Document:

Exhibit
10.1

 

Execution
Version

 

AMENDMENT
TO SETTLEMENT AGREEMENT

 

This
AMENDMENT TO SETTLEMENT AGREEMENT (this “Amendment”), is made and entered into as of August 16, 2018 by
and among Surge Components, Inc., a Nevada corporation (the “Company”), and Ira Levy, Peter Levy, Steven J.
Lubman, Alan Plafker, Lawrence Chariton, Gary Jacobs and Martin Novick (the “Insiders”), on the one hand, and
Messrs. Michael D. Tofias and Bradley P. Rexroad (collectively, the “Stockholders”), on the other hand. The
Company, the Insiders, and the Stockholders are each referred to herein as a “Party” and collectively, as the
“Parties.” Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms
in the Agreement (defined below).

 

RECITALS

 

WHEREAS,
the Parties have entered into that certain Settlement Agreement, dated December 22, 2016 (the “Agreement”);

 

WHEREAS,
pursuant to Section 19(f) of the Agreement, the Agreement may be amended in a writing signed by each of the Parties; and

 

WHEREAS,
the Parties desire that the Agreement be amended in certain respects in accordance with the terms of this Amendment.

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

 

		1.	Amendments
                                         to Section 3 of the Agreement.

 

Section
3(c) of the Agreement is hereby amended and restated to read as follows:

 

“(c) Reincorporation.

 

(i) Reincorporation
Process.

 

(A) The
Company shall take all steps necessary and within its power to change its state of incorporation from the State of Nevada to the
State of Delaware (the “Reincorporation”). In furtherance of the foregoing, the Board shall, as promptly as
practicable, convene a Stockholder Meeting in fiscal year 2018 (the “2018 Meeting”) for the purpose of submitting
to the stockholders a proposal to approve the Reincorporation (the “First Reincorporation Proposal”), which
purpose need not be the sole purpose of such meeting. At the 2018 Meeting, the Company will take all steps necessary and within
its power to encourage stockholders to vote for, and will solicit proxies in favor of, the approval of the Reincorporation.

  

     

     

    

 

(B) If
stockholders representing more than forty thousand (40,000) shares of Common Stock seek to exercise dissenter’s rights pursuant
to Chapter 92A, Section 380 of the Nevada Revised Statutes (“Dissenter’s Rights”) in connection with
the First Reincorporation Proposal, the Board may, in accordance with its fiduciary duties, withdraw the First Reincorporation
Proposal prior to its submission to stockholders for a vote at the 2018 Meeting.

 

(C) If
the First Reincorporation Proposal is not submitted for a stockholder vote at the 2018 Meeting, then the Board shall take all
steps necessary to file a definitive proxy statement with the SEC no later than February 1, 2019, for a Stockholder Meeting to
be held promptly thereafter (the “2019 Meeting”) for the purpose of submitting to the stockholders a proposal
to approve the Reincorporation (the “Second Reincorporation Proposal”), which purpose need not be the sole
purpose of such meeting. At the 2019 Meeting, the Company will take all steps necessary and within its power to encourage stockholders
to vote for, and will solicit proxies in favor of, the approval of the Reincorporation.

 

(D) If
stockholders representing more than sixty thousand (60,000) shares of Common Stock seek to exercise Dissenter’s Rights in
connection with the Second Reincorporation Proposal, the Board may, in accordance with its fiduciary duties, withdraw the Second
Reincorporation Proposal prior to its submission to stockholders for a vote at the 2019 Meeting.

 

(E) If
the Second Reincorporation Proposal is not submitted for a stockholder vote at the 2019 Meeting, then the Board shall take all
steps necessary to file a definitive proxy statement with the SEC no later than February 1, 2020, for a Stockholder Meeting to
be held promptly thereafter (the “2020 Meeting”) for the purpose of submitting to the stockholders a proposal
to approve the Reincorporation (the “Final Reincorporation Proposal” and, together with the First Reincorporation
Proposal and Second Reincorporation Proposal, the “Reincorporation Proposals”), which purpose need not be the
sole purpose of such meeting.

