Document:

Exhibit 4.02 Supplemental Indenture

Exhibit 4.02

SUPPLEMENTAL INDENTURE
(First Mortgage Bonds)

SOUTHWESTERN PUBLIC SERVICE COMPANY

TO

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

__________________________

This Instrument Grants A Security Interest By A Utility.

This Instrument Contains After-Acquired Property Provisions.

The following addresses for the parties to this Supplemental Indenture No. 3 are set out in Section 108 of the Indenture hereinafter referred to:

Trustee:    Company:

U.S. Bank National Association    Southwestern Public Service Company
U.S. Bank Corporate Trust Services    Tyler at Sixth Street
60 Livingston Avenue, EP-MN-WS3C    Amarillo, Texas  79101
St. Paul, MN  55107-2292
Facsimile No. 651-495-8097
Attention: Joshua A. Hahn

__________________________

Supplemental Indenture No. 3

Dated as of June 1, 2014

Supplemental to the Indenture
dated as of August 1, 2011

filed as Texas Utility Security Instrument File No. 11-0022610194
as supplemented by Supplemental Indentures filed with the Texas Secretary of State

__________________________

Establishing the Securities of Series No. 3,
Designated 3.30% First Mortgage Bonds, Series No. 3 due 2024

SUPPLEMENTAL INDENTURE NO. 3, dated as of June 1, 2014 between SOUTHWESTERN PUBLIC SERVICE COMPANY, a corporation duly organized and existing under the laws of the State of New Mexico (hereinafter sometimes called the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (hereinafter sometimes called the “Trustee”) under the Indenture, dated as of August 1, 2011 (hereinafter called the “Original Indenture”), as previously supplemented and as further supplemented by this Supplemental Indenture No. 3.  The Original Indenture and any and all indentures and all other instruments supplemental thereto are hereinafter sometimes collectively called the “Indenture.”

Recitals of the Company

The Original Indenture was authorized, executed and delivered by the Company to provide for the issuance from time to time of its Securities (such term and all other capitalized terms used herein without definition having the meanings assigned to them in the Original Indenture), to be issued in one or more series as contemplated therein, and to provide security for the payment of the principal of and premium, if any, and interest, if any, on the Securities.  The Original Indenture has been filed in the office of the Secretary of State of the State of New Mexico and in the office of the Secretary of State of the State of Texas, and notices with respect to such filings have been recorded in each county in New Mexico and each county in Texas in which the Company owns real property that is used or intended to be used in or in connection with the Electric Utility Business, as more fully set forth in Schedule A hereto.

The Company has heretofore executed and delivered to the Trustee the Supplemental Indentures referred to in Schedule B for the purpose of establishing a series of securities.

The Company desires to establish a new series of Securities to be designated “3.30% First Mortgage Bonds, Series No. 3 due 2024,” such series of Securities to be hereinafter sometimes called “Series No. 3.”

The Company has duly authorized the execution and delivery of this Supplemental Indenture No. 3 to establish the Securities of Series No. 3 and has duly authorized the issuance of such Securities; and all acts necessary to make this Supplemental Indenture No. 3 a valid agreement of the Company, and to make the Securities of Series No. 3 valid obligations of the Company, have been performed.

Granting Clauses

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE NO. 3 WITNESSETH, that, in consideration of the premises and of the purchase of the Securities by the Holders thereof, and in order to secure the payment of the principal of and premium, if any, and interest, if any, on all Securities from time to time Outstanding and the performance of the covenants contained therein and in the Indenture and to declare the terms and conditions on which such Securities are secured, the Company hereby grants, bargains, sells, releases, conveys, assigns, transfers, mortgages, pledges, sets over and confirms to the Trustee, and grants to the Trustee a security interest in and lien on, the following:

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Granting Clause First

All right, title and interest of the Company, as of the date of the execution and delivery of this Supplemental Indenture No. 3, in and to all property (other than Excepted Property), real, personal and mixed, located in the State of Texas or in the State of New Mexico and used or intended to be used in or in connection with the Electric Utility Business (whether or not such use is the sole use of such property), including all right, title and interest of the Company in and to the following property (other than Excepted Property) so located and so used or intended to be so used:  (a) all real property owned in fee, easements, servitudes, rights of way and other rights and interests in or relating to real property used or intended to be used in or in connection with the Electric Utility Business or relating to the occupancy or use of such real property, including but not limited to that described in Schedule C hereto; (b) all plants, generators, turbines, engines, boilers, fuel handling and transportation facilities, air and water pollution control and sewage and solid waste disposal facilities, whether or not control or disposal of such substances is the exclusive function or purpose of such facilities, and other machinery and facilities for the generation of electric energy; (c) all switchyards, lines, towers, substations, transformers and other machinery and facilities for the transmission of electric energy; (d) all lines, poles, conduits, conductors, meters, regulators and other machinery and facilities for the distribution of electric energy; (e) all buildings, offices, warehouses and other structures used or intended to be used in or in connection with the Electric Utility Business; (f) all pipes, cables, insulators, ducts, tools, computers and other data processing and/or storage equipment and other equipment, apparatus and facilities used or intended to be used in or in connection with the Electric Utility Business; (g) any or all of the foregoing properties in the process of construction; and (h) all other property, of whatever kind and nature, ancillary to or otherwise used or intended to be used in conjunction with any or all of the foregoing or otherwise, directly or indirectly, in furtherance of the Electric Utility Business;

Granting Clause Second

Subject to the applicable exceptions permitted by Section 709(d), Section 1203 and Section 1205 of the Original Indenture, all right, title and interest of the Company in and to all property (other than Excepted Property) of the kind and nature described in Granting Clause First which may be hereafter acquired by the Company, it being the intention of the Company that all such property acquired by the Company after the date of the execution and delivery of this Supplemental Indenture No. 3 shall be as fully embraced within and subjected to the Lien hereof as if such property were owned by the Company as of the date of the execution and delivery of this Supplemental Indenture No. 3;

Granting Clause Third

All other property of whatever kind and nature subjected or required to be subjected to the Lien of the Indenture by any of the provisions thereof;

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Excepted Property

Expressly excepting and excluding, however, from the Lien and operation of the Indenture all Excepted Property of the Company, whether now owned or hereafter acquired;

TO HAVE AND TO HOLD all such property, real, personal and mixed, unto the Trustee, its successors in trust and their assigns forever;

SUBJECT, HOWEVER, to (a) Existing Liens, (b) Acquisition Liens, (c) Retained Interests and (d) any other Permitted Liens;

IN TRUST, NEVERTHELESS, for the equal and ratable benefit and security of the Holders from time to time of all Outstanding Securities without any priority of any such Security over any other such Security;

PROVIDED, HOWEVER, that the right, title and interest of the Trustee in and to the Mortgaged Property shall cease, terminate and become void in accordance with, and subject to the conditions set forth in, Article Eight of the Original Indenture; otherwise the Indenture, and the estate and rights thereby granted shall be and remain in full force and effect; and

THE PARTIES HEREBY FURTHER COVENANT AND AGREE as follows:

ARTICLE ONE

Securities of Series No. 3

There are hereby established the Securities of Series No. 3, which shall have the terms and characteristics set forth below (the lettered subdivisions set forth below corresponding to the lettered subdivisions of Section 301 of the Original Indenture):

(a)the title of the Securities of Series No. 3 shall be “3.30% First Mortgage Bonds, Series No. 3 due 2024”;

(b)the Securities of Series No. 3 shall initially be authenticated and delivered in the aggregate principal amount of $150,000,000.  The Securities of Series No. 3 may be reopened and additional Securities of Series No. 3 may be issued in excess of the amount initially authenticated and delivered, provided that such additional Securities of Series No. 3 will contain the same terms (including the Stated Maturity and interest rate), except for the public offering price and issue date, as the other Securities of Series No. 3. Any such additional Securities of Series No. 3, together with the Securities of Series No. 3 initially authenticated, shall constitute a single series for purposes of the Indenture and shall be limited to an aggregate principal amount of $500,000,000;

(c)interest on the Securities of Series No. 3 shall be payable to the Persons in whose names such Securities (or one or more Predecessor Securities) are registered at the close of 

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business on the Regular Record Date for such interest, except as otherwise expressly provided in the form of such Securities attached as Exhibit A hereto;

(d)the principal of the Securities of Series No. 3 shall be payable on June 15, 2024 the Stated Maturity for Series No. 3;

(e)the Securities of Series No. 3 shall bear interest at a rate of 3.30% per annum; interest shall accrue on the Securities of Series No. 3 from June 9, 2014 or the most recent date to which interest has been paid or duly provided for; the Interest Payment Dates for such Securities shall be June 15 and December 15 in each year, commencing December 15, 2014 and the Regular Record Dates with respect to the Interest Payment Dates for such Securities shall be June 1 and December 1 in each year, respectively (whether or not a Business Day);

(f)the Corporate Trust Office of U.S. Bank National Association in New York, New York shall be the place at which (i) the principal of, premium, if any, and interest, if any, on the Securities of Series No. 3 shall be payable, (ii) registration of transfer of such Securities may be effected, (iii) exchanges of such Securities may be effected and (iv) notices and demands to or upon the Company in respect of such Securities and the Indenture may be served; and U.S. Bank National Association shall be the Security Registrar for such Securities; provided, however, that the Company reserves the right to change, by one or more Officer’s Certificates, any such place or the Security Registrar; and provided, further, that the Company reserves the right to designate, by one or more Officer’s Certificates, its office in Minneapolis, Minnesota as any such place or itself as the Security Registrar;

(g)the Securities of Series No. 3 shall be redeemable at the option of the Company at any time prior to their maturity at the redemption prices specified in the form of such Securities attached as Exhibit A hereto;

(h)not applicable;

(i)the Securities of Series No. 3 shall be issuable in denominations of $1,000 and multiples of $1,000 in excess thereof;

(j)not applicable;

(k)not applicable;

(l)not applicable;

(m)not applicable;

(n)not applicable;

(o)not applicable;

(p)not applicable;

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(q)the Securities of Series No. 3 are to be initially registered in the name of Cede & Co., as nominee for The Depository Trust Company (the “Depositary”).  Such Securities shall not be transferable or exchangeable, nor shall any purported transfer be registered, except as follows:

		
	(i)
	such Securities may be transferred in whole, and appropriate registration of transfer effected, if such transfer is by such nominee to the Depositary, or by the Depositary to another nominee thereof, or by any nominee of the Depositary to any other nominee thereof, or by the Depositary or any nominee thereof to any successor securities depositary or any nominee thereof; and

		
	(ii)
	such Securities may be exchanged for definitive Securities registered in the respective names of the beneficial holders thereof, and thereafter shall be transferable without restriction, if:

		
	(A)
	the Depositary, or any successor securities depositary, shall have notified the Company and the Trustee that it is unwilling or unable to continue to act as securities depositary with respect to such Securities or the Depositary has ceased to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and the Trustee shall not have been notified by the Company within ninety (90) days of the identity of a successor securities depositary with respect to such Securities; or

		
	(B)
	the Company shall have delivered to the Trustee a Company Order to the effect that such Securities shall be so exchangeable on and after a date specified therein; or

		
	(C)
	(1)  an Event of Default shall have occurred and be continuing, (2) the Trustee shall have given notice of such Event of Default pursuant to Section 1002 of the Original Indenture and (3) there shall have been delivered to the Company and the Trustee an Opinion of Counsel to the effect that the interests of the beneficial owners of such Securities in respect thereof will be materially impaired unless such owners become Holders of definitive Securities;

(r)not applicable;

(s)no service charge shall be made for the registration of transfer or exchange of the Securities of Series No. 3; provided, however, that the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the exchange or transfer;

(t)not applicable; and

		
	(u)
	(i)  If the Company shall have caused the Company’s indebtedness in respect of any Securities of Series No. 3 to have been satisfied and discharged prior to the

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Maturity of such Securities, as provided in Section 801 of the Original Indenture, the Company shall, promptly after the date of such satisfaction and discharge, give a notice to each Person who was a Holder of any of such Securities on such date stating (A)(1) the aggregate principal amount of such Securities and (2) the aggregate amount of any money (other than amounts, if any, deposited in respect of accrued interest on such Securities) and the aggregate principal amount of, the rate or rates of interest on, and the aggregate fair market value of, any Eligible Obligations deposited pursuant to Section 801 of the Original Indenture with respect to such Securities and (B) that the Company will provide (and the Company shall promptly so provide) to such Person, or any beneficial owner of such Securities holding through such Person (upon written request to the Company sent to an address specified in such notice), such other information as such Person or beneficial owner, as the case may be, reasonably may request in order to enable it to determine the federal income tax consequences to it resulting from the satisfaction and discharge of the Company’s indebtedness in respect of such Securities.  Thereafter, the Company shall, within forty-five (45) days after the end of each calendar year, give to each Person who at any time during such calendar year was a Holder of such Securities a notice containing (X) such information as may be necessary to enable such Person to report its income, gain or loss for federal income tax purposes with respect to such Securities or the assets held on deposit in respect thereof during such calendar year or the portion thereof during which such Person was a Holder of such Securities, as the case may be (such information to be set forth for such calendar year as a whole and for each month during such year) and (Y) a statement to the effect that the Company will provide (and the Company shall promptly so provide) to such Person, or any beneficial owner of such Securities holding through such Person (upon written request to the Company sent to an address specified in such notice), such other information as such Person or beneficial owner, as the case may be, reasonably may request in order to enable it to determine its income, gain or loss for federal income tax purposes with respect to such Securities or such assets for such year or portion thereof, as the case may be.  The obligation of the Company to provide or cause to be provided information for purposes of income tax reporting by any Person as described in the first two sentences of this paragraph shall be deemed to have been satisfied to the extent that the Company has provided or caused to be provided substantially comparable information pursuant to any requirements of the Internal Revenue Code of 1986, as amended from time to time (the “Code”) and United States Treasury regulations thereunder.

