<PAGE>
<PAGE>
Registration No. 333-_________
As filed with the Securities and Exchange Commission on
February 12, 1999
================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
KENTUCKY NATIONAL BANCORP, INC.
(Exact name of registrant as specified in charter)
<TABLE>
<CAPTION>
<S> <C> <C>
INDIANA 6021 APPLIED FOR
- ---------------------------- ---------------------------- ---------------------
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification Number)
</TABLE>
1000 NORTH DIXIE AVENUE
ELIZABETHTOWN, KENTUCKY 42701
(502) 737-6000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
RONALD J. PENCE, PRESIDENT
KENTUCKY NATIONAL BANCORP, INC.
1000 NORTH DIXIE AVENUE
ELIZABETHTOWN, KENTUCKY 42701
(502) 737-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
copies to:
JAMES C. STEWART, ESQUIRE
HOUSLEY KANTARIAN & BRONSTEIN, P.C.
1220 19TH STREET, N.W., SUITE 700
WASHINGTON, D.C. 20036
(202) 822-9611
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER EFFECTIVENESS.
If the securities being registered on this form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check the
following box. [ ]
If this form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If this form is a post-effective amendment filed pursuant
to Rule 462(d) under the Securities Act, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[ ] ____________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================
Title of Proposed Proposed
Each Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
To Be To Be Price Per Offering Registration
Registered Registered (1) Unit (2) Price Fee
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$.01 par value 256,000 shares $21.65 $5,542,400 $1,541
===============================================================================
<FN>
____________
1 Based on a maximum of 240,000 shares of Kentucky National Bancorp, Inc. common
stock to be issued with respect to the currently outstanding shares of
Kentucky National Bank common stock and 16,000 shares to be reserved for
issuance under the Organizational Stock Option and Incentive Plan.
2 Estimated solely for the purposes of calculating registration fee based on
book value per share of the common stock, $1.00 par value per share, of
Kentucky National Bank at December 31, 1998.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT
ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================
<PAGE>
<PAGE>
March __, 1999
Dear Fellow Shareholder:
On behalf of the Board of Directors, we invite you to
attend the 1999 Annual Meeting of Shareholders of Kentucky
National Bank which will be held at _______________________
___________________________, Elizabethtown, Kentucky on Tuesday,
April 27, 1999 at 4:00 p.m. local time.
In addition to the election of directors, shareholders
will be asked to consider and a proposal to establish a holding
company for the Bank. The Board of Directors believes that a
holding company will increase our operating flexibility and make
the Bank more competitive. If the holding company
reorganization is approved, shareholders will hold stock in the
holding company rather than in the Bank. For more information
on the holding company reorganization, please read the enclosed
materials.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES
YOU OWN. Because the holding company reorganization requires
the approval of two-thirds of the shares outstanding, your
failure to vote or abstention from voting is equivalent to a
vote against the reorganization. On behalf of the Board of
Directors, we urge you to please sign, date and return the
enclosed proxy card in the enclosed postage-prepaid envelope as
soon as possible even if you currently plan to attend the
Meeting. Returning the proxy will not prevent you from voting
in person, but will assure that your vote is counted if you are
unable to attend the meeting.
Sincerely,
Lawrence P. Calvert Ronald J. Pence
Chief Executive Officer President<PAGE>
<PAGE>
KENTUCKY NATIONAL BANK
1000 NORTH DIXIE AVENUE
ELIZABETHTOWN, KENTUCKY 42701
________________________________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 1999
________________________________________________________________
The Annual Meeting of Shareholders (the "Annual Meeting")
of Kentucky National Bank (the "Bank") will be held in the
________________________________________________________________
__, Elizabethtown, Kentucky, on Tuesday, April 27, 1999 at 4:00
p.m. local time.
The Annual Meeting is for the following purposes which are
more completely described in the accompanying Proxy
Statement/Prospectus:
1. The election of nine directors of the Bank;
2. The approval of the reorganization of the Bank into
the holding company form of ownership by approving
an Agreement and Plan of Reorganization, pursuant to
which the Bank will become a wholly owned subsidiary
of a holding company, Kentucky National Bancorp,
Inc., a newly formed Indiana corporation ("Holding
Company"), and each outstanding share of common
stock of the Bank will be converted into one share
of common stock of the Holding Company (the "Holding
Company Reorganization"); and
3. Such other matters as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on any one of the foregoing
proposals at the Annual Meeting or any adjournment or
postponement thereof. Shareholders of record at the close of
business on March __, 1999 (the "Record Date"), are the
shareholders entitled to vote at the Annual Meeting and any
adjournment thereof.
Appraisal rights will be available to shareholders as of
the Record Date who do not vote in favor of the Holding Company
Reorganization and otherwise comply with the procedures set
forth in 12 U.S.C. 215a, a copy of which is attached as Exhibit
D to the accompanying Proxy Statement/Prospectus.
<PAGE>
You are requested to fill in and sign the enclosed proxy
which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The proxy will not be used
if you attend and vote at the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
KATHLYN JENEAN COOPER
CASHIER
Elizabethtown, Kentucky
March __, 1999
________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE BANK THE
EXPENSE OF A FURTHER REQUEST FOR PROXIES IN ORDER TO INSURE A
QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVEN-
IENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES.
________________________________________________________________
<PAGE>
<PAGE>
KENTUCKY NATIONAL BANK
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 1999
KENTUCKY NATIONAL BANCORP, INC..
PROSPECTUS FOR
256,000 SHARES OF COMMON STOCK,
PAR VALUE $.01 PER SHARE
The Board of Directors of Kentucky National Bank has
unanimously approved a plan to reorganize into a bank holding
company structure. This plan is subject to shareholder approval
and requires approval of two-thirds of the outstanding shares of
Kentucky National. You will be asked to vote on this plan, as
well to as elect directors, at the annual meeting. Kentucky
National will hold its annual meeting of shareholders at
_____________________ ___________________________________,
Elizabethtown, Kentucky, on Tuesday, April 27, 1999 at 4:00 p.m.
local time. YOUR VOTE IS VERY IMPORTANT. The Board of
Directors believes the holding company reorganization is in the
best interests of Kentucky National's shareholders and a very
important step in keeping the organization competitive.
If the holding company reorganization is approved by the
shareholders and the appropriate bank regulatory agencies, all
outstanding shares of Kentucky National will be converted into
an equal number of shares of Kentucky National Bancorp, Inc., an
Indiana corporation recently formed by Kentucky National to
serve as its holding company. This proxy statement/prospectus
serves as the prospectus for the shares that will be issued by
Kentucky National Bancorp, Inc. in the reorganization. This
proxy statement/prospectus provides details on the reasons for
the holding company reorganization and also explains how your
rights as a shareholder of the holding company will differ from
those you currently have as a shareholder of Kentucky National.
This proxy statement/prospectus does not contain all the
information set forth in the registration statement which the
holding company has filed with the Securities and Exchange
Commission. We encourage you to read the entire document
carefully.
PLEASE REFER TO RISK FACTORS ON PAGE 2 OF THE PROXY
STATEMENT/PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION, THE BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, THE OFFICE OF THE
COMPTROLLER OF THE CURRENCY OR ANY STATE SECURITIES AUTHORITY
HAS APPROVED OR DISAPPROVED THESE SECURITIES, NOR PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
This proxy statement/prospectus is dated ____________, 1999 and
is first being mailed to shareholders on ___________, 1999.
<PAGE>
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS NOT CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE HOLDING COMPANY
REORGANIZATION, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE HOLDING COMPANY OR THE BANK SINCE
ANY OF THE DATES AS OF WHICH INFORMATION FURNISHED HEREIN OR
SINCE THE DATE HEREOF.
TABLE OF CONTENTS
Page
Questions and Answers Regarding Holding
Company Reorganization. . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . .
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . .
Voting Securities and Principal Holders Thereof
Business of the Bank . . . . . . . . . . . . . . . . . . . .
Proposal I - Election of Directors . . . . . . . . . . . . . . .
Business of Kentucky National Bancorp, Inc.. . . . . . . . . . .
Meetings and Committees of the Board of Directors . . . . . .
Management of Kentucky National.. . . . . . . . . . . . . . .
Director Compensation . . . . . . . . . . . . . . . . . . . .
Executive Compensation. . . . . . . . . . . . . . . . . . . .
Transactions with Management. . . . . . . . . . . . . . . . .
Proposal II - Proposed Holding Company Formation
Holding Company Common Stock . . . . . . . . . . . . . . . .
Reasons for the Holding Company Reorganization. . . . . . . .
Plan of Reorganization. . . . . . . . . . . . . . . . . . . .
Effective Date. . . . . . . . . . . . . . . . . . . . . . . .
Exchange of Stock Certificates. . . . . . . . . . . . . . . .
Rights of Dissenting Shareholders . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences . . . . . . . . . . .
Consequences Under Federal Securities Laws. . . . . . . . . .
Effect on Organizational Stock Option and Incentive Plan. . .
Stock Transfer Agreement. . . . . . . . . . . . . . . . . . .
Conditions to the Reorganization. . . . . . . . . . . . . . .
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . .
Amendment, Termination or Waiver. . . . . . . . . . . . . . .
Comparison of Shareholders' Rights. . . . . . . . . . . . . .
Certain Anti-Takeover Provisions. . . . . . . . . . . . . . .
Provisions of the Holding Company's Articles
of Incorporation and Bylaws . . . . . . . . . . . . . . .
Indiana Business Corporation Law. . . . . . . . . . . . . . .
Business of the Bank. . . . . . . . . . . . . . . . . . . . .
Business of Kentucky National Bancorp, Inc. . . . . . . . . .
Management of Kentucky National Bancorp, Inc. . . . . . . . .
Regulation of Kentucky National Bancorp, Inc. . . . . . . . .
Description of Holding Company Capital Stock. . . . . . . . .
Holding Company Common Stock. . . . . . . . . . . . . . . . .
Serial Preferred Stock. . . . . . . . . . . . . . . . . . . .
Accounting Treatment. . . . . . . . . . . . . . . . . . . . .
Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . .
Vote Required . . . . . . . . . . . . . . . . . . . . . . . .
Market for Kentucky National Common Stock and Dividends. . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . .
Date for Submission of Shareholder Proposals . . . . . . . . . .
Exhibit A - Agereement and Plan of Reorganization. . . . . . A-1
Exhibit B - Articles of Incorporation. . . . . . . . . . . . B-1
Exhibit C - Bylaws . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D - Dissenter and Appraisal Rights . . . . . . . . . D-1
<PAGE>
<PAGE>
________________________________________________________________
QUESTIONS AND ANSWERS REGARDING
THE HOLDING COMPANY REORGANIZATION
________________________________________________________________
The following question and answer section highlights selected
information from this proxy statement/prospectus and may not
contain all of the information that is important to you. To
understand the holding company reorganization fully, you should
read carefully this entire document, including the attachments.
WHY IS THE BOARD PROPOSING THE HOLDING COMPANY REORGANIZATION?
The Board of Directors believes that the holding company
reorganization will provide the Bank with greater financial and
corporate flexibility. By having a holding company, the Bank
will have more options for structuring acquisitions and will be
able to raise capital by means which are not available to the
Bank by itself. In addition, by incorporating the holding
company under a modern state corporate code, the Board of
Directors will have more flexibility in conducting the
day-to-day operations of the Bank.
HOW WILL THE HOLDING COMPANY REORGANIZATION BE ACCOMPLISHED?
The holding company reorganization will be accomplished by
merging the Bank into a temporarily chartered national bank
subsidiary of a newly formed Indiana corporation, Kentucky
National Bancorp, Inc. In connection with this merger,
shareholders will be issued one share of stock in the holding
company for each share of Bank stock which they currently own.
Outstanding stock certificates will no longer represent an
interest in the Bank but will instead represent an interest in
the Bank's holding company.
HOW WILL THE HOLDING COMPANY REORGANIZATION CHANGE THE BUSINESS
OF THE BANK?
The holding company reorganization will not change the
current business of the Bank. Neither Kentucky National
Bancorp, Inc. nor its specially chartered bank subsidiary will
engage in any business activity prior to the holding company
reorganization. Following the holding company reorganization,
the principal activity of Kentucky National Bancorp, Inc. will
be owning and operating the Bank and the Bank will continue to
conduct its current business from its current offices. The
principal executive offices of both the Bank and the holding
company will be located at 1000 North Dixie Avenue,
Elizabethtown, Kentucky 42701 and their telephone number will be
(502) 737-6000.
HOW WILL THE HOLDING COMPANY REORGANIZATION AFFECT SHAREHOLDERS?
As a result of the holding company reorganization, the
shareholders will no longer own stock directly in the Bank but
will instead own stock in the Bank's holding company. The
rights of shareholders will be governed by the holding company's
Articles of Incorporation and Bylaws and the Indiana Business
Corporation Law rather than by the Bank's Articles of
Association and Bylaws and the National Bank Act and regulations
of the Office of the Comptroller of the Currency. For a
detailed discussion of the differences in the rights of
shareholders, see "PROPOSAL II -- PROPOSED HOLDING COMPANY
REORGANIZATION -- Comparison of Shareholders' Rights."
WHAT IS THE VOTE REQUIRED FOR APPROVAL OF THE HOLDING COMPANY
REORGANIZATION?
The holding company reorganization must be approved by at
least two-thirds of the shares outstanding. THE BOARD OF
DIRECTORS HAS UNANIMOUSLY APPROVED THE HOLDING COMPANY
REORGANIZATION AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR IT AS
WELL. Because the vote is based on the total number of shares
outstanding rather than the votes cast at the meeting, the
failure to vote has the same effect as a vote against the
holding company reorganization. Accordingly, the Board of
Directors recommends that you sign and return your proxy at your
earliest convenience even if you currently plan to attend the
meeting. Directors and executive officers of the Bank currently
own ____ shares of the Bank's stock or __% of shares
outstanding.
IS THE HOLDING COMPANY REORGANIZATION SUBJECT TO ANY OTHER
APPROVALS?
The holding company reorganization must also be approved by
the federal agencies that regulate national banks and bank
holding companies, respectively: the Office of the Comptroller
of the Currency and the Board of Governors of the Federal
1<PAGE>
<PAGE>
Reserve System. Applications have been filed for these
approvals.
DO SHAREHOLDERS HAVE THE RIGHT TO DISSENT TO THE HOLDING COMPANY
REORGANIZATION?
Shareholders who vote against the reorganization will have
the right to demand appraisal for their shares. In order to
obtain payment for their shares, dissenting shareholders
will need to follow the procedures described in "PROPOSAL II --
PROPOSED HOLDING COMPANY FORMATION -- Rights of Dissenting
Shareholders." The Board of Directors does not intend to
complete the holding company reorganization if shareholders seek
appraisal for more than 10% of the outstanding shares.
WHAT ARE THE TAX CONSEQUENCES TO SHAREHOLDERS?
The Bank has received an opinion from its special counsel
that no gains or losses will be recognized by the bank or its
shareholders as a result of the reorganization, except for
shareholders who dissent from the reorganization and receive the
appraised value of their shares.
Risk Factors
In addition to the other information contained in this
Proxy Statement/Prospectus, the following factors should be
considered carefully in evaluating the purchase of the shares of
Holding Company Common Stock offered hereby. In addition to
historical and factual statements, the information discussed in
this Proxy Statement/Prospectus contains forward-looking
statements, which can be identified by the use of
forward-looking phrases such as "believes," "expects," "may,"
"should," "projected," "contemplates," or "anticipates" or the
negative thereof or comparable words that involve risks and
uncertainties. The Holding Company's actual results may differ
materially from the results discussed in the forward-looking
statements. The following matters are cautionary statements
identifying important factors with respect to such
forward-looking statements, including certain risks and
uncertainties, that could cause actual results to vary
materially from the future results discussed in such
forward-looking statements.
CERTAIN PROVISIONS OF THE HOLDING COMPANY'S ARTICLES OF
INCORPORATION AND BYLAWS MAY DETER TAKEOVERS. The Holding
Company's Articles of Incorporation and Bylaws contain certain
provisions that could delay, discourage or prevent an attempted
takeover of the Holding Company. These provisions include:
provisions requiring the affirmative vote of 80% of the shares
outstanding for the approval of Business Combinations with
Related Persons; the requirement of advance notice of
shareholder nominations and new business; a limitation of the
voting rights of holders of more than 10% of the Holding
Company's equity securities; the authorization of the issuance
of preferred stock; the classification of the Board of
Directors; and the requirement of an 80% vote to remove
directors or to amend certain provisions of the Articles of
Incorporation and the inability of shareholders to call special
meetings or to amend the Bylaws. These provisions could
discourage takeover proposals in which shareholders could
receive a premium for their share but which are not approved by
the Board of Directors.
2<PAGE>
<PAGE>
KENTUCKY NATIONAL BANK
ANNUAL MEETING OF SHAREHOLDERS
________________________________________________________________
GENERAL
________________________________________________________________
This Proxy Statement/Prospectus is furnished in connection
with the solicitation of proxies by the Board of Directors of
Kentucky National Bank ("Kentucky National" or the "Bank") for
the annual meeting of shareholders to be held at _____________
_________________________________________, Elizabethtown,
Kentucky, Tuesday, April 27, 1999 at 4:00 p.m. local time (the
"Annual Meeting"). The accompanying Notice of Annual Meeting
and this Proxy Statement/Prospectus, together with the enclosed
form of proxy, are first being mailed to shareholders on or
about March __, 1999.
________________________________________________________________
VOTING AND REVOCATION OF PROXIES
________________________________________________________________
Proxies solicited by the Board of Directors will be voted
as directed by shareholders in the proxy. IF NO INSTRUCTIONS
ARE GIVEN, PROPERLY EXECUTED PROXIES WHICH HAVE NOT BEEN REVOKED
WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR SET FORTH BELOW AND
IN FAVOR OF THE PROPOSED HOLDING COMPANY FORMATION. Proxies
marked as abstentions will not be counted as votes cast. In
addition, shares held in street name which have been designated
by brokers on proxy cards as not voted ("broker no votes") will
not be counted as votes cast. Proxies marked as abstentions or
as broker no votes, however, will be treated as shares present
for purposes of determining whether a quorum is present.
Shareholders who execute the enclosed form of proxy retain
the right to revoke their proxies at any time prior to exercise.
Unless so revoked, the shares represented by properly executed
proxies will be voted at the Annual Meeting and all adjournments
thereof. Proxies may be revoked at any time prior to exercise
by written notice to the Bank or by the filing of a properly
executed, later-dated proxy. A proxy will not be voted if a
shareholder attends the Annual Meeting and votes in person. The
presence of a shareholder at the Annual Meeting alone will not
revoke such shareholder's proxy.
________________________________________________________________
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
________________________________________________________________
The securities entitled to vote at the Annual Meeting
consist of the Common Stock of Kentucky National Bank.
Shareholders of record as of the close of business on March __,
1999 (the "Record Date") are entitled to one vote for each share
then held except in elections of directors in which shareholders
may cumulate their votes. At the Record Date, the Bank had
240,000 shares of Kentucky National Common Stock outstanding.
In order to have a quorum at the Annual Meeting, at least a
majority of the total outstanding shares of Kentucky National
Common Stock must be present, either in person or by proxy. The
following table sets forth, as of the Record Date, certain
information as to the Common Stock beneficially owned by all
persons owning more than 5% of the Common Stock outstanding at
the Record Date.
3<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF SHARES OF
NAME AND ADDRESS BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP (1) OUTSTANDING (2)
- ------------------- ------------- --------------
<S> <C> <C>
Kevin Addington 12,040 5.02%
701 W. Park Road
Elizabethtown, Kentucky 42701
Robert E. Robbins 12,040 5.02
P.O. Box 2089
Elizabethtown, Kentucky 42701
Allen McNutt 12,040 5.02
109 Gaither Station Road
Elizabethtown, Kentucky 42701
Christopher Knight 12,040 5.02
1109 Woodland Drive
Elizabethtown, Kentucky 42701
Ronald J. Pence 14,040 (3) 5.80
1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
<FN>
___________
1 For purposes of this table, a person is deemed to be the beneficial owner
of any shares of the Common Stock (1) over which he or she has or shares
voting or investment power, or (2) of which he or she has the right to
acquire beneficial ownership at any time within 60 days from the Record
Date. As used herein, "voting power" is the power to vote or direct the
voting of shares and "investment power" is the power to dispose or direct
the disposition of shares.
2 In calculating percentage ownership for a given individual or group of
individuals, the number of shares of the Common Stock outstanding
includes unissued shares subject to options exercisable within 60 days of
the Record Date held by that individual or group.
3 Includes 2,000 shares which Mr. Pence has the right to acquire pursuant
to the exercise of options.
</FN>
</TABLE>
________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
________________________________________________________________
The Bank's Articles of Association specify that the Board
of Directors must consist of not less than five nor more than 25
members as fixed from time to time by resolution of a majority
of the full Board of Directors or by resolution of a majority of
the shareholders at any meeting thereof. Each director must
stand for election annually. The Board of Directors has fixed
the number of directors at nine and has nominated the persons
named below, each of whom currently serves as a director, for
election as directors to serve until the next annual meeting of
shareholders and their successors have been elected and
qualified.
Under the Bank's Articles of Association, shareholders
have the right to cumulate their votes. Under cumulative
voting, a shareholder has the right to cast as many votes as the
shareholder would be entitled to cast for all nominees for a
single nominee or to distribute such votes among as many
nominees as he or she sees fit. There is no provision on the
accompanying proxy card for the cumulation of votes by a
shareholder. Accordingly, any shareholder desiring to vote
cumulatively will be required to attend the Annual Meeting and
vote in person.
4<PAGE>
<PAGE>
If any nominee is unable to serve, the shares represented
by all valid proxies will be voted for the election of such
substitute as the Board of Directors may recommend or the size
of the Board may be reduced to eliminate the vacancy. At this
time, the Board of Directors knows of no reason why any nominee
might be unavailable to serve.
The following table sets forth the names of the Board of
Directors' nominees for election as directors. Also set forth is
certain other information with respect to each person's age as
of December 31, 1998, their position with the Bank, the number
and percentage of shares of Common Stock beneficially owned.
Each director first became a director in 1997 when the Bank
commenced operations.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
-------------------------------
NUMBER PERCENTAGE OF
NOMINEE AGE POSITIONS WITH THE BANK OF SHARES SHARES OUTSTANDING
- ------- --- ----------------------- ---------- ------------------
<S> <C> <C> <C> <C>
Robert E. Robbins, M.D. 64 Chairman of the Board, Director 12,040 5.02%
Lawrence P. Calvert 51 Chief Executive Officer, Director 8,040 2 3.32
Ronald J. Pence 43 President, Director 14,040 2 5.80
Kevin D. Addington 36 Director 12,040 5.02
Henry Lee Chitwood 53 Director 6,040 2.52
Lois Watkins Gray 61 Director 3,040 1.27
William R. Hawkins 41 Director 6,040 2.52
Christopher G. Knight, M.D. 54 Director 12,040 5.02
Leonard Allen McNutt 55 Director 12,040 5.02
All directors and executive
officers as a group
(10 persons) 90,693 37.17%
<FN>
___________
1 For definition of beneficial ownership, see footnote 1 to the table in "Voting Securities and
Principal Holders Thereof."
2 Includes 2,000 shares which he has the right to acquire pursuant to the exercise of options.
</FN>
</TABLE>
The following is a summary of the business experience of
the nominees. Unless otherwise indicated, each nominee has
served in their current position for the last five years.
