Document:

Exhibit 10.3

 

NOTWITHSTANDING
ANY OTHER PROVISION OF THIS AGREEMENT, NO SHARES OF NEVADA SECURITY BANK’S
STOCK SHALL BE ISSUED PURSUANT HERETO UNLESS THE NEVADA SECURITY BANK 2002
STOCK OPTION PLAN SHALL HAVE FIRST BEEN APPROVED BY THE SHAREHOLDERS OF NEVADA
SECURITY BANK.

 

 

NEVADA SECURITY BANK

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

 

This
Nonqualified Stock Option Agreement (the “Agreement”) is made and entered into
as of the 18th day of July, 2002, by and between Nevada Security
Bank, a Nevada corporation (the “Bank”), and Hal
Giomi (“Optionee”);

 

WHEREAS,
pursuant to the Nevada Security Bank 2002 Stock Option Plan (the “Plan”), a
copy of which is attached hereto, the Board of Directors of the Bank has
authorized granting to Optionee, a nonqualified stock option to purchase all or
any part of Twenty-Two Thousand Five Hundred,
(22,500) authorized but unissued
shares of the Bank’s common stock for cash at the price of Ten Dollars and No Cents ($10.00)
per share, such option to be for the term and upon the terms and conditions
hereinafter stated;

 

NOW,
THEREFORE, it is hereby agreed:

 

1.                                      Grant
of Option.  Pursuant to said
action of the Board of Directors and pursuant to authorizations granted by all
appropriate regulatory and governmental agencies, the Bank hereby grants to
Optionee the option to purchase, upon and subject to the terms and conditions
of the Plan, which is incorporated in full herein by this reference, all or any
part of Twenty-Two Thousand Five Hundred,
(22,500) shares of the Bank’s
common stock (hereinafter called “Common Stock”) at the price of Ten Dollars and No Cents ($10.00)
per share, which price is not less than one hundred percent (100%) of the fair
market value of the Common Stock as of the date of action of the Board of
Directors granting this option.

 

1

 

2.                                      Exercisability.  This option shall be exercisable as to:

 

	
  4,500 Shares

  	
   

  	
  Upon Grant, July 18, 2002

  
	
  4,500 Shares

  	
   

  	
  After July 18, 2003

  
	
  4,500 Shares

  	
   

  	
  After July 18, 2004

  
	
  4,500 Shares

  	
   

  	
  After July 18, 2005

  
	
  4,500 Shares

  	
   

  	
  After July 18, 2006

  

 

This option shall remain
exercisable as to all of such shares until July 18,
2012 (but not later than ten (10) years from the date this option is
granted) unless this option has expired or terminated earlier in accordance
with the provisions hereof.  Shares as
to which this option becomes exercisable pursuant to the foregoing provision
may be purchased at any time prior to expiration of this option.

 

3.                                      Exercise
of Option.  This option may be
exercised by written notice delivered to the Bank stating the number of shares
with respect to which this option is being exercised, together with cash or
qualifying shares of the Bank’s stock, as applicable,  in the amount of the purchase price of such shares.  Not less than one (1) share may be purchased
at any one time, and in no event may the option be exercised with respect to
fractional shares. Upon exercise, Optionee shall be responsible for providing
Bank with that information 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 contained
herein or in the Plan, benefits in the form of payment of taxes by the Bank
shall not be payable under this section or under the Plan to the extent
the benefit would be an excess parachute payment under Section 280G of the
Internal Revenue Code of 1986, as amended

 

4.                                      Cessation
of Directorship or Employment. 
Except as provided in Paragraphs 2 and 5 hereof, if Optionee shall cease
to be a director or an employee of the Bank or a subsidiary corporation for any
reason other than Optionee’s death or disability [as defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended from
time to time (the “Code”)], this 

 

2

 

option shall expire three (3)
months thereafter.  During the three (3)
month period this option shall be exercisable only as to those installments, if
any, which had accrued as of the date when the Optionee ceased to be a director
or an employee of the Bank or a subsidiary corporation.

