UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to
___________________
Commission File Number: 33-96358
BOURBON BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Kentucky 61-0993464
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 157, Paris, Kentucky 40362-0157
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (859)987-1795
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _____
Number of shares of Common Stock outstanding as of August 1, 2000: 2,814,195.
<PAGE>
BOURBON BANCSHARES, INC.
Table of Contents
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statement of Income and Comprehensive Income
Six Months Ending June 30, 2000 & 1999 4
Three Months Ending June 30, 2000 & 1999 5
Consolidated Statements of Changes in Stockholders' Equity 6
Consolidated Statements of Cash Flows
Six Months Ending June 30, 2000 & 1999 7
Three Months Ending June 30, 2000 & 1999 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 18
Part II - Other Information 20
Signatures 21
Exhibits
3.1 Bylaws of the Registrant dated March 9, 1993 22
11 Earnings Per Share Calculation 45
27 Financial Data Schedule 46
<PAGE>
Item 1 - Financial Statements
BOURBON BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(thousands) 6/30/00 12/31/99
Assets
Cash and due from banks $ 9,642 $ 20,042
Federal funds sold 289 675
Cash and cash equivalents 9,931 20,717
Investment securities:
Available for sale 46,570 54,930
Held to maturity 16,213 15,693
Mortgage loans held for sale 1,749 3,494
Loans 260,874 238,607
Allowance for loan losses 3,333 3,103
Net loans 257,541 235,504
Federal home loan bank stock 3,466 3,345
Bank premises and equipment, net 7,272 7,082
Interest receivable 3,885 3,454
Intangible assets 1,939 2,108
Other assets 1,247 1,152
Total assets $ 349,813 $ 347,479
Liabilities and Stockholders' Equity
Deposits
Non-interest bearing $ 42,959 $ 42,931
Time deposits, $100,000 and over 40,834 34,715
Other interest bearing 195,358 196,920
Total deposits 279,151 274,566
Securities sold under agreements to repurchase 8,951 10,331
Federal Funds Purchased 2,300 -
Other borrowed funds 1,766 1,528
Federal home loan bank advances 21,408 26,592
Interest payable 2,404 2,142
Other liabilities 231 600
Total liabilities 316,211 315,759
Stockholders' equity
Common stock 6,514 6,491
Retained earnings 27,665 25,778
Accumulated other comprehensive income (577) (549)
Total stockholders' equity 33,602 31,720
Total liabilities & stockholders' equity $ 349,813 $ 347,479
<PAGE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (unaudited)
(thousands, except per share amounts) Six Months Ending
6/30/00 6/30/99
INTEREST INCOME:
Loans, including fees $ 11,197 $ 9,111
Investment securities 2,045 1,985
Other 225 189
Total interest income 13,467 11,285
INTEREST EXPENSE:
Deposits 5,426 4,523
Other 788 527
Total interest expense 6,214 5,050
Net interest income 7,253 6,235
Loan loss provision 375 350
Net interest income after provision 6,878 5,885
OTHER INCOME:
Service charges 1,264 967
Loan service fee income 146 144
Trust department income 249 225
Investment securities gains, net (76) (14)
Gain on sale of mortgage loans 44 268
Other 177 104
Total other income 1,804 1,694
OTHER EXPENSES:
Salaries and employee benefits 2,655 2,416
Occupancy expenses 776 584
Amortization of intangibles 216 217
Advertising and marketing 182 150
Taxes other than payroll, property and income 168 158
Other 1,057 1,012
Total other expenses 5,054 4,537
Income before taxes 3,628 3,042
Income taxes 1,008 847
Net income 2,620 2,195
Other Comprehensive Income, net of tax:
Change in Unrealized Gains on Securities (27) (339)
Comprehensive Income $ 2,593 $ 1,856
Earnings per share
Basic $ 0.93 $ 0.79
Diluted 0.91 0.77
<PAGE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (unaudited)
(thousands, except per share amounts) Three Months Ending
6/30/00 6/30/99
INTEREST INCOME:
Loans, including fees $ 5,756 $ 4,631
Investment securities 1,019 1,016
Other 100 66
Total interest income 6,875 5,713
INTEREST EXPENSE:
Deposits 2,800 2,234
Other 390 295
Total interest expense 3,190 2,529
Net interest income 3,685 3,184
Loan loss provision 187 175
Net interest income after provision 3,498 3,009
OTHER INCOME:
Service charges 649 502
Loan service fee income 73 73
Trust department income 90 98
Investment securities gains, net (75) (21)
Gain on sale of mortgage loans 44 120
Other 96 63
Total other income 877 835
OTHER EXPENSES:
Salaries and employee benefits 1,330 1,221
Occupancy expenses 383 291
Amortization of intangibles 108 113
Advertising and marketing 91 76
Taxes other than payroll, property and income 84 79
Other 537 586
Total other expenses 2,533 2,366
Income before taxes 1,842 1,478
Income taxes 530 402
Net income 1,312 1,076
Other Comprehensive Income, net of tax:
Change in Unrealized Gains on Securities (3) (276)
Comprehensive Income $ 1,309 $ 800
Earnings per share
Basic $ 0.46 $ 0.39
Diluted 0.45 0.37
<PAGE>
<TABLE>
<CAPTION>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
(thousands, except number of shares)
Accumulated
Other Total
---Common Stock--- Retained Comprehensive Stockholders'
Shares Amount Earnings Income Equity
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1999 2,802,471 $ 6,491 $ 25,778 $ (549) $ 31,720
Common stock issued 15,260 130 - - 130
Net change in unrealized gain (loss)
on securities available for sale,
net of tax - - - (24) (24)
Net income - - 1,308 - 1,308
Dividends declared - $.13 per share - - (366) - (366)
Balances, March 31, 2000 2,817,731 $ 6,621 $ 26,720 $ (573) $ 32,768
Common stock issued 1,000 7 - - 7
Common stock purchased (4,536) (114) - - (114)
Net change in unrealized gain (loss)
on securities available for sale,
net of tax - - - (4) (4)
Net income - - 1,312 - 1,312
Dividends declared - $.13 per share - - (367) - (367)
Balances, June 30, 2000 2,814,195 $ 6,514 $ 27,665 $ (577) $ 33,602
</TABLE>
<PAGE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands) Six Months Ending
6/30/00 6/30/99
Cash Flows From Operating Activities
Net Income $ 2,620 $ 2,195
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 395 300
Amortization 216 255
Investment securities amortization (accretion), net (48) 20
Provision for loan losses 375 350
Investment securities gains, net 76 14
Originations of loans held for sale (6,061) (15,255)
Proceeds from sale of loans 7,850 17,792
Federal Home Loan Bank Stock Dividends (121) (109)
Gain on sale of mortgage loans (44) (268)
Losses (gains), including write-downs, on real
estate acquired through foreclosure, net - 25
Changes in:
Interest receivable (431) 63
Other assets (95) (476)
Interest payable 262 (10)
Other liabilities (369) (108)
Net cash from operating activities 4,625 4,788
Cash Flows From Investing Activities
Purchases of securities available for sale (12,618) (22,614)
Proceeds from sales of securities available for sale 14,759 8,930
Proceeds from principal payments, maturities and
calls of securities available for sale 6,145 14,135
Purchases of securities held to maturity (632) -
Proceeds from maturities and calls of securities
held to maturity 115 265
Net change in loans (22,444) (7,456)
Purchases of bank premises and equipment, net (585) (304)
Net cash from investing activities (15,260) (7,044)
Cash Flows From Financing Activities:
Net change in deposits 4,585 (5,931)
Net change in securities sold under agreements to
repurchase and other borrowings 1,158 5,165
Advances from Federal Home Loan Bank 5,000 5,000
Payments on Federal Home Loan Bank advances (10,184) (214)
Proceeds from issuance of common stock 137 50
Purchase of common stock (114) (236)
Dividends paid (733) (617)
Net cash from financing activities (151) 3,217
Net change in cash and cash equivalents (10,786) 961
Cash and cash equivalents at beginning of period 20,717 10,756
Cash and cash equivalents at end of period $ 9,931 $ 11,717
<PAGE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands) Three Months Ending
6/30/00 6/30/99
Cash Flows From Operating Activities
Net Income $ 1,312 $ 1,076
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 200 150
Amortization 109 118
Investment securities amortization (accretion), net (27) 18
Provision for loan losses 187 175
Investment securities gains, net 75 21
Originations of loans held for sale (3,127) (6,533)
Proceeds from sale of loans 4,930 11,486
Federal Home Loan Bank Stock Dividends (63) (55)
Gain on sale of mortgage loans (44) (120)
Losses (gains), including write-downs, on real
estate acquired through foreclosure, net - 25
Changes in:
Interest receivable (539) (375)
Other assets (758) (882)
Interest payable (46) (134)
Other liabilities (11) 111
Net cash from operating activities 2,198 5,081
Cash Flows From Investing Activities
Purchases of securities available for sale (6,338) (7,039)
Proceeds from sales of securities available for sale 12,759 4,083
Proceeds from principal payments, maturities and
calls of securities available for sale 1,206 4,098
Purchases of securities held to maturity (363) -
Proceeds from maturities and calls of securities
held to maturity - 265
Net change in loans (19,032) (8,546)
Purchases of bank premises and equipment, net (505) (130)
Net cash from investing activities (12,273) (7,269)
Cash Flows From Financing Activities:
Net change in deposits 336 (5,697)
Net change in securities sold under agreements to
repurchase and other borrowings 3,809 9,658
Advances from Federal Home Loan Bank 5,000 -
Payments on Federal Home Loan Bank advances (76) (140)
Proceeds from issuance of common stock 7 39
Purchase of common stock (114) -
Dividends paid (367) (308)
Net cash from financing activities 8,595 3,552
Net change in cash and cash equivalents (1,480) 1,364
Cash and cash equivalents at beginning of period 11,411 10,353
Cash and cash equivalents at end of period $ 9,931 $ 11,717
<PAGE>
BOURBON BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In Management's opinion, the financial information,
which is unaudited, reflects all adjustments, (consisting
solely of normal recurring adjustments) necessary for a fair
presentation of the financial information as of and for the
six and three month periods ended June 30, 2000 and June 30,
1999 in conformity with generally accepted accounting
principles. These financial statements should be read in
conjunction with Bourbon Bancshares, Inc. (Company) Annual
Report on Form 10-K.
