Exhibit 10.4

 

SETTLEMENT AGREEMENT

 

This Settlement Agreement (the “Agreement”) is entered into as of July 11, 2018
by and among Miles Armentrout (the “Executive”), Poage Bankshares, Inc., a
Maryland corporation (“Poage”), and Town Square Bank, a wholly-owned subsidiary
of Poage (“Town Square Bank”), and City Holding Company, a West Virginia
corporation (“City”).

 

WITNESSETH:

 

WHEREAS, concurrently with the execution of this Agreement, City and Poage are
entering into an Agreement and Plan of Merger, dated as of July 11, 2018 (the
“Merger Agreement”), and all capitalized terms not defined herein shall have the
meaning set forth in the Merger Agreement; and

 

WHEREAS, Poage, Town Square Bank, and the Executive desire to enter into this
Agreement, which shall supersede in its entirety the Change in Control Agreement
by and between Town Square Bank and the Executive, dated January 19, 2016 (the
“Prior Agreement”), effective immediately prior to the Effective Time of the
Merger, and in lieu of any rights and payments under the Prior Agreement, the
Executive shall be entitled to the rights and payments set forth herein.

 

NOW THEREFORE, in consideration of the foregoing and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
Executive, Poage, and Town Square Bank agree as follows:

 

1.            Cancellation of Prior Agreement. As of the Effective Date (the
“Effective Date” of this Agreement), the Prior Agreement shall be cancelled in
its entirety and the parties thereto shall have no further rights or obligations
thereunder. In the event that the Merger Agreement is terminated or otherwise
cancelled, this Agreement will be null and void ab initio, and the Prior
Agreement will remain in full force and effect.

 

2.            Settlement.

 

2.1           Cash Settlement. Provided the Executive has remained employed with
Poage and Town Square Bank to and including the Effective Date, and Executive
does not become employed by City, or its wholly-owned subsidiary, City National
Bank of West Virginia (“City National”), immediately after the Effective Time,
the Executive shall be entitled to, and have a non-forfeitable right to, a cash
payment in an amount equal to $155,920 (“Cash Settlement”), paid in a lump sum,
less required tax withholding, on the day immediately prior to the Effective
Date. For the avoidance of doubt, the payment of the Cash Settlement under this
Agreement shall not release Poage or Town Square Bank, as applicable, from any
of the following obligations: (a) obligations to pay to the Executive accrued
but unpaid wages earned up to the Effective Time of the Merger to the extent
required by applicable law; (b) the payment of any of the Executive’s vested
benefits under the tax-qualified plans of Town Square Bank, including any
benefits that become vested as a result of the Merger; (c) obligations regarding
accelerated vesting of equity awards, if any, under any equity awards granted by
Poage to the Executive and outstanding immediately prior to the Effective Time;
(d) the payment of the Merger Consideration with respect to the Executive’s
common stock of Poage as contemplated by Section 3.01 of the Merger Agreement;
or (e) rights to indemnification under applicable corporate law, the
organizational documents of Poage or Town Square Bank, as an insured under any
director’s and officer’s liability insurance policy new or previously in force,
or pursuant to Section 6.18 of the Merger Agreement.

 

 

 

  

2.2          Health/Dental Insurance Subsidy. Executive shall have the option of
either (a) receiving a cash payment in the amount of $22,586, paid in a lump
sum, less required tax withholding, on the day immediately prior to the
Effective Date, or (b) making an election for health insurance coverage under
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for
continuation of health and dental insurance coverage under the Poage/Town Square
health and dental insurance plans in effect for Executive immediately prior to
the Effective Time, in which case City will pay on Executive’s behalf the COBRA
premiums for a period of 12 months following the Effective Time. Under no
circumstances will City be obligated to make more than 12 monthly Premium
Subsidy payments to Executive. Executive shall be solely responsible for the
payment of all deductibles, copays, coinsurance and out of pocket payments
relating to any health or dental insurance plan or health or dental services
rendered. Executive shall be solely responsible for all federal, state and local
taxes related to the any payment to Executive pursuant to this Section 2.2.

