Document:

Patent License and Strategic Alliance Agreement

 Exhibit 10(r) 
  
 PATENT LICENSE AND STRATEGIC ALLIANCE AGREEMENT WITH SAWYER PRODUCTS, INC. 
  
 PATENT LICENSE AND STATEGIC ALLIANCE AGREEMENT 
  
 THIS PATENT LICENSE AGREEMENT (“Agreement”) is made and entered into, and shall be effective as of August 6, 2003, by and between
SAWYER PRODUCTS, INC.(Sawyer) an Illinois corporation (“Licensee”) domiciled at 605 7th Ave N. Safety
Harbor, Florida 34695, and INNOVA PURE WATER, INC.(Innova), a Florida corporation (“Licensor”) domiciled at 13130 56th Court Suite 609. 
  
 Background and Intent

  
 Innova develops, manufactures, and sells consumer, emergency, and
military water treatment products, currently marketed through various Strategic Alliance Partners and distributors. Sawyer is a leading manufacturer and distributor of a line of outdoor products to the Outdoor and Military markets and has for the
past two years been a Strategic alliance Partner and has distributed the Innova portable Biological Sport Bottles. Innova has developed the in-line, or tandem dual element biological filter used in the Innova Sport Bottle and distributed by Sawyer.
This product is further described on Exhibit A, which is the subject of an Innova patent, as described on Exhibit B 
  

	 	A.	Innova represents that it possesses over thirty five existing or pending patents covering both technology and products in the field of water purification. 

 

	 	B.	In addition to the in-line dual element filter used in the Sawyer Sport Bottle, Innova has developed a proprietary filtration system using carbon composite elements and HFM for use
internally in water containers, hydration Packs, and canteens licensed to, or sold through, other distributors on either an exclusive or non-exclusive basis. 

  

	 	C.	Sawyer desires to purchase and license the Innova Sport Bottle with tandem dual In-Line Filters from Innova and wishes to avail itself of Innova’s future product development
capability in areas relating to Sport Bottles combining Hollow Fiber Membrane technology with a carbon composite filter, providing such future development is not funded or owned by third parties. 

  

	 	D.	Innova desires to avail itself of the marketing resources and distribution capability of Sawyer relating to tandem dual filter Biological Sport Bottle filter systems, and such other
water treatment products as deemed appropriate and covered specifically under the subject patent. 

  

	 	E.	Innova and Sawyer wish to achieve these goals through entering into this License Agreement to grant Sawyer certain non-exclusive rights to market Innova tandem In-Line Filtration
Products, and under specific circumstances manufacture the named and defined product. 

  

	 	F.	Definitions: As used in this Agreement, the following terms will have the meaning indicated below, unless the context clearly requires otherwise:

  

	 	a.	“Licensed Patent” shall mean. Patent Application No.WO 03/014025 A1 currently pending and incorporated under terms of confidentiality in Appendix B, and the US counterpart
Patent when issued. 

	 	b.	“Licensed Product” shall mean the specific water treatment product as shown and described in Exhibit A,” and consisting of dual filters in a tandem relationship
consisting of a sub-micron hollow fiber membrane filter and a carbon composite filter. 

  

	 	c.	“Unit” shall mean each replacement set of Hollow Fiber Membrane and Carbon Composite water treatment filters, which may be for replacement purposes or sold in combination
with a bottle or other container. 

  

	 	d.	“Territory” shall mean the United States and such foreign countries as permission to sell into is provided on a case-by-case basis by written confirmation from Innova; it
does not include the direct sales, multi-level marketing claws of trade. 

  
 1. Grant of License 
  
 a. The License fee will be $200,000, which will be deducted from the loan principal presently outstanding between the parties together with the reduction of the option package eliminating the $1 options and reducing
the $0.50 options to purchase 200,000 shares and the $0.75 options to purchase 200,000 shares; there now being no other options or warrants outstanding. 
  
 b. Licensor hereby grants to Licensee, for the Term of this Agreement, a non-exclusive license under the Licensed Patent to market
distribute and sell the Licensed Product throughout the Territory. 
  
 c. Licensor hereby grants to the Licensee the right to manufacture the product produced for and purchased by Sawyer per the stipulations contained within this agreement. 
  