		
	(ii)
	Notwithstanding the provisions of subparagraph (i) above, the Company shall not be required to give any notice specified in such subparagraph or to otherwise furnish any of the information contemplated therein if the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Securities will not recognize income, gain or loss for federal income tax purposes as a result of the satisfaction and discharge of the Company’s indebtedness in respect of such Securities and such Holders will be subject to federal income taxation on the same amounts and in the same manner and at the same times as if such satisfaction and discharge had not occurred.

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	(iii)
	Anything in this clause (u) to the contrary notwithstanding, the Company shall not be required to give any notice specified in subparagraph (i) or to otherwise furnish the information contemplated therein or to deliver any Opinion of Counsel contemplated by subparagraph (ii) if the Company shall have caused Securities of Series No. 3 to be deemed to have been paid for purposes of the Indenture, as provided in Section 801 of the Original Indenture, but shall not have effected the satisfaction and discharge of its indebtedness in respect of such Securities pursuant to such Section.

The Securities of Series No. 3 shall be substantially in the form attached hereto as Exhibit A and shall have such further terms as are set forth in such form.

ARTICLE TWO

Miscellaneous Provisions

This Supplemental Indenture No. 3 is a supplement to the Original Indenture.  As  previously supplemented and further supplemented by this Supplemental Indenture No. 3, the Original Indenture is in all respects ratified, approved and confirmed, and the Original Indenture, all previous supplements thereto and this Supplemental Indenture No. 3 shall together constitute one and the same instrument.

If any provision of this Supplemental Indenture No. 3 limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act through operation of Section 318(c), such imposed duties shall control.

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture No. 3 to be duly executed as of the day and year first above written.

SOUTHWESTERN PUBLIC SERVICE 
COMPANY

By:     /s/  George E. Tyson II            
Name:     George E. Tyson II
Its:     Vice President and Treasurer

STATE OF MINNESOTA        )
) ss.
COUNTY OF HENNEPIN        )

This instrument was acknowledged before me on the 3rd day of June, 2014, by George E. Tyson II, the Vice President and Treasurer of Southwestern Public Service Company, a New Mexico corporation, on behalf of said corporation.

 /s/  Sharon M. Quellhorst    
Name: Sharon M. Quellhorst
Notary Public, State of Minnesota
My commission expires: January 31, 2015
(Seal, if any)

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U.S. BANK NATIONAL ASSOCIATION,
  Trustee

By:    /s/  Joshua A. Hahn                
Name:     Joshua A. Hahn
Its:     Vice President

STATE OF MINNESOTA    )
) ss.
COUNTY OF RAMSEY    )

This instrument was acknowledged before me on the 3rd day of June, 2014, by Joshua A. Hahn, a Vice President of U.S. Bank National Association, a national banking association, on behalf of said national banking association.

 /s/  Kelly J. Wagner    
Name:   Kelly J. Wagner     
Notary Public, State of Minnesota
My commission expires: January 31, 2018
(Seal, if any)

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EXHIBIT A

FORM OF SECURITY

(See legend at the end of this Security for
restrictions on transfer)

SOUTHWESTERN PUBLIC SERVICE COMPANY
3.30% First Mortgage Bond, Series No. 3 due 2024

	
				
	Original Interest Accrual Date:
	 
	[                   ]
	 

	Interest Rate:
	 
	3.30% per annum
	 

	Stated Maturity:
	 
	June 15, 2024
	 

	Interest Payment Dates:
	 
	June 15 and December 15
	 

	Regular Record Dates:
	 
	June 1 and December 1
	 

This Security is not a Discount Security
within the meaning of the within-mentioned Indenture

__________________________

	
			
	Principal Amount
	 
	Registered No.

	 
	 
	 

	$
	 
	 

SOUTHWESTERN PUBLIC SERVICE COMPANY, a corporation duly organized and existing under the laws of the State of New Mexico (herein called the “Company,” which term includes any successor corporation under the Indenture referred to below), for value received, hereby promises to pay to

, or registered assigns, the principal sum of

Dollars on the Stated Maturity specified above, and to pay interest thereon from the Original Interest Accrual Date specified above or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on the Interest Payment Dates specified above in each year, commencing December 15, 2014 and at Maturity, at the Interest Rate per annum specified above, until the principal hereof is paid or duly provided for.  The interest so payable, and paid or duly provided for, on any Interest Payment Date shall, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date specified above (whether or not a Business Day) next preceding such Interest Payment Date.  Notwithstanding the foregoing, interest payable at Maturity shall be paid to the Person to whom principal shall be paid.  Except as otherwise provided in said Indenture, any such interest not so paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to 

Holders of Securities of this series not less than 15 days prior to such Special Record Date, or be paid in such other manner as permitted by the Indenture.

Payment of the principal of this Security and interest hereon at Maturity shall be made upon presentation of this Security at the Corporate Trust Office of U.S. Bank National Association in New York, New York, or at such other office or agency as may be designated for such purpose by the Company from time to time.  Payment of interest on this Security (other than interest at Maturity) shall be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, except that if such Person shall be a securities depositary, such payment may be made by such other means in lieu of check as shall be agreed upon by the Company, the Trustee and such Person.  Payment of the principal of and interest on this Security, as aforesaid, shall be made in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and issuable in one or more series under and equally secured by an Indenture, dated as of August 1, 2011 (such Indenture as originally executed and delivered and as supplemented or amended from time to time thereafter, together with any constituent instruments establishing the terms of particular Securities, being herein called the “Indenture”), between the Company and U.S. Bank National Association as trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the property mortgaged, pledged and held in trust, the nature and extent of the security and the respective rights, limitations of rights, duties and immunities of the Company, the Trustee and the Holders of the Securities thereunder and of the terms and conditions upon which the Securities are, and are to be, authenticated and delivered and secured.  The acceptance of this Security shall be deemed to constitute the consent and agreement by the Holder hereof to all of the terms and provisions of the Indenture.  This Security is one of the series designated above.

If any Interest Payment Date, any Redemption Date or the Stated Maturity shall not be a Business Day (as hereinafter defined), payment of the amounts due on this Security on such date may be made on the next succeeding Business Day; and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such Interest Payment Date, such Redemption Date or Stated Maturity, as the case may be, to such Business Day.

This Security shall be redeemable at the option of the Company at any time prior to December 15, 2023, in whole or in part, at a “make whole” redemption price equal to the greater of (1) 100% of the principal amount of this Security being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on this Security, or portion hereof, being redeemed (excluding the portion of any such interest accrued to but excluding the Redemption Date), discounted to but excluding the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 15 basis points plus, in each case, accrued and unpaid interest thereon to but excluding the Redemption Date.  This Security shall be redeemable at the option of the Company at any time 

Exhibit A-2

on or after December 15, 2023, in whole or in part, at 100% of the principal amount of this Security being redeemed plus accrued and unpaid interest thereon to but excluding the Redemption Date.

“Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of this Security that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of this Security.

“Comparable Treasury Price” means (1) the average of the Reference Treasury Dealer Quotations for the Redemption Date, after excluding the highest and lowest Reference Treasury Dealer Quotations for the Redemption Date, or (2) if the Trustee obtains fewer than four Reference Treasury Dealer Quotations, the average of all of the Reference Treasury Dealer Quotations.

“Independent Investment Banker” means Credit Suisse Securities (USA) LLC or RBS Securities Inc., or their respective successors or, if such firms or successors are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee after consultation with the Company.

“Primary Treasury Dealer” means any primary U.S. Government securities dealer in the United States.

“Reference Treasury Dealer” means (1) Credit Suisse Securities (USA) LLC or RBS Securities Inc. and any other Primary Treasury Dealer designated by, and not affiliated with Credit Suisse Securities (USA) LLC or RBS Securities Inc. or their respective successors, provided, however, that if any of the foregoing or any of their respective designees ceases to be a Primary Treasury Dealer, the Company will appoint another Primary Treasury Dealer as a substitute and (2) any other Primary Treasury Dealer selected by the Company after consultation with an Independent Investment Banker.

“Reference Treasury Dealer Quotations” means, for any Reference Treasury Dealer and any Redemption Date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by the Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding the Redemption Date.

“Treasury Yield” means, for any Redemption Date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining term, yields 

Exhibit A-3

for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Yield will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.  The Treasury Yield will be calculated on the third Business Day preceding the Redemption Date.

If an Event of Default shall occur and be continuing, the principal of this Security may be declared due and payable in the manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the Trustee to enter into one or more supplemental indentures for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of all series then Outstanding under the Indenture, considered as one class; provided, however, that if there shall be Securities of more than one series Outstanding under the Indenture and if a proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such series, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series so directly affected, considered as one class, shall be required; and provided, further, that if the Securities of any series shall have been issued in more than one Tranche and if the proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all Tranches so directly affected, considered as one class, shall be required; and provided, further, that the Indenture permits the Trustee to enter into one or more supplemental indentures for limited purposes without the consent of any Holders of Securities.  The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities then Outstanding, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in the Indenture and subject to certain limitations therein set forth, this Security or any portion of the principal amount hereof will be deemed to have been paid for all purposes of the Indenture and to be no longer Outstanding thereunder, and, at the election of the Company, the Company’s entire indebtedness in respect thereof will be satisfied and discharged, if there has been irrevocably deposited with the Trustee or any Paying Agent (other than the Company), in trust, money in an amount which will be sufficient and/or Eligible Obligations, the principal of and interest on which when due, without regard to any reinvestment thereof, will 

Exhibit A-4

provide moneys which, together with moneys so deposited, will be sufficient to pay when due the principal of and interest on this Security when due.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the corporate office of U.S. Bank National Association in New York, New York, or such other office or agency as may be designated by the Company from time to time, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series of authorized denominations and of like tenor and aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities of this series are issuable only as registered Securities, without coupons, and in denominations of $1,000 and multiples of $1,000 in excess thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of the same series, of any authorized denominations, as requested by the Holder surrendering the same, and of like tenor upon surrender of the Security or Securities to be exchanged at the office of U.S. Bank National Association in New York, New York, or such other office or agency as may be designated by the Company from time to time.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

The Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York (including without limitation Section 5-1401 of the New York General Obligations Law or any successor to such statute), except to the extent that the Trust Indenture Act of 1939, as then in effect or any successor statute shall be applicable and except to the extent that the law of any jurisdiction wherein any portion of the property mortgaged pursuant to the Indenture or any indenture supplemental thereto is located shall mandatorily govern the attachment, perfection, priority or enforcement of the lien of the Indenture and all indentures supplemental thereto with respect to such portion of the mortgaged property.