 

(F) The
Company will allow stockholders to vote on the Final Reincorporation Proposal at the 2020 Meeting.

 

(G)
The Stockholders and Insiders (i) shall not seek to exercise Dissenter’s Rights in connection with any of the
Reincorporation Proposals; and (ii) as applicable, shall appear in person or by proxy at the applicable Stockholder Meeting
and be present for quorum purposes and vote, or cause to be voted, all of their shares of Common Stock in favor of the
applicable Reincorporation Proposal.

  

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		(ii)	Governance
                                         During the Interim Period. From the time, if any, that the Company withdraws the
                                         First Reincorporation Proposal until the Reincorporation is effectuated (such period,
                                         the “Interim Period”):

 

(A) the
Company shall not make any Equity Grants to any person who is serving as a director or officer of the Company (it being understood
that, notwithstanding anything to the contrary in this Agreement, the restrictions contemplated by this Section 3(c)(ii)(A) will
be in effect from July [●], 2018 until the Reincorporation is effectuated);

 

(B) the
Board shall take all steps necessary and within its power to immediately declassify the entire Board as soon as reasonably practicable,
including calling a Stockholder Meeting for the purpose of allowing stockholders to approve appropriate amendments to the Company’s
articles of incorporation (the “Articles”);

 

(C) the
Board shall (i) promptly appoint Mr. Peter Levy as Lead Independent Director of the Board for no less than a three-year term;
and (ii) take all steps necessary and within its power to encourage stockholders to vote for, and will solicit proxies in favor
of, Mr. Peter Levy’s re-election to the Board at any Stockholder Meeting at which he stands for election in 2018, 2019 and
2020;

 

(D) the
Insiders shall appear in person or by proxy and be present for quorum purposes and vote all shares of Common Stock beneficially
owned by them and over which they have voting power for Mr. Peter Levy’s re-election to the Board at any Stockholder Meeting
at which he stands for election in 2018, 2019 and 2020;

 

(E) the
Board shall promptly amend Section 2 of Article II and Section 1 of Article III of the Company’s Amended and Restated By-Laws
(the “By-Laws”) to implement a customary majority voting standard in uncontested director elections;

 

(F) the
Board shall promptly form a committee comprised of Mr. Peter Levy and Mr. Jacobs to (i) annually review the size of the Board
and the compensation of the Company’s executive officers and members of the Board and (ii) make recommendations concerning
the results of such review to the Board (it being understood that, within one year of the formation of such committee, the Board
will re-examine its membership with the objective of making Mr. Peter Levy the sole member of such committee);

  

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(G) the
Board shall promptly take all steps necessary and within its power to provide that directors and officers of the Company owe the
Company’s stockholders the same duties that such directors and officers would owe if the Company were incorporated in Delaware;

 

(H) the
Board shall promptly amend the By-Laws to provide stockholders the ability to inspect the Company’s books and records in
accordance with and to the fullest extent permitted under Section 220 of the Delaware General Corporation Law, as if the Company
was a corporation incorporated in Delaware;

 

(I) the
Board shall promptly take all steps necessary and within its power to eliminate any anti-takeover protections contained in the
Articles and/or By-Laws that are prohibited under Delaware law; and

 

(J) the
Board shall promptly take all steps necessary and within its power to provide the procedural protections described in Kahn
v. M&F Worldwide, 88 A.3d 635 (Del. 2014), and its progeny for the Company’s minority stockholders.

 

		2.	Amendments
                                         to Section 13 of the Agreement.

 

Section
13 of the Agreement is hereby amended by making the first sentence read as follows:

 

“Termination.
This Agreement shall terminate on the date that is the later of the (i) end of the Interim Period or (ii) 15 Business Days prior
to the deadline under the By-Laws for director nominations and stockholder proposals for the 2019 Annual Meeting (such date, the
“Termination Date”). Notwithstanding anything to the contrary in this Agreement, the obligations of the Stockholders
pursuant to Section 5, Section 6, Section 7 and Section 11 (to the extent applicable to Section 5, Section 6, Section 7) will
terminate in all instances on the date that is 15 Business Days prior to the deadline under the By-Laws for director nominations
and stockholder proposals for the 2019 Annual Meeting.”

