Common use of Employee Benefits; Employees Clause in Contracts

Employee Benefits; Employees. (a) Each First Financial Benefit Plan has been established, operated and administered in all material respects in accordance with its terms and the requirements of all applicable laws, including ERISA and the Code. Except as set forth on Section 4.11(a) of the First Financial Disclosure Schedule, within the past three (3) years, neither First Financial nor any of its Subsidiaries has taken any corrective action or made a filing under any voluntary correction program of the IRS, Department of Labor or any other Governmental Entity with respect to any First Financial Benefit Plan, and neither First Financial nor any of its Subsidiaries has any knowledge of any plan defect that would qualify for correction under any such program and no First Financial Benefit Plan has, within the six (6) years prior to the date hereof, been the subject of an examination or audit by a Governmental Entity. For purposes of this Agreement, “First Financial Benefit Plans” means all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), whether or not subject to ERISA, and all bonus, stock option, stock purchase, restricted stock, incentive, commission, deferred compensation, retiree medical or life insurance, supplemental retirement, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, vacation and other time off benefits, severance or other benefit plans, programs, policies, practices or arrangements, and all retention, bonus, employment, termination, severance plans, programs or arrangements or other contracts or agreements to or with respect to which First Financial or any First Financial Subsidiary, or any trade or business of First Financial or any of its Subsidiaries, whether or not incorporated, all of which together with First Financial would be deemed a “single employer” within the meaning of Section 4001 of ERISA (a “First Financial ERISA Affiliate”), is a party or has any current or future obligation or that are maintained, contributed to or sponsored by First Financial or any of its Subsidiaries or any First Financial ERISA Affiliate for the benefit of any current or former employee, officer, director or independent contractor of First Financial or any of its Subsidiaries or any First Financial ERISA Affiliate.

Employee Benefits; Employees. (a) Each First Financial Benefit Plan The Parent has been established, operated and administered in all material respects in accordance with its terms and the requirements of all applicable laws, including ERISA and the Code. Except as set forth on Section 4.11(a) of the First Financial Disclosure Schedule, within the past three (3) years, neither First Financial nor any of its Subsidiaries has taken any corrective action delivered or made a filing under any voluntary correction program of available to the IRSAcquiror, Department of Labor or any other Governmental Entity with respect to any First Financial Benefit Plan, and neither First Financial nor any of its Subsidiaries has any knowledge of any plan defect that would qualify for correction under any such program and no First Financial Benefit Plan has, within the six (6) years prior to the date hereof, been (i) true, correct and complete copies of all material work rules (shugyo kisoku), (ii) true, correct and complete copies of all material incentive, profit-sharing, stock option, stock purchase, other equity-based, employment, consulting, compensation, congratulatory and condolence pay, commission pay, the subject Zaikei plan, vacation or other leave, change in control, retention, retiree medical or life, supplemental retirement, severance, health, medical, disability, life insurance, deferred compensation and other employee compensation and benefit plans, programs, policies, agreements, arrangements and practices, and all amendments and trust documents related thereto, in each case established or maintained by the Parent or any of an examination its Affiliates (including any of the Companies and the Transferred Subsidiaries) or audit by a Governmental Entity. For purposes to which the Parent or any of this Agreementits Affiliates (including any of the Companies and the Transferred Subsidiaries) contributed or is obligated to contribute thereunder, for the benefit of any of the Employees or any former employees of any of the Companies and the Transferred Subsidiaries (collectively, the “First Financial Benefit Plans” means ”), (iii) true, correct and complete copies of any annual reports for each Benefit Plan for the most recent completed plan year and (iv) true, correct and complete copies of any material written Contracts, communications, summary plan descriptions or correspondence from any Governmental Authority that materially affect (or could reasonably be expected to materially affect) any Company’s, any Transferred Subsidiary’s, the Acquiror’s or any of the Acquiror’s Affiliate’s current or future obligations or liability with respect to any Benefit Plan or any Employee or former Employee of any Company or any Transferred Subsidiary (including their dependents, spouses or beneficiaries). Section 3.13(a) of the Seller Disclosure Letter sets forth a true and complete list of all employee benefit Benefit Plans, and separately identifies the Benefit Plans that are sponsored by any of the Companies or Transferred Subsidiaries (the “Company Benefit Plans”). (b) Each Company Benefit Plan has been maintained in all material respects in compliance with its terms and with the requirements