Prichard Agreement with Kentucky Bancshares, Inc
This Agreement (“Agreement”) is between and among Kentucky Bancshares, Inc., a Kentucky corporation, Kentucky Bank (Kentucky Bancshares, Inc. and Kentucky Bank and their respective successors by merger are referred to herein collectively as “Employer” except where the context clearly refers to one or the other), and Louis Prichard (“Executive”).
|A.||Employer and Executive are parties to an Employment Agreement dated as of March 28, 2008 (the “Employment Agreement”).|
|B.||Employer and Stock Yards Bancorp, Inc. have entered into an Agreement and Plan of Merger dated January 27 , 2021 (“Merger Agreement”), pursuant to which Kentucky Bancshares, Inc. will merge with and into Stock Yards Bancorp, Inc. and simultaneously or shortly thereafter Kentucky Bank shall merge with and into Stock Yards Bank & Trust Company (the “Merger”), which Mergers will constitute a Change in Control as defined in the Employment Agreement and pursuant to which the Stock Yards Bank & Trust Company shall be and become Executive’s Employer.|
|C.||The Employment Agreement provides for certain compensation to be paid if Executive’s employment is terminated by (i) Employer without good cause or (ii) by Executive for good reason within 12 months following a Change in Control.|
|D.||Stock Yards Bank & Trust Company desires that Executive remain employed on an “at will” basis following the Merger in a new role, as a Senior Vice President and Central Kentucky Market President, and Executive is willing to so serve and to cancel his Employment Agreement (which cancellation shall be a termination of and accelerate payment thereunder of certain amounts, as is permitted by Treas. Reg. Section 1.409A-3(j)(4)(ix) along with all other account-based such arrangements), and to agree to the restrictive covenants set forth in this Agreement, in exchange for certain promises set out herein regarding potential compensation if a second change in control were to occur after the Merger.|
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the adequacy of which is acknowledged, the parties agree as follows:
|(a)||If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Employer’s affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)) of similar succeeding law or authority, the Employer’s obligations under the Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer may, in its discretion, (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended or (ii) reinstate (in whole or in part) any of its obligations which were suspended.|
|(b)||If Executive is removed and/or permanently prohibited from participating in the conduct of the Employer’s affairs by an order issued under 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) and (g)(1)) or similar succeeding law or authority, all obligations of the Employer under the Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.|
|(c)||If the Employer is in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act or succeeding law or authority), all obligations under the Agreement shall terminate as of the date of default, but this Section 3(c) shall not affect any vested rights of the contracting parties.|
|(d)||All obligations under the Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Employer, by the Chairman of the Federal Deposit Insurance Corporation, or his or her designee, or by the action or direction of the Board of Directors of the Federal Deposit Insurance Corporation (the “FDIC”):|
|i.||at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Employer under the authority contained in section 13(c) of the Federal Deposit Insurance Act; or|
|ii.||at the time the FDIC approves a supervisory merger to resolve problems related to operation of the Employer or when the Employer is determined by the FDIC to be in an unsafe or unsound condition.|
8.3Cooperation With Litigation. Executive agrees to cooperate with Employer, during the term of this Agreement and thereafter (including after Executive’s Termination of Employment hereunder for any reason), by making Executive reasonably available to testify on behalf of Employer or any affiliated company in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist Employer or any affiliated company in any such action, suit, or proceeding by providing information to and meeting and consulting with Employer, any affiliated company, or any of their counsel or representatives upon reasonable request, provided that such cooperation and assistance shall not materially interfere with Executive’s then current professional activities and that Employer shall agree to reimburse Executive for all reasonable out-of-pocket expenses incurred by Executive in connection with providing such cooperation and assistance.