  

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		3.	Amendments
                                         to Section 15 of the Agreement.

 

Section
15 of the Agreement is hereby amended and restated to read as follows:

 

“All
notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given (a) when delivered by hand, with written confirmation of receipt; (b) upon
sending if sent by facsimile to the facsimile numbers below, with electronic confirmation of sending; (c) one day after being
sent by a nationally recognized overnight carrier to the addresses set forth below; or (d) when actually delivered if sent by
any other method that results in delivery, with written confirmation of receipt:

  

	 	If to the Company or any of the Insiders:	with copies (which shall not constitute notice) to:
	 	 	 
	 	
        Surge Components, Inc.

        95 East Jefryn Blvd.

        Dear Park, NY 11729

        Attention: Ira Levy

        Facsimile: (631) 595-1283
	
        Vinson & Elkins L.L.P.

        666 Fifth Avenue, 26th Floor

        New York, NY 10103-0040

        Attention: Lawrence Elbaum

        Facsimile: (212) 237-0100

         

        and

         

        Ellenoff Grossman & Schole LLP

        1345 Avenue of the Americas

        New York, NY 10105

        Attention: David Selengut

        Facsimile: (212) 370-7889

	 	 	 
	 	If to Michael D. Tofias:	with copies (which shall not constitute notice) to:
	 	 	 
	 	
        Michael D. Tofias

        25 Cambridge Drive

        Short Hills, NJ 07078
	
        Wilson Sonsini Goodrich & Rosati

        Professional Corporation

        650 Page Mill Road

        Palo Alto, CA 94304

        Attention: Douglas K. Schnell

        Facsimile: (650) 493-6811

	 	 	 
	 	If to Bradley P. Rexroad:	with copies (which shall not constitute notice) to:
	 	 	 
	 	
        Bradley P. Rexroad

        970 Reserve Drive, Suite 126

        Roseville, CA 95678
	
        Wilson Sonsini Goodrich & Rosati

        Professional Corporation

        650 Page Mill Road

        Palo Alto, CA 94304

        Attention: Douglas K. Schnell

        Facsimile: (650) 493-6811

  

    	 	5	 

     

    

 

		4.	Amendments
to Section 19 of the Agreement.

 

Section
19(b) of the Agreement is hereby amended and restated to read as follows:

 

“Reserved.”

 

5.           SEC
Filing. No later than four Business Days following the date of this Amendment, the Company shall file with the SEC a Current
Report on Form 8-K reporting its entry into this Amendment, disclosing applicable items to conform to its obligations hereunder
and appending this Amendment as an exhibit thereto (the “Amendment Form 8-K”). The Amendment Form 8-K shall
be consistent with the terms of this Amendment. The Company shall provide the Stockholders and their Representatives with a reasonable
opportunity to review and comment on the Amendment Form 8-K prior to the filing with the SEC and consider in good faith any comments
of the Stockholders.

 

6.           Expenses.
Within five Business Days of the date of this Amendment, the Company shall reimburse the Stockholders, in an amount not to exceed
$15,000, for their reasonable, documented out-of-pocket legal expenses, incurred since March 1, 2017, in connection with the
Stockholders’ negotiation and execution of this Amendment.

