Exhibit 10.1

 

SEPARATION AGREEMENT AND

 

FULL AND FINAL WAIVER, RELEASE AND DISMISSAL OF ALL CLAIMS

 

This Separation Agreement and Full and Final Waiver, Release and Dismissal of
All Claims (“Agreement”) is entered into by and among Ralph E. Coffman, Jr. (the
“Executive”), Poage Bankshares, Inc. (the “Company”) and Town Square Bank (the
“Bank”) on August 21, 2015. For purposes of this Agreement, the term “Company”
and “Bank” shall also include the Company’s and Bank’s successors, and all of
their respective parent companies, subsidiaries, affiliates, officers,
directors, employees and agents.

 

WHEREAS, Executive is employed as President and Chief Executive Officer of the
Company and Chief Executive Officer of the Bank; and

 

WHEREAS, Executive is also a Director of the Company and Bank; and

 

WHEREAS, Executive wishes to resign from his employment with the Company and
Bank and from his positions on the boards of directors of the Company and the
Bank.

 

NOW, THEREFORE, in consideration of the mutual covenants and other good and
valuable consideration described herein, the parties agree as follows:

 

1. Resignation. Executive hereby resigns from his employment with the Company
and Bank, and from his positions on the Board of Directors of the Company and
Bank, as of August 21, 2015 (the “Date of Resignation”). Commencing on the Date
of Resignation, and except as expressly provided in this Agreement, Executive
shall not receive and/or accrue any further compensation or benefits of any kind
beyond the Date of Resignation, including any wages, bonuses, profit sharing,
incentive, retirement or salary payments, as well as any compensation for
vacation, holiday, sick or personal days.

 

2. Consideration. In consideration of Executive’s resignation and full and final
waiver, release and dismissal of all claims, and his other agreements and
promises herein, the Company, Bank and Executive agree to the following:

 

(a) Severance Pay. The Bank will pay Executive a lump sum severance payment in
the amount of $89,207.84 (the “Severance Pay”), which is an amount equal to: (i)
$82,381.60, which represents the Executive’s base salary and automobile
allowance that would have been paid to him if he had remained employed through
December 31, 2015, and (ii) $6,826.24, which represents a cash payment for eight
days of unused vacation time. The payment will be made on the Bank’s next
regularly scheduled payroll date following the expiration of the seven (7) day
revocation period as described in Section 10 of this Agreement (the “Expiration
Date”); and for purposes of clarity, no payments or benefits will be made under
Sections 2(a) and 2(d) if the Executive revokes this Agreement prior to the
Expiration Date. Applicable withholding taxes shall be deducted from the
Severance Pay and shall be reported on a Form W-2.

 

(b) Cash Payment in Exchange for Cancellation of Vested Stock Options. Executive
was granted 57,500 incentive stock options (“Options”) with an exercise price of
$15.00 on May 21, 2013, of which 23,000 Options are vested and the remaining
34,500 Options are non-vested. Executive hereby exercises the 23,000 vested
stock options on the Date of Resignation and the Bank will pay Executive an
amount of cash equal to the excess, if any, of the fair market value of Company
common stock over the exercise price ($15.00 per Option) of the vested Options
multiplied by the total number of vested Options (23,000), less applicable
withholding, in exchange for the cancellation of the 23,000 vested Options (and
in lieu of the delivery of shares of common stock of the Company). Fair market
value will be the closing price of Company common stock on the day before the
Date of Resignation. This amount will be reported on a Form W-2. Executive
agrees to sign any consent forms that may be necessary. Pursuant to the terms of
the 2013 Equity Incentive Plan, the non-vested Options will be forfeited on the
Date of Resignation.