prescribed by any and all applicable Laws (including any special provisions relating to registered or qualified plans where such Company Benefit Plan was intended to so qualify) and has been maintained in good standing with applicable regulatory authorities. The Companies and the Transferred Subsidiaries have made all required contributions to each Company Benefit Plan with respect to their respective employees and such contributions have been properly reflected on the balance sheets included in the Statutory Statements or the Ancillary Financial Statements, as applicable, other than any failures that, individually or in the aggregate, would not be material. (c) Except as defined in otherwise provided on Section 3(33.13(c) of the Seller Disclosure Letter, no Company Benefit Plan is subject to Title IV of the Employee Retirement Income Security Act of 1974, as amended amended, or provides any material compensation or benefits to Employees based in the United States. (“ERISA”d) Except as otherwise provided on Section 3.13(d) of the Seller Disclosure Letter, none of the Companies or the Transferred Subsidiaries nor any of the persons who is serving or, to the Knowledge of Parent, was serving as an officer or director of the Companies or the Transferred Subsidiaries has, at any time during the immediately preceding 13 years, been convicted or released from imprisonment, whichever is later, as a result of a crime or similar activity that would disqualify any of the Companies or Transferred Subsidiaries from qualifying as a qualified professional asset manager, within the meaning of U.S. Department of Labor Prohibited Transaction Class Exemption 84-14. (e) No Benefit Plan provides retiree life insurance, retiree health benefits or other retiree welfare benefits to any Employee or former Employee of any Company or any Transferred Subsidiary (including any dependents, spouses or beneficiaries) for any reason other than coverage or benefits (i) mandated by applicable Law or (ii) the full cost of which is borne by any such Employee or former Employee of such Company or Transferred Subsidiary (or their dependents, spouses or beneficiaries)). (f) Except as disclosed on Section 3.13(f) of the Seller Disclosure Letter, whether or not subject the Companies and the Transferred Subsidiaries have no material unfunded liabilities with respect to ERISAany pension plan, and all bonus, stock option, stock purchase, restricted stock, incentive, commission, nonqualified deferred compensation, retiree medical supplemental or life insuranceexcess plans, supplemental retirementor any post-retirement life, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, vacation and other time off benefits, severance health or other benefit planswelfare benefits. (g) Except as otherwise provided on Section 3.13(g) of the Seller Disclosure Letter, programswith respect to the Employees: (i) there is not in existence, policiesnor has there been within the twelve months prior to the date of this Agreement, practices any pending or, to the Knowledge of the Parent, threatened: (A) strike, slowdown, stoppage, picketing, interruption of work, lockout, or arrangements, and all retention, bonus, employment, termination, severance plans, programs any other dispute or arrangements controversy with or other contracts or agreements to involving a labor organization or with respect to which First Financial unionization or any First Financial Subsidiarycollective bargaining; (B) labor-related organizational effort, election activities, or request or demand for negotiations, recognition or representation; or (C) grievance, arbitration, administrative hearing, formal claim of unfair labor practice, other union- or labor-related Action or other formal claim, workers’ compensation claim, formal claim or investigation of wrongful discharge, formal claim or investigation of employment discrimination or retaliation, formal claim or investigation of sexual harassment, or other employment dispute of a similar nature, against any trade or business of First Financial the Companies or any of its Subsidiariesthe Transferred Subsidiaries that, whether individually or in the aggregate, would be reasonably expected to be material to the Business; (ii) there is not incorporatedpending or, all to the Knowledge of which the Parent, threatened any Action or other formal claim, audit or investigation against any of the Companies or any Transferred Subsidiary for actual or possible violation of any agreement described in Section 3.13(i), or for violation of any right or obligation under any of the Benefit Plans, nor to the Knowledge of the Parent is there any reasonable basis for any such Action or other claim or investigation, except in each case as would not, individually or in the aggregate, reasonably be expected to be material to the Business; and (iii) the consummation of the transactions contemplated by this Agreement will not (either alone or together with First Financial would be deemed a “single employer” within any other event) entitle any Employee to severance, termination, change of control or other similar pay or benefits under any Benefit Plan or result in an increase in the meaning amount of Section 4001 compensation or benefits or the acceleration of ERISA (a “First Financial ERISA Affiliate”), is a party the vesting or has timing of payment of any current compensation or future obligation or that are maintained, contributed benefits payable to or sponsored by First Financial or any of its Subsidiaries or