 

5.                                      Termination
of Employment for Cause.  If
Optionee is an employee of the Bank or a subsidiary corporation and Optionee’s
employment with the Bank or a subsidiary corporation is terminated for cause,
this option shall expire immediately, unless reinstated by the Board of
Directors within thirty (30) days of such termination by giving written notice
of such reinstatement to Optionee at his or her last known address.  In the event of such reinstatement, Optionee
may exercise this option only to such extent, for such time, and upon such
terms and conditions as if Optionee had ceased to be an employee of the Bank or
a subsidiary corporation upon the date of such termination for a reason other
than cause, death or disability. 
Termination for cause shall include, but not be limited to, termination
for malfeasance or gross misfeasance in the performance of duties or conviction
of a crime involving moral turpitude, and, in any event, the determination of
the Board of Directors with respect thereto shall be final and conclusive.

 

6.                                      Nontransferability;
Death or Disability of Optionee. 
This option shall not be transferable except by will or by the
applicable laws of descent and distribution and shall be exercisable during
Optionee’s lifetime only by Optionee. 
If Optionee dies while serving as a director or an employee of the Bank
or a subsidiary corporation, or during the three (3) month period referred to
in Paragraph 4 hereof, this option shall expire one (1) year after the date of
Optionee’s death or on the day specified in Paragraph 2 hereof, whichever is
earlier.  After Optionee’s death but
before such expiration, the persons to whom Optionee’s rights under this option
shall have passed by will or by the applicable laws of descent and distribution
or the executor or administrator of Optionee’s estate shall have the right to
exercise this option as to those shares for which installments had accrued
under Paragraph 2 hereof as of the date on which Optionee ceased to be a
director or an employee of the Bank or a subsidiary corporation.

 

If Optionee
terminates his or her directorship or employment because of disability,
Optionee may exercise this option to the extent he or she is entitled to do so
at the date of 

 

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termination, at any time within
one (1) year of the date of termination, or before the expiration date
specified in Paragraph 2 hereof, whichever is earlier.

 

7.                                      Employment.  This Agreement shall not obligate the Bank
or a subsidiary corporation to employ Optionee for any period, nor shall it
interfere in any way with the right of the Bank or a subsidiary corporation to
reduce Optionee’s compensation.

 

8.                                      Privileges
of Stock Ownership.  Optionee
shall have no rights as a shareholder with respect to the Common Stock subject
to this option until the date of issuance of stock certificates to
Optionee.  Except as provided in the
Plan, no adjustment will be made for dividends or other rights for which the
record date is prior to the date such stock certificates are issued.

 

9.                                      Modification
and Termination.  The rights of
Optionee are subject to modification and termination upon the occurrence 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 upon exercise of this option, will
notify the Bank not more than five (5) days after any sale or other disposition
of such shares.  No shares issuable upon
the exercise of this option shall be issued and delivered unless and until the
Bank has fully complied with all applicable requirements of any regulatory
agency having jurisdiction over the Bank, and all applicable requirements of
any exchange upon which the Common Stock of the Bank may be listed.

 

11.                               Notices.  Any notice to the Bank provided for in this
Agreement shall be addressed to it in care of its President at its main office
and any notice to Optionee shall be addressed to Optionee’s address on file
with the Bank or a subsidiary corporation, or to such other address as either
may designate to the other in writing. 
Any notice shall be deemed to be duly given if and when enclosed in a
properly sealed envelope and addressed as stated above and deposited, postage
prepaid, with the United States Postal Service.  In lieu of giving notice by mail as aforesaid, any written notice
under this Agreement may be given to Optionee in person, and to the Bank by
personal delivery to its President.

 

4

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

 

 

	
  OPTIONEE

  	
   

  	
   

  	
  NEVADA SECURITY BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   /s/Hal Giomi

  	
   

  	
  By 

  	
  /s/Ed Allison

  	
   

  
	
   

  	
  Hal Giomi

  	
   

  	
   

  	
  Ed Allison, Chairman of the Board

  

 

5Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

This Agreement
effective November 18, 2002, by and between Nevada Security Bank, a Nevada
corporation (“Bank”), and David A. Funk (“Executive”).