2. INVESTMENT SECURITIES
Period-end securities are as follows:
(in thousands)
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Available for Sale
June 30, 2000
U.S. Treasury $ 14,944 $ - $ (38) $ 14,906
U.S. government agencies 2,000 - (47) 1,953
States and political subdivisions 3,643 32 (18) 3,657
Mortgage-backed 24,261 21 (533) 23,749
Other 2,599 3 (297) 2,305
Total 47,447 56 (933) 46,570
December 31, 1999
U.S. Treasury $ 18,013 $ - $ (59) $ 17,954
U.S. government agencies 5,983 - (81) 5,902
States and political subdivisions 3,643 44 (6) 3,681
Mortgage-backed 26,317 6 (551) 25,772
Other 1,807 15 (201) 1,621
Total 55,763 65 (898) 54,930
Held to Maturity
June 30, 2000
States and political subdivisions 16,213 305 (124) 16,394
December 31, 1999
States and political subdivisions 15,693 362 (138) 15,917
3. LOANS
Loans at period-end are as follows:
(in thousands)
6/30/00 12/31/99
Commercial $ 19,770 $ 17,713
Real estate construction 18,296 17,003
Real estate mortgage 148,824 134,810
Agricultural 47,718 46,443
Consumer 25,140 22,358
Other 126 280
Total 260,874 238,607
<PAGE>
4. Basic earnings per common share is net income divided
by the weighted average number of common shares outstanding
during the period. Diluted earnings per common share
includes the dilutive effect of additional potential common
shares issuable under stock options. Earnings and dividends
per share are restated for all stock splits.
The factors used in the earnings per share computation follow:
Six Months Ended
June 30,
2000 1999
(in thousands)
Basic Earnings Per Share
Net Income $2,620 $2,195
Weighted average common shares outstanding 2,812 2,803
Basic earnings per share $ 0.93 $ 0.79
Diluted Earnings Per Share
Net Income $2,620 $2,195
Weighted average common shares outstanding 2,812 2,803
Add dilutive effects of assumed exercise
of stock options 63 58
Weighted average common and dilutive
Potential common shares outstanding 2,875 2,861
Diluted earnings per share $ 0.91 $ 0.77
Three Months Ended
June 30,
2000 1999
(in thousands)
Basic Earnings Per Share
Net Income $1,312 $1,076
Weighted average common shares outstanding 2,815 2,801
Basic earnings per share $ 0.46 $ 0.39
Diluted Earnings Per Share
Net Income $1,312 $1,076
Weighted average common shares outstanding 2,815 2,801
Add dilutive effects of assumed exercise
of stock options 62 60
Weighted average common and dilutive
Potential common shares outstanding 2,877 2,861
Diluted earnings per share $ 0.45 $ 0.37
Stock options for 600 shares (for the period ended June
30, 2000) of common stock were not considered in
computing earnings per share because they were
antidilutive.
5. Dividends per share paid for the quarter ended June 30,
2000 were $0.13 compared to $0.11 for June 30, 1999. This
is the same rate of dividend paid for the first quarter of
the respective years.
6. As of July 15, 1999, the Company approved a two for one
stock split. Each shareholder received one additional share
for each share they held. Relative numbers have been
adjusted to reflect this change.
7. On August 13, 1999, Kentucky Bank acquired the Wilmore,
Kentucky branch of National City Bank. Included in the
purchase were $9.0 million in net deposits and $353,000 in
fixed assets. The net deposits assumed exceeded the cash
received by $287,000.
<PAGE>
8. Beginning January 1, 2001, a new accounting standard will
require all derivatives to be recorded at fair value.
Unless designated as hedges, changes in these fair values
will be recorded in the income statement. Fair value
changes involving hedges will generally be recorded by
offsetting gains and losses on the hedge and on the
hedged item, even if the fair value of the hedged item is
not otherwise recorded. This is not expected to have a
material effect, but the effect will depend on derivative
holdings when this standard applies.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This discussion contains forward-looking statements under
the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties. Words such as "believes,"
"anticipates," "expects," "intends," "plans," "targeted,"
and similar expressions are intended to identify forward-
looking statements but are not the exclusive means of
identifying such statements. Although the Company believes
that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be
no assurance that the forward-looking statements included
herein will prove to be accurate. Factors that could cause
actual results to differ from the results discussed in the
forward-looking statements include, but are not limited to:
economic conditions (both generally and more specifically in
the markets, including the tobacco market, in which the
Company and its bank operate); competition for the Company's
customers from other providers of financial and mortgage
services; government legislation and regulation (which
changes from time to time and over which the Company has no
control); changes in interest rates (both generally and more
specifically mortgage interest rates); material unforeseen
changes in the liquidity, results of operations, or
financial condition of the Company's customers; and other
risks detailed in the Company's filings with the Securities
and Exchange Commission, all of which are difficult to
predict and many of which are beyond the control of the
Company. The Company undertakes no obligation to republish
revised forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
Summary
Bourbon Bancshares, Inc. recorded net income of $2.6
million, or $0.93 basic earnings per share and $0.91 diluted
earnings per share for the first six months ended June 30,
2000 compared to $2.2 million, or $0.79 basic earnings per
share and $0.77 diluted earnings per share for the six month
period ending June 30, 1999. The first six months reflects
an increase in net income of 19%. For the three month
period ending June 30, 2000, net income was $1.3 million
($0.46 basic earnings per share and $0.45 diluted earnings
per share) compared to $1.1 million ($0.39 basic earnings
per share and $0.37 diluted earnings per share) for the same
time period in 1999. This was an increase in net income of
21%. The per share amounts above have been adjusted to
reflect the 2 for 1 stock split effective in July 1999.
Return on average assets was 1.52% for the first six months
ended June 30, 2000 compared to 1.41% for the same time
period in 1999, an increase of 8%. For the three month
period ending June 30, 2000, the return on average assets
was 1.53% compared to 1.37% for the same period in 1999, an
increase of 12%. Return on average equity was 16.1% and
14.6% for the six months ended June 30, 2000 and 1999,
respectively, an increase of 10%. The return on equity was
15.9% (up 14%) and 14.0% for three month period ending June
30, 2000 and June 30, 1999, respectively.
<PAGE>
Our business continues to grow at a healthy pace. Average
deposits have increased $28 million from June 1999 to June
2000, up 11%. This growth has been assisted by the Wilmore,
Kentucky branch acquisition in August, 1999. Our loan
demand has been even greater. June 2000 average loans have
increased $45 million from June 1999, up 21%. These changes
have caused the interest margin to increase 18 basis points
during the first six months of 2000 compared to 1999.
Net Interest Income
Net interest income was $7.2 million for the six months
ending June 30, 2000 compared to $6.2 million in 1999,
resulting in an increase of $1.0 million or 16%. The
interest margin was 4.53% for the first six months of 2000
compared to 4.35% in 1999, an increase of 18 basis points or
4%. Loan volume continues to improve. For the three month
period ending June 30, 2000, net interest income was $3.7
million compared to $3.2 million for the same period in
1999, up 16%. The interest margin was 4.54% for the three
month period ending June 30, 2000 compared to 4.38% for the
same period in 1999, an increase of 4%. Typically, banks
have experienced declining margins over the past year with
the increase in rates. However, our interest margins have
increased due to the change in the composition of our
balance sheet. Year to date average loans are up $27
million, or 12% from 1999 to 2000 resulting in an increase
in loan interest income of $2.1 million for the first six
months. Loan growth is expected to continue in the near
future. Average deposits also increased from 1999 to 2000,
up $18 million, or 7%. This increased volume has resulted
in an increase in deposit interest expense of $904 thousand
for the first six months. The banking industry continues to
battle competition for deposit dollars, and this trend is
expected to continue.