 d. Licensor expressly reserves to itself the right to
manufacture, market, and license to others as the Licensor shall deem is in its best interest. 
  
 e. Future Developments, Products and/or Patents funded by third parties, and which may take place should a change of control take place
are restricted from inclusion from this agreement without the specific agreement of the funding party. 
  
 f. Licensee shall continue or commence sale of the current product model concurrent with the execution of this Agreement. As a condition
of maintaining this license the licensee shall sell within each of the following years, commencing January 1, 2003, One-Thousand finished Products. 
  
 g. The term (“Term”) of this Agreement shall commence upon the effective date set forth above and continue through the life of
the controlling patent, provided all other conditions of the agreement are met by the Licensee. 
  
 2. License Provisions 
  
 a. Sawyer will be required to provide quarterly sales and purchase projections, relative to the production required of Innova. Upon the
issuance of a purchase order and payment of fifty-percent of the order value, Innova will provide firm delivery dates to the best of Innova’s ability, which may be predicated upon the availability of components from Innova suppliers. Typically
delivery will commence from Innova within 120 days; or as soon thereafter as components can be received from a supplier based upon Innova placing an order upon receipt of the order and deposit from Sawyer 
  
 b. Price increases shall be limited to the percentage
increase in cost of raw material and change in the Producers cost index for consumer product companies. (Consumer Price Index). 

 c. The right to manufacture will be provided to the Licensee under the condition or
circumstances that Innova, its affiliates, or successor companies cannot fulfill the reasonable delivery requirements of Sawyer Products: 
  

	 	i.	In accordance with quarterly forecasts, and with such advanced forecasts having been provided on a timely basis, the quoted delivery time period is beyond 120 days, unless delayed
by a vendor or alternatively: 

  

	 	ii.	If the product supplied quality becomes deficient when compared to “Physical Proofs” provided for quality assurance and as standards for quality and performance previously
accepted and signed by both parties. 

  

	 	iii.	Innova becomes insolvent; or ceases to function as a going concern; or ceases to conduct its operation in the normal course of business; or a receiver for it or assignee for benefit
of creditors is appointed; suffers an attachment or levy on a substantial portion of its assets; or files for relief under any bankruptcy, reorganization, liquidation or other insolvency proceeding; or it otherwise takes advantage of any insolvency
law; and cannot fulfill its delivery obligation; or 

  

	 	iv.	Innova breaches any other material provision of this Agreement. 

  

	 	v.	Tooling purchased entirely by Sawyer will be Sawyer property and will not be used to produce product for others without the expressed approval of Sawyer. 

 

	 	vi.	Should any of the above conditions not be met or cured within forty-five days of notification by Sawyer, Sawyer may have full access to the tooling that Sawyer has become a part
owner of, or has purchased for use within the vendors facility and proceed to manufacture under this license for it’s own account until such time as Innova corrects the problem. 

  

	 	vii.	Should Innova refuse an order to develop a product for Sawyer in good faith which would be covered by the license, then Sawyer will be free to develop and manufacture such product
provided: 

  

	 	a.	Sawyer will allow an adequate time for the product development, which may be from nine months to one year or more for a totally new product; and three to six months for tooling
change. 

  

	 	b.	Sawyer will pay the cost of the product development, which will be against a quotation provided by Innova within thirty days of Sawyer’s request confirmed by letter or fax.

  
 d. The licensee may not
sub-license the manufacturing of the licensed products to any third party for distribution by a third party. 
  
 3. Royalty – Should for any of the pre-stated reasons or conditions, Sawyer enters into the production of the Product covered under
this license: 
  
 a. Royalties will be paid per
Sport Bottle Product produced by Sawyer rather than purchased from Innova or a successor company under the provision of paragraph number 1. 
  
 b. The replacement Carbon Filter will be purchased from Innova; if not a Royalty will be paid; Royalty paid on the current hollow fiber
membrane sold separately as a replacement unit. 

 c. Royalties will be paid quarterly, net of returned Product within fifteen days of the
close of the calendar quarter. 
  
 d. The
licensor will be entitled to increase the royalty by the same percentage as the elevation of the consumer price index. 
  
 e. Royalties on other products that may be produced by Sawyer under this license, based upon an Innova default, or Innova’s
unwillingness to manufacturing will be paid. 
  
 f. Audit provision – An audit may be required by the Licensor, the audit to be preformed by and independent CPA acceptable to both parties. The cost of the audit will be born by the Licensor. Should the audit reveal that the royalties
due Licensor have been underpaid by five percent (5%) or more, on an aggregate, annualized basis, Licensee shall reimburse Licensor for the reasonable costs of performing the audit, and pay a penalty of one hundred percent over the under payment due
plus the amount of underpayment due. 
  