 

		7.	Mutual
                                         Releases.

  

(a) Each
of the Stockholder Releasors hereby do remise, release and forever discharge, and covenant not to sue or take any steps to pursue
or further any Legal Proceeding against, the Company Releasees, and each of them, from and in respect of any and all claims and
causes of action, whether based on any federal, state or foreign law or right of action, direct, indirect or representative in
nature, foreseen or unforeseen, matured or unmatured, known or unknown, that all or any of the Stockholder Releasors have, had
or may have against the Company Releasees, or any of them, of any kind, nature or type whatsoever, from the beginning of time
to the date of this Amendment; provided, however, that the foregoing release shall not release any rights or duties
under this Amendment or any claims or causes of action that the Stockholder Releasors may have for the breach or enforcement of
any provision of this Amendment.

 

(b) The
Company Releasors hereby do remise, release and forever discharge, and covenant not to sue or take any steps to pursue or further
any Legal Proceeding against, any of the Stockholder Releasees, and each of them, from and in respect of any and all claims and
causes of action, whether based on any federal, state or foreign law or right of action, direct, indirect or representative in
nature, foreseen or unforeseen, matured or unmatured, known or unknown, that all or any of the Company Releasors have, had or
may have against the Stockholder Releasees, or any of them, of any kind, nature or type whatsoever, from the beginning of time
to the date of this Amendment; provided, however, that the foregoing release shall not release any rights or duties
under this Amendment or any claims or causes of action that the Company Releasors may have for the breach or enforcement of any
provision of this Amendment.

  

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(c) Each
party hereto represents and warrants that it has not heretofore transferred or assigned, or purported to transfer or assign, to
any person, firm or corporation any claims, demands, obligations, losses, causes of action, damages, penalties, costs, expenses,
attorneys’ fees, liabilities or indemnities herein released. Other than for the Nevada Lawsuit, each of the parties hereto
represents and warrants that neither it nor any assignee has filed any lawsuit against any other party.

 

(d) Each
party hereto waives any and all rights (to the extent permitted by state law, federal law, principles of common law or any other
law) that may have the effect of limiting the releases in this Section 6. Without limiting the generality of the foregoing, each
party hereto acknowledges that there is a risk that the damages and costs that it believes it has suffered or will suffer may
turn out to be other than or greater than those now known, suspected or believed to be true. Facts on which each party hereto
has been relying in entering into this Amendment may later turn out to be other than or different from those now known, suspected
or believed to be true. Each party hereto acknowledges that in entering into this Amendment, it has expressed that it agrees to
accept the risk of any such possible unknown damages, claims, facts, demands, actions and causes of action. Each party hereto
acknowledges and agrees that the releases and covenants provided for in this Section 6 are binding, unconditional and final as
of the date hereof.

 

8.           Effect
on Agreement. Except as specifically amended hereby, the terms and provisions of the Agreement are, in all other respects,
ratified and confirmed and remain in full force and effect. Except as expressly set forth herein, the amendments provided herein
shall not by implication or otherwise limit, constitute a waiver of, or otherwise affect the rights and remedies of the Parties
with respect to the Agreement. The provisions of Section 16 and Section 19 of the Agreement apply to this Amendment with any necessary
modifications. No reference to this Amendment need be made in any notice, writing, or other communication relating to the Agreement,
any such reference to the Agreement to be deemed a reference thereto as amended by this Amendment. All references to the Agreement
in any document, instrument, or agreement executed in connection with the Agreement will be deemed to refer to the Agreement as
amended hereby.

 

9.           Entire
Agreement. The Agreement, as amended hereby, constitutes the full and entire understanding and agreement among the Parties
with regard to the subject matter hereof, and supersedes all prior agreements with respect to the subject matter hereof.

 

10.         Severability.
If any provision of this Amendment is held invalid or unenforceable by any court of competent jurisdiction, the other provisions
of this Amendment shall remain in full force and effect. Any provision of this Amendment held invalid or unenforceable only in
part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. The Parties further agree
to replace such invalid or unenforceable provision of this Amendment with a valid and enforceable provision that will achieve,
to the extent possible, the purposes of such invalid or unenforceable provision.

