be determined and designated upon the grant of each option hereunder.

 

**2.****             Administration**

 

The Plan shallbe administered by the Stock Option Committee of the Board of Directors (the“Committee”), which shall consist of at least three Directors appointed by theHolding Company’s Board of Directors. In the event such Committee has not been appointed, the Board ofDirectors shall act as the Committee.  Any action of the Committee with respect to the administration of thePlan shall be taken pursuant to a majority vote, or the unanimous writtenconsent, of its members.

 

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Subject to the expressprovisions of the Plan, the Committee shall have the authority to construe andinterpret the Plan, define the terms used therein, prescribe, amend andrescind, the rules and regulations relating to administration of the Plan, andmake all other determinations necessary or advisable for administration of thePlan.

 

All decisions,determinations, interpretations or other actions by the Committee shall befinal, conclusive and binding on all persons, optionees, grantees, subsidiarycorporations of the Holding Company and any successors-in-interest to suchparties.

 

**3.****             Incentive StockOptions**

 

All optionsgranted which are designated at the time of grant as an “incentive stockoption” shall be deemed an incentive stock option.

 

(a)           Incentive stock optionsgranted under the Plan are intended to be qualified under Section 422 of theCode.

 

(b)           Officers and keyemployees of the Holding Company or a subsidiary corporation shall be eligiblefor selection to participate in the incentive stock option portion of thePlan.  No director, founder orincorporator of the Holding Company, who is not also an officer or employee ofthe Holding Company or a subsidiary corporation, may be granted an incentivestock option hereunder.  Subject to theexpress provisions of the Plan, the Committee shall (i) select from theeligible class of employees to whom incentive stock options shall be grantedand make appropriate grants of incentive stock options to those selected, (ii)determine the discretionary terms and provisions of the respective incentivestock option agreements (which need not be identical), (iii) determine thetimes at which such incentive stock options shall be granted, and (iv)determine the number of shares subject to each incentive stock option.  An individual who has been granted anincentive stock option 

 

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may, if he or she is otherwiseeligible under the Plan, be granted additional incentive stock options if theCommittee shall so determine.

 

(c)           Except as described insubsection (e) below, the Committee shall not grant an incentive stock optionto purchase shares of the Holding Company’s common stock to any individual who,at the time of the grant, owns stock possessing more than ten percent (10%) ofthe total combined voting power or value of all classes of stock of the HoldingCompany or a subsidiary corporation. The attribution rules of Section 424(d) of the Code shall apply in thedetermination of ownership of stock for these purposes.

 

(d)           The aggregate fairmarket value (determined as of the time the incentive stock option is granted)of stock with respect to which incentive stock options are exercisable for thefirst time by an individual during any calendar year (under all plans of theHolding Company and its subsidiary corporations, if any) shall not exceed$100,000, plus any greater amount as may be permitted under subsequentamendments to the Code.

 

(e)           The purchase price ofstock subject to each incentive stock option shall be determined by theCommittee, but shall not be less than one hundred percent (100%) of the fairmarket value of such stock at the time such option is granted, except, in thecase of optionees who at the time of the grant own more than ten percent (10%)of the total combined voting power of all classes of stock of the HoldingCompany or a subsidiary corporation, in which case the purchase price of thestock shall not be less than one hundred ten percent (110%) of the fair marketvalue of such stock at the time such option is granted. The fair market valueof such stock shall be determined in accordance with any reasonable valuationmethod, including the valuation methods described in Treasury RegulationSection 20.2031-2.

 

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**4.****             Nonqualified StockOptions**

 

(a)           All options grantedwhich are (i) in excess of the aggregate fair market value limitations setforth in Section 3(d) hereof, (ii) designated at the time of the grant as“nonqualified”, or (iii) intended to be incentive stock options but do not meetthe requirements of incentive stock options, shall be deemed nonqualified stockoptions.  Nonqualified stock optionsgranted hereunder shall be so designated in the nonqualified stock optionagreement entered into between the Holding Company and the optionee.