ROBERT E. ROBBINS, M.D. practices general surgery with
Surgical Specialists, PSC, in Elizabethtown, Kentucky. He also
is the Chief of Staff-Elect of the Hardin Memorial Hospital
Medical Staff and is active in numerous local and national
medical organizations. In addition, Dr. Robbins is active in
property development in the Elizabethtown area. He has also
served as a past president of the Elizabethtown Lions Club and
as a former First Vice President of the Elizabethtown Chamber of
Commerce.
LAWRENCE P. CALVERT has served as the Chief Executive
Officer of the Bank since its opening in October 1997. Mr.
Calvert has over 23 years of experience in banking in Hardin
County. Most recently, Mr. Calvert served as the Chief
Executive Officer of The Cecilian Bank, a $100 million asset
bank with five locations in Hardin County. Mr. Calvert joined
The Cecilian Bank in 1973 and left that bank in January of 1997
in order to help organize the Bank. Mr. Calvert has various
other business interests in Hardin County and is serving as a
director of the Elizabethtown Chamber of Commerce.
RONALD J. PENCE has served as the President of the Bank
since it opened for business in October 1997. He has over 18
years of banking experience in Hardin County, serving most
recently as the Chief Financial Officer of The Cecilian Bank
which he joined in 1978 and left in 1997 to assist in the
formation of the Bank. Mr. Pence has numerous business interest
in Hardin County and is active in civic affairs. He currently
serves as a director of the Rotary International.
5<PAGE>
<PAGE>
KEVIN D. ADDINGTON is the President of Addington
Transportation, Inc. which owns and operates warehouse and
storage facilities in the Elizabethtown area. Mr. Addington is
also the owner of Addington Properties which is engaged in
property leasing and management. He is active in local civic
affairs and serves as Administrative Board Chairman for the
Cecilia United Methodist Church.
HENRY LEE CHITWOOD is a sales executive for Bean
Publishing Co., an office equipment and furnishings supplier.
Mr. Chitwood also has various property interests.
LOIS WATKINS GRAY is the superintendent of Schools for
Hardin County, a position which she has held since 1992. Ms.
Gray has served as an educator for six years in Hardin County.
She is also active in state and national educational and
professional groups.
WILLIAM R. HAWKINS is the founder and owner of Three Oaks
Marketing and Development which markets satellite television
systems. Operating under the name Starpath of Hardin County,
Mr. Hawkins' company holds the franchise for providing direct
television programming for Hardin county. Mr. Hawkins is active
in industry groups and trade associations having held numerous
posts in the Satellite Broadcasting and Communication
Association of America. Mr. Hawkins is also a founder of the T.
Howard Foundation, an educational foundation on whose board of
directors he currently serves.
CHRISTOPHER G. KNIGHT, M.D. is an ophthalmologist
practicing with Knight & Smith, PSC in Elizabethtown, Kentucky.
He also has other diversified business interests in local
medical, media and real estate. Dr. Knight is active in local
medical and civic organizations. He serves on the Board of
Directors of Wesley Hilltop House.
LEONARD ALLEN MCNUTT is the owner and operator of McNutt
Construction Company, a general construction firm engaged in
commercial and industrial renovation and new construction. Mr.
McNutt has been engaged in construction and construction
contracting in Hardin County for nearly 30 years. Mr. McNutt's
other business interest include part ownership of the Hardin
County Independent newspaper and local real estate investments.
Mr. McNutt is also active in various local civic organizations
and professional groups.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors holds regular monthly meetings and
special meetings as needed. During the year ended December 31,
1998, the Board of Directors met 21 times. No director attended
fewer than 75% of the total number of meetings of the Board of
Directors held during 1998 and the total number of meetings held
by all committees on which the director served during such year.
The Bank's Executive, Audit and Personnel Committee
consisting of Directors Robbins, Gray, Pence and Calvert acts as
the Bank's audit and compensation committees. As the audit
committee, the Committee monitors internal accounting controls
and meets with the Bank's independent auditors regarding these
internal controls to assure full disclosure of the Bank's
financial condition. As the compensation committee, the
Committee evaluates and ascertains the appropriateness of
compensation levels pertaining to the officers of the Bank. The
Executive, Audit and Compensation Committee met three times
during 1998.
The Bank's full Board of Directors acts as a nominating
committee for the annual selection of its nominees for election
as directors. While the Board of Directors will consider
nominees recommended by shareholders, it has not actively
solicited recommendations from the Bank's shareholders for
nominees, nor established any procedures for this purpose. The
Board of Directors held one meeting during 1998 in order to make
nominations for directors.
6<PAGE>
<PAGE>
DIRECTOR COMPENSATION
Directors are paid a retainer of $500 a month for each
month in which there is only one board meeting and $700 per
month for any month in which there is more than one meeting.
Directors do not receive any additional fees for committee
meetings. To date the directors have deferred receipt of all
fees.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets
forth the cash and noncash compensation awarded to or earned by
the Chief Executive Officer of the Bank and by each executive
officer whose salary and bonus earned in fiscal year 1998
exceeded $100,000 for services rendered in all capacities to the
Bank (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------ -----------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
- ------------------ ---- ------ ----- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence P. Calvert 1998 $115,000 $ -- $ -- -- -- $9,695 (2)
Chief Executive Officer 1997 112,879 (1) -- -- -- 6,000 3,795
Ronald J. Pence 1998 $115,000 $ -- $ -- -- -- $8,535 (3)
President 1997 112,879 (1) -- -- -- 6,000 2,635
<FN>
____________
(1) Includes salary paid by the Organizers prior to the organization of the Bank and reimbursed
by the Bank upon its commencement of operations.
(2) Mr. Calvert's "Other Compensation" for 1998 consisted of $1,895 in paid term life insurance
premiums and $7,800 in deferred directors' fees.
(3) Mr. Pence's "Other Compensation" for 1998 consisted of $735 in paid term life insurance
premiums and $7,800 in deferred director fees.
</FN>
</TABLE>
OPTION YEAR-END VALUE TABLE. The following table sets
forth information concerning the value of options held by the
Named Executive Officers at the end of fiscal year 1998. No
options were exercised during fiscal year 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END AT YEAR-END (1)
--------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Lawrence P. Calvert 2,000 4,000 $ -- $ --
Ronald J. Pence 2,000 4,000 -- --
<FN>
___________
(1) Options are considered in-the-money of the fair market value of the
underlying securities exceeds the exercise price. Neither Mr. Calvert's
nor Mr. Pence's options were in-the-money at December 31, 1998.
</FN>
</TABLE>
6<PAGE>
<PAGE>
TRANSACTIONS WITH MANAGEMENT
From time to time, it is expected that the Bank will
engage in banking transactions with its directors, officers and
their associates in the ordinary course of business. At
December 31, 1998, $204,400 of such loans were outstanding.
Loans to directors and executive officers will only be made in
the ordinary course of business of the Bank and on substantially
the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with
other persons and will not involve more than the normal risk of
collectibility or present other unfavorable features.
The Bank leases its main office from Kentucky National
Properties, L.L.C., a limited liability company in which each of
the directors has a 10% ownership interest. The lease is for a
ten-year term with four successive renewal options of ten years
each. Rental payments are $12,000 per month during the initial
term of the lease with provision for increase based on the
percentage increase in the Consumer Price Index. During the term
of the lease and any renewals thereof, the premises may only be
used for a bank or banking institution unless the prior written
consent of the lessor has been received.
During 1998, McNutt Construction Company, which is owned
and operated by Director McNutt, acted as general contractor for
improvements to the Bank's new branch at Dolphin Drive and U.S.
Highway 62. Payments by the Bank to McNutt Construction Company
totaled $309,980 for the year.
________________________________________________________________
PROPOSAL II -- PROPOSED HOLDING COMPANY FORMATION
________________________________________________________________
SUMMARY
The Board of Directors is seeking shareholder approval an
Agreement and Plan of Reorganization, dated January 13, 1999
(the "Plan of Reorganization"), by which Kentucky National will
become a wholly owned subsidiary of Kentucky National Bancorp,
Inc., an Indiana corporation recently formed by the Bank for the
purpose of becoming a holding company for the Bank. Under the
Plan of Reorganization, each outstanding share of Kentucky
National Common Stock (other than shares as to which dissenters'
rights of appraisal have been properly exercised) will be
converted into one share of Holding Company Common Stock, and
the former holders of Kentucky National Common Stock will become
the holders of all of the outstanding Holding Company Common
Stock. The Holding Company was incorporated on February 5,
1999, and has no prior operating history. Following the
Reorganization, it is intended that Kentucky National will
continue its operations at the same location, with the same
management, and subject to all the rights, obligations and
liabilities of the Bank existing immediately prior to the
Reorganization.
REASONS FOR THE HOLDING COMPANY REORGANIZATION
The Board of Directors believes that the formation of a
holding company will provide the Bank with greater flexibility
in structuring acquisitions of banks and other companies, allow
greater diversification in activities and expand the means by
which capital can be raised. In addition, by incorporating the
holding company under a modern state corporate code, the Board
of Directors will have more flexibility in running the day-to-
day operations of the Bank. Various provisions of the Holding
Company's Articles of Incorporation and Bylaws and of the
Indiana Business Corporation Act will also reduce the Bank's
vulnerability to hostile acquisitions of control and help the
Bank to remain a locally owned and oriented community bank. The
Board of Directors further believes that the establishment of a
holding company will increase the Bank's competitiveness in
attracting and retaining personnel.
Acquisition Flexibility. The holding company structure
can be used to facilitate acquisitions of other banks and
potentially allows the acquisition of a greater range of
organizations. As a national bank, the Bank is currently
prohibited from having another bank as a subsidiary.
Consequently, any acquisition of another bank must be structured
as a direct merger with the Bank in which one of the parties
will disappear as a separate entity. Any
8<PAGE>
<PAGE>
merger involving the Bank must also be approved by two-thirds of
the Bank's outstanding shares. With a holding company, an
acquisition may be structured so that the other bank is acquired
as a separate subsidiary that can continue to operate under its
original name and under the direction of a separate board of
directors. The ability to allow an acquired bank to operate
with some degree of autonomy may be an important factor in
negotiating an acquisition and allows the Holding Company to
take advantage of the acquired bank's name recognition and
goodwill. In addition, an acquisition of another bank by the
Holding Company can be structured so that approval of the
Holding Company's shareholders is not required. The Holding
Company can avoid the expense of a shareholder meeting and can
negotiate acquisitions with greater certainty that the
transaction will be consummated. Although the Bank does not
have any current arrangements for the acquisition of another
bank or other entity, the Board of Directors believes that it is
desirable to be able to take advantage of future acquisitions
opportunities.
Financing Flexibility. The Holding Company's Articles of
Incorporation authorize the issuance of up to 5,000,000 shares
of common stock, $.01 par value per share, and up to 1,000,000
shares of preferred stock, $.01 par value per share. The Bank's
Articles of Association currently authorize the issuance of
5,000,000 shares of common stock, $1.00 par value per share and
no shares of preferred stock. The Board of Directors believes
that the ability to issue preferred stock is an important
financing option. Preferred stock may be issued on terms
established by the Board of Directors without additional
approval by the shareholders. By contrast, the terms of any
preferred stock issued by the Bank must be set forth in an
amendment to the Articles of Association and specifically
approved by the shareholders. The Board of Directors believes
that the ability to issue preferred stock without further
shareholder approval is necessary in order to negotiate the sale
of preferred stock.
The Holding Company will also allow the raising of capital
in ways that are not available to the Bank on a stand-alone
basis. For example, the Holding Company can raise funds through
the issuance of debt or trust preferred securities and invest
the proceeds to the Bank in a manner that will qualify as Tier 1
capital. In this way, capital can be raised without diluting
the percentage ownership interest of current shareholders.
While the Holding Company will be subject to capital
requirements that are similar to those applied to the Bank, bank
holding companies are permitted to include a broader range of
instruments in capital. For example, bank holding companies may
include some cumulative preferred stock in Tier 1 capital while
preferred stock will only count as regulatory capital for the
Bank if it is non-cumulative.
Diversification. Federal Reserve Board regulations
authorize bank holding companies to engage in a variety of non-
banking activities that have been determined to be closely
related to banking under the Bank Holding Company Act of 1956.
Accordingly, a bank holding company is permitted to diversify
into banking related activities. While the Bank may establish
operating subsidiaries that engage in activities that are
incidental or part of the business of banking, the range of pre-
approved activities is currently less extensive than that
permitted to bank holding companies.
Corporate Flexibility. As a national bank, the Bank is
chartered under and governed by the National Bank Act which was
enacted in 1864 and contains many of its original provisions
regarding the corporate governance of national banks. The
National Bank Act does not confer the same operating flexibility
on national banks as most modern state corporate codes confer on
private corporations. As noted above, the Board of Directors is
not authorized to issue preferred stock without shareholder
approval. National banks must allow cumulative voting in
elections in directors. Directors of a national bank cannot
serve staggered terms. By incorporating the Holding Company
under a modern state corporate code, the Board of Directors will
have greater flexibility to conduct the business of the Bank.
Enhancement of Independence. The Board of Directors
believes that establishment of a holding company will help the
Bank remain an independent, locally owned community bank. The
Holding Company's Articles of Incorporation and Bylaws do not
contain certain provisions currently in the Bank's Articles of
Association which the Board of Directors believe may facilitate
dissident shareholder activity such as cumulative voting which
could be used by a small minority of shareholders to obtain a
seat on the Board notwithstanding the voting preferences of the
majority of the shares. The Holding Company's Articles of
Incorporation and certain provision of the Indiana Business
Corporation Act also contain provisions that can deter hostile
acquisitions of control.
9<PAGE>
<PAGE>
Increased Competitiveness. The Board of Directors
believes that the establishment of the holding company will
enhance the Bank's ability to attract and retain qualified
personnel. Under the National Bank Act, Bank officers must
serve at the will of the Board of Directors. Although national
banks are permitted by regulations of the Office of the
Comptroller of the Currency to enter into reasonable employment
agreements with officers, the "at will" provisions of the
National Bank Act limit the enforceability of employment
agreements. The Holding Company, however, will have greater
flexibility to enter into contractual commitments for employment
of officers.
THE BOARD OF DIRECTORS OF THE BANK HAS UNANIMOUSLY
APPROVED THE PLAN OF REORGANIZATION AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" THE PLAN OF REORGANIZATION.
PLAN OF REORGANIZATION
The Reorganization will be accomplished under the Plan of
Reorganization, which is attached as Exhibit A hereto. The
following discussion is qualified in its entirety by reference
to the Plan of Reorganization which is incorporated herein by
reference. The Plan of Reorganization was unanimously approved
by the Board of Directors on January 13, 1999.
The Holding Company is a newly organized Indiana
corporation which was formed by the Bank solely for the purpose
of effecting the Reorganization, and, therefore, the Holding
Company has no prior operating history. The Plan of
Reorganization is by and between the Holding Company, the Bank,
and Kentucky National Interim Bank, a to-be-formed interim
national bank ("New Bank").
The Reorganization will be accomplished by the following
steps: (i) the incorporation of the Holding Company under the
laws of the State of Indiana for the purpose of becoming the
sole shareholder of a newly formed interim national bank, and
subsequently becoming the sole shareholder of the Bank; (ii) the
formation of an interim national bank, New Bank, which will be
wholly owned by the Holding Company; and (iii) the merger of the
Bank and New Bank, with New Bank as the surviving corporation
but operating under the same charter and name as the Bank.
Pursuant to such merger: (i) all of the issued and outstanding
shares of Kentucky National Common Stock (other than shares as
to which dissenters' rights of appraisal have been properly
exercised) will automatically be converted by operation of law
on a one-for-one basis into an equal number of issued and
outstanding shares of Holding Company Common Stock, and (ii) all
of the issued and outstanding shares of common stock of Kentucky
National automatically be converted by operation of law on a
one-for-one basis into an equal number of issued and outstanding
shares of New Bank Common Stock, which will be all of the issued
and outstanding stock of the Bank.
After the Reorganization, the former holders of Kentucky
National Common Stock will be the holders of all of the
outstanding Holding Company Common Stock. Thus, because the
Holding Company will hold all of the issued and outstanding
voting stock of the Bank, the Bank is described herein as a
"wholly owned" subsidiary of the Holding Company following the
Reorganization.
After the Merger, the Bank will make a capital
distribution to the Holding Company to reimburse the expenses of
the Holding Company in connection with the Reorganization.
Future capitalization of the Holding Company will be
dependent upon dividends declared by the Bank or the raising of
additional capital by the Holding Company through a future
issuance of securities or debt or through other means. The
Board of Directors of the Holding Company has no present plans
or intentions with respect to any future issuance of securities
or debt at this time.
After the Reorganization, the Bank will continue its
existing business and operations as a wholly owned subsidiary of
the Holding Company, and the consolidated capitalization,
assets, liabilities, income and financial statements of the
Holding Company immediately following the Reorganization will be
substantially the same as those
10<PAGE>
<PAGE>
of the Bank immediately prior to consummation of the
Reorganization. The Articles of Association and the Bylaws of
the Bank will continue in effect, and will not be affected in
any manner by the Reorganization. The name "Kentucky National
Bank" will continue to be used. The corporate existence of the
Bank will continue unaffected and unimpaired by the
Reorganization.
EFFECTIVE DATE
The "Effective Date" of the Reorganization will be the
date specified in the certificate to be issued by the OCC and
the FRB. Although management of the Bank does not anticipate
any significant delays in obtaining the OCC's and the FRB's
approval of the merger and issuance of the certificate, the
effects of any such delays on holders of the Kentucky National
Common Stock would depend upon the attendant facts and
circumstances surrounding the specific delay.
EXCHANGE OF STOCK CERTIFICATES
The outstanding stock certificates that represent one
share of the Bank Common Stock will be deemed automatically to
represent one share of the Holding Company Common Stock.
Shareholders will be required to exchange their present stock
certificates (bearing the name "Kentucky National Bank") for new
stock certificates (bearing the name "Kentucky National Bancorp,
Inc."). The Board of Directors has reserved the right to
withhold any dividends from those shareholders who do not
exchange their present stock certificates for new stock
certificates within a reasonable period of time after being
advised by the Board of Directors of such exchange of share
certificates.
Upon consummation of the Reorganization, the Holding
Company will mail to holders of Bank Common Stock a letter of
transmittal and instructions related to the exchange of the Bank
Common Stock certificate for certificates representing the
number of shares of Holding Company Common Stock into which
their Bank Common Stock has been converted as a result of the
reorganization.
BANK SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE SUCH NOTIFICATION.
RIGHTS OF DISSENTING SHAREHOLDERS
Federal law entitles a shareholder who does not vote for
the Reorganization to demand payment by the Bank of the fair or
appraised value for his shares. A dissenting shareholder must
deliver to Ronald J. Pence, President, Kentucky National Bank,
1000 North Dixie Avenue, Elizabethtown, Kentucky 42701, before
voting on Proposal II, written notice identifying himself and
stating his intention thereby to demand appraisal of and payment
for his shares. Such written notice must be separate from and
in addition to any proxy or vote against Proposal II. A proxy
or vote against the Plan of Reorganization does not by itself
constitute a demand for appraisal. In addition to making
written notice of their demand appraisal, the shareholder must
not vote in favor of the Plan of Reorganization. Shareholders
who return executed but unmarked proxies will be deemed to have
voted in favor of the Plan of Reorganization. Shareholders who
abstain from voting on the Reorganization will not be deemed to
have voted in favor of the Plan of Reorganization.
Under the Plan of Reorganization, the obligations of the
Holding Company, the Bank and New Bank to consummate the
Reorganization are conditioned upon the holders of not more than
10% of the Bank's outstanding shares electing to exercise their
rights as dissenting shareholders. Although the parties to the
Plan of Reorganization could waive this condition, none of them
presently intends to do so.
If the Reorganization is approved and adopted by the
shareholders at the Annual Meeting, the Bank will mail a further
notice to all shareholders who timely filed a written notice of
intention to demand payment and who refrained from voting in
favor of the proposed merger. The further notice will include
the following: (1) information concerning
11<PAGE>
<PAGE>
where and when a request for payment must be sent; (2) where and
when a shareholder must deposit the certificates representing
his Common Stock in order to obtain payment; (3) a form to be
used by a shareholder for requesting payment that includes a
request for certification of the date on which the shareholder,
or the person on whose behalf the shareholder dissents, acquired
beneficial ownership of the shares; and (4) a copy of Section
215a of the National Bank Act. The time set by the Bank for
receipt of the demand for payment and deposit of the
certificates by shareholders shall not be less than 30 days from
the mailing of the notice. A SHAREHOLDER WHO FAILS TO TIMELY
FILE THE FORM FOR REQUESTING PAYMENT OR FAILS TO DEPOSIT HIS OR
HER COMMON STOCK CERTIFICATES, AS REQUIRED BY THE NOTICE, SHALL
NOT HAVE ANY RIGHT TO RECEIVE PAYMENT OF THE FAIR VALUE OF HIS
OR HER SHARES. A dissenting shareholder shall retain all other
rights of a shareholder until those rights are modified by
consummation of the Reorganization.
A VOTE AGAINST THE PLAN OF REORGANIZATION AND PLAN OF
MERGER, WHETHER CAST BY PROXY OR IN PERSON AT THE ANNUAL
MEETING, SHALL NOT, IN ITSELF, CONSTITUTE THE REQUIRED WRITTEN
REQUEST FOR PAYMENT.
A shareholder may assert Dissenters' Rights as to fewer
than all of the shares of the Bank's Common Stock registered in
his or her name only if he or she dissents with respect to all
the shares beneficially owned by any one person and notifies the
Bank of the name and address of the beneficial owner or owners
on whose behalf he or she dissents. A shareholder may assert
Dissenters' Rights with respect to shares owned beneficially but
not registered in his or her name if he or she submits to the
Bank a written consent of the record shareholder prior to
commencement of the voting by the shareholders on the Merger at
the Annual Meeting. A shareholder may not dissent with respect
to some but less than all shares owned beneficially, whether or
not the shares so owned are registered in the shareholder's
name.
The foregoing discussion is only a summary of the rights
and obligations of dissenting shareholders and is qualified in
its entirety by reference to the provisions of Section 215a of
the National Bank Act, which provisions are reproduced and set
forth in full in Exhibit D to this proxy statement and
prospectus. Failure to follow the procedures set forth in
Section 215a of the National Bank Act regarding dissenters'
rights will constitute a waiver of appraisal rights.
Shareholders may wish to consult independent legal counsel
before exercising dissenters' rights.
Except as set forth herein, notification of the beginning
or end of any statutory period will not be given by the Bank to
any dissenting shareholders.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Kentucky National expects that, for federal income tax
purposes, the Reorganization will be treated as a tax-free
reorganization and that no gain or loss will be recognized by a
shareholder of Kentucky National who receives Holding Company
Common Stock in the Reorganization solely in exchange for such
shareholder's shares of Kentucky National Common Stock. The
Internal Revenue Service ("IRS") has not been asked to rule upon
the tax consequences of the Reorganization. Instead, Kentucky
National will rely upon the opinion of Housley Kantarian &
Bronstein, P.C., its special counsel, as to certain federal
income tax consequences of the Reorganization to the Kentucky
National shareholders. Such opinion is based upon the Code,
regulations now in effect or proposed thereunder, current
administrative rulings and practice and judicial authority, all
of which are subject to change and such change may be made with
retroactive effect. Unlike private letter rulings received from
the IRS, an opinion is not binding upon the IRS and there can be
no assurance that the IRS will not take a position contrary to
the positions reflected in such opinion, or that such opinion
will be upheld by the courts if challenged by the IRS.