any First Financial ERISA Affiliate for the benefit in respect of any current or former employeeEmployee of the Companies or the Transferred Subsidiaries or any increased or accelerated funding obligation with respect to any Benefit Plan. (h) Except as provided on Section 3.13(h) of the Seller Disclosure Letter, officerthere are no Compensation Restrictions applicable with respect to any Employee. (i) Section 3.13(i) of the Seller Disclosure Letter sets forth a true and complete list of each agreement with a labor union, director works council or independent contractor other similar organization representing the current employees of First Financial the Companies and the Transferred Subsidiaries as of the date hereof. The Companies and the Transferred Subsidiaries have complied in all material respects with the terms of such agreements, there have been no material defaults or material breaches of any such agreements by any party to the agreements and there does not exist any event, condition or omission that would constitute such a material default or material breach (with or without the giving of notice or lapse of time, or both) or that would permit the termination, cancellation or acceleration of performance of any material obligation of the Company or the Transferred Subsidiary (as applicable) that is party thereto, or to the Knowledge of the Parent, any other party to the agreement. Each agreement listed on Section 3.13(i) of the Seller Disclosure Letter is in full force and effect and is a valid and binding obligation of the Company or the Transferred Subsidiary (as applicable) that is party thereto and, to the Knowledge of the Parent, each other party to such agreement. Each such agreement listed on Section 3.13(i) of the Seller Disclosure Letter is enforceable against the Company or the Transferred Subsidiary (as applicable) that is party thereto, and, to the Knowledge of the Parent, each other party to such agreement, in accordance with its terms (subject in each case to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium, rehabilitation, liquidation, fraudulent conveyance, preferential transfer or similar Laws now or hereafter in effect relating to or affecting creditors’ rights and remedies generally and subject, as to enforceability, to the effect of general equitable principles or of Laws regarding prohibition of abuse of rights (kenriranyo-no-kinshi) and principles of trust (shingiseijitsu-no-gensoku) (regardless of whether enforcement is sought in a proceeding in equity or at law)). The Parent has made available or delivered to the Acquiror, prior to the date hereof, complete and accurate copies of all collective bargaining agreements, charters, work rules, industry rules, arbitration awards or other Contracts which pertain to Employees who belong to unions, work councils or other similar organizations. There is no current, pending, or, to the Knowledge of the Parent, threatened, Action or audit against any of the Companies or any of its the Transferred Subsidiaries for any violations or breaches of, or defaults under, (i) any collective bargaining or other union agreements, (ii) obligations with respect to work councils, (iii) any work rules, or (iv) any arbitration awards or other mandates that, individually or in the aggregate, would be reasonably expected to be material to the Business. Except as set forth on Section 3.13(i) of the Seller Disclosure Letter, no agreement with a labor union, works council or other similar organization representing the current employees of the Companies and the Transferred Subsidiaries contains any provision providing that any such other party thereto may terminate, cancel or commute the same by reason of the transactions contemplated by the Transaction Agreements. (j) Except as would not reasonably be expected to be material to the Business, each Company and each Transferred Subsidiary is (A) in compliance with applicable Law which relates to employment, classification of employees, agents and independent contractors (or similar classifications outside of the U.S.), equal employment opportunity, wages, hours, pay equity, immigration, collective bargaining, secondment, contractors and temporary employees, withholding and deduction of payroll and employment and unemployment related Taxes, other employment terms and conditions, and plant closings layoffs (including, but not limited to, the Japan Labor Standards Law and any other comparable state, local or other Laws) and (B) is not and has not been (individually or collectively) in any respect liable for arrears of wages (including overtime), mandatory indemnity payments in non-U.S. jurisdictions, other compensation or benefits or any First Financial ERISA AffiliateTaxes or penalties for failure to comply with any of the foregoing. (k) There is no current, pending or, to the Knowledge of the Parent, threatened material Action against or involving any of the Companies or any of the Transferred Subsidiaries for failure to comply with applicable Laws that relate to employee privacy and employee data protection. (l) Except as disclosed in Section 3.13(l) of the Seller Disclosure Letter, with respect to Employees with a current or proposed base compensation rate of $150,000 (or the equivalent in any other applicable currency) or more, every Employee who requires permission to work in any jurisdiction in which any of the Companies or any of the Transferred Subsidiaries is based has current and appropriate permission to both reside and work in such jurisdiction.