 

(b)           Directors**,**founders,incorporators**,** executive officers and key employees of the Holding Companyor a subsidiary corporation shall be eligible for selection to participate inthe nonqualified stock option portion of the Plan.

 

Subject to theexpress provisions of the Plan, the Committee shall (i) select from theeligible class of individuals to whom nonqualified stock options shall begranted and make appropriate grants of nonqualified stock options to thoseselected, (ii) determine the discretionary terms and provisions of therespective nonqualified stock option agreements (which need not be identical),(iii) determine the times at which such nonqualified stock options shall begranted, and (iv) determine the number of shares subject to each nonqualifiedstock option.  An individual who hasbeen granted a nonqualified stock option may, if he or she is otherwiseeligible under the Plan, be granted additional nonqualified stock options ifthe Committee shall so determine.

 

(c)           The purchase price ofstock subject to each nonqualified stock option shall be determined by theCommittee, but shall not be less than one hundred percent (100%) of the fairmarket value of such stock at the time such option is granted. The fair marketvalue of such stock shall be determined in accordance with any reasonablevaluation method, including the valuation methods described in TreasuryRegulation 20.2031-2.

 

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(d)           The Holding Companyshall make a cash payment to the director,****founder, incorporator), executive officer,or key employee covered thereby equal to the aggregate of the amount offederal, state, and local taxes which such individual would be required to payattributable to the realization of taxable income, if any, as a result of thereceipt of shares pursuant to the exercise of options granted under the Plan.In computing the amount of such payment, it shall be assumed that everydirector, founder, incorporator, executive officer, or key employee granted anoption under the Plan is subject to tax by each taxing authority at the highestmarginal tax rate in the respective taxing jurisdiction, giving effect to thetax benefit, if any, which such director, founder, incorporator, executiveofficer, or key employee may enjoy to the extent that any such tax isdeductible in determining the tax liability of any other taxing jurisdiction.

 

**5.****             Stock Subject tothe Plan**

 

Subject toadjustments as provided in Section 12, hereof, the stock to be offered underthe Plan shall be shares of the Holding Company’s authorized but unissued commonstock (hereinafter called “stock”) and the aggregate amount of stock to bedelivered upon exercise of all options granted under the Plan shall not exceed281,166 shares.  If any option shall becanceled, surrendered or expire for any reason without having been exercised infull, the underlying shares subject thereto shall again be available forpurposes of the Plan.

 

**6.****             Continuation ofEmployment**

 

Nothingcontained in the Plan (or in any option agreement) shall obligate the HoldingCompany or a subsidiary corporation to employ any optionee for any period orinterfere in any way with the right of the Holding Company or a subsidiarycorporation to reduce the optionee’s 

 

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compensation.  However, the Holding Company may not reducethe terms of any option without the approval of the optionee.

 

**7.****             Exercise ofOptions**

 

No optionshall be exercisable until all necessary regulatory and shareholder approvalsof the Plan are obtained.  Except asotherwise provided in this section, each option shall be exercisable in suchinstallments, which need not be equal, and upon such contingencies as theCommittee shall determine; provided, however, that if an optionee shall not inany given installment period purchase all of the shares which the optionee isentitled to purchase in such installment period, the optionee’s right topurchase any shares not purchased in such installment period shall continueuntil expiration or termination of such option**.**

 

Fractionalshare interests shall be disregarded and they may not be accumulated.  Not less than one (1) share may be purchasedat any one time.  Options may beexercised by written notice delivered to the Holding Company stating the numberof shares with respect to which the option is being exercised, together withthe full purchase price for such shares. Payment of the option price in full, for the number of shares to bedelivered, must be made in cash or by cashier’s check.  If the option is being exercised by anyperson other than the optionee, said notice shall be accompanied by proof,satisfactory to counsel for the Holding Company, of the right of such person toexercise the option.  Optionees willhave no rights as shareholders with respect to stock of the Holding Company subjectto their stock option agreements until the date of issuance of the stockcertificate to them.

