Document:

Exhibit

AMENDED AND RESTATED CONFIDENTIALITY, NON-COMPETITION, AND 
NON-SOLICITATION AGREEMENT
This Amended and Restated Confidentiality, Non-Competition, and Non-Solicitation Agreement (“Agreement”) is made and entered into this 13th day of December 2019 by and between Sound Community Bank, a Washington corporation (the “Company”), and Laura Lee Stewart (the “Employee”). This Agreement amends and restates the Confidentiality, Non-Competition, and Non-Solicitation Agreement between the Company and the Executive as originally adopted effective December 30, 2011, as amended and restated on November 23, 2015 and January 25, 2019 (the “Prior Agreement”).

WHEREAS the Employee is a key member of the management of the Company and has provided guidance, leadership, and direction in the growth, management, and development of the Company and has learned trade secrets, confidential procedures and information, and sensitive business plans of the Company; 
WHEREAS the Company desires to continue to employ the Employee, and the Employee desires to continue employment with the Company;
WHEREAS the Company desires to restrict, after the Employee’s Separation from Service with the Company, the Employee’s availability to other companies or entities that compete with the Company;

WHEREAS, the Company desires to amend and restate the Prior Agreement in order to comply with Engrossed Substitute House Bill 1450, which was signed into law on May 8, 2019 and which governs non-competition agreements in the State of Washington; and

WHEREAS the Employee agrees to undertake such post-employment restrictions in exchange for the severance payments described herein;

NOW THEREFORE, in consideration of these premises, the mutual promises and undertakings set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Employee and the Company hereby agree as follows.

1.    DEFINITIONS.  As used in this Agreement, certain terms shall have the following meanings:
		
	a.
	Affiliate shall mean the Company and any entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Company.  

		
	b.
	Cause shall mean and be limited to:  (i) willful and gross neglect of duties by the Employee, (ii) an act or acts committed by the Employee constituting a felony and substantially detrimental to the Company or its reputation, (iii) any action or inaction detrimental to the Company or its reputation that results in regulatory enforcement action, whether or not such enforcement action is subject to direct enforcement under 12 U.S.C § 1818(i)(l), by any regulatory authorities having authority over the Company, (iv) any regulatory or other finding, action or directive requiring Employee’s termination of employment pursuant to any applicable statue, rule or regulation; and/or (v) any violation of Employee’s 

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obligations under this Agreement, including, without limitation, the obligations set forth in paragraphs 3, 4, 6 and 7.  
		
	c.
	Change in Control shall mean a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, as such change is defined under the default definition in Treasury Regulation §1.409A-3(i)(5) or any subsequently applicable Treasury Regulation.  

		
	d.
	Code shall mean the Internal Revenue Code of 1986, as amended, or any successor statute, rule or regulation of similar effect.

		
	e.
	Customer shall mean any individual, joint venturer, entity of any sort, or other business partner of the Company or its Affiliates with, for, or to whom the Company or its Affiliates have provided financial products or services during the final two years of the Employee’s employment with the Company, or any individual, joint venturer, entity of any sort, or business partner whom the Company or any of its Affiliates has identified as a prospective customer of financial products or services within the final year of the Employee’s employment with the Company or any of its Affiliates.

		
	f.
	Disability or Disabled means the Employee:  (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, is receiving income replacement benefits for a period of not less than three (3) months under a disability plan covering employees of the Company.

		
	g.
	Financial products or services shall mean any product or service that a financial institution or a financial holding company could offer by engaging in any activity that is financial in nature or incidental to such a financial activity under Section 4(k) of the Bank Holding Company Act of 1956 and that is offered by the Company or an Affiliate on the date of the Employee’s Separation from Service, including but not limited to banking activities and activities that are closely related and a proper incident to banking, or other products or services of the type in which the Employee was involved during the Employee’s employment with the Company.

		
	h.
	Good Reason shall mean and be limited to:  (i) without the Employee’s express written consent, a material diminution in authority, duties or responsibilities, except as required by any regulatory or other finding, action or directive pursuant to any applicable statute, rule or regulation; (ii) any material reduction by the Company in the Employee’s Base Salary; (iii) any failure of the Company to obtain the assumption of, or the agreement to perform, this Agreement by any successor as contemplated in paragraph 15 hereof; (iv) the Company’s material breach of this Agreement; or (v) the Company requiring the Employee to be permanently assigned to a location more than 35 miles from Employee’s current work location, except for required travel on Company business, or, in the event the Employee consents to any relocation, and such relocation is more than 35 miles from the Employee’s previous location, the failure by the Company to pay (or reimburse the Employee) for all reasonable moving expenses incurred by the Employee relating to a change of the Employee’s principal residence in connection with such relocation and to 

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indemnify the Employee against any loss realized on the sale of the Employee’s principal residence in connection with any such change of residence. Good Reason shall be deemed to occur only when Employee provides written notice to the Company of Employee’s judgment that a Good Reason event has occurred within 90 days of such occurrence, and the Company will have at least 30 days during which it may remedy the condition.
		
	i.
	Specified Employee means an employee who at the time of termination of employment is a key employee of the Company, if any stock of Sound Financial is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5)) at any time during the 12-month period ending on December 31 (the “identification period”). If the employee is a key employee during an identification period, the employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of January following the close of the identification period.

		
	j.
	Sound Financial shall mean Sound Financial Bancorp, Inc., the parent holding company of the Company. 

		
	k.
	Voluntary Termination shall mean the termination by Employee of Employee’s employment, which is not the result of Good Reason.

		
	l. 
	By way of clarification, when used in this Agreement, the terms "Separation from Service," "separation from service," "termination of employment," "terminates  employment" and similar phrases in each case shall mean a "Separation  from Service" as defined in Treasury Regulation §1.409A-l(h), taking into account all of the facts and circumstances, special rules and presumptions set forth in such regulation.

2.    TERM.  The term of this Agreement shall commence upon the date the Employee has a Separation from Service and shall continue for a period of 18 months following the date of such Separation from Service, with such term referred to herein as the “Restricted Period.” 