 4.
Improvements - In the event that Licensee makes any improvements to the Licensed Patent during the Term, the rights to such improvement(s) shall be assigned to the Licensor. For purposes of the foregoing, the parties expressly
acknowledge and agree that the improvements required to be assigned to Licensor shall include any improvements to products that could not be developed, produced or marketed by Licensee without infringing on the Licensed Patent. All costs pertaining
to the patenting and/or assignment will be born by the Licensor. Such patentable improvements will not be marketed to third parties without the written permission of Sawyer. 
  
 5. Warranties - Licensor warrants and represents to Licensee as follows: 
  
 a. Licensor is the sole and exclusive owner of all right,
title, and interest in the Patent; 
  
 b.
Licensor has the right to enter into this Agreement and to grant the rights as set forth herein above; 
  
 c. Neither this Agreement nor the transactions contemplated hereby will cause a violation of any other agreement to which Licensor is a
party. 
  
 d. Innova warrants that the product
will meet the minimum performance specifications of Exhibit C, and will conform to the “Physical Proof” which both parties have agreed represents an acceptable product and to which an officer of both companies has affixed their signature.
If the reject or fault rate outside the function and operation of the “Physical Proof” exceeds 1% reject from the customer of the specific product delivered, Innova will have the responsibility of replacing the products out of
specification, and handling a general recall if such is required from the customer. 
  
 e. Innova will package in accordance with the Sawyer requirements or Sawyer may take over this aspect of the manufacturing operation.
Should this occur all aspects of the packaging become the responsibility of Sawyer. Should Sawyer undertake the packaging Sawyer will warrant to Innova the cleanliness of the assembly area to be suitable for food grade product. 
  
 6. Licensee Warrants and represents to Licensor as follows:

  
 a. Should the Licensee manufacture a licensed
product the Licensee warrants that all products under license from the Licensor will be in accordance with Exhibit A, which may be modified from time to time by mutual written agreement. 

 b. Should the Licensee manufacture, the Licensee warrants that quality control standards
and procedures are in place to assure the product performance to consistently meet the claims put forth for the products manufactured or marketed under this license when and if produced by Sawyer. 
  
 c. The claims made for the product will be as represented by
Innova and the Licensee will not make other performance claims that are not authored or approved by Innova. 
  
 d. Licensee is a duly organized, validly existing entity, as such entity is described herein above, and is in good standing under the laws
of the State of Illinois and Florida, and it has taken all requisite action for it to enter into this Agreement and to perform its obligations hereunder. 
  
 e. The Licensee will maintain a manufacturing environment suitable for the production of food grade products and be subject to random
inspection by NSF, should manufacturing be undertaken. 
  
 7.
Indemnification: 
  
 a.
Licensee agrees to notify Licensor in writing of any claim or potential claim known to Licensee that the Licensed Patent infringes any third party patent, such written notice to be given to Licensor as soon as reasonably practicable, but in no event
more than thirty (30) days from the date Licensee first becomes aware of same. Licensor shall defend, indemnify and hold Licensee, and its officers, directors, employees, agents, successors, affiliates and assigns, harmless from any and all loss,
cost, damage, liability, or expense arising out of or resulting from any claim of infringement by the Licensed Patent or any third party patent. Licensor will have the option, at its expense, of either entering into such license arrangements as may
be necessary in order to avoid the payment by Licensee of royalties to any third party, or defending any claim or litigation alleging infringement of any third party patent by the Licensed Patent. Licensee shall have the opportunity to participate
in, and to be represented by counsel of its choice at its sole cost and expense in any such infringement suit. This indemnification applies to product features pursuant to the licensed patent, and not to product features added by the Licensee.

