Exhibit 10.7


 


FIRST AMENDMENT TO

EMPLOYMENT AGREEMENT

JACK BUCHOLD


 


This first amendment (“Amendment”)
to the Employment Agreement (“Agreement”) dated December 27, 2004 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 Jack Buchold, 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 Chief Financial Officer;


 


WHEREAS, the Executive and Bank had entered into the
Agreement in December 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 of the Bank. 
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.               A
new Section 4.7 of the Agreement is added 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.


 


7.               A
new Section 4.8 of the Agreement is added 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 


 


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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.


 


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 


 


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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 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 


 


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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.         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.


 


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).


 


14.         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.


 


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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

  	
   

  	
  JACK BUCHOLD

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Ed Allison

  	
   

  	
  /s/ Jack Buchold

  
	
  Ed Allison, Chairman of the Board

  	
   

  	
   

  



 


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