Exhibit 10.1
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is entered into as of the 31st day of May 2000, by and
between HopFed Bancorp, Inc. (the "Company") and Xxxx X. Xxxx (the "Employee").
WHEREAS, the Company desires to employ the Employee; and
WHEREAS, the Employee is willing to commence employment with the Company on
the terms and conditions set forth below, and the Board of Directors has
determined that such terms are reasonable and in the best interests of the
Company.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is hereby employed by the Company. Effective
July 3, 2000, the Employee shall serve as President and Chief Executive Officer
of the Company. Except to the extent that the Board of Directors of the Company
(the "Board") shall have delegated a portion of such authority to one or more
other officers, as President and Chief Executive Officer of the Company the
Employee shall have general charge and direction of the business of the Company,
shall see that all orders and resolutions of the Board are carried into effect,
and shall perform such other administrative and management services for the
Company as are currently rendered and as are customarily performed by persons
situated in a similar executive capacity. The Employee shall also promote, by
entertainment or otherwise, as and to the extent permitted by law, the business
of the Company.
2. Consideration from Company Joint, and Several Liability. In lieu of
paying the Employee a base salary during the term of this Agreement, the Company
hereby agrees that to the extent permitted by law, it shall be jointly and
severally liable with its subsidiary, Hopkinsville Federal Savings Bank (the
"Bank"), for the payment of all amounts due under the employment agreement of
even date herewith between the Bank and the Employee. Nevertheless, the Board
may in its discretion at any time during the term of this Agreement agree to pay
the Employee a base salary for the remaining term of this Agreement. If the
Board agrees to pay such salary, the Board shall thereafter review, not less
often than annually, the rate of the Employee's salary, and in its sole
discretion may decide to increase his salary.
3. Discretionary Bonuses. The Employee shall participate in an equitable
manner with all other senior management employees of the Company in
discretionary bonuses that the Board may award from time to time to the
Company's senior management employees. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee's right to
participate in such discretionary bonuses.
4. (a) Participation in Retirement, Medical and Other Plans. The Employee
shall be entitled to participate in any plan that the Company maintains for the
benefit of its employees if the plan relates to (i) pension, profit-sharing, or
other retirement benefits, (ii) medical insurance or the reimbursement of
medical or dependent care expenses, or (iii) other group benefits, including
disability and life insurance plans.
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Exhibit 10.1
(b) Employee Benefits. The Employee shall participate in any fringe
benefits that are or may become available to the Company's senior management
employees, including, for example: any stock option or incentive compensation
plans and any other benefits that are commensurate with the responsibilities and
functions to be performed by the Employee under this Agreement.
(c) Stock Options. As of the date hereof, and as an inducement to the
Employee's entering into this Agreement with the Company, the Employee shall be
granted options to acquire 40,000 shares of the Company's common stock under the
Company's 2000 Stock Option Plan. The stock options shall be granted at the fair
market value of the Company's common stock as of the close of business on the
date hereof, shall be subject to a four-year vesting schedule (i.e., 25% of such
options shall vest on each of the later of May 31, 2001 or the business day
subsequent to the 2001 Annual Meeting of Stockholders (the "Annual Meeting"),
May 31, 2002, May 31, 2003 and May 31, 2004), shall become fully exercisable
upon a "change in control" (as defined in the Section 11(a) hereof) and shall be
for a term of 10 years. Such options shall be incentive stock options as defined
in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
subject to approval of the 2000 Stock Option Plan by the Company's stockholders
at the Annual Meeting. If the 2000 Stock Option Plan is not approved at the
Annual Meeting, such options shall not be incentive stock options as defined in
Section 422 of the Code.
(d) Expenses. The Employee shall be reimbursed for all reasonable
out-of-pocket business expenses that he shall incur in connection with his
services under this Agreement upon substantiation of such expenses in accordance
with the policies of the Company.
5. Term. The Company hereby employs the Employee, and the Employee hereby
accepts such employment under this Agreement, for the period commencing on July
3, 2000 (the "Effective Date") and ending 36 months thereafter (or such earlier
date as is determined in accordance with Section 9 hereof). Additionally, on
each annual anniversary date from the Effective Date, this Agreement and the
Employee's term of employment shall be extended for an additional one-year
period beyond the then effective expiration date, provided that the Board
determines in a duly adopted resolution that the performance of the Employee has
met the Board's requirements and standards, and that this Agreement shall be
extended.