3.    NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.  Except as permitted in writing by the Company, the Employee shall not at any time divulge, furnish or make accessible to anyone, or use in any way other than in the ordinary course of the business of the Company or its Affiliates, any confidential, proprietary or secret knowledge or information of the Company or its Affiliates that the Employee has acquired or will acquire about the Company or its Affiliates, whether developed by herself or by others, concerning (i) any trade secrets; (ii) any confidential, proprietary or secret designs, programs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of the Company or of its Affiliates; (iii) any customer or supplier lists; (iv) any confidential, proprietary or secret development or research work; (v) any strategic or other business, marketing or sales plans; (vi) any financial data or plans; or (viii) any other confidential, proprietary or secret information about any aspect of the business of the Company or of its Affiliates (collectively “Confidential Information”). The Employee acknowledges that the knowledge and information described above constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company or its Affiliates would be wrongful and would cause irreparable harm to the Company. The Employee shall not intentionally commit any act that would materially reduce the value of such knowledge or information to the Company or its 

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Affiliates. The Employee's obligations under this Agreement to maintain the confidentiality of the Company's confidential, proprietary, and secret information are in addition to any obligations of the Employee under applicable statutory or common law . The obligations of the Employee under this paragraph 3 shall survive the termination of this Agreement and the termination of the Employee’s employment with the Company.
		
	a.
	Exceptions.  The foregoing obligations of confidentiality shall not apply to any knowledge or information that:  (i) is now or subsequently becomes generally publicly known, other than as a direct or indirect result of the breach of this Agreement; (ii) is independently made available to the Employee in good faith by a third party who has not violated a confidential relationship with the Company or its Affiliates or any other entity; or (iii) is required to be disclosed by law or legal process. Notwithstanding anything to the contrary herein, the parties hereto agree that nothing contained in this Agreement limits the Employee’s ability to report information to or file a charge or complaint with the Equal Employment Opportunity Commission, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System or any other federal, state or local governmental agency or commission that has jurisdiction over the Company or any Affiliate (the “Government Agencies”). The Employee further understands that this Agreement does not limit his ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company and/or any Affiliate. This Agreement does not limit the Employee’s right to receive an award for information provided to any Government Agencies. In addition, pursuant to the Defend Trade Secrets Act of 2016, the Employee understands that an individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding.  Further, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the employer's trade secrets to the attorney and use the trade secret information in the court proceeding if the individual (y) files any document containing the trade secret under seal; and (z) does not disclose the trade secret, except pursuant to court order.  

4.    NON-COMPETITION AND NON-SOLICITATION.  

		
	a.
	Non-Competition Obligations.  For and in consideration of the payments described in paragraph 5, the Employee shall not, during the Restricted Period, either separately, jointly or in association with others, directly or indirectly, as an agent, employee, owner, partner, stockholder or otherwise, compete with the Company or any of its Affiliates, or establish, engage in, or become interested in any business, trade or occupation that competes with the Company or any of its Affiliates, in the financial products or services industry (a “Competing Entity”), if such Competing Entity has an office in (i) any county in which the Company or any Affiliate has an office or (ii) any county adjacent to any of the counties covered by clause (i). The Company and the Employee acknowledge that, during the term of the Employee’s employment, the Employee has acquired special and confidential knowledge regarding the operations of the Company and its Affiliates. Furthermore, although not a term or condition of this Agreement, the Company and the Employee 

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acknowledge that the Employee’s services have been used and are being used by the Company in executive, managerial, and supervisory capacities throughout the areas in which the Company and its Affiliates conduct business. Employee acknowledges that the non-compete restrictions contained herein are reasonable and fair in scope and necessary to protect the legitimate business interests of the Company.
		
	b.
	Non-Solicitation Obligations.  For and in consideration of the payments described in paragraph 5, the Employee shall not, during the Restricted Period:  (a) directly or indirectly solicit or attempt to solicit any customer of the Company or any of its Affiliates to accept or purchase financial products or services of the same nature, kind or variety currently being provided to the customer by the Company or any of its Affiliates, or being provided to the customer by the Company or any of its Affiliates when the Employee’s Separation from Service occurs; (b) directly or indirectly influence or attempt to influence any customer, joint venturer or other business partner of the Company or any of its Affiliates to alter that person or entity’s business relationship with the Company or any of its Affiliates in any way; and/or (c) accept the financial products or services business of any customer or provide financial products or services to any customer on behalf of anyone other than the Company or its Affiliates. In addition, the Employee shall not solicit or attempt to solicit and shall not encourage or induce in any way any employee, joint venturer or business partner of the Company or any of its Affiliates to terminate an employment or contractual relationship with the Company or any of its Affiliates, and shall not hire any person employed by the Company or any of its Affiliates during the two (2)-year period immediately before the Employee’s employment termination or any person employed by the Company or any of its Affiliates during the term of this covenant.

		
	c.
	Duration; no impact on existing obligations under law or contract.  The covenants in this paragraph 4 shall apply throughout the Restricted Period.  The Restricted Period referenced herein shall be tolled and shall not run during any period of time the Employee is in breach of this Agreement and/or in violation of any of the covenants contained herein, and once tolled hereunder shall not begin to run again until such time as all such breach and/or violations have ceased. The Employee acknowledges and agrees that nothing in this Agreement is intended to or shall have any impact on the Employee’s obligations as an officer or employee of the Company to refrain from competing against the Company or any of its Affiliates, soliciting customers, officers or employees of the Company or any of its Affiliates, or disclosing confidential information of the Company or any of its Affiliates while the Employee is serving as an officer or employee of the Company or thereafter, whether the Employee’s obligations arise under applicable statutory or common law, under an employment agreement, or otherwise.

		
	d.
	Forfeiture of payments under this Agreement.  If the Employee breaches any of the covenants in this paragraph 4, the Employee’s right to any of the payments specified in paragraph 5 after the date of the breach shall be forever forfeited and the right of the Employee’s designated beneficiary or estate to any payments under this Agreement shall likewise be forever forfeited. This forfeiture is in addition to and not instead of any injunctive or other relief that may be available to the Company. The Employee further acknowledges and agrees that any breach of any of the covenants in paragraphs 3, 4 and 7 shall be deemed a material breach by the Employee of this Agreement.

5.    NON-COMPETITION AND NON-SOLICITATION PAYMENTS.  

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	a.
	Payments.  In consideration of the Employee’s non-competition and non-solicitation obligations, as described in paragraph 4, the Company shall pay to the Employee:

		
	(i)
	Upon the termination of Employee’s employment by the Company for Cause or upon a Voluntary Termination of Employment by the Employee, except for a Termination for Good Reason, a bi-monthly payment, in an amount equal to $3,541.67, which amount shall be paid in equal bi-monthly payments during the Restricted Period beginning on the fifth day of the month following the Employee’s Separation from Service; or

		
	(ii)
	Except as set forth in paragraph 5(c) below, upon the Employee’s Separation from Service for any reason other than those set forth in subparagraph (a)(i) above, an amount equal to 1.5 times the sum of (a) the annual rate of base salary then being paid to the Employee, plus (b) the average of the short-term bonuses paid to the Employee for the three years preceding the Employee’s Separation from Service, which amount shall be paid in 12 equal monthly payments beginning on the first day of the month following the Employee’s Separation from Service. 