As used herein, “Business Day” means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in The City of New York, New York or other city in which is located any office or agency maintained for the payment of principal or interest on this Security, are authorized or required by law, regulation or executive 

Exhibit A-5

order to remain closed.  All other terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

As provided in the Indenture, no recourse shall be had for the payment of the principal of or premium, if any, or interest on any Securities, or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under the Indenture, against, and no personal liability whatsoever shall attach to, or be incurred by, any incorporator, shareholder, officer or director, as such, past, present or future of the Company or of any predecessor or successor corporation (either directly or through the Company or a predecessor or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that the Indenture and all the Securities are solely corporate obligations and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of the Indenture and the issuance of the Securities.

Unless the certificate of authentication hereon has been executed by the Trustee or an Authenticating Agent by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

Exhibit A-6

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

SOUTHWESTERN PUBLIC SERVICE 
COMPANY

	
		
	By:
	 

	Name:
	 

	Its:
	 

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated:     

U.S. BANK NATIONAL ASSOCIATION,
as Trustee

	
		
	By:
	 

Authorized Officer

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York Corporation (“DTC”), to the Company or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

This Security may not be transferred or exchanged, nor may any purported transfer be registered, except (i) this Security may be transferred in whole, and appropriate registration of transfer effected, if such transfer is by Cede & Co., as nominee for DTC (the “Depositary”), to the Depositary, or by the Depositary to another nominee thereof, or by any nominee of the Depositary to any other nominee thereof, or by the Depositary or any nominee thereof to any successor securities depositary or any nominee thereof; and (ii) this Security may be exchanged for definitive Securities registered in the respective names of 

Exhibit A-7

the beneficial holders hereof, and thereafter shall be transferable without restrictions if:  (A) the Depositary, or any successor securities depositary, shall have notified the Company and the Trustee that it is unwilling or unable to continue to act as securities depositary with respect to the Securities and the Trustee shall not have been notified by the Company within ninety (90) days of the identity of a successor securities depositary with respect to the Securities; or (B) the Company shall have delivered to the Trustee a Company Order to the effect that the Securities shall be so exchangeable on and after a date specified therein or (C) (1) an Event of Default shall have occurred and be continuing, (2) the Trustee shall have given notice of such Event of Default pursuant to Section 1002 of the Original Indenture and (3) there shall have been delivered to the Company and the Trustee an Opinion of Counsel to the effect that the interests of the beneficial owners of such Securities in respect thereof will be materially impaired unless such owners become Holders of definitive Securities.

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

	
			
	[please insert social security or other identifying number of assignee]

	 
	 
	 

	 
	 
	 

	[please print or typewrite name and address of assignee]

the within Security of SOUTHWESTERN PUBLIC SERVICE COMPANY and does hereby irrevocably constitute and appoint              , Attorney, to transfer said Security on the books of the within-mentioned Company, with full power of substitution in the premises.

	
		
	Dated:
	 

Notice: The signature to this assignment must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatsoever.

Exhibit A-8

SCHEDULE A

The Indenture dated as of August 1, 2011, granted by Southwestern Public Service Company to U.S. Bank National Association, Trustee, was filed with the Secretary of State of the State of Texas on August 2, 2011 as Utility Security Instrument No. 11-0022610194.
In accordance with Texas Business and Commerce Code Section 261.011, a Notice of Utility Security Instrument Affecting Real Property was thereafter recorded in each Texas county in which any of the Mortgaged Property consisting of real property was located as of the Effective Date of such Indenture. The following table sets forth recording information relating to the recordation, in each of the specified Texas counties, of such Notice of Utility Security Instrument Affecting Real Property:

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	 
	 
	 
	 
	 

	Andrews
	8/3/11
	112770
	N/A
	N/A

	Armstrong
	8/3/11
	2011276
	53
	790

	Bailey
	8/3/11
	201100016286
	N/A
	N/A

	Borden
	8/3/11
	111124
	N/A
	N/A

	Briscoe
	8/3/11
	11271
	N/A
	N/A

	Carson
	8/3/11
	1100000862
	N/A
	N/A

	Castro
	8/3/11
	59278
	335
	796

	Cochran
	8/3/11
	13897
	N/A
	N/A

	Cottle
	8/3/11
	2011-291
	194
	708

	Crosby
	8/3/11
	235843
	N/A
	N/A

	Dallam
	8/2/11
	164351
	149
	384

	Deaf Smith
	8/3/11
	1493
	N/A
	N/A

	Ector
	8/3/11
	201100011005
	N/A
	N/A

	Floyd
	8/3/11
	110857
	N/A
	N/A

	Foard
	8/3/11
	68419
	247
	71

	Gaines
	8/3/11
	20113945
	N/A
	N/A

	Garza
	8/3/11
	111229
	N/A
	N/A

	 
	 
	 
	 
	 

Schedule A-1

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	Gray
	8/3/11
	019194
	N/A
	N/A

	Hale
	8/3/11
	2011002855
	N/A
	N/A

	Hansford
	8/3/11
	78454
	382
	511

	Hartley
	8/3/11
	100087
	N/A
	N/A

	Hemphill
	8/3/11
	059371
	N/A
	N/A

	Hockley
	8/3/11
	00002996
	N/A
	N/A

	Hutchinson
	8/3/11
	343845
	1664
	137

	Lamb
	8/3/11
	1442
	N/A
	N/A

	Lipscomb
	8/3/11
	N/A
	502
	782

	Lubbock
	8/3/11
	2011026116
	N/A
	N/A

	Lynn
	8/3/11
	20112298
	N/A
	N/A

	Midland
	8/3/11
	15266
	N/A
	N/A

	Moore
	8/2/11
	0176902
	702
	18

	Motley
	8/3/11
	N/A
	102
	237

	Ochiltree
	8/3/11
	95434
	N/A
	N/A

	Oldham
	8/3/11
	11429
	N/A
	N/A

	Parmer
	8/3/11
	51211
	N/A
	N/A

	Potter
	8/2/11
	01200092
	N/A
	N/A

	Randall
	8/2/11
	2011012189
	N/A
	N/A

	Roberts
	8/3/11
	044416
	N/A
	N/A

	Sherman
	8/3/11
	23551
	297
	756

	Swisher
	8/3/11
	2011-0678
	392
	314

	Terry
	8/3/11
	252458
	N/A
	N/A

	Wheeler
	8/3/11
	N/A
	640
	738

	 
	 
	 
	 
	 

Schedule A-2

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	Wilbarger
	8/3/11
	00112766
	636
	602

	Yoakum
	8/3/11
	20111463
	N/A
	N/A

Schedule A-3

The Indenture dated as of August 1, 2011, granted by Southwestern Public Service Company to U.S. Bank National Association, Trustee, was filed with the Secretary of State of the State of New Mexico on August 2, 2011 under the Public Utility Act, receiving Public Utility Filing No. 599. Concurrently with such filing, a Uniform Commercial Code financing statement, to which a copy of such Indenture was appended as an exhibit, was filed in the Uniform Commercial Code records of the Secretary of State of the State of New Mexico on August 2, 2011 as UCC Filing No. 20110012866J.
In accordance with New Mexico Statutes Annotated, 1978, Section 62-13-11, a Notice of Filing of Indenture with New Mexico Secretary of State, to which a copy of such Indenture was appended as an exhibit, was thereafter recorded in each New Mexico county in which any of the Mortgaged Property consisting of real property was located as of the Effective Date of such Indenture. The following table sets forth recording information relating to the recordation, in each of the specified New Mexico counties, of such Notice of Filing of Indenture with New Mexico Secretary of State:

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	 
	 
	 
	 
	 

	Chaves
	8/3/11
	340593
	N/A
	N/A

	Curry
	8/3/11
	110005245
	N/A
	N/A

	Eddy
	8/3/11
	1107879
	N/A
	N/A

	Lea
	8/3/11
	33578
	N/A
	N/A

	Quay
	8/3/11
	201108030006
	N/A
	N/A

	Roosevelt
	8/3/11
	20112258
	N/A
	N/A

Schedule A-4

SCHEDULE B

	
							
	Date of Supplemental Indenture
	 
	

Series of Bonds
	 
	Principal Amount Issued
	 
	Principal Amount Outstanding

	 
	 
	 
	 
	 
	 
	 

	August 3, 2011
	 
	1
	 
	$400,000,000
	 
	$400,000,000

	June 1, 2014
	 
	2
	 
	$250,000,000
	 
	$250,000,000

Schedule B-1

SCHEDULE C

DESCRIPTION OF PROPERTY

No additional properties have been acquired by the Company since the date of the Second Supplemental Indenture dated as of June 1, 2014 between Southwestern Public Service Company and U.S. Bank National Association, Trustee.  

US.48651524.04

Schedule C-1Employment Agreement

This Employment Agreement is made and entered into effective June 3, 2014, 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, and John S. Gulas.  As used in this Agreement, capitalized terms have the meanings set forth in Section 23.

Recitals

A.            The Bank is a wholly-owned subsidiary of the Company.

B.            The Company and the Bank desire to employ Executive as Chief Executive Officer and President of the Company and Chief Executive Officer of the Bank, and Executive desires to be employed by the Company and the Bank, on the terms and conditions set forth herein.

C.            The Parties have made commitments to each other on a variety of important issues concerning Executive's employment, including the performance that will be expected of Executive, the compensation Executive will be paid, how long and under what circumstances Executive will remain employed, and the financial details relating to any decision that either the Company or Executive may make to terminate this Agreement and Executive's employment with the Company.

D.            The Parties desire to enter into this Agreement as of the Effective Date and to have this Agreement supersede all agreements between the Parties, whether or not in writing, and to have any such prior agreements become null and void as of the Effective Date.

 

Agreement

In consideration of the foregoing and the mutual promises and covenants of the Parties set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby expressly covenant and agree as follows:

1.            Employment Period.  The Company shall employ Executive during the Employment Period and Executive shall remain in the employ of the Company and provide services to the Company during the Employment Period in accordance with the terms of this Agreement.  The "Employment Period" shall be the period beginning on the Effective Date and ending on the second anniversary of the Effective Date, unless sooner terminated as provided herein, provided that the Employment Period shall be extended automatically for one additional year beginning on the first anniversary of the Effective Date and on each anniversary thereafter unless either Party notifies the other Party, by written notice delivered no later than 90 days prior to such anniversary, that the Employment Period shall not be extended.  Notwithstanding any provision of this Agreement to the contrary, if a Change in Control occurs during the Employment Period, this Agreement shall remain in effect for the one-year period immediately following the Change in Control and shall then terminate.

 

2.            Duties.

(a)            During the Employment Period, Executive shall devote Executive's full business time, energy, and talent to serving as Chief Executive Officer and President of the Company and Chief Executive Officer of the Bank, subject to the direction of the Board.

(b)            Executive shall have the duties that are commensurate with Executive's positions and any other duties consistent therewith that may be assigned to Executive by the Board, and Executive shall perform all such duties faithfully and efficiently.  Executive shall have such powers as are inherent to the undertakings applicable to Executive's positions and necessary to carry out the duties required of Executive hereunder.

(c)            Notwithstanding the foregoing provisions of this Section 2, during the Employment Period, Executive may devote reasonable time to activities other than those required under this Agreement, including activities of a charitable, educational, religious, or similar nature to the extent such activities do not, in the judgment of the Board, inhibit, prohibit, interfere with, or conflict with Executive's duties under this Agreement or conflict in any material way with the business of the Company or any Affiliate; provided, however, that Executive shall not serve on the board of directors of any business (other than the Company or an Affiliate) or hold any other position with any business without receiving the prior written consent of the Board.

 

3.            Compensation and Benefits.  During the Employment Period, while Executive is employed by the Company, the Company shall compensate Executive for Executive's services as follows:

(a)            Executive shall be paid a base salary at an annual rate of $400,000.00 (the "Annual Base Salary"), which shall be payable in accordance with the normal payroll practices of the Company then in effect.  Beginning in 2015, each year during the Employment Period, Executive's Annual Base Salary shall be reviewed by the Board for possible increase, but not decrease, with any such increase to be effective as of January 1 of the year of such adjustment.

(b)            Executive shall be eligible to receive performance-based annual incentive bonuses (each, the "Incentive Bonus") from the Company for each fiscal year ending during the Employment Period.  Incentive Bonuses shall be as determined by the Board, or as may be pursuant to a new annual incentive plan as may be adopted and in effect from time to time.  Any Incentive Bonus shall be paid to Executive no later than two and one-half months after the close of the year in which it is earned, provided that any Incentive Bonus shall not be considered earned until the Board has made all determinations and taken all actions necessary to establish such Incentive Bonus.