 

 

 

 

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(c) Cash Payment for Vested Restricted Stock Awards. In connection with the
14,838 shares of restricted stock granted to Executive on April 16, 2013, the
Executive holds 3,556 vested shares and 8,904 shares remain non-vested. Pursuant
to Section 10 of the Executive’s restricted stock award agreement, the Company
hereby, as of the Date of Resignation, elects to exercise its right of first
refusal and to purchase the vested shares (3,556) at fair market value. Fair
market value will be the closing price of Company common stock on the day before
the Date of Resignation. Executive agrees to sign any stock transfer forms and
consent forms that may be necessary. Pursuant to the terms of the 2013 Equity
Incentive Plan, the non-vested restricted stock awards will be forfeited on the
Date of Resignation.

 

(d) Health Benefits. The Bank shall pay Executive’s COBRA premiums on behalf of
Executive for Executive’s medical and dental insurance coverage through December
31, 2015. Such medical and dental coverage shall be substantially comparable, as
reasonably available, to the coverage maintained by the Bank for the Executive
prior to the Date of Resignation, except to the extent such coverage may be
changed in its application to all employees of the Bank.

 

3. Mutual Release and Waiver.

 

(a) Executive, on behalf of himself, his executors, heirs, administrators,
assigns and anyone else claiming by, through or under him, hereby waives,
releases, covenants not to sue, and forever discharges the Company, Bank, its
Affiliates, successors, and present and former officers, directors, agents,
employees, attorneys, and representatives (hereinafter “Releasees”) and the
Company, Bank and its Affiliates hereby release, waive and forever discharge the
Executive from and with respect to any and all debts, demands, actions, causes
of action, suits, covenants, contracts, agreements, promises, torts, damages,
claims, and liabilities whatsoever of any name and nature, both in law and/or in
equity (hereinafter “Claims”) which he or they now has, ever had or may in the
future have against each or any of the Releasees or the Executive by reason of
any matter, cause or thing whatsoever from the beginning of time to the date of
the signing of this Agreement, including, but not limited to, any Claims arising
out of, based upon or connected with his employment by and board service with
the Bank and Company, the compensation and working conditions for that
employment, and/or the termination of that employment and board service. This
necessarily includes but is not limited to any Claims that might exist under
federal, state, and/or local laws, including, but not limited to, any Claims
based on race, national origin, ethnicity, handicap, color, age, sex, sexual
preference, military status, genetic status or information, other protected
status, retaliation, or anything else. The waiver and release includes, but is
not limited to, any claims Executive may have or have had based on promises,
contracts, common law, laws regarding unfair or bad faith conduct and wrongful
discharge, and state and federal statutory protections against discrimination in
employment, specifically including, among all the others and without limitation,
any rights or claims that Executive may have under the Age Discrimination in
Employment Act of 1967, as amended by the Older Workers Benefit Protection Act
(29 U.S.C. § 621 et seq.), which prohibits age discrimination in employment;
Title VII of the Civil Rights Act of 1964, which prohibits discrimination in
employment based on race, color, national origin, religion or sex; the Americans
with Disabilities Act, which prohibits discrimination against qualified
individuals with disabilities; the Family and Medical Leave Act, which provides
for leave of absence under certain specified circumstances; and all other
statutes, rules, and common law, and all other theories of recovery. This waiver
and release thus applies to all claims of any nature that may now exist, whether
or not now known to the undersigned; provided, however, that this release does
not apply to any claims Executive may have under any tax-qualified retirement
plan of the Bank in which Executive is or was a participant.

 

 

 

 

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(b) Executive agrees that amounts to be paid to him under this Agreement are in
excess of anything presently owed to him, and that he has no pending or known
claims against the Bank or the Company. Executive also agrees that he will not
bring any federal or state lawsuit, or file any administrative or other claims,
against the Company or Bank, or any other party based on his employment or the
termination of his employment, except that nothing in this Agreement is intended
to prevent the undersigned from filing a claim for unemployment compensation, or
from exercising any right that cannot be waived by law, including the right to
file a charge of discrimination with the Equal Employment Opportunity Commission
(“EEOC”). If Executive does file a charge of discrimination or retaliation,
however, he agrees that he will not seek or accept reinstatement, attorney’s
fees, or any amount of monetary damages in connection with such charge.