  
 b. Except for obligations subject to
Licensor’s indemnification obligations in paragraph 7a. above, Licensee shall defend, indemnify and hold Licensor, and its officers, directors, employees, agents, successors, affiliates and permitted assigns, harmless from any and all loss,
cost, damage, liability, or expense arising out of or resulting from the marketing, product representations, advertising, distribution and/or sale by Licensee (for its Affiliates or permitted assigns) of the Licensed Product, including, but not
limited to, all product liability claims brought forth by statements or representations outside the scope of and not approved by Innova. For the duration of the Term of this Agreement (and, with respect to product liability insurance, for an
additional period of two years following expiration of the Term), 
  
 8. Insurance: Licensor and Licensee both agree to maintain comprehensive general liability insurance, including advertising liability coverage, and product liability insurance policies in full force and effect and to have the
other party included as an additional named insured on each such policy, with the following policy limits: 
  
 a. Comp. General Liability: $1,000,000 per occurrence; $2,000,000 aggregate. 
  
 b. Product Liability: $1,000,000 per occurrence; $2,000,000
aggregate. 
  
 c. The parties shall provide each
other on an annual basis with certificates evidencing the foregoing coverage and maintain such coverage for a period of three years from date of shipment. 

 9. Termination – 
  
 a. Either party shall have the right to terminate this Agreement upon thirty (30) day’s prior written
notice to the other party: (a) in the event of a voluntary or involuntary filing of a petition in bankruptcy by the other party, or in the event such party makes an assignment for the benefit of creditors; (b) in the event the other party is
insolvent by reason of being unable to pay debts generally as they mature; (c) in the event of an appointment of a receiver for the other party; (d) in the event of any material default under this Agreement which is not remedied within thirty (30)
days after receipt of written notice of such default from the other party; or (e) in the event that all of the claims comprising the Licensed Patent are declared invalid or unenforceable by a court of competent jurisdiction and last resort, or by a
court or tribunal from whose decision no timely appeal is taken. 
  
 b. This Agreement will automatically terminate (i.e.: without further notice and without any opportunity to cure) upon expiration of any one-year term (Initial or Renewal Term) in the event that the Renewal Minimum
set forth in paragraph 1. f. i. is not achieved. 
  
 c. The Licensor may terminate this agreement should the licensee fail to make a royalty payment, if due, on a timely basis within thirty (30) days of the end of each quarter provided the Licensee is the manufacture and paying royalties; and
at the end of thirty (30) days after delivery if purchasing products from Innova. 
  

	 	i.	Within ten days of the end of each quarter the Licensee will provide to the Licensor a preliminary accounting of royalties due. 

  

	 	ii.	Should the Licensee fail to pay royalties or accounts payable due on a timely basis, curing the default within the subsequent thirty day period, the Licensor may terminate the
License after the second such occurrence within any one year period, or if the second default follows immediately after the first default without consideration of the year during which the defaults occur. 

  

	 	iii.	This License may be terminated if false representations are made for the Licensed Product, or representations (claims) are made which have not been fully substantiated by
independent laboratories accredited to perform the testing and have so certified the testing results. 

  
 d. Upon termination of this Agreement, all rights granted to Licensee shall immediately terminate and shall revert to Licensor. Licensee
shall thereafter make no further use of the Licensed Patent or any other rights granted to Licensee under this Agreement. Provided termination is not as a result of a financial default or as a result of paragraph 6 a-e, the Licensee will be provided
a period of six months after termination in which to eliminate existing inventory provided the remaining terms of the contract continue to be met. 
  
 10. Prohibition on Assignment – This Agreement may not be assigned by the Licensee without the written consent of the licensor.

  
 11. Patent Marking - Licensee shall provide
patent marking on the Licensed Product P.D.P. and its consumer packaging as follows: “ “Licensed from Innova Pure Water, Inc. U.S. and Foreign Pat’s Pend.” And the actual patent number(s) when issued. 