		
	(iii)
	Notwithstanding (i) and (ii) above, in the event the Employee has an involuntary Separation from Service including Good Reason that occurs within 24 months immediately following a Change in Control, the Employee shall receive an amount equal to the amount determined in (ii) above to be paid in a lump sum within 10 business days following the date of such involuntary Separation from Service.

		
	b.
	Potential six-month delay under Section 409A.  If, when Separation from Service occurs, the Employee is a specified employee within the meaning of Section 409A of the Code, and if the non-competition payments under this paragraph 5 would be considered deferred compensation under Section 409A of the Code, and finally if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available, the Employee’s non-competition payments for the first six months following Separation from Service shall be paid to the Employee in a single lump sum on the first day of the seventh month after the month in which the Employee’s Separation from Service occurs.

		
	c.
	Death and Disability.  Notwithstanding anything herein to the contrary, no amounts are payable under this Agreement in the event of the Employee’s Separation from Service as a result of death or Disability. Further, all payments under this Agreement shall cease upon the Employee’s death.

		
	d.
	Employee’s Ineligibility to Work in Financial Products or Services Industry.  Notwithstanding anything herein to the contrary, no amounts are payable under this Agreement in the event of a regulatory or other finding, action or directive resulting in the Employee’s ineligibility to work in the financial products or services industry (as defined in paragraph 1(g) above) pursuant to any applicable statute, rule or regulation.

  6.     CONSULTING AND ADVISORY SERVICES.

		
	 a.
	Services to be Provided by the Employee.  Upon her Separation from Service with the Company and continuing for the Restricted Period, the Employee shall provide consulting and advisory services to the Company and any of its Affiliates with regard to the following matters:

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A.     Shareholder and investor relations;

B.     Legislative and regulatory developments impacting the Company;

C.    The market area and customers served by the Company;

D.     The business of financial institutions and their affiliates generally; and

E.     Such other matters as may be requested by the President of the
Company from time to time.

		
	 b.
	Time Commitment, Status and Responsibilities the Employee.  The Employee shall make herself available to provide the above consulting services, at the request of the Company, for a maximum of 25 hours per month.  Such services shall be provided by the Employee at places and times as the Company and the Employee shall agree. The Employee shall have the status of independent contractor and nothing in this Agreement shall:  (i) be construed or interpreted as creating a relationship  of employer and employee or principal and agent between the Employee and the Company; (ii) give either party the power to direct and control the day-to-day activities of the other; (iii) constitute the parties as partners, joint venturers or otherwise; or (iv) allow the Employee to create or assume any obligation on behalf of the Company for any purpose whatsoever.  The Employee will not be entitled to any employee benefits during the Restricted Period as a result of this Agreement or the Prior Agreement. The Employee shall be responsible for paying all income taxes and other taxes owed by the Employee on amounts paid to the Employee pursuant to this Agreement. The Employee shall be responsible for keeping third persons appropriately informed of her inability to act in any way on behalf of the Company.  During the Restricted Period, the Employee shall adhere to the Code of Business Conduct and Ethics of the Company.

		
	c. 
	Title.  The Company and the Employee shall agree to an appropriate title for the Employee during the Restricted Period.

		
	d. 
	Responsibilities of the Company.  During the Restricted Period, the Company shall provide the Employee, on the premises of the Company, with an office, computer, telephone and appropriate supplies and secretarial assistance necessary or appropriate for the Employee to perform the consulting services enumerated above.  The Company shall provide the Employee with an email address utilizing the domain name of the Company.

		
	e. 
	Compensation. The Employee shall not receive any additional compensation beyond that provided for in the Agreement for performing the consulting services enumerated in this Agreement, it being expressly agreed that her use of office space, a computer, telephone, supplies and secretarial assistance shall constitute adequate consideration for her services hereunder.

7.    RETURN OF RECORDS AND PROPERTY.  Upon the Employee's Separation from Service for any reason, or at any time upon the Company's request, the Employee shall promptly deliver to the Company all Company and Affiliate records and all Company and Affiliate property in the 

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Employee’s possession or the Employee’s control, including without limitation manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, printouts, computer disks, computer tapes, source codes, data, tables or calculations, and all copies thereof; documents that in whole or in part contain any Confidential Information of the Company or its Affiliates and all copies thereof; and keys, access cards, access codes, passwords, credit cards, personal or laptop computers, telephones, PDAs, smart phones, and other electronic equipment belonging to the Company or an Affiliate.
8.    REMEDIES.  Employee agrees that if Employee fails to fulfill Employee’s obligations under this Agreement, including, without limitation, the Non-Competition and Non-Solicitation obligations set forth in paragraph 4, the damages to the Company or any of its Affiliates would be very difficult or impossible to determine.  Therefore, in addition to any other rights or remedies available to the Company at law, in equity or by statute, Employee hereby consents to the specific enforcement by the Company of this Agreement through an injunction or restraining order issued by an appropriate court, without the necessity of proving actual damages, and Employee hereby waives as a defense to any equitable action the allegation that the Company has an adequate remedy at law.  The provisions of this paragraph shall not diminish the right of the Company to claim and recover damages or to obtain any equitable remedy in addition to injunctive relief to which the Company may otherwise be entitled.  The Employee understands and agrees that the Employee will also be responsible for all costs and attorney’s fees incurred by the Company in enforcing any of the provisions of this Agreement including, but not limited to, expert witness fees and deposition costs.  
9.    SEVERABILITY.  If, for any reason, any paragraph or portion of this Agreement shall be held by a court to be invalid or unenforceable, it is agreed that such holding shall not affect any other section or portion of this Agreement. The covenants in paragraph 4(a) with respect to the geographic area shall be deemed to be separate covenants with respect to each county, and should any court of competent jurisdiction conclude or find that this Agreement or any portion is not enforceable with respect to a particular county, such conclusion or finding shall in no way render invalid or unenforceable the covenants herein with respect to any other county.   If the final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.  If such court does not have the legal authority to take the actions described in the preceding sentence, the parties agree to negotiate in good faith a modified provision that would, in so far as possible, reflect the original intent of this Agreement, including without limitation paragraph 4 hereof, without violating applicable law.
10.    ENTIRE AGREEMENT.  This Agreement constitutes the entire agreement between Company and the Employee concerning the subject matter of confidentiality, non-competition and non-solicitation and supersedes all prior agreements between the parties with respect to the subject matter hereof, including, without limitation, the Management/Employment Agreement, executed February 27, 2007 and amended August 27, 2007, and the Prior Agreement. For clarification purposes, nothing contained herein shall supersede the Amended and Restated Supplemental Executive Retirement Plan Agreement between the Company and the Employee originally adopted December 30, 2011 and most recently amended and restated as of November 23, 2015 (the “2011 SERP”) or the Amended and Restated Executive Long Term Compensation Agreement between the Company and the Employee originally 

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adopted effective August 14, 2007 and most recently amended and restated as of November 23, 2015. No rights are granted to the Employee under this Agreement other than those specifically set forth herein.
11.    NO EMPLOYMENT AGREEMENT.  This Agreement is not an employment policy or contract. It does not give the Employee the right to remain an employee of the Company, nor does it interfere with the Company’s right to discharge the Employee. It also does not require the Employee to remain an employee or interfere with the Employee’s right to separate from service at any time.