 

2.3          Waiver of Claims. Except as expressly set forth in Section 2.1 of
this Agreement, Executive hereby irrevocably and forever releases and discharges
Poage and Town Square from each and every claim, charge, liability, complaint,
expense, cost and demand Executive has or may have against Poage or Town Square
whether related to Executive’s employment by, or severance of employment from,
Poage or Town Square or otherwise.

 

3.            Complete Satisfaction. In consideration of the payment of the Cash
Settlement, the Executive, Poage and Town Square Bank hereby agree that the full
payment of the Cash Settlement, as determined in accordance Section 2.1 and the
obligations of Section 2.2, shall be in complete satisfaction of all rights to
payments due to Executive under the Prior Agreement.

 

4.            Code Section 409A Compliance. The intent of the parties is that
payments under this Agreement either be exempt from or comply with Section 409A
of the Code and the Treasury Regulations and guidance promulgated thereunder
and, accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith. A termination of employment, as used
in this Agreement, shall mean a Separation from Service within the meaning of
Section 409A of the Code.

 

5.           Non-Solicitation. The Executive agrees that, for a period of one
(1) year beginning on the Effective Time of the Merger, the Executive will not
solicit or assist any person in soliciting, any customers or employees of City
National, or directly or indirectly induce or attempt to persuade any current or
former employees of City National to terminate their employment with City
National. If litigation and/or arbitration is commenced by City National or the
Executive directly or indirectly pertaining to the non-solicitation provision
contained herein, then the non-solicitation provision shall begin upon the
Effective Time of the Merger, continue through arbitration and/or litigation,
and terminate one (1) year after entry of a final non-appealable ruling by a
court and/or arbitration tribunal of competent jurisdiction.

 

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6.            General.

 

6.1           Heirs, Successors, and Assigns. The terms of this Agreement shall
be binding upon the parties hereto and their respective heirs, successors,
assigns and legal representatives.

 

6.2           Final Agreement. This Agreement represents the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior understandings, written or oral. The terms of this
Agreement may be changed, modified, or discharged only by an instrument in
writing signed by each of the parties hereto.

 

6.3          Withholdings. Poage and Town Square Bank may withhold from any
amounts payable under this Agreement such federal, state, or local taxes as may
be required to be withheld pursuant to applicable law or regulation.

 

6.4           Governing Law. This Agreement shall be construed, enforced, and
interpreted in accordance with and governed by the laws of the Commonwealth of
Kentucky, without reference to its principles of conflicts of law, except to the
extent that federal law shall be deemed to preempt such state laws.

 

6.5           Voluntary Action and Waiver. The Executive acknowledges that by
his free and voluntary act of signing below, the Executive agrees to all of the
terms of this Agreement and intends to be legally bound thereby. The Executive
acknowledges that he has been advised to consult with an attorney prior to
executing this Agreement.

 

6.6           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 shall constitute one and the same instrument.

 

7.            Effectiveness. Notwithstanding anything to the contrary contained
herein, this Agreement shall be subject to consummation of the Merger in
accordance with the terms of the Merger Agreement, as the same may be amended by
the parties thereto in accordance with its terms. In the event the Merger
Agreement is terminated for any reason or the Merger does not occur, this
Agreement shall be deemed null and void.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, Poage and Town Square Bank have each caused this Agreement
to be executed by their duly authorized officers, and the Executive has signed
this Agreement, effective as of the date first above written.

 

  EXECUTIVE:       /s/ Miles Armentrout   Miles Armentrout         Poage
Bankshares, Inc.         By: /s/ Bruce VanHorn   Name: Bruce VanHorn   Title:
CEO/President         TOWN SQUARE BANK         By: /s/ Bruce VanHorn   Name:
Bruce VanHorn   Title: CEO/President         CITY HOLDING COMPANY         By:
/s/ Charles R. Hageboeck   Name: Charles R. Hageboeck   Title: President and CEO

 

[SIGNATURE PAGE TO THE SETTLEMENT AGREEMENT]

 

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