 

Bank desires
to employ Executive to devote full time to the business of the Bank, and
Executive desires to be so employed.

 

The parties
agree as follows:

 

I.

 

EMPLOYMENT TERM

 

Bank agrees to
employ Executive, and Executive agrees to be so employed, in the capacity of
President.  Employment shall begin
November 18, 2002 and continue until termination in accordance with this
Agreement.

 

II.

 

TIME AND EFFORTS

 

Executive
shall diligently and conscientiously devote his full and exclusive time and
attention and best efforts in discharging his duties as the Bank’s President.

 

III.

 

BOARD OF DIRECTORS

 

Executive
shall be a member of the Board of Directors and at all times discharge his
duties in consultation with and under the supervision of the Bank’s Board of
Directors.  In the performance of his
duties, Executive shall make his principal office in such place as the Bank’s
Board of Directors and Executive may from time to time agree.

 

1

 

IV.

 

COMPENSATION

 

Bank shall pay
to Executive as compensation for his services the sum of $140,000.00 per year
payable semi-monthly.

 

V.

 

EXPENSES

 

(a)                                  Business.                                              The Bank
shall reimburse Executive for all reasonable and necessary business expenses
incurred in carrying out his duties under this Agreement.  Executive shall present to the Bank from
time to time an itemized account of such expenses in any form required by the
bank.

 

(b)                                 Memberships.                     The Bank shall pay or reimburse
Executive for social, professional and community membership fees, including but
not limited to, Hidden Valley County Club, Prospectors Club, Western Industrial
of Nevada, Economic Development of Western Nevada, American Bankers
Association, Western Independent Bankers and Nevada Bankers.

 

(c)                                  Automobile.                              The Bank shall pay
Executive a car allowance of $700.00 a month.

 

VI.

 

EXECUTIVE BENEFITS

 

Executive
shall receive the following:

 

(a)                                  Insurance.                                       Bank paid
medical, vision, short and long term disability and a $525,000 life insurance
policy.

 

(b)                                 Vacation.                                           Four weeks
paid vacation per calendar year commencing January 1, 2003 accruing at the rate
of one week every three months.  For the
remainder of the calendar year 2002, Executive shall be entitled to four days
paid vacation.  Upon termination
Executive shall be paid for accrued and unused vacation.

 

(c)                                  Holidays.                                            All paid
holidays the Bank observes.

 

(d)                                 Sick leave.                                     Ten paid sick
leave days per year accruing at the rate 2.5 days every three months.  Unused sick days can be accumulated up to
120 days.

 

2

 

(e)                                  401K.               Executive
is eligible to participate in Bank’s 401K Plan following 90 days of
employment.  There are currently no Bank
matching contributions.

 

(f)                                    Stock options.                  15,000 shares of Bank stock at an
option price of $10 a share subject to the conditions of the Bank’s Stock
Option Plan.  The option to purchase the
stock shall vest as follows: 3,000 shares vest immediately on the first day of
employment; thereafter an additional 3,000 shares vest yearly on the
anniversary date of employment for 4 years.

 

(g)                                 Participation in other executive and/or
employee-benefit plans.

Nothing in
this Agreement shall in any manner modify, impair, or affect the existing or
future rights or interests of the Executive (a) to receive any executive and/or
employee-benefits to which he would otherwise be entitled, or (b) as a
participant in the present or any future incentive profit-sharing or bonus
plan, stock option plan or pension plan of the Bank.  The rights and interests of the Executive to any executive and/or
employee benefits or as a participant or beneficiary in or under any or all
such plans shall continue in full force and effect.  The Executive shall have the right at any future time to become a
participant or beneficiary under or pursuant to any and all such plans.

 

VII.

