Stock Pledge and Stock Pledge & Security Agreement between Premier Financial Bancorp and The Kentucky Bankers’ Bank dated Nov 10, 2006


    Exhibit
      10.4


    


     

    STOCK
      PLEDGE AND SECURITY AGREEMENT

     

    THIS
      STOCK PLEDGE AND SECURITY AGREEMENT (“Pledge Agreement”) is made and entered
      into on this 10th
      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 Certificates and Stock Powers.
      Pledgor shall deliver to the Bank, and the Bank shall be entitled to possess,
      the share certificates evidencing the Pledged Shares represented to be owned
      by
      the Pledgor and an executed blank stock power with respect to each such share
      certificate. If for any reason Pledgor acquires any interest in any additional
      Capital Stock of Citizens or Farmers, Pledgor shall immediately deliver
      certificates representing that stock and a blank stock power for those
      certificates to Bank, to be held by the Bank in the same manner as the Pledged
      Shares, and that stock shall be pledged under this Pledge Agreement and shall
      constitute a part of the Pledged Shares.

    


    10.
      Event
      of Default.
      The following shall each constitute an “Event of Default”
hereunder:

    


    10.1
      If any principal or interest on the Notes shall not be paid in full punctually
      when due and payable and shall remain unpaid for a period of ten (10) days
      after
      written notice of such default has been given to Pledgor.

    


    10.2
      If Pledgor breaches, violates or fails to perform or observe any covenant,
      obligation, agreement, condition or other provision contained in this Pledge
      Agreement, and the same is not cured to the satisfaction of the Bank within
      thirty (30) days after the Bank has specified such default in a written notice
      delivered to the Pledgor.


    10.3
      If any representation or warranty or other statement of fact contained herein
      or
      in any related writing furnished to the Bank in connection with the transaction
      contemplated hereby shall be false or misleading in any material respect as
      of
      the date of this Pledge Agreement and shall continue to be false or misleading
      in any material respect, or shall omit to state a material fact required to
      be
      stated therein in order to make the statements contained therein, in light
      of
      the circumstances under which made, not misleading as of the date of this Pledge
      Agreement, whether or not made with knowledge of the same, and such omission
      to
      state a material fact shall not have been corrected.

    


    10.4
      The occurrence of any Event of Default under the Loan Agreement.

    


    11.
      Remedies.

    


    11.1
      Upon the occurrence of any Event of Default, the Bank may, at its option,
      declare the Term Note or the Promissory Note, or both of them, to be immediately
      due and payable, may exercise the rights with respect to the Pledged Shares
      contemplated in Section 7 of this Pledge Agreement, and, in addition to
      exercising all other rights or remedies, proceed to exercise with respect to
      the
      Pledged Shares all rights, options and remedies of a secured party upon default
      as provided for under the Uniform Commercial Code as enacted in the Commonwealth
      of Kentucky.

    


    11.2
      The rights of the Bank upon the occurrence of any Event of Default shall
      include, without limitation, the following:

    


    (a)
      The right to the immediate possession of Pledged Shares not then in the Bank’s
      possession without requirement of notice or demand or of any legal
      process.

    


    (b)
      The right to sell the Pledged Shares at public or private sale and in one or
      more lots, and in any order or sequence. The Bank shall be entitled to apply
      the
      proceeds of any such sale to the satisfaction of the Term Note or the Promissory
      Note, or both of them, as the Bank determines, and to expenses incurred in
      realizing upon the Pledged Shares in accordance with the Uniform Commercial
      Code
      as enacted in the Commonwealth of Kentucky; provided, however, the Bank may,
      but
      shall not be obligated to, postpone the time of any proposed sale of any of
      the
      Pledged Shares, or any part thereof, and may change the time and/or place of
      such sale, subject to the obligation of the Bank to give the Pledgor notice
      of
      such new time and/or place of the Pledged Shares, or any part thereof, as
      applicable, as provided in Section 18.1 below. In the event the Bank sells
      the
      Pledged Shares, or any part thereof on credit or for future delivery, which
      may
      be elected by the Bank at its sole discretion, the Pledged Shares so sold may,
      at the Bank’s sole option, be transferred and/or delivered to the purchaser
      thereof or retained by the Bank until the purchase price thereof has been paid
      by the purchaser. 

    


    (c)
      The right to recover the reasonable expenses of the Bank in preparing for sale
      and selling the Pledged Shares and other like expenses, together with court
      costs and reasonable attorneys’ fees incurred by the Bank.