Non-Interest Income
Non-interest income increased $0.1 million for the six month
period ended June 30 from $1.7 million in 1999 to $1.8
million in 2000. An increase of $297 thousand in service
charges from 1999 to 2000 is mainly attributable to an
increase in overdraft charges of $167 thousand. Income from
insurance sales of $46 thousand also contributed to this
increase. Investment securities net losses were $62
thousand greater for the first six months of 2000 compared
to the same period in 1999. The increase in rates have
caused the value of the existing portfolio to decline.
Therefore, some securities were exchanged resulting in a
loss and an increase in future interest income. The
reduction of loan gains of $224 thousand is attributable to
an increase in rates in 2000 as compared to 1999. The
increase in rates resulted in a reduction of loan
originations and refinances. Due to the volatility of
rates, the level of activity and related income may continue
to decline. The increase in other income of $73 thousand in
the first six months of 2000 as compared to the same time
period in 1999 is a result of an increase in debit card
income of $65 thousand. We continue to promote the use of
electronic products and expect these to be a integral part
of our business.
For the three month period ending June 30, 2000, non-
interest income increased $42 thousand to $877 thousand from
$835 thousand in 1999. Service charges increased $147
thousand from $502 thousand in 1999 to $649 thousand in
2000. Of this, $84 thousand is attributable to overdraft
charges. Net investment security losses increased $54
thousand. The mortgage banking business continued to
decline. The gain on sale of mortgage loans declined $76
thousand. Other income increased $33 thousand, with the
majority of this being an increase in debit and credit card
income of $25 thousand.
<PAGE>
Non-Interest Expense
The explanations for the increase of $517 thousand in non-
interest expenses from $4.5 million for the six months ended
June 30, 1999 to $5.1 million for the same period in 2000
follows. Salaries and benefits increased $239 thousand for
the first six months of 2000 compared to 1999, an increase
of 9.9%. Of this, $63 thousand is attributable to the
acquisition of the Wilmore branch, since it was acquired in
August 1999. The remainder is due to the maintaining an
expected level of staffing and annual salary increases.
Salaries, excluding bonuses and incentives, increased 7.4%
from 1999 to 2000. Employee benefits increased $110
thousand for this same period. This increase is mainly
attributable to the increasing cost of health insurance.
For the three month period ending June 30, 2000, salaries
and benefits increased $109 thousand.
Occupancy expense increased $192 thousand to $776 thousand
for the first six months of 2000 compared to 1999.
Depreciation is up $95 thousand for this period. Building
and equipment maintenance was $40 thousand higher for the
first six months of 2000 compared to 1999. For the three
month period ending June 30, 2000, occupancy expense
increased $92 thousand. The second quarter's increase is
consistent with the increase in the first quarter. These
increases are a result on the Company's continued emphasis
on improving and maintaining its facilities.
Advertising and Marketing costs increased $32 thousand to
$182 for the first six months of 2000 as compared to the
same period in 1999. For the three month period ending June
30, 2000, these costs increased $15 thousand. Continued
efforts have been made by the Company to promote the name
and the products of Kentucky Bank.
Other expenses for the first six months of 2000 compared to
1999 increased $45 thousand to $1.1 million. For the three
month period ending June 30, 2000, other expenses decreased
$49 thousand to $537 thousand. During the second quarter of
1999, the processing of electronic products was changed.
Costs of these products and their related usage, and the
related conversion resulted in an increase in expenses of
$70 thousand in 1999. Outside of the electronic products
change, the other changes are normal due to the growth of
the Bank and the general increase in the cost of doing
business.
Income Taxes
The tax equivalent rate for the six months ended June 30 was
28% for both 2000 and for 1999. For the three month period
ending June 30, 2000 the tax equivalent rate was 29%
compared to 27% for the same period in 1999. These rates
being less than the statutory rate is a result of the tax-
free securities and loans held by the Company.
<PAGE>
Liquidity and Funding
Cash and cash equivalents were $9.9 million as of June 30,
2000 compared to $20.7 million at December 31, 1999. At the
end to 1999, the Bank has excess cash on hand for "Y2K",
which was common in the financial industry. The cash flow
statement indicates the funds provided and their uses from
the operations of the Bank.
Therefore, the cash flow statements provide a useful
analysis of liquidity. This report reveals a decrease of
cash and cash equivalents for the first six months of 2000
of $10.8 million compared to an increase of $1.0 million for
the same period in 1999. In 2000, net cash from operating
activities was $4.6 million compared to $4.8 million in
1999. For the three months ending June 30, 2000, net cash
from operating activities increased $2.2 million compared to
$5.1 million in 1999. In 1999, the isolated sale of
selected mortgage loans increased the cash from operating
activities.
For the first six months, securities had a net decline of
$7.8 million in 2000 and by $716 thousand in 1999. Much of
this change in 2000 has been used to offset the net change
in loans of $22 million in 2000. For the first six months
of 1999, the net change in loans was $7 million. Similarly,
for the three months ending June 30, 2000, net loans have
increased $19 million compared to $9 million for the same
period in 1999.
During the first six months of 2000, $10 million has been
repaid to the Federal Home Loan Bank (FHLB). In both 2000
and 1999, $5 million in advances were received from the
FHLB. Other borrowings increased $1 million in 2000 and $5
million in 1999. Deposits increased $5 million in 2000 and
decreased $6 million in 1999 during this same time period.
During the three months ending June 30, 2000, deposits have
been relatively flat, while during this period in 1999,
deposits decreased $6 million. For the three months ending
June 30, other borrowings increased $4 million in 2000
compared to an increase of $10 million in 1999.
Management is aware of the potential problem of funding
sustained loan growth. In light of this, management
believes there is sufficient liquidity to meet all
reasonable borrower, depositor and creditor needs in the
present economic environment.
<PAGE>
Non-Performing Assets
As of June 30, 2000, the Company's non-performing assets
totaled $2.2 million or 0.8% of loans compared to $1.1
million or 0.5% of loans in 1999. One line totaling $800
thousand added to the 90 days past due category. This is a
nonrecurring item and the Company does not expect to incur
any loss related to this borrower. (See table below) Real
estate loans composed 96% and 55% of the non-performing
loans as of June 30, 2000 and 1999, respectively. Forgone
interest income on the non-accrual loans for both 2000 and
1999 is immaterial.
Nonperforming Assets
June 30
(in thousands)
2000 1999
Non-accrual Loans $ 253 $ 131
Accruing Loans which are
Contractually past due
90 days or more 1,771 803
Restructured Loans 130 139
Total Nonperforming and Restructured 2,154 1,073
Other Real Estate 130 240
Total Nonperforming and Restructured
Loans and Other Real Estate $ 2,284 $ 1,313
Nonperforming and Restructured Loans
as a Percentage of Loans 0.83% 0.49%
Nonperforming and Restructured Loans
and Other Real Estate as a Percentage
of Total Assets 0.65% 0.42%
<PAGE>
Provision and Reserve for Possible Loan Losses
The 2000 six month provision for loan losses of $375
thousand is higher than the 1999 number of $350 thousand.
The three month provision was $187 thousand in 2000 and $175
thousand in 1999. Loan growth has required management to
increase the provision in order to maintain a reserve for
loan losses that is representative of the risk of loss based
on the quality of loans currently in the portfolio. As
depicted in the table below, the loan loss reserve to total
loans was 1.28% on June 30, 2000 and 1.35% on June 30, 1999.
Net charge-offs for the periods mentioned above have been
relatively insignificant. Management feels the current loan
loss reserve is sufficient to meet expected loan losses.