 

(c) Executive also agrees not to institute, nor has Executive instituted, a
lawsuit against the Bank or Company and their respective directors, officers,
employees and agents, affiliates, subsidiaries, and the heirs, successors and
assigns of all of them, based on any waived claims or rights to the extent set
forth above. The Company and Bank also agree not to institute, nor has the
Company and Bank instituted, a lawsuit against the Executive based on any waived
claims or rights to the extent set forth above. Nothing in this paragraph shall
prevent the Company, Bank or Executive from enforcing the terms of this
Agreement.

 

(d) EXECUTIVE ACKNOWLEDGES AND AGREES THAT THIS RELEASE IS A FULL AND FINAL BAR
TO ANY AND ALL CLAIM(S) OF ANY TYPE THAT EXECUTIVE MAY NOW HAVE AGAINST THE
COMPANY, BANK OR ANY AFFILIATE OF THE BANK AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS, AFFILIATES, SUBSIDIARIES, AND THE HEIRS,
SUCCESSORS AND ASSIGNS, TO THE EXTENT PROVIDED ABOVE, BUT THAT IT DOES NOT
RELEASE ANY CLAIMS THAT MAY ARISE AFTER THE DATE OF THIS AGREEMENT.

 

4. Public Statement. The parties agree that the public statement attached hereto
will be released by the Company to the press and to the general public within
two business days following the execution of this Agreement. The parties agree
that the release of said public statement does not violate the terms of any
confidentiality provision, or any other provision, contained in this Agreement.
The public statement attached hereto is incorporated herein by reference.

 

5. Return of Materials. Executive will promptly return to the Bank or the
Company all equipment, documents and other materials in Executive’s possession
that are the property of the Bank or the Company, whether created by Executive
or by others, and including the originals and all copies thereof, whether
electronic, paper or any other form, without maintaining any copies thereof
whether electronic, paper or any other form.

 

 

 

 

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6. Confidentiality. Executive acknowledges that Executive has had access to
trade secrets and other confidential information regarding the Bank and their
businesses that are unique and irreplaceable and that the use of such trade
secrets and other confidential information by a competitor, or certain other
persons, would cause irreparable harm to the Bank. Accordingly, Executive will
not disclose or use to the detriment of the Bank any such trade secrets or other
confidential information. Confidential information includes any information,
whether or not reduced to written or other tangible form, which is defined as
confidential under the Company’s or Bank’s confidentiality policies or (i) is
not generally known to the public or within the industry; (ii) has been treated
by the Company or the Bank as confidential or proprietary; and (iii) is of
competitive advantage to the Company or the Bank.

 

7. Mutual Non-Disparagement. Executive covenants that, except to the extent
required by law, Executive will not make to any person or entity any statement,
whether written or oral, that directly or indirectly impugns the integrity of,
or reflects negatively on the Company, the Bank or any of their employees,
officers or directors, or that denigrates, disparages or results in detriment to
the Company or the Bank. The Company and Bank covenant that, except to the
extent required by law, they and their boards of directors and management will
not make to any person or entity any statement, whether written or oral, that
directly or indirectly impugns the integrity of, or reflects negatively on
Executive. This section does not prohibit any truthful statement made to any
government agency, or as part of a judicial process brought by the disclosing
party.

 

8. Post-Employment Obligations. Executive agrees that for a period of one (1)
year from the Date of Resignation, he shall not hire or attempt to hire any
employee of the Company, Bank or any affiliate of the Bank. Executive will not,
directly or indirectly, on his own behalf or on behalf of any third person or
entity, and whether through his own efforts or through the efforts or assistance
of any other person or entity (including, without limitation, any person
employed by or associated with any entity with whom Executive is or may become
employed or associated): (1) solicit or accept any banking, lending, wealth
management, investment, insurance or financial services-related business from
any individual or entity that was a client or customer of the Company or Bank at
any time during the three (3) months immediately prior to the Date of
Resignation, or (2) participate in hiring, hire or employ an employee of the
Company or Bank, or solicit, encourage or induce any such employee or consultant
to terminate his or her employment or other relationship with the Company or
Bank.