    


    (d)
      The right to proceed by appropriate legal process at law or in equity to enforce
      any provision of this Pledge Agreement or in aid of the execution of any power
      of sale, or for foreclosure of the security interest of the Bank in the Pledged
      Shares, or for the sale of the Pledged Shares under the judgment or decree
      of
      any court.

    


    (e)
      In furtherance of the rights and remedies of the Bank upon the occurrence of
      an
      Event of Default, Pledgor hereby constitutes any officer of the Bank as
      Pledgor’s proxy and attorney-in-fact to complete, execute and file with the
      Securities and Exchange Commission, if such filing be required by law, one
      or
      more notices of proposed sale of securities pursuant to Rule 144 under the
      Securities Act of 1933, as amended, and this appointment shall be deemed coupled
      with an interest, and is and shall be irrevocable, until the Notes have been
      paid and performed in full to the Bank.

    


    12.
      Exercise
      of Remedies.
      The rights and remedies of the Bank shall be deemed to be cumulative, and any
      exercise of any right or remedy shall not be deemed to be an election of that
      right or remedy to the exclusion of any other right or remedy.

    


    13.
      Waiver.
      Pledgor hereby waives any claim arising by reason of (a) the fact that the
      price
      or prices for which the Pledged Shares or any part thereof is sold at any
      private sale or sales is less than the price which would have been obtained
      at a
      public sale or sales or is less than the amount of the Notes, (b) any reasonable
      delay by the Bank in selling the Pledged Shares following the occurrence of
      an
      Event of Default, including, without limitation, any delays in selling the
      Pledged Shares resulting from the compliance by the Bank with applicable federal
      and state securities laws, even if the price of the Pledged Shares thereafter
      declines; or (c) the immediate sale of the Pledged Shares upon the occurrence
      of
      an Event of Default, even if the price of the Pledged Shares should thereafter
      increase. Pledgor shall remain liable for any deficiency remaining due, after
      the sale of the Pledged Shares, on the Notes.

    


    14.
      Payment
      of Costs, Attorneys’ Fees and Expenses.
      To the extent not paid out of the proceeds of the sale of the Pledged Shares,
      Pledgor shall be responsible for and shall pay any and all reasonable costs,
      attorneys’ fees and other expenses of whatever kind incurred by the Bank in
      connection with (i) enforcing the Loan Agreement, the Notes and/or this Pledge
      Agreement; (ii) obtaining possession of the Pledged Shares; (iii) the protection
      and preservation of the Pledged Shares; (iv) the collection of the Notes or
      any
      part thereof; and (v) any litigation involving the Pledged Shares, and/or any
      benefit accruing by virtue of the provisions hereof or the rights of the Bank
      hereunder. 

    


    15.
      Advances
      by Bank.
      Pledgor shall reimburse the Bank for all reasonable advances made by the Bank
      in
      performing any actions on behalf of the Pledgor pursuant to this Pledge
      Agreement, including, without limitation, all amounts paid by the Bank (a)
      to
      discharge taxes, levies, liens and/or security interests against the Pledged
      Shares, and/or (b) in connection with the exercise by the Bank of its rights
      and
      remedies hereunder. All such advances made by the Bank shall bear interest
      at
      the rate set forth in the Notes as applicable to overdue principal and/or
      accrued interest on the Notes, and all such advances and all interest thereon
      shall be secured by this Pledge Agreement with the same priority as the Notes,
      to the fullest extent permitted by applicable law, and shall be due and payable
      in full to the Bank upon demand by the Bank at any time in its sole and absolute
      discretion.

    


    16.
      Irrevocable
      Attorney-in-Fact.
      Pledgor hereby irrevocably appoints the Bank as such Pledgor’s attorney-in-fact
      (a) to do all acts and things which the Bank may deem necessary or appropriate
      in its sole and absolute discretion to perfect and to continue the perfected
      status of the security interest in the Pledged Shares created in favor of the
      Bank pursuant to this Pledge Agreement and to protect the Pledged Shares, and
      (b) to perform such other acts in connection with the Pledged Shares as the
      Bank
      determines in its reasonable discretion to be necessary or appropriate to
      effectuate the purposes of this Pledge Agreement.

    


    17.
      Return
      of Pledged Shares.
      The Bank may, at any time, deliver the Pledged Shares, or any part thereof,
      to
      the Pledgor. The receipt by the Pledgor of the Pledged Shares, or any part
      thereof shall be a complete and full discharge of the Bank, and the Bank shall
      be discharged from any liability or responsibility with respect
      thereto.