Loan Losses
Six Months Ended June 30
(in thousands)
2000 1999
Balance at Beginning of Period $ 3,104 $ 2,735
Amounts Charged-off:
Commercial - -
Real Estate Mortgage 24 28
Agricultural 6 43
Consumer 161 108
Total Charged-off Loans 191 179
Recoveries on Amounts
Previously Charged-off:
Commercial 3 3
Real Estate Mortgage 1 1
Agricultural 1 1
Consumer 40 24
Total Recoveries 45 29
Net Charge-offs 146 150
Provision for Loan Losses 375 350
Balance at End of Period 3,333 2,935
Loans
Average 243,846 213,357
At June 30 260,874 217,682
As a Percentage of Average Loans:
Net Charge-offs 0.06% 0.07%
Provision for Loan Losses 0.15% 0.16%
Allowance as a Percentage of
Period-end Loans 1.28% 1.35%
Allowance as a Multiple of
Net Charge-offs 22.8 19.6
Allowance as a Percentage of
Non-performing and Restructured Loans 1.55 2.74
<PAGE>
Loan Losses
Quarter Ended June 30
(in thousands)
2000 1999
Balance at Beginning of Period $ 3,268 $ 2,885
Amounts Charged-off:
Commercial - -
Real Estate Mortgage 24 28
Agricultural 6 41
Consumer 111 67
Total Charged-off Loans 141 136
Recoveries on Amounts
Previously Charged-off:
Commercial 2 1
Real Estate Mortgage 1 1
Agricultural 1 1
Consumer 15 8
Total Recoveries 19 11
Net Charge-offs 122 125
Provision for Loan Losses 187 175
Balance at End of Period 3,333 2,935
Loans
Average 249,048 215,711
At June 30 260,874 217,682
As a Percentage of Average Loans:
Net Charge-offs 0.05% 0.06%
Provision for Loan Losses 0.08% 0.08%
Allowance as a Percentage of
Period-end Loans 1.28% 1.35%
Allowance as a Multiple of
Net Charge-offs 27.3 23.5
<PAGE>
Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Asset/Liability management control is designed to ensure
safety and soundness, maintain liquidity and regulatory
capital standards, and achieve acceptable net interest
income. Management considers interest rate risk to be the
most significant market risk. The Company's exposure to
market risk is reviewed on a regular basis by the
Asset/Liability Committee. Interest rate risk is the
potential of economic losses due to future interest rate
changes. These economic losses can be reflected as a loss
of future net interest income and/or a loss of current fair
market values. The objective is to measure the effect on
net interest income and to adjust the balance sheet to
minimize the inherent risk while at the same time maximize
income. Management realizes certain risks are inherent and
that the goal is to identify and minimize the risks. The
primary tool used by management is an interest rate shock
simulation model. The Bank has no market risk sensitive
instruments held for trading purposes. The following table
depicts the change in net interest income resulting from 100
and 300 basis point changes in rates. The projections are
based on balance sheet growth assumptions and repricing
opportunities for new, maturing and adjustable rate amounts.
In addition, the projected percentage changes from level
rates are outlined below within the Board of Directors
specified limits. As of June 30, 2000 the projected
percentage changes are within the Board limits and the
Company's interest rate risk is also within Board limits.
The projected net interest income report summarizing the
Company's interest rate sensitivity as of June 30, 2000 is
as follows:
(in thousands)
PROJECTED NET INTEREST INCOME
Level
Rate Change: - 300 - 100 Rates + 100 + 300
Year One (7/1/00 - 6/30/01)
Interest Income $26,066 $28,177 $29,232 $30,288 $32,399
Interest Expense 11,416 13,296 14,237 15,177 17,057
Net Interest Income 14,650 14,881 14,995 15,111 15,342
PROJECTED DOLLAR INCREASE (DECREASE) FROM "LEVEL RATES"
Year One (7/1/00 - 6/30/01)
Interest Income $(3,166) $(1,055) N/A 1,055 3,167
Interest Expense (2,820) (940) N/A 940 2,820
Net Interest Income (346) (115) N/A 115 347
PROJECTED PERCENTAGE INCREASE (DECREASE) FROM "LEVEL RATES"
Year One (7/1/00 - 6/30/01)
Interest Income -10.8% -3.6% N/A 3.6% 10.8%
Interest Expense -19.8% -6.6% N/A 6.6% 19.8%
Net Interest Income -2.3% -0.8% N/A 0.8% 2.3%
Board approved limit >-10.0% >-4.0% N/A >-4.0% >-10.0%
<PAGE>
These numbers are comparable to 1999. In 2000, year one
reflected a decline in net interest income of 2.3% with a
300 basis point decline compared to the 1.6% decline in
1999. The 300 basis point increase in rates reflected a
2.3% increase in net interest income in 2000 compared to
1.7% in 1999. Percentage changes in 2000 are comparable to
1999.
Management measures the Company's interest rate risk by
computing estimated changes in net interest income in the
event of a range of assumed changes in market interest
rates. The Company's exposure to interest rates is reviewed
on a monthly basis by senior management and quarterly with
the Board of Directors. Exposure to interest rate risk is
measured with the use of interest rate sensitivity analysis
to determine the change in net interest income in the event
of hypothetical changes in interest rates, while interest
rate sensitivity gap analysis is used to determine the
repricing characteristics of the Company's assets and
liabilities. If estimated changes to net interest income
are not within the limits established by the Board, the
Board may direct management to adjust the Company's asset
and liability mix to bring interest rate risk within Board
approved limits.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
The Company is not a party to any material legal proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The registrant's 2000 Annual Meeting of Shareholders
was held May 2, 2000. Proxies were solicited by the
registrant's board of directors. There was no solicitation
in opposition to the board's nominees as listed in the proxy
statement, and all of the nominees were elected by vote of
the shareholders. Voting results for each nominee were as
follows:
Votes For Votes Withheld
William R. Stamler 2,346,879 300
Buckner Woodford 2,347,129 50
The following directors have a term of office that will
continue following the Annual Meeting: William Arvin, James
L. Ferrell, Henry Hinkle, Theodore Kuster and Robert G.
Thompson.
A proposal to approve the appointment of the firm of
Crowe, Chizek and Company LLP as the independent accountants
for the Corporation to audit the Corporation's financial
statements for its year ending December 31, 2000 was
approved by a majority of the outstanding shares of the
registrant's common stock. A total of 2,345,119 shares were
voted in favor of the proposal; and 2,060 shares were voted
against.
The total number of Common Shares outstanding as of
March 17, 2000, the record date for the Annual Meeting of
Shareholders was 2,817,731.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits as required by Item 601 of Regulation S-B.
3.1 Bylaws of the Registrant dated March 9, 1993
11 Earnings Per Share Calculation
27 Financial Data Schedule
2. No reports on Form 8-K have been filed during the
quarter for which this report is filed.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused the report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Bourbon Bancshares, Inc.
Date __8/14/00_________ __/s/Buckner Woodford____________
Buckner Woodford, President and C.E.O.
Date __8/14/00_________ __/s/Gregory J. Dawson___________
Gregory J. Dawson, Chief Financial Officer
<PAGE>
EXHIBIT 3.1
BYLAWS
OF
BOURBON BANCSHARES, INC.
(The "Corporation")
ARTICLE I
Offices
1.1 Principal office. The principal office of the
Corporation shall be located in Paris, Kentucky. The
Corporation may have such other offices, either within or
outside the Commonwealth of Kentucky, as the business of
the Corporation may require from time to time.
1.2 Registered Office. The registered office of the
Corporation shall be at Fourth and Main Streets, Paris,
Kentucky. The address of the registered office may be
changed from time to time by the Board of Directors.
ARTICLE II
Shareholders
2.1 Annual Meetings. The annual meeting of the
shareholders shall be held at such time, place and on such
date as the Board of Directors shall designate and as
stated in the notice of the meeting, said date to be no
later than six months following the end of the
Corporation's fiscal year. The purpose of such meeting
shall be the election of directors and the transaction of
such other business as may properly come before it. If the
election of directors shall not be held on the day
designated for an annual meeting, or at any adjournment
thereof, the Board of Directors shall cause the election to
be held at a special meeting of the shareholders to be held
as soon thereafter as may be practicable. Failure to hold
the annual meeting at or within the designated time, or to
elect directors at or within such time, shall not work any
forfeiture or a dissolution of the Corporation, and shall
not otherwise affect valid corporate acts.
2.2 Special meetings. Special meetings of the
shareholders for any purpose or purposes shall be called by
the
<PAGE>
Chief Executive Officer at the written request of a majority
of the members of the Board of Directors, or upon the
written demand of the holders of not less than 67% of all
the outstanding shares of the Corporation entitled to vote
at such meeting.
2.3 Place of Special Meetings. The Board of Directors
may designate any place within or outside the Commonwealth
of Kentucky as the place for any special meeting of
shareholders called by the Board of Directors. If no
designation is properly made, or if a special meeting is
otherwise called, the place of meeting shall be at the
principal office of the Corporation in the Commonwealth of
Kentucky.
2.4 Notice of Annual or Special Meetings. The
Corporation shall give notice to shareholders of record of
the date, time and place of each annual or special
shareholders meeting to be held, and, in case of a special
meeting, the purpose or purposes for which the meeting is
called, no less than 10 days nor more than 60 days before
the date of the meeting. Notice shall be given in written
form, delivered personally or by telegraph, teletype, any
other form of wire or wireless written communication or by
mail or private carrier, by or at the direction of the Chief
Executive Officer or the Secretary. If notice is given by
mail, such notice shall be deemed to be delivered when
deposited in the United States mail correctly addressed to
the shareholder at his address as it appears on the stock
transfer books of the Corporation, with postage prepaid. If
notice is given by private carrier, such notice shall be
deemed to be delivered upon delivery of such notice to a
private carrier, in any envelope required by such private
carrier for delivery without charge to the shareholder,
correctly addressed to the shareholder at his address as it
appears on the stock transfer books of the Corporation. If
notice is given by telegraph, teletype or any other form of
wire or wireless written communication, notice shall be
deemed to be delivered upon proper transmission of such
written communication to the shareholder's address as it
appears on the stock transfer books of the Corporation or
through a wireless communication telephone number for a
shareholder's business or residence address known to the
Corporation that the Corporation reasonably believes will
result in the receipt of such written communication (or all
material information as to its contents) by the shareholder.
