Exhibit
10.8


 


FIRST AMENDMENT TO

EMPLOYMENT AGREEMENT

JOHN DONOVAN


 


This
first amendment (“Amendment”) to the Employment Agreement (“Agreement”) dated May 25,
2007 is made and entered into this 31st day of December, 2008, by and among Nevada
Security Bank, a Nevada state chartered bank (the “Bank”), and John Donovan, an
individual residing in the State of Nevada (hereinafter referred to as the “Executive”).


 


RECITALS


 


WHEREAS, the Executive
is an Executive of the Bank and is serving as its Executive Vice President and
Chief Credit Officer;


 


WHEREAS, the Executive
and Bank had entered into the Agreement in May of 2007, and the parties desire
to amend the Agreement to comply with Section 409A of the Internal Revenue
Code of 1986, as amended (“Code”) and the final regulations promulgated
thereunder.


 


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 Bank
agree to amend the Agreement as follows:


 


1.               Section 4.2
of the Agreement is amended in the entirety to read as follows:


 


Automobile
Allowance:  The
Bank shall pay the Executive the sum of Seven Hundred Fifty Dollars ($750) per
month on a semi-monthly basis as and for expenses to cover all costs of use,
maintenance, repair, upkeep, fuel, cleaning and operation of his automobile
(except mileage costs incurred to travel to locations outside of the Reno
service area) used in the course and scope of his employment.


 


2.               The last sentence of Section 4.3 of the
Agreement is deleted in the entirety, as disability insurance for the Executive
is covered in the first sentence of Section 4.3 of the Agreement.


 


3.               Section 4.4
of the Agreement is amended in the entirety to read as follows:


 


Business Expenses:  The
Executive shall be entitled to reimbursement by the Bank for any ordinary and
necessary business expenses he incurs in the performance of his duties during
the Term, including, but not limited to, entertainment, dues, and other
expenses, meals, travel expenses, conventions, meetings, seminars and the like
which are reasonable for the office of the Executive.  All
reimbursements shall be made in accord with Bank reimbursement policies, on a
timely basis, but in all events no later than the end of the calendar year
following the year in which reimbursed expenses are incurred.


 


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4.               Section 4.5
of the Agreement is amended in the entirety to read as follows:


 


Club Memberships: 
The Executive shall be provided paid memberships in clubs approved by
the Chief Executive Officer.  The
reimbursement to Executive of such paid memberships shall be made in accord
with Bank reimbursement policies, on a timely basis, but in all events no later
than the end of the calendar year following the year in which reimbursed
expenses are incurred.


 


5.               Section 4.6
of the Agreement is amended in the entirety to read as follows:


 


Retirement Benefits:  Retirement age shall be at a minimum Sixty-Two
(62) years of age.  Upon Executive’s retirement,
the Bank, at its expense, will provide the Executive and his eligible
dependents the maximum medical and health benefit available through the Bank’s
Group Insurance program that will not result in federal taxable income for the
Executive for a period equal to the maximum applicable continuation coverage
period under the Consolidated Omnibus Budget Reconciliation Act of 1985 after
Executive’s retirement (“Post-Employment Covered Period”).  If the Executive or any of his or her covered
dependents is eligible to qualify for governmental healthcare benefits
(including, but not limited to, Medicare benefits) during the Post-Employment
Covered Period, then upon the eligibility of such person to qualify for such
governmental benefits the Bank’s obligation to provide the group insurance
benefits aforementioned shall cease and the Bank will, at its expense, provide
such person additional insurance benefits to the extent possible and to the
extent such person qualifies to supplement the governmental healthcare benefits
so that such person is provided with the maximum medical and health benefits
that will not result in federal taxable income for the Executive for the
remainder of the Post-Employment Covered Period.


 


6.               Section 4.7
of the Agreement is amended to read in the entirety as follows:


 


Supplemental Executive Compensation.  The Bank shall pay to Executive, as
additional executive compensation the amount of $4,000 per year payable
beginning November 1, 2009 and on each anniversary thereafter for the term
of this Agreement and thereafter up to and including November 1,
2016.  This provision shall survive the
Agreement, notwithstanding the termination provisions in Sections 5.1 and 5.2
of the Agreement.


 


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7.               Section 4.8
of the Agreement is amended to read in the entirety as follows:


 


Nevada Security Bank Executive
Supplemental Compensation Agreement, Nevada Security Bank Split Dollar
Agreement, and Nevada Security Bank Excess Plan. 
The Bank has agreed to provide certain compensation and benefits to the
Executive pursuant to the Nevada Security Bank Executive Supplemental
Compensation Agreement and amendments thereto; the Nevada Security Bank Split
Dollar Agreement and amendments thereto; the Nevada Security Bank Excess Plan
and amendments thereto.  The Executive
shall be entitled to any and all benefits provided under these agreements and
plans and in accordance with any amendments thereto.


