Exhibit 10.4
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT
(“Pledge Agreement”) is made and entered into on this
10 th day of
November, 2006, by and between PREMIER FINANCIAL BANCORP, INC.
(“Pledgor”), a Kentucky corporation serving as a bank
holding company under the Bank Holding Company Act of 1956, as
amended for Citizens Deposit Bank and Trust, Inc., Vanceburg,
Kentucky (“Citizens”) and Farmers-Deposit Bank,
Eminence, Kentucky (“Farmers”), both Kentucky banking
organizations, and THE BANKERS’ BANK OF KENTUCKY, INC., a
Kentucky banking organization with principal office and place of
business in Frankfort, Kentucky (the “Bank”).
PRELIMINARY STATEMENT
A. Pursuant to that certain Loan Agreement of
even date herewith, between the Pledgor and the Bank, the Bank has
agreed to enter into a Credit Facility for Pledgor, such Loan from
Bank being evidenced by a Term Note and a Promissory Note of even
date herewith, made by Pledgor, payable to the order of the Bank
(the “Notes”).
B. The Pledgor hereby agrees that the payment
of the Notes and the other indebtedness referred to below shall be
secured by this Pledge Agreement and acknowledges that Bank would
not have entered into the Loan without Pledgor becoming a party to
this Agreement.
NOW, THEREFORE, in consideration of the Loan
made contemporaneously herewith by the Bank to Pledgor, and for
other good and valuable consideration, the mutuality, receipt and
sufficiency of which are hereby acknowledged, the Pledgor and the
Bank hereby agree as follows:
1. Definitions. The capitalized terms
and phrases not otherwise defined herein shall have the meanings
given them in the Loan Agreement, and the following terms or
phrases shall have the following meanings:
1.1 “Event of Default” shall have
the meaning set forth in Section 10 of this Pledge Agreement.
1.2 “Pledged Shares” means (a) the
559,800 shares of the issued and outstanding Common Capital Stock
of Citizens which constitutes One Hundred (100%) Percent of the
outstanding common stock of Citizens and (b) the 18,750 shares of
issued and outstanding common stock of Farmers which constitutes
One Hundred (100%) Percent of the outstanding common stock of
Farmers.
2. Grant of Security Interest.
2.1 The Pledgor hereby pledges and assigns to
the Bank, and hereby grants to the Bank a security interest in, the
Pledged Shares. The Pledgor further grants to the Bank a security
interest in any and all stock rights, rights to subscribe,
liquidating dividends, dividends paid in stock, new securities or
any other property to which the Pledgor is or may hereafter become
entitled to receive on account of the Pledged Shares owned by the
Pledgor. If the Pledgor receives additional property of such
nature, the Pledgor shall immediately deliver such property to the
Bank, to be held by the Bank pursuant to his Pledge Agreement.
2.2 The Pledgor hereby grants a security
interest in the Pledgor’s share of all proceeds of any sale
or other disposition of the Pledged Shares.
3. Secured Obligations. Pledgor has
granted to the Bank a security interest in the collateral to secure
(a) the payment of the entire unpaid principal of, and all interest
now accrued or hereafter to accrued or hereafter to accrue on, the
Notes and all costs and expenses, including, without limitation,
reasonable attorneys’ fees now or hereafter incurred by the
Bank in enforcing the Loan Agreement, the Notes and this Pledge
Agreement, and (b) the performance of all other covenants,
agreements and obligations of the Pledgor set forth herein and in
the Loan Agreement and the documents supplemental thereto.
4. Representations and Warranties. To
induce the Bank to enter into the Loan Agreement, and to make the
Loan to Pledgor, Pledgor hereby represents and warrants to the Bank
as follows, which representations and warranties shall survive the
execution and delivery of this Pledge Agreement and the delivery of
the Pledged Shares to the Bank:
4.1 The Pledgor has the full right, power and
authority to enter into and perform this Pledge Agreement. This
Pledge Agreement has been duly entered into and delivered by the
Pledgor and constitutes a legal, valid and binding obligation of
the Pledgor, enforceable in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy,
insolvency or other laws affecting creditors’ rights
generally, and by the application of usual equitable principles
where equitable principles are sought.