 

11.         Counterparts.
This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Amendment shall become effective when each party hereto shall
have received a counterpart hereof signed by all of the other parties hereto. Until and unless each party has received a counterpart
hereof signed by the other party hereto, this Amendment shall have no effect and no party shall have any right or obligation hereunder
(whether by virtue of any other oral or written agreement or other communication). The exchange of a fully executed Amendment
(in counterparts or otherwise) by electronic transmission in .PDF format or by facsimile shall be sufficient to bind the parties
to the terms and conditions of this Amendment.

 

 

[Signature
Pages Follow]

  

    	 	7	 

     

    

 

IN
WITNESS WHEREOF, each of the parties has executed this Agreement, or caused the same to be executed by its duly authorized representative,
as of the date first above written.

  

	SURGE COMPONENTS, INC.	 
	 	 
	By:	/s/
    Ira Levy	 
	Name: 	Ira
    Levy	 
	Title:	CEO,
    CFO, President and Director	 

  

	MICHAEL D. TOFIAS	 
	 	 
	/s/ Michael D. Tofias	 
	Michael D. Tofias	 

  

	Bradley
P. Rexroad	 
	 	 
	/s/
Bradley P. Rexroad	 
	Bradley P. Rexroad	 

  

	IRA
LEVY	 
	 	 
	/s/
Ira
Levy	 
	Ira
Levy	 

   

	PETER
LEVY	 
	 	 
	/s/
Peter
Levy	 
	Peter
Levy	 

  

	STEVEN
J. LUBMAN	 
	 	 
	/s/
Steven J. Lubman	 
	Steven
J. Lubman	 

  

	LAWRENCE
CHARITON	 
	 	 
	/s/
Lawrence
Chariton	 
	Lawrence
Chariton	 

  

	GARY
JACOBS	 
	 	 
	/s/
Gary
Jacobs	 
	Gary
Jacobs	 

  

	ALAN
PLAFKER	 
	 	 
	/s/
Alan
Plafker	 
	Alan
Plafker	 

   

	MARTIN
NOVICK	 
	 	 
	/s/
Martin
Novick	 
	Martin
Novick	 

 

 

8Exhibit 10.1

 

SEVERANCE AGREEMENT

This SEVERANCE AGREEMENT (this “Agreement”), dated as of  17  August 2018 by and among Trinity Capital Corporation, a New Mexico corporation, Los Alamos National bank, a national banking association with its main office located in Los Alamos, New Mexico (collectively, the “Bank”), and John S. Gulas (the “Executive”).

WHEREAS, the Executive has been employed by the Bank as its Chief Executive Officer and President pursuant to an Employment Agreement by and among the parties dated as of June 3, 2014 (the “Employment Agreement”); and

WHEREAS, the parties believe it is desirable to terminate the Employment Agreement, but wish to provide for the payment of certain severance benefits to the Executive in the event a of qualifying termination of employment, subject to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the terms and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

1.          Termination of Employment Agreement.  By execution hereof, the parties shall have terminated the Employment Agreement in all respects, and this Agreement, with such other agreements Executive and the Bank maintain by and among each other, shall continue in full force and effect in accordance with each of their respective terms.

2.          Severance.

(a)        Severance in the Event of Termination by the Bank without Cause.  In the event of the termination of Executive by the Bank without Cause (as defined herein), the Bank shall pay to the Executive in twenty-four (24) substantially equal semimonthly installments (in accordance with the normal payroll practices of the Bank) commencing with the first calendar month following the date of termination and continuing through the twelfth (12th) calendar month following the date of termination, an aggregate amount equal to 1 multiplied by the Executive’s cash base salary as it existed as of the date of termination, plus make available twelve (12) months of health care benefits from the date of termination, and the benefit provided and cost to Executive would be a medical plan that is the same as that offered to all other employees with the related share of the cost to the Executive deducted from the semimonthly installments paid to the Executive (collectively, (the “Severance Payments”), unless prohibited by Section 5(a) of this Agreement.  Notwithstanding the foregoing provisions of this Section 2(a):  (i) the Executive’s entitlement to the Severance Payments shall be subject to and conditioned upon the Executive providing to the Bank  an  Irrevocable Release of claims not later than sixty (60) days after the date of the Executive’s termination of employment in a form to be provided to Executive by the Bank at or shortly after the date of termination; (ii) if the 60-day period following the Executive’s termination of employment begins in one calendar year and ends in another, the Severance Payments shall, to the extent required in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), commence on the first payroll date following the later of (A) the end of the calendar year in which the Executive’s termination of employment occurs or (B) the date the Executive satisfies the Irrevocable Release requirement; and (iii) the Executive’s entitlement to the Severance Payments shall be subject to and conditioned upon the Executive complying with the terms of this Agreement.  “Irrevocable Release” means a general release of claims in such form as shall be specified by the Bank that has been executed by the Executive and for which the revocation period under Age Discrimination in Employment Act of 1967, as amended, and the terms of the release have expired.