12.    AMENDMENTS.  The parties agree that no modification of the Agreement may be made except by means of a written agreement signed by the parties.  However, if the Company determines to its reasonable satisfaction that an alteration or amendment of this Agreement is necessary or advisable so that the Agreement complies with the Code or any other applicable tax law, then, upon written notice to Employee, the Company may unilaterally amend this Agreement in such manner and to such extent as the Company reasonably considers necessary or advisable to ensure compliance with the Code or other applicable tax law. Nothing in this paragraph shall be deemed to limit the Company’s right to terminate this Agreement at any time and without stated cause.
13.    ASSIGNMENT OF RIGHTS; SPENDTHRIFT CLAUSE.  None of the Employee, the Employee’s estate or the Employee’s beneficiary shall have any right to sell, assign, transfer, pledge, attach, encumber or otherwise convey the right to receive any payment hereunder. To the extent permitted by law, benefits payable under this Agreement shall not be subject to the claim of any creditor of the Employee, the Employee’s estate, or the Employee’s designated beneficiary or subject to any legal process by any creditor of the Employee, the Employee’s estate or the Employee’s designated beneficiary.
14.    BINDING EFFECT.  This Agreement shall bind the Employee, the Company and their beneficiaries, survivors, executors, successors and assigns, administrators and transferees.
15.    SUCCESSORS; BINDING AGREEMENT.  By an assumption agreement in form and substance satisfactory to the Employee, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform this Agreement had no succession occurred.
16.    TAX WITHHOLDING.  If taxes are required by the Code or other applicable tax law to be withheld by the Company from payments under this Agreement, the Company shall withhold any taxes that are required to be withheld.

17.    GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of Washington.

18.    NOTICES.  All notices, requests and demands given to or made pursuant hereto shall be in writing and shall be delivered or mailed to any such party at its address which:

		
	a.
	In the case of the Company shall be:

Sound Community Bank
2005 5th Avenue, Second Floor
Seattle, WA 98121
Attention:  Human Resources

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	b.
	In the case of the Employee shall be:

Laura Lee Stewart
At her last address on
file with the Employer

Either party may, by notice hereunder, designate a changed address. Any notice, if mailed properly addressed, postage prepaid, registered or certified mail, shall be deemed to have been given on the registered date or that date stamped on the certified mail receipt.

19.    SEVERABILITY.  In the event that any portion of this Agreement is held to be invalid or unenforceable for any reason, it is hereby agreed that such invalidity or unenforceability shall not affect the other portions of this Agreement and that the remaining covenants, terms and conditions or portions hereof shall remain in full force and effect, and any court of competent jurisdiction may so modify the objectionable provision as to make it valid, reasonable and enforceable.

20.    RELEASE OF CLAIMS.  Notwithstanding the foregoing provisions of this Agreement, the Company will not be obligated to make any payments to the Employee under this Agreement unless the Employee has signed a release of claims in favor of the Company and its Affiliates in a form to be prescribed by the Company, and all applicable consideration and rescission periods provided by law have expired. Notwithstanding any other provision contained in this Agreement, in the event the time period that the Employee has to consider the terms of such general release (including any revocation period under such release) commences in one calendar year and ends in the succeeding calendar year, then the payments shall not commence until the succeeding calendar year.
21.    COMPLIANCE WITH CODE SECTION 409A.  The Company and the Employee intend that their exercise of authority or discretion under this Agreement shall comply with Section 409A of the Code. The payments under paragraph 5 of this Agreement shall be deemed exempt from Section 409A of the Code to the fullest extent possible in reliance upon the separation pay plan exemption and/or the short-term deferral exemption.  Notwithstanding anything herein to the contrary in this Agreement, to the extent that any benefit under this Agreement that is nonqualified deferred compensation (within the meaning of Section 409A of the Code) payable upon Employee’s termination of employment, such payment(s) shall be made only upon Employee’s “Separation from Service” pursuant to the default definition in Treasury Regulation Section 1.409A-1(h). To the extent permitted by Section 409A, amounts payable under paragraph 5 which are considered deferred compensation shall be treated as payable after amounts which are not considered deferred compensation (i.e., which are exempt from Section 409A of the Code).
(Signature page follows)
    

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
            
	
				
	Date: December 13, 2019
	By:
	/s/ Laura Lee Stewart
	 

	 
	 
	Laura Lee Stewart
	 

	 
	 
	 
	 

	
				
	Accepted for Sound Community Bank:
	 

	 
	 
	 
	 

	Date: December 13, 2019
	By:
	/s/ Tyler Myers
	 

	 
	 
	Tyler Myers
	 

	 
	Its:
	Chairman of the Board
	 

11Exhibit
10.1

 

CONFIDENTIAL
SEVERANCE AND RELEASE AGREEMENT 

 

This
Confidential Severance and Release Agreement (the “Severance Agreement”) is entered into as of the Effective
Date (as that term is defined herein), by and between Gino Mauriello (“Executive”) and CipherLoc Corporation,
a Texas corporation (the “Company”). The signatories to this Agreement will be referred to collectively
as the “Parties” and individually as a “Party”.

 

WHEREAS,
Executive has been employed by the Company as its Chief Financial Officer since May 19, 2019, pursuant to the terms of that
certain Employment Agreement made by and between the Parties, dated May 19, 2019 (the “Employment Agreement”);

 

WHEREAS,
pursuant to the terms of the Employment Agreement, the Company and Executive have agreed that the Executive shall resign from
the Company, effective December 13, 2019 (the “Termination Date”); and

 

WHEREAS,
Executive and the Company desire, pursuant to the terms and conditions of this Severance Agreement, to enter into this Severance
Agreement to set forth the Parties’ rights and obligations existing as of and after the Termination Date.

 

NOW
THEREFORE, in consideration of the premises, the mutual promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Executive and the Company hereby AGREE AS FOLLOWS:

 

1.
Release and Waiver Agreement. Executive acknowledges and understands that this Severance Agreement is a release and
waiver contract, and that this document is legally binding. The Parties acknowledge and understand that this Agreement applies
only to claims which accrue or have accrued prior to the Effective Date.

 

2.
Termination/Resignation as Board Member. Executive and the Company acknowledge that Executive’s employment with
the Company shall be deemed to have terminated on the Termination Date. Additionally, in return for the Company’s execution
of this Severance Agreement, Executive hereby waives any notice of termination obligations set forth in the Employment Agreement.
Additionally, to the extent the Employee serves as a member of the Company’s Board of Directors (the “Board”),
Employee agrees to resign from that position no later than twenty-four (24) hours after the Delivery Date (defined below) and,
further, he agrees to execute any documents provided by the Company to effectuate such resignation.