 12. Miscellaneous 
  
 a. Notices. All notices and other communications to be given pursuant to this Agreement shall be in writing
to the party for whom intended at the addresses set forth below, or at such other addresses as the parties may in the future specify. Each such notice shall be effective on the earlier to occur of; (a) the day it is received, or (b) (i) if given by
facsimile with machine confirmation, one day following transmission of the facsimile; (ii) if given by mail, three days after the notice is deposited in the mail; or (iii) if given by delivery, the day it is delivered, provided same is accomplished
during normal business hours. 
  
 b.
Attorney’s Fees: In the event that any legal action is commenced to enforce any term of this Agreement or to seek recovery for any breach thereof, the prevailing party in such action shall be entitled to recovery of its reasonable
attorney’s fees and actual costs incurred in such action. 
  
 c. Controlling Law/Arbitration: This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. Any controversy or claim arising out of or relating to this contract, or the
breach thereof, shall be settled by an expedited arbitration in Florida, to be heard by the American Arbitration Association (“AAA”), and judgment upon the award rendered by the arbitrator(s), which shall be prompt and timely, may be
entered in any Court having jurisdiction thereof. The parties shall have the right to engage in reasonable discovery in connection with any such arbitration. The arbitrator shall be entitled to award reasonable expenses to the prevailing party
(including reasonable attorney’s fees). 
  
 d. Entire Agreement: This Agreement contains the entire Agreement of the parties and supersedes any prior agreements, understandings and memoranda relating thereto. This Agreement may not be changed, altered and modified in any way except
by a writing signed by the parties hereto. 
  
 e.
Severability: If any clause or provision herein shall be adjudged to be invalid or unenforceable by a court of competent jurisdiction or by operation of any applicable law, such adjudication shall not affect the validity of any other clause Or
provision, which shall remain in full force and effect. 
  
 f. Independent Contractor: It is understood and agreed that the relationship of Licensor and Licensee is that of an independent contractor, and nothing contained in this Agreement shall be construed to create any
partnership, joint venture, principal/agent relationship, or any other fiduciary relationship between the parties hereto. The parties expressly disclaim the existence of any third party beneficiaries to this Agreement. 
  
 g. Force Majeure: If, for any reason, such as strikes,
boycotts, war, weather, raw materials and labor shortages, other acts of God, riots, delays of commercial carriers, restraints of public authority, or any other reason beyond the control of Licensee and outside the normal scope of commercial
restraints (collectively “Force Majeure”), either party is unable to timely fulfill its obligations under this Agreement, the time period for completion of same shall be extended for a period of time equal in duration to the period of time
during which performance was not possible, but in no event to exceed three (3) consecutive months in total. 
  
 h. The attached Exhibits A-E are a component of this agreement. 

	 Innova Pure Water, Inc.
	 	 Sawyer Products, Inc.

	 13130 56th Court, Suite 609
	 	 605 7th Ave N.

	 Clearwater, Florida 33760
	 	 Safety Harbor, Florida 34695,

				
	 By:
	 	 /s/  JOHN E. NOHREN, JR.

	 	 By:
	 	 /s  KURT AVERY

	 John E. Nohren, Jr.
	 	 Kurt Avery, President

	 Chairman & Treasurer
	 	 

 EXHIBIT A 
 LICENSED PRODUCTS 
  

	 	1.	Sport bottles containing a HFM and standard Innova “B” filter in tandem configuration 

	 	2.	Sport Bottles integrating a HFM and a monolithic carbon composite filter within the parameter as set forth in the licensed patent. 

	 	3.	Injector for electrolyte or other permitted liquid components. 

 EXHIBIT B 
 LICENSED PATENT – TO BE TREATED CONFIDENTIALLY UNTIL ISSUED 

 EXHIBIT C 
  

EXISTING PRODUCT PERFORMANCE 
  
 Performance Specification for Hollow Fiber Membrane: 
 Per Test results previously provided when used in accordance with the Sport Bottle Product. Typically four log removal of protozoa cysts and six log reduction of bacteria. 
 Product Life nominally 75 gallons with NTU-1 water (Clearwater, Fl. municipal tap water) 
  
 Performance of Innova “B” Carbon composite filter: 
 Removal of 75% - 90% of chlorine using NSF standard testing protocol 
 (Optional) Removal of 90% - 97% of lead using NSF standard testing protocol if optionally chosen and increase in cost accepted by /sawyer. 
 Nominal rated life using NSF testing protocol – 20 Gallons.Exhibit 10.1

 Exhibit 10.1 
  
 CAPITAL SECURITIES SUBSCRIPTION AGREEMENT 
  
 September 17, 2003 
  
 THIS CAPITAL SECURITIES SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is made among HopFed Capital Trust I, a statutory trust created
under the laws of the State of Delaware (the “Trust”), HopFed Bancorp, Inc. (the “Company” and, collectively with the Trust, the “Offerors”) and ALESCO Preferred Funding I, Ltd., a newly formed exempted company with
limited liability incorporated under the laws of the Cayman Islands (the “Purchaser”). 
  