 

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(b)        No Severance in the Event of Other Terminations of Employment.  No Severance Payments shall be paid to the Executive hereunder if Executive’s employment is terminated (i) as a result of the Executive’s disability or death, (ii) by the Bank for Cause,  or (iii) voluntarily by the Executive.

(c)         Effect on Termination Rights.  Nothing in this Agreement shall affect the right of the Bank to terminate Executive’s employment with the Bank, with or without Cause, or Executive to terminate his employment for any reason; in each case subject to the terms of this Agreement and any right of the Executive to the Severance Payments under this Agreement.

(d)        “Cause” Defined.  When used herein concerning the termination of Executive’s employment by the Bank, Cause means: (i) willful malfeasance, gross negligence, conduct involving dishonesty, or a material breach of fiduciary duty in the performance of Executive’s duties, as reasonably determined by the Bank; (ii) conviction of a crime in connection with Executive’s duties, or of any felony; (iii) conduct significantly harmful to the Bank, as reasonably determined by the Bank, including, but not limited to, intentional violation of law or of any significant policy or procedure of the Bank, or conduct that materially discredits the Bank or is materially detrimental to the reputation of the Bank; (iv) refusal or failure to act in accordance with a stipulation, requirement, or directive of the Bank, provided such directive is lawful; (v) failure to faithfully or diligently perform any of the duties of Executive’s employment which are specified in this Agreement, articulated by the Bank, or are usual and customary duties of Executive’s employment, if such failure has not been remedied or is not being remedied to the Bank’s reasonable satisfaction within thirty (30) days after written notice, including a detailed description of the failure, has been delivered by the Bank to Executive; or (vi) chronic drug or alcohol abuse, as reasonably determined by the Bank.

3.          Other Termination Provisions.

(a)        If the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) or (g)(1)), the Bank’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Bank may in its discretion (but subject in all events to the requirements of Section 409A of the Code (i) pay the Executive all or part of the compensation withheld while its obligations under this Agreement were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

 

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(b)        If the Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement shall terminate as of the effective date of the order.

(c)        If the Bank is in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x)(1)), all obligations under this Agreement shall terminate as of the date of default.