 

3.
Time is of the Essence; Review Period; Revocation Period. Time is of the essence, as Executive and his counsel have
had notice by the Company for a negotiated severance prior to initiating a termination for cause. Executive understands that he
has until December 16, 2019 to decide whether or not to sign this Severance Agreement (the “Consideration Period”),
during which time Executive may seek his own counsel. The Parties agree that any changes to this Severance Agreement after the
Delivery Date, whether material or immaterial, will not restart the running of the Consideration Period. Executive can accept
this Agreement at any time before December 16, 2019 date by signing and returning it to the attention of Andrew Borene, by electronic
mail (to andrew@cipherloc.net). Employee acknowledges and understands that he may revoke or cancel his acceptance of this Severance
Agreement by so notifying Andrew Borene by electronic mail (to andrew@cipherloc.net) before December 16, 2019 (the “Revocation
Period”). Executive understands and acknowledges that, if he revokes his acceptance of this Severance Agreement
within the Revocation Period, he will not receive any of the consideration set forth in this Severance Agreement, and this Severance
Agreement will be void. If Executive does not revoke his acceptance within the Revocation Period, this Severance Agreement will
become effective and enforceable on the calendar day after Executive returns an executed version of the Severance Agreement to
Andrew Borene (the “Effective Date”).

 

    	Confidential and Severance Agreement	Page 1 of 10

     

    

 

4.
Separation Consideration to Executive. In exchange for the promises made, covenants contained, and consideration provided
by Executive in this Severance Agreement, and for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company agrees to provide the following monetary benefits and other consideration to Executive:

 

A.
The Company agrees to make one single payment to Executive in the amount of $50,000.00, less deductions for applicable taxes,
due on the next regularly scheduled payroll date following the Effective Date or December 31, 2019, whichever date is later. This
single payment is final and includes consideration and repayment by the Company for any outstanding expenses claimed by employee.

 

B.
The consideration referenced in Section 4(A) shall be referred to herein as the “Separation Consideration”.
The Parties agree that the Company’s obligation to provide Separation Consideration, including any portion of the payments
referenced therein but not yet paid to him, will cease, and any of the Separation Consideration paid pursuant to this Severance
Agreement must be immediately returned to the Company, if Executive engages in any action or conduct that violates any of the
terms of this Severance Agreement. If Executive takes any legal action to challenge the enforceability of this Severance Agreement
for any reason, including without limitation, that Executive did not knowingly or voluntarily enter into this Severance Agreement,
Executive agrees that he will first return to the Company the full amount of any portion of the Separation Consideration received
by him under this Severance Agreement.

 

C.
Executive acknowledges that the Separation Consideration does not constitute an “exit incentive or other employment
termination program offered to a group or class of employees” within the meaning of federal law. Moreover, Executive acknowledges
that the Separation Consideration represents good and sufficient consideration for the promises set forth in Section 5,
as well as any and all attorneys’ fees, expenses, costs of court and any other unknown fees, costs and/or expenses incurred
by Executive or his counsel in connection with Executive’s departure from the Company.

 

D.
Executive acknowledges that the Separation Consideration represents good and sufficient consideration for the promises made
by him and set forth in this Severance Agreement. Executive further acknowledges and agrees that the Separation Consideration
represents compensation to which Executive would not otherwise be entitled to receive except for his execution and non-revocation
of this Severance Agreement.

 

E.
The Company hereby agrees to hold harmless and indemnify Executive to the fullest extent permitted by law and/or the organizational
documents of the Company, as such may be amended from time to time, for acts or omissions arising from Executive’s service
as a director, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

 

    	Confidential and Severance Agreement	Page 2 of 10

     

    

 

5.
Consideration to the Company. In exchange for the promises made, covenants contained, and consideration provided by
the Company in this Severance Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Executive agrees to the following terms: 

 

A.
Final Wages and Expense Reimbursement. Executive acknowledges and agrees that he has received all wages, bonuses, commission
payments, and vacation and/or paid-time off payments due him for work performed through the Termination Date and, further, that
as of the Termination Date, he has received reimbursement for any and all business expenses incurred during and in connection
with his employment with the Company. Executive further affirms and agrees that he is waiving any rights under the terms of the
Employment Agreement to receive any bonuses or paid vacation that may have accrued as of the Termination Date. Executive further
affirms and agrees that he is not entitled to any rights of indemnity under the terms of the Employment Agreement.

 

B.
Releases.

 

(1)
General Release by Executive. Executive, individually and on behalf of his descendants, dependents, heirs, executors,
trustees, administrators, assigns, and successors, knowingly and voluntarily releases and forever discharges the Released Parties
(as defined below) from any and all manner of action or actions, cause or causes of action, suits, debts, contracts, agreements,
promises, liability, claims, demands, damages payments, compensation, loss, cost, or expense, of any nature whatsoever, known
or unknown, in law or in equity (hereinafter “Claims”), which
Executive now has or may have against the Company, its divisions, subsidiaries, and related or affiliated entities, and each of
their associates, owners, representatives, trustees, shareholders, members, directors, officers, partners, employees, insurers,
contractors, agents, and attorneys, past or present, and all persons acting by, through, under, or in concert with any of them,
and all predecessors, successors, and assigns thereof (collectively the “Released
Parties”) arising out of, based upon, or indirectly or directly related to any matter, cause, or thing that
occurs, accrues, or otherwise exists on or before the Effective Date of this Agreement. Claims released by Executive include,
without limitation, claims relating to or arising out of (i) Executive’s hiring, compensation, benefits, and employment
with the Company; (ii) Executive’s separation of employment from the Company; (iii) any salary, claimed bonus or any other
compensation or reimbursement payments, and (iv) all Claims arising out of Executive’s employment, known or unknown, that
could or have been asserted by him against the Company, at law or in equity, or sounding in contract, express or implied, (including
breach of or any rights under any agreement to which Executive, on the one hand, and the Company, on the other hand, are parties),
sounding in tort, and any and all fraud-based Claims. Claims released specifically include, but are not limited to, any Claims
arising under any federal, state, or local laws of any jurisdiction that prohibit age, sex, race, national origin, color, disability,
religion, veteran, military status, sexual orientation, or any other form of discrimination, harassment, or retaliation, including,
without limitation, all Claims under the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621, et seq. (the
“ADEA”), the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the Rehabilitation
Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. §1981, the Civil Rights Act of 1991, the Civil Rights
Act of 1866 and/or 1871, the Sarbanes Oxley Act, the Occupational Safety and Health Act, the Uniform Services and Employment and
Re- Employment Rights Act, the Worker Adjustment Retraining Notification Act, the Lilly Ledbetter Act, the Genetic Information
and Nondiscrimination Act, the Employment Non-Discrimination Act, the National Labor Relations Act, the retaliation provisions
of the Fair Labor Standards Act, the Labor Management Relations Act, and any other similar or equivalent federal, state, or local
laws, all as amended; all Claims under any federal, state, local, municipal, or common law concerning whistleblower protection;
and all Claims arising under the Employee Retirement Income Security Act of 1974, as amended. This release is intended to apply
to any rights Executive may have under any Company policy or practice, any employment agreement that may exist between Executive
and the Company including any bonus, commission, or incentive plan, and all other compensation not specifically set forth herein.