 

TERMINATION FOR CAUSE

 

The Bank may
terminate this Agreement at any time by action of its Board of Directors,
without further obligation or liability to the Executive, in the event that:

 

(a)                                  The
Executive fails to abide by and/or enforce the Bank’s written safety and
soundness policies; or

 

(b)                                 The
Executive is convicted of a felony or misdemeanor involving moral turpitude; or

 

(c)                                  State
and/or Federal regulators request or order termination of this Agreement; or

 

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

 

(e)                                  The
Executive dies.

 

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VIII.

 

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, the Executive shall be paid as and for severance payments and in lieu of
any and all other Compensation, remedy or damages, a non-discounted lump-sum
equal to not less than Twelve (12) months compensation at the then current base
salary of the Executive, plus any accrued and unused vacation days and any
accrued but unpaid Bonus Compensation. 
In addition, the Bank, at its expense will provide the Executive and his
dependent family with medical and vision insurance coverage for a period of not
less than six (6) months following the Executive’s termination.  Upon such payment and provision of insurance
coverage, 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.

 

IX.

 

ACTION BY SUPERVISORY AUTHORITY

 

If the Bank is
closed or taken over by any banking supervisory authority, such banking
authority may immediately terminate this Agreement without liability or
obligation to the Executive.

 

X.

 

MERGER OR CORPORATE DISSOLUTION

 

In the event
of a merger where the Bank is not the surviving corporation, in the event of a
consolidation, in the event of a transfer of all or substantially all of the
assets of the Bank, in the event of any other corporate reorganization where
there is a change in ownership of at least Twenty Five Percent (25%) except as
may result from a transfer of the Bank’s stock to another corporation in
exchange for at least Sixty-Six and Two/Thirds Percent (66 2/3%) control of
that corporation, or in the event of the dissolution of the Bank, the Executive
may terminate this Agreement.  In the event
of such termination, the Executive shall be paid, as and for severance payments
and in lieu of any and all other compensation remedy or damages, a
non-discounted lump-sum equal to not less than Twenty Four (24) months
compensation at the then current base salary of the Executive, plus any accrued
and unused vacation days and any accrued but unpaid Bonus Compensation.  In addition, the Bank at its expense will
provide the Executive and

 

4

 

his dependent family with medical and vision insurance coverage for a
period of not less than Twelve (12) months following the Executive’s
termination.  Upon such payment and
provision of insurance coverage, 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.

 

XI.

 

TERMINATION BY THE EXECUTIVE

 

The Executive
may terminate his employment hereunder at any time upon Ninety (90) days 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.  All unvested options shall be forfeited and
the Executive must exercise his vested options within Sixty (60) days of
termination.  If not so exercised, those
options shall also be forfeited.

 

XII.

 

INDEMNIFICATION

 

The Bank shall
indemnify the Executive against liability or loss arising out of the
Executive’s actual or asserted negligence, misfeasance or malfeasance in the
performance of the Executive’s duties or out of any actual or asserted wrongful
act or omission against, or by, the Bank including, but not limited to,
judgments, fines, settlements, expenses, attorney fees and costs incurred in
the defense of actions, proceedings and appeals therefrom.  The Bank shall provide Directors and
Officers Liability Insurance to indemnify and insure the Bank and the Executive
from and against the aforementioned liabilities.  The provisions of this paragraph shall apply to the estate,
executor, administrator, heirs, legatees or devisees of the Executive.

 

XIII.

 

NOTICES

 

Any written
notice required or desired to be given under this Agreement shall be given in
writing and delivered, personally or by certified mail to the Executive’s
residence or to the Bank’s principal office, as the case may be.

 

5

 

XIV.

 

WAIVER OF BREACH

 

The Bank’s
waiver of a breach of any provision of this Agreement by the Executive shall
not operate or be construed as a waiver of any subsequent breach by the
Executive. No waiver shall be valid unless in writing and signed by an
authorized officer of the Bank.

 

XV.