<PAGE>
Based upon the opinion of Housley Kantarian & Bronstein,
P.C., which is based upon various representations and subject to
various assumptions and qualifications described below, the
following federal income tax consequences to the Kentucky
National shareholders will result from the Reorganization.
12<PAGE>
<PAGE>
(1) The merger of Kentucky National with and into New
Bank will constitute a reorganization within the
meaning of 368(a) of the Code.
(2) Shareholders of Kentucky National will not recognize
any gain or loss upon their exchange of Kentucky
National Common Stock solely for shares of Holding
Company Common Stock.
(3) A Kentucky National shareholder's aggregate basis in
his or her shares of Holding Company Common Stock
received pursuant to the Reorganization will be
equal to the aggregate basis of such shareholder's
shares of Kentucky National Common Stock surrendered
in exchange therefor.
(4) A Kentucky National shareholder's holding period of
his or her shares of Holding Company Common Stock
received pursuant to the Reorganization will include
the period during which the shareholder's shares of
Kentucky National Common Stock surrendered in
exchange therefor was held by such shareholder,
provided that such Kentucky National Common Stock is
a capital asset in the hands of such shareholder on
the date of the Reorganization.
(5) If a shareholder of Kentucky National dissents to
the Reorganization and receives solely cash in
exchange for all of his or her shares of Kentucky
National Common Stock, such cash will be treated as
having been received by the shareholder as a
distribution in redemption of his or her shares of
Kentucky National Common Stock, subject to the
provisions and limitations of Section 302 of the
Code. Accordingly, assuming such shareholder
satisfies at least one of the four conditions under
Section 302(b) of the Code, such as that the
shareholder's direct and indirect interest in
Kentucky National or the Holding Company will
completely terminate, the shareholder will recognize
gain or loss in an amount equal to the difference
between the cash received and the shareholder's
basis in such shares of Kentucky National Common
Stock.
The opinion of Housley Kantarian & Bronstein, P.C., is
based in part upon, and subject to the continuing validity in
all material respects through the date of the Reorganization to,
various representations of Kentucky National and upon certain
assumptions and qualifications, including that the
Reorganization is consummated in the manner and according to the
terms provided in the Plan of Reorganization. For instance,
such opinion assumes, among other things, the accuracy of the
facts regarding the Reorganization as described in the Proxy
Statement/Prospectus, including that only voting stock of the
Holding Company (i.e., the Holding Company Common Stock) will be
used in the Reorganization, that the Bank will continue its
historic business operations following the Reorganization, and
that there is no plan or intention by the Holding Company to
liquidate the Bank following the Reorganization. Further, such
opinion assumes the satisfaction of the "continuity of interest"
requirement under judicial interpretations of Section 368(a) of
the Code. Generally, under the "continuity of interest"
requirement, the Kentucky National shareholders must maintain a
continuing proprietary interest in the successor company (i.e.,
the Holding Company) after the Reorganization through ownership
on an aggregate basis of a minimum percentage of the stock of
the Holding Company. In addition, the opinion is qualified by
reference to the statutory, judicial and administrative tax
authorities then in effect, the subsequent change of which may
have retroactive effect or render the opinion invalid.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND DOES NOT
PURPORT TO CONSIDER ALL ASPECTS OF FEDERAL INCOME TAXATION WHICH
MAY BE RELEVANT TO A KENTUCKY NATIONAL SHAREHOLDER ENTITLED TO
SPECIAL TREATMENT UNDER THE INTERNAL REVENUE CODE, SUCH AS
TRUSTS, INDIVIDUAL RETIREMENT ACCOUNTS, OTHER EMPLOYEE BENEFIT
PLANS, INSURANCE COMPANIES, AND SHAREHOLDERS WHO ARE NOT
CITIZENS OR RESIDENTS OF THE UNITED STATES. DUE TO THE
INDIVIDUAL NATURE OF TAX CONSEQUENCES, EACH KENTUCKY NATIONAL
SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX AND FINANCIAL
ADVISOR AS TO THE EFFECT OF SUCH FEDERAL INCOME TAX CONSEQUENCES
ON HIS OR HER OWN FACTS AND
13<PAGE>
<PAGE>
CIRCUMSTANCES AND ALSO AS TO ANY STATE, LOCAL, FOREIGN OR OTHER
TAX CONSEQUENCES ARISING OUT OF THE REORGANIZATION.
Cash payments made to Kentucky National shareholders who
exercise their right to dissent to the Reorganization will be
subject to a 31% backup withholding tax under federal income tax
law unless certain requirements are met. Generally, the Bank
will be required to deduct and withhold the tax if: (i) the
shareholder fails to furnish a taxpayer identification number
("TIN") to the Bank or fails to certify under penalty of perjury
that such TIN is correct; (ii) the IRS notifies the Bank that
the TIN furnished by the shareholder is incorrect; (iii) the IRS
notifies the Bank that the shareholder has failed to report
interest, dividends or original issue discount in the past; or
(iv) there has been a failure by the shareholder to certify
under penalty of perjury that such shareholder is not subject to
such backup withholding tax. Any amounts withheld by the Bank
in collection of the backup withholding tax will reduce the
federal income tax liability of the shareholder from whom such
tax was withheld. The TIN of an individual shareholder is that
shareholder's Social Security number.
CONSEQUENCES UNDER FEDERAL SECURITIES LAWS
The Holding Company has filed with the SEC a registration
statement under the Securities Act for the registration of the
Holding Company Common Stock to be issued and exchanged pursuant
to the Plan of Reorganization. This Proxy Statement and the
accompanying Notice of Annual Meeting constitute the Prospectus
of the Holding Company filed as part of such registration
statement. Upon consummation of the Reorganization, the Holding
Company will be required to comply with the periodic reporting
requirements under the Exchange Act for as long as it has at
least 300 shareholders. The Holding Company will also be
subject to the general anti-fraud provisions of the federal
securities laws after the Reorganization.
The registration under the Securities Act of shares of
Holding Company Common Stock to be issued in connection with the
Reorganization does not cover the resale of such shares. The
Holding Company Common Stock acquired by persons who are not
affiliates of the Holding Company or Kentucky National may be
resold without registration. Shares received by affiliates of
Kentucky National will be subject to the resale restrictions of
Rule 145 under the Securities Act, which are substantially the
same as the restrictions of Rule 144 discussed below. For
purposes of these Rules, an "affiliate" of an issuer is any
person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, such issuer. The Rule 145 restrictions
terminate after two years if the Holding Company continues to
comply with the reporting requirements under the Exchange Act,
but any affiliate of Kentucky National who becomes an affiliate
of the Holding Company will continue to be subject to the
restrictions on sales by affiliates under Rule 144.
If the Holding Company meets the current public
information requirements of Rule 144 under the Securities Act,
each affiliate of Kentucky National who complies with the other
conditions of Rule 144, including those that require the
affiliate sales to be aggregated with those of certain other
persons, would be able to sell in the public market, without
registration, in any three-month period, a number of shares not
to exceed the greater of (i) 1.0% of the outstanding shares of
the Holding Company, or (ii) the average weekly volume of
trading in such shares during the preceding four calendar weeks.
Provision may be made in the future by the Holding Company to
permit affiliates to have their shares registered for sale under
the Securities Act under certain circumstances.
EFFECT ON ORGANIZATIONAL STOCK OPTION AND INCENTIVE PLAN
Upon consummation of the Reorganization, the
Organizational Stock Option and Incentive Plan (the "Option
Plan") of the Bank will be continued as and become the stock
option plan of the Holding Company. Stock options with respect
to shares of the common stock granted under the Option Plan and
outstanding prior to consummation of the Reorganization will
automatically become options to purchase the same number of
shares of Holding Company Common Stock upon consummation of the
Reorganization, with identical terms and conditions and for an
identical price, and the Holding Company will assume all of the
Bank's obligations with respect to such outstanding options.
14<PAGE>
<PAGE>
By voting in favor of the Plan of Reorganization, shareholders
of the Bank will be approving the adoption by the Holding
Company of the existing Option Plan of the Bank as the option
plan of the Holding Company.
STOCK TRANSFER AGREEMENT
Each shareholder of Kentucky National Common Stock has
previously agreed to be bound by the Stock Transfer Agreement
which, among other things, restricts the assignment, sale,
transfer, pledge or other encumbrance of the shares of Kentucky
National Common Stock. Pursuant to the Stock Transfer
Agreement, each shareholder who desires to sell or otherwise
transfer their shares for value will be required to first offer
such shares to the "Organizers," as defined in the Stock
Transfer Agent. The Stock Transfer Agreement is intended to
preserve community ownership of the Bank but may reduce the
liquidity of the Common Stock. The Stock Transfer Agreement
will continue in effect following the holding company
reorganization.
CONDITIONS TO THE REORGANIZATION
The Plan of Reorganization sets forth a number of
conditions which must be met before the Reorganization will be
consummated, including, among others, (i) the approval of the
Plan of Reorganization by the holders of two-thirds of the
outstanding shares of Kentucky National Common Stock, (ii)
holders of no more than 10% of the outstanding shares shall have
exercised dissenters' appraisal rights, (iii) the receipt of
either a ruling from the IRS or an opinion of counsel that the
Reorganization will be treated as a non-taxable transaction
under the Code (see "-- Tax Consequences"), (iv) the approval of
the Reorganization by the OCC and the FRB and the receipt of all
approvals from any other governmental agencies which may be
required for the consummation of the Reorganization, and (v)
registration of the shares of the Holding Company Common Stock
to be issued in the Reorganization under the Securities Act, to
the extent required by applicable law, and the compliance by the
Holding Company with all applicable state securities laws
relating to the issuance of the Holding Company Common Stock.
Additionally, the Plan of Reorganization may be terminated at
any time prior to the Effective Date of the Reorganization by
the Board of Directors.
REGULATORY APPROVALS
Applications to charter the New Bank and for approval of
the Reorganization of the Bank and the New Bank have been filed
with the OCC. The Holding Company has also filed a notice with
the FRB for permission to become a Bank Holding Company.
In general, the OCC and FRB may disapprove this
transaction if the Reorganization of the Bank into a one-bank
holding company would not be consistent with adequate sound
banking practices and would not be in the public interest.
In addition, the Reorganization may not be consummated for
15 days from the date of the later approval by the OCC or
approval by the FRB if there has been no challenge issued by the
United States Department of Justice on anti-trust grounds in
which case the period of time before which consummation may
occur may be extended. The Reorganization of the Bank into a
one-bank holding company cannot proceed in the absence of
requisite regulatory approvals. The approval of the OCC and FRB
reflect only the view that the transaction does not contravene
the competitive standards of the law and is consistent with
regulatory concerns relating to bank management and to the
safety and soundness of the subject banking organizations. Such
approval is not to be interpreted as an opinion by the OCC or
the FRB that the reorganization is favorable to the shareholders
from a financial point of view or that the OCC or the FRB have
considered the adequacy of the terms of the exchange. NEITHER
THE OCC NOR THE FRB APPROVAL IS AN ENDORSEMENT OR RECOMMENDATION
OF THE REORGANIZATION.
There can be no assurance that the OCC or the FRB will
approve the Reorganization, and, if approvals are granted, there
can be no assurance as to the grant date of such approvals.
15<PAGE>
<PAGE>
AMENDMENT, TERMINATION OR WAIVER
The Board of Directors of the Bank may cause the Plan of
Reorganization to be amended or terminated if the Board
determines for any reason that such amendment or termination
would be advisable. Such amendment or termination may occur at
any time prior to the effective date of the Merger, whether
before or after shareholder approval of the Plan of
Reorganization, by the mutual consent in writing of the Boards
of Directors of the Bank, the New Bank and the Holding Company
or by the Board of Directors of the Bank if the Merger would not
be in the best interests of the Bank, its employees, depositors,
or shareholders. Additionally, any of the terms or conditions
of the Plan of Reorganization may be waived by the party which
is entitled to the benefit thereof.
COMPARISON OF SHAREHOLDERS' RIGHTS
As a result of the proposed reorganization, shareholders
of the Bank, whose rights are presently governed by the National
Bank Act and OCC regulations, will become shareholders in the
Holding Company, and their rights in the future will be governed
by the Indiana Business Corporation Act. Another result is that
the Articles of Incorporation and By-laws of the Holding Company
differ in several aspects from those of the Bank. The Articles
of Incorporation and Bylaws of the Holding Company are attached
hereto as Exhibits B and C and should be reviewed for more
detailed information.
The following table compares the rights of shareholders of
the Bank with the rights of shareholders of the Holding Company.
This table is qualified by the more detailed information
appearing elsewhere in this Proxy Statement/ Prospectus and in
the exhibits hereto and is not intended to be an exhaustive
comparison. The Articles of Incorporation and Bylaws of the
Holding Company are attached hereto as Exhibits B and C and
should be reviewed for more detailed information.
<TABLE>
<CAPTION>
THE BANK THE HOLDING COMPANY
-------- -------------------
<S> <C> <C>
CAPITAL STOCK
(a) COMMON STOCK Authorized 1,000,000 Authorized 5,000,000
shares, $1.00 par value; shares, $.01 par value;
240,000 shares 240,000 shares of Common
outstanding. Stock expected to be
outstanding following the
reorganization.
(b) PREFERRED STOCK None authorized or Authorized, 1,000,000
outstanding. Any issuance shares, $.01 par value
of preferred stock would stock; none to be
require an amendment to outstanding following the
the Articles of reorganization. In the
Association approved by could be issued on terms
shareholders. established by the Board
of Directors without
further shareholder
approval.
(c) VOTING RIGHTS One vote per share with One vote per share with no
cumulative voting in cumulative voting rights.
elections of directors. Shares held by any person
in excess of 10% of shares
outstanding are only
entitled to 1/100th of a
vote per share unless
approved in advance by a
majority of the Continuing
Directors.
</TABLE>
16<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE BANK THE HOLDING COMPANY
-------- -------------------
<S> <C> <C>
(d) ASSESSABILITY OF OCC may order pro rata Non-assessable.
SHARES. assessment for capital
deficiency.
(e) PREEMPTIVE RIGHTS None. None.
(f) DIVIDENDS As declared by the Board As declared by the Board
of Directors; may not of Directors; Indiana law
exceed in any calendar permits payment of
year the Bank's net income dividend only if, the
for that year plus its corporation is able to pay
retained net income for its debts as they come due
the preceding two years, in the usual course of
may not exceed the Bank's business and the
undivided profits without corporation's assets
OCC approval, and may not exceed its liabilities;
be made if after making the Bank's dividend
the dividend, the Bank restriction applies
would be "undercapitalized." indirectly to the Holding
Company as cash available
for dividend distributions
will initially come from
dividends paid to the
Holding Company by the
Bank. Federal Reserve
Board policy states that a
bank holding company
should pay cash dividends
only out of income over
the past year and only if
prospective earnings
retention is consistent
with the organization's
expected future needs and
financial condition. In
addition, the Holding
Company may not pay a
dividend if: (1) after
giving effect to the
dividend, the Holding
Company would be insolvent
or (2) the dividend
exceeds the surplus of the
Holding Company.
SHAREHOLDER ACTION
(a) MERGERS, Approval by vote of at Approval by a vote of at
CONSOLIDATIONS, least 66-2/3% of least a majority of the
LIQUIDATIONS, outstanding shares. outstanding shares;
SALE OF SUBSTANTIALLY Approval of 80% of shares
ALL ASSETS required for certain
"Business Combinations,"
unless approved in advance
by a majority of
Continuing Directors.
(b) SPECIAL Upon request of a majority Upon request of a majority
SHAREHOLDER of the Board of Directors, of the Board of Directors,
MEETINGS or by any 15 or more a duly appointed committee
shareholders owning in the of the Board of Directors,
aggregate, not less than a the Chairman of the Board,
majority of stock. or the President.
Shareholders will not be
able to call special
meetings.
(c) AUTHORIZATION OF Approval by a vote of at Approval by a vote of at
ADDITIONAL SHARES least a majority of least a majority of
outstanding shares. outstanding shares; 80%
approval required for
issuance of shares in
certain "Business Combinations."
</TABLE>
17<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE BANK THE HOLDING COMPANY
-------- -------------------
<S> <C> <C>
(d) AMENDMENT OF ARTICLES Approval by a vote of at Approval by vote of at
OF ASSOCIATION OR least a majority of least a majority of
INCORPORATION (OTHER outstanding shares. outstanding shares if
THAN FOR PURPOSES STATED majority of Board of
ABOVE) Directors also approves
amendment; otherwise,
approval by 80% of
outstanding shares.
(e) AMENDMENT OF THE May be amended by a May only be amended by a
BYLAWS majority vote of the majority vote of the
shareholders or by a Board of Directors.
majority vote of the Board
of Directors.
REPURCHASE OF CAPITAL STOCK Cannot repurchase or Stock can be repurchased
retire any part of its without regulation
stock without prior approval if: (1) after
regulatory approvals and giving effect to the
shareholder approval. purchase the Holding
Company would not be
insolvent or (2) the
purchase would not
exceed the surplus of
the Holding Company.
Permitted under FRB
regulations with no
prior approval required
for well-capitalized,
well-managed holding
companies. In all other
cases, no more than ten
percent of the outstanding
shares of Holding Company
Common Stock may be repurchased
in any 12-month period
without prior regulatory
approval.
BOARD OF DIRECTORS
(a) TERM OF DIRECTORS All directors elected annually. Directors have staggered
terms with one-third of
the board standing for
election each year.
(b) REMOVAL OF DIRECTORS Majority of shares for cause 80% of outstanding shares and
or if failure to fulfill only for cause.
requirements for qualification.
(c) SHAREHOLDER Must be delivered in Notice of nominations must be
NOMINATIONS writing not more than 50 made in writing not more than 60
days and not less than 14 and not less than 30 days prior to
days before the meeting at the meeting.
which directors will be
elected.
</TABLE>
18<PAGE>
<PAGE>
CERTAIN ANTI-TAKEOVER PROVISIONS
The following discussion is a general summary of the
provisions of the Articles of Incorporation and Bylaws of the
Holding Company and certain other provisions of the Indiana
Business Corporation Law which may be deemed to have an anti-
takeover effect. The description of these provisions is
necessarily general and shareholders should refer, in each case,
to the Articles of Incorporation and Bylaws of the Holding
Company which are attached as Exhibits B and C and incorporated
herein by reference.
While the Board of Directors is not aware of any effort that
might be made to obtain control of the Bank, the Board of
Directors believes that it is appropriate to include certain
provisions as part of the Holding Company's Articles of
Incorporation and Bylaws to protect the interests of the Holding
Company and its shareholders from hostile takeovers
("anti-takeover" provisions) which the Board of Directors might
conclude are not in the best interests of the Holding Company or
its shareholders. These provisions may have the effect of
discouraging a future takeover attempt which is not approved by
the Board of Directors but which individual shareholders may
deem to be in their best interests or in which shareholders may
receive a substantial premium for their shares over the current
market prices. As a result, shareholders who might desire to
participate in such a transaction may not have an opportunity to
do so. Such provisions will also render the removal of the
current Board of Directors or management of the Holding Company
more difficult.
PROVISIONS OF THE HOLDING COMPANY'S ARTICLES OF INCORPORATION
AND BYLAWS
Restriction on Acquisition of Common Stock; Limitations on
Voting Rights. The Articles of Incorporation of the Holding
Company provide that no person may directly or indirectly,
acquire or offer to acquire beneficial ownership of more than
10% of any class of equity security outstanding of the Holding
Company (the "Limit"), unless the "continuing" Board of
Directors has first approved by a two-thirds vote the offer or
acquisition. Should any party acquire the beneficial ownership
of shares in excess of 10%, the record holders of such shares
would be entitled to cast only one-hundredth (1/100) of a vote
for each share beneficially owned in excess of 10%, and the
aggregate voting power of such holders shall be allocated
proportionately among such record holders. A person is a
beneficial owner of a security if he has the power to
vote or direct the voting of all or part of the voting rights of
the security, or has the power to dispose of or direct the
disposition of the security. The Articles of Incorporation
further provide that this provision limiting voting rights may
only be amended upon the vote of 80% of the outstanding shares
of voting stock.
Election of Directors. The Holding Company's Articles of
Incorporation provide that the board of directors of the Holding
Company will be divided into three staggered classes, with
directors in each class elected for three-year terms. As a
result of this provision, it would take two annual elections to
replace a majority of the Holding Company's board. The Articles
of Incorporation also provides that any vacancy occurring in the
board of directors, including a vacancy created by an increase
in the number of directors, shall be filled by the board and any
director so chosen shall serve until the annual meeting at which
the other members of his class must stand for election.
Finally, the Bylaws impose certain notice and information
requirements in connection with the nomination by shareholders
of candidates for election to the board of directors or the
proposal by shareholders of business to be acted upon at an
annual meeting of shareholders.
Removal of Directors. The Articles of Incorporation provide
that a director may only be removed for cause by the affirmative
vote of at least 80% of the shares of the Holding Company
entitled to vote generally in an election of directors cast at a
meeting of shareholders called for that purpose.
Restrictions on Call of Special Meeting. The Articles of
Incorporation of the Holding Company provide that special
meetings of shareholders may be called only pursuant to a
resolution adopted by a majority of the board of directors, or a
Committee of the board.
Absence of Cumulative Voting. The Holding Company's
Articles of Incorporation provide that shareholders may not
cumulate their votes in elections of directors.
19<PAGE>
<PAGE>
Authorized Shares. The Articles of Incorporation authorize
the issuance of 5,000,000 shares of common stock and 1,000,000
shares of preferred stock. The shares of common stock and
preferred stock were authorized in an amount greater than that
to be issued in the reorganization to provide the Holding
Company's Board of Directors with as much flexibility as
possible to effect, among other transactions, financings,
acquisitions, stock dividends, stock splits and the exercise of
stock options. However, these additional authorized shares may
also be used by the Board of Directors consistent with its
fiduciary duty to deter future attempts to gain control of the
Holding Company. The Board of Directors also has sole authority
to determine the terms of any one or more series of preferred
stock, including voting rights, conversion rates, and
liquidation preferences. As a result of the ability to fix
voting rights for a series of preferred stock, the board has the
power, to the extent consistent with its fiduciary duty, to
issue a series of preferred stock to persons friendly to
management in order to attempt to block a post-tender offer
merger or other transaction by which a third party seeks
control, and thereby assist management to retain its position.
The Board of Directors currently has no plans for the issuance
of additional shares, other than the possible issuance of
additional shares pursuant to the Organizational Stock Option
Incentive Plan.
Procedures for Certain Business Combinations. The Articles
of Incorporation require the affirmative vote of at least 80% of
the outstanding shares of the Holding Company entitled to vote
in the election of directors in order for the Holding Company to
engage in or enter into certain "Business Combinations," as
defined therein, with any "Related Person" (as defined below) or
any affiliates of the "Related Person," unless the proposed
transaction has been approved in advance by the Holding
Company's Board of Directors, excluding those who were not
directors prior to the time the "Related Person" became the
"Related Person."
The term "Related Person" is defined to include any person
and the affiliates and associates of the person (other than the
Holding Company or its subsidiary) who beneficially owns,
directly or indirectly, 10% or more of the outstanding shares of
voting stock of the Holding Company. Any amendment to this
provision requires the affirmative vote of at least 80% of the
shares of the Holding Company entitled to vote generally in an
election of directors.
Amendments to Articles of Incorporation and Bylaws.