An affidavit (a) of mailing of notice of a meeting of
shareholders, executed by the Secretary, any Assistant
Secretary or any transfer agent of the Corporation, (b) of
delivery of notice, executed by any private carrier or any
independent company engaged in the transmission and delivery
of telegraphs, and (c) of proper transmission of notice by
teletype or any other form
2
<PAGE>
of wire or wireless written communication, executed by any
officer of the Corporation, shall be prima facie evidence of
the giving of such notice. The notice of every meeting of
the shareholders may be accompanied by a form of proxy
approved by the Board of Directors in favor of such
person(s) or matter(s) as the Board of Directors may
determine.
2.5 Advance Notice of Shareholder Business. At any
annual meeting of the shareholders, only such business shall
be conducted, and only such proposals shall be acted upon,
as shall have been properly brought before the meeting. To
be properly brought before an annual meeting, business must
be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before the meeting
by or at the direction of the Board of Directors or (c)
otherwise properly brought before the meeting by a
shareholder in compliance with the procedures set forth in
this Section 2.5. For business to be properly brought
before an annual meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a shareholder's
notice must be delivered to or mailed and received at the
principal office of the Corporation, not less than 60 nor
more than 90 days prior to the scheduled date of the
meeting, regardless of any postponement, deferral or
adjournment of that meeting to a later date; provided,
however, that if less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be
so received not later than the close of business on the 10th
day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was
made. A shareholder's notice to the Secretary shall set
forth as to each matter the shareholder proposes to bring
before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual
meeting, (b) the name, age, business address, residence
address and principal occupation or employment of the
shareholder proposing such business, (c) the class and
number of shares of the Corporation which are beneficially
owned by the shareholder and (d) any material interest of
the shareholder in such business. Notwithstanding anything
in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with
the procedures set forth in this section 2.5. The chairman
of the annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly
brought before the meeting and in accordance with the
3
<PAGE>
provisions of this Section 2.5, and if he should so
determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not
be transacted.
2.6 Closing Transfer Books and Fixing of a Record
Date. The Board of Directors of the Corporation may close
its stock transfer books for a period not exceeding 70 days,
immediately prior to the date of any meeting of
shareholders, or the date for the payment of any dividend or
for the allotment of rights, or the date when any exchange
or reclassification of shares shall be effective; or in lieu
thereof, may fix in advance a date, not exceeding 70 days
prior to the date of any meeting of shareholders, or to the
date for the payment of any dividend or for the allotment of
rights, or to the date when any exchange or reclassification
of shares shall be effective, as the record date for the
determination of shareholders entitled to notice of, or to
vote at, such meeting, or shareholders entitled to receive
payment of any such dividend or to receive any such
allotment of rights, or to exercise rights in respect of any
exchange or reclassification of shares. The shareholders of
record on such record date shall be the shareholders
entitled to notice of, and to vote at, such meeting, or to
receive payment of such dividend or to receive such
allotment of rights, or to exercise such rights, in the
event of an exchange or reclassification of shares, as the
case may be. If the transfer books are not closed and no
record date is fixed by the Board of Directors, the date on
which notice of the meeting is mailed, or the date on which
the resolution of the Board of Directors declaring such
dividend is adopted or such other action is taken, as the
case may be, shall be deemed to be the record date for the
determination of the shareholders of the Corporation and the
number of shares owned by them for all of the purposes set
forth in the immediately preceding sentence. When a record
date has been established as provided herein, such record
date shall be effective for any adjournment of the meeting
for which such record date was established, unless the
meeting is adjourned (other than by court order) to a date
more than 120 days after the date fixed for the original
meeting, in which case the Board of Directors shall
establish a new record date in accordance with these Bylaws.
If a court orders a meeting adjourned to a date more than
120 days after the date fixed for the original meeting and
provides that the original record date continue in effect,
the Board of Directors need not establish a new record date.
2.7 Voting Record. The officer or agent having charge
of the Corporation's stock transfer books shall make, at
least 5 business days before every meeting of shareholders,
4
<PAGE>
a list of the shareholders entitled to notice of the
shareholders' meeting. The list shall be arranged by voting
group (and within each voting group by class or series of
shares) and show the address of and number of shares held by
each shareholder. Such shareholders' list shall be
available for inspection by any shareholder, beginning 5
business days before the meeting for which the list was
prepared and continuing through the meeting, at the
Corporation's principal office or at a place identified in
the meeting notice in the city where the meeting will be
held. A shareholder, his agent or attorney may on written
demand inspect and copy the list during regular business
hours and at the shareholder's expense, during the period it
is available for inspection, subject to the Corporation's
ability to refuse to permit such inspection or copying
without a court order. The Corporation shall make the
shareholders' list available at the meeting, and any
shareholder, his agent or attorney shall be entitled to
inspect the list at any time during the meeting or any
adjournment.
2.8 Quorum. A majority of the outstanding shares of
the Corporation entitled to vote, represented in person or
by proxy, shall constitute a quorum of the shareholders for
all purposes unless a greater or lesser quorum shall be
provided by law or the Corporation's Articles of
Incorporation and in such case the representation of the
number so required shall constitute a quorum. Once a share
is represented for any purpose at the meeting, it shall be
deemed present for quorum purposes for the remainder of the
meeting and for any adjournment of that meeting, unless a
new record date is or must be set for that adjourned
meeting. In the absence of a quorum, the shareholders so
present may, by majority vote, adjourn the meeting from time
to time in the manner provided in Section 2.9 of these
Bylaws.
2.9 Adjournments. Any meeting of shareholders, annual
or special, may adjourn from time to time to reconvene at
the same or some other place, and notice need not be given
of any such adjourned meeting if the time and place thereof
is announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the corporation may
transact any business which might have been transacted at
the original meeting. If after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to persons who are
shareholders as of the new record date.
2.10 Organization. The Chairman of the Board, or such
other person as may have been designated for the purpose by
the Board of Directors, or if no such designation shall have
been made, a chairman elected by the shareholders present,
5
<PAGE>
shall act as chairman of meetings of shareholders. The
Secretary of the Corporation shall act as secretary of
meetings of shareholders, but in the absence of the
Secretary the chairman of the meeting may appoint any
person to act as secretary of the meeting.
2.11 Voting. Unless otherwise required by the
Kentucky Business Corporation Act, the Corporation's
Articles of Incorporation or these Bylaws, (a) any question
brought before any meeting of shareholders shall be decided
by the vote of the holders of a majority of the shares
represented and entitled to vote on the matter and (b) each
shareholder represented at a meeting of shareholders shall
be entitled to cast one vote for each share entitled to
vote on the matter held by such shareholder; provided,
however, that at each election for directors, each
shareholder entitled to vote shall have the right to cast
as many votes in the aggregate as he shall be entitled to
vote under the Corporation's Articles of Incorporation,
multiplied by the number of directors to be elected at such
election, and each shareholder may cast the whole number of
votes for one candidate or distribute such votes in whole
numbers among two or more candidates. The Board of
Directors, in its discretion, or the chairman presiding at
a meeting of shareholders, in his discretion, may require
that any votes cast at such meeting shall be cast by
written ballot.
2.12 Proxies. At all meetings of shareholders, a
shareholder may vote by a proxy signed by the shareholder
or by his duly authorized attorney-in-fact. Such proxy
shall be filed with the Secretary of the Corporation before
or at the time of the meeting. No proxy shall be valid
after 11 months from the date of its execution, unless
otherwise expressly provided in the proxy. A proxy may be
revoked in writing at any time unless the appointment form
conspicuously states that it is irrevocable and the
appointment is coupled with an interest. The effective
time of such revocation shall be the time the Secretary of
the Corporation receives the written notice of revocation.
2.13 Voting of Shares by Certain Holders.
(a) Shares standing in the name of another
corporation may be voted by that corporation's president or
by proxy appointed by him or by such other person as the
board of directors of such other corporation may determine.
6
<PAGE>
(b) Shares held by an administrator, executor,
guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such shares into
his name. Shares standing in the name of a trustee may be
voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a
transfer of such shares into his name.
(c) Shares standing in the name of a receiver may
be voted by such receiver, and shares held by or under the
control of a receiver may be voted by such receiver without
the transfer thereof into his name if authority so to do is
contained in an appropriate order of the court by which such
receiver was appointed.
(d) Where shares are held jointly by two or more
fiduciaries, unless the Secretary of the Corporation is
given written notice to the contrary by any of such
fiduciaries, the vote of one or more of such fiduciaries
shall be presumed to be the vote of all such fiduciaries.
Where shares are held jointly by two or more fiduciaries and
written notice is given to the Secretary of the Corporation
that the vote of one or more of such fiduciaries may not be
presumed to be the vote of all such fiduciaries, the vote of
the majority of such fiduciaries (or both in the case of two
fiduciaries) shall control the manner of voting or the
giving of a proxy unless the instrument or order appointing
the fiduciaries otherwise directs. Where, in any case,
fiduciaries are equally divided upon the manner of voting
shares jointly held by them, any court of competent
jurisdiction may, upon petition filed by any of the
fiduciaries, or by any beneficiary, appoint an additional
person to act with the fiduciaries in determining the manner
in which the shares shall be voted upon the particular
questions as to which the fiduciaries are divided.