8.4Employer’s Confidential Information. Executive agrees that, during the term of this Agreement and at any time thereafter, he shall not directly or indirectly, without the express written consent of Employer, disclose, divulge, discuss, copy, or otherwise use or suffer to be used in any manner, in competition with or contrary to the interests of Employer or any affiliated companies, the customer lists, proprietary organizational methods, products, business plans or strategies, or other trade secrets of Employer or any affiliated companies, it being acknowledged by Executive that all such information regarding the business of Employer and affiliated companies compiled or obtained by, or furnished to, Executive while Executive shall have been employed by or associated with Employer is confidential information and Employer’s exclusive property. Confidential information shall not include any information (A) which becomes publicly known through no fault or act of the Executive; (B) is lawfully received by the Executive from a third party after a Termination of Employment without a similar restriction regarding confidentiality and use and without a breach of this Agreement or (C) which is independently developed by the Executive and entirely unrelated to the business of providing banking or banking-related services.
8.5Advice to Future Employers. If Executive, in the future, seeks or is offered employment by any other company, firm, or person, he shall provide a copy of this Section 8 to the prospective employer prior to accepting employment with that prospective employer.
10.Governing Law. The provisions of this Agreement shall be construed in accordance with the laws of the Commonwealth of Kentucky.
11.Amendment. This Agreement may be amended only by mutual agreement of the parties in writing without the consent of any other person.
12.Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Employer and its successors and assigns; including but not limited to any successor to the Employer, direct or indirect, resulting from purchase, merger, consolidation or otherwise. This Agreement shall also be binding upon Executive and shall inure to the benefit of Executive, his personal or legal representatives, successors, heirs and assigns. No interest of the Executive, or any right to receive any payment or distribution hereunder, will be subject in an manner to sale, transfer, assignment, pledge, attachment, garnishment or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligation or debts of, or other claims against, the Executive, including claims for alimony, support, separate maintenance, and claims in bankruptcy proceedings. All rights under this Agreement of the Executive will at all times be entirely unfunded, and no provision will at any time be made with respect to segregating any assets of the Employer or any affiliate for payment of any amounts due hereunder. The Executive will have only the rights of general unsecured creditor of the Employer.
13Definitions. As used in this Agreement, in addition to phrases or words defined in the text of this Agreement where first used, the following terms shall have the following meanings:
13.1A “Change in Control” of Employer shall be deemed to have occurred if:
(ii)during any period of two consecutive years beginning after April 26, 1995, individuals who at the beginning of such period constitute the Board of Stock Yards Bancorp, Inc. and any new director (other than a director designated by a person
who has entered into an agreement with Stock Yards Bancorp, Inc. to effect a transaction described in clause (i), (iii) or (iv) of this Change in Control definition) whose election or nomination for election was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority of the Board of Stock Yards Bancorp, Inc.;
(iii)the shareholders of Stock Yards Bancorp, Inc. (or Stock Yards Bancorp, Inc. as the sole shareholder of Stock Yards Bank & Trust Company) approve a merger or consolidation of Stock Yards Bancorp, Inc. or Stock Yards Bank & Trust Company with any other corporation (other than a merger or consolidation which would result in the voting securities of Stock Yards Bancorp, Inc. outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the entity surviving such merger or consolidation), in combination with voting securities of Stock Yards Bancorp, Inc. or such surviving entity held by a trustee or other fiduciary pursuant to any employee benefit plan of Stock Yards Bancorp, Inc. or such surviving entity or of any subsidiary of Stock Yards Bancorp, Inc. or such surviving entity, at least 80% of the combined voting power of the securities of Stock Yards Bancorp, Inc. or such surviving entity outstanding immediately after such merger or consolidation); or
(iv)the shareholders of Stock Yards Bancorp, Inc. approve a plan of complete liquidation or dissolution of Stock Yards Bancorp, Inc. or an agreement for the sale or disposition by Stock Yards Bancorp, Inc. of all or substantially all of Stock Yards Bancorp, Inc.’s assets.
For purposes of the definition of Change in Control, “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended, as supplemented by Section 13(d)(3) of such Act; provided, however, that Person shall not include (i) Stock Yards Bancorp, Inc., any subsidiary or any other Person controlled by Stock Yards Bancorp, Inc., (ii) any trustee or other fiduciary holding securities under any employee benefit plan of Stock Yards Bancorp, Inc. or of any subsidiary, or (iii) a corporation owned, directly or indirectly, by the shareholders of Stock Yards Bancorp, Inc. in substantially the same proportions as their ownership of securities of Stock Yards Bancorp, Inc..