Amendments to the Holding Company's Articles of Incorporation
must be approved by the Holding Company's Board of Directors and
also by a majority of the outstanding shares of the Holding
Company's voting stock, provided, however, that approval by at
least 80% of the outstanding voting stock is generally required
for certain provisions (i.e., the provisions relating to
restrictions on the acquisition and voting of greater than 10%
of the common stock; number, classification, election and
removal of directors; amendment of Bylaws; call of special
shareholder meetings; limits on director liability; approval of
Business Combinations with interested shareholders; power of
indemnification; and amendments to provisions relating to the
foregoing in the Articles of Incorporation).
The bylaws may only be amended by a majority vote of the
board of directors.
INDIANA BUSINESS CORPORATION LAW
The IBCL contains a statute designed to provide Indiana
corporations with additional protection against hostile
takeovers. The takeover statute, which is codified in Chapter
43 of the IBCL, among other things, prohibits the Holding
Company from engaging in certain business combinations
(including a merger) with a person who is the beneficial owner
of 10% or more of the Holding Company's outstanding voting stock
(an Interested Shareholder) during the five-year period
following the date such person became an Interested Shareholder.
This restriction does not apply if (1) before such person became
an Interested Shareholder, the Board of Directors approved the
transaction in which the Interested Shareholder becomes an
Interested Shareholder or approved the business combination; or
(2) upon consummation of the transaction which resulted in the
shareholder's becoming an Interested Shareholder, the Interested
Shareholder owned at least 85% of the voting stock of the
Holding Company outstanding at the time the transaction
commenced, excluding for purposes of determining the number of
shares outstanding, those shares owned by (i) persons who
are directors and also officers and (ii) employee stock plans in
which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or (3) on or subsequent
to such date, the business combination is approved by the Board
of Directors and authorized at an
21<PAGE>
<PAGE>
annual or special meeting of shareholders, and not by written
consent, by the affirmative vote of at least two-thirds of the
outstanding voting stock which is not owned by the Interested
Shareholder. The Holding Company may exempt itself from the
requirements of the statute by adopting an amendment to its
Articles of Incorporation. At the present time, the Board of
Directors does not intend to propose any such amendment.
In addition, the Indiana Control Share Acquisitions Statute
provides that if shares are acquired equal to or greater than
certain thresholds of voting power (that is, 20%, 33 1/3% and
50% of all voting shares), the shares will not be entitled to
any voting rights unless specifically granted by the adoption of
a resolution by the holders of at least a majority of the shares
entitled to vote. In addition, in the event a control share
acquisition of a majority of the outstanding shares of stock is
made and voting rights are approved for these shares, the
remaining shareholders will be entitled to have their shares
redeemed at fair value by the corporation.
BUSINESS OF THE BANK
Kentucky National commenced operations on October 15, 1997.
The Bank's deposits are insured to applicable limits by the
Federal Deposit Insurance Corporation ("FDIC") and the Bank is a
member of the Federal Reserve Bank of St. Louis. The Bank
engages in the general commercial banking business, primarily
serving the city of Elizabethtown, Kentucky and surrounding
Hardin County through its main office and branch in
Elizabethtown. The Bank offers a full range of banking and
related financial services focused primarily towards serving
individuals, the small to medium size businesses, and the
professional community. The Bank strives to serve the
banking needs of its customers in the Elizabethtown market while
developing personal hometown relationships with its customers.
Management believes that the marketing of customized services
will enable the Bank to establish a niche in the financial
services marketplace in this market.
The Bank intends to provide individuals and small and
medium size businesses in its market area with responsive and
technologically advanced banking services. These services will
include loans that are priced on a deposit-based relationship,
easy access to the Bank's decision makers, and quick and
innovative action necessary to meet a customer's banking needs.
The Board of Directors anticipates the Bank's initial
capitalization will enable it to commence operations with a
lending limit that should satisfy the credit needs of a large
portion of the targeted market segment. In the event there are
customers whose loan requirements exceed the Bank's lending
limit, the Bank will seek to arrange such loans on a
participation basis with other financial institutions. The
Board of Directors believes the Bank's initial capitalization
should support substantial growth in deposits and loans.
The Bank's principal executive offices are located at 1000
North Dixie Avenue, Elizabethtown, Kentucky 42701, main
telephone number is (502) 737-6000.
BUSINESS OF KENTUCKY NATIONAL BANCORP, INC.
GENERAL. Prior to completion of the Reorganization, the
Holding Company will be a non-operating, wholly owned operating
subsidiary of the Bank. Upon the completion of the
Reorganization, the Bank will become a wholly owned subsidiary
of the Holding Company, and each shareholder of the Bank will
become a shareholder of the Holding Company with the same
respective ownership interest therein as presently held in the
Bank.
Immediately after consummation of the Reorganization, it is
expected that the Holding Company will not engage in any
business activity other than to hold all of the stock of the
Bank. The Holding Company does not presently have any
arrangements or understandings regarding any acquisition or
merger opportunities. It is anticipated, however, that the
Holding Company in the future may pursue other investment
opportunities, including possible diversification through
acquisitions and mergers.
PROPERTY. The Holding Company is not expected to own or
lease real or personal property initially. Instead, it intends
to utilize the premises, equipment and furniture of Kentucky
National without the direct payment of any rental fees to the
Bank.
21<PAGE>
<PAGE>
LEGAL PROCEEDINGS. The Holding Company has not, since its
organization, been a party to any legal proceedings.
EMPLOYEES. At the present time, the Holding Company does
not intend to employ any persons other than its management. It
will utilize the support staff of the Bank from time to time and
reimburse Kentucky National for the time of its employees. If
the Holding Company acquires other banks or pursues other lines
of business, at such time it may hire additional employees.
COMPETITION. It is expected that for the immediate future
the primary business of the Holding Company will be the
ownership of the Bank's common stock. Therefore, the
competitive conditions to be faced by the Holding Company will
be the same as those faced by the Bank.
MANAGEMENT OF KENTUCKY NATIONAL BANCORP, INC.
DIRECTORS. The Holding Company's Articles of Incorporation
provide that the Board of Directors shall consist of not less
than seven nor more than fifteen members. The Board of
Directors will initially consist of nine members who will be
divided into three classes. Directors shall be elected for
staggered terms of three years so that one-third of the
directors are elected each year. The directors of the Holding
Company are, and upon completion of Reorganization will continue
to be, the same persons who are at present the directors of the
Bank.
The directors of the Bank and their proposed classes as
directors of the Holding Company are listed below:
NAME CLASS TERM TO EXPIRE
- ---- ----- --------------
Robert E. Robbins, M.D.
Lawrence P. Calvert
Ronald J. Pence
Kevin D. Addington
Henry Lee Chitwood
Lois Watkins Gray
William R. Hawkins
Christopher G. Knight, M.D.
Leonard Allen McNutt
For information regarding the principal occupation and
business experience of the directors for the past five years,
see "PROPOSAL I -- ELECTION OF DIRECTORS."
EXECUTIVE OFFICERS. The executive officers of the Holding
Company are, and upon completion of the Reorganization will be,
the following persons, each of whom is an officer with Kentucky
National:
Name Position
---- ---------
Robert E. Robbins Chairman of the Board
Lawrence P. Calvert Chief Executive Officer
Ronald J. Pence President
Jenean Cooper Secretary/Treasurer
For information regarding the principal occupation and
business experience for the past five years of the executive
officers, see "PROPOSAL I -- ELECTION OF DIRECTORS."
22<PAGE>
<PAGE>
EXECUTIVE COMPENSATION. Since the formation of the Holding
Company, none of its executive officers or directors has
received any remuneration from the Holding Company. It is
expected that unless and until the Holding Company becomes
actively involved in additional businesses, no separate
compensation will be paid to its directors and officers in
addition to compensation paid to them by the Bank. However, the
Holding Company may determine that such separate compensation is
appropriate in the future. At the present time, the Holding
Company does not intend to employ any persons other than its
present management. If the Holding Company acquires other
businesses, it may at such time hire additional employees.
Indemnification of Directors and Officers. The Bank is
permitted to indemnify its directors, officers and employees
against legal and other expenses incurred in defending lawsuits
brought against them by reason of the performance of their
official duties. Indemnification may be made to such person
only if final judgment on the merits is in his favor or, in case
of (i) settlement, (ii) final judgment against him or (iii)
final judgment in his favor, other than on the merits, if a
majority of the disinterested directors of the Bank determines
that he was acting in good faith within the scope of his
employment or authority as he could reasonably have perceived it
under the circumstances and for a purpose he could have
reasonably believed under the circumstances was in the best
interest of the Bank or its shareholders. If a majority of the
disinterested directors of the Bank concludes that in connection
with an action any person ultimately may become entitled to
indemnification, the directors may authorize payment of
reasonable costs and expenses arising from defense or settlement
of such action.
Article XVIII of the Holding Company's Articles of
Incorporation provides for indemnification of the Holding
Company's directors and officers. In the case of a threatened,
pending or completed action or suit by or in the name of the
Holding Company, the Holding Company shall indemnify a director
or officer for amounts actually and reasonably incurred by him
in connection with the defense or settlement of the action or
suit if the director or officer: (i) is successful on the
merits or otherwise; (ii) acted in good faith in the transaction
which is the subject of the suit or action, and in a manner he
reasonably believed to be in, the best interest of the Holding
Company or (iii) in a criminal proceeding he either had (a)
reasonable cause to believe that his conduct was lawful, or (b)
no reasonable cause to believe his conduct was unlawful.
Under Indiana law, a corporation may indemnify a director or
officer made a party to a proceeding because such person was a
director or officer of the corporation if: (i) the individual's
conduct was in good faith; and (ii) the individual reasonably
believed (A) in the case of conduct in the individual's official
capacity with the corporation, that the individual's conduct was
in the corporation's best interests, and (B) in all other cases,
that the individual's conduct was at least not opposed to the
corporation's best interests. An Indiana corporation may also
indemnify an officer or director in a criminal proceeding if the
individual: (i) had reasonable cause to believe that his
conduct was lawful; or (ii) had no reasonable cause to believe
that his conduct was unlawful.
An Indiana corporation must, unless limited by its articles
of incorporation, indemnify any director or officer who was
wholly successful, on the merits or otherwise, in the defense of
a proceeding to which the individual was a party because the
individual was a director or officer of the corporation, against
reasonable expenses incurred by the director or officer in
connection with the proceeding. Unless limited by the
corporation's articles of incorporation, an officer or director
may apply to the court conducting the proceeding or another
court of competent jurisdiction for indemnification. The court
may order indemnification if it determines: (i) the director or
officer is entitled to mandatory indemnification under Indiana
law; or (ii) the officer or director is fairly and reasonably
entitled to indemnification in view of all the relevant
circumstances, whether or not such director or officer met the
standard of conduct set forth for mandatory indemnification
under Indiana law. The Holding Company's Articles of
Incorporation do not contain any limitations on the ability of
the Holding Company to indemnify its directors and officers
under Indiana law.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or
persons controlling the Holding Company pursuant to the
foregoing provisions, the Holding Company has been informed that
in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is therefore
unenforceable.
23<PAGE>
<PAGE>
LIMITATION ON LIABILITY. As permitted for national banks,
the Bank's Articles of Association limit the Directors' personal
liability to the Bank for most breaches of fiduciary duty and
adopt Delaware law regarding the limitation of liability for
directors.
The Holding Company's Articles of Incorporation also provide
that directors and officers shall not be personally liable to
the Holding Company or its shareholders for monetary damages for
breach of his fiduciary duty as a director, except (i) to the
extent that it is proved that the person actually received an
improper benefit or profit in money, property or services for
the amount of the benefit or profit in money, property or
services actually received; (ii) to the extent that a judgment
or other final adjudication adverse to the person is entered in
a proceeding based on a finding in the proceeding that the
person's action, or failure to act, was the result of active and
deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding; or (iii) to the extent otherwise
required by Indiana law.
This provision eliminates the potential liability of the
Holding Company's directors and officers for failure, through
ordinary negligence, to satisfy their duty of care, which
requires directors and officers to exercise informed business
judgment in discharging their duties. It may thus reduce the
likelihood of derivative litigation against directors and
officers and discourage or deter shareholders from bringing a
lawsuit against directors and officers for breach of their duty
of care, even though such an action, if successful, might
otherwise have been beneficial to the Holding Company and its
shareholders. Shareholders may thus be surrendering a cause of
action based upon negligent business decisions, including those
relating to attempts to change control of the Holding Company.
The provision will not, however, affect the right to pursue
equitable remedies for breach of the duty of care, although such
remedies might not be available as a practical matter, and the
provision does not apply to breaches of duty prior to the
incorporation of the Holding Company or to breaches not
committed as a director, officer, employee or agent of the
Holding Company.
To the best of management's knowledge, there is currently no
pending or threatened litigation for which indemnification may
be sought or any recent litigation involving directors of the
Bank that might have been affected by the limited liability
provision in the Holding Company's Articles of Incorporation had
it been in effect at the time of the litigation.
REGULATION OF KENTUCKY NATIONAL BANCORP, INC.
The Holding Company will be subject to the jurisdiction of
the SEC and of state securities commissions for matters relating
to the offering and sale of its securities. Presently, the Bank
is subject to the jurisdiction of the OCC. Accordingly,
additional issuances of Holding Company stock to raise
capital and for dividend reinvestment, stock option and other
plans will be subject to such registration (absent any exemption
from registration). If the Holding Company were to register
additional stock, it would incur some additional costs that the
Bank does not presently have to incur since the OCC does not
presently impose any fee for registering securities.
Upon completion of the Reorganization, the Holding Company
will become a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended ("BHCA"). As such,
it will be registered with the FRB and will be subject to FRB
regulations, examinations and reporting requirements. As a
subsidiary of a bank holding company, the Bank will be subject
to certain restrictions in its dealings with the Holding Company
and with other companies affiliated with the Holding Company,
and will continue to be subject to regulatory requirements as a
national bank.
ACTIVITIES RESTRICTIONS. The BHCA requires the Holding
Company to secure prior approval of the FRB before acquiring
control, directly or indirectly, of more than five percent of
the voting shares or substantially all of the assets of any
institution, including another bank.
A bank holding company is prohibited from engaging in or
acquiring direct or indirect control of more than five percent
of the voting shares of any company engaged in non-banking
activities unless the Federal Reserve Board, by order or
regulation, has found such activities to be so closely related
to banking, managing, or controlling banks as to be a proper
incident thereto. In making this determination, the Federal
Reserve Board considers whether these activities offer benefits
to the public that outweigh any possible adverse effects.
24<PAGE>
<PAGE>
Further, under the BHCA and the FRB's regulations, a bank
holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any
extension of credit or provision of credit or provision of any
property or services. The so-called "anti-tie-in" provisions
state generally that a bank may not extend credit, lease, sell
property or furnish any service to a customer on the condition
that the customer provide additional credit or service to the
bank, to its bank holding company or to any other subsidiary of
its bank holding company or on the condition that the customer
not obtain other credit or service from a competitor of the
bank, its bank holding company or any subsidiary of its bank
holding company.
CAPITAL REQUIREMENTS. The Federal Reserve Board has
established guidelines with respect to the maintenance of
appropriate levels of capital by bank holding companies with
consolidated assets of $150 million or more. For bank holding
companies with less than $150 million in consolidated assets,
the Federal Reserve Board applies the guidelines on a bank-only
basis unless the bank holding company has publicly held debt
securities or is engaged in non-bank activities involving
significant leverage. The regulations impose two sets of
capital adequacy requirements: minimum leverage rules, which
require bank holding companies and state non-member banks to
maintain a specified minimum ratio of capital to total assets,
and risk-based capital rules, which require the maintenance of
specified minimum ratios of capital to "risk-weighted" assets.
The regulations of the Federal Reserve Board require bank
holding companies to maintain a minimum leverage ratio of "Tier
1 capital" to total assets of 3.0%. Tier 1 capital is the sum
of common shareholders' equity, certain perpetual preferred
stock (which must be noncumulative with respect to banks),
including any related surplus, and minority interests in
consolidated subsidiaries; minus all intangible assets
(other than certain purchased mortgage servicing rights and
purchased credit card receivables), identified losses and
investments in certain subsidiaries. Although setting a minimum
3.0% leverage ratio, the capital regulations state that only the
strongest bank holding companies, with composite examination
ratings of 1 under the rating system used by the federal bank
regulators, would be permitted to operate at or near such
minimum level of capital. All other bank holding companies are
expected to maintain a leverage ratio of at least 1% to 2% above
the minimum ratio, depending on the assessment of an individual
organization's capital adequacy by its primary regulator. Any
bank holding companies experiencing or anticipating significant
growth would be expected to maintain capital well above the
minimum levels. In addition, the Federal Reserve Board has
indicated that whenever appropriate, and in particular when a
bank holding company is undertaking expansion, seeking to engage
in new activities or otherwise facing unusual or abnormal risks,
it will consider, on a case-by-case basis, the level of an
organization's ratio of tangible Tier 1 capital to total assets
in making an overall assessment of capital.
In addition to the leverage ratio, the regulations of the
Federal Reserve Board require bank holding companies to maintain
a minimum ratio of qualifying total capital to risk-weighted
assets of at least 8.0% of which at least four percentage points
must be Tier 1 capital. Qualifying total capital consists of
Tier 1 capital plus Tier 2 or supplementary capital items which
include allowances for loan losses in an amount of up to 1.25%
of risk-weighted assets, cumulative preferred stock and
preferred stock with a maturity of 20 years or more and certain
other capital instruments. The includable amount of Tier 2
capital cannot exceed the institution's Tier 1 capital.
Qualifying total capital is further reduced by the amount of the
bank's investments in banking and finance subsidiaries that are
not consolidated for regulatory capital purposes, reciprocal
cross-holdings of capital securities issued by other banks and
certain other deductions. The risk-based capital regulations
assign balance sheet assets and the credit equivalent amounts of
certain off-balance sheet items to one of four broad risk weight
categories. The aggregate dollar amount of each category is
multiplied by the risk weight assigned to that category based
principally on the degree of credit risk associated
with the obligor. The sum of these weighted values equals the
bank holding company's risk-weighted assets.
RESTRICTIONS ON ACQUISITIONS. Bank holding companies are
prohibited from acquiring, without prior approval of the FRB,
(i) control of any other bank or bank holding company or
substantially all the assets thereof or (ii) more than 5% of the
voting shares of a bank or holding company thereof which is not
a subsidiary.
TRANSACTIONS WITH AFFILIATES. Transactions between banks
and any affiliate are governed by Sections 23A and 23B of the
Federal Reserve Act, as amended. An affiliate of a bank is any
company or entity which controls, is controlled by or is under
common control with the bank. In a holding company context, the
parent holding company
25<PAGE>
<PAGE>
of a bank (such as the Holding Company) and any companies which
are controlled by such parent holding company are affiliates of
the bank. Generally, Sections 23A and 23B (i) limit the extent
to which the bank or its subsidiaries may engage in "covered
transactions" with any one affiliate to an amount equal to 10%
of such bank's capital stock and surplus, and contain an
aggregate limit on all such transactions with all affiliates to
an amount equal to 20% of such capital stock and surplus and
(ii) require that all such transactions be on terms
substantially the same, or at least as favorable to the
institution or subsidiary, as those provided to a non-affiliate.
The term "covered transaction" includes the making of loans,
purchase of assets, issuance of a guarantee and similar other
types of transactions.
The restrictions contained in Section 22(h) of the Federal
Reserve Act, as amended, apply to loans by banks to executive
officers, directors and principal shareholders (such as the
Holding Company). Section 22(h) requires that loans to
directors, executive officers and greater than 10% shareholders
be made on terms substantially the same as offered in comparable
transactions to other persons. Under Section 22(h), loans to an
executive officer and to a greater than 10% shareholder of a
bank (18% in the case of institutions located in an area with
less than 30,000 in population), and certain affiliated entities
of either, may not exceed together with all other outstanding
loans to such person and affiliated entities the bank's
loan-to-one borrower limit (generally equal to 15% of the
institution's unimpaired capital and surplus and an additional
10% of such capital and surplus for loans fully secured by
certain readily marketable collateral). Section 22(h) also
prohibits loans, above amounts prescribed by the appropriate
federal banking agency, to directors, executive officers and
greater than 10% shareholders of a bank, and their respective
affiliates, unless such loan is approved in advance by a
majority of the board of directors of the association with any
"interested" director not participating in the voting. The
Federal Reserve Board has prescribed the loan amount (which
includes all other outstanding loans to such person), as to
which such prior board of director approval is required, to be
the greater of $25,000 or 5% of capital and surplus (up to
$500,000).
DESCRIPTION OF HOLDING COMPANY CAPITAL STOCK
The Holding Company is authorized to issue 5,000,000 shares
of the common stock, $0.01 par value per share, and 1,000,000
shares of preferred stock, $0.01 par value per share. The
Holding Company currently expects to issue up to 240,000 shares
of Holding Company Common Stock in the holding company
reorganization. The Holding Company does not intend to issue
any shares of preferred stock in the holding company
reorganization, nor are there any present plans to issue such
preferred stock following the holding company reorganization.
Each share of common stock will have the same relative rights
as, and will be identical in all respects with, each other share
of common stock. THE COMMON STOCK OF THE HOLDING COMPANY WILL
REPRESENT NONWITHDRAWABLE CAPITAL AND WILL NOT BE INSURED BY THE
FDIC, OR ANY OTHER GOVERNMENT AGENCY.
HOLDING COMPANY COMMON STOCK
Voting Rights. Each share of the Holding Company Common
Stock will have the same relative rights and will be identical
in all respects with every other share of the common stock. The
holders of the Holding Company Common Stock will possess
exclusive voting rights in the Holding Company, except to the
extent that shares of preferred stock issued in the future may
have voting rights, if any. Each holder of the common stock
will be entitled to only one vote for each share held of record
on all matters submitted to a vote of holders of the Holding
Company Common Stock and will not be permitted to cumulate their
votes in elections of the Holding Company's directors. The
voting rights of shares beneficially owned by any person in
excess of 10% of shares outstanding will be limited to 1/100th
of a vote unless the acquisition has previously been approved by
the Continuing Directors.
Liquidation. In the unlikely event of the complete
liquidation or dissolution of the Holding Company, the holders
of the common stock will be entitled to receive all assets of
the Holding Company available for distribution in cash or in
kind, after payment or provision for payment of (i) all debts
and liabilities of the Holding Company; (ii) any accrued
dividend claims; and (iii) liquidation preferences of any
preferred stock which may be issued in the future.
Dividends. From time to time, dividends may be declared and
paid to the holders of the common stock, who will share equally
in any such dividends.
26<PAGE>
<PAGE>
Restrictions on Acquisition of the Holding Company Common
Stock. See "Certain Anti-Takeover Provisions" for a discussion
of the limitations on acquisition of shares of the common stock.
Other Characteristics. Holders of the Holding Company
Common Stock will not have preemptive rights with respect to any
additional shares of the common stock which may be issued.
Therefore, the board of directors may sell shares of capital
stock of the Holding Company without first offering such shares
to existing shareholders of the Holding Company. The common
stock is not subject to call for redemption, and the outstanding
shares of common stock when issued and upon receipt by the
Holding Company of the full purchase price therefor will be
fully paid and non-assessable.
Registrar and Transfer Agent. Illinois Stock Transfer
Company will act as Registrar and Transfer Agent for the Holding
Company's common stock.
SERIAL PREFERRED STOCK
None of the 1,000,000 authorized shares of preferred stock
of the Holding Company will be issued in the reorganization.