4.2 The Pledgor has good and marketable title
to the Pledged Shares represented to be owned by the Pledgor, and
the Pledged Shares are not subject to any lien, charge, pledge,
encumbrance, claim or security interest of any nature whatsoever,
other than the security interest created by this Pledge
Agreement.
4.3 The Pledged Shares are fully paid and
nonassessable.
4.4 The Pledgor has not entered into any stock
restriction, voting agreement, proxy or purchase agreement with
respect to the Pledged Shares which would in any way restrict the
sale, pledge or other transfer of the Pledged Shares or of any
interest in or to the Pledged Shares.
5. Duration of Security Interest. The
Bank shall hold the Pledged Shares upon the terms and provisions of
this Pledge Agreement and the security interest in the Pledged
Shares granted to the Bank pursuant to this Pledge Agreement shall
continue until Notes have been paid in full to the Bank.
6. Maintaining Freedom from Liens.
Pledgor shall keep the Pledged Shares owned by such Pledgor free
and clear of all liens and encumbrances and shall pay all amounts,
including taxes, assessments or charges, which might result in a
lien against the Pledged Shares if left unpaid, unless the Pledgor,
all at the Pledgor’s expense, is contesting any such amount
in good faith by an appropriate proceeding timely instituted and
which shall operate to prevent the collection or satisfaction of
the lien or amount so contested. If Pledgor fails to pay such
amounts and is not contesting the validity of amount thereof in
accordance with the preceding sentence, the Bank may, but is not
obligated to, pay such amounts, and such payment shall be
conclusive evidence of the legality or validity.
7. Certain Rights Respecting the Pledged
Shares.
7.1 Pledgor shall continue to be the sole
owner of the Pledged Shares represented to be owned by such
Pledgor, and may exercise all voting rights with respect to the
Pledged Shares owned by such Pledgor, so long as no Event of
Default has occurred and is continuing.
7.2 Pledgor shall not sell, transfer or
attempt to sell or transfer the Pledged Shares, or any part thereof
or interest therein, without the prior express written consent of
the Bank. Any such consent of the Bank shall not constitute the
release by the Bank of its security interest in the Pledged Shares
so sold or transferred, and any such sale or transfer consented to
by the Bank shall transfer the Pledged Shares, subject to the
security interest therein of the Bank created pursuant to this
Pledge Agreement.
7.3 The Bank, at its option upon the
occurrence of any Event of Default, and so long as such Event of
Default exists, may exercise all voting rights and privileges
whatsoever with respect to the Pledged Shares, and to that end,
Pledgor hereby constitutes any executive officer of the Bank as
such Pledgor's proxy and attorney-in-fact for all purposes of
voting the Pledged Shares represented to be owned by such Pledgor
at any annual, regular or special meeting of shareholders of
Citizens and/or Farmers, and this appointment shall be deemed
coupled with an interest and is and shall be irrevocable until the
Notes have been fully paid and performed to the Bank, and all
persons whatsoever shall be conclusively entitled to rely upon any
oral or written certification of the Bank that it is entitled to
vote the Pledged Shares. Pledgor shall execute and deliver to the
Bank any additional proxies and powers of attorney that the Bank
may desire in its own name to effectuate the provisions of the Loan
Agreement and this Pledge Agreement.
8. Issuance or Acquisition of New Stock or
Sale of Treasury Shares, Mergers, Sales and Other Distribution of
Assets. Until the Notes have been paid and performed in full to
the Bank, Pledgor shall not vote in favor of permitting Citizens or
Farmers (a) to issue new shares of their capital stock, or any
options, subscription rights or warrants with respect thereto, (b)
to sell any treasury shares, (c) to merge into or with, or
consolidate with, any other entity, (d) to sell or otherwise
transfer any material part of their assets, or (e) to liquidate or
dissolve or take any action with a view towards liquidation or
dissolution.
9. Delivery of Cert