(c)            Executive shall receive an initial equity award under the Company's stock incentive plan, with a grant date fair value for GAAP purposes of $50,000.00.  The type and form of the award shall be determined by the Compensation Committee of the Board in consultation with the Executive.  The award will vest over a period of not less than two years.

(d)            Executive shall be eligible to participate, subject to the terms thereof, in all incentive plans of the Company as may be in effect from time to time with respect to senior executives employed by the Company, on as favorable a basis as other similarly situated and performing executives.

(e)            Executive and Executive's dependents, as the case may be, shall be eligible to participate, subject to the terms thereof, in all pension and similar benefit plans and all medical, dental, disability, group and executive life, accidental death and travel accident insurance, and other similar welfare benefit plans of the Company as may be in effect from time to time with respect to senior executives employed by the Company, on as favorable a basis as other similarly situated and performing executives.

(f)            Executive shall be entitled to accrue paid vacation days and holidays in accordance with and subject to the Company's paid time off programs and policies as may be in effect from time to time, provided that Executive shall accrue a minimum of 15 vacation days and 10 sick days per calendar year.  Two additional vacation days accrue on each anniversary of the Effective Date. Following the release of the Bank from the Consent Order issued by the Office of the Comptroller of the Currency on December 17, 2013, Executive shall be entitled to accrue a minimum of 20 vacation days per calendar year.

(g)            Executive shall be eligible to be reimbursed by the Company, on terms that are substantially similar to those that apply to other similarly situated and performing executives employed by the Company, for reasonable out-of-pocket expenses for entertainment, travel, meals, lodging, and similar items that are consistent with the Company's expense reimbursement policy and that are actually incurred by Executive in the promotion of the Company's business.  Executive shall be provided a cellular phone, an Apple iPad and a computer, all subject to the Company's policy, as may be in effect from time to time, regarding the use and return of Company property.

(h)            The Company shall pay to Executive on a monthly basis the sum of $750.00 as an automobile allowance, in accordance with the normal payroll practices of the Company then in effect.  Executive shall be responsible for all expenses for fuel, maintenance, repairs, insurance, and other costs relating to Executive's automobile.

(i)            The Company shall provide the following:

	
(i)

	
Reasonable costs of packing, moving and unpacking of household items and the moving of one automobile, if the Executive relocates to the Los Alamos, New Mexico area within 12 months of the Effective Date.  The Executive must submit two bids for such moving costs and the Company shall have the right to select one of the two bids and shall pay the costs directly to the service provider.

	
(ii)

	
Up to $5,000 per month for the purpose of offsetting travel, temporary housing, meals and associated expenses with such payments to be made for the shorter of six months or through the date on which Executive takes possession of a new residence in the Los Alamos, New Mexico area.

	
(iii)

	
One-half (1/2) of a reasonable realty sales fee related to the sale of the Executive's primary residence in Canfield, Ohio.

	
(iv)

	
Any relocation assistance shall be included in Executive's Form W-2 as wages.

4.            Rights upon Termination.  This Agreement and Executive's employment under this Agreement may be terminated for any of the reasons described in this Section 4.  Executive's right to benefits, if any, for periods after the Termination Date shall be determined in accordance with this Section 4:

(a)            Minimum Benefits.  If the Termination Date occurs during the Employment Period for any reason, Executive shall be entitled to the Minimum Benefits, in addition to any other benefits to which Executive may be entitled under the following provisions of this Section 4 or the express terms of any employee benefit plan or as required by law.  Any benefits to be provided to Executive pursuant to this Section 4(a) shall be provided within 30 days after the Termination Date; provided, however, that any benefits, incentives, or awards payable as described in Section 4(e)(i) shall be provided in accordance with the terms of the applicable plan, program, or arrangement.  Except as may expressly be provided to the contrary in this Agreement, nothing in this Agreement shall be construed as requiring Executive to be treated as employed by the Company or any Affiliate following the Termination Date for purposes of any plan, program, or arrangement.

(b)            Certain Terminations During a Covered Period Commencing within 24 Months of Effective Date.  If a Change in Control occurs within the 24 months immediately following the Effective Date, during any automatic 12 month extension of this Agreement, or during the 12 month period immediately following the Change in Control, and Executive's employment under this Agreement is terminated as a result of (i) an Involuntary Termination during a Covered Period, or (ii) Executive's voluntary Termination within 30 days following the effective date of the Change in Control, then, in addition to the Minimum Benefits, the Company shall pay to Executive in a single lump sum an amount equal to the Severance Amount, subject to all applicable tax withholding.  The payment of the Severance Amount will be made by the Company on the 45th day following the Termination Date.

(c)            Any Other Termination.  If the Termination Date occurs during the Employment Period and is a result of any reason other than as set forth in Section 4(b) above, then, other than the Minimum Benefits, Executive shall have no right to benefits under this Agreement (and the Company and its Affiliates shall have no obligation to provide any such benefits) for periods after the Termination Date.

(d)            Golden Parachute Payment Adjustment.  It is the intention of the Parties that no portion of any payment under this Agreement, or payments to or for the benefit of Executive under any other agreement or plan, be deemed to be an Excess Parachute Payment.  The present value of payments to or for the benefit of Executive in the nature of compensation, receipt of which is contingent on a Change in Control, and to which Code Section 280G applies (in the aggregate "Total Payments") shall not exceed an amount equal to $1.00 less than the maximum amount that the Company may pay without loss of deduction under Code Section 280G(a).  Present value for purposes of this Section 4(d) shall be calculated in accordance with Code Section 280G(d)(4).  Within 90 days following the earlier of the giving of the notice of termination or the giving of notice by the Company to Executive of its belief that there is a payment or benefit due to Executive that will result in an Excess Parachute Payment, Executive and the Company, at the Company's expense, shall obtain the opinion of such legal counsel and certified public accountants as Executive may choose (notwithstanding the fact that such persons have acted or may also be acting as the legal counsel or certified public accountants for the Company or the Bank), which opinions need not be unqualified, which set forth (i) the amount of the includable compensation of Executive for the base period, as determined under Code Section 280G, (ii) the present value of Total Payments, and (iii) the amount and present value of any Excess Parachute Payments.  If such opinions determine that there would be an Excess Parachute Payment, the payment hereunder or any other payment determined by such counsel to be includable in Total Payments shall be modified, reduced, or eliminated as specified by Executive in writing delivered to the Company within 60 days of Executive's receipt of such opinions or, if Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no Excess Parachute Payment; provided, however, that any such specification by Executive or the Company shall not be effective where it would result in an imposition of any additional income tax under Code Section 409A.  The provisions of this Section 4(d), including the calculations, notices, and opinions provided for herein shall be based upon the conclusive presumption that (A) the compensation provided for in this Agreement and (B) any other compensation earned by Executive pursuant to the Company's or the Bank's programs that would have been provided in any event are reasonable compensation for services rendered, even though the timing of such payment is triggered by the Change in Control; provided, however, that if such legal counsel so requests in connection with the opinion required by this Section 4(d), Executive and the Company shall obtain, at the Company's expense, and the legal counsel may rely on in providing the opinion, the advice of a firm of recognized executive compensation consultants as to the reasonableness of any item of compensation to be received by Executive.

(e)            Other Benefits.

	
(i)

	
Executive's rights following a Termination with respect to any benefits, incentives, or awards provided to Executive pursuant to the terms of any plan, program, or arrangement sponsored or maintained by the Company or its Affiliates, whether tax-qualified or not, which are not specifically addressed herein, shall be subject to the terms of such plan, program, or arrangement and this Agreement shall have no effect upon such terms except as specifically provided herein.

	
(ii)

	
Except as specifically provided herein, the Company and its Affiliates shall have no further obligations to Executive under this Agreement following a Termination.

(f)            Removal from any Boards and Positions.  Unless otherwise agreed to in writing by the Parties at the time of Termination, upon a Termination, Executive shall be deemed to resign (i) if a member, from the Board and the board of directors of any Affiliate and any other board to which Executive has been appointed or nominated by or on behalf of the Company or an Affiliate, (ii) from each position with the Company and any Affiliate, including as an officer of the Company or an Affiliate and (iii) as a fiduciary of any employee benefit plan of the Company and any Affiliate.

(g)            Regulatory Suspension and Termination.

	
(i)

	
If Executive is suspended or temporarily prohibited from participating in the conduct of the affairs of the Company or an Affiliate by a notice served under Section 8(e) or 8(g) of the FDIA, all obligations of the Company and the Affiliates under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings, provided that if the charges in such notice are dismissed, the Company may in its discretion (A) pay Executive all or part of the compensation withheld while its and the Affiliates' obligations under this Agreement were suspended and (B) reinstate in whole or in part any of its and the Affiliates' obligations that were suspended, all in accordance with Code Section 409A.

	
(ii)

	
If Executive is removed or permanently prohibited from participating in the conduct of the affairs of the Company or an Affiliate by an order issued under Section 8(e) or 8(g) of the FDIA, all obligations of the Company and the Affiliates under this Agreement shall terminate as of the effective date of the order, provided that this Section 4(g) shall not affect any vested rights of the Parties.

	
(iii)

	
If the Company is in default as defined in Section 3(x) of the FDIA, all obligations of the Company under this Agreement shall terminate as of the date of default, provided that this Section 4(g) shall not affect any vested rights of the Parties.

	
(iv)

	
All obligations of the Company under this Agreement shall be terminated, except to the extent determined by the FDIC that continuation of this Agreement is necessary for the continued operation of the institution, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Company under the authority contained in Section 13(c) of the FDIA, or when the Company is determined by the FDIC to be in an unsafe or unsound condition, provided that this Section 4(g) shall not affect any vested rights of the Parties.

	
(v)

	
Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDIA.

(h)            Clawback.  Notwithstanding any provision of this Agreement to the contrary, Executive covenants and agrees that the Company and the Bank and their successors and assigns shall have the right to demand the return of any "golden parachute payments" (as defined in 12 C.F.R. Part 359) in the event that information is obtained indicating that the Executive committed, is substantially responsible for, or has violated, the respective acts or omissions, conditions, or offenses contained in 12 C.F.R. § 359.4(a)(4) or any Severance Restriction applies.  Executive shall repay to the Company the aggregate amount of any such payments, with such repayment to occur no later than 30 days following Executive's receipt of a written notice from the Company indicating that payments received by Executive under this Agreement are subject to recapture or clawback pursuant to the Severance Restrictions and/or the terms of this paragraph.

 

5.            Release.  Notwithstanding any provision of this Agreement to the contrary, Executive shall not be entitled to any benefits under Section (4) (other than the Minimum Benefits), and shall repay to the Company any such benefits received, unless Executive executes (without subsequent revocation) and delivers to the Company a Release within 21 days (or such longer period to the extent required by applicable law) following the Termination Date.

 

6.            Restrictive Covenants.  Executive acknowledges that Executive has been and will continue to be provided intimate knowledge of the business practices, trade secrets, and other confidential and proprietary information of the Company (including the Confidential Information), which, if exploited by Executive, would seriously, adversely, and irreparably affect the interests of the Company and the ability of the Company to continue its business.  Executive further acknowledges that, during the course of Executive's employment with the Company, Executive may produce and have access to Confidential Information.

(a)            Confidential Information.  During the course of Executive's employment and following a Termination:

(i)            Executive shall not directly or indirectly use, disclose, copy, or make lists of Confidential Information for the benefit of anyone other than the Company, except to the extent that such information is or thereafter becomes lawfully available from public sources, or such disclosure is authorized in writing by the Company, required by law, or otherwise as reasonably necessary or appropriate in connection with the performance by Executive of Executive's duties to the Company.

(ii)            If Executive receives a subpoena or other court order or is otherwise required by law to provide information to a governmental authority or other person concerning the activities of the Company or its Affiliates, or Executive's activities in connection with the business of the Company or its Affiliates, Executive shall immediately notify the Company of such subpoena, court order, or other requirement and deliver forthwith to the Company a copy thereof and any attachments and non-privileged correspondence related thereto.

(iii)            Executive shall take reasonable precautions to protect against the inadvertent disclosure of Confidential Information.