After completion of the holding company reorganization, the
Board of Directors of the Holding Company will be authorized to
issue serial preferred stock and to fix and state voting powers,
designations, preferences or other special rights of such shares
and the qualifications, limitations and restrictions thereof,
subject to regulatory approval but without shareholder approval.
If and when issued, the serial preferred stock is likely to rank
prior to the common stock as to dividend rights, liquidation
preferences, or both, and may have full or limited voting
rights. The Board of Directors, without shareholder approval,
can issue serial preferred stock with voting and conversion
rights which could adversely affect the voting power of the
holders of the common stock. The Board of Directors has no
present intention to issue any of the serial preferred stock.
ACCOUNTING TREATMENT
The Reorganization will be accounted for as a reorganization
under common control treated as if a pooling of interests.
Therefore, the consolidated capitalization, assets, liabilities,
income and other financial data of the Holding Company
immediately following the Reorganization will be substantially
the same as those of the Bank immediately prior to consummation
of the Reorganization, and after the Reorganization, will be
shown in the Holding Company's consolidated financial statements
at the Bank's historical recorded values. Because the
Reorganization will not result in a change in such financial
statements, this Proxy Statement/Prospectus does not include
financial statements of the Bank or the Holding Company.
LEGAL OPINION
The validity of the shares of the Holding Company Common
Stock issuable upon consummation of the Reorganization will be
passed upon by Housley Kantarian & Bronstein, P.C., Washington,
D.C.
VOTE REQUIRED
Approval of the Plan of Reorganization requires the
affirmative vote of two-thirds of the total votes eligible to be
cast at the Annual Meeting. Since the required vote is based on
the number of shares outstanding, an abstention or failure to
vote, including a broker no vote, is equivalent to voting
against the Plan of Reorganization. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PLAN OF
REORGANIZATION.
Approximately _______ shares or _____% of the shares of
Kentucky National Common Stock outstanding are held by
directors, executive officers and their affiliates. It is
expected that these shares will be voted "FOR" the
Reorganization.
27<PAGE>
<PAGE>
THIS DESCRIPTION OF THE PROPOSED HOLDING COMPANY FOR
KENTUCKY NATIONAL DOES NOT PURPORT TO BE COMPLETE, BUT IS
QUALIFIED IN ITS ENTIRETY BY THE PLAN OF REORGANIZATION AND THE
ARTICLES OF INCORPORATION AND BYLAWS OF THE HOLDING COMPANY
ATTACHED AS EXHIBITS A, B AND C, RESPECTIVELY, TO THIS PROXY
STATEMENT/PROSPECTUS WHICH ARE INCORPORATED BY REFERENCE HEREIN.
________________________________________________________________
MARKET FOR KENTUCKY NATIONAL COMMON STOCK AND DIVIDENDS
________________________________________________________________
There is currently no established market for the Kentucky
National Common Stock and no bid or asked quotes are available.
The most recent trade of which the Bank is aware took place at
$___ per share. It is not expected that a market in the common
stock of Kentucky National Bancorp, Inc. will develop. There
were approximately [325] shareholders of record at the Record
Date.
Since commencing operations, the Bank has not paid any
dividends. For additional information describing regulatory
restrictions on the payment of dividends, see "PROPOSAL II --
PROPOSED HOLDING COMPANY FORMATION -- Comparison of
Shareholders' Rights -- Payment of Dividends."
________________________________________________________________
FINANCIAL STATEMENTS
________________________________________________________________
The audited financial statements of the Bank for its fiscal
year ended December 31, 1998, prepared in conformity with
generally accepted accounting principles, are included in the
Annual Report to Shareholders which accompanies this Proxy
Statement/Prospectus. No financial statements of the Holding
Company are presented in this Proxy Statement/Prospectus, as the
Holding Company currently has no significant assets or
liabilities. In addition, no pro forma consolidated financial
statements of the Holding Company are included herein since such
statements would reflect no material differences from the
consolidated financial statements of the Bank.
________________________________________________________________
SHAREHOLDER PROPOSALS
________________________________________________________________
If the holding company reorganization is approved by
shareholders, it is anticipated that the 2000 Annual Meeting of
Shareholders will be held in accordance with the Articles of
Incorporation and Bylaws of the Holding Company rather than the
Articles of Association and Bylaws of the Bank. In order for a
shareholder proposal to be considered at an annual meeting of
the Holding Company's shareholders, it must be delivered or
mailed to the Secretary not more than 60 nor less than 30 days
prior to the meeting provided that if less than 31 days' notice
is given, shareholder proposals may be submitted not later than
the tenth day following the day on which notice of the meeting
was mailed to shareholders.
________________________________________________________________
MISCELLANEOUS
________________________________________________________________
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described
above in this Proxy Statement/Prospectus. However, if any other
matters should properly come before the Annual Meeting, it is
intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the judgment of the person or
persons voting the proxies, including matters relating to the
conduct of the Annual Meeting.
The cost of solicitation of proxies will be borne by the
Bank. The Bank will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy material to the beneficial
owners of common stock. In addition to solicitations by mail,
directors, officers and regular employees of the Bank may
solicit proxies personally, by telegraph or telephone without
additional compensation.
28 <PAGE>
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Exhibit A
KENTUCKY NATIONAL BANK
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION made as of this
13th day of January, 1999, among KENTUCKY NATIONAL BANCORP,
INC., an Indiana corporation (the "Holding Company"), KENTUCKY
NATIONAL BANK, Elizabethtown, Kentucky, a national banking
association (the "Bank"). In addition, as soon as reasonably and
legally possible, the Holding Company will form as a
wholly-owned subsidiary, a new national banking association
organized and existing under the laws of the United States (the
"New Bank") under the name and KENTUCKY NATIONAL INTERIM BANK,
which will upon such formation become a party to this Agreement
and to the Agreement of Merger attached hereto as Exhibit A-1.
All obligations of the New Bank will, until properly assumed by
the New Bank by its execution of this Agreement, be made and
assumed on its behalf by the Holding Company.
WHEREAS, the Holding Company, the Bank, and the New Bank
desire to effect the formation of a bank holding company whereby
the Bank and the New Bank will be merged, the surviving bank
will become a wholly-owned subsidiary of the Holding Company,
and the present stockholders of the Bank (except for those who
perfect dissenters' rights) will become stockholders of the
Holding Company, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements contained herein, and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE I
MERGER
------
1.1 AGREEMENT TO MERGE. Subject to the terms and
conditions hereinafter set forth, the parties hereto agree to
effect a merger of the Bank and the New Bank (the "Merger")
pursuant to the provisions of Section 215a of the National Bank
Act, as amended (the "Act") in accordance with the Agreement to
Merge, attached hereto as Exhibit A-1 and made a part hereof
(the "Merger Agreement").
1.2 HOLDING COMPANY COMMON STOCK. The Holding Company
shall make available to the Bank and the New Bank a sufficient
number of shares of the Common Stock, par value $0.01 per share
(the "Holding Company Common Stock"), of the Holding Company to
effect the Merger pursuant to the Merger Agreement.
ARTICLE II
SHARES OF THE HOLDING COMPANY AND OF THE SURVIVING BANK
-------------------------------------------------------
2.1 CONVERSION OF SHARES. The manner of converting the
shares of Common Stock, par value $1.00 per share, of the Bank
(the "Bank Common Stock") into shares of Holding Company Common
Stock and the shares of Common Stock of the New Bank into shares
of Common Stock of the surviving bank in the Merger and the
assumption of the outstanding options of the Bank by the Holding
Company, shall be as set forth in Section 7 of the Merger
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE HOLDING COMPANY
-----------------------------------------------------
The Holding Company represents, warrants and agrees as
follows:
3.1 ORGANIZATION AND STANDING. The Holding Company is a
corporation duly organized and validly existing under the
Indiana Business Corporation Law.
A-1<PAGE>
<PAGE>
3.2 CAPITALIZATION. The Holding Company is authorized to
issue 5,000,000 shares of Common Stock, par value $0.01 per
share, of which 1000 shares are issued and outstanding and
1,000,000 shares of preferred stock, par value $0.01 per share,
of which no shares are issued and outstanding. There are no
outstanding options, warrants, calls, convertible securities,
subscriptions, or other commitments or rights of any nature with
respect to the Common Stock of the Holding Company.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The execution,
delivery, and performance of this Agreement have been duly
authorized by the Board of Directors of the Holding Company.
Subject to appropriate stockholder and regulatory approvals,
neither the execution and delivery of this Agreement nor the
consummation of the transactions provided for herein will
violate any agreement to which the Holding Company is a party or
by which it is bound or any law, order, or decree or any
provision of its Articles of Incorporation or By-laws.
3.4 ABSENCE OF LIABILITIES. Prior to the effective time
of the Merger, the Holding Company will have engaged only in the
transactions contemplated by this Agreement and the Merger
Agreement, will have no material liabilities and will have
incurred no material obligations except in connection with its
performance of the transactions provided for in this Agreement
and in the Merger Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BANK
------------------------------------------
The Bank represents, warrants and agrees as follows:
4.1 ORGANIZATION AND STANDING. The Bank is a national
banking association duly organized and validly existing under
the Act.
4.2 CAPITALIZATION. The Bank is authorized to issue
1,000,000 shares of Common Stock, par value $1.00 per share, of
which 240,000 shares are issued and outstanding. As of the date
of this Agreement, the Bank has issued 16,000 options at an
exercise price of $25.00 per share each. Each such option is
exercisable for one share of Bank Common Stock. There are no
other outstanding options, warrants, calls, convertible
securities, subscriptions, or other commitments or rights of any
nature with respect to the Bank Common Stock.
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The execution,
delivery, and performance of this Agreement and of the Merger
Agreement have been duly authorized by the Board of Directors of
the Bank. Subject to appropriate stockholder and regulatory
approvals, neither the execution and delivery of this Agreement
or the Merger Agreement nor the consummation of the transactions
provided for herein or therein will violate any agreement to
which the Bank is a party or by which it is bound, or any law,
order, decree, or any provision of its Articles of Incorporation
or By-laws.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE NEW BANK
----------------------------------------------
The New Bank represents, warrants and agrees as follows:
5.1 ORGANIZATION AND STANDING. The New Bank is an interim
national banking institution in the process of formation under
the Act.
5.2 CAPITALIZATION. The New Bank is authorized to issue
1,000,000 shares of Common Stock, par value $1.00 per share, of
which 200,000 shares will be issued and outstanding and owned by
the Holding Company and five organizers immediately prior to the
Merger.
5.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The execution,
delivery, and performance of this Agreement and the Merger
Agreement have been duly authorized by the Board of Directors of
the New Bank. Subject to appropriate stockholder and regulatory
approvals, neither the execution and delivery of this Agreement
or the Merger
A-2<PAGE>
<PAGE>
Agreement nor the consummation of the transactions
provided for herein or therein will violate any agreement to
which the New Bank is a party or by which it is bound or any
law, order, decree, or any provision of its Articles of
Incorporation or By-laws.
5.4 ABSENCE OF LIABILITIES. Prior to the effective time
of the Merger, the New Bank will have engaged only in the
transactions contemplated by this Agreement and the Merger
Agreement, will have no material liabilities and will have
incurred no material obligations except in connection with its
performance of the transactions provided for in this Agreement
and in the Merger Agreement.
ARTICLE VI
COVENANTS OF THE HOLDING COMPANY
--------------------------------
The Holding Company agrees that between the date hereof and
the effective time of the Merger:
6.1 CAPITALIZATION OF THE NEW BANK. The Holding Company
shall purchase a total of 95,000 shares of Common Stock, par
value $1.00 per share, of the New Bank for $1.20 per share, and
shall cause the New Bank to do all things necessary to obtain a
charter as an interim national banking association, pursuant to
the Act, so as to permit the consummation of the Merger provided
for in the Merger Agreement. The Holding Company may also
purchase the subscription rights of the organizers of the New
Bank for the 5,000 shares of Common Stock issued to them in the
aggregate. Such shares of the organizers shall be purchased at
$1.20 per share.
6.2 APPROVAL OF MERGER. The Holding Company, as a
stockholder of the New Bank, shall approve this Agreement and
the Merger Agreement in accordance with applicable law.
6.3 ORGANIZATIONAL STOCK OPTION PLAN. The Holding Company
shall assume all of the Bank's obligations under the Bank's
Organizational Stock Option Plan and each outstanding option
thereunder shall become an option to purchase the same number of
shares of Holding Company Common Stock at the same exercise
price per share and on the same terms and conditions as before
the Merger. The Holding Company shall at all times reserve a
sufficient number of shares of Holding Company Common Stock to
fulfill its obligations under the Organizational Stock Option
Plan.
6.4 STOCK TRANSFER AGREEMENT. The Holding Company agrees
to be bound by and assume all of the obligations of the Bank
under the Stock Transfer Agreement by and among the Bank, the
Organizers of the Bank and each stockholder and place a legend
in the form specified on each certificate evidencing ownership
of shares of Holding Company Common Stock.
6.5 BEST EFFORTS. The Holding Company will use its best
efforts to take, or cause to be taken, all actions or do, or
cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and
the Merger Agreement, subject, however, to the requisite vote of
the stockholders of the Bank in accordance with the requirements
of the Act and applicable law.
ARTICLE VII
COVENANTS OF THE BANK
---------------------
The Bank agrees that between the date hereof and the
effective time of the Merger:
7.1 STOCKHOLDERS MEETING. The Bank shall submit this
Agreement and the Merger Agreement to the vote of its
stockholders, as provided by the Act and other applicable laws,
at the Annual Meeting of Stockholders to be held on or about
April 27, 1999, and any adjournment or postponement thereof.
A-3<PAGE>
<PAGE>
7.2 BEST EFFORTS. The Bank will use its best efforts to
take, or cause to be taken, all actions or do, or cause to be
done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Merger
Agreement, subject, however, to the requisite vote of the
stockholders of the Bank in accordance with the requirements of
the Act and applicable law.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
----------------------------------------
The obligations of the parties to consummate this Agreement
and the Merger Agreement shall be subject to the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
COVENANTS. The representations and warranties and covenants
contained in Sections 3, 4, 5, 6, and 7 hereof shall be true as
of and at the effective time of the Merger, and each party shall
have performed all obligations required hereby to be performed
by it prior to the effective time of the Merger.
8.2 BANK STOCKHOLDER APPROVAL. The stockholders of the
Bank shall have duly approved this Agreement and the Merger
Agreement in accordance with applicable laws.
8.3 REGULATORY APPROVALS. Any federal or state regulatory
agency having jurisdiction (banking or otherwise), to the extent
that any consent or approval is required by applicable laws or
regulations for the consummation of this Agreement and the
Merger Agreement, shall have granted any necessary consent or
approval.
8.4 REGISTRATION STATEMENT. The Registration Statement on
Form S-4 (the "Registration Statement") filed by the Holding
Company, if required, under the Securities Act of 1933, as
amended, covering the shares of the Holding Company Common Stock
to be issued pursuant to the Merger Agreement shall have been
declared effective by the Securities and Exchange Commission;
and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding
for that purpose shall have been initiated or, to the knowledge
of the Holding Company, shall be contemplated or threatened by
the Securities and Exchange Commission.
8.5 LITIGATION. There shall be no litigation or
proceeding pending or threatened for the purpose of enjoining,
restraining or preventing the consummation of the Merger, this
Agreement or the Merger Agreement or otherwise claiming that
such consummation is improper.
8.6 TAX OPINION. A tax opinion shall have been obtained
from Housley Kantarian & Bronstein, P.C., counsel to the Bank
that the conversion of the Bank Common Stock into the Holding
Company Common Stock will be tax free for federal income tax
purposes; provided, however, that the requirements of this
Section 8.6 may be waived by the affirmative vote of a majority
of the Board of Directors of each of the parties hereto.
ARTICLE IX
TERMINATION, WAIVER, AND AMENDMENT
----------------------------------
9.1 CIRCUMSTANCES OF TERMINATION. Anything herein or
elsewhere to the contrary notwithstanding, this Agreement and
the Merger Agreement may be terminated at any time before the
effective time of the Merger (whether before or after action
with respect thereto by the Bank's stockholders) only:
(a) by the mutual consent of the Board of Directors
of the Bank, the New Bank and the Holding Company evidenced
by an instrument in writing signed on behalf of each by any
two of their respective officers; or
(b) by the Board of Directors of the Bank if, in its
sole judgment, the Merger would be inadvisable because of
the number of stockholders of the Bank who perfect their
dissenter's rights in accordance with
A-4<PAGE>
<PAGE>
applicable law and the Merger Agreement, or if, in the sole
judgment of such Board, the Merger would not be in the best
interests of the Bank or its employees, depositors or
stockholders for any reason whatsoever.
9.2 EFFECT OF TERMINATION. In the event of the
termination and abandonment hereof, this Agreement and the
Merger Agreement shall become void and have no effect, without
any liability on the part of any of the parties, their
directors, officers or stockholders, except as set forth in
Section 10 hereof.
9.3 WAIVER. Any of the terms or conditions of this
Agreement and the Merger Agreement may be waived in writing at
any time by the Bank by action taken by its Board of Directors,
whether before or after action by the Bank's stockholders;
provided, however, that such action shall be taken only if, in
the judgment of the Board of Directors, such waiver will not
have a materially adverse effect on the benefits intended to be
granted hereunder to the stockholders of the Bank.
9.4 AMENDMENT. Anything herein or elsewhere to the
contrary notwithstanding, to the extent permitted by law, this
Agreement and the Merger Agreement may be amended at any time by
the affirmative vote of a majority of the Board of Directors of
each of the Bank, the Holding Company and the New Bank, whether
before or after action with respect thereto by the Bank's
stockholders and without further approval of such amendment by
the stockholders of the parties hereto; provided, however, that
Section 2.1 of this Agreement and Section 7 of the Merger
Agreement may not be amended after the meeting of the Bank's
stockholders referred to in Section 7.1 hereof except by the
vote of the Bank's stockholders required for the approval of the
Merger by such stockholders.
ARTICLE X
EXPENSES
--------
10.1 GENERAL. Each party hereto will pay its own expenses
incurred in connection with this Agreement and the Merger
Agreement, whether or not the transactions contemplated herein
are effected.
10.2 CAPITAL DISTRIBUTION. Upon the effective time of the
Merger, the surviving bank shall make a capital distribution to
the Holding Company in an amount equal to the sum of:
(a) the expenses of the Holding Company in connection
with the transactions contemplated herein, if any;
(b) the principal amount of any loan that the Holding
Company shall have obtained to purchase shares of Common
Stock of the New Bank as provided in 6.1 hereof; and
(c) the amount of any interest incurred by the
Holding Company on account of any loans obtained by it in
order to purchase shares of Common Stock of the New Bank as
provided in Section 6.1 hereof.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 RESTRICTIONS ON AFFILIATES. The Holding Company may
cause stock certificates representing any shares issued to any
stockholder who may be deemed to be an affiliate of the Bank,
within the meaning of Rule 145 under the Securities Act of 1933,
as amended, to bear a legend setting forth any applicable
restrictions on transfer thereof under Rule 145 and may cause
stop-transfer orders to be entered with its transfer agent with
respect to any such certificates.
11.2 NO BROKERS. Each of the parties represents to the
other that it has not incurred and will not incur any liability
for brokerage fees or agents' commissions in connection with
this Agreement, the Merger Agreement and the transactions
contemplated hereby.
A-5<PAGE>
<PAGE>
11.3 RIGHT TO WITHHOLD DIVIDENDS. The Board of Directors
of the Holding Company reserves the right to withhold dividends
from any former stockholder of the Bank who fails to exchange
certificates representing the shares of the Bank for
certificates representing the shares of the Holding Company in
accordance with Section 7 of the Merger Agreement.
11.5 ENTIRE AGREEMENT. This Agreement (including the
Merger Agreement attached as an exhibit hereto) contains the
entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements, written or
oral, with respect thereto.
11.6 CAPTIONS. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction
of any provisions of this Agreement or the Merger Agreement.
11.7 APPLICABLE LAW. This Agreement and the Merger
Agreement shall be governed by the laws of the Commonwealth of
Kentucky applicable to contracts executed in and to be performed
exclusively within the Commonwealth of Kentucky, regardless of
where they are executed.
11.8 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts
together shall constitute but one agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of
the day, month and year first above mentioned.
KENTUCKY NATIONAL BANCORP, INC.
By: /s/ Ronald J. Pence
---------------------------
Ronald J. Pence, President
KENTUCKY NATIONAL BANK
By: /s/ Ronald J. Pence
---------------------------
Ronald J. Pence, President
Kentucky National Interim Bank hereby agrees to and assumes
all of the obligations and agreements contained herein which
were agreed to and assumed on its behalf by Kentucky National
Bancorp, Inc.
Date:____________________
KENTUCKY NATIONAL INTERIM BANK
By: ____________________________
A-6<PAGE>
<PAGE>
EXHIBIT A-1
AGREEMENT TO MERGE
KENTUCKY NATIONAL BANK
WITH AND INTO, AND UNDER THE CHARTER OF,
KENTUCKY NATIONAL INTERIM BANK
UNDER THE TITLE OF "KENTUCKY NATIONAL BANK"
THIS AGREEMENT is made between KENTUCKY NATIONAL BANK
(hereinafter referred to as the "Bank"), a national banking
association located at 1000 North Dixie Avenue, City of
Elizabethtown, County of Hardin, in the Commonwealth of Kentucky
and KENTUCKY NATIONAL INTERIM BANK (hereinafter referred to as
the "New Bank"), a national banking association located at the
same address, and is JOINED IN AND assented to by KENTUCKY
NATIONAL BANCORP, INC., an Indiana corporation (hereinafter
referred to as the "Holding Company").
The Bank and the New Bank are banks duly organized under
the banking laws of the United States of America. As of
December 31, 1998, the Bank had capital stock issued and
outstanding in the amount of $240,000 (divided into 240,000
shares of common stock of the par value of $1.00 per share),
surplus of $_________ and undivided profits (including
unrealized gains on securities available for sale) of
$_____________.
The New Bank was organized on ______ __, 1999, and has
authorized capital stock in the amount of $1,000,000 (divided
into 1,000,000 shares of common stock of the par value of $1.00
per share). Immediately prior to the merger becoming effective,
100,000 shares of the New Bank shall be issued and outstanding
and the New Bank shall have a surplus in the amount of $20,000.
The merger hereby provided for shall hereinafter be called the
"Merger."
The Holding Company is a corporation duly organized under
the laws of the State of Indiana and has its principal office in
the City of Elizabethtown, County of Hardin, Commonwealth of
Kentucky. The Holding Company's authorized capital stock
consists of 6,000,000 shares of common stock, of the par value
of $.01 per share and 1,000,000 shares of preferred stock of the
par value of $.01 per share.
A majority of the Board of Directors of the Bank and a
majority of the Board of Directors of the New Bank have,
respectively, approved this Agreement and authorized its
execution. A majority of the Board of Directors of the Holding
Company has approved this Agreement, agreed that the Holding
Company shall join in and be bound by it, and authorized the
undertakings hereinafter made by the Holding Company.
This Agreement is and shall be deemed to be a plan of
reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises, the Bank
and the New Bank, joined in by the Holding Company, hereby make
this Agreement prescribing the terms and conditions of merger of
the Bank and the New Bank as follows:
SECTION 1
The Bank shall be merged into the New Bank under the
Charter and Articles of Association of the New Bank pursuant to
the provisions of, and with the effect provided in, Section 2 of
Chapter 209 of the Act of Congress of November 7, 1918, as
amended (12 U.S.C. Section 215a).