 RECITALS: 
  
 A. The Trust desires to issue $10,000,000 of its MMCapSSM (the “Capital Securities”), with a
liquidation amount of $1,000 per Capital Security, representing undivided beneficial interests in the assets of the Trust (the “Offering”), to be issued pursuant to an Amended and Restated Declaration of Trust (the
“Declaration”), by the Company, as Sponsor, Wilmington Trust Company, as Institutional Trustee, Wilmington Trust Company, as Delaware Trustee, and the Administrators named therein. The Capital Securities are to be guaranteed by the Company
with respect to distributions and payments upon liquidation, redemption and otherwise to the extent provided in and pursuant to the terms of a Guarantee Agreement (the “Guarantee”) between the Company and Wilmington Trust Company, as
Guarantee Trustee; and 
  
 B. The proceeds from the sale of the
Capital Securities will be combined with the proceeds from the sale of the Common Securities by the Trust to the Company and will be used by the Trust to purchase an equivalent aggregate principal amount of Floating Rate Junior Subordinated
Debentures due 2033 of the Company (the “Debentures”), to be issued by the Company pursuant to an Indenture (the “Indenture”) to be executed by the Company, as Issuer, and Wilmington Trust Company, as Debenture Trustee; and

  
 C. The Purchaser intends to complete an offering of its
securities (the “CBO Offering”) on or about September 25, 2003 or such other business day as may be agreed upon by the Offerors and the placement agent (“Placement Agent”) identified in the Placement Agreement (the “Closing
Date”) and to use the proceeds of the CBO Offering to, among other things, acquire the Capital Securities from the Trust and other subordinated notes and capital securities in a quantity and with other particular characteristics, in the
aggregate, sufficient to permit the successful completion of the CBO Offering; and 
  
 D. In consideration of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto agree as follows: 
  
 ARTICLE I 
  
 PURCHASE AND SALE OF CAPITAL SECURITIES 
  
 1.1. Upon the execution of this Subscription Agreement, subject to the conditions precedent set forth in Section 1.5, the Purchaser hereby agrees to
purchase from the Trust 10,000 Capital Securities at a price equal to $1,000 per Capital Security (the “Purchase Price”) and the 

  

 
Trust agrees to sell the same number of Capital Securities with a liquidation amount of $1,000 per Capital Security to the Purchaser for the Purchase Price.
The rights and preferences of the Capital Securities will be set forth in the Declaration in form and substance reasonably acceptable to the Purchaser. The Purchase Price is payable by the Purchaser on the Closing Date in immediately available funds
to the account designated by Wilmington Trust Company against delivery of the aforementioned Capital Securities. 
  
 1.2. The certificate for the Capital Securities shall be authenticated by the Institutional Trustee and delivered in definitive form by the Trust on the
Closing Date to the Purchaser or its designee, shall be registered in the name of the Purchaser and shall represent the aggregate liquidation amount of the Capital Securities being purchased by the Purchaser. 
  
 1.3. Each of the provisions of the Placement Agreement, dated September 17,
2003 (the “Placement Agreement”), including the definitions therein, are hereby incorporated by reference into this Subscription Agreement. In addition, to the extent provided for in the Placement Agreement, the Purchaser shall be entitled
to the benefits of the Placement Agreement and shall be entitled to enforce such obligations of the Offerors under the Placement Agreement as fully as if the Purchaser were a party to such Placement Agreement, it being agreed between the parties
that any and all representations, covenants and other agreements made by the Offerors to the Placement Agent in the Placement Agreement shall be deemed to have also been made to the Purchaser. 
  