(iv)            Executive shall abide by the Company's policies, as in effect from time to time, respecting avoidance of interests conflicting with those of the Company and its Affiliates.  In this regard, Executive shall not directly or indirectly render services to any person or entity where Executive's service would involve the use or disclosure of Confidential Information.

(v)            Executive shall not use any Confidential Information to guide Executive in searching publications or other publicly available information, selecting a series of items of knowledge from unconnected sources, and fitting them together to claim that Executive did not violate any terms set forth in this Agreement.

(b)            Documents and Property.

(i)            All records, files, documents, and other materials or copies thereof relating to the business of the Company or its Affiliates that Executive prepares, receives, or uses, shall be and remain the sole property of the Company and, other than in connection with the performance by Executive of Executive's duties to the Company, shall not be removed from the premises of the Company or its Affiliates without the Company's prior written consent, and shall be immediately returned to the Company upon a Termination, together with all copies (including copies or recordings in electronic form), abstracts, notes, or reproductions of any kind made from or about the records, files, documents, or other materials.

(ii)            Executive acknowledges that Executive's access to and permission to use the Company's and its Affiliates' computer systems, networks, and equipment, and all the Company and Affiliate information contained therein, is restricted to legitimate business purposes on behalf of the Company and reasonable personal use in accordance with the Company's applicable policies and procedures.  Any other access to or use of such systems, networks, equipment, and information is without authorization and is prohibited.  The restrictions contained in this Section 6(b) extend to any personal computers or other electronic devices of Executive that are used for business purposes relating to the Company or its Affiliates.  Executive shall not transfer any Company or Affiliate information to any personal computer or other electronic device that is not otherwise used for any business purpose relating to the Company or an Affiliate.  Upon a Termination, Executive's authorization to access and permission to use the Company's and its Affiliates' computer systems, networks, and equipment, and any Company and Affiliate information contained therein, shall cease, and Executive shall delete any Company and Affiliate information from Executive's personal computer or other electronic device.

(c)            Non-Competition and Non-Solicitation.  The primary service area of the Company's business in which Executive will actively participate extends separately to the Restricted Area.  Therefore, as an essential ingredient of and in consideration of this Agreement and Executive's employment with the Company, Executive shall not, during Executive's employment with the Company or during the Restricted Period, directly or indirectly do any of the following (all of which are collectively referred to in this Agreement as the "Restrictive Covenant"):

(i)            Engage or invest in, own, manage, operate, finance, control, participate in the ownership, management, operation, or control of, be employed by, associated with, or in any manner connected with, serve as a director, officer, or consultant to, lend Executive's name or any similar name to, lend Executive's credit to or render services or advice to, in each case in the capacity (or any substantially similar capacity) that Executive provided services to the Company, any person, firm, partnership, corporation, other business entity, or trust that owns, operates, or is in the process of forming a Competitor with an office located, or to be located at an address identified in a filing with any regulatory authority, within the Restricted Area; provided, however, that the ownership by Executive of shares of the capital stock of any institution, which shares are listed on a securities exchange and that do not represent more than 1% of the institution's outstanding capital stock, shall not violate any terms of this Agreement;

(ii)            (A) Induce or attempt to induce any employee of the Company or its Affiliates to leave the employ of the Company or its Affiliates; (B) interfere with the relationship between the Company or its Affiliates and any employee of the Company or its Affiliates; or (C) induce or attempt to induce any customer, supplier, licensee, or other business relation of the Company or its Affiliates with whom Executive had an ongoing business relationship to cease doing business with the Company or its Affiliates or interfere with the relationship between the Company or its Affiliates and their respective customers, suppliers, licensees, or other business relations with whom Executive had an ongoing business relationship.

(iii)            Solicit the business of any person or entity known to Executive to be a customer of the Company 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 Substantial Business Efforts with respect to, such person or entity, with respect to products, activities, or services that compete in whole or in part with the products, activities, or services of the Company or its Affiliates.

(iv)            Serve as the agent, broker, or representative of, or otherwise assist, any person or entity in obtaining services or products from any Competitor within the Restricted Area, with respect to products, activities, or services that Executive devoted time to on behalf of the Company or any Affiliate (or any substantially similar products, activities, or services) and that compete in whole or in part with the products, activities, or services of the Company or its Affiliates.

(v)            Accept employment with, provide services to, or act in any other such capacity for or with any Competitor, if in such employment or capacity Executive would inevitably use or disclose the Company's Confidential Information in Executive's work or service for such Competitor.

(d)            Works Made for Hire; Ownership of Company Work Product.

(i)            The Parties understand and agree that all work prepared by Executive for the Company or for its Affiliates shall be a Work Made For Hire as such phrase is defined under the U.S. Copyright laws, 17 U.S.C. § 101 et seq., and if such work does not qualify as a Work Made For Hire, Executive shall, and does, assign to the Company all of Executive's right, title, and interest in and to the work, including all patent, copyright, trademark, and other proprietary rights thereto.  Executive waives and releases all moral rights in any of the works as Executive may possess by virtue of the Visual Artist's Moral Rights Act of 1990 and various country or state laws of attribution, authorship, and integrity commonly referred to as Moral Rights Law.  Executive shall not assert any claim based upon such moral rights against the Company, the Affiliates, or any of their respective successors in interest or assigns.  Executive shall have no right, title, or interest in any of the work and shall not be entitled to any royalties or other proceeds received by the Company or its Affiliates from the commercialization in any manner of the work.

(ii)            Executive hereby assigns to the Company any right, title, and interest in and to all Company Work Product that Executive may have, by law or equity, without additional consideration of any kind whatsoever from the Company or its Affiliates.

(iii)            Executive shall execute and deliver any instruments or documents and do all further acts (including the giving of testimony and executing any applications, oaths, and assignments) requested by the Company (both before and after a Termination) in order to vest more fully in the Company or its Affiliates all ownership rights in the Company Work Product (including obtaining patent, copyright, trademark, or other intellectual property protection therefore in the United States and foreign countries). 

(iv)            The Company or its Affiliates shall at all times own and have exclusive right, title, and interest in and to all Confidential Information and Company Work Product, and the Company or its Affiliates shall retain the exclusive right to use, license, sell, transfer, and otherwise exploit and dispose of the same.  Executive acknowledges the Company's or its Affiliates' exclusive right, title, and interest in and to the Confidential Information and Company Work Product, and shall not contest, challenge or make any claim adverse to the Company's or its Affiliates' ownership of or the validity of the Confidential Information and Company Work Product, any future application for registration or registration thereof, or any rights of the Company or its Affiliates therein, or which, directly or indirectly, may impair any part of the Company's or its Affiliates' right, title, and interest therein.

(v)            To the extent required by applicable state statute, this Section 6(d) shall not apply to an invention for which no equipment, supplies, facility, or trade secret information of the Company or its Affiliates was used and that was developed entirely on Executive's own time, unless the invention (i) relates to the business of the Company or an Affiliate or to the Company's or an Affiliate's actual or demonstrably anticipated research or development or (ii) results from any work performed by Executive for the Company or an Affiliate. 

(e)            Consent and Release.  From time to time, the Company's locations may be the subject of a Promotional Work.  Executive acknowledges that Executive is aware that Executive's name, image, and likeness may be captured in such Promotional Work, and hereby consents and agrees that the Company may use Executive's name, image, and likeness as captured in the Promotional Work in any manner, in connection with the Company's products and services, and, at all times, the Company, its Affiliates, and, without limitation, their respective customers, successors, licensees, and assigns, may continue to use the Promotional Work that includes Executive's name, image, or likeness.  Executive, Executive's heirs, predecessors, successors, assigns, and all affiliated entities hereby fully and finally release, remise, and forever discharge the Company, its Affiliates, their respective predecessors, successors, assigns, and all affiliated entities, and each of their respective directors, officers, members, shareholders, partners, employees, customers, agents, and attorneys, to the extent that such apply, of and from any and all manner of actions, causes of action, losses, claims, demands, liabilities, obligations, suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, controversies, agreements, promises, variances, trespasses, damages, judgments, and executions, in law or in equity, that arise out of or are related to the Company's or its Affiliates' use of a Promotional Work that includes Executive's name, image, or likeness.

(f)            Online Medium.

(i)            Executive shall not create or otherwise establish any Online Medium without the Company's prior written consent.  Notwithstanding the foregoing, if Executive creates an Online Medium without such prior written consent, Executive shall, and hereby does (A) assign to the Company any right, title, and interest Executive may have in and to the Online Medium and (B) transfer to the Company all primary administrative rights to the Online Medium, including all codes and passwords.  If the Company has approved the content of any material to be posted or otherwise used online and obtained primary administrative rights to the Online Medium, then the Company may, at its sole and absolute discretion, provide Executive with subordinate administrative access to, and guidelines for, Executive's use of such Online Medium in connection with Executive's duties under this Agreement.  Executive has no right, title, or interest to any material or other information on any Online Medium including all "fans," "followers," "friends," and "contacts" associated therewith that mentions, uses, or refers in any way to Company Proprietary and Intellectual Property, Company Work Product, or Confidential Information, which shall remain the sole and exclusive property of the Company, even if such Online Medium is established by Executive or otherwise held in the name of Executive.  Upon a Termination, the Company will remove Executive's administrative access to the Online Medium. 

(ii)            Executive shall execute and deliver any instruments or documents and do all further acts (including the giving of testimony and executing any applications, oaths, and assignments) requested by the Company (both before and after a Termination) in order to vest more fully in the Company or its Affiliates all ownership rights in the Online Medium (including obtaining any available intellectual property or similar protection therefore in the United States and foreign countries).

(iii)            The Company or its Affiliates shall at all times own and have exclusive right, title, and interest in and to all Online Medium, and the Company or its Affiliates shall retain the exclusive right to use, license, sell, transfer, and otherwise exploit and dispose of the same.  Executive acknowledges the Company's or its Affiliates' exclusive right, title, and interest in and to the Online Medium, and shall not contest, challenge, or make any claim adverse to the Company's or its Affiliates' ownership of or the validity of the Online Medium, any future application for registration or registration thereof, or any rights of the Company or its Affiliates therein, or which, directly or indirectly, may impair any part of the Company's or its Affiliates' right, title, and interest therein.

(g)            Company Proprietary and Intellectual Property.  The Company or its Affiliates shall at all times own and have exclusive right, title, and interest in and to all Company Proprietary and Intellectual Property, and the Company or its Affiliates shall retain the exclusive right to use, license, sell, transfer, and otherwise exploit and dispose of the same.  Executive acknowledges the Company's or its Affiliates' exclusive right, title, and interest in and to Company Proprietary and Intellectual Property, and shall not contest, challenge, or make any claim adverse to the Company's or its Affiliates' ownership of or the validity of Company Proprietary and Intellectual Property, any future application for registration or registration thereof, or any rights of the Company or its Affiliates therein, or which, directly or indirectly, may impair any part of the Company's or its Affiliates' right, title, and interest therein.  Executive shall not use or otherwise exploit any of Company Proprietary and Intellectual Property in any manner not authorized by the Company.

(h)            Remedies for Breach of Restrictive Covenant.

(i)            Executive has reviewed the provisions of this Agreement with legal counsel, or has been given adequate opportunity to seek such counsel, and Executive acknowledges that the covenants contained in this Section 6 are reasonable with respect to their duration, geographical area, and scope.

(ii)            Executive acknowledges that (A) the restrictions contained in this Section 6 are reasonable and necessary for the protection of the legitimate business interests of the Company, (B) such restrictions create no undue hardships, (C) any violation of these restrictions would seriously, adversely, and irreparably injure the Company and such interests, and (D) such restrictions were a material inducement to the Company to employ Executive and to enter into this Agreement.

(iii)            Executive must, and the Company may, communicate the existence and terms of this Agreement to any third party with whom Executive may seek or obtain future employment or other similar arrangement.

(iv)            In the event of any violation or threatened violation of the restrictions contained in this Section 6, the Company, in addition to and not in limitation of, any other rights, remedies, or damages available to the Company under this Agreement or otherwise at law or in equity, shall not be required to provide any amounts or benefits under this Agreement and shall be entitled to preliminary and permanent injunctive relief to prevent or restrain any such violation by Executive and all persons directly or indirectly acting for or with Executive, as the case may be, without any requirement that the Company post bond.