For purposes of the definition of Change in Control, a Person shall be deemed the “Beneficial Owner” of any securities which such Person, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that: (i) a Person shall not be deemed the Beneficial Owner of any security as a result of an agreement, arrangement or understanding to vote such security (x) arising solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to, and in accordance with the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder or (y) made in connection with, or to otherwise participate in, a proxy or consent solicitation made, or to be made, pursuant to, and in accordance with, the applicable provisions of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder; in either case described in clause (x) or clause (y) above, whether or not such agreement, arrangement or understanding is also then reportable by such Person on Schedule 13D under the Securities Exchange Act of 1934, as amended (or any comparable or successor report); and (ii) a Person engaged in business as an underwriter of securities shall not be deemed to be the Beneficial Owner of any securities acquired through such Person’s
participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition.
13.2“Cause” shall mean termination because of dishonesty, willful misconduct, breach of fiduciary duty, intentional failure to perform duties, willful violation of any law or regulation (other than traffic or similar offenses) or a material breach of any provision of this Agreement by Executive; provided, however, that with respect to a material breach of any provision of this Agreement by Executive, Executive shall be given notice of such breach and his employment shall not be terminated if he cures such breach within 15 days of receiving notice thereof.
13.3“Code” means Internal Revenue Code of 1986, as amended.
13.4“Customer” shall mean any firm, individual, corporation or entity which used the facilities, products or services of the Employer during the 12 month period immediately preceding the voluntary or involuntary termination of Executive’s employment with the Employer.
13.5“Good Reason” means a resignation at Executive’s initiative following a Change in Control and the occurrence of any of the following triggering events, provided such resignation occurs within 90 days after a triggering event or, if earlier, prior to 3 years following the effective date of this Agreement.
13.6“Permanent Disability” means any mental or physical condition or impairment which prevents Executive from substantially performing his duties for a period of more than 90 consecutive days.
13.7“Termination of Employment” or “Termination” means the date the Employer reasonably anticipates that (i) Executive will not perform any further services for the Employer, Stock Yards Bancorp, Inc., or any other entity considered a single employer with the Employer under Section 414(b) or (c) of the Code (inserting 50% threshold for ownership in each place where 80% now appears therein) (the “Employer Group”), or (ii) the level of bona fide services Executive will perform for the Employer Group after that date will permanently decrease to less than 20% of the average level of bona fide services performed over the previous 36 months (or if shorter, over the duration of service). For this purpose, service performed as an employee or as an independent contractor is counted, except that service as a member of the Board of an Employer Group entity is not counted unless benefits under this Agreement are aggregated with benefits under any other Employer Group plan or agreement in which Executive also participates as a director. An Executive will not be treated as having a Termination of Employment while on military leave, sick leave or other bona fide leave of absence if the leave does not exceed six months or, if longer, the period during which Executive has a reemployment right under statute or contract. If a bona fide leave of absence extends beyond six months, Executive will be considered to have a Termination of Employment on the first day after the end of such six month period, or on the day after Executive’s statutory or contractual reemployment right lapses, if later. The Company will determine when Executive’s Termination of Employment occurs based on all relevant facts and circumstances, in accordance with the definition of separation from service in Treasury Regulation Section 1.409A-1(h).
14.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
[signature page follows]
IN WITNESS WHEREOF, this Agreement has been executed on the date(s) set forth below, to be effective as set forth above.
Executive:Kentucky Bancshares, Inc.
/s/ Louis Prichard By /s/ B. P. Caudill, Jr.
Date: February 22, 2021Date: February 20, 2021
By /s/ B. P. Caudill, Jr.
Date: February 20, 2021
NEW-HIRE AGREEMENTS TO BE SIGNED AT CLOSING