 

    	Confidential and Severance Agreement	Page 3 of 10

     

    

 

(2)
ADEA Release. Executive acknowledges and agrees that his release and waiver of Claims also includes all Claims under
the ADEA, as amended, including by the Older Workers Benefit Protection Act, and any municipal, state, or federal law regarding
age discrimination. The following terms and conditions apply to and are part of the release of ADEA claims under this Agreement:
(i) Executive is not waiving or releasing a claim challenging the validity of his release and waiver of Claims based on the ADEA;
and (ii) Executive is not waiving or releasing any right or claim under the ADEA that may arise after the Effective Date of this
Agreement.

 

(3)
Covenant Not to Sue; Indemnification. Executive covenants and agrees that he will not initiate, or cause to be initiated,
any action or cause of action against any of the Released Parties in the future asserting any Claims covered by the release set
forth herein. Executive further agrees to indemnify the Released Parties for (i) any additional sum of money that any of them
may hereafter be compelled to pay Executive, and (ii) any of the Released Parties’ legal fees, costs, and expenses associated
therewith, on account of Executive bringing or allowing to be brought on his behalf any legal action based directly or indirectly
upon the claims covered by the release.

 

(4)
No Interference with Rights. The Parties agree that nothing in this Severance Agreement shall be construed to limit
Executive’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations
Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission, or any other federal, state,
or local government agency or commission (collectively “Government Agency”). Further, the Parties agree
that this Severance Agreement does not limit Executive’s ability to communicate with any Government Agency or otherwise
participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or
other information, without notice to Company. Executive acknowledges and agrees that (i) the consideration provided under this
Agreement shall be the sole relief to him for the released Claims, and Executive is not entitled to recover, and agrees to waive,
any monetary benefits or recovery against the Released Parties in connection with any charge filed with or investigation by any
Government Agency, without regard to who filed such charge or initiated such investigation; (ii) Executive is not waiving or releasing
any rights or claims that may arise after the Effective Date, including Claims arising from or related to a breach of this Severance
Agreement; and (iii) Executive is not waiving or releasing any rights or claims which cannot be waived by law, including but not
limited to his right to workers’ compensation or to pursue claims for vested pension benefits. However, Executive’s
release and waiver of Claims in this Agreement includes any Claims that currently exist and/or have been asserted by him in any
forum, venue, or judicial or administrative proceeding.

 

C.
Cooperation. Subject to Section 5(B)(4) above, Executive agrees to reasonably cooperate with the Company: (i)
regarding the transition of any business matters Executive handled or had involvement with on behalf of the Company; and (ii)
in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf
of any of the Released Parties that relate in any way to events or occurrences that transpired while Executive was employed by
the Company. Executive’s cooperation in connection with such claims or actions will include, but not be limited to, being
available to meet with the Company’s counsel to prepare for discovery or any legal proceeding, and to act as a witness on
behalf of the Company at mutually convenient times. The Company will reimburse Executive for reasonable, pre-approved out-of-pocket
costs and expenses (but not including attorneys’ fees, costs, or compensation for time) that Executive incurs in connection
with fulfilling his obligations under this Section 6(E) to the extent permitted by law. Notwithstanding anything herein
to the contrary, nothing in this Severance Agreement is intended to prohibit, restrict, or otherwise discourage Executive from
making reports of unsafe, wrongful, or illegal conduct to any agency or branch of the local, state, or federal government, including
law enforcement authorities, the SEC, or any other lawful authority. Specifically, nothing in this Severance Agreement shall (i)
prohibit Executive from making reports of possible violations of federal law or regulation to any governmental agency or entity
in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section
806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection provisions of state or federal law or regulation,
or (ii) require notification or prior approval by the Company of any reporting described in clause (i).

 

    	Confidential and Severance Agreement	Page 4 of 10

     

    

 

D.
No Future Employment. As consideration for this Severance Agreement, Executive agrees not to seek future employment
with any of the Released Parties, and further agrees he shall have no recourse against any of the Released Parties for any decision
by any of the Released Parties not to hire him or to discharge him from employment in the future. Executive further agrees that
this Severance Agreement constitutes a legitimate, non-discriminatory, and non-retaliatory reason for the termination of any future
employment or the rejection of any application for future employment of Executive by the Released Parties.

 

E.
Non-Disparagement. Subject to the terms of Section 5(B)(4) above, Executive hereby agrees not engage in any
conduct or communications (verbal or written) which denigrates, disparages, or harms the business and/or personal reputation of
the Company or any of the Released Parties. Such conduct shall include, but not be limited to, any disparaging, defamatory, or
negative statements or comments made verbally or in writing by Executive about the Company, or its officers, directors, owners,
shareholders, or employees, including disparaging, defamatory, or negative statements or comments concerning the Company’s
products, services, methods of doing business, or employment practices. Executive will not discuss or otherwise disclose to anyone,
including, but not limited to, the press or media or any organization or individual associated with the press or media, any allegations
of wrongdoing made against the Company. The restrictions in this Section 6(G) shall not apply to any responses Executive
is required to make in compliance with applicable law.

 

F.
Survival of Pre-Existing Obligations; Confirmation of Access to Company Confidential Information and Goodwill; Non-Disclosure
and Non-Solicitation Promises.

 

1.
Survival of Pre-Existing Obligations. Except as otherwise provided here, this Severance Agreement does not amend, modify,
restrict, alter or change in any way the terms of any agreement between the Parties addressing: (i) inventions, (ii) confidential
and proprietary information, (iii) non-competition, and/or (iv) non-solicitation (the “Restrictive Provisions”).
Without limiting the foregoing, these types of provisions set forth in any such agreement shall survive Employee’s termination
and continue as forth in that agreement.

 

2.
Confirmation of Access to Company Confidential Information and Goodwill. During his employment with the Company, Executive
acknowledges and confirms that the Company provided him with access to certain proprietary information relevant to his position
and duties (and Executive acknowledges that, prior to his association with the Company, he was unfamiliar with such information),
as well as specialized training and instruction about the Company’s business relevant to his position and duties (collectively,
“Confidential Information”). Executive further acknowledges and confirms that the Company developed,
prior to and during the course of his employment with the Company, goodwill between itself and its clients and customers by providing
superior products and services, that this goodwill is a valuable asset belonging solely to the Company, that the Company permitted
Executive to use its goodwill in connection with performing his duties and responsibilities for the Company, and that Executive
benefited during his employment with the Company from this goodwill.