(v)            If Executive violates the Restrictive Covenant and the Company brings legal action for injunctive or other relief, the Company shall not, as a result of the time involved in obtaining such relief, be deprived of the benefit of the full period of the Restrictive Covenant; accordingly, the Restrictive Covenant shall be deemed to have the duration specified herein computed from the date the relief is granted but reduced by the time between the period when the Restricted Period began to run and the date of the first violation of the Restrictive Covenant by Executive.

(i)            Other Agreements.  In the event of the existence of another agreement between the Parties that (i) is in effect during the Restricted Period, and (ii) contains restrictive covenants that conflict with any of the provisions of this Section 6, then the more restrictive of such provisions from the two agreements shall control for the period during which both agreements would otherwise be in effect.

 

7.            No Set-Off; No Mitigation.  Except as provided herein, the Company's obligation to provide benefits under this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including any set-off, counterclaim, recoupment, defense, or other right the Company may have against Executive or others.  In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not Executive obtains other employment.

 

8.            Notices.  Notices and all other communications under this Agreement shall be in writing and shall be deemed given when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: if to the Company, to the principal headquarters of the Company, attention: General Counsel; and if to Executive, to Executive's most recent address in the Company's records; or, in each respective case, to such other address as either Party may furnish to the other in writing, except that notices of changes of address shall be effective only upon receipt.

 

9.            Governing Law.  This Agreement shall be governed by and construed under the laws of the State of New Mexico, without regard to principles of conflict of laws (whether in the State of New Mexico or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New Mexico.

 

10.            Choice of Venue and Consent to Jurisdiction.  Each Party hereby irrevocably submits to the exclusive jurisdiction of the First Judicial District Court for the State of New Mexico, if such courts have or can acquire jurisdiction, and if such jurisdiction does not exist and cannot be acquired, to the exclusive jurisdiction of the United States District Court for the District of New Mexico, for the purpose of any suit, action, or other proceeding arising out of or based on this Agreement or any other agreement contemplated hereby or any subject matter hereof, whether in tort, contract, or otherwise.

 

11.            Service of Process.  Each Party may be served with process in any manner permitted under State of New Mexico law, or by United States registered or certified mail, return receipt requested.

 

12.            Entire Agreement.  This Agreement constitutes the entire agreement between the Parties concerning the subject matter hereof, and supersedes all prior negotiations, undertakings, agreements, and arrangements with respect thereto, whether written or oral, including any written offer of employment.

 

13.            Withholding of Taxes.  The Company may withhold from any benefits payable under this Agreement all federal, state, city and other taxes as may be required pursuant to any law, governmental regulation, or ruling.

 

14.            No Assignment.  Executive's right to receive benefits under this Agreement shall not be assignable or transferable whether by pledge, creation of a security interest, or otherwise, other than a transfer by will or by the laws of descent or distribution.  In the event of any attempted assignment or transfer contrary to this Section 14, the Company and its Affiliates shall have no liability to pay any amount so attempted to be assigned or transferred.  This Agreement shall inure to the benefit of and be enforceable by Executive's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.

 

15.            Successors.  This Agreement shall be binding upon and inure to the benefit of the Company, its successors, and assigns.

 

16.            Legal Fees.  In the event that either Party commences mediation, arbitration, litigation, or any similar action to enforce or protect such Party's rights in accordance with and under this Agreement, the prevailing Party in any such action shall be entitled to recover reasonable attorneys' fees and costs (including the costs of experts, evidence, and counsel) and other costs relating to such action, in addition to all other entitled relief, including damages and injunctive relief.

 

17.            Amendment.  This Agreement may not be amended or modified except by written agreement signed by the Parties.

 

18.            Executive Acknowledgement.  Executive hereby represents that from and after the Effective Date the performance of Executive's duties hereunder will not breach any other agreement to which Executive is a party.  Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive's own judgment.

 

19.            No Inconsistent Obligations. Executive represents and warrants that he is aware of no obligations legal or otherwise that are inconsistent with the terms of this Agreement or with his employment by the Company and the Bank. Executive acknowledges that he is subject to one or more restrictive covenants in favor of The Farmers National Bank of Canfield and Farmers National Banc Corp. (the "Farmers Covenants"). Executive represents and warrants that his employment under this Agreement will not, directly or indirectly, cause or result in a violation of the Farmers Covenants. Executive will not disclose to the Company or the Bank, or use, or induce the Company or the Bank to use, any proprietary information or trade secrets of others. Executive represents and warrants that he has returned all proprietary and confidential information belonging to all prior employers.

 

20.            Code Section 409A.

(a)            To the extent any provision of this Agreement or action by the Company would subject Executive to liability for interest or additional taxes under Code Section 409A, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Company.  It is intended that this Agreement will comply with Code Section 409A, and this Agreement shall be administered accordingly and interpreted and construed on a basis consistent with such intent.  Notwithstanding any provision of this Agreement to the contrary, no termination or similar payments or benefits shall be payable hereunder on account of a Termination unless such Termination constitutes a "separation from service" within the meaning of Code Section 409A.  For purposes of Code Section 409A, all installment payments of deferred compensation made hereunder, or pursuant to another plan or arrangement, shall be deemed to be separate payments.  To the extent any reimbursements or in-kind benefit payments under this Agreement are subject to Code Section 409A, such reimbursements and in-kind benefit payments shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv).  This Agreement may be amended to the extent necessary (including retroactively) by the Company to avoid the application of taxes or interest under Code Section 409A, while maintaining to the maximum extent practicable the original intent of this Agreement.  This Section 19 shall not be construed as a guarantee of any particular tax effect for Executive's benefits under this Agreement and the Company does not guarantee that any such benefits will satisfy the provisions of Code Section 409A or any other provision of the Code.

(b)            Notwithstanding any provision of this Agreement to the contrary, if Executive is determined to be a Specified Employee as of the Termination Date, then, to the extent required pursuant to Code Section 409A, payments due under this Agreement that are deemed to be deferred compensation shall be subject to a six-month delay following the Termination Date; and all delayed payments shall be accumulated and paid in a lump-sum payment as of the first day of the seventh month following the Termination Date (or, if earlier, as of Executive's death), with all such delayed payments being credited with interest (compounded monthly) for this period of delay equal to the prime rate in effect on the first day of such six-month period.  Any portion of the benefits hereunder that were not otherwise due to be paid during the six-month period following the Termination Date shall be paid to Executive in accordance with the payment schedule established herein.

 

21.            Scope of Company and Affiliate Obligations.  Although the Company and its Affiliates may have jointly obligated themselves to Executive under certain provisions of this Agreement, in no event shall Executive be entitled to more than what is explicitly provided for hereunder, such that no duplicative payments shall be provided under this Agreement.

 

22.            Construction.

(a)            In this Agreement, unless otherwise stated, the following uses apply: (i) references to a statute refer to the statute and any amendments and any successor statutes, and to all regulations promulgated under or implementing the statute, as amended, or its successors, as in effect at the relevant time; (ii) in computing periods from a specified date to a later specified date, the words "from" and "commencing on" (and the like) mean "from and including," and the words "to," "until," and "ending on" (and the like) mean "to, and including"; (iii) references to a governmental or quasi-governmental agency, authority, or instrumentality also refer to a regulatory body that succeeds to the functions of the agency, authority, or instrumentality; (iv) indications of time of day are based upon the time applicable to the location of the principal headquarters of the Company; (v) the words "include," "includes," and "including" (and the like) mean "include, without limitation," "includes, without limitation," and "including, without limitation," (and the like) respectively; (vi) all references to preambles, recitals, sections, and exhibits are to preambles, recitals, sections, and exhibits in or to this Agreement; (vii) the words "hereof," "herein," "hereto," "hereby," "hereunder," (and the like) refer to this Agreement as a whole (including exhibits); (viii) any reference to a document or set of documents, and the rights and obligations of the parties under any such documents, means such document or documents as amended from time to time, and all modifications, extensions, renewals, substitutions, or replacements thereof; (ix) all words used shall be construed to be of such gender or number as the circumstances and context require; (x) the captions and headings of preambles, recitals, sections, and exhibits appearing in or attached to this Agreement have been inserted solely for convenience of reference and shall not be considered a part of this Agreement, nor shall any of them affect the meaning or interpretation of this Agreement or any of its provisions; and (xi) all accounting terms not specifically defined herein shall be construed in accordance with GAAP.

(b)            If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement and all other provisions shall remain in full force and effect.

(c)            The various covenants and provisions of this Agreement are intended to be severable and to constitute independent and distinct binding obligations.

(d)            Without limiting the generality of the foregoing, if the scope of any covenant contained in this Agreement is too broad to permit enforcement to its full extent, such covenant shall be enforced to the maximum extent permitted by law, and such scope may be judicially modified accordingly.

(e)            This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same Agreement.

 

23.            Definitions.  As used in this Agreement, the terms defined in this Section 23 have the meanings set forth below.

(a)            "1934 Act" means the Securities Exchange Act of 1934.

(b)            "Affiliate" means each Business Entity that, directly or indirectly, is controlled by, controls, or is under common control with, the Company, where "control" means (i) the ownership of more than 50% of the Voting Securities or other voting or equity interests of any Business Entity, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Business Entity.

(c)            "Agreement" means this employment agreement, made and entered into as of the Effective Date, by and between the Parties.

(d)            "Annual Base Salary" has the meaning set forth in Section 3(a).

(e)            "Bank" means Los Alamos National Bank, a national chartered bank with its main office located in Los Alamos, New Mexico.

(f)            "Bank Board" means the Board of Directors of the Bank.

(g)            "Board" means the Board of Directors of the Company.

(h)            "Business Entity" means any corporation, partnership, limited liability company, joint venture, association, partnership, business trust or other business entity.

(i)            "Change in Control" means the first to occur of the following:

	
(i)

	
The consummation of the acquisition by any "person" (as such term is defined in Section 13(d) or 14(d) of the 1934 Act) of "beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of more than 50% of the combined voting power of the then outstanding Voting Securities of the Company;

	
(ii)

	
During any 12-month period, the individuals who, as of the Effective Date, are members of the Board cease for any reason to constitute a majority of the Board, unless the election, or nomination for election by the Company's shareholders, of any new director was approved by a vote of a majority of the Board, in which case such new director shall, for purposes of this Agreement, be considered as a member of the Board; or

	
(iii)

	
The consummation by the Company of: (A) a merger or consolidation if the Company's shareholders immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than 50% of the combined voting power of the then outstanding Voting Securities of the entity resulting from such merger or consolidation in substantially the same proportion as their ownership of the combined voting power of the Voting Securities of the Company outstanding immediately before such merger or consolidation; or (B) a complete liquidation or dissolution of, or an agreement for the sale or other disposition of all or substantially all of the assets of, the Company.

Notwithstanding any provision of this definition to the contrary, a Change in Control shall not be deemed to have occurred solely because more than 50% of the combined voting power of the then outstanding securities of the Company are acquired by (A) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained by the Company or an Affiliate or (B) any corporation that, immediately prior to such acquisition, is owned directly or indirectly by the Company's shareholders in the same proportion as their ownership of stock immediately prior to such acquisition.

Further notwithstanding any provision of this definition to the contrary, in the event that any amount or benefit under this Agreement constitutes deferred compensation under Code Section 409A and the settlement of or distribution of such amount or benefit is to be triggered by a Change in Control, then such settlement or distribution shall be subject to the event constituting the Change in Control also constituting a "change in control event" under Code Section 409A.

(j)            "Code" means the Internal Revenue Code of 1986.

(k)            "Company" means Trinity Capital Corporation, a New Mexico corporation.

(l)            "Company Proprietary and Intellectual Property" means all products, systems, methods, procedures, techniques, manuals, databases, plans, lists, inventions, discoveries, innovations, improvements, enhancements, concepts, ideas, and software conceived, created, compiled, or otherwise developed by the Company or its Affiliates and/or comprised, in whole or part, of Confidential Information, together with all patent rights, copyrights, trademarks, service marks, trade name rights and other source identifiers, trade secrets, and other intellectual property and property rights therein, if any.