A-1-1
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<PAGE>
SECTION 2
The name of the receiving association (hereinafter referred
to as the "Association") shall be "Kentucky National Bank" and
its charter number shall be 23434.
SECTION 3
The business of the Association shall be that of a national
banking association. This business shall be conducted by the
Association at its main office which shall be located at 1000
North Dixie Avenue, Elizabethtown, Kentucky, and its legally
established branches.
SECTION 4
The amount of capital stock of the Association shall be
$200,000 divided into 100,000 shares of common stock, each of
$1.00 par value, and at the time the Merger shall become
effective, the Association shall have a surplus of $_________,
and undivided profits, including capital reserves, which when
combined with the capital and surplus will be equal to the
combined capital structures of the merging banks as stated in
the preamble of this Agreement, adjusted, however, for normal
earnings and expenses between December 31, 1998, and the
effective time of the Merger.
SECTION 5
(a) Upon the Merger becoming effective, the corporate
existence of the Bank and the New Bank shall, as provided by the
aforementioned Act of Congress, be merged into and continued in
the Association, and the Association shall be deemed to be the
same corporation as the Bank and the New Bank. All rights,
franchises, and interests of the Bank and the New Bank,
respectively, in and to every type of property (real, personal,
and mixed) and chooses in action shall be transferred to and
vested in the Association by virtue of such Merger without any
deed or other transfer, and the Association, without any order
or action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises, and interests,
including appointments, designations, and nominations, and all
other rights and interests as trustee, executor, administrator,
registrar of stocks and bonds, guardian of estates and persons,
assignee, receiver, and in every other fiduciary capacity, in
the same manner and to the same extent as such rights,
franchises, and interests were held or enjoyed by the
Bank and the New Bank, respectively, at the time the Merger
becomes effective. Thereafter, the Association shall engage in
the business of a national banking association at the main
office and the legally established and approved branches of the
Bank.
(b) Upon the Merger becoming effective, the Association
shall be liable for all liabilities of the Bank; and all
liabilities, obligations, and contracts of the Bank and of the
New Bank, respectively, matured or unmatured, whether accrued,
absolute, contingent, or otherwise, and whether or not reflected
or reserved against on balance sheets, books of account, or
records of the Bank or the New Bank, as the case may be, shall
be those of the Association, and shall not be released or
impaired by the merger, and all rights of creditors and other
obligees and all liens on property of either the Bank or the New
Bank shall be preserved unimpaired.
SECTION 6
This Agreement shall be submitted to the stockholders of
the Bank and the New Bank for ratification and confirmation at
meetings to be called and held in accordance with the applicable
provisions of law and their respective Articles of Association
and By-laws. The Bank and the New Bank shall proceed
expeditiously and cooperate fully in the procurement of any
other consents and approvals and in the taking of any other
action, and the satisfaction of all other requirements
prescribed by law or otherwise, necessary for consummation of
the Merger on the terms herein provided including, without being
limited to, the preparation and submission of an application to
the Comptroller of the Currency of the United States for
approval of the merger under the provisions of Section 18(c)
of the Federal Deposit Insurance Act, as amended (12 U.S.C.
Section 1828(c)) and Section 215a of Title 12 United States
Code.
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<PAGE>
SECTION 7
Upon the merger becoming effective:
(a) Each share of the common stock of the Bank (other than
shares as to which dissenters' rights of appraisal have been
elected and perfected in accordance with Section 11 hereof and
applicable law) shall, by virtue of this Agreement and without
any action on the part of the holder thereof, be converted into
and become one share of the common stock of the Holding Company,
and outstanding certificates representing shares of common
stock, par value $1.00 per share, of the Bank shall thereafter
represent shares of common stock, par value $0.01 per share, of
the Holding Company. Each holder of any such shares of the Bank
which shall have been so converted into common stock of the
Holding Company, shall, upon surrender in proper form to the
Association for cancellation of one or more stock certificates
(hereinafter called "Old Certificates") which, prior to the
merger becoming effective, represented common stock of the Bank,
be entitled to receive as evidence of the shares so converted
one or more stock certificates (hereinafter called "New
Certificates") bearing the name of the Holding Company as
issuer, for the number of shares of Holding Company represented
by such Old Certificates when surrendered. Until so surrendered,
each Old Certificate shall be deemed, for all corporate
purposes, to evidence the ownership of the number of shares of
common stock of the Holding Company which the holder thereof
would be entitled to receive upon its surrender, except that
Holding Company may withhold, from the holder of shares
represented by such Old Certificates, distribution of any or all
dividends declared by the Holding Company on such shares until
such time as such Old Certificate shall be surrendered in
exchange for one or more New Certificates, at which time
dividends so withheld by the Holding Company with respect to
such shares shall be delivered, without interest thereon, to the
stockholder to whom such New Certificates are issued.
(b) The amount, and the number of shares, of common stock
of the New Bank outstanding immediately before the merger
becomes effective (specifically $200,000 divided into 200,000
shares of the par value of $1.00 each) shall be the amount and
the number of shares of the common stock of the Association
outstanding upon the completion of the merger.
(c) No cash shall be allocated to stockholders of the Bank
(except as to those stockholders who elect to dissent from the
plan of merger as provided in Section 11 hereof) or to any other
person, firm, or corporation, and stock shall be allocated as
follows:
(i) To stockholders of the Bank of record at the time
the Merger becomes effective there shall be allocated one
share of common stock of the Holding Company for each one
share of common stock of the Bank held of record at the
time of the Merger; and
(ii) To the Holding Company there shall be allocated
the amount, and the number of shares, of common stock of
the Association of the par value of $1.00 per share, which
shall be equal to the amount, and the number of shares, of
common stock of the Bank outstanding immediately before the
Merger.
(d) The Holding Company shall assume all of the
obligations of the Bank under the stock options outstanding to
the extent that such options remain unexercised on the effective
date of the Merger of the Bank and the New Bank. Option holders
shall receive options to purchase the same number of shares at
the same option exercise price that the option held had such
option been exercised prior to the Merger.
(e) The shares of the capital stock of the New Bank issued
and outstanding at the time of the Merger shall continue to be
issued and outstanding shares of the Association.
<PAGE>
SECTION 8
Neither of the banks shall declare or pay any dividend to
its stockholders between the date of this Agreement and the time
at which the Merger shall become effective, except in the
ordinary course of business, nor dispose of any of its assets in
any other manner except in the normal course of business and for
adequate value.
A-1-3
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<PAGE>
SECTION 9
The present Board of Directors of the Bank shall continue
to serve as the Board of Directors of the Association until the
next annual meeting or until such time as their successors have
been elected and have qualified.
SECTION 10
Effective as of the time this Merger shall become effective
as specified in the "Certificate Approving Merger" to be issued
by the Comptroller of the Currency, the Articles of Association
of the Association shall read in their entirety as provided in
Exhibit A hereto. The By-Laws of the Association shall be the
By-Laws of the Bank.
SECTION 11
Any stockholder of the Bank who shall have voted against
the Merger at the meeting of the stockholders of the Bank held
for the purpose set forth in Section 6 of this Agreement or who
shall have given notice in writing at or prior to such meeting
to the presiding officer that he dissents from the plan of
merger, shall be entitled to receive the value of the shares so
held by him when the Merger shall be approved by the Comptroller
of the Currency upon written request made to the Association at
any time before 30 days after the date of consummation of the
Merger, accompanied by the surrender of his stock certificates.
The value of the shares of any dissenting stockholder shall be
ascertained, as of the effective date of the Merger, by an
appraisal made by a committee of three persons, composed of (1)
one selected by the vote of the holders of the majority of the
stock, the owners of which are entitled to payment in cash (by
reason of such dissent and request for appraisal); (2) one
selected by the directors of the Association; and (3) one
selected by the two so selected. The valuation agreed upon by
any two of the three appraisers shall govern. If the value so
fixed shall not be satisfactory to any dissenting stockholder
who has requested payment, that stockholder may, within five
days after being notified of the appraised value of such shares,
appeal to the Comptroller of the Currency, who shall cause a
reappraisal to be made which shall be final and binding as to
the value of the shares of the appellant. If within 90 days from
the date of consummation of the Merger, for any reason
one or more of the appraisers is not selected as herein
provided, or the appraisers fail to determine the value of such
shares, the Comptroller of the Currency shall upon written
request of any interested party cause an appraisal to be made
which shall be final and binding on all parties. The expenses of
the Comptroller of the Currency in making the reappraisal or the
appraisal, as the case may be, shall be paid by the Association.
The value of the shares ascertained shall be promptly paid to
the dissenting stockholders by the Association.
SECTION 12
Effectuation of the Merger herein provided for is
conditional upon:
(a) Ratification and confirmation of this Agreement
by vote of the stockholders of the Bank and the New Bank as
required by law;
(b) The approval of the Office of the Comptroller of
the Currency of the merger herein provided for; and
(c) Procurement of all other consents and approvals,
and satisfaction of all other requirements prescribed by
law, which are necessary for consummation of the merger.
A-1-4
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<PAGE>
SECTION 13
In the event that:
(a) The number of shares of capital stock of the Bank
voted against the Merger, or in respect of which written
notice is given purporting to dissent from the Merger,
shall make consummation of the Merger unwise in the opinion
of either the Board of Directors of the Bank or the Board
of Directors of the New Bank; or
(b) Any action, suit, proceeding, or claim has been
instituted, made or threatened relating to the proposed
merger which shall make consummation of the Merger
inadvisable in the opinion of either the Board of Directors
of the Bank or the Board of Directors of the New Bank; or
(c) Any action, consent or approval, governmental,
or otherwise, which is, or in the opinion of counsel for
the Bank may be, necessary to permit or enable the
Association, upon and after the Merger, to conduct all or
any part of the business and activities of the Bank up to
the time of the Merger, in the manner in which such
activities and business are then conducted, shall not have
been obtained; or
(d) For any other reason consummation of the merger
is inadvisable in the opinion of the respective Boards of
Directors of both the Bank and the New Bank; then this
Agreement may be terminated at any time before the merger
becomes effective by written notice by either the Bank or
the New Bank to the other of them, authorized or approved
by resolution adopted by the Board of Directors of the one
of them giving such notice. Upon termination by written
notice as provided in this Section 13, this Agreement shall
be void and of no further effect, and there shall be no
liability by reason of this Agreement or the termination
thereof on the part of the Bank, the New Bank, Holding
Company or the directors, officers, employees, agents or
stockholders, or any of them.
SECTION 14
Subject to the terms of and upon satisfaction of all
requirements of law and the conditions specified in this
Agreement, including, among other conditions, receipt of the
approval of the Comptroller of the Currency specified in the Act
of Congress referred to in Section l of this Agreement, the
merger shall become effective at the time specified in the
certificate to be issued by the Comptroller of the Currency
under the seal of his office approving the merger.
A-1-5<PAGE>
WITNESS, the signature and seals of said merging banks this
____ day of _________, 1999, each hereunto set by its President
and attested by its Cashier, pursuant to a resolution of its
Board of Directors, acting by a majority thereof, and witness
the signatures hereto of a majority of each of said Boards of
Directors:
ATTEST: KENTUCKY NATIONAL BANK
(SEAL)
By: _______________________ By: ___________________________
Cashier Ronald J. Pence, President
ATTEST: KENTUCKY NATIONAL INTERIM BANK
(SEAL)
By: _______________________ By: ____________________________
Cashier Ronald J. Pence, President
* * * * *
Kentucky National Bancorp, Inc. hereby joins in and assents
to the foregoing Agreement, undertakes that it will be bound
thereby and that it will do and perform all acts and things
therein referred to or provided to be done by it.
IN WITNESS WHEREOF, Kentucky National Bancorp, Inc. has
caused this undertaking to be executed by its duly authorized
officer and its corporate seal to be hereunto affixed this ___
day of __________, 1999.
KENTUCKY NATIONAL BANCORP, INC.
By: __________________________
Ronald J. Pence, President
A-1-6<PAGE>
<PAGE>
Exhibit B
ARTICLES OF INCORPORATION
OF
KENTUCKY NATIONAL BANCORP, INC.
ARTICLE I
NAME
The name of the corporation is Kentucky National Bancorp,
Inc. (the "Corporation") and the address of the initial
principal office of the Corporation is 1000 North Dixie Avenue,
Elizabethtown, Kentucky 42701.
ARTICLE II
REGISTERED OFFICE
The address of the Corporation's registered office is One
North Capitol Avenue, in the City of Indianapolis, in the County
of Marion, in the State of Indiana. The name of the
Corporation's registered agent at the registered office is CT
Corporation System.
ARTICLE III
POWERS
The purpose for which the Corporation is organized is to
act as a bank holding company and to transact all other lawful
business for which corporations may be incorporated pursuant to
the laws of Indiana. The Corporation shall have all the powers
of a corporation organized under said laws.
ARTICLE IV
TERM
The Corporation is to have perpetual existence.
ARTICLE V
INCORPORATOR
The name and street address of the incorporator are as
follows:
NAME STREET ADDRESS
---- --------------
Ronald J. Pence 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
B-1
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<PAGE>
ARTICLE VI
INITIAL DIRECTORS
The number of directors constituting the initial board of
directors of the Corporation is nine, and the names and
addresses of the persons who are to serve as directors until
their successors are elected and qualified are:
NAME STREET ADDRESS
---- --------------
Dr. Robert Earl Robbins 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
Lawrence P. Calvert 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
Ronald J. Pence 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
Leonard Allen McNutt 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
Lois Watkins Gray 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
Kevin D. Addington 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
William R. Hawkins 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
Dr. Christopher G. Knight 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
Henry Lee Chitwood 1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
ARTICLE VII
CAPITAL STOCK
The aggregate number of shares of all classes of capital
stock that the Corporation has authority to issue is 6,000,000,
of which 5,000,000 are to be shares of common stock, $.01 par
value per share, and of which 1,000,000 are to be shares of
serial preferred stock, $.01 par value per share. The shares
may be issued by the Corporation from time to time as approved
by the board of directors of the Corporation without the
approval of the shareholders, except as otherwise provided in
this Article VII. The consideration for the issuance of the
shares shall be paid to or received by the Corporation in full
before their issuance and shall not be less than the par value
per share. The board of directors may authorize shares to be
issued for consideration consisting of any tangible or
intangible property or benefit to the Corporation, including
cash, promissory notes, services performed, contracts for
services to be performed, or other securities of the
Corporation. In the absence of actual fraud in the transaction,
the judgment of the board of directors as to the adequacy of
such consideration shall be conclusive. Upon payment of such
consideration such shares shall be deemed to be fully paid and
nonassessable. In the case of a stock dividend, the part of the
surplus of the Corporation which is transferred to stated
capital upon the issuance of shares as a stock dividend shall be
deemed to be the consideration for their issuance.
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A description of the different classes and series (if any)
of the Corporation's capital stock, and a statement of the
relative powers, designations, preferences and rights of the
shares of each class and series (if any) of capital stock and
the qualifications, limitations or restrictions thereof, are as
follows:
A. COMMON STOCK. Except as otherwise provided in these
Articles of Incorporation or by Indiana law, the holders of the
common stock shall exclusively possess all voting power. Each
holder of shares of common stock shall be entitled to one vote
for each share held by such holder.
Whenever there shall have been paid, or declared and set
aside for payment, to the holders of the outstanding shares of
any class of stock having preference over the common stock as to
the payment of dividends, the full amount of dividends and
sinking fund or retirement fund or other retirement payments, if
any, to which such holders are respectively entitled in
preference to the common stock, then dividends may be paid on
the common stock, and on any class or series of stock entitled
to participate therewith as to dividends, out of any assets
legally available for the payment of dividends, but only when
and as declared by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up
of the Corporation, after there shall have been paid, or
declared and set aside for payment, to the holders of the
outstanding shares of any class having preference over the
common stock in any such event, the full preferential amounts to
which they are respectively entitled, the holders of the common
stock and of any class or series of stock entitled to
participate therewith, in whole or in part, as to distribution
of assets shall be entitled, after payment or provision for
payment of all debts and liabilities of the Corporation, to
receive the remaining assets of the Corporation available for
distribution, in cash or in kind.
Each share of common stock shall have the same relative
powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of common stock of the
Corporation.
B. SERIAL PREFERRED STOCK. Except as otherwise provided in
these Articles of Incorporation, the board of directors of the
Corporation is further authorized, by resolution or resolutions
from time to time adopted without shareholder action and by
filing articles of amendment with the Secretary of State of
Indiana, to provide for the issuance of serial preferred stock
in series and to fix and state the powers, designations,
preferences and relative, participating, optional or other
special rights of the shares of each such series, and the
qualifications, limitations or restrictions thereof, including,
but not limited to determination of any of the following:
1. the distinctive serial designation and the number of
shares constituting such series; and
2. the dividend rates or the amount of dividends to be paid
on the shares of such series, whether dividends shall be
cumulative and, if so, from which date or dates, the payment
date or dates for dividends, and the participating or other
special rights, if any, with respect to dividends; and
3. the voting powers, full or limited, if any, of the
shares of such series; and
4. whether the shares of such series shall be redeemable
and, if so, the price or prices at which, and the terms and
conditions upon which such shares may be redeemed; and
5. the amount or amounts payable upon the shares of such
series in the event of voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; and
6. whether the shares of such series shall be entitled to
the benefits of a sinking or retirement fund to be applied to
the purchase or redemption of such shares, and, if so entitled,
the amount of such fund and the manner of its application,
including the price or prices at which such shares may be
redeemed or purchased through the application of such funds; and
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7. whether the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes
or any other series of the same or any other class or classes of
stock of the Corporation and, if so convertible or exchangeable,
the conversion price or prices, or the rate or rates of
exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange; and
8. the subscription or purchase price and form of
consideration for which the shares of such series shall be
issued; and
9. whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued
shares of serial preferred stock and whether such shares may be
reissued as shares of the same or any other series of serial
preferred stock.
Each share of each series of serial preferred stock shall
have the same relative powers, preferences and rights as, and
shall be identical in all respects with, all the other shares of
the Corporation of the same series.
ARTICLE VIII
PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of
stock or of options, warrants or other rights to purchase shares
of any class or series of stock or of other securities of the
Corporation shall have any preemptive right to purchase or
subscribe for any unissued stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or
other securities convertible into or exchangeable for stock of
any class or series or carrying any right to purchase stock of
any class or series; but any such unissued stock, bonds,
certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock or carrying any right
to purchase stock may be issued pursuant to resolution of the
board of directors of the Corporation to such persons, firms,
corporations or associations, whether or not holders thereof,
and upon such terms as may be deemed advisable by the board of
directors in the exercise of its sole discretion.
ARTICLE IX
REPURCHASE OF SHARES
The Corporation may from time to time, pursuant to
authorization by the board of directors of the Corporation and
without action by the shareholders, purchase or otherwise
acquire shares of any class, bonds, debentures, notes, scrip,
warrants, obligations, evidences of indebtedness, or other
securities of the Corporation in such manner, upon such terms,
and in such amounts as the board of directors shall determine;
subject, however, to such limitations or restrictions, if any,
as are contained in the express terms of any class of shares of
the Corporation outstanding at the time of the purchase or
acquisition in question or as are imposed by law or regulation.
Any shares of capital stock so acquired may either be held in
treasury or treated as authorized but unissued shares as
determined by the board of directors.
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ARTICLE X
MEETINGS OF SHAREHOLDERS; NO CUMULATIVE VOTING
A. Except as otherwise required by law, notwithstanding any
other provision of these Articles of Incorporation or the Bylaws
of the Corporation, no action required to be taken or which may
be taken at any annual or special meeting of the shareholders of
the Corporation may be taken without a meeting, except any
action required or permitted to be taken at a shareholders'
meeting may be taken without a meeting if the action is taken by
all the shareholders entitled to vote on the action and the
action is evidenced by one or more written consents describing
the action taken, signed by all the shareholders entitled to
vote on the action and delivered to the Corporation.
B. Special meetings of the shareholders of the Corporation
for any purpose or purposes may be called at any time by the
board of directors of the Corporation, by a committee of the
board of directors which has been duly designated by the board
of directors and whose powers and authorities, as provided in a
resolution of the board of directors or in the Bylaws of the
Corporation, include the power and authority to call such
meetings, by the chairman of the board of directors or by the
President of the Corporation, but such special meetings may not
be called by any other person or persons, except as otherwise
provided in the Bylaws of the Corporation or required by law.
C. Meetings of shareholders may be held within or without
the State of Indiana, as the Bylaws may provide.
D. There shall be no cumulative voting by shareholders of
any class or series in the election of directors of the
Corporation.
ARTICLE XI
NOTICE FOR NOMINATIONS AND PROPOSALS
A. Nominations for the election of directors and proposals
for any new business to be taken up at any annual meeting of
shareholders may be made by the board of directors of the
Corporation or by any shareholder of the Corporation entitled to
vote generally in the election of directors. In order for a
shareholder of the Corporation to make any such nominations or
proposals, he or she shall give notice thereof in writing,
delivered or mailed by first class United States mail, postage
prepaid, to the Secretary of the Corporation not less than
thirty days nor more than sixty days prior to any such meeting;
provided, however, that if less than thirty-one days' notice of
the meeting is given to shareholders, such written notice shall
be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the tenth day following
the day on which notice of the meeting was mailed to
shareholders. Each such notice given by a shareholder with
respect to nominations for the election of directors shall set
forth (i) the name, age, business address and, if known,
residence address of each nominee proposed in such notice, (ii)
the principal occupation or employment of each such nominee,
(iii) the number of shares of stock of the Corporation which are
beneficially owned by each such nominee, (iv) such other
information as would be required to be included in a proxy
statement soliciting proxies for the election of the proposed
nominee pursuant to Regulation 14A of the Securities Exchange
Act of 1934, as amended, and (v) as to the shareholder giving
such notice (A) his name and address as they appear on the
Corporation's books, and (B) the class and number of shares of
the Corporation which are beneficially owned by such
shareholder. In addition, the shareholder making such
nomination shall promptly provide any other information
reasonably requested by the Corporation.
B. Each such notice given by a shareholder to the Secretary
with respect to business proposals to bring before a meeting
shall set forth in writing as to each matter: (i) a brief
description of the business desired to be brought before the
meeting and the reasons for conducting such business at the
meeting; (ii) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such business;
(iii) the class and number of shares of the Corporation which
are beneficially owned by the shareholder; and (iv) any material
interest of the shareholder in such
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business. Notwithstanding anything in these Articles of
Incorporation to the contrary, no business submitted by
shareholders shall be conducted at the meeting except in
accordance with the procedures set forth in this Article XI.
C. The Chairman of the annual meeting of shareholders may,
if the facts warrant, determine and declare to such meeting that
a nomination or proposal was not made in accordance with the
foregoing procedure, and, if he should so determine, he shall so
declare to the meeting and the defective nomination or proposal
shall be disregarded.
ARTICLE XII
DIRECTORS
A. NUMBER; VACANCIES. The number of directors of the
Corporation shall be such number, not less than 7 nor more than
15 (exclusive of directors, if any, to be elected by holders of
preferred stock of the Corporation, voting separately as a
class), as shall be provided from time to time in or in
accordance with the Bylaws, provided that no decrease in the
number of directors shall have the effect of shortening the term
of any incumbent director, and provided further that no action
shall be taken to decrease or increase the number of directors
from time to time unless at least two-thirds of the directors
then in office shall concur in said action. Vacancies in the
board of directors of the Corporation, however caused, and newly
created directorships shall be filled by a vote of a majority of
the directors then in office, whether or not a quorum, and any
director so chosen shall hold office for a term expiring at the
annual meeting of shareholders at which the term of the group to
which the director has been chosen expires and when the
director's successor is elected and qualified. Directors
need not be residents of any particular state, country or other
jurisdiction.