 

ASSIGNMENT

 

The Executive
acknowledges that his services are unique and personal.  Accordingly, the Executive may not assign
his rights or delegate his duties or obligations under this Agreement.  The Bank’s rights and obligations under this
Agreement shall inure to the benefit of and shall be binding upon the Bank’s
successors and assigns.

 

XVI.

 

ATTORNEYS’ FEES AND COSTS

 

If either
party brings an action or a proceeding, including arbitration, to enforce,
protect, or establish any right or remedy under the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorneys’ fees and costs,
and the fees and expenses of the arbitrators in any arbitration proceeding.

 

XVII.

 

ENTIRE AGREEMENT

 

This Agreement
contains the entire understanding of the parties.  It may not be changed orally but only by an Agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.

 

XVIII.

 

GOVERNING LAW

 

This
Employment Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada in effect from time to time.

 

6

 

XIX.

 

SEVERABILITY

 

The
severability, unenforceability, invalidity, or illegality of any provision of
this Employment Agreement shall not render any other provisions unenforceable,
invalid, or illegal, and the Employment Agreement shall be construed in all
respects as if the unenforceable, invalid or illegal provisions were omitted.

 

XX.

 

HEADINGS

 

Headings in
this Agreement are for convenience only and shall not be used to interpret or
construe its provisions.

 

XXI.

 

COUNTERPARTS

 

This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

 

XXII.

 

GENDER AND NUMBER

 

As used in
this Employment Agreement, the masculine, feminine, or neuter gender, and
singular or plural number, shall each be considered to indicate the others
whenever the context so indicates.

 

XXIII.

 

AGREEMENT TO BE CONSTRUED IN ACCORDANCE WITH
ITS INTENT

 

This Agreement
shall be construed in accordance with its intent and without regard to any
presumption or other rule requiring construction against the party causing the
same to be drafted.

 

7

 

IN WITNESS
WHEREOF the parties have executed this Agreement effective the day first above
written.

 

	
  Nevada Security Bank

  	
  Executive

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Hal Giomi

  	
   

  	
  /s/ David A. Funk

  	
   

  
	
  President & CEO

  	
   

  	
  3290 [ILLEGIBLE]

  	
   

  
	
   

  	
  address

  
	
  Board of Directors

  	
  Reno, NV 89502

  	
   

  

 

8

 

NEVADA SECURITY BANK

EMPLOYMENT AGREEMENT
ADDENDUM

DAVID A. FUNK

 

 

An employment agreement dated
November 18, 2003, by and between Nevada Security Bank and David A. Funk, is
hereby amended to include the following paragraph:

 

 

EXECUTIVE BENEFITS

 

 

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 available from time to time under
the Bank’s Group Insurance program for an employee of the Executive’s salary
level at the Bank’s expense upon retirement from the Bank.  Retirement age shall be at a minimum
Sixty-two (62) years of age.

 

 

IN WITNESS WHEREOF the parties
have executed this Addendum to the Agreement effective on May 9, 2003.

 

 

	
  Nevada
  Security Bank

  	
  David A.
  Funk, Executive

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Hal Giomi

  	
   

  	
  /s/ David A.
  Funk

  	
   

  
	
  Chief
  Executive Office

  	
   

  
	
  Board of
  Directors

  	
   

  
					

 

9

 

NEVADA SECURITY BANK

EMPLOYMENT AGREEMENT
ADDENDUM NUMBER TWO

DAVID A. FUNK

 

 

An employment agreement dated
November 18, 2003, by and between Nevada Security Bank and David A. Funk, is
hereby amended as follows:

 

 

VI.

 

EXPENSES

 

(C).  Automobile.            The Bank shall pay Executive a car allowance of $750.00 a
month.

 

 

 

IN WITNESS WHEREOF the parties
have executed this Addendum to the Agreement effective on July 2, 2003.

 

 

	
  Nevada
  Security Bank

  	
   

  	
  David A.
  Funk, Executive

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Hal Giomi

  	
   

  	
    /s/
  David A. Funk

  	
   

  
	
  Chief
  Executive Office

  	
   

  	
   

  
					

 

10

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