6. Loyalty Full Time and Attention.
(a) During the period of his employment hereunder and except for illness,
reasonable vacation periods, and reasonable leaves of absence, the Employee
shall devote all his full business time, attention, skill, and efforts to the
faithful performance of his duties hereunder to the Company and its
subsidiaries; provided that, from time to time, the Employee may serve on the
board of directors of, and hold any other offices or positions in, companies or
organizations, that will not present any conflict of interest with the Company
or any of its subsidiaries or affiliates, or unfavorably affect the performance
of Employee's duties pursuant to this Agreement, or will not violate any
applicable statute or regulation. "Full business time" is hereby defined as that
amount of time usually devoted to like companies by similarly situated
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Exhibit 10.1
executive officers. During the term of his employment under this Agreement, the
Employee shall not engage in any business or activity contrary to the business
affairs or interests of the Company, or be gainfully employed in any other
position or job other than as provided above.
(b) Nothing contained in this Section 6 shall be deemed to prevent or limit
the Employee's right to invest in the capital stock or other securities of any
business dissimilar from that of the Company, or, solely as a passive or
minority investor, in any business.
7. Standards. The Employee shall perform his duties under this Agreement in
accordance with such reasonable standards as the Board may establish from time
to time. The Company will provide the Employee with the working facilities and
staff customary for similar executive officers and necessary for him to perform
his duties.
8. Vacation and Sick Leave. The Employee shall be entitled, without loss of
pay, to absent himself voluntarily from the performance of his duties under this
Agreement in accordance with the terms set forth below, all such voluntary
absences to count as vacation time; provided that:
(a) The Employee shall be entitled to an annual vacation in accordance with
the policies periodically established by the Board for senior management
employees of the Company.
(b) The Employee shall not receive any additional compensation from the
Company on account of his failure to take a vacation, and the Employee shall not
accumulate unused vacation from one fiscal year to the next, except in either
case to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee shall be
entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment obligations with the Company for such additional
periods of time and for such valid and legitimate reasons as the Board may in
its discretion approve. Further, the Board may grant to the Employee a leave or
leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as the Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick leave
benefit as established by the Board.
9. Termination and Termination Pay. Subject to Section 11 hereof, the
Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall terminate
upon his death during the term of this Agreement, in which event the Employee's
estate shall be entitled to receive the compensation due the Employee through
the last day of the calendar month in which his death occurred.
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Exhibit 10.1
(b) Disability. The Company may terminate the Employee's employment after
having established, through a determination by the Board, the Employee's
Disability. For purposes of this Agreement, "Disability" means a physical or
mental infirmity that impairs the Employee's ability to substantially perform
his duties under this Agreement and that results in the Employee becoming
eligible for long-term disability benefits under the Company's long-term
disability plan (or, if the Company has no such plan in effect, that impairs the
Employee's ability to substantially perform his duties under this Agreement for
a period of 180 consecutive days). The Employee shall be entitled to the
compensation and benefits provided for under this Agreement for (i) any period
during the term of this Agreement and prior to the establishment of the
Employee's Disability during which the Employee is unable to work due to the
physical or mental infirmity, or (ii) any period of Disability that is prior to
the Employee's termination of employment pursuant to this Section 9(b); provided
that any benefits paid pursuant to the Company's long-term disability plan will
continue as provided in such plan.
(c) For Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause. Termination for "Just Cause" shall mean
termination because of, in the good faith determination of the Board, the
Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Just Cause unless there
shall have been delivered to the Employee a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the entire membership of the
Board (excluding the Employee if a member of the Board) at a meeting of the
Board called and held for the purpose (after reasonable notice to the Employee
and an opportunity for the Employee to be heard before the Board), finding that
in the good faith opinion of the Board the Employee was guilty of conduct set
forth above in the second sentence of this Subsection (c) and specifying the
particulars thereof in detail.
(d) Without Just Cause. Subject to the provisions of Section 11 hereof, the
Board may, by written notice to the Employee, immediately terminate his
employment at any time for any reason; provided that, if such termination is for
any reason other than pursuant to Sections 9(a), (b) or (c) above, the Employee
shall be entitled to receive the following compensation and benefits: (i) the
salary provided pursuant to Section 2 hereof, up to the date of expiration of
the term (including any renewal term then in effect) of this Agreement (the
"Termination Date") and (ii) the cost to the Employee of obtaining all health,
life, disability and other benefits (excluding any bonus, stock option or other
compensation benefits) in which the Employee would have been eligible to
participate through the Termination Date based upon the benefit levels
substantially equal to those that the Company provided for the Employee at the
date of termination of employment. Said sum shall be paid, at the option of the
Employee, either (1) in periodic payments over the remaining term of this
Agreement, as if the Employee's employment had not terminated, or (2) in one
lump sum within 10 days of such termination.
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Exhibit 10.1
(e) Termination or Suspension Under Federal Law.
(1) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C. ss.1818(e)(4) or (g)(1)), all obligations of the Company under this
Agreement shall terminate, as of the effective date of the order, but vested
rights of the parties shall not be affected.
(2) If the Bank is in default (as "defined in Section 3(x)(1) of FDIA), all
obligations under this Agreement shall terminate as of the date of default;
however, this Paragraph 9(e)(2) shall not affect the vested rights of the
parties.