4.          Confidential Information and Post-Termination Restriction on Activities.

(a)         In the course of service to the Bank, Executive has had and will continue to have access to (i) the identities of the Bank’s existing and prospective customers or clients, including names, addresses, credit status, and pricing levels; (ii) the buying and selling habits and customs of the Bank’s existing and prospective customers or clients; (iii) non-public financial information about the Bank; (iv) product and systems specifications, concepts for new or improved products and or systems data; (v) the identities of, and special skills possessed by the Bank’s employees; (vi) the identities of and pricing information about the Bank’s vendors; (vii) training programs developed by Bank; (viii) pricing studies, information and analyses; (ix) current and prospective products and inventories; (x) financial models, business projections and market studies; (xi) the Bank’s financial results and business conditions; (xii) business plans and strategies; (xiii) special processes, procedures, and services of the Bank and its vendors; and (xiv) computer programs and software developed by the Bank or its consultants, or software or databases used or modified by the Bank for its particular use, all of which are confidential and may be proprietary and are owned or used by the Bank, or any of its subsidiaries or affiliates.  Such information shall hereinafter be called “Confidential Information” and shall include any and all items enumerated in the preceding sentence and coming within the scope of the business of the Bank or any of its subsidiaries or affiliates as to which Executive may have access, whether conceived or developed by others or by Executive alone or with others during the period of service to the Bank, whether or not conceived or developed during regular working hours.  Confidential Information shall not include any records, data or information which are in the public domain during or after the period of service by Executive provided the same are not in the public domain as a consequence of disclosure directly or indirectly by Executive in violation of this Agreement.  Executive acknowledges and agrees that it is a condition of employment with the Bank that the terms of this Agreement are agreed to by both parties hereto, and that Executive’s promises and covenants herein constitute a material inducement for the Bank’s agreement to employ Executive with the Bank, and access to and use of the Bank’s Confidential Information and goodwill.

(b)        Executive agrees that Confidential Information is of critical importance to the Bank and a violation of this Section would seriously and irreparably impair and damage the Bank’s business.  Executive agrees that he shall keep all Confidential Information in a fiduciary capacity for the sole benefit of the Bank.

 

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(c)         As a material inducement for the Bank to enter into this Agreement, and to protect the Bank’s Confidential Information and goodwill, Executive agrees that during his employment, and for a period of twelve (12) months following the termination of such employment, regardless of the reason for the termination of his employment, Executive shall not for himself or in conjunction with others: (i) induce or attempt to induce any employee of the Bank or its affiliates to leave the employ of the Bank or its affiliates; (ii) interfere with the relationship between the Bank or its affiliates and any employee of the Bank or its affiliates; (iii) induce or attempt to induce any customers, supplier, licensee, or other business relation of the Bank or its affiliates with whom Executive had an ongoing business relationship or about whom Executive had Confidential Information to cease doing business with the Bank or its affiliates or interfere with the relationship between the Bank or its affiliates and their respective customers, suppliers, licensees, or other business relations with whom Executive had an ongoing business relationship or about whom Executive had Confidential Information; (iv) solicit the business of, or provide Confidential Information about, any person or entity known to Executive to be a customer of the Bank or its affiliates, where Executive or any person reporting to Executive, had accessed Confidential Information of, had an ongoing business relationship with, or had made solicitations to such person or entity in the twenty-four (24) months prior to termination of employment, with respect to products, activities, or services that compete in whole or in part with the products, activities or services of the bank or its affiliates.

5.          Miscellaneous.

(a)         Notwithstanding anything herein to the contrary: (i) any payments made to the Executive pursuant to this Agreement or otherwise are subject to and conditioned upon their compliance with 12 U.S.C. 1828(k) and 12 C.F.R. Part 359 regarding golden parachute and indemnification payments; (ii) no severance pay or golden parachute payments or benefits shall be paid, provided, or accrued under this Agreement or otherwise to the extent it would violate Section 111 of Emergency Economic Stabilization Act of 2008, as amended (“EESA”), and the Interim Final Rule (as hereinafter defined); (iii) no payment or benefit shall be paid or provided under this Agreement or otherwise to the extent that it would violate any agreement between or among the Bank and the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency or any other governmental entity or agency; (iv) subject to, and in accordance with, the interim final rule promulgated pursuant to Sections 101(a), 101(c)(5), and 111 of EESA (the “Interim Final Rule”), the Executive shall be required to repay to the Bank the amount of any bonus payment (as defined in the Interim Final Rule) made during the TARP period (as defined in the Interim Final Rule) to the extent that the bonus payment was based on materially inaccurate financial statements (which includes, but is not limited to, statements of earnings, revenues, or gains) or any other materially inaccurate performance metric criteria; and (v) the Bank may terminate the Executive’s right to receive any Severance Payments under Section 3 of this Agreement, and the Executive shall be required to repay any portion of such Severance Payments previously paid, in the event it is determined, at any time, that Executive committed, was responsible for, or violated, any of the acts or omissions, conditions, or offenses identified in 12 C.F.R. § 359.4(a)(4) .