 1.4. If any condition specified herein or in the Placement Agreement shall
not have been fulfilled when and as required to be fulfilled by, on behalf of or in respect of the Offerors or the Capital Securities or the Debentures, this Subscription Agreement may be terminated by the Purchaser by notice to the Offerors at any
time at or prior to the Closing Date, and such termination shall be without liability of any party to any other party except as provided in Section 5(i) of the Placement Agreement and except that Sections 1, 7, and 8 of the Placement Agreement shall
survive any such termination and remain in full force and effect. 
  
 1.5. If the CBO Offering is not successfully completed for any reason, including, without limitation, as a result of the inability of the Purchaser to acquire sufficient capital securities and subordinated notes from the Trust and other
issuers and sellers in a quantity and with other particular characteristics, in the aggregate, sufficient to satisfy rating agency criteria with respect to expected ratings on the securities to be issued by the Purchaser and other criteria deemed
necessary or advisable by the Purchaser, all obligations of the Purchaser hereunder and any claims against the Purchaser hereunder shall automatically terminate and be extinguished and shall not thereafter revive. 
  
 1.6. Notwithstanding any other provision of this Subscription Agreement, the
obligations of the Purchaser hereunder are limited recourse obligations of the Purchaser, payable solely from the proceeds of the CBO Offering, and if the CBO Offering is not completed or the proceeds of the CBO Offering are insufficient to satisfy
the obligations of the Purchaser, all obligations of the Purchaser hereunder and any claims against the Purchaser hereunder shall be extinguished and shall not thereafter revive. No recourse shall be had to any subscriber, officer, director,
employee, administrator, shareholder, incorporator or agent of the Purchaser or their respective successors or assigns for any obligations hereunder. The Trust, Wilmington Trust 

  

 2 

 
Company (on behalf of the Trust) and the Company further agree (i) not to take any action in respect of any claims hereunder against any subscriber, officer,
director, employee, administrator, shareholder, incorporator or agent of the Purchaser and (ii) not to institute against the Purchaser any insolvency, bankruptcy, reorganization, liquidation or similar proceedings in any jurisdiction until one year
and one day or, if longer, the applicable preference period then in effect, as the case may be, shall have elapsed since the final payments to the holders of the securities issued by the Purchaser in connection with the CBO Offering. 
  
 ARTICLE II 
  
 REPRESENTATIONS AND WARRANTIES OF PURCHASER 
  
 2.1. The Purchaser understands and acknowledges that (i) none of the Capital
Securities, the Debentures or the Guarantee (the “Offeror Securities”) have been or will be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any other applicable securities laws, (ii) the Offeror
Securities are being offered for sale by the Offerors in transactions not requiring registration under the Securities Act, and (iii) the Offeror Securities may not be offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act, or any other applicable securities laws, pursuant to an exemption therefrom or in a transaction not subject thereto. 
  
 2.2. The Purchaser represents and warrants that (i) it is not a “U.S. person” (as such term is defined in Rule 902
under the Securities Act), (ii) it is not acquiring the Capital Securities for the account or benefit of any U.S. person, and (iii) the offer and sale of Capital Securities to the Purchaser constitutes an “offshore transaction” under
Regulation S under the Securities Act. 
  
 2.3. The Purchaser
represents and warrants that it is purchasing the Capital Securities for its own account, for investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or other applicable
securities laws, subject to any requirement of law that the disposition of its property be at all times within its control and subject to its ability to resell such Capital Securities pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption therefrom or in a transaction not subject thereto, and the Purchaser agrees to the legends and transfer restrictions applicable to the Capital Securities contained in the Declaration. 
  
 2.4. The Purchaser, a Cayman Islands company whose business includes the
issuance of certain notes and acquiring the Capital Securities and other similar securities, has had the opportunity to ask questions of, and receive answers and request additional information from, the Offerors and is aware that it may be required
to bear the economic risk of an investment in the Capital Securities. 
  
 2.5. The Purchaser is an exempted company with limited liability duly incorporated, validly existing and in good standing under the laws of the jurisdiction where it is organized, with full power and authority to execute, deliver and
perform this Subscription Agreement, to make the representations and warranties specified herein, and to consummate the transactions contemplated herein and it has full right and power to subscribe for the Capital Securities. 
  