(3) All obligations under this Agreement shall terminate, except to the
extent that continuation of this Agreement is necessary for the continued
operation of the Company and the Bank: (A) by the Director of the Office of
Thrift Supervision ("OTS"), or his or her designee, at the time that the Federal
Deposit Insurance Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of the
FDIA; or (B) by the Director of the OTS, or his or her designee, at the time
that the Director of the OTS, or his or her designee, approves a supervisory
merger to resolve problems related to operation of the Bank or when the Bank is
determined by the Director of the OTS to be in an unsafe or unsound condition.
Such action shall not affect any vested rights of the parties.
(4) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12
U.S.C.ss.1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the
Employee from participating in the conduct of the Bank's affairs, the Company's
obligations under this Agreement shall be suspended as of the date of such
service unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Company may in its discretion (A) pay the Employee all or
part of the compensation withheld while its contract obligations were suspended,
and (B) reinstate (in whole or in part) any of its obligations that were
suspended.
(5) If any of the provisions of this Paragraph 9(e) conflict with 12
C.F.R.ss.563.39(b), the latter shall prevail.
(f) Voluntary Termination by Employee. Subject to the provisions of Section
11 hereof, the Employee may voluntarily terminate employment with the Company
during the term of this Agreement, upon at least 60 days' prior written notice
to the Board, in which case the Employee shall receive, only his compensation,
vested rights and employee benefits accrued up to the date of his termination.
(g) Limitation by Section 18(k) of the FDIA. Notwithstanding anything
herein to the contrary, any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C. ss.1828(k)) and any regulations
promulgated thereunder.
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Exhibit 10.1
10. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, and no such payment shall be offset or reduced by the amount of
any compensation or benefits provided to the Employee in any subsequent
employment.
11. Change in Control.
(a) Notwithstanding any provision herein to the contrary, if
the Employee's employment under this Agreement is terminated by the Company,
without the Employee's prior written consent and for a reason other than for
Just Cause, death or disability in connection with or within 12 months after any
change in control of the Bank or the Company, which has not been approved in
advance by a two-thirds vote of the full Board of Directors of each of the Bank
and the Company, the Employee shall be paid an amount equal to two times the
Employee's "Base Salary" as defined in the employment agreement of even date
herewith between the Bank and the Employee. The term "change in control" shall
mean (1) a change in the ownership, holding or power to vote more than 25% of
the Bank's or the Company's voting stock, (2) a change in the ownership or
possession of the ability to control the election of a majority of the Bank's or
the Company's directors, or (3) a change in the ownership or possession of the
ability to exercise a controlling influence over the management or policies of
the Bank or the Company by any person or by persons acting as a "group" (within
the meaning of Section 13(d) of the Securities Exchange Act of 1934) (except
that, in the case of (1), (2) and (3) hereof), ownership or control of the Bank
or its directors by the Company itself shall not constitute a change in control.
The term "person" means an individual other than the Employee, or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.
(b) The sum of the amount payable under Section 11(a) hereof
and any other "parachute payment" as defined under Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended from time to time (the "Code"), shall
not exceed 2.99 times the Employee's "base amount" as defined in Section
280G(b)(3) of the Code.
(c) Notwithstanding the foregoing, but only to the extent
required under federal banking law, the amount payable under Section 11(a)
hereof shall be reduced to the extent that on the date of the Employee's
termination of employment, the amount payable under Section 11(a) exceeds the
limitation on severance benefits set forth in Regulatory Bulletin 27a of the
OTS, as in effect on such termination date.
(d) In the event that any dispute arises between the Employee
and the Company as to the terms or interpretation of this Agreement, including
this Section 11, whether instituted by formal legal proceedings or otherwise,
including an action that Employee takes to enforce the terms of this Section 11
or to defend against any action taken by the Company, the Employee shall be
reimbursed for all costs and expenses, including reasonable attorneys' fees,
arising from such disputes or proceedings, provided that the Employee shall have
obtained a final judgment by a court of competent jurisdiction in his or her
favor. Such reimbursement shall be paid within 10 days of Employee's providing
the Company with
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Exhibit 10.1
written evidence, which may be in the form, among others, of a canceled check or
receipt, of any costs or expenses incurred by the Employee.
12. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Company that shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the corporation.
(b) Since the Company is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
13. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
14. Applicable Law. This Agreement shall be governed in all respects,
whether as to its validity, construction, capacity, performance or otherwise, by
the laws of the Commonwealth of Kentucky, except to the extent that Federal law
shall be deemed to apply.
15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. Entire Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
IN WITNESS WHEREOF the parties have executed this Agreement on the day and
year first above written.
ATTEST: HOPFED BANCORP, INC.
________________________ By:____________________________________
Secretary XX Xxxxxx, Chairman of the Board
WITNESS:
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Xxxx X. Xxxx
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