NEVADA SECURITY
BANK
EXECUTIVE
SUPPLEMENTAL COMPENSATION AGREEMENT
This Agreement is made and entered
into this 15th day of September, 2005, by and between Nevada
Security Bank, a banking corporation organized under the laws of
the State of Nevada (the “Employer”), and Jack Buchold,
an individual (hereinafter referred to as the
“Executive”).
RECITALS
WHEREAS, the Executive is an employee
of the Employer and is serving as its Executive Vice President and
Chief Financial Officer;
WHEREAS, the Executive’s
experience and knowledge of the affairs of the Employer and the
banking industry are extensive and valuable;
WHEREAS, it is deemed to be in the
best interests of the Employer to provide the Executive with
certain supplemental executive benefits in the form of salary
continuation after retirement or certain other events, on the terms
and conditions set forth herein, in order to reasonably induce the
Executive to remain in the Employer’s employment; and
WHEREAS, the Executive and the
Employer wish to specify in writing the terms and conditions upon
which this additional compensatory incentive will be provided to
the Executive.
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
Employer agree as follows:
AGREEMENT
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1.0
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TERMS AND DEFINITIONS .
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1.1 Annual
Benefit . The term “Annual Benefit” shall mean
the amount equal to the product of the Executive’s Final
Average Annual Compensation times the Benefit Level Percentage
times the Applicable Percentage, which amount shall be reduced to
the extent required: (i) under the other provisions of this
Agreement; (ii) by reason of the lawful order of any
regulatory agency or body having jurisdiction over the Employer;
and (iii) in order for the Employer to properly comply with
any and all applicable state and federal laws, including, but not
limited to, income, employment and disability income tax laws
(e.g., FICA, FUTA, SDI).
1.2
Applicable Percentage . Unless otherwise defined, The
term “Applicable Percentage” shall mean that percentage
listed on Schedule “A” attached hereto which is
adjacent to the number of complete years (with a “year”
being the performance of personal services for or on behalf of the
Employer as an employee for a period of 365 days) which have
elapsed starting from the Effective Date of this Agreement and
ending on the date payments are to first begin under the terms of
this Agreement. In the event that Executive’s employment with
Employer is terminated other than by reason of disability,
Retirement, Early Retirement or voluntary termination on the part
of Executive, Executive shall be deemed for purposes of determining
the number of complete years to have completed a year of service in
its entirety for any partial year of service after the last
anniversary date of the Effective Date during which the
Executive’s employment is terminated.
1.3 Benefit
Level Percentage . The term “Benefit Level”
shall mean 50%.
1.4
Board . The “Board” shall mean the Board
of Directors of Nevada Security Bank.
1.5 Change
In Control . A “Change in Control” shall mean
the earliest occurrence of one of the following events:
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A.
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A Change In Ownership of The Bank Holding
or the Employer .
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A change in ownership of The Bank
Holding (TBH) or the Employer occurs on the date that any
person (or group of persons) acquires ownership of stock of TBH or
the Employer 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 TBH or the
Employer, respectively.
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B.
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A Change in Effective Control of TBH or the
Employer .
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A change in effective control of
TBH or the Employer occurs on the date that:
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1.
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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 TBH or the Employer possessing thirty-five
percent (35%) or more of the total voting power of the stock of TBH
or the Employer, respectively; or
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2.
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A majority of members of TBH’s or the
Employer’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 TBH’s or the
Employer’s Board, respectively prior to the date of the
appointment or election.
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C.
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A Change in Ownership of a Substantial
Portion of TBH’s or the Employer’s Assets .
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A change in the ownership of a
substantial portion of TBH’s or the Employer’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 TBH or the Employer, 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 TBH or
the Employer, respectively immediately prior to such acquisition or
acquisitions.
For the purpose
of this Agreement, transfers of the outstanding voting securities
of TBH or the Employer made on account of deaths or gifts,
transfers between family members, former spouses or transfers to a
qualified retirement plan maintained by the TBH or the Employer
shall not be considered in determining whether there has been a
Change in Control.
1.6
Code . The “Code” shall mean the Internal
Revenue Code of 1986, as amended.
1.7
Committee . The “Committee” means the
Governance Committee of the Board of Directors of Nevada Security
Bank.
1.8
Compensation . The term “Compensation”
means the base salary and cash bonuses paid to Executive by
Employer that are considered to be “wages” for purposes
of federal income tax withholding and includes any benefits under
the supplemental insurance plan agreement. Compensation shall be
calculated before reduction for any amounts deferred pursuant to
any deferral arrangement by which Executive can defer the current
receipt of income. Compensation does not include expense
reimbursements or any form of non-cash compensation or
benefits.
1.9
Disability/Disabled . The term
“Disability” or “Disabled” shall mean
either that the Executive is (i) unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months, or (ii) is, by reason of
any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan sponsored
by the Employer.