 

    	Confidential and Severance Agreement	Page 5 of 10

     

    

 

3.
Employee Non-Solicitation Promise. In exchange for the promises made, covenants contained, and consideration provided
by the Company in this Severance Agreement and in order to protect the Company’s legitimate business interests, Executive
covenants and agrees that, for a period of one (1) year from the Effective Date, he will not initiate contact or communicate with,
orally or in writing, any current employee, or any person who is or has been an investor owning securities in the Company regarding
any matters involving the Company, its business, directors, officers, employees or shareholders. This does not apply to personal
communications unrelated to the Company and its business. Additionally, Executive covenants and agrees that, for a period of one
(1) year from the Termination Date, he will not directly or indirectly solicit or encourage any current employee or Past Employee
to leave his/her employment with or cease providing services to the Company. For purposes of this Section 5(F)(3), “Past
Employee” shall refer to any employee whose employment has been terminated within the twelve (12) month period following
Executive’s termination. In addition to any other remedies provided for in this Severance Agreement or under the law, in
the event Executive violates the non-solicitation restrictions (as contrasted with the non-communication restrictions) set forth
in this Section 5(F)(3), the Company will be entitled to recover liquidated damages from Executive in the amount of the
sum of Separation Consideration. The Parties acknowledge that it would be difficult to calculate damages incurred by the Company
as a result of a breach of the non-solicitation restrictions set forth in this Section 5(F)(3) and that this liquidated
damages clause is necessary and reasonable for the Company’s protection. The Parties also acknowledge that the foregoing
damage amount is fair and reasonable.

 

4.
Customer Non-Solicitation Promise. In exchange for the promises made, covenants contained, and consideration provided
by the Company in this Severance Agreement and in order to protect the Company’s legitimate business interests, Executive
agrees that, for a period of one (1) year following the Effective Date, he will not, directly or indirectly, alone or for his
own account, or as owner, partner, investor, member, trustee, officer, director, shareholder, employee, consultant, contractor,
distributor, advisor, representative or agent of any partnership, joint venture, corporation, trust, or other business organization
or entity: (i) contact or communicate with, orally or in writing, any Covered Customer; (ii) solicit sales or placement of, sell,
deliver or place any service, product, or system of the kind and character created, designed, sold, provided, distributed or placed
by Executive on behalf of the Company to any Covered Customer, or divert the business or patronage of any Covered Customer, unless
given the prior written consent of the Company to do so; or (iii) induce or attempt to induce any Covered Customer to withdraw,
curtail, divert, or cancel its business with the Company or in any manner modify or fail to enter into any actual or potential
business relationship with the Company, unless given the Company’s prior written consent to do so. For purposes of this
Severance Agreement, the term “Covered Customer” means any individual, proprietorship, partnership,
corporation, association, limited liability company, or other business entity who was or is a customer or potential customer at
any time during Executive’s employment with the Company and (a) who Executive contacted, communicated with, solicited, called
upon, worked for, sold products or services to, or dealt with on behalf of the Company; (b) who Executive directed or managed
others to contact, communicate with, solicit, call upon, work for, sell products or services to, or serve, on behalf of the Company;
(c) whose dealings with the Company were coordinated or supervised by Executive; (d) about whom Executive obtained confidential
information as a result of his association with the Company; or (e) who received services or products from the Company the sale
or provision of which resulted in compensation or commission payments to or earnings for Executive.

 

5.
Reasonableness of Promises in Section 5(F). Executive acknowledges and agrees that the limitations as to time and scope
of activity to be restrained by this Section 5(F) are reasonable and acceptable, and do not impose any greater restraint
than is reasonably necessary to protect the Company’s Confidential Information, goodwill, and other business interests.
Executive agrees that if, at some later date, a court of competent jurisdiction determines that the restrictions set forth in
this Section 5(F) do not meet the criteria established by state or federal law, Section 5(F) shall be reformed by
the court and enforced to the maximum extent permitted under state or federal law.

 

    	Confidential and Severance Agreement	Page 6 of 10

     

    

 

6.
Remedies. In the event that Employee violates or threatens to violate any of the provisions set forth in this Section
5(F), Executive acknowledges that the Company will suffer immediate and irreparable harm which cannot be accurately calculated
in monetary damages. Consequently, Executive acknowledges and agrees that the Company shall be entitled to (i) immediate injunctive
relief, either by temporary or permanent injunction, to prevent such a violation; (ii) recovery of attorneys’ fees and costs
incurred or expended in obtaining such relief or any other relief permissible under this Agreement; and (iii) any other legal
or equitable relief to which it may be entitled, including any and all monetary damages which the Company may incur as a result
of said breach or threatened breach. Finally, the Parties agree that the bond to be posted if any injunction is sought by the
Company shall not exceed $1,000.00. The pursuit of one remedy at any time will not be deemed an election of remedies or waiver
of the right to pursue any other remedy.

 

G.
Return of Property. Executive agrees that all documents, files, letters, memoranda, reports, records, data, sketches,
drawings, models, notebooks, program listings, computer equipment or devices, computer programs or other written, photographic,
or other tangible material containing the Company’s confidential information, as well as any CDs, DVDs, disks, databases,
computers and servers containing confidential information, whether created by Executive or others, which shall come into his custody
or possession, shall be and are the exclusive property of the Company (collectively, “Company Materials”),
and he agrees that he will not copy or remove Company Materials from the Company’s premises. Executive agrees to deliver
all Company Materials and all tangible property of the Company in his custody or possession, including any equipment
or other tangible property which he received from the Company during his association with the Company, including, but not limited
to, desktop and laptop computers, tablets, printers, monitors, cellular telephones, smart phones, pagers, or other personal communication
devices, credit cards, access cards, security cards, keys, and company vehicles that are in his possession, custody or control,
to the Company no later than forty-eight (48) hours after this Severance Agreement is delivered to him, and he shall disclose
any and all passwords or codes required to gain access to electronic devices. After such delivery, Executive shall not retain
any such materials or copies thereof or any such equipment or tangible property. Executive’s promise to return any such
materials, equipment or tangible property applies to any materials, equipment, or tangible property which are in his possession,
custody or control, regardless of whether such materials, equipment or tangible property are located in his office or automobile,
or on his office, home or personal computer. Executive also shall authorize and permit the Company to inspect all computer drives
used or maintained by him during his association with the Company and, if necessary, to permit the Company to delete Confidential
Information contained on such drives.