(m)            "Company Work Product" means all products, systems, methods, procedures, techniques, manuals, databases, plans, lists, inventions, discoveries, innovations, improvements, enhancements, concepts, ideas, and software conceived, created, compiled, or otherwise developed by Executive in the course of Executive's employment with the Company or its Affiliates and/or comprised, in whole or part, of Confidential Information, together with all patent rights, copyrights, trademarks, service marks, trade name rights, trade secrets, and other intellectual property and propriety rights therein, if any.  Notwithstanding the foregoing sentence, to the extent required by applicable state statute, Company Work Product shall not include (i) any inventions independently developed by Executive and not derived, in whole or part, from any Confidential Information or (ii) any invention made by Executive prior to Executive's exposure to any Confidential Information.

(n)            "Competitor" means a bank, savings bank, savings and loan association, credit union, or similar financial institution.

(o)            "Confidential Information" means confidential or proprietary non-public information concerning the Company or its Affiliates, including research, development, designs, formulae, processes, specifications, technologies, marketing materials, financial and other information concerning customers and prospective customers, customer lists, records, data, computer programs, source codes, object codes, database structures, trade secrets, proprietary business information, pricing and profitability information, policies, strategic planning, commitments, plans, procedures, litigation, pending litigation, and other information not generally available to the public.

(p)            "Covered Period" means the period beginning six months prior to a Change in Control and ending on the date that is 12 months after the Change in Control.

(q)            RESERVED.

(r)            "Effective Date" means June 3, 2014.

(s)            "Employment Period" has the meaning set forth in Section 1.

(t)            "Excess Parachute Payment" has the meaning set forth in Code Section 280G.

(u)            "Executive" means John S. Gulas.

(v)            "FDIA" means the Federal Deposit Insurance Act.

(w)            "FDIC" means the Federal Deposit Insurance Corporation.

(x)            "Good Reason" means the occurrence of any one of the following events, unless Executive agrees in writing that such event shall not constitute Good Reason:

	
(i)

	
A material and adverse change in the nature, scope, or status of Executive's position, authorities, or duties from those in effect in accordance with Section 2; provided, however, that a change in title as a result of a merger or reorganization of the Company or the Bank, where Executive maintains a similar level of responsibility or oversight (including, where applicable, duties with respect to a public company officer or director), shall not constitute Good Reason or a breach of this Agreement;

	
(ii)

	
A material reduction in Executive's then-current Annual Base Salary, or a material reduction in Executive's aggregate benefits or other compensation plans in effect immediately following the Effective Date;

	
(iii)

	
A relocation of Executive's primary place of employment of more than 50 miles, which relocation also causes Executive's primary place of employment to be located further from Executive's primary residence; or

	
(iv)

	
A material breach by the Company of this Agreement.

Notwithstanding any provision of this Good Reason definition to the contrary, (A) prior to a Termination for Good Reason, Executive must give the Company written notice of the existence of any condition set forth in a clause immediately above within 90 days of its initial existence and the Company shall have 30 days from the date of such notice in which to cure the condition giving rise to Good Reason, if curable, and if, during such 30-day period, the Company cures the condition giving rise to Good Reason, such condition shall not constitute Good Reason and (B) any Termination for Good Reason must occur within six months of the initial existence of the condition constituting Good Reason.

(y)            "Incentive Bonus" has the meaning set forth in Section 3(b).

(z)            "Involuntary Termination" means a Termination during the Employment Period either:

	
(i)

	
By the Company other than a Termination for Cause; or

	
(ii)

	
By Executive for Good Reason.

(aa)            "Minimum Benefits" means, as applicable, the following:

	
(i)

	
Executive's earned but unpaid Annual Base Salary for the period ending on the Termination Date;

	
(ii)

	
Executive's earned but unpaid Incentive Bonus, if any, for any completed fiscal year preceding the Termination Date; provided, however, that Executive shall not be entitled to any Incentive Bonus in the event of a Termination for Cause;

	
(iii)

	
Executive's accrued but unpaid vacation pay for the period ending on the Termination Date;

	
(iv)

	
Executive's unreimbursed business expenses through and including the Termination Date, provided that all required submissions for expense reimbursement are made in accordance with the Company's expense reimbursement policy and within 15 days following the Termination Date; and

	
(v)

	
The benefits, incentives, and awards described in Section 4(e)(i).

(bb)            "Online Medium" means any website, domain, social network account or identity, blog, feed, email address, email distribution list, or other Internet account or presence (including Instagram, Tumblr, Facebook, Twitter, and Flicker) that incorporates, exploits, utilizes, displays, or otherwise makes use of any of the Company Proprietary and Intellectual Property, Company Work Product, or Confidential Information.

(cc)            "Parties" means the Company, the Bank, and Executive.

(dd)            RESERVED.

(ee)            "Promotional Work" means, without limitation, photographs, films, clips, sketches, segments, and other media and promotional works.

(ff)            "Release" means a general release and waiver substantially in the form attached hereto as Exhibit A.

(gg)            "Restricted Area" means the area that encompasses a 35-mile radius from each banking or other office location of the Company and its Affiliates.

(hh)            "Restricted Period" means a period of 18 months immediately following a Termination, whether such Termination occurs during the Employment Period or thereafter.

(ii)            "Restrictive Covenant" has the meaning set forth in Section 6(c).

(jj)            "Severance Amount" means an amount equal to 100% of Executive's Annual Base Salary as of the respective Termination.

(kk)            "Severance Restrictions" means any applicable statute, law, regulation, or regulatory interpretation or other guidance, including FIL-66-2010 and any related or successor FDIC guidance, that would require the Company or any Affiliate to seek or demand repayment or return of any payments made to Executive for any reason, including the Company, an Affiliate or their successors later obtaining information indicating that Executive has committed, is substantially responsible for, or has violated, the respective acts or omissions, conditions, or offenses outlined under 12 C.F.R. 359.4(a)(4). Additionally, the obligation to make payment of the Severance Amount as provided herein is conditioned upon (i) the Company and the Bank obtaining any necessary approvals from each of their primary federal regulators (including, where applicable, FDIC concurrence), and (ii) compliance with applicable law, including 12 C.F.R. Part 359.

(ll)            "Specified Employee" means any person who is a "key employee" (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as determined by the Company based upon the 12-month period ending on each December 31st (such 12-month period is referred to below as the "identification period").  If Executive is determined to be a key employee, Executive shall be treated as a Specified Employee for purposes of this Agreement during the 12-month period that begins on the April 1 following the close of the identification period.  For purposes of determining whether Executive is a key employee, "compensation" means Executive's W-2 compensation as reported by the Company for a particular calendar year.

(mm)            "Substantial Business Efforts" means marketing, promotional, purchasing, sales, or solicitation activities undertaken on behalf of the Company or an Affiliate, which include (i) in person and voice communications and (ii) either or both of (A) delivery of a quote, bid, proposal, or request for any of the foregoing or (B) visits to the site of the actual or potential business development and other similar meetings or visits (conducted alone or with other employees of the Company or an Affiliate), where such activities would enjoy a reasonable prospect of success in the absence of any breach of this Agreement.

(nn)            "Termination" means termination of Executive's employment with the Company and all Affiliates for any reason or no reason.

(oo)            "Termination Date" means the date of Termination.

(pp)            "Termination for Cause" means a termination of Executive's employment by the Company as a result of any of the following (in each case as determined by the Board):

	
(i)

	
Executive's willful and continuing failure to perform Executive's obligations hereunder, which failure is not remedied within 10 business days after receipt of written notice of such failure from the Company;

	
(ii)

	
Executive's conviction of, or plea of nolo contendere to, a crime of embezzlement or fraud or any felony under the laws of the United States or any state thereof;

	
(iii)

	
Executive's breach of fiduciary responsibility;

	
(iv)

	
An act of dishonesty by Executive that is materially injurious to the Company or an Affiliate;

	
(v)

	
Executive's engagement in one or more unsafe or unsound banking practices that have a material adverse effect on the Company or an Affiliate;

	
(vi)

	
Executive's removal or permanent suspension from banking pursuant to Section 8(e) of the FDIA or any other applicable state or federal law;

	
(vii)

	
A material breach by Executive of this Agreement;

	
(viii)

	
An act or omission by Executive that leads to a material harm (financial or reputational) to the Company or an Affiliate; or

	
(ix)

	
A material breach by Executive of Company policies as may be in effect from time to time.

Further, a Termination for Cause shall be deemed to have occurred if, within 12 months following the Termination, facts and circumstances arising during the course of such employment are discovered that would have warranted a Termination for Cause.

Further, with respect to subsections (i), (vii), (viii), and (ix), Executive shall be entitled to at least 30 days' prior written notice of the Company's intention to terminate Executive's employment in a Termination for Cause, which notice shall specify the grounds for the Termination for Cause; and Executive shall be provided a reasonable opportunity to cure any conduct or act, if curable, alleged as grounds for the Termination for Cause, and a reasonable opportunity to present to the Board Executive's position regarding any dispute relating to the existence of any grounds for Termination for Cause.

Further, all rights Executive has or may have under this Agreement shall be suspended automatically during (A) the pendency of any investigation by the Board or its designee, or (B) any negotiations between the Board or its designee and Executive regarding any actual or alleged act or omission by Executive of the type that would warrant a Termination for Cause and any such suspension shall not give rise to a claim of Good Reason by Executive.

(qq)            "Total Payments" has the meaning set forth in Section 4(d).

(rr)            "Voting Securities" means any securities that ordinarily possess the power to vote in the election of directors without the happening of any precondition or contingency.

 

24.            Survival.  The provisions of Section 6 shall survive the termination of this Agreement.

[Signature page follows.]

John S. Gulas Employment Agreement

June 3, 2014

IN WITNESS WHEREOF, each of the Company and the Bank has caused this Agreement to be executed in its name and on its behalf, and Executive acknowledges understanding and acceptance of, and agrees to, the terms of this Agreement, all as of the Effective Date.

TRINITY CAPITAL CORPORATION

By:  /s/ Robert P. Worcester                                                                                                              

Print Name:  Robert P. Worcester                                                                                                         

Title:   Director                                                                                                             

LOS ALAMOS NATIONAL BANK

By:   /s/ Robert P. Worcester                                                                                                              

Print Name:   Robert P. Worcester                                                                                                             

Title:    Director                                                                                                            

JOHN S. GULAS

By:      /s/ John S. Gulas                                                                                                          

John S. Gulas Employment Agreement

June 3, 2014

EXHIBIT A

Agreement and Release and Waiver

This Agreement and Release ("Agreement") is made and entered into by and between Trinity Capital Corporation (the "Company") and [_______________] ("Executive").

Whereas, Executive and the Company desire to settle fully and amicably all issues between them, including any issues arising out of Executive's employment with the Company and the termination of that employment; and

Whereas, Executive and the Company are parties to that certain Employment Agreement, made and entered into as of [_______________], as amended (the "Employment Agreement").

Now, therefore, for and in consideration of the mutual promises contained herein, and for other good and sufficient consideration, receipt of which is hereby acknowledged, Executive and the Company (collectively, the "Parties" and, individually, each a "Party"), intending to be legally bound, hereby agree as follows:

1.            Termination of Employment.  Executive's employment with the Company shall terminate effective as of the close of business on [_______________] (the "Termination Date").

2.            Compensation and Benefits.  Subject to the terms of this Agreement, the Company shall compensate Executive under this Agreement as follows (collectively, the "Severance Payments"):

(a)            Severance Amount.  [_______________].

(b)            Accrued Salary and Vacation.  Executive shall be entitled to a lump sum payment in an amount equal to Executive's earned but unpaid annual base salary and vacation pay for the period ending on the Termination Date, with such payment to be made on the first payroll date following the Termination Date.

(c)            Executive Acknowledgement.  Executive acknowledges that, subject to fulfillment of all obligations provided for herein, Executive has been fully compensated by the Company, including under all applicable laws, and that nothing further is owed to Executive with respect to wages, bonuses, severance, other compensation, or benefits.  Executive further acknowledges that the Severance Payments (other than (b) above) are consideration for Executive's promises contained in this Agreement, and that the Severance Payments are above and beyond any wages, bonuses, severance, other compensation, or benefits to which Executive is entitled from the Company under the terms of Executive's employment or under any other contract or law that Executive would be entitled to absent execution of this Agreement.

(d)            Withholding.  The Severance Payments shall be treated as wages and subject to all taxes and other payroll deductions required by law.