 3 

 2.6. No filing with, or authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental body, agency or court having jurisdiction over the Purchaser, other than those that have been made or obtained, is necessary or required for the performance by the Purchaser of its obligations under this Subscription
Agreement or to consummate the transactions contemplated herein. 
  
 2.7. This Subscription Agreement has been duly authorized, executed and delivered by the Purchaser. 
  
 2.8. The Purchaser is not in violation of or default under any term of its Memorandum of Association or Articles of Association, of any provision of any
mortgage, indenture, contract, agreement, instrument or contract to which it is a party or by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute, rule or regulation applicable to the Purchaser which would
prevent the Purchaser from performing any material obligation set forth in this Subscription Agreement. The execution, delivery and performance of and compliance with this Subscription Agreement, and the consummation of the transactions contemplated
herein, will not, with or without the passage of time or giving of notice, result in any such violation or default or the suspension, revocation, impairment, forfeiture or non-renewal of any permit, license, authorization or approval applicable to
the Purchaser, its business or operations or any of its assets or properties which would prevent the Purchaser from performing any material obligations set forth in this Subscription Agreement. 
  
 2.9. The Purchaser understands and acknowledges that the Offerors will rely
upon the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements and agrees that if any of the foregoing acknowledgments, representations, warranties or agreements cease to be accurate, it shall promptly
notify the Offerors. 
  
 2.10. The Purchaser understands that no
public market exists for any of the Capital Securities, and that it is unlikely that a public market will ever exist for the Capital Securities. 
  
 ARTICLE III 
  
 MISCELLANEOUS 
  
 3.1. Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, international courier, or delivered by hand against written receipt
therefor, or by facsimile transmission and confirmed by telephone, to the following addresses, or such other address as may be furnished to the other parties as herein provided: 
  

	 To the Offerors:
	  	 HopFed Bancorp, Inc.

	 	  	 2700 Fort Campbell Boulevard

	 	  	 Hopkinsville, KY 42240

	 	  	 Attention: Billy C. Duvall

	 	  	 Telephone: 270-885-1171

	 	  	 Fax: 270-889-0313

  

 4 

	 To the Purchaser:
	  	 ALESCO Preferred Funding I, Ltd.

	 	  	 c/o Walkers SPV Limited

	 	  	 P.O. Box 908 GT

	 	  	 Walker House, Mary Street

	 	  	 George Town, Grand Cayman

	 	  	 Cayman Islands

	 	  	 Attention: Directors

	 	  	 Telephone: 345-945-3727

	 	  	 Fax: 345-945-4757

	 	  	 
	 To the Purchaser for service of all process:
	  	 CT Corporation

	 	  	 111 Eighth Avenue, 13th Floor

	 	  	 New York, N.Y. 10011

  
 Unless otherwise
expressly provided herein, notices shall be deemed to have been given when received. 
  
 3.2. This Subscription Agreement shall not be changed, modified or amended except by a writing signed by the parties hereto. 
  
 3.3. Upon the execution and delivery of this Subscription Agreement by the parties hereto, this Subscription Agreement shall become a binding obligation
of each such party with respect to the matters covered herein, including those incorporated by reference from the Placement Agreement. 
  
 3.4. THIS SUBSCRIPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. EACH OF THE TRUST, PURCHASER AND THE COMPANY, ON BEHALF OF ITSELF AND ITS SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, THE TRUST), HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES
ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH OF THE TRUST, PURCHASER AND THE COMPANY, ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, THE TRUST), IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 
  

 5 

 3.5. The parties hereto agree to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Subscription Agreement. 
  
 3.6. This Subscription Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument. 
  
 Signatures appear on
the following page 
  

 6 

 IN WITNESS WHEREOF, this Subscription Agreement is agreed to and accepted as of the day and year first
written above. 
  

	 	 	HOPFED BANCORP, INC.
		
	By:	 	 
	 	

	 	 	 Name:
 Title:

		
	 	 	HOPFED CAPITAL TRUST I
		
	By:	 	 
	 	

	 	 	 Name:
 Title: Administrator

  

 7 

 IN WITNESS WHEREOF, I have set my hand the day and year first written above. 
  

	ALESCO PREFERRED FUNDING I, LTD.
		
	By:	 	 
	 	

	 	 	 Name: John Cullinane
 Title: Director

  

 8

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