Employee Benefits; Employees. (a) Each First Financial Benefit Plan has been established, operated and administered in all material respects in accordance with its terms and the requirements of all applicable laws, including ERISA and the Code. Except as set forth on Section 4.11(a3.11(a) of the First Financial HopFed Disclosure Schedule, within the past three (3) years, neither First Financial nor any of its Subsidiaries has taken any corrective action or made a filing under any voluntary correction program of the IRS, Department of Labor or any other Governmental Entity with respect to any First Financial Schedule lists all material HopFed Benefit Plan, and neither First Financial nor any of its Subsidiaries has any knowledge of any plan defect that would qualify for correction under any such program and no First Financial Benefit Plan has, within the six (6) years prior to the date hereof, been the subject of an examination or audit by a Governmental EntityPlans. For purposes of this Agreement, “First Financial HopFed Benefit Plans” means all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), whether or not subject to ERISA, and all bonus, stock option, stock purchase, restricted stock, incentive, commission, deferred compensation, retiree medical or life insurance, supplemental retirement, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, vacation and other time off benefits, severance or other benefit plans, programs, policies, practices or arrangements, and all retention, bonus, employment, termination, severance plans, programs or arrangements or other contracts or agreements to or with respect to which First Financial HopFed or any First Financial HopFed Subsidiary, or any trade or business of First Financial HopFed or any of its Subsidiaries, whether or not incorporated, all of which together with First Financial HopFed would be deemed a “single employer” within the meaning of Section 4001 of ERISA (a “First Financial HopFed ERISA Affiliate”), is a party or has any current or future obligation or that are maintained, contributed to or sponsored by First Financial HopFed or any of its Subsidiaries or any First Financial HopFed ERISA Affiliate for the benefit of any current or former employee, officer, director or independent contractor of First Financial HopFed or any of its Subsidiaries or any First Financial HopFed ERISA Affiliate. (b) HopFed has heretofore made available to First Financial true and complete copies of each of the HopFed Benefit Plans and certain related documents, including, but not limited to, (i) all documents constituting each HopFed Benefit Plan to the extent currently effective, including all amendments thereto and all related trust documents (or, in the case of any unwritten HopFed Benefit Plans, descriptions thereof), (ii) all summary plan descriptions, together with the summary(ies) of material modifications thereto, if any, required under ERISA with respect to amendments, modifications or material supplements to any HopFed Benefit Plan, (iii) the annual report (Form 5500 and all schedules and financial statements attached thereto), if any, filed with the IRS for the last three (3) plan years, (iv) the most recently received IRS determination letter, if any, relating to a HopFed Benefit Plan, (iv) the most recently prepared actuarial report for each HopFed Benefit Plan (if applicable) for each of the last three (3) years, (vi) all material written contracts relating to any HopFed Benefit Plan to the extent currently effective, including administrative service agreements and group insurance contracts, (vii) ESOP contribution and allocation schedules, valuations and valuation opinions, and (viii) all material correspondence to or from any Governmental Entity received in the last three (3) years with respect to such HopFed Benefit Plan. (c) Each HopFed Benefit Plan has been established, operated and administered in all material respects in accordance with its terms and the requirements of all applicable laws, including ERISA and the Code. Except as set forth on Section 3.11(c) of the HopFed Disclosure Schedule, within the past three (3) years, neither HopFed nor any of its Subsidiaries has taken any corrective action or made a filing under any voluntary correction program of the IRS, Department of Labor or any other Governmental Entity with respect to any HopFed Benefit Plan, and neither HopFed nor any of its Subsidiaries has any knowledge of any plan defect that would qualify for correction under any such program and no HopFed Benefit Plan has, within the six (6) years prior to the date hereof, been the subject of an examination or audit by a Governmental Entity. (d) Section 3.11(d) of the HopFed Disclosure Schedule identifies each HopFed Benefit Plan that is intended to be qualified under Section 401(a) of the Code (the “HopFed Qualified Plans”). The IRS has issued a favorable determination letter with respect to each HopFed Qualified Plan and the related trust, which letter has not been revoked (nor has revocation been threatened), and, to the knowledge of HopFed, there are no existing circumstances and no events have occurred that could adversely affect the qualified status of any HopFed Qualified Plan or the related trust or increase the costs relating thereto. No HopFed Qualified Plan, other than the HopFed Bancorp, Inc. 2015 Employee Stock Ownership Plan (the “ESOP”) owns or holds HopFed Common Stock. (e) Each HopFed Benefit Plan that is