(e) A shareholder whose shares are pledged shall
be entitled to vote such shares until the shares have been
transferred into the name of the pledgee, and thereafter,
the pledgee shall be entitled to vote the shares so
transferred.
(f) Neither treasury shares of its own stock held
by the Corporation, nor shares held by another corporation
if a majority of the shares entitled to vote for the
election of directors of such other corporation is held by
the Corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares at any
given time.
7
<PAGE>
(g) The Secretary or any shareholder may demand
written proof that the person asserting the right to vote
shares pursuant to this Section 2.13 holds the position he
claims to hold and has been properly authorized to vote the
shares he represents. Such proof, if demanded, shall be
presented prior to the voting of such shares by such person.
2.14 Inspectors of Elections. The Board of Directors
or the chairman of the meeting may appoint two or more
inspectors to tally and certify each vote required to be
tallied and certified by them as provided in the resolution
of the Board of Directors appointing them or in their
appointment by the chairman of the meeting, and to perform
such other acts or duties as may be requested by the
chairman of the meeting or required by law. On request of
the chairman of the meeting or as otherwise required by law,
the inspectors shall make and execute a written report to
the chairman of the meeting certifying any facts found by
them and matters determined by them. The report shall be
prima facie evidence of the facts stated and of the vote
certified by the inspectors.
2.15 Attendance at Meeting as Waiver. Attendance by a
shareholder at a meeting of shareholders (a) waives
objection to lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the
meeting objects to holding the meeting or transacting
business at the meeting; and (b) waives objection to
consideration of a particular matter at the meeting that is
not within the purpose or purposes described in the meeting
notice, unless the shareholder objects to considering the
matter when it is presented.
ARTICLE III
Directors
3.1 General Powers. The business affairs of the
Corporation shall be managed by its Board of Directors.
3.2 Number, Tenure and Qualifications. The number of
directors of the Corporation shall be not less than nine (9)
and no more than fifteen (15), and within this range shall
be fixed by resolution adopted by a majority of the Board of
Directors from time to time. Each director shall hold
office for the term for which he was elected and until his
successor shall be elected and qualified, whichever period
is longer, or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided.
8
<PAGE>
3.3 Removal and Resignations. Subject to the rights
of the holders of any class or series of Preferred Shares
then outstanding, at a meeting of shareholders called
expressly for the purpose of removing one or more directors,
any director or the entire Board of Directors may be
removed, with cause, by a vote of the holders of not less
than 67% of the shares then entitled to vote at an election
of directors. Whenever the holders of the shares of any
class or series are entitled to elect one or more directors
by the provisions of the Articles of Incorporation, the
provisions of this Section shall apply, in respect to the
removal of a director or directors so elected, to the vote
of the holders of the outstanding shares of that class or
series and not to the vote of the outstanding shares as a
whole. Any member of the Board of Directors may resign from
the Board of Directors at any time by giving written notice
to the Chairman of the Board or President of the
Corporation. Any such resignation shall take effect at the
time specified therein or, if no time is specified, upon
receipt thereof; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to
make it effective.
3.4 Annual and Regular Meetings. An annual meeting of
the Board of Directors shall be held without other notice
than this Bylaw for organization, the election of officers
and the transaction of such other business as may properly
come before the meeting within 30 days after each annual
election of directors. The Board of Directors may provide
by resolution the time and place, either within or outside
the Commonwealth of Kentucky for the holding of regular
meetings without other notice than such resolution.
3.5 Special Meetings. Special meetings of the Board
of Directors may be called by, or at the request of, the
Chairman of the Board or by any two directors. All special
meetings of the Board of Directors shall be held at the
principal office of the Corporation unless some other place
shall be specified in the notice of the meeting.
3.6 Notice. Notice of any special meeting shall be
given at least 36 hours prior thereto, either in person or
by telephone, or in written form delivered personally or by
telegraph, teletype, any other form of wire or wireless
written communication or by mail or private carrier, to each
director at such business address (and business wire or
wireless communication telephone number, if any) as he shall
register with the Secretary of the Corporation. If mailed,
such notice shall be deemed to be delivered at the earliest
of the following: (a) when received, (b) five days after
its deposit in the United States mail, as evidenced by the
postmark, if mailed postpaid and correctly addressed, or (c)
9
<PAGE>
on the date shown on the return receipt, if sent by
registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the director. If
notice is given by a private carrier, such notice shall be
deemed to be delivered upon delivery of such notice to a
private carrier, in any envelope required by such private
carrier for delivery without charge to the director,
correctly addressed to the director at his business address.
If notice is given by telegraph, teletype or any other form
of wire or wireless written communication, notice shall be
deemed to be delivered when receipt of such written
communication is confirmed (whether by telephone or
otherwise) by any person present at the director's business
address to which such written communication has been
transmitted. Any director may waive notice of any meeting.
The attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director
at the beginning of the meeting (or promptly upon the
director's arrival) objects to holding the meeting or
transacting business at the meeting and does not thereafter
vote for or assent to action taken at the meeting. Neither
the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
3.7 Quorum. A majority of the total number of
directors as constituted from time to time shall be
necessary and sufficient to constitute a quorum for the
transaction of business at any meeting of the Board of
Directors. In the absence of a quorum, a majority of the
directors present may adjourn the meeting from time to time
until a quorum is present and the meeting may be held as
adjourned without further notice.
3.8 Organization. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any,
or in his absence the Vice-chairman, if any, or in the
absence of the Chairman of the Board and Vice Chairman, if
any, the President, or in his absence by a chairman chosen
at the meeting. The Secretary shall act as secretary of the
meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
3.9 Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, unless otherwise
required by the Articles of Incorporation.
3.10 Participation by Telephonic Means. Members of the
Board of Directors, or of any committee designated by the
Board of Directors, may participate in a meeting of such
10
<PAGE>
Board or committee by means of conference telephone or
similar communications equipment by means of which all
persons participating in the meeting can hear and speak to
each other at the same time, and participation in a meeting
pursuant to this provision shall constitute presence in
person at the meeting.
3.11 Increase or Decrease to Number of Directors;
Vacancies. Subject to Section 3.2, the Board of Directors
may increase or decrease by 30% or less the number of
directors last elected by the shareholders of the
Corporation. Subject to the rights of the holders of any
series of Preferred Shares then outstanding, newly created
directorships resulting from any increase in the authorized
number of directors or any vacancies in the Board of
Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause shall
be filled by a majority of the remaining directors then in
office, and directors so chosen shall hold office for a term
expiring at the next annual meeting of shareholders and
until his successor shall have been duly elected and
qualified, or until his earlier resignation or removal. No
decrease in the number of directors constituting the Board
of Directors shall shorten the term of any incumbent
director.
3.12 Compensation. Directors may be paid their
expenses, if any, of attendance at each meeting of the Board
of Directors, and may be paid a stated salary as director, a
fixed sum for attendance at each meeting of the Board of
Directors or some combination thereof. No such payment
shall preclude any director from serving the Corporation in
any other capacity and receiving compensation therefore.
Members of special or standing committees may be allowed
like compensation for attending committee meetings.
3.13 Action by Written Consent. Any action required or
permitted to be taken by the Board of Directors at a meeting
may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of
the directors.
3.14 Nominations of Director Candidates. Only persons
who are nominated in accordance with the procedures set
forth in this Section 3.14 shall be eligible for election as
directors. Nominations of persons for election to the Board
of Directors of the Corporation may be made at a meeting of
shareholders by or at the direction of the Board of
Directors or by any shareholder of the Corporation entitled
to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this
Section 3.14. Such nominations, other than those made by or
at
11
<PAGE>
the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed and received at the principal office
of the Corporation not less than 60 days nor more than 90
days prior to the meeting; provided, however, that in the
event that less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be
so received not later than the close of business on the 10th
day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made.
Such shareholders' notice shall set forth (a) as to each
director whom the shareholder proposes to nominate for
election or re-election as a director, (i) the name, age,
business address and residence address of such person, (ii)
the principal occupation or employment of such person, (iii)
the class and number of shares of the Corporation which are
beneficially owned by such person and (iv) any other
information relating to such person that is required to be
disclosed in solicitations of proxies for election of
directors, or as otherwise required, in each case pursuant
to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including, without limitation, such persons'
written consent to being named in the proxy statement as a
nominee and to serving as a director if elected); and (b) as
to the shareholder giving the notice, (i) the name and
address, as they appear on the Corporation's stock transfer
books, of such shareholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by
such shareholder. At the request of the Board of Directors
any person nominated by the Board of Directors for election
as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a
shareholder's notice of nomination which pertains to the
nominee. No person shall be eligible for election as a
director of the Corporation unless nominated in accordance
with the procedures set forth in this Section 3.14. The
chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by the
Bylaws, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be
disregarded.