1.10 Early
Retirement . The term “Early Retirement” shall
mean the Retirement of the Executive on a date which occurs after
the date Executive reaches age 62 and prior to the date Executive
reaches age 65.
1.11 Effective Date .
The term “Effective Date” shall mean September 15,
2005.
1.12
ERISA . The term “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.
1.13 Final
Average Annual Compensation. Unless otherwise defined,
“Final Average Annual Compensation” means the higher of
(i) the average annual Compensation of Executive during the
last 36 full consecutive calendar months of Executive’s
employment with Employer or (ii) the average annual
Compensation of Executive during Executive’s employment with
Employer.
1.14
Involuntary Termination . The term “Involuntary
Termination” shall mean the termination of the Executive by
the Employer for any reason other than a Change in Control, Death,
Disability or Termination for Cause.
1.15
Retirement. The term “Retirement” or
“Retires” shall refer to the date which the Executive
acknowledges in writing to Employer to be the last day the
Executive will provide any significant personal services, whether
as an employee, director or independent consultant or contractor,
to Employer or to, for, or on behalf of, any other business entity
conducting, performing or making available to any person or entity
banking or other financial services of any kind. For purposes of
this Agreement, the phrase “significant personal
services” shall mean more than 10 hours of personal services
rendered to one or more individuals or entities in any 30 day
period.
1.16
Termination for Cause . The term “Termination
for Cause” shall mean termination of employment of the
Executive with the Employer by reason of any of the following:
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A.
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Dishonest or fraudulent conduct by the
Executive with respect to the performance of Executive’s
duties with Bank or the Bank’s parent corporation, TBH;
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B.
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Conduct by the Executive that materially
discredits Bank, TBH or any of TBH’s subsidiaries or is
materially detrimental to the reputation of the Bank, TBH or any of
its subsidiaries, including but not limited to conviction of or a
plea of nolo contendere by the Executive of a felony or crime
involving moral turpitude;
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C.
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Executive’s willful misconduct or gross
negligence in performance of Executive’s duties, including
but not limited to Executive’s refusal to comply in any
material respect with the legal directives of the Executive’s
immediate supervisor or the Board of Directors, if such misconduct
or negligence has not been remedied or is not being remedied to the
Board’s reasonable satisfaction within thirty (30) days
after written notice, including a detailed description of the
misconduct or negligence, has been delivered by the Board to the
Executive;
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D.
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An order or directive from a state or federal
banking regulatory agency requesting or requiring removal of the
Executive or a finding by any such agency that the
Executive’s performance threatens the safety or soundness of
Bank, TBH or any of its subsidiaries;
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E.
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Material breach of Executive’s fiduciary
duties to Bank if such breach has not been remedied or is not being
remedied to the Board’s reasonable satisfaction within thirty
(30) days after written notice, including a detailed
description of the breach, has been delivered by the Board to the
Executive;
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F.
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State and/or Federal banking regulators
request or order termination of this Agreement; or
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G.
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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.
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1.15
Voluntary Termination . The term “Voluntary
Termination” shall mean voluntary resignation of employment
by the Executive prior to Early Retirement or prior to Retirement
at or after age 65.
2.0 SCOPE, PURPOSE AND EFFECT.
2.1.
Contract of Employment . Although this Agreement is
intended to provide the Executive with an additional incentive to
remain in the employ of the Employer, this Agreement shall not be
deemed to constitute a contract of employment between the Executive
and the Employer nor shall any provision of this Agreement restrict
or expand the right of the Employer to terminate the
Executive’s employment. This Agreement shall have no impact
or effect upon any separate written Employment Agreement which the
Executive may have with the Employer, it being the parties’
intention and agreement that unless this Agreement is specifically
referenced in said Employment Agreement (or any modification
thereto), this Agreement (and the Employer’s obligations
hereunder) shall stand separate and apart and shall have no effect
upon, nor be affected by, the terms and provisions of said
Employment Agreement.
2.2. Fringe
Benefit . The benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Executive and
are not a part of any salary reduction plan or any arrangement
deferring a bonus or a salary increase. The Executive has no option
to take any current payments or bonus in lieu of the benefits
provided by this Agreement.
3.0 BENEFITS PAYABLE.
3.1
Benefits Upon Retirement . In the event the Executive
elects to retire and Retires from active employment with the
Employer on a date after Executive attains age 65, then the
Executive shall be entitled to be paid the Annual Benefit each year
for the remainder of Executive’s life with the Applicable
Percentage being based on Executive’s years of service as of
the Executive’s Retirement. The Annual Benefit, shall be paid
in substantially equal monthly installments on the first day of
each month, beginning with the month following the month in which
the Executive Retires and continuing until the Executive’s
death. In the event that (i) the Participant is a “Key
Employee,” as defined in Code section 416, and (ii) the
Employer is publicly traded at the time of Executive’s
Retirement, the benefit payable under this subsection shall
commence on the first day of the seventh (7th) month following
Participant’s termination of Employment. No payments shall be
made to Executive, beneficiary or estate pursuant to this
Section 3.1 after Executive’s death.