a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) and any award thereunder, in each case that is subject to Section 409A of the Code, has, (i) since January 1, 2005, been maintained and operated, in all material respects, in good faith compliance with Section 409A of the Code and IRS Notice 2005-1 and (ii) since January 1, 2009, been, in all material respects, in documentary and operational compliance with Section 409A of the Code. (f) With respect to each HopFed Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code: (i) no such plan is in “at-risk” status for purposes of Section 430 of the Code, (ii) the present value of accrued benefits under such HopFed Benefit Plan, based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such HopFed Benefit Plan’s actuary with respect to such HopFed Benefit Plan, did not, as of its latest valuation date, exceed the then current fair market value of the assets of such HopFed Benefit Plan allocable to such accrued benefits, (iii) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred, (iv) all premiums to the Pension Benefit Guaranty Corporation (the “PBGC”) have been timely paid in full, (v) no liability (other than for premiums to the PBGC) under Title IV of ERISA has been or is expected to be incurred by HopFed or any of its Subsidiaries, and (vi) the PBGC has not instituted proceedings to terminate any such HopFed Benefit Plan. (g) None of HopFed and its Subsidiaries nor any HopFed ERISA Affiliate has, at any time during the last six (6) years, contributed to or been obligated to contribute to any plan that is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA (a “Multiemployer Plan”) or a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (a “Multiple Employer Plan”), and none of HopFed and its Subsidiaries nor any HopFed ERISA Affiliate has incurred any liability to a Multiemployer Plan or Multiple Employer Plan as a result of a complete or partial withdrawal (as those terms are defined in Part I of Subtitle E of Title IV of ERISA) from a Multiemployer Plan or Multiple Employer Plan. (h) Except as set forth in Section 3.11(h) of the HopFed Disclosure Schedule, neither HopFed nor any of its Subsidiaries sponsors, has sponsored or has any obligation with respect to any employee benefit plan that provides for any post-employment or post-retirement health or medical or life insurance benefits for retired, former or current employees or beneficiaries or dependents thereof, except as required by Section 4980B of the Code. No trust funding any HopFed Benefit Plan is intended to meet the requirements of Section 501(c)(9) of the Code. (i) All contributions required to be made to any HopFed Benefit Plan by applicable law or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any HopFed Benefit Plan, for any period through the date hereof, have been timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the books and records of HopFed. (j) There are no pending or, to the knowledge of HopFed, threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations that have been asserted or instituted, and, to HopFed’s knowledge, no set of circumstances exists that may reasonably be expected to give rise to a claim or lawsuit, against the HopFed Benefit Plans, any fiduciaries thereof with respect to their duties to the HopFed Benefit Plans or the assets of any of the trusts under any of the HopFed Benefit Plans that could reasonably be expected to result in any material liability of HopFed or any of its Subsidiaries to the PBGC, the IRS, the Department of Labor, any Multiemployer Plan, a Multiple Employer Plan, any participant in a HopFed Benefit Plan, or any other party. (k) None of HopFed and its Subsidiaries nor, to the knowledge of HopFed, any HopFed ERISA Affiliate or other person, including any fiduciary, has engaged in any “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA), which could subject any of the HopFed Benefit Plans or their related trusts, HopFed, any of its Subsidiaries, any HopFed ERISA Affiliate or any person that HopFed or any of its Subsidiaries has an obligation to indemnify, to any material tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA. (l) Except as set forth on Section 3.11(l) of the HopFed Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in conjunction with any other event) result in, cause the vesting, exercisability or delivery of, or increase in the amount or value of, any payment, right or other benefit to any employee, officer, director or other service provider of HopFed or any of its Subsidiaries, or result in any limitation on the right of HopFed or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any HopFed Benefit Plan or related trust. Except as set forth on Section 3.11(l) of the HopFed Disclosure Schedule, without limiting the generality of the foregoing, no amount paid or payable (whether in cash, in property, or in the form of benefits) by HopFed or any of its Subsidiaries in connection with the transactions contemplated hereby (either solely as a result thereof or as a result of such transactions in conjunction with any other event) will be an “excess parachute payment” within the meaning of Section 280G of the Code. Except as set forth on Section 3.11(l) of the HopFed Disclosure Schedule, neither HopFed nor any of its Subsidiaries maintains or contributes to a rabbi trust or similar funding vehicle, and the transactions contemplated by this Agreement will not cause or require HopFed or any