 

6.
Confidentiality of Severance Agreement. Subject to Section 5(B)(4) above, Executive and his representatives
and agents agree that the terms of this Severance Agreement, including without limitation the consideration set forth in Section
4 above, are to remain strictly confidential and shall not be disclosed unless required by law or the judicial process, as
explained below. Notwithstanding the foregoing restriction, Executive may disclose the terms of this Severance Agreement to Executive’s
spouse, tax and financial advisors, and attorneys, so long as such persons agree to be bound by the confidentiality terms of this
Agreement, and to the IRS in response to an inquiry. Executive acknowledges and agrees that he will be responsible and liable
for any disclosure prohibited by this Section 6 made by him, his representatives, and/or his family members. If any Party
sues to enforce the terms of this Agreement, that Party must file it under seal. If Executive is served with a court order, subpoena,
or other legal process that calls for disclosure of this Agreement or its terms, Executive shall immediately provide the Company
with written notice thereof by first class mail and e-mail to Jeffrey Fessler at JFessler@sheppardmullin.com, along with a copy
of the order, subpoena, or other legal process. The breach of this Section 6 shall not affect the continuing validity or
enforceability of this Severance Agreement. The restrictions in this Section 6 shall not apply to any responses the Company
is required to make in compliance with applicable law.

 

    	Confidential and Severance Agreement	Page 7 of 10

     

    

 

7.
Miscellaneous.

 

A.
Entire Agreement. This Severance Agreement supersedes any and all prior agreements, arrangements, or understandings
between the Parties regarding the subject matter herein, other than any prior non-disclosure, non-competition, or non-solicitation
agreement, which is re-affirmed by Executive as consideration for this Severance Agreement. The Parties acknowledge and agree
that there have been no representations, promises, understandings, or agreements made by either Party as an inducement for the
other Party to enter into this Severance Agreement other than what are expressly set forth and contained in the terms of this
Severance Agreement.

 

B.
Severability. If any provision of this Severance Agreement shall be determined by a court of competent jurisdiction
to be void or unenforceable, the remaining provisions shall remain effective and legally binding, and the void or unenforceable
term shall be modified to the extent necessary to render it enforceable under applicable law.

 

C.
Modification. Except as otherwise provided herein, the Parties agree that alterations, amendments, modifications, or
changes to this Severance Agreement may only be made in a written document that specifically references this Severance Agreement
and is signed by an authorized representative of each Party. The Parties cannot orally agree to alter, amend, modify, or in any
way change the terms of this Severance Agreement. The Parties further agree that evidence of prior promises, commitments, agreements,
arrangements, or understandings cannot be used to attempt to alter, amend, modify, or in any way change the written terms of this
Severance Agreement.

 

D.
Reliance. Executive hereby represents and acknowledges that in signing this Severance Agreement, he does not rely,
and has not relied, upon any representation or statement not set forth in this Agreement made by the Company or by any of its
employees, managers, officers, directors, agents, representatives, or attorneys with regard to the subject matter of this Severance
Agreement.

 

E.
Construction of Agreement/Counterparts. The Parties acknowledge and agree that this Severance Agreement shall not be
construed more favorably in favor of one Party than another based upon which Party drafted same, it being acknowledged and agreed
that the Parties all contributed substantially to the negotiation and preparation of this Severance Agreement. This Severance
Agreement can be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall
be deemed an original, and all of which shall be taken to be one and the same instrument for the same effect as if all Parties
hereto had signed the same signature page. A facsimile or e-mail copy of any Party’s signature is as legally binding as
the original signature.

 

F.
Binding Agreement/Non-Assignment of Claims. This Severance Agreement shall inure to the benefit of, be binding upon,
and be enforceable by Executive’s legal representatives. This Severance Agreement shall inure to the benefit of, be binding
upon, and be enforceable by the Released Parties. By signing this Severance Agreement,
Executive represents and warrants that he has not assigned to any third party any claim involving the Company or authorized any
third party to assert on her behalf any claims against the Company.

 

    	Confidential and Severance Agreement	Page 8 of 10

     

    

 

G.
Notices. All notices, requests, demands and other communications under this Severance Agreement shall be in writing
and delivered by electronic mail, courier or by registered or certified mail (return receipt requested) to the following addresses:

 

If
to Executive:

 

Gino
Mauriello

1607
East Windmill Lane

Las
Vegas, NV 89123

gino@ginotax.com

 

If
to CipherLoc Corporation, to:

 

CipherLoc
Corporation

c/o
Andrew Borene

Chief
Executive Officer

825
Main Street

Suite
100

Buda,
TX 78610

andrew@cipherloc.net

 

With
a copy to:

 

Sheppard,
Mullin, Richter & Hampton LLP

30 Rockefeller Plaza

New
York, NY 10112

Attention:
Jeffry Fessler (jfessler@sheppardmullin.com)

 

H.
Governing Law and Forum. It is the intention of the parties that the laws of the State
of Texas should govern the validity of this Severance Agreement, the construction of its terms, and the interpretation of the
rights and duties of the parties hereto without regard to any contrary conflicts of laws principles or provisions of any
state or jurisdiction. It is stipulated that Texas has a compelling state interest in the subject
matter of this Severance Agreement, and that Executive has had and will have regular contact with Texas in the performance of
this Severance Agreement. Further, the Parties hereby irrevocably submit to the exclusive jurisdiction of any federal or
state court located within Travis County, Texas or, if a mandatory venue provision is applicable, to the jurisdiction of any other
federal or state court within the State of Texas required to hear such matter by any such applicable mandatory venue provision.
The Parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter
have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance
of such dispute. Each of the Parties agrees that a judgment in any such dispute may be enforced in other jurisdiction by suit
on the judgment or in any other manner provided by law.

 

I.
Knowing and Voluntary Agreement. Executive acknowledges and agrees that (i) after he received a copy of this Severance
Agreement in writing, he has been granted a reasonable time to consider the terms of this Severance Agreement; (ii) he has personally
read this Severance Agreement; (iii) he fully understands its contents; and (iv) he enters into this Severance Agreement knowingly,
voluntarily, and after any consultations with his attorney or other advisor, as he deems appropriate.

 

    	Confidential and Severance Agreement	Page 9 of 10

     

    

 

IN
WITNESS WHEREOF, this Confidential Severance and Release Agreement has been executed by each of the listed Parties below:

 

	Gino
    Mauriello	 	CipherLoc
    Corporation
	 	 	 
	/s/
    Gino Mauriello	 	/s/
    Andrew Borene
	Signature	 	Signature
	 	 	 
	12/14/2019	 	Andrew
    Borene
	Date	 	Printed Name
	 	 	 
	 	 	Chief
    Executive Officer
	 	 	Title
	 	 	 
	 	 	12/15/2019
	 	 	Date

 

    	Confidential and Severance Agreement	Page 10 of 10

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