B. STAGGERED BOARD. The board of directors of the
Corporation shall be divided into three groups of directors
which shall be designated Group I, Group II and Group III. The
members of each group shall be elected for a term of three years
and until their successors are elected and qualified. Such
groups shall be as nearly equal in number as the then total
number of directors constituting the entire board of directors
shall permit, with the terms of office of all members of one
group expiring each year. Should the number of directors not be
equally divisible by three, the excess director or directors
shall be assigned to Group I or II as follows: (i) if there
shall be an excess of one directorship over a number equally
divisible by three, such extra directorship shall be placed in
Group I; and (ii) if there be an excess of two directorships
over a number equally divisible by three, one shall be placed in
Group I and the other in Group II. At the first meeting of
shareholders at which directors are elected, directors of Group
I shall be elected to hold office for a term expiring at the
first succeeding annual meeting thereafter; directors of Group
II shall be elected to hold office for a term expiring at the
second succeeding annual meeting thereafter; and directors of
Group III shall be elected to hold office for a term expiring at
the third succeeding annual meeting thereafter. Thereafter, at
each succeeding annual meeting, directors of each group shall be
elected for three year terms. Notwithstanding the foregoing,
the director whose term shall expire at any annual meeting shall
continue to serve until such time as his successor shall have
been duly elected and shall have qualified unless his position
on the board of directors shall have been abolished by action
taken to reduce the size of the board of directors prior to said
meeting.
Should the number of directors of the Corporation be
reduced, the directorship(s) eliminated shall be allocated among
groups as appropriate so that the number of directors in each
group is as specified in the immediately preceding paragraph.
The board of directors shall designate, by the name of the
incumbent(s), the position(s) to be abolished. Notwithstanding
the foregoing, no decrease in the number of directors shall have
the effect of shortening the term of any incumbent director.
Should the number of directors of the Corporation be increased,
the additional directorships shall be allocated among groups as
appropriate so that the number of directors in each group is as
specified in the immediately preceding paragraph.
Whenever the holders of any one or more series of preferred
stock of the Corporation shall have the right, voting separately
as a class, to elect one or more directors of the Corporation,
the board of directors shall consist of ]said directors so
elected in addition to the number of directors fixed as provided
above in this Article XII. Notwithstanding
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the foregoing, and except as otherwise may be required by law,
whenever the holders of any one or more series of preferred
stock of the Corporation shall have the right, voting separately
as a class, to elect one or more directors of the Corporation,
the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of
shareholders.
ARTICLE XIII
REMOVAL OF DIRECTORS
Notwithstanding any other provision of these Articles of
Incorporation or the Bylaws of the Corporation, any director or
directors or the entire board of directors of the Corporation
may be removed only for cause and only by the affirmative vote
of the holders of at least eighty percent (80%) of the shares of
capital stock outstanding and eligible to vote in election of
directors. Notwithstanding the foregoing, whenever the holders
of any one or more series of preferred stock of the Corporation
shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the preceding provisions
of this Article XIII shall not apply with respect to the
director or directors elected by such holders of preferred stock
and such director or directors may only be removed for cause by
the affirmative vote of the holders of two-thirds of such
series, voting separately as a class.
ARTICLE XIV
RESTRICTIONS ON VOTING RIGHTS OF CERTAIN HOLDERS
(A) RESTRICTION ON VOTING RIGHTS OF CERTAIN HOLDERS. If,
at any time, any person shall acquire the beneficial ownership
of more than ten percent (10%) of any class of equity security
of the Corporation without the prior approval by a two-thirds
vote of the Continuing Directors, as defined in Article XV of
these Articles of Incorporation, then the record holders of
voting stock of the Corporation beneficially owned by such
acquiring person shall have only the voting rights set forth in
this Section (A) on any matter requiring their vote or consent.
With respect to each vote in excess of 10% of the voting power
of the outstanding shares of voting stock of the Corporation
which such record holders would otherwise be entitled to cast
without giving effect to this Section (A), such record holders
in the aggregate shall be entitled to cast only one-hundredth
(1/100th) of a vote, and the aggregate voting power of such
record holders, so limited for all shares of voting stock of the
Corporation beneficially owned by such acquiring person, shall
be allocated proportionately among such record holders. For
each such record holder, this allocation shall be accomplished
by multiplying the aggregate voting power, as so limited, of the
outstanding shares of voting stock of the Corporation
beneficially owned by such acquiring person by a fraction whose
numerator is the number of votes represented by the shares of
voting stock of the Corporation owned of record by such record
holder (and which are beneficially owned by such acquiring
person) and whose denominator is the total number of votes
represented by the shares of voting stock of the Corporation
that are beneficially owned by such acquiring person. A person
who is a record owner of shares of voting stock of the
Corporation that are beneficially owned simultaneously by more
than one person shall have, with respect to such shares, the
right to cast the least number of votes that such person would
be entitled to cast under this Section (A) by virtue of such
shares being so beneficially owned by any of such acquiring
persons.
(B) DEFINITIONS. The term "person" means an individual,
a group acting in concert, a corporation, a partnership, an
association, a joint stock company, a trust, an unincorporated
organization or similar company, a syndicate or any other group
acting in concert formed for the purpose of acquiring, holding
or disposing of securities of the Corporation. The term
"acquire" includes every type of acquisition, whether effected
by purchase, exchange, operation of law or otherwise. The term
"offer" includes every offer to buy or otherwise acquire,
solicitation of an offer to sell, tender offer for or request
for invitation for tenders of, a security or interest in a
security for value. The term "acting in concert" includes: (1)
knowing participation in a joint activity or conscious parallel
action towards a common goal whether or not pursuant to an
express agreement; and (2) a combination or pooling of voting or
other interests in
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the Corporation's outstanding shares for a common purpose
pursuant to any contract, understanding, relationship, agreement
or other arrangement, whether written or otherwise. The term
"beneficial ownership" shall have the meaning defined in Rule
13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934.
(C) EXCLUSION FOR UNDERWRITERS, EMPLOYEE BENEFIT PLANS AND
CERTAIN PROXIES. The restrictions contained in this Article XIV
shall not apply to: (1) any underwriter or member of an
underwriting or selling group involving a public sale or resale
of securities of the Corporation or a subsidiary thereof;
provided, however, that upon completion of the sale or resale of
such securities, no such underwriter or member of such selling
group is a beneficial owner of more than ten percent (10%) of
any class of equity security of the Corporation; (2) any proxy
granted to one or more Continuing Directors, as defined in
Article XV of these Articles of Incorporation, by a shareholder
of the Corporation; or (3) any employee benefit plans of the
Corporation or a subsidiary thereof. In addition, the
Continuing Directors, as defined in Article XV of these Articles
of Incorporation, the officers and employees of the Corporation
and its subsidiaries, the directors of subsidiaries of the
Corporation, the employee benefit plans of the Corporation and
its subsidiaries, entities organized or established by the
Corporation or any subsidiary thereof pursuant to the terms of
such plans and trustees and fiduciaries with respect to such
plans acting in such capacity shall not be deemed to be a group
with respect to their beneficial ownership of voting stock of
the Corporation solely by virtue of their being directors,
officers or employees of the Corporation or a subsidiary thereof
or by virtue of the Continuing Directors, as defined in Article
XV of these Articles of Incorporation, the officers and
employees of the Corporation and its subsidiaries and the
directors of subsidiaries of the Corporation being fiduciaries
or beneficiaries of an employee benefit plan of the Corporation
or a subsidiary of the Corporation. Notwithstanding the
foregoing, no director, officer or employee of the Corporation
or any of its subsidiaries, or group of any of them, shall be
exempt from the provisions of this Article XIV should any such
person or group become a beneficial owner of more than ten
percent (10%) of any class of equity security of the
Corporation.
(D) DETERMINATIONS. A majority of the Continuing
Directors, as defined in Article XV of these Articles of
Incorporation, shall have the power to construe and apply the
provisions of this Article XIV and to make all determinations
necessary or desirable to implement such provisions, including
but not limited to matters with respect to: (1) the number of
shares beneficially owned by any person; (2) whether a person
has an agreement, arrangement or understanding with another as
to the matters referred to in the definition of beneficial
ownership; (3) the application of any other definition or
operative provision of this Article XIV to the given facts; or
(4) any other matter relating to the applicability or effect of
this Article XIV. Any constructions, applications or
determinations made by the Continuing Directors, as defined in
Article XV of these Articles of Incorporation, pursuant to this
Article XIV in good faith and on the basis of such information
and assistance as was then reasonably available for such purpose
shall be conclusive and binding upon the Corporation and its
shareholders.
ARTICLE XV
APPROVAL OF CERTAIN BUSINESS COMBINATIONS
The shareholder vote required to approve Business
Combinations (as hereinafter defined) shall be as set forth in
this Article XV.
A. (1) Except as otherwise expressly provided in this
Article XV, the affirmative vote of the holders of (i) at least
eighty percent (80%) of the outstanding shares entitled to vote
thereon (and, if any class or series of shares is entitled to
vote thereon separately, the affirmative vote of the holders of
at least eighty percent of the outstanding shares of each such
class or series), and (ii) at least a majority of the
outstanding shares entitled to vote thereon, not including
shares deemed beneficially owned by a Related Person (as
hereinafter defined), shall be required in order to authorize
any of the following:
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(a) any merger or consolidation of the
Corporation with or into a Related Person (as hereinafter
defined);
(b) any sale, lease, exchange, transfer or other
disposition, including without limitation, a mortgage, or any
other security device, of all or any Substantial Part (as
hereinafter defined) of the assets of the Corporation (including
without limitation any voting securities of a subsidiary) or of
a subsidiary, to a Related Person;
(c) any merger or consolidation of a Related
Person with or into the Corporation or a subsidiary of the
Corporation;
(d) any sale, lease, exchange, transfer or other
disposition of all or any Substantial Part of the assets of a
Related Person to the Corporation or a subsidiary of the
Corporation;
(e) the issuance of any securities of the
Corporation or a subsidiary of the Corporation to a Related
Person;
(f) the acquisition by the Corporation or a
subsidiary of the Corporation of any securities of a Related
Person;
(g) any reclassification of the common stock of
the Corporation, or any recapitalization involving the common
stock of the Corporation; and
(h) any agreement, contract or other arrangement
providing for any of the transactions described in this Article
XV.
(2) Such affirmative vote shall be required
notwithstanding any other provision of these Articles of
Incorporation, any provision of law or any agreement with any
regulatory agency or national securities exchange which might
otherwise permit a lesser vote or no vote.
(3) The term "Business Combination" as used in this
Article XIV shall mean any transaction which is referred to in
any one or more of clauses (a) through (h).
B. The provisions of paragraph A shall not be applicable
to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is
required by any other provision of these Articles of
Incorporation, any provision of law or any agreement with any
regulatory agency or national securities exchange, if the
Business Combination shall have been approved by a majority of
the Continuing Directors (as hereinafter defined); provided,
however, that such approval shall only be effective if obtained
at a meeting at which a Continuing Director Quorum (as
hereinafter defined) is present.
C. For the purposes of this Article XV the following
definitions apply:
(1) The term "Related Person" shall mean and include
(a) any individual, corporation, partnership or other person or
entity which together with its "affiliates" (as that term is
defined in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934), "beneficially owns" (as
that term is defined in Rule 13d-3 of the General Rules and
Regulations under the Securities Act of 1934) in the aggregate
ten percent (10%) or more of the outstanding shares of the
common stock of the Corporation; and (b) any "affiliate" (as
that term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of any such individual, corporation, partnership or
other person or entity. Without limitation, any shares of the
common stock of the Corporation which any Related Person has the
right to acquire pursuant to any agreement, upon exercise of
conversion rights, warrants or options or otherwise, shall be
deemed "beneficially owned" by such Related Person.
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(2) The term "Substantial Part" shall mean more than
twenty-five (25%) percent of the total assets of the
Corporation, as of the end of its most recent fiscal year ending
prior to the time the determination is made.
(3) The term "Continuing Director" shall mean any
member of the Board of Directors of the Corporation who is
unaffiliated with the Related Party and was a member of the
Board prior to the time that the Related Party became a Related
Party, and any successor of a Continuing Director who is
unaffiliated with the Related Party and is recommended to
succeed a Continuing Director by a majority of Continuing
Directors then on the Board.
(4) The term "Continuing Director Quorum" shall mean
two-thirds of the Continuing Directors capable of exercising the
powers conferred on them.
ARTICLE XVI
EVALUATION OF BUSINESS COMBINATIONS
In connection with the exercise of its judgment in
determining what is in the best interests of the Corporation and
of the shareholders, when evaluating a Business Combination (as
defined in Article XV of these Articles of Incorporation) or a
tender or exchange offer, the board of directors of the
Corporation shall, in addition to considering the adequacy of
the amount to be paid in connection with any such transaction,
consider all of the following factors and any other factors
which it deems relevant: (i) the social and economic effects of
the transaction on the Corporation and its subsidiaries,
employees, depositors, loan and other customers, creditors and
other elements of the communities in which the Corporation and
its subsidiaries operate or are located; (ii) the business and
financial condition and earnings prospects of the acquiring
person or entity, including, but not limited to, debt service
and other existing financial obligations, financial obligations
to be incurred in connection with the acquisition and other
likely financial obligations of the acquiring person or entity
and the possible effect of such conditions upon the Corporation
and its subsidiaries and the other elements of the communities
in which the Corporation and its subsidiaries operate or are
located; and (iii) the competence, experience and integrity
of the acquiring person, entity or group and its management.
ARTICLE XVII
LIMITED LIABILITY OF DIRECTORS
No director of the Corporation shall be subject to liability
for any action taken as a director, or any failure to take any
action as a director, unless both (i) the director has breached
or failed to perform the duties of the director's office in
compliance with applicable law, and (ii) the breach or failure
to perform constitutes willful misconduct or recklessness under
applicable law.
If the Indiana Business Corporation Law or other applicable
law is amended after the effective date of these Articles of
Incorporation to permit further limitation or elimination of the
liability of directors, then the liability of every director of
the Corporation shall be eliminated or limited to the fullest
extent permitted under the Indiana Business Corporation Law or
other applicable law as amended.
Any repeal or modification of the foregoing paragraphs by
the shareholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
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ARTICLE XVIII
INDEMNIFICATION
A. PERSONS ENTITLED TO INDEMNIFICATION. The Corporation
shall indemnify, to the extent provided in paragraph B of this
Article XVIII:
1. any person who is or was a director, officer, employee
or agent of the Corporation; and
2. any person who, while a director, officer, employee or
agent of the Corporation, serves or has served at the
Corporation's request as a director, officer, employee,
partner, manager, member or trustee of another
corporation, limited liability corporation, partnership,
joint venture, trust, employee benefit plan or other
enterprise.
For purposes of clause A.2, a person shall be considered to
be serving an employee benefit plan at the Corporation's request
if the person's duties to the Corporation also impose duties on,
or otherwise involve services by, the person to the plan or to
participants in or beneficiaries of the plan.
B. EXTENT. In case of a threatened, pending or completed
suit, action or proceeding (whether civil, criminal,
administrative or investigative and whether formal or informal
(hereinafter a "Proceeding") against a person described in
paragraph A by reason of his holding a position described in
paragraph A, the Corporation shall indemnify him if he satisfies
the standard in paragraph C, for amounts actually and reasonably
incurred by him in connection with the defense or settlement of
the Proceeding, including, but not limited to (i) reasonable
expenses (including attorneys' fees), (ii) amounts paid in
settlement, (iii) judgments, (iv) penalties, and (v) fines
(including any excise tax assessed with respect to an employee
benefit plan).
C. STANDARD. A person described in paragraph A shall be
indemnified if:
1. he is wholly successful, on the merits or otherwise,
in the defense of the Proceeding; or
2. (i) his conduct in the transaction which is the subject
of the Proceeding was in good faith; and
(ii) he reasonably believed that:
a. in the case of conduct in his official capacity
as a director, officer or employee of the Corporation,
his conduct was in the Corporation's best interests,
which shall include any and all actions taken in
connection with the Corporation's response to a tender
offer or other offer or proposal of another party to
engage in a Business Combination (as defined in
Article XV of these Articles of Incorporation) not
approved by the Continuing Directors (as defined
in Article XV of these Articles of Incorporation);
b. in the case of conduct with respect to an
employee benefit plan, his conduct was in the
interests of the participants in and beneficiaries of
the plan; and
c. in all other cases, his conduct was at least
not opposed to the best interests of the Corporation;
and
(iii) in the case of a criminal proceeding, he either
had (a) reasonable cause to believe that his conduct
was lawful, or (b) no reasonable cause to believe
that his conduct was unlawful.
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The termination of a Proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo
contendere or its equivalent shall not, in itself,
create a presumption that the person failed to satisfy
the standard of this subparagraph C.2.
D. DETERMINATION THAT STANDARD HAS BEEN MET. A
determination that the standard of subparagraph C.2 has been
satisfied may be made by:
1. the board of directors by a majority vote of a
quorum consisting of directors of the Corporation not at
the time parties to the Proceeding ("disinterested
directors"); or
2. if a quorum consisting of disinterested directors cannot be
obtained, by a majority vote of a committee duly designated
by the board of directors (in which designation directors
who are parties to the Proceeding may participate)
consisting solely of two or more disinterested directors;
or
3. special legal counsel (selected by the board of directors
or its committee in the manner prescribed in clauses D.1 or
D.2 or, if a quorum of disinterested directors cannot be
obtained, or a committee of disinterested directors cannot
be appointed in accordance with clause D.2, then selected
by a majority vote of the full board of directors (in which
selection directors who are parties to the Preceeding may
participate)); or
4. the shareholders of the Corporation, providedthat shares
owned by or voted under the control of directors
who are, at the time, parties to the Proceeding may not be
voted on the determination.
E. PRORATION. Anyone making a determination under
paragraph D may determine that a person has met the standard as
to some matters but not as to others, and may reasonably prorate
amounts to be indemnified.
F. ADVANCE PAYMENT. The Corporation may pay for or
reimburse the reasonable expenses incurred by a person described
in paragraph A who is a party to a Proceeding in advance of
final disposition of the Proceeding if:
1. the person furnishes the Corporation a written
affirmation of their good faith belief that they have met
the standard of conduct described in subparagraph C.2;
2. the person furnishes the Corporation a written
undertaking, executed personally or on their behalf, to
repay the advance if it is ultimately determined that the
person did not met the standard of conduct described in
subparagraph C.2; and
3. a determination is made that the facts then known
to those making the determination would not preclude
indemnification under this Article XVIII.
The undertaking required by clause F.2 shall be an unlimited
general obligation of the director but need not be secured and
may be accepted without reference to financial ability to make
repayment. Determinations and authorization of payments under
this paragraph F shall be made in the manner specified in
paragraph D of this Article XVIII.
G. NONEXCLUSIVE. The indemnification and advancement of
expenses provided by paragraphs A-F or otherwise granted
pursuant to Indiana law shall not be exclusive of any other
rights to indemnification to which a person may be entitled by
law, bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise.
H. CONTINUATION. The indemnification provided by this
Article XVIII shall be deemed to be a contract between the
Corporation and the persons entitled to indemnification
thereunder, and any repeal or modification of this Article XVIII
shall not affect any rights or obligations then existing with
respect to any state of facts then or theretofore existing or
any Proceeding theretofore or thereafter brought based in whole
or in part upon any such state of facts. The
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indemnification and advance payment provided by paragraphs A
through F shall continue as to a person who has ceased to hold a
position named in paragraph A and shall inure to his heirs,
executors and administrators.
I. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who holds or who has held any
position named in paragraph A, against any liability incurred by
him in any such position, or arising out of his status as such,
whether or not the Corporation would have power to indemnify him
against such liability under paragraphs A-I of this Article
XVIII.
J. JUDICIAL DETERMINATION. Any person described in
paragraph A who is a party to a Proceeding may apply for
indemnification to the court conducting the Proceeding or to
another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court
considers necessary, may order indemnification if it determines:
1. the person is entitled to indemnification under
subparagraph C.1, in which case the court shall also order
the Corporation to pay the person's reasonable expenses
incurred to obtain court-ordered indemnification; or
2. the person is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances,
whether or not the person met the standard of conduct set
forth in subparagraph C.2.
K. Savings Clause. If this Article XVIII or any portion
hereof shall be invalidated on any ground by any court of
competent jurisdiction, then the Corporation shall nevertheless
indemnify each director, officer, employee, and agent of the
Corporation as to costs, charges, and expenses (including
attorneys' fees), judgments, fines, and amounts paid in
settlement with respect to any action, suit, or proceeding,
whether civil, criminal, administrative, or investigative,
including an action by or in the right of the Corporation to the
full extent permitted by any applicable portion of this Article
XVIII that shall not have been invalidated and to the full
extent permitted by applicable law.
ARTICLE XIX
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred
by statute, the board of directors of the Corporation is
expressly authorized to make, repeal, alter, amend and rescind
the Bylaws of the Corporation. Notwithstanding any other
provision of these Articles of Incorporation or the Bylaws of
the Corporation, the Bylaws shall not be made, repealed,
altered, amended or rescinded by the shareholders of the
Corporation.
ARTICLE XX
AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation reserves the right to repeal, alter, amend
or rescind any provision contained in these Articles of
Incorporation in the manner now or hereafter prescribed by law,
and all rights conferred on shareholders herein are granted
subject to this reservation. Notwithstanding the foregoing,
unless a majority of the Company's Continuing Directors
approves their repeal, amendment, alteration, or rescission, in
which case only the affirmative vote of the holders of a
majority of the outstanding shares of capital stock of the
Corporation entitled to vote in the election of directors is
required, the provisions set forth in Articles X, XI, XII, XIII,
XIV, XV, XVI, XVII, XVIII, XIX and this Article XX of these
Articles of Incorporation may not be repealed, altered, amended
or rescinded in any respect unless the same is approved by the
affirmative vote of the holders of not less than eighty percent
(80%) of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors (considered for this purpose as a single class) cast
at a meeting of the shareholders called for that purpose
(provided that notice of such proposed adoption, repeal,
alteration, amendment or rescission is included in the notice of
such meeting).
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THE UNDERSIGNED, being the incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the
Business Corporation Law of Indiana, does make these Articles of
Incorporation, hereby declaring and certifying that this is my
act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 4th day of February,
1999.
/s/ Ronald J.Pence
--------------------------
Incorporator
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EXHIBIT C
BYLAWS
OF
KENTUCKY NATIONAL BANCORP, INC.
ARTICLE I - Principal Office
The principal office of Kentucky National Bancorp, Inc. (the
"Corporation") shall be located at 1000 North Dixie Avenue in
the City of Elizabethtown, in the County of Hardin, in the
Commonwealth of Kentucky.
ARTICLE II - Shareholders
SECTION 1. PLACE OF MEETINGS. All annual and special
meetings of shareholders shall be held at the home office of the
Corporation or at such other place within or without the
Commonwealth of Kentucky as the board of directors may
determine.
SECTION 2. ANNUAL MEETING. A meeting of the shareholders
of the Corporation for the election of directors and for the
transaction of any other business of the Corporation shall be
held annually after each fiscal year at such date and time as
the board of directors may determine.