3.            Termination of Benefits.  Except as provided in Section 2 above or as may be required by law, Executive's participation in all employee benefit (pension and welfare) and compensation plans of the Company shall cease as of the Termination Date.  Nothing contained herein shall limit or otherwise impair Executive's right to receive pension or similar benefit payments that are vested as of the Termination Date under any applicable tax-qualified pension or other plans, pursuant to the terms of the applicable plan.

4.            Release of Claims and Waiver of Rights.  Executive, on Executive's own behalf and that of Executive's heirs, executors, attorneys, administrators, successors, and assigns, fully releases and discharges the Company, its predecessors, successors, parents, subsidiaries, affiliates, and assigns, and its and their directors, officers, trustees, employees, and agents, both in their individual and official capacities, and the current and former trustees and administrators of each retirement and other benefit plan applicable to the employees and former employees of the Company, both in their official and individual capacities (the "Releasees") from all liability, claims, demands, and actions Executive now has, may have had, or may ever have, whether currently known or unknown, as of or prior to Executive's execution of this Agreement (the "Release"), including liability claims, demands, and actions:

(a)            Arising from or relating to Executive's employment or other association with the Company, or the termination of such employment,

(b)            Relating to wages, bonuses, other compensation, or benefits,

(c)            Relating to any employment or change in control contract,

(d)            Relating to any employment law, including

		(i)	The United States and State of New Mexico Constitutions,

		(ii)	The Civil Rights Act of 1964,

		(iii)	The Civil Rights Act of 1991,

		(iv)	The Equal Pay Act,

		(v)	The Employee Retirement Income Security Act of 1974,

		(vi)	The Age Discrimination in Employment Act (the "ADEA"),

		(vii)	The Americans with Disabilities Act,

		(viii)	Executive Order 11246, and

		(ix)	Any other federal, state, or local statute, ordinance, or regulation relating to employment,

(e)            Relating to any right of payment for disability,

(f)            Relating to any statutory or contractual right of payment, and

(g)            For relief on the basis of any alleged tort or breach of contract under the common law of the State of New Mexico or any other state, including defamation, intentional or negligent infliction of emotional distress, breach of the covenant of good faith and fair dealing, promissory estoppel, and negligence.

Executive acknowledges that Executive is aware that statutes exist that render null and void releases and discharges of any claims, rights, demands, liabilities, actions, and causes of action that are unknown to the releasing or discharging party at the time of execution of the release and discharge.  Executive waives, surrenders, and shall forego any protection to which Executive would otherwise be entitled by virtue of the existence of any such statutes in any jurisdiction, including the State of New Mexico.

5.            Exclusions from General Release.  Excluded from the Release are any claims or rights that cannot be waived by law, as well as Executive's right to file a charge with an administrative agency or participate in any agency investigation.  Executive is, however, waiving the right to recover any money in connection with a charge or investigation.  Executive is also waiving the right to recover any money in connection with a charge filed by any other individual or by the Equal Employment Opportunity Commission or any other federal or state agency.

6.            Covenant Not to Sue.

(a)            A "covenant not to sue" is a legal term that means Executive promises not to file a lawsuit in court.  It is different from the release of claims and waiver of rights contained in Section 4 above.  Besides waiving and releasing the claims covered by Section 4 above, Executive shall never sue the Releasees in any forum for any reason covered by the Release.  Notwithstanding this covenant not to sue, Executive may bring a claim against the Company to enforce this Agreement, to challenge the validity of this Agreement under the ADEA or for any claim that arises after execution of this Agreement.  If Executive sues any of the Releasees in violation of this Agreement, Executive shall be liable to them for their reasonable attorneys' fees and costs (including the costs of experts, evidence, and counsel) and other litigation costs incurred in defending against Executive's suit.  In addition, if Executive sues any of the Releasees in violation of this Agreement, the Company can require Executive to return all but a sum of $100 of the Severance Payments, which sum is, by itself, adequate consideration for the promises and covenants in this Agreement.  In that event, the Company shall have no obligation to make any further Severance Payments.

(b)            If Executive has previously filed any lawsuit against any of the Releasees, Executive shall immediately take all necessary steps and execute all necessary documents to withdraw or dismiss such lawsuit to the extent Executive's agreement to withdraw, dismiss, or not file a lawsuit would not be a violation of any applicable law or regulation.

7.            Representations by Executive.  Executive warrants that Executive is legally competent to execute this Agreement and that Executive has not relied on any statements or explanations made by the Company or its attorneys.  Executive acknowledges that Executive has been afforded the opportunity to be advised by legal counsel regarding the terms of this Agreement, including the Release.  Executive acknowledges that Executive has been offered at least 21 days to consider this Agreement.  After being so advised, and without coercion of any kind, Executive freely, knowingly, and voluntarily enters into this Agreement.  Executive acknowledges that Executive may revoke this Agreement within seven days after Executive has signed this Agreement and acknowledges understanding that this Agreement shall not become effective or enforceable until seven days after Executive has signed this Agreement (the "Effective Date"), as evidenced by the date set forth below Executive's signature on the signature page hereto.  Any revocation must be in writing and directed to [_______________].  If sent by mail, any revocation must be postmarked within the seven-day period described above and sent by certified mail, return receipt requested.

8.            Restrictive Covenants.  Section 6 of the Employment Agreement (entitled "Restrictive Covenants"), shall continue in full force and effect as if fully restated herein.

9.            Non-Disparagement.  Executive shall not engage in any disparagement or vilification of the Releasees, and shall refrain from making any false, negative, critical, or disparaging statements, implied or expressed, concerning the Releasees, including regarding management style, methods of doing business, the quality of products and services, role in the community, or treatment of employees.  Executive shall do nothing that would damage the Company's business reputation or goodwill.

10.            Company Property.

(a)            Executive shall return to the Company all information, property, and supplies belonging to the Company or any of its affiliates, including any confidential or proprietary information, Company autos, keys (for equipment or facilities), laptop computers and related equipment, cellular phones, smart phones or PDAs (including SIM cards), security cards, corporate credit cards, and the originals and all copies of all files, materials, and documents (whether in tangible or electronic form) containing confidential or proprietary information or relating to the business of the Company or any of its affiliates.

(b)            Executive shall not, at any time on or after the Termination Date, directly or indirectly use, access, or in any way alter or modify any of the databases, e-mail systems, software, computer systems, or hardware or other electronic, computerized, or technological systems of the Company or any of its affiliates.  Executive acknowledges that any such conduct by Executive would be illegal and would subject Executive to legal action by the Company, including claims for damages and/or appropriate injunctive relief.

11.            No Admissions.  The Company denies that the Company or any of its affiliates, or any of their employees or agents, has taken any improper action against Executive, and this Agreement shall not be admissible in any proceeding as evidence of improper action by the Company or any of its affiliates or any of their employees or agents.

12.            Confidentiality of Agreement.  Executive shall keep the existence and the terms of this Agreement confidential, except for Executive's immediate family members and Executive's legal and tax advisors in connection with services related hereto and except as may be required by law or in connection with the preparation of tax returns.

13.            Non-Waiver.  The Company's waiver of a breach of this Agreement by Executive shall not be construed or operate as a waiver of any subsequent breach by Executive of the same or of any other provision of this Agreement.

14.            Governing Law.  This Agreement shall be governed by and construed under the laws of the State of New Mexico, without regard to principles of conflict of laws (whether in the State of New Mexico or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New Mexico.

15.            Legal Fees.  In the event that either Party commences mediation, arbitration, litigation, or any similar action to enforce or protect such Party's rights in accordance with and under this Agreement, the prevailing Party in any such action shall be entitled to recover reasonable attorneys' fees and costs (including the costs of experts, evidence, and counsel) and other costs relating to such action, in addition to all other entitled relief, including damages and injunctive relief.

16.            Entire Agreement.  This Agreement sets forth the entire agreement of the Parties regarding the subject matter hereof, and shall be final and binding as to all claims that have been or could have been advanced on behalf of Executive pursuant to any claim arising out of or related in any way to Executive's employment with the Company and the termination of that employment.

17.            Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.

18.            Successors.  This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns.

19.            Enforcement.  The provisions of this Agreement shall be regarded as divisible and separable and if any provision should be declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remaining provisions shall not be affected thereby.  If the scope of any restriction or requirement contained in this Agreement is too broad to permit enforcement of such restriction or requirement to its full extent, then such restriction or requirement shall be enforced to the maximum extent permitted by law, and Executive hereby consents that any court of competent jurisdiction may so modify such scope in any proceeding brought to enforce such restriction or requirement.  In addition, Executive stipulates that breach by Executive of restrictions and requirements under this Agreement will cause irreparable damage to the Releasees in the case of Executive's breach and that the Company would not have entered into this Agreement without Executive binding Executive to these restrictions and requirements.  In the event of Executive's breach of this Agreement, in addition to any other remedies the Company may have, and without bond and without prejudice to any other rights and remedies that the Company may have for Executive's breach of this Agreement, the Company shall be relieved of any obligation to provide Severance Payments and shall be entitled to an injunction to prevent or restrain any such violation by Executive and all persons directly or indirectly acting for or with Executive.  Executive stipulates that the restrictive period for which the Company is entitled to an injunction shall be extended in for a period that equals the time period during which Executive is or has been in violation of the restrictions contained herein.

20.            Construction.  In this Agreement, unless otherwise stated, the following uses apply: (a) references to a statute refer to the statute and any amendments and any successor statutes, and to all regulations promulgated under or implementing the statute, as amended, or its successors, as in effect at the relevant time; (b) in computing periods from a specified date to a later specified date, the words "from" and "commencing on" (and the like) mean "from and including, " and the words "to," "until," and "ending on" (and the like) mean "to, and including"; (c) references to a governmental or quasi-governmental agency, authority, or instrumentality also refer to a regulatory body that succeeds to the functions of the agency, authority, or instrumentality; (d) indications of time of day are based upon the time applicable to the location of the principal headquarters of the Company; (e) the words "include," "includes," and "including" (and the like) mean "include, without limitation," "includes, without limitation," and "including, without limitation," (and the like) respectively; (f) all references to preambles, recitals, sections, and exhibits are to preambles, recitals, sections, and exhibits in or to this Agreement; (g) the words "hereof," "herein," "hereto," "hereby," "hereunder," (and the like) refer to this Agreement as a whole (including exhibits); (h) any reference to a document or set of documents, and the rights and obligations of the parties under any such documents, means such document or documents as amended from time to time, and all modifications, extensions, renewals, substitutions, or replacements thereof; (i) all words used shall be construed to be of such gender or number as the circumstances and context require; (j) the captions and headings of preambles, recitals, sections, and exhibits appearing in or attached to this Agreement have been inserted solely for convenience of reference and shall not be considered a part of this Agreement, nor shall any of them affect the meaning or interpretation of this Agreement or any of its provisions; and (k) all accounting terms not specifically defined herein shall be construed in accordance with GAAP.

21.            Future Cooperation.  In connection with any and all claims, disputes, negotiations, governmental, internal or other investigations, lawsuits, or administrative proceedings (the "Legal Matters") involving the Company or any affiliate, or any of their current or former officers, employees or board members (collectively, the "Disputing Parties" and, individually, each a "Disputing Party"), Executive shall make himself reasonably available, upon reasonable notice from the Company and without the necessity of subpoena, to provide information and documents, provide declarations and statements regarding a Disputing Party, meet with attorneys and other representatives of a Disputing Party, prepare for and give depositions and testimony, and otherwise cooperate in the investigation, defense, and prosecution of any and all such Legal Matters, as may, in the good faith and judgment of the Company, be reasonably requested.  The Company shall consult with Executive and make reasonable efforts to schedule such assistance so as not to materially disrupt Executive's business and personal affairs.  The Company shall reimburse all reasonable expenses incurred by Executive in connection with such assistance, including travel, meals, rental car, and hotel expenses, if any; provided such expenses are approved in advance by the Company and are documented in a manner consistent with expense reporting policies of the Company as may be in effect from time to time.

In witness whereof, the Parties have duly executed this Agreement as of the dates set forth below their respective signatures below.

TRINITY CAPITAL CORPORATION

By:                                                                                                                

Print Name:                                                                                                                

Title:                                                                                                                

Date:                                                                                                                

[EXECUTIVE]

By:                                                                                                                

Print Name:                                                                                                                

Date:                                                                                                                

897625.v2

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