 


8.               Section 5.2
of the Agreement is amended to read in the entirety as follows:


 


Termination without Cause:  In the event the Board of Directors of the
Bank determines that either (i) the continued association of the Executive
with the Bank or (ii) the performance of his duties by the Executive is
not in the best interest of the Bank, then the Bank may terminate this
Agreement by action of its Board of Directors. 
In the event of such termination without cause, and subject to any
limitation of payments to Officers and Directors under applicable Federal and
State law, the Executive shall be paid within 10 business days of such
termination (except if Executive is a Specified Employee in which case
Executive shall be paid at such time as set forth in Section 6.12 of this
amended Agreement) as and for severance payments and in lieu of any and all
other compensation, remedy or damages under this Agreement
a lump-sum amount equal to Twenty-Four (24) months compensation at the then
current base salary of the Executive, plus an additional severance payment of
one (1) month of the Executive’s then current base salary for each year of
service to the Bank, plus any accrued but unpaid Bonus Compensation described
elsewhere in this Agreement.  In
addition, the Bank, at its expense will provide the Executive and his eligible
dependents with insurance coverage, as described in Paragraph 4.6 in this
amended Agreement as if Executive retired as of the effective date of
termination without cause with coverage provided for a period of the lesser of (i) 12
months plus one additional month for each year of service or (ii) the
maximum applicable continuation coverage period under the Consolidated Omnibus
Budget Reconciliation Act of 1985.  Upon
such payment, any and all obligations of the Bank to the Executive shall have
been fully and completely satisfied and the Executive shall be entitled to no
additional compensation, claim, right or benefit hereunder or otherwise.


 


 


9.               Section 5.4
of the Agreement is amended in the entirety to read as follows:


 


Change in Control:  For purposes of this Agreement,
a change in control (“Change in Control”) shall mean the earliest occurrence of
one of the following events:


 


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A.                                   A Change In Ownership of The Bank Holdings or
the Bank.


 


A
change in ownership of The Bank Holdings (“Company”) or the Bank occurs on the
date that any person (or group of persons) acquires ownership of stock of the
Company or the Bank that, together with stock held by such person or group,
constitutes more than fifty percent (50%) of the total fair market value or
total voting power of the stock of the Company or the Bank, respectively.


 


B.                                     A Change in Effective Control of the Company
or the Bank.


 


A
change in effective control of the Company or the Bank occurs on the date that:


 


1.                                       Any person (or group of persons) acquires (or
has acquired during the twelve (12) month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the Company
or the Bank possessing thirty-five percent (35%) or more of the total voting
power of the stock of the Company or the Bank, respectively; or


 


2.                                       A majority of members of the Company’ or Bank’s
Board is replaced during any twelve (12) month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Company’ or the Bank’s Board, respectively prior to the date of the appointment
or election.


 


C.                                     A Change in Ownership of a Substantial
Portion of the Company’s or the Bank’s Assets.


 


A
change in the ownership of a substantial portion of the Company’s or the Bank’s
assets occurs on the date that any person (or group of persons) acquires (or
has acquired during the twelve (12) month period ending on the date of the most
recent acquisition by such person or persons) assets from the Company or the
Bank, respectively that have a total gross fair market value equal to, or more
than, forty percent (40%) of the total gross fair market value of all of the
assets of the Company or the Bank, respectively immediately prior to such
acquisition or acquisitions.


 


For the purpose of this Agreement, transfers of the outstanding voting
securities of the Company or the Bank made on account of deaths or gifts,
transfers between family members, former spouses or transfers to a qualified
retirement plan maintained by the Company or the Bank shall not be considered
in determining whether there has been a Change in Control.


 


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In the event of any Change in Control and subject to any limitation of
payments to officers and directors under applicable Federal and State law, the
Executive shall be paid within 10 business days of the effective date of such
Change in Control, as and for severance payment and in lieu of any and all
other compensation, remedy or damages under this Agreement, a lump-sum equal to
Twenty-Four (24) months compensation at the then current base salary of the
Executive, plus an additional severance payment of one (1) month of the
Executive’s then current base salary for each year of service to the Bank, plus
any accrued but unpaid Bonus Compensation described elsewhere in this Agreement
accrued to the end of the month immediately prior to the month in which the
Change in Control occurs.  In addition,
the Bank, at its expense will provide the Executive and his eligible dependents
with insurance coverage, as described in Paragraph 4.6 in this amended
Agreement as if Executive retired as of the effective date of the Change in
Control with coverage provided for a period of the lesser of (i) 12 months
plus one additional month for each year of service or (ii) the maximum
applicable continuation coverage period under the Consolidated Omnibus Budget
Reconciliation Act of 1985.  Upon such
payment, any and all obligations of Bank to the Executive shall have been fully
and completely satisfied and the Executive shall be entitled to no additional
compensation, claim, right or benefit hereunder.  Any stock options shall only be exercised in
accordance with “The Bank Holdings Stock Option Plan” referenced and incorporated
in this Agreement.