 

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**8.****             Nontransferabilityof Options**

 

Each optionshall, by its terms, be nontransferable by the optionee other than by will orthe applicable laws of descent and distribution, and shall be exercisableduring his or her lifetime only by the optionee.

 

**9.****             Cessation ofDirectorship or Employment**

 

Except asprovided in Sections 10 and 20 hereof, if an optionee ceases to be a directoror an employee of the Holding Company or a subsidiary corporation for anyreason other than his or her disability (as defined in Section 22(e) (3) of theCode) or death, the optionee’s option shall expire three (3) months after the dateof termination of such directorship or employment.  During the period after cessation of directorship or employment,such option shall be exercisable only as to those installments, if any, whichhave accrued and/or vested as of the date on which the optionee ceased to be adirector or an employee of the Holding Company or a subsidiary corporation.

 

**10.****          Termination ofEmployment for Cause**

 

If the stockoption agreement so provides and if an optionee’s employment by the HoldingCompany or a subsidiary corporation is terminated for cause, the optionee’soption shall expire immediately; provided, however, the Committee may, in itssole discretion, within thirty (30) days of such termination, reinstate theoption by giving written notice of such reinstatement to the optionee at theoptionee’s last known address.  In theevent of reinstatement, the optionee may exercise the option only to suchextent, for such time, and upon such terms and conditions as if he or she had ceasedto be employed by the Holding Company or a subsidiary corporation upon the dateof such termination for a reason other than cause, disability or death.  Termination for cause shall include, but notbe limited to, termination for malfeasance or gross misfeasance in theperformance of duties 

 

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or conviction of a crimeinvolving moral turpitude, and, in any event, the determination of theCommittee with respect thereto shall be final and conclusive.

 

**11.****          Disability or Deathof Optionee**

 

If anyoptionee dies while serving as a director, incorporator, founder or an employeeof the Holding Company or a subsidiary corporation, the option shall expire one(1) year after the date of such death, except as provided in Section 20 hereof.  After such death but before such expiration,the persons to whom the optionee’s rights under the option shall have passed bywill or the applicable laws of descent and distribution or the executor oradministrator of optionee’s estate shall have the right to exercise such optionto the extent that installments, if any, had accrued and/or vested as of thedate on which the optionee ceased to be a director or an employee of theHolding Company or a subsidiary corporation.

 

If theoptionee shall terminate his or her directorship or employment because ofdisability (as defined in Section 22(e) (3) of the Code), the optionee mayexercise this option to the extent he or she is entitled to do so at the dateof termination, at any time within one (1) year of the date of termination,except as provided in Section 20 hereof.

 

If anyoptionee dies during the three (3) month period referred to in Section 9hereof, the option shall expire one (1) year after the date of such death,except as provided in Section 20 hereof.

 

**12.****          Adjustment uponChanges in Capitalization**

 

If theoutstanding shares of the stock of the Holding Company are increased,decreased, changed into or exchanged for a different number or kind of sharesor securities of the Holding Company through reorganization, merger,recapitalization, reclassification, stock split, stock dividend, stockconsolidation or otherwise, without consideration to the Holding Company, an 

 

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appropriate and proportionateadjustment shall be made in the number and kind of shares as to which optionsmay be granted.  At the initiation ofthis plan, 1,405,830 shares are authorized and outstanding.  A corresponding adjustment changing thenumber or kind of shares and the exercise price per share allocated tounexercised options or portions thereof, which shall have been granted prior toany such change shall likewise be made. Any such adjustment, however, in an outstanding option shall be madewithout change in the total price applicable to the unexercised portion of theoption, but with a corresponding adjustment in the price for each share subjectto the option.  Any adjustment underthis Section 12 shall be made by the Committee, whose determination as to whatadjustments shall be made, and the extent thereof, shall be final andconclusive.  No fractional shares ofstock shall be issued or made available under the Plan on account of any suchadjustment, and fractional share-interests shall be disregarded.