3.2
Benefits Upon Early Retirement Date. If the Executive
elects to retire from active employment and retires on a date after
Executive attains age 62 and prior to age 65, then the Executive
shall be entitled to be paid the Annual Benefit each year for the
remainder of Executive’s life with the Applicable Percentage
being based on Executive’s years of service as of the date of
Executive’s Retirement less the product of 6% times the
number of full and partial years that remain before Executive
attains age 65. For example, if the Executive were to retire at age
62 and 7 months and had 7 years of service completed, the
Executive’s Applicable Percentage would be 70% less 18% or
52%. The Annual Benefit, shall be paid in substantially equal
monthly installments on the first day of each month, beginning with
the month following the month in which the Executive elects Early
Retirement and Retires and continuing until the Executive’s
death. In the event that (i) the Participant is a “Key
Employee,” as defined in Code section 416, and (ii) the
Employer is publicly traded at the time of Executive’s Early
Retirement, the benefit payable under this subsection shall
commence on the first day of the seventh (7th) month following
Participant’s termination of Employment. No payments shall be
made to Executive, beneficiary or estate pursuant to this
Section 3.2 after Executive’s death.
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3.3 Benefit
Payments in the Event of Disability. In the event the
Executive becomes Disabled while actively employed by the Employer
at any time after the effective date of this Agreement, but prior
to Retirement, the Executive shall be paid the Annual Benefit each
year for the remainder of Executive’s life in substantially
equal monthly installments on the first day of each month,
beginning with the month following the month in which the Executive
becomes Disabled and continuing until the Executive’s death.
For purposes of this Section 3.3, the Annual Benefit shall be
determined with the with the Final Average Annual Compensation
being equal to greater of (i) the average annual Compensation
of Executive during the last 36 full consecutive calendar months of
Executive’s employment with Employer or (ii) the average
annual Compensation of Executive during Executive’s
employment with Employer. No payments shall be made to Executive,
beneficiary or estate pursuant to this Section 3.3 after
Executive’s death.
3.4
Benefits Payable Upon a Change in Control. In the
event of a Change in Control then the Executive shall be entitled
to be paid the Annual Benefit (determined with the Applicable
Percentage being equal to 100% and the Final Average Annual
Compensation being equal to Executive’s average annual
Compensation for the 36 full consecutive calendar months
immediately prior to the effective date of the Change in Control)
each year for the remainder of Executive’s life or
20 years whichever is less, on a monthly basis beginning on
the first day of each month, beginning with the month following the
Change in Control and continuing to the earlier of
Executive’s death or 20 years. In the event of
Executive’s death prior to receiving the full benefit payable
under this Section 3.4, the Executive’s legal
representative shall be paid the remaining Annual Benefit as if the
Executive had survived to the date of the final payment provided
for by this Section 3.4. If Executive is entitled to receive
benefits pursuant to this Section 3.4, Executive shall not be
entitled to payment of benefits under any other section of this
Agreement.
3.5
Termination Without Cause . In the event the
Executive’s employment is terminated, then the amounts
payable pursuant to this Agreement shall be as follows:
(a) If Termination Occurs Prior
to Executive’s Having 3 Full Years of Service with
Employer: If the Executive’s Employment is terminated by
the Employer prior to Executive having 3 full years of service with
Employer, then the Executive and Employer agree that no payments
shall be made to Executive pursuant to this Agreement.
(b) If Termination Occurs After
the Executive Has 3 or more Full Years of Service: If the
Executive’s Employment is terminated by the Employer on or
after the Executive completes 3 or more full years of service with
the Employer and such termination of Executive was not Termination
for Cause, death, disability, a Change in Control or Retirement,
then the Employer and Executive agree that Executive shall receive
the Annual Benefit each year for the remainder of Executive’s
life beginning with the month following the month in which the
Executive attains 65 years of age, or the earlier effective
date elected by the Executive, which alternate date satisfies the
requirements relating to Early Retirement. In the event that the
Executive elects to begin receiving payments at a date which
satisfies the requirements relating to Early Retirement, then the
Annual Benefit shall be reduced by the product of 6% times the
Benefit Level Percentage for each full and partial years that
remain between the earlier effective date elected and the date
Executive attains age 65.
3.6
Voluntary Termination by the Executive. In the event
the Executive’s employment is pursuant to Executive’s
Voluntary Termination before Early Retirement or Retirement, then
the amounts payable pursuant to this Agreement shall be as
follows:
(a) If Termination Occurs Prior
to the Executive’s Having 10 Years of Service with
Employer : In the event the Executive’s employment is
pursuant to Executive’s Voluntary