 

9. Acceptance of Agreement.

 

(a) Executive acknowledges that Executive has been advised by the Bank and the
Company that Executive has at least 21 calendar days from the date Executive
receives this Agreement (the “Acceptance Period”) to consider whether or not to
accept this Agreement and seek counsel to advise Executive about signing this
Agreement. This Agreement was provided to Executive on August 19, 2015. Any
modifications or changes to this Agreement agreed upon by the parties will not
restart or affect Executive’s 21 day review period. This Agreement will not
become effective or enforceable until the cancellation period described in
Section 10 below has expired without Executive cancelling this Agreement.

 

 

 

 

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(b) Executive acknowledges that, before signing this Agreement, Executive was
advised by the Bank and the Company to consult with an attorney. Executive
agrees that Executive had an adequate opportunity to review this Agreement with
persons of Executive’s choice, including Executive’s attorney, that Executive
fully understands the terms of this Agreement, and that Executive has signed it
knowingly and voluntarily.

 

10. Cancellation of Agreement. Executive has the right to cancel this Agreement
at any time within the seven calendar (7) day period immediately following
Executive’s acceptance of the Agreement. If Executive decides to cancel this
Agreement, Executive must do so by mailing notice of cancellation, by certified
mail, return receipt requested, postmarked within the seven calendar (7) day
cancellation period to Thomas P. Carver II, Chairman of the Board, Town Square
Bank, 1500 Carter Avenue, Ashland, Kentucky 41101. This Agreement will not be
effective until the 8th calendar day after Executive signs and does not cancel
Agreement.

 

11. No Admission of Liability. This Agreement is not an admission by any party
of any liability to the other party.

 

12. Governing Law and Jurisdiction. This Agreement shall be governed and
conformed in accordance with the laws of the Commonwealth of Kentucky without
regard to its conflict of laws provision.

 

13. Savings Clause. If any provision of this Agreement is determined to by void
or unenforceable, the remaining provisions of this Agreement will remain in full
force and effect.

 

14. Entire Agreement. This Agreement represents the entire understanding of
Executive, the Bank and the Company with respect to the subject matter hereof
and supersedes all prior understandings, written, or oral.

 

15. Counterparts. This Agreement may be signed in counterparts, and all of the
counterpart copies shall be treated as a single agreement.

 

16. Assignment; Modification of Agreement. This Agreement will inure to the
benefit of the Bank and the Company and any successors and assigns. Executive
may not assign Executive’s rights, duties or obligations under this Agreement.
None of the terms of this Agreement may be changed or modified except in a
writing signed by both Executive and the Bank and the Company. Any such agreed
upon change or modification to this Agreement will not restart or otherwise
affect the original 21 calendar day consideration period referred to in Section
9 above.

 

PLEASE INDICATE EXECUTIVE’S ACCEPTANCE OF THIS AGREEMENT BY SIGNING THE
FOLLOWING PAGE.

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have signed this Agreement on the on the
date first above written and Executive hereby declares that the terms of this
Agreement have been completely read, are fully understood, and are voluntarily
accepted after complete consideration of all facts and legal claims.

 

  EXECUTIVE               /s/ Ralph E. Coffman, Jr.   Ralph E. Coffman, Jr.    
          POAGE BANKSHARES, INC.               By:  /s/ Thomas P. Carver II    
Thomas P. Carver II     Chairman of the Board               TOWN SQUARE BANK    
          By: /s/ Thomas P. Carver II     Thomas P. Carver II     Chairman of
the Board