12
<PAGE>
ARTICLE IV
Committees
4.1 Committees. The Board of Directors may, by
resolution passed by a majority of the full Board of
Directors, designate one or more committees, each committee
to consist of two or more of the directors of the
Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who
may replace any absent or disqualified member at any
meeting of the committee. In the absence or
disqualification of a member of the committee, and in the
absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified
member, the members thereof present at any meeting and not
disqualified from voting, whether or not they constitute a
quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such
absent or disqualified member. Any such committee, to the
extent permitted by law and to the extent provided in the
resolution of the Board of Directors, shall have and may
exercise all of the powers and authority of the Board of
Directors in the management of the business and affairs of
the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require
it. Each committee shall keep regular minutes and report
to the Board of Directors when required.
4.2 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board
of Directors may make, alter and repeal rules for the
conduct of its business. In the absence of such rules,
each committee shall conduct its business in the same
manner as the Board of Directors conducts its business
pursuant to Article III of these Bylaws.
ARTICLE V
Officers
5.1 Classes. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President
(who shall be the Chief Executive Officer of the
Corporation unless the Board of Directors shall expressly
designate the Chairman of the Board, if any, as such), a
Secretary and a Treasurer. Further, the Board of Directors
may elect or appoint a Chairman of the Board, a Vice
Chairman, one or more Vice Presidents (whose titles may be
modified by words such as "Executive," "Senior,"
"Finance," "Operations" or words of similar ranking or
descriptive import), a Controller,
13
<PAGE>
Assistant Secretaries, Assistant Treasurers and such other
officers and assistants to offices as it from time to time
deems necessary. Any two or more offices may be held by the
same person. The Chairman of the Board, if any, the Vice-
Chairman, if any, and the President shall be directors of
the Corporation.
5.2 Election and Term of Office. The officers of the
Corporation shall be elected by the Board of Directors at
its annual meeting held after the Annual Meeting of
Shareholders. If the election of officers is not held at
any such meeting, such election shall be held as soon
thereafter as is practicable. Vacancies may be filled or
new offices created and filled at any meeting of the Board
of Directors. Each officer shall hold office until his
successor is duly elected or until his death or until he
shall resign or shall have been removed in the manner
hereinafter provided.
5.3 Removal and Resignations. Any officer or agent
elected or appointed by the Board of Directors may be
removed by the Board of Directors whenever, in its judgment,
the best interests of the Corporation would be served
thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself
create contract rights. Any officer of the Corporation may
resign at any time by giving written notice to the President
or Secretary of the Corporation. Any such resignation shall
take effect at the time specified therein or, if no time is
specified, upon receipt thereof; and unless otherwise
specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
5.4 Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise
may be filled by the Board of Directors for the unexpired
portion of the term.
5.5 Chairman of the Board of Directors. The Chairman
of the Board of Directors shall preside at all meetings of
the shareholders and of the Board of Directors, subject to
Sections 2.10 and 3.8 of these Bylaws. The Chairman of the
Board (if expressly designated as Chief Executive Officer)
shall have general supervision over the entire business of
the Corporation. Except where by law the signature of the
President is required, the Chairman of the Board (provided
he is the Chief Executive Officer) shall possess the same
power as the President to sign all contracts, certificates
and other instruments of the Corporation that may be
authorized by the Board of Directors.
14
<PAGE>
5.6 Vice-Chairman. The Vice Chairman, if any, shall
have such duties and powers as from time to time may be
assigned by these Bylaws or the Board of Directors.
5.7 President. The President shall be the Chief
Executive Officer of the Corporation unless the Board of
Directors expressly designates by resolution the Chairman of
the Board to be such, in which event the President shall be
the Chief Operating Officer of the Corporation. Subject to
the direction of the Board of Directors, and the Chairman of
the Board if he shall be the Chief Executive Officer of the
Corporation, the President shall have general supervision
over the administration and operations of the Corporation.
Except as otherwise provided in these Bylaws, he shall
perform all the duties and functions and exercise all the
powers of the Chairman of the Board in the absence or
disability of the Chairman of the Board. The President may
sign certificates for shares of the Corporation, any deeds,
mortgages, bonds, contracts or other instruments which the
Board of Directors has authorized to be executed, except in
cases where the signing and execution thereof is expressly
delegated by the Board of Directors or by these Bylaws to
some other officer or agent of the Corporation or is
required by law to be otherwise signed or executed. The
President shall, in general, perform all duties incident to
the office of President and such other duties as may be
assigned to him by the Chairman of the Board (unless he is
not the Chief Executive Officer of the Corporation) or the
Board of Directors from time to time.
5.8 Vice-Presidents. Any Vice-President shall have
such duties and powers as shall be designated from time to
time by the Board of Directors.
5.9 Secretary. The Secretary shall (a) record all the
proceedings of the shareholders' meetings and of the Board
of Directors' meetings and (unless otherwise directed) all
committees thereof in one or more books to be kept for that
purpose; (b) cause all notices to be duly given in
accordance with the provisions of these Bylaws or as
required by law; (c) be custodian of the corporate records
and of the seal, if any, of the corporation; (d) cause the
lists, books, reports, statements, certificates and other
documents and records required by law to be properly kept
and filed; (e) sign with the President or Vice-President
certificates for shares of stock of the Corporation the
issuance of which shall have been duly authorized (the
signature to which may be a facsimile signature); (f) have
charge of the stock and transfer books of the corporation
(which may, however, be kept by any transfer agent or agents
of the corporation); and, (g) in general, perform all duties
incident to the
15
<PAGE>
office of Secretary, and have such other duties and powers
as may be designated from time to time by the Chairman of
the Board (provided he is the Chief Executive Officer), the
President or the Board of Directors.
5.10 Treasurer. The Treasurer shall supervise and
conduct the routine financial business of the Corporation
and shall have care and custody of its funds, securities and
property subject to the supervision of the President. The
Treasurer shall keep permanent records of the funds and
property of the Corporation and shall have authority to
receive all monies and to pay out and disburse such monies
under the direction and control of the Board of Directors.
The Treasurer shall deposit daily to the credit of the
Corporation all monies not required for the convenience of
the Corporation's business, in such banks, trust companies
or other depositories as the Board of Directors may from
time to time direct. The Treasurer shall in general perform
all the duties incident to the office of Treasurer, and have
such other duties and powers as may be designated from time
to time by the Chairman of the Board (provided he is the
Chief Executive Officer), the President or the Board of
Directors.
5.11 Chief Financial Officer. The Chief Financial
Officer shall be the chief accounting officer of the
Corporation and shall be in charge of its books of account,
accounting records and accounting procedures. He shall have
such other duties and powers as may be designated from time
to time by the Chairman of the Board (provided he is the
Chief Executive Officer), the President or the Board of
Directors.
5.12 Other officers; Assistant officers. If the Board
of Directors elects or appoints (i) other officers or (ii)
assistants to any other officers, such officers and
assistant officers shall exercise such powers and perform
such duties as pertain to their respective offices, or as
may be conferred upon, or assigned to, them by the Chairman
of the Board (provided he is the Chief Executive Officer),
the President, the Board of Directors and, in the case of
assistant officers, the respective officer to whom they are
assistants.
5.13 Compensation. The compensation of the Chairman of
the Board and the Vice-Chairman of the Board, if any, and
the President of the Corporation shall be fixed from time to
time by the Board of Directors. The compensation of the
other officers of the Corporation may be fixed by the
President, although such compensation shall be reviewed at
least annually by the Board of Directors and may be altered
by the
16
<PAGE>
Board of Directors. No officer shall be prevented from
receiving such compensation by reason of the fact that he is
also a director of the Corporation.
ARTICLE VI
Clerks, Agents and Employees
The Board of Directors may appoint, from time to time,
such clerks, agents and employees as it may deem advisable
for the prompt and orderly transaction of the business of
the Corporation, define their duties, fix the salaries to be
paid them and dismiss them. Subject to the authority of the
Board of Directors, the President, or any other officer of
the Corporation authorized by him, may appoint and dismiss
all or any of such clerks, agents and employees and
prescribe their duties and the conditions of their
employment, and from time to time fix their compensation.
ARTICLE VII
Contracts, Loans,
Checks and Deposits
7.1 Contracts. The Board of Directors may authorize
any officer or officers, or agent or agents, to enter into
any contract and execute and deliver any instruments in the
name of and on behalf of the Corporation. Such authority
may be general or confined to specific instances.
7.2 Loans and Evidences of Indebtedness. No loan
shall be contracted on behalf of the Corporation, and no
evidence of indebtedness shall be issued in its name, unless
authorized by the Board of Directors. Such authorization
may be general or confined to specific instances. Loans so
authorized by the Board of Directors may be effected at any
time for the Corporation from any bank, trust company or
other institution, or from any firm, corporation or
individual. A11 bonds, debentures, notes and other
obligations or evidences of indebtedness of the Corporation
issued for such loans shall be made, executed and delivered
as the Board of Directors shall authorize. When so
authorized by the Board of Directors, any part of or all of
the properties, including contract rights, assets, business
or goodwill of the Corporation, whether then owned or
thereafter acquired, may be mortgaged, pledged, hypothecated
or conveyed or assigned in trust as security for the payment
of such bonds, debentures, notes and other obligations or
evidences of indebtedness of the Corporation, and of the
interest thereon, by
17
<PAGE>
instruments executed and delivered in the name of the
Corporation.