 


10.         Section 5.5
of the Agreement is amended in the entirety to read as follows:


 


Termination by the Executive:   The
Executive may terminate his employment hereunder at any time upon ninety (90)
days written notice to the Bank.  In such
event, the Executive shall be entitled to all salary, bonus and other benefits
(accrued vacation, etc.), which have accrued prior to the effective date of
termination and shall be paid such amount entitled within 10 days of
termination of employment, except if Executive is a Specified Employee and any
part of the bonus or other benefits compensation is considered deferred
compensation under Section 409A of the Code in which case Executive shall
be paid such deferred compensation at such time as set forth in Section 6.12
in this amended Agreement.  Any stock
options shall only be exercised in accordance with “The Bank Holdings Stock
Option Plan” referenced and incorporated in this Agreement.


 


11.         The
first sentence of the first paragraph of Section 6.1 of the Agreement is
amended in the entirety to read as follows:


 


If any portion of the amounts payable to the Executive under this
Agreement as a result of a Change in Control as defined in Section 5.4 of
this Agreement, either alone or together with other payments or benefits which
are “contingent on change in ownership or control” would constitute “excess
parachute payments” that are subject to the excise tax imposed by section 4999
(or similar tax and/or assessments) of the Internal Revenue Code of 1986, as
amended (Code) then such payments shall 


 


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either be (i) paid in full, or (ii) reduced to an amount
equal to two hundred ninety-nine percent (299%) of the Executive’s “base amount”,
whichever of the foregoing payments, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Code
section 4999, results in the receipt by the Executive on an after-tax basis of
the greatest amount of benefits.


 


12.         The
first sentence of the second paragraph of Section 6.1 of the Agreement is
amended in the entirety to read as follows:


 


Any determination required under this Section 6.1 shall be made in
writing by the Bank’s independent public accountants immediately prior to a Change
in Control (“Accountants”), whose determination shall be conclusive and binding
upon the Executive and the Bank for all purposes.


 


13.         Section 6.8
of the Agreement is amended in the entirety to read as follows:


 


Entire Agreement:  This Agreement contains the entire agreement
of the parties and supersedes all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of the Executive by
the Bank, except for any compensation and/or benefits provided to Executive
under his Nevada Security Bank Executive Supplemental Compensation Agreement or
his Nevada Security Bank Split Dollar Agreement and any amendments to such
agreements and plans.  Each party to this
Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any party or anyone acting on
behalf of any party, which are not embodied herein and that no other agreement,
statement or promise not contained in this Agreement shall be valid or binding,
except for the agreements previously referenced.  This Agreement may not be modified or amended
by oral agreement but only by an agreement in writing signed by the Bank and
the Executive.


 


14.         The
Agreement is amended by adding a new Section 6.12 to read as follows:


 


Delayed Payments for Specified Employees.  In the event that §409A of the Code applies
to any compensation paid to Executive with respect to a Separation of Service
and no exception under §409A is applicable as determined by Bank counsel,
payment of that compensation shall be delayed if Executive is a “specified
employee,” as defined in § 409A(a)(2)(B)(i) of the Code.  Such delay shall last six months from the
date of Separation of Service.  On the
day following the end of the six-month period, the Bank shall make a catch-up
payment to Executive equal to the total amount of such payments that would have
been made during the six-month period but for this Section 6.12.


 


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The term “Separation from Service” means the termination of the
Executive’s employment with the Bank for reasons other than death or
Disability.  Whether a Separation from
Service takes place is determined based on the facts and circumstances
surrounding the termination of the Executive’s employment and whether the Bank
and the Executive intended for the Executive to provide significant services
for the Bank following such termination. 
A termination of employment and Separation of Service is presumed to
have occurred if the level of bona fide services provided by the Executive
permanently decreases to no more than 20% of the average level of services
rendered during the previous 36 months of employment (or if employed less than
36 months, such lesser period), and no Separation of Service is presumed to
have occurred if the Executive continues to provide services to the Bank at the
level that is 50% or more of the average level of services provided during the
previous 36 months of employment (or if employed less than 36 months, such lesser
period).


 


15.         The
Agreement is amended by adding a new Section 6.13 to read as follows:


 


Compliance with Section 409A.  This
Agreement shall at all times be administered in compliance with the
requirements of §409A of the Code and any and all regulations
thereunder, including such regulations as may be promulgated after the date of
the Agreement.


 


Except as amended
hereby, the provisions of the Agreement remain in full force and effect and the
enforceability thereof is not affected by this Amendment.


 


IN WITNESS WHEREOF, the
parties to this Amendment have duly executed this Amendment as of the day and
year first above written.


 


	
  NEVADA SECURITY BANK

  	
   

  	
  JOHN DONOVAN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Ed Allison

  	
   

  	
  /s/ John Donovan

  
	
  Ed Allison, Chairman of
  the Board

  	
   

  	
   

  



 


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