     

     

     

    
 

    18.
      Notice.

    


    18.1
      Any requirement of the Uniform Commercial Code of Kentucky of reasonable notice
      of the intended sale or other disposition of the Pledged Shares shall be met
      if
      such notice is given to the Pledgor at least ten (10) business days before
      the
      time of sale, disposition or other event or thing giving rise to the requirement
      of notice.

    


    18.2
      All notices or communications under this Pledge Agreement shall be in writing
      and shall be personally delivered or sent by express courier service or by
      registered or certified United States mail, return receipt requested, postage
      prepaid, addressed as follows (or to such other address as to which either
      party
      shall have given the other party written notice):

    


    If
      to the Pledgor:          
Robert
      W. Walker, President/CEO

    Premier
      Financial Bancorp, Inc.

    2883
      5th
      Avenue

    Huntington,
      West Virginia 25702


    


    If
      to the Bank:        The
      Bankers’ Bank of Kentucky, Inc.

    Attention:
      John Clark, 
      Executive Vice President

    P.O.
      Box 713

    Frankfort,
      Kentucky 40602

    


    All
      notices and other communications hereunder shall be deemed given upon the
      earliest of (a) actual delivery in person, (b) one (1) business day after having
      been delivered to an express courier service, or (c) two (2) business days
      after
      having been deposited in the United States mails, in accordance with the
      foregoing, as applicable.

    


    19.
      Further
      Assurances.
      The Pledgor shall execute any such other documents or instruments, and take
      such
      other actions, as the Bank may request to more fully create and maintain, or
      to
      verify, ratify or perfect the security interest intended to be created in this
      Pledge Agreement.

    


    20.
      No
      Implied Waiver.
      All options and rights of the Bank hereunder are continuing, and the failure
      of
      the Bank to exercise any such option or right of election in any instance shall
      not be construed as waiving the right to exercise such option or right at any
      subsequent time or be construed as waiving the right to exercise any other
      option or right hereunder, at law or at equity. No exercise by the Bank of
      any
      of the options, rights or powers provided herein and no delay or omission in
      the
      exercise of such options, rights or powers provided herein shall be construed
      to
      exhaust the same or be construed as a waiver thereof, and each such option,
      right and power may be exercised at any time and from time to time.

    


    21.
      Severability
      of Provisions.
      If any term or provision of this Pledge Agreement is held to be invalid or
      unenforceable in any jurisdiction, the other terms and provisions hereof shall
      remain in full force and effect in such jurisdiction and the invalid or
      unenforceable provision shall remain in full force and effect in all other
      jurisdictions.

    


    22.
      Governing
      Law.
      This Pledge Agreement and the respective rights, duties and obligations of
      the
      parties hereto shall be governed by and construed in accordance with the laws
      of
      the Commonwealth of Kentucky.

    


    23.
      Successors
      and Assigns.
      This Pledge Agreement shall bind the Pledgor and its respective heirs, personal
      representatives, successors and assigns and shall inure to the benefit of the
      Bank and its successors and assigns, including, without limitation, each
      subsequent holder of the Term Note and/or the Promissory Note. 

    


    24.
      Captions.
      The various section headings used in this Pledge Agreement are inserted for
      convenience of reference only and shall be ignored in construing the provisions
      hereof.

    


    25.
      Time
      of Essence.
      Time shall be of the essence in the performance of all of the covenants,
      obligations and agreements under this Pledge Agreement.

    


    26.
      Entire
      Agreement.
      This Pledge Agreement constitutes the entire agreement of the parties with
      respect to the subject matter hereof and supersedes all prior understandings
      with respect to the subject matter hereof. No change, modification, addition
      or
      termination of this Pledge Agreement shall be enforceable unless in writing
      and
      signed by the party against whom enforcement is sought.

    


    


    IN
      WITNESS WHEREOF, the Pledgor and the Bank have executed this Pledge Agreement
      on
      the day, month and year first above written.

    


    


    


    PREMIER
      FINANCIAL BANCORP, INC. 

    (Pledgor)

    


    By:
      /s/ Robert W. Walker               

    Robert
      W. Walker

    Title:
      President

    


    


    


    THE
      BANKERS’ BANK OF KENTUCKY, INC.

    (Bank)

    


    By:
      /s/ John Clark                    

    John
      Clark

    
      Title:
        Executive VicePresident