7.3 Checks, Drafts, Etc. All checks, drafts or other
orders for the payment of money, issued in the name of the
Corporation, shall be signed by such person or persons and
in such manner as may from time to time be designated by the
Board of Directors. Such designations may be general or
confined to specific instances.
7.4 Deposits. All funds of the Corporation not
otherwise employed shall be deposited, from time to time, to
the credit of the Corporation in such banks, trust companies
and other depositories as the Board of Directors may
authorize. The Board of Directors may make such special
rules and regulations with respect to such bank accounts,
not inconsistent with the provisions of these Bylaws, as it
may deem expedient. For the purpose of deposit and for the
purpose of collection for the account of the Corporation,
checks, drafts and other orders for the payment of money
that are payable to the order of the Corporation shall be
endorsed, assigned and delivered by such person or persons
and in such manner as may from time to time be authorized by
the Board of Directors.
ARTICLES VIII
Certificates for
Shares and Their Transfer
8.1 Certificates for Shares. Every shareholder shall
be entitled to have a certificate certifying the number and
type of shares of the Corporation owned by him, signed by,
or in the name of the Corporation by the Chairman of the
Board, or Vice-Chairman, President or a Vice-President and
by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation (except that
when any such certificate is countersigned by a transfer
agent other than the Corporation or its employee or by a
registrar other than the Corporation or its employee the
signature of any such officers may be facsimiles). Such
certificates shall be in such form as may be determined by
the Board of Directors and by the laws of the Commonwealth
of Kentucky. If the Corporation shall be authorized to
issue more than one class of shares or more than one series
of any class, the designations, preferences and relative,
participating, optional or other special rights of each
class of shares or series thereof and the qualifications,
limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on the face
18
<PAGE>
or back of the certificate that the Corporation shall issue
to represent such class or series of shares, provided that,
except in the case of restrictions on transfer of securities
which are required to be noted on the certificate, in lieu
of the foregoing requirements, there may be set forth on the
face or back of the certificate that the Corporation shall
issue to represent such class or series of shares, a
statement that the Corporation will furnish without charge
to each shareholder who so requests the designations,
preferences and relative, participating, optional or other
special rights of each class of shares or series thereof and
the qualifications, limitations or restrictions of such
preferences and/or rights.
8.2 Transfer of Shares. Transfer of shares of the
Corporation shall be made only on the books of the
Corporation by the registered holder thereof, or by his
legal representative who shall furnish proper evidence of
authority to transfer, or by his attorney-in-fact thereunto
authorized by power of attorney duly executed and filed with
the Corporation, and on surrender for cancellation of the
certificate for such shares. The person in whose name
shares stand on the books of the Corporation shall be deemed
the owner thereof for all purposes as regards the
Corporation.
8.3 Lost, Stolen or Destroyed Certificates. A new
certificate or certificates may be issued in place of any
certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person
claiming the certificate of shares to be lost, stolen or
destroyed. When issuing a new certificate or certificates,
the Corporation, acting through its officers or agents,
including any transfer agent or registrar, may, in its
discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to
give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
8.4 Regulations. The Board of Directors shall have
the power and authority to take such action and make such
rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates for
shares of the Corporation, including, without limitation,
the appointment of a transfer agent and registrar for the
Corporation.
19
<PAGE>
ARTICLE IX
Emergency Bylaws
The Board of Directors may adopt, either before or
during an emergency, as that term is defined by the Kentucky
Business Corporation Act, any emergency bylaws permitted by
the Kentucky Business Corporation Act which shall be
operative only during such emergency.
ARTICLE X
Indemnification of Directors and Officers
10.1 General. The Corporation shall, to the fullest
extent permitted by, and in accordance with the provisions
of, the Kentucky Business Corporation Act, as it presently
exists or may hereafter be amended, indemnify each director
and officer of the Corporation against expenses (including
attorneys' fees), judgments, taxes, fines, and amounts paid
in settlement, incurred by him in connection with, and shall
advance expenses (including attorneys' fees) incurred by him
in defending, any threatened, pending or completed action,
suit or proceeding (whether civil, criminal, administrative
or investigative) to which he is, or is threatened to be
made, a party by reason of the fact that he is or was a
director or officer of the Corporation, or is or was serving
at the request of the Corporation as a director, officer,
partner, employee, or agent of another domestic or foreign
corporation, partnership, joint venture, trust or other
enterprise. Advancement of expenses shall be made upon
receipt of an undertaking, with such security, if any, as
the Board of Directors or shareholders may reasonably
require, by or on behalf of the person seeking
indemnification to repay amounts advanced if it shall
ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized herein.
10.2 Non-Exclusive Right. The indemnification provided
for by Section 10.1 shall not be deemed exclusive of any
other rights to which directors or officers of the
Corporation may be entitled under any statute, provision in
the Corporation's Articles of Incorporation, agreement or
action of the Board of Directors or shareholders of the
Corporation, or otherwise, and shall continue as to a person
who has ceased to be a director or officer of the
Corporation, and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
20
<PAGE>
10.3 Insurance. Without in any way limiting the
Corporation's power to purchase and maintain insurance for
any other purpose or on behalf of any other person, the
Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner,
employee, or agent of another domestic or foreign
corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and
incurred by him in such capacity or arising out of his
status as such, whether or not the Corporation would have
the power or be obligated to indemnify him against such
liability under the provisions of Section 10.1 of these
Bylaws or the Kentucky Business Corporation Act.
ARTICLE XI
Miscellaneous
11.1 Amendments. The Board of Directors shall have the
power and authority to alter, amend or repeal these Bylaws,
and to make new Bylaws, by the vote of a majority of the
entire Board of Directors, subject always to the power of
the shareholders to change or repeal such Bylaws. Sections
2.5, 3.14 and this 11.1 of these Bylaws shall not be
altered, amended or repealed by the shareholders of the
Corporation unless the holders of at least 80% of the
outstanding voting shares of the Corporation shall have
approved such alteration, amendment or repeal.
11.2 Fiscal Year. The Board of Directors shall have
the power to fix, and from time to time change, the fiscal
year of the Corporation.
11.3 Seal. The Board of Directors may adopt a
corporate seal which shall be circular in form and shall
have inscribed thereon the name of the Corporation, the
state of incorporation, and the word "SEAL".
11.4 Waiver of Notice. Whenever any notice is required
to be given under the provisions of these Bylaws, the
Articles of Incorporation, or the Kentucky Business
Corporation Act, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or
after the time stated therein, shall be equivalent to the
giving of such notice.
21
<PAGE>
11.5 Voting of Shares Held by Corporation. Unless
otherwise ordered by the Board of Directors, the Chief
Executive Officer of the Corporation may from time to time
appoint an attorney or attorneys, or any agent or agents, to
exercise in the name and on behalf of the Corporation the
powers and rights that the Corporation may have, as the
holder of shares or other securities in any other
corporation, to vote or to consent in respect of such shares
or other securities; and the Chief Executive Officer may
instruct the person or persons so appointed as to the manner
of exercising such powers and rights; and the Chief
Executive Officer may execute or cause to be executed in the
name and on behalf of the Corporation and under its
Corporate seal or otherwise, all such written proxies,
powers of attorney or other written instruments as he may
deem necessary in order that the Corporation may exercise
such powers and rights.
11.6 Form of Records. Any records maintained by
the Corporation in the regular course of its business,
including its stock ledger, books of account and minute
books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other
information storage device, provided that the records so
kept can be converted into clearly legible form within a
reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to
inspect the same.
11.7 Stock Ledger. The stock ledger of the
Corporation shall be the only evidence as to who are the
shareholders entitled to examine the stock ledger and the
list of the shareholders entitled to vote at every meeting
of shareholders or the books of the Corporation, to vote in
person or by proxy at any meeting of shareholders, to
receive notice of any meeting of shareholders and to
receive distributions on shares of the Corporation. The
Corporation shall not be bound to recognize any equitable
or other claim to or interest in such shares on the part of
any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the
laws of the Commonwealth of Kentucky.
11.8 Construction. Unless the context
specifically requires otherwise, any reference in these
Bylaws to any gender shall include all other genders; any
reference to the
22
<PAGE>
singular shall include the plural; and any reference to the
plural shall include the singular.
The above By-Laws of the
Corporation were adopted by
the Corporation's Board of
Directors at a meeting held on
March 9, 1993.
___/s/Joe
Allen___________________
Joe Allen, Secretary
23
<PAGE>
Exhibit 11
Earnings Per Share
See Note 2 in Notes to Consolidated Financial Statements for
computation of per share earnings.