 

**13.****          Terminating Events**

 

A TerminatingEvent shall be defined as any one of the following events: (i) a dissolution orliquidation of the Holding Company; (ii) a reorganization, merger orconsolidation of Holding Company with one or more corporations, the result ofwhich (A) the Holding Company is not the surviving corporation, or (B) theHolding Company becomes a subsidiary of another corporation (which shall bedeemed to have occurred if another corporation shall own directly orindirectly, over 25% of the aggregate voting power of all outstanding equitysecurities of the Holding Company); (iii) a sale of substantially all theassets of the Holding Company to another corporation; or (iv) a sale of theequity securities of the Holding Company representing more than 25% of theaggregate voting power of all outstanding equity securities of the HoldingCompany to any person or entity, or any group of persons and/or entities actingin concert.  Notwithstanding theforegoing, a Terminating Event shall not include a bank holding companyreorganization wherein the shareholders who 

 

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control at least 80% of theshares of the Holding Company prior to the reorganization will control at least80% of the shares of the bank holding company in substantially the sameproportion following the bank holding company reorganization. When the HoldingCompany knows that a Terminating Event will occur (i) the Holding Company shalldeliver to each optionee no less than thirty (30) days prior to the TerminatingEvent, written notification of the Terminating Event and the optionee’s rightto exercise all options granted pursuant to the Plan, whether or not vestedunder the Plan or applicable stock option agreement, and (ii) all outstandingoptions granted pursuant to the Plan shall completely vest and becomeimmediately exercisable as to all shares granted pursuant to the optionimmediately prior to such Terminating Event. This right of exercise shall be conditional upon execution of a finalplan of dissolution or liquidation or the consummation of a consolidation ormerger.  Upon the occurrence of theTerminating Event all outstanding options and the Plan shall terminate;provided, however, that any outstanding options not exercised as of theoccurrence of the Terminating Event shall not terminate if there is a successorcorporation which assumes the outstanding options or substitutes for suchoptions, new options covering the stock of the successor corporation withappropriate adjustments as to the number and kind of shares and prices.

 

**14.****          Amendment andTermination**

 

The Board mayat any time suspend or terminate the Plan. The Committee may amend the Plan at any time and may, with the consentof the optionee, make such modification of the terms and conditions of theoption as it shall deem advisable; provided that, except as permitted under theprovisions of Sections 12 and 13 hereof, no amendment or modification whichwould:

 

(a)           increase the maximum number of shares whichmay be purchased pursuant to options granted under the Plan either in theaggregate or by an individual;

 

(b)           change the minimum option price;

 

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(c)           increase the maximum term of optionsprovided for herein; or

 

(d)           permit options to be granted to anyone otherthan directors, incorporators, founders, officers or key employees of theHolding Company or a subsidiary corporation;

 

may be adopted without theHolding Company having first obtained any necessary regulatory and shareholderapprovals required by law.

 

No option maybe granted during any suspension or after termination of the Plan.  Amendment, suspension or termination of thePlan shall not (except as otherwise provided in Section 12 hereof), without theconsent of the optionee, alter or impair any rights or obligations under anyoption theretofore granted.

 

**15.****          Time of GrantingOptions**

 

The time anoption is granted, sometimes referred to as the date of grant, shall be the dayof the action of the Committee described in Sections 3(b) and 4(b) hereof; provided,however, that if appropriate resolutions of the Committee indicate that anoption is granted as of and on some future date, the time such option isgranted shall be such future date.  Ifaction by the Committee is taken by unanimous written consent of its members,the action of the Committee shall be deemed to be at the time the lastCommittee member signs the consent.