of its affiliates to establish or make any contribution to a rabbi trust or similar funding vehicle. (m) Except as set forth on Section 3.11(m) of the HopFed Disclosure Schedule, no HopFed Benefit Plan provides for the gross-up or reimbursement of Taxes under Section 409A or 4999 of the Code. HopFed has made available to First Financial true, correct and complete copies of Section 280G calculations (whether or not final) with respect to any disqualified individual in connection with the transactions contemplated hereby. (n) There are no pending or, to HopFed’s knowledge, threatened material labor grievances or material unfair labor practice claims or charges against HopFed or any of its Subsidiaries, or any strikes or other material labor disputes against HopFed or any of its Subsidiaries. Neither HopFed nor any of its Subsidiaries are party to or bound by any collective bargaining or similar agreement with any labor organization, or work rules or practices agreed to with any labor organization or employee association applicable to employees of HopFed or any of its Subsidiaries and, to the knowledge of HopFed, there are no organizing efforts by any union or other group seeking to represent any employees of HopFed or any of its Subsidiaries. (o) There has been no amendment to any HopFed Benefit Plan or announcement by HopFed or any of its Subsidiaries relating to or change in eligibility for participation or coverage under any HopFed Benefit Plan that would increase the annual expense of maintaining such plan above the level of the expense incurred for the most recently completed fiscal year plus annual premium increases or anticipated future increases in premiums based upon normal market cost increases with respect to any director, officer, employee, independent contractor or consultant plan, as applicable. (p) HopFed and its Subsidiaries have complied with the applicable provisions of the Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) including all provisions of the ACA applicable to employees, including the employer shared responsibility provisions relating to the offer of “minimum essential coverage” to “full-time” employees that is “affordable” and provides “minimum value” (as defined in Code Section 4980H and related regulations) and the applicable employer information reporting provisions under Code Sections 6055 and 6056 (and all related regulations). (q) With respect to the ESOP: (i) HopFed has the authority to take all actions and provide such direction as contemplated by this Agreement. (ii) No event of default has occurred or presently exists under the ESOP Loan Agreement dated March 2, 2015, by and between the ESOP trustees and HopFed (the “ESOP Loan Agreement”), the Promissory Note dated March 2, 2015 issued by the ESOP (the “Promissory Note”), the Stock Purchase Agreement dated March 2, 2015, by and between the ESOP and HopFed (the “Stock Purchase Agreement”) or the ESOP Pledge Agreement dated March 2, 2015, by and between the ESOP and HopFed (the “Pledge Agreement”) (the ESOP Loan Agreement, Promissory Note, Stock Purchase Agreement and Pledge Agreement referred to collectively as the “ESOP Loan Documents”). The ESOP has the right under the ESOP Loan Agreement to prepay at any time the principal amount of the Promissory Note without penalty and subject only to payment of accrued interest through the date of prepayment, as contemplated by Section 5.17(d). Except for the Indebtedness under the ESOP Loan Documents, there is no existing Indebtedness of the ESOP or HopFed relating to the ESOP. (iii) No purchase of shares of HopFed Common Stock by any HopFed Benefit Plan holding shares of HopFed Common Stock, including, but not limited to, the ESOP, has adversely affected the tax qualification of such HopFed Benefit Plan or failed to satisfy all of the requirements for the prohibited transaction exemption provided by Section 408(e) of ERISA. Each loan to the ESOP which has been made by or guaranteed by HopFed or any other disqualified person in connection with any purchase of such shares by the Plan (an “ESOP Loan”), satisfied each of the requirements of the prohibited transaction exemption provided in Section 408(b)(3) of ERISA, Section 4975(d)(3) and Treasury Regulation Section 54-4975-7(b), and, in particular, all shares of HopFed Common Stock purchased by the ESOP or any other HopFed Benefit Plan were purchased for no more than “adequate consideration” within the meaning Section 3(18) of ERISA, as determined on the basis of a stock valuation prepared by an “independent appraiser” (as this term is defined in Section 401(a)(28)(C) of the Code) satisfying all requirements of Sections 3(18) and 408(e) of ERISA and applicable DOL regulations. (iv) The ESOP is now and has been at all times since its inception a qualified employee stock ownership plan within the meaning of Code Section 4975(e)(7). The trust maintained to fund the ESOP (the “ESOP Trust”) is a trust duly formed in accordance with applicable state law and is, and at all times has been, a trust described in Code Section 501(a). All shares of HopFed Common Stock owned by the ESOP are and have at all times constituted “employer securities” as that term is defined in Section 409(l) of the Code and “qualifying employer securities” as defined in Section 407(d)(5) of ERISA. The ESOP Trustee has been duly and properly appointed and granted full authority to act as trustee of the ESOP and exercise trust powers thereunder..