 

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(b)        This Agreement is intended to comply with the requirements of Section 409A of the Code (including the exceptions thereto), to the extent applicable, and the parties’ Agreement shall be interpreted in accordance with such requirements.  If any provision contained in the Agreement conflicts with the requirements of Section 409A of the Code (or the exemptions intended to apply under the Agreement), the Agreement shall be deemed to be reformed to comply with the requirements of Section 409A of the Code (or the applicable exemptions thereto).  Notwithstanding anything to the contrary herein, for purposes of determining the Executive’s entitlement to the Severance Payments, the Service Period shall not be deemed to have terminated unless and until the Executive incurs a “separation from service” as defined in Section 409A of the Code.  The Severance Payments are intended not to constitute deferred compensation subject to Section 409A of the Code to the extent such Severance Payments are covered by (i) the “short-term deferral exception” set forth in Treas. Reg. § 1.409A-1(b)(4), (ii) the “two times severance exception” set forth in Treas. Reg. § 1.409A-1(b)(9)(iii), or (iii) the “limited payments exception” set forth in Treas. Reg. § 1.409A-1(b)(9)(v)(D).  The short-term deferral exception, the two times severance exception and the limited payments exception shall be applied to the Severance Payments in order of payment in such manner as results in the maximum exclusion of such Severance Payments from treatment as deferred compensation under Section 409A of the Code.  Each installment of the Severance Payments shall be deemed to be a separate payment for purposes of Section 409A of the Code.

(c)         This Agreement shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and supersedes and is in full substitution for any and all prior understandings or agreements with respect to the subject matter hereof.  For the avoidance of doubt, in the event that Executive is entitled to benefits pursuant to that certain Change of Control Agreement between the parties dated as of  April 17 , 2018, Executive is not entitled to the benefits pursuant to this Agreement.

(d)        Only an instrument in writing signed by the parties hereto may amend this Agreement, and any provision hereof may be waived only by an instrument in writing signed by the party or parties against whom or which enforcement of such waiver is sought.  The failure of any party hereto at any time to require the performance by any other party hereto of any provision hereof shall in no way affect the full right to require such performance at any time thereafter, nor shall the waiver by any party hereto of a breach of any provision hereof be taken or held to be a waiver of any succeeding breach of such provision or a waiver of the provision itself or a waiver of any other provision of this Agreement.

(e)         Neither this Agreement nor any right or obligation hereunder may be assigned by the Executive.

(f)         The Bank may withhold from any amounts payable to the Executive hereunder all federal, state, city or other taxes that the Bank may reasonably determine are required to be withheld pursuant to any applicable law or regulation (it being understood, that the Executive shall be responsible for payment of all taxes in respect of the payments and benefits provided herein).

 

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(g)        This Agreement shall be governed by and construed in accordance with the laws of the State of New Mexico, without reference to its principles of conflicts of law.

(h)        This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.  A facsimile of a signature shall be deemed to be and have the effect of an original signature.

(i)          The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	Trinity Capital Corporation	 	 
		
 

	 
	/s/ Arthur B. Montoya, Jr. 	 	
/s/ James E. Goodwin, Jr.

	 
	Name: Arthur B. Montoya, Jr.	
James E. Goodwin, Jr.

	 
	Title: Secretary	
Chairman of the Board

	 
	 	 	 
	Los Alamos National Bank		 
	 	 	 
	/s/ Arthur B. Montoya, Jr.	 	/s/ James E. Goodwin, Jr.	 
	
Name:  Arthur B. Montoya, Jr.

	
James E. Goodwin, Jr.

	 
	
Title:  Secretary

	
Chairman of the Board

	 
	  	 	 
	Executive	 	 
	 	 	 
	
/s/ John S. Gulas

	 	 	 
	John S. Gulas		 

 

 

6

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