 

**16.****          Privileges of StockOwnership; Securities Law Compliance; Notice of Sale**

 

No optioneeshall be entitled to the privileges of stock ownership as to any shares ofstock not actually issued.  No sharesshall be purchased upon the exercise of any option unless and until the HoldingCompany has fully complied with all applicable requirements of any regulatoryagency having jurisdiction over the Holding Company , and all applicablerequirements of any exchange upon which stock of the Holding Company may belisted.  The optionee shall give theHolding 

 

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Company notice of any sale ordisposition of any such shares not more than five (5) days after such sale ordisposition.

 

**17.****          Effective Date of thePlan**

 

The Plan shallbe deemed adopted by the Board as of July 18, 2002 and shall be effectiveimmediately subject to approval by the shareholders of the Holding Companywithin twelve months of the date the Plan is adopted, by the vote of a majorityof the outstanding shares represented and voting at a meeting of shareholdersat which a quorum is present, or by the written consent vote of the holders ofa majority of the outstanding shares of the Holding Company’s stock.

 

**18.****          Termination**

 

Unlesspreviously terminated by the Board, the Plan shall terminate at the close ofbusiness on July 18, 2012.  No optionsshall be granted under the Plan thereafter, but such termination shall notaffect any option theretofore granted.

 

**19.****          Option Agreement**

 

Each optionshall be evidenced by a written stock option agreement executed by the HoldingCompany and the optionee and shall contain each of the provisions andagreements herein specifically required to be contained therein, and such otherterms and conditions as are deemed desirable and are not inconsistent with thePlan.  Each incentive stock optionagreement shall contain such terms and provisions as the Committee maydetermine to be necessary in order to qualify such option as an incentive stockoption within the meaning of Section 422 of the Code.

 

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**20.****          Option Period**

 

Each optionand all rights and obligations thereunder shall expire on such date as theCommittee may determine, but not later than ten (10) years from the date suchoption is granted, and shall be subject to earlier termination as providedelsewhere in the Plan.

 

**21.****          Exculpation andIndemnification**

 

To the extentpermitted by applicable law in effect from time to time, no member of the Boardshall be liable for any act or omission of any other member of the Board norfor any act or omission on the member’s own part, except the member’s own willfulmisconduct or gross negligence.  TheHolding Company and its subsidiary corporations shall pay expenses incurred by,and satisfy a judgment or fine rendered or levied against, a present or formermember of the Board in any action brought by a third party against such person(whether or not the Holding Company is joined as a party defendant) to impose aliability or penalty on such person while a member of the Board arising withrespect to the Plan or administration thereof or out of membership on the Board, or all or any combination of the preceding; provided, the Board determines ingood faith that such member of the Board was acting in good faith, within whatsuch member of the Board reasonably believed to be the scope of his or heremployment or authority, and for a purpose which he or she reasonably believedto be in the best interests of the Holding Company or its shareholders.  Payments authorized hereunder includeamounts paid and expenses incurred in settling any such action or threatenedaction.  This Section 21 does not applyto any action instituted or maintained in the right of the Holding Company by ashareholder or holder of a voting trust certificate representing shares of theHolding Company or a subsidiary corporation thereof.  The provisions of this Section 21 shall apply to the estate,executor, administrator, heirs, legatees or devisees of a member of the Board,and 

 

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the term “person” as used inthis Section 21 shall include the estate, executor, administrator, heirs,legatees or devisees of such person.

 

**22.****          Regulatory CapitalRequirements**

 

Notwithstandingthe foregoing provisions, in the event the Holding Company’s capital fallsbelow the minimum requirements as determined by the Nevada Division ofFinancial Institutions or the Holding Company’s primary federal regulator, theHolding Company’s primary federal regulator may direct the Holding Company torequire the optionees to either exercise or forfeit their options.

 

***Adoptedby Nevada Security Bank on July 18, 2002 and approved by shareholders onSeptember 19, 2002; Assumed by The Bank Holdings on August 29, 2003 as a resultof the Plan of Merger and Reorganization dated April 17, 2003 and approved byshareholders on July 9, 2003.***

 

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