Exhibit 10.2
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is entered into as of the 31st day of May, 2000, by and
between Hopkinsville Federal Savings Bank (the "Bank") and John E. Peck (the
"Employee").
WHEREAS, the Bank desires to employ the Employee; and
WHEREAS, the Employee is willing to commence employment with the Bank on
the terms and conditions set forth below, and the Board of Directors of the Bank
has determined that such terms and conditions are reasonable and in the best
interests of the Bank.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is hereby employed by the Bank. Effective July
3, 2000, the Employee shall serve as President and Chief Executive Officer of
the Bank. Except to the extent that the Board of Directors of the Bank (the
"Board") shall have delegated a portion of such authority to one or more other
officers, as President and Chief Executive Officer the Employee shall have
general charge and direction of the business of the Bank, 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 Bank 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 Bank.
2. Base Compensation. Prior to July 3, 2000, the Bank agrees to pay the
Employee $1,000. Thereafter, the Bank agrees to pay the Employee as President
and Chief Executive Officer during the term of this Agreement a salary (the
"Base Salary") at the rate of $116,500 per annum through July 3, 2001, at the
rate of $122,325 per annum through July 3, 2002 and at the rate of $128,442 per
annum through July 3, 2003, payable in cash not less frequently than monthly.
The Board shall review, not less often than annually, the rate of the Employee's
Base Salary, and in its sole discretion may decide to increase his Base Salary.
3. Discretionary Bonuses. The Employee shall participate in an equitable
manner with all other senior management employees of the Bank in discretionary
bonuses that the Board may award from time to time to the Bank'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 Bank 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.
1
Exhibit 10.2
(b) Employee Benefits. The Employee shall participate in any fringe
benefits that are or may become available to the Bank'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) 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 Bank.
(d) Automobile. The Bank shall provide the Employee with the use of an
automobile, including all related maintenance, repairs and other costs. The Bank
shall also, at its own expense, provide comprehensive insurance coverage for
such automobile, naming the Employee as a named insured. The Employee shall take
proper care of such automobile and shall be responsible for all damage to such
automobile resulting from any misuse or neglect thereof.
(e) Relocation Expenses. The Bank shall assist the Employee with relocation
expenses, some or all of which may be taxable income to the Employee, as
follows:
(1) Reasonable expenses incurred in moving furniture, normal household
goods and personal belongings to Hopkinsville, Kentucky.
(2) Reasonable temporary living expenses in Hopkinsville, Kentucky while
awaiting occupancy of the Employee's new quarters. Such temporary living
quarters shall consist of an apartment, hotel or similar residence. Hotel
expenses shall be reimbursed for overnight lodging if Bank related.
5. Term. The Bank hereby employs the Employee, and the Employee hereby
accepts such employment under this Agreement, for the period commencing on the
date hereof (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. Prior to each such anniversary date, the Board
shall meet to review the Employee's performance and determine whether this
Agreement should 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
2
Exhibit 10.2
hereunder; 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 Bank 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 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 Bank, 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 Bank, 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 Bank 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 Bank.
(b) The Employee shall not receive any additional compensation from the
Bank 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 Bank 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:
3
Exhibit 10.2
(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.
(b) Disability. The Bank 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 Bank's
long-term disability plan (or, if the Bank 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 Bank'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
4
Exhibit 10.2
the Employee would have been eligible to participate through the Termination
Date based upon the benefit levels substantially equal to those that the Bank
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.
(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 Bank 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 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 Bank'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 Bank 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 Bank 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.
5
Exhibit 10.2
(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.
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 Bank,
without the Employee's prior written consent and for a reason other than for
Just Cause, death or disability in connection with or 12 months after any change
in control of the Bank or 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 of the date of termination. Said sum shall be paid in one lump sum within 10
days of such termination. 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
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 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 Bank as to the terms or interpretation of this Agreement, including this
Section 11, whether
6
Exhibit 10.2
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 Bank, 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 favor. Such reimbursement shall be paid
within 10 days of Employee's providing the Bank with 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 Bank 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 Bank 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 Bank.
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.
7
Exhibit 10.2
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
ATTEST: HOPKINSVILLE FEDERAL SAVINGS BANK
________________________ By:_____________________________________
Secretary WD Kelley, Chairman of the Board
WITNESS:
- ------------------------ -------------------------------------
John E. Peck
8