SECTION 3. SPECIAL MEETINGS. Special meetings of the
shareholders of the Corporation for any purpose or purposes may
be called at any time by the board of directors of the
Corporation, by a committee of the board of directors which has
been duly designated by the board of directors and whose powers
and authorities, as provided in a resolution of the board of
directors, include the power and authority to call such meeting,
by the chairman of the board of directors or by the president of
the Corporation, but such special meetings shall not be called
by any other person or persons, except as otherwise required by
law.
SECTION 4. CONDUCT OF MEETINGS. Annual and special
meetings shall be conducted in accordance with rules and
procedures adopted by the board of directors. The board of
directors shall designate, when present, either the chairman of
the board or the president to preside at such meetings.
SECTION 5. NOTICE OF MEETINGS. Written notice stating the
place, day and hour of the meeting and the purpose or purposes
for which the meeting is called shall be delivered neither fewer
than ten (10) nor more than sixty (60) days before the date of
the meeting, either personally or by mail, by or at the
direction of the chairman of the board, the president, the
secretary or the directors calling the meeting, to each
shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when
deposited in the mail, addressed to the shareholder at
the address as it appears on the stock transfer books or records
of the Corporation as of the record date prescribed in Section 6
of this Article II, with postage prepaid. If a shareholder
attends a meeting without objecting either at the beginning of
the meeting to holding the meeting or transacting business at
the meeting or upon presentation of a particular matter for
consideration at the meeting, or if a shareholder in writing
waives notice of the meeting or of a particular matter
either before or after the meeting, then notice of the meeting
or the matter to the shareholder shall be unnecessary. When any
meeting of shareholders, either annual or special, is adjourned
for thirty (30) days or more, notice of the adjourned meeting
shall be given as in the case of an original meeting. It shall
not be necessary to give any notice of the time and place of any
meeting adjourned for less than thirty (30) days or of the
business to be transacted at that meeting, other than an
announcement at the meeting at which such adjournment is taken.
SECTION 6. FIXING OF RECORD DATE. For the purpose of
determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or
shareholders entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other
proper purpose, the board of directors shall fix in advance a
date as the record date for any such determination of
shareholders. Such date in any case shall be not more
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than seventy (70) days prior to the date on which the particular
action, requiring such determination of shareholders, is to
be taken. When a determination of shareholders entitled to vote
at any meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment not
more than one-hundred-twenty (120) days after the date fixed for
the original meeting. The board of directors shall fix a new
record date for any adjournment more than one hundred twenty
days after the date fixed for the original meeting.
SECTION 7. VOTING LISTS. At least five (5) days before
each meeting of the shareholders, the officer or agent having
charge of the stock transfer books for the Corporation shall
make a complete list of the shareholders entitled to vote at
such meeting or any adjournment, arranged in alphabetical order,
with the address and the number of shares of stock held by each.
The list of shareholders shall be kept on file at the home
office of the Corporation and shall be subject to inspection by
any shareholder at any time during usual business hours for a
period of at least five (5) days prior to such meeting. Such
list shall also be produced and kept open at the time and place
of the meeting and shall be subject to inspection by any
shareholder for any proper purpose during the entire time of the
meeting. The original stock transfer books shall constitute
prima facie evidence of the shareholders entitled to examine
such list or transfer books or to vote at any meeting of
shareholders.
Section 8. Quorum. A majority of the outstanding stock of
the Corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders.
If less than a majority of the outstanding stock is represented
at a meeting, a majority of the stock so represented may adjourn
the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have
been transacted at the meeting as originally notified. The
shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to constitute less than a
quorum.
SECTION 9. PROXIES. At all meetings of shareholders, a
shareholder may vote by proxy executed in writing by the
shareholder or by its duly authorized attorney in fact. Proxies
solicited on behalf of the management shall be voted as directed
by the shareholders or, in the absence of such direction, as
determined by a majority of the board of directors. No proxy
shall be valid more than eleven months from the date of its
execution, unless otherwise provided in the proxy.
SECTION 10. VOTING. At each election for directors, every
shareholder entitled to vote at such election shall be entitled
to one vote for each share of common stock held by it. Unless
otherwise provided in the Corporation's Articles of
Incorporation, by these Bylaws or by applicable law, a majority
of those votes cast by shareholders at a lawful meeting shall be
sufficient to pass on a transaction or matter, except that
directors shall be elected by a plurality of the votes cast by
shareholders entitled to vote.
SECTION 11. VOTING OF SHARES IN THE NAME OF TWO OR MORE
PERSONS. When ownership of stock is recorded in the name of two
or more persons, in the absence of written directions to the
Corporation to the contrary, at any meeting of the shareholders
of the Corporation, any one or more of such holders of record
may cast, in person or by proxy, all votes to which such stock
is entitled. In the event an attempt is made to cast
conflicting votes, in person or by proxy, by the several
persons in whose names ownership of stock is recorded, the vote
or votes to which those holders of record are entitled shall be
cast as directed by a majority of those holders present in
person or by proxy at such meeting, but no votes shall be cast
for such stock if a majority cannot agree.
SECTION 12. VOTING OF STOCK OF CERTAIN HOLDERS. Stock held
in the name of another corporation may be voted by such officer,
agent or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provision, as the board of directors
of such corporation may determine. Stock held by an
administrator, executor, guardian or conservator may be voted by
it, either in person or by proxy, without a transfer of such
stock into its name. Stock held in the name of a trustee may be
voted by it, either in person or by proxy, but no trustee shall
be entitled to vote stock held by it without a transfer of such
stock into its name. Stock held in the name of a receiver
may be voted by such receiver, and stock held by or under the
control of a receiver may be voted by such receiver without the
transfer into
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its name, if authority to do so is contained in an appropriate
order of the court or other public authority by which such
receiver was appointed.
A shareholder whose stock is pledged shall be entitled to
vote such stock until the stock has been transferred into the
name of the pledgee, and thereafter the pledgee shall be
entitled to vote the stock so transferred.
Neither treasury shares of its own stock held by the
Corporation nor stock held by another corporation, if a majority
of the shares of stock 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 of stock at any given time
for purposes of any meeting.
SECTION 13. INSPECTORS OF ELECTION. In advance of any
meeting of shareholders, the board of directors may appoint any
persons other than nominees for office as inspectors of election
to act at such meeting or any adjournment. The number of
inspectors shall be either one or three. Any such appointment
shall not be altered at the meeting. If inspectors of election
are not so appointed, the chairman of the board or the president
may make such appointment at the meeting. In case any person
appointed as an inspector fails to appear or fails or refuses to
act, the vacancy may be filled by appointment by the board of
directors in advance of the meeting or at the meeting by the
chairman of the board or the president.
Unless otherwise prescribed by applicable law, the duties of
such inspectors shall include: determining the number of shares
of stock and the voting power of each share of stock, the stock
represented at the meeting, the existence of a quorum, the
authenticity, validity and effect of proxies; receiving votes,
ballots or consents; hearing and determining all challenges and
questions in any way arising in connection with the right to
vote; counting and tabulating all votes or consents; determining
the result; and such other acts as may be proper to conduct the
election or the vote with fairness to all shareholders.
SECTION 14. NOMINATING COMMITTEE. The board of directors
shall act as a nominating committee for selecting the management
nominees for election as directors. Except in the case of
a nominee substituted as a result of the death or other
incapacity of a management nominee, the nominating committee
shall deliver written nominations to the secretary of the
Corporation at least twenty days prior to the date of the annual
meeting. No nominations for directors except those made by the
nominating committee shall be voted upon at the annual meeting,
unless other nominations by shareholders are made in writing and
delivered to the secretary of the Corporation in accordance with
the provisions of the Corporation's Articles of Incorporation.
SECTION 15. NEW BUSINESS. Any new business to be taken up
at the annual meeting shall be stated in writing and filed with
the secretary of the Corporation in accordance with the
provisions of the Articles of Incorporation. This provision
shall not prevent the consideration and approval or disapproval
at the annual meeting of reports of officers, directors and
committees, but in connection with such reports, no new business
shall be acted upon at such annual meeting unless stated and
filed as provided in the Articles of Incorporation.
ARTICLE III - Board of Directors
SECTION 1. GENERAL POWERS. The business and affairs of the
Corporation shall be under the direction of its board of
directors. The board of directors shall annually elect a
chairman of the board and a president from among its members and
shall designate, when present, either the chairman of the board
or the president to preside at its meetings.
SECTION 2. NUMBER, TERM AND ELECTION. The board of
directors shall consist of nine members, and shall, after the
first meeting of the shareholders at which directors are
elected, be divided into three groups as nearly equal in number
as possible. The members of each group shall be elected for
staggered terms of three years (and until their successors are
elected or qualified) in accordance with the provisions of the
Articles of Incorporation. The board of
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directors may increase or decrease the number of members of the
board of directors consistent with the Articles of
Incorporation.
SECTION 3. REGULAR MEETINGS. A regular meeting of the
board of directors shall be held without other notice than this
Bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The board of directors may provide, by
resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
SECTION 4. QUALIFICATION. Directors need not own stock of
the Corporation.
SECTION 5. SPECIAL MEETINGS. Special meetings of the board
of directors may be called by or at the request of the chairman
of the board, the president or one-third of the directors. The
persons authorized to call special meetings of the board of
directors may fix any place within the State of Kentucky as the
place for holding any special meeting of the board of directors
called by such persons. Members of the board of directors may
participate in special meetings by means of conference telephone
or similar communications equipment by which all persons
participating in the meeting can hear each other. Such
participation shall constitute presence in person.
SECTION 6. NOTICE OF SPECIAL MEETING. Written notice of
any special meeting shall be given to each director at least two
days prior thereto if delivered personally or by telegram, or at
least five days prior thereto if delivered by mail at the
address at which the director is most likely to be reached.
Such notice shall be deemed to be delivered when deposited in
the United States mail so addressed, with postage thereon
prepaid, if mailed, or when delivered to the telegraph company
if sent by telegram. Any director may waive notice of any
meeting by a signed writing filed with the secretary. The
attendance of a director at a meeting shall constitute waiver of
notice of such meeting, except where a director both attends a
meeting for the express purpose of objecting to holding the
meeting or transacting any business and does not thereafter vote
for or assent to any action taken at the meeting because the
meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of
the board of directors need be specified in the notice or waiver
of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors
fixed by Section 2 of this Article III shall constitute a quorum
for the transaction of business at any meeting of the board of
directors; but if less than such majority is present at a
meeting, a majority of the directors present may adjourn the
meeting from time to time. Notice of any adjourned meeting
shall be given in the same manner as prescribed by Section 6 of
this Article III.
SECTION 8. 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 a greater
number is prescribed by these Bylaws, the Articles of
Incorporation or applicable law.
SECTION 9. ACTION WITHOUT A MEETING. 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.
SECTION 10. RESIGNATION. Any director may resign at any
time by sending a written notice of such resignation to the home
office of the Corporation addressed to the chairman of the board
or the president. Unless otherwise specified, such resignation
shall take effect upon receipt by the chairman of the board or
the president.
SECTION 11. VACANCIES. Any vacancy occurring in the board
of directors shall be filled in accordance with the provisions
of the Articles of Incorporation. Any directorship to be filled
by reason of an increase in the number of directors may be
filled by the affirmative vote of two-thirds of the directors
then in office. The term of such director shall be in
accordance with the provisions of the Articles of Incorporation.
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SECTION 12. COMPENSATION. Directors, as such, may receive
a stated fee for their services. By resolution of the board of
directors, a reasonable fixed sum, and reasonable expenses of
attendance, if any, may be allowed for actual attendance at each
regular or special meeting of the board of directors. Members
of either standing or special committees may be allowed such
compensation for actual attendance at committee meetings as the
board of directors may determine. Nothing herein shall be
construed to preclude any director from serving the Corporation
in any other capacity and receiving remuneration therefor.
SECTION 13. PRESUMPTION OF ASSENT. A director of the
Corporation who is present at a meeting of the board of
directors at which action on any corporate matter is taken shall
be presumed to have assented to the action taken unless his
dissent or abstention shall be entered in the minutes
of the meeting or unless he shall file a written dissent to such
action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent
shall not apply to a director who voted in favor of such action.
SECTION 14. REMOVAL OF DIRECTORS. Any director or the
entire board of directors may be removed only in accordance with
the provisions of the Articles of Incorporation.
SECTION 15. ADVISORY DIRECTORS. The board of directors may
by resolution appoint advisory directors to the board, who shall
have such authority and receive such compensation and
reimbursement as the board of directors shall provide. Advisory
directors or directors emeriti shall not have the authority to
participate by vote in the transaction of business.
ARTICLE IV -- COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors, by resolution passed by a majority
of the whole board, may designate one or more committees as it
may determine to be necessary or appropriate for the
conduct of the business of the Corporation and may prescribe the
duties, constitution and procedures thereof. Each committee
shall consist of one or more directors of the Corporation. The
board 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.
Sections 5 through 9 of Article III, which govern meetings,
action without meetings, notice, waiver of notice, quorum and
voting requirements of the board of directors, apply to
committees and their members. The act of a the majority of the
members present at a meeting at which a quorum is present shall
be the act of the committee. The act of the committee, within
the authority delegated to it by the board of directors, shall
be the act of the board of directors.
The board of directors shall have power, by the affirmative
vote of a majority of the authorized number of directors, at any
time to change the members of, to fill vacancies in and to
discharge any committee of the board. Any member of any such
committee may resign at any time by giving notice to the
Corporation; provided, however, that only notice to the board,
the chairman of the board, the chief executive officer, the
chairman of such committee or the secretary shall be deemed to
constitute notice to the Corporation. Such resignation shall
take effect upon receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it
effective. Any member of any such committee may be removed at
any time, either with or without cause, by the affirmative vote
of a majority of the authorized number of directors at any
meeting of the board called for that purpose.
ARTICLE V -- OFFICERS
Section 1. Positions. The officers of the Corporation
shall be a president, one or more vice presidents, a secretary
and a treasurer, each of whom shall be elected by the board of
directors. The board of directors may also designate the
chairman of the board as an officer. The president shall be the
chief executive officer unless the board of directors designates
the chairman of the board as chief executive officer. The
president shall be a director of the
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Corporation. The offices of the secretary and treasurer may be
held by the same person, and a vice president may also be
either the secretary or the treasurer. The board of directors
may designate one or more vice presidents as executive vice
president or senior vice president. The board of directors may
also elect or authorize the appointment of such other officers
as the business of the Corporation may require. The officers
shall have such authority and perform such duties as the board
of directors may from time to time authorize or determine. In
the absence of action by the board of directors, the officers
shall have such powers and duties as generally pertain to their
respective offices. The secretary of the Corporation shall have
the responsibility of preparing the minutes of the directors'
and shareholders' meetings and for authenticating records of the
Corporation.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of
the Corporation shall be elected annually at the first meeting
of the board of directors held after each annual meeting of the
shareholders. If the election of officers is not held at such
meeting, such election shall be held as soon thereafter as
possible. Each officer shall hold office until a successor has
been duly elected and qualified or until the officer's death,
resignation or removal in the manner hereinafter provided.
Election or appointment of an officer, employee or agent shall
not of itself create contractual rights. The board of directors
may authorize the Corporation to enter into an employment
contract with any officer, but no such contract shall impair the
right of the board of directors to remove any officer
at any time in accordance with Section 3 of this Article V.
SECTION 3. REMOVAL. Any officer may be removed by vote of
two-thirds of the board of directors whenever in its judgment
the best interests of the Corporation will be served thereby,
but such removal, other than for cause, shall be without
prejudice to any contractual rights of the person so removed.
SECTION 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 thereof.
SECTION 5. REMUNERATION. The remuneration of the officers
shall be fixed from time to time by the board of directors by
employment contracts or otherwise, and no officer shall be
prevented from receiving such salary by reason of the fact that
he is also a director of the Corporation.
ARTICLE VI -- CONTRACTS, LOANS, CHECKS, AND DEPOSITS
SECTION 1. CONTRACTS. To the extent permitted by
applicable law, and except as otherwise proscribed by the
Articles of Incorporation or these Bylaws with respect to
certificates for shares of stock, the board of directors may
authorize any officer, employee or agent of the Corporation to
enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation. Such authority
may be general or confined to specific instances.
SECTION 2. LOANS. No loans 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 authority may be general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or
other orders for the payment of money, notes or other evidences
of indebtedness issued in the name of the Corporation shall be
signed by one or more officers, employees or agents of the
Corporation in such manner as shall from time to time be
determined by the board of directors.
SECTION 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 duly authorized depositories
as the board of directors may select.
C-6<PAGE>
<PAGE>
ARTICLE VII - CERTIFICATES FOR SHARES OF STOCK
AND THEIR TRANSFER
Section 1. CERTIFICATES FOR SHARES OF STOCK. The stock of
the Corporation shall be represented by certificates for shares
signed by the chairman of the board of directors, the president
or by any other officer of the Corporation authorized by the
board of directors, and by the secretary or an assistant
secretary, and may be sealed with the seal of the Corporation or
a facsimile thereof. Any or all of the signatures upon a
certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar,
other than the Corporation itself or an employee of the
Corporation. If any officer who has signed or whose facsimile
signature has been placed upon such certificate shall have
ceased to be such officer before the certificate is issued, the
certificate may be issued by the Corporation with the same
effect as if the person were the officer at the date of the
certificate's issue.
SECTION 2. FORM OF STOCK CERTIFICATES. All certificates
representing stock issued by the Corporation shall set forth
upon the face or back that the Corporation will furnish to any
shareholder upon request and without charge a full statement of
the designations, preferences, limitations and relative rights
of each class of stock authorized to be issued, the variations
in the relative rights and preferences between each such series
so far as the same have been fixed and determined and the
authority of the board of directors to fix and determine the
relative rights and preferences of subsequent series.
Each certificate representing stock shall state upon the
face thereof: that the corporation is organized under the laws
of the State of Indiana; the name of the person to whom issued;
the number and class of the shares of stock; the date of issue;
the designation of the series, if any, which such certificate
represents; the par value of each share of stock represented by
such certificate or a statement that the stock is without par
value. Other matters in regard to the form of the certificates
shall be determined by the board of directors.
SECTION 3. PAYMENT FOR STOCK. No certificate shall be
issued for any stock until such stock is fully paid.
SECTION 4. FORM OF PAYMENT FOR STOCK. The consideration
for the issuance of stock shall be paid in accordance with the
provisions of the Articles of Incorporation.
SECTION 5. TRANSFER OF STOCK. Transfer of shares of
capital stock of the Corporation shall be made only on its stock
transfer books. Authority for such transfer shall be given only
by the holder of record thereof, by its legal representative,
who shall furnish proper evidence of such authority, or by his
attorney thereunto authorized by power of attorney duly executed
and filed with the Corporation. Such transfer shall be made
only on surrender for cancellation of the certificate
of such shares of stock. The person in whose name shares of
capital stock are recorded on the books of the Corporation shall
be deemed by the Corporation to be the owner thereof for all
purposes.
SECTION 6. 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, the list
required by Section 7 of Article II or the books of the
Corporation or to vote in person or by proxy at any meeting of
shareholders.
SECTION 7. LOST CERTIFICATES. The board of directors may
direct a new certificate to be issued in place of any
certificate theretofore issued by the Corporation and alleged to
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of the lost, stolen or destroyed certificate,
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.
SECTION 8. BENEFICIAL OWNERS. The Corporation shall be
entitled to recognize the exclusive right of a person registered
on its books as the owner of stock to receive dividends, and
to vote as such owner, and shall not be bound
C-7<PAGE>
<PAGE>
to recognize any equitable or other claim to or interest
in such stock on the part of any other person, whether or not
the Corporation shall have express or other notice thereof,
except as otherwise provided by applicable law.
ARTICLE VIII - FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Corporation shall end on the
thirty-first day of December at the end of each calendar year.
The Corporation shall be subject to an annual audit as of the
end of its fiscal year by independent public accountants
appointed by and responsible to the board of directors.
ARTICLE IX - DIVIDENDS
Subject to the provisions of the Articles of Incorporation
and applicable law, the board of directors may, at any regular
or special meeting, declare dividends on the Corporation's
outstanding capital stock. Dividends may be paid in cash, in
property or in the Corporation's own stock.
ARTICLE X - CORPORATE SEAL
The corporate seal of the Corporation shall be in such form
as the board of directors may prescribe.
ARTICLE XI - AMENDMENTS
In accordance with the Articles of Incorporation, the board of
directors may repeal, alter, amend or rescind these Bylaws by
vote of two-thirds of the board of directors at a legal meeting
held in accordance with the provisions of these Bylaws. These
Bylaws may not be repealed, altered, amended or rescinded by the
shareholders of the corporation.
C-8<PAGE>
<PAGE>
EXHIBIT D
DISSENTER AND APPRAISAL RIGHTS
Dissenter and appraisal rights in a national bank are
governed by 12 U.S.C. 215a, the text of which is reproduced
below:
United States Code
Title 12. Banks and Banking
Chapter 2 -- National Banks
Subchapter XVI -- Consolidation and Merger
Section 215a. Merger of national banks or State banks into
national banks
(a) Approval of Comptroller, board and shareholders; merger
agreement; notice; capital stock; liability of receiving
association
[Omitted]
(b) Dissenting shareholders
If a merger shall be voted for at the called meetings
by the necessary majorities of the shareholders of each
association or State bank participating in the plan of merger,
and thereafter the merger shall be approved by the Comptroller,
any shareholder of any association or State bank to be merged
into the receiving association who has voted against such
merger at the meeting of the association or bank of which he is
a shareholder, or has given notice in writing at or prior to
such meeting to the presiding officer that he dissents from the
plan of merger, shall be entitled to receive the value of the
shares so held by him when such merger shall be approved by the
Comptroller upon written request made to the receiving
association at any time before thirty days after the date of
consummation of the merger, accompanied by the surrender of his
stock certificates.
(c) Valuation of shares
The value of the shares of any dissenting shareholder
shall be ascertained, as of the effective date of the merger, by
an appraisal made by a committee of three persons, composed of
(1) one selected by the vote of the holders of the majority of
the stock, the owners of which are entitled to payment in cash;
(2) one selected by the directors of the receiving association;
and (3) one selected by the two so selected. The valuation
agreed upon by any two of the three appraisers shall govern. If
the value so fixed shall not be satisfactory to any dissenting
shareholder who has requested payment, that shareholder may,
within five days after being notified of the appraised value of
his shares, appeal to the Comptroller, who shall cause a
reappraisal to be made which shall be final and binding as to
the value of the shares of the appellant.
(d) Application to shareholders of merging associations;
appraisal by Comptroller; expenses of receiving association;
sale and resale of shares; State appraisal and merger law
If, within ninety days from the date of consummation
of the merger, for any reason one or more of the appraisers is
not selected as herein provided, or the appraisers fail to
determine the value of such shares, the Comptroller shall upon
written request of any interested party cause an appraisal to be
made which shall be final and binding on all parties. The
expenses of the Comptroller in making the reappraisal or the
appraisal, as the case may be, shall be paid by the receiving
association. The value of the shares ascertained shall be
promptly paid to the dissenting shareholders by the receiving
association. The shares of stock of the receiving association
which would have been delivered to such dissenting shareholders
had they not requested payment shall be sold by the receiving
association at
D-1
<PAGE>
an advertised public auction, and the receiving association
shall have the right to purchase any of such shares at such
public auction, if it is the highest bidder therefor, for the
purpose of reselling such shares within thirty days thereafter
to such person or persons and at such price not
less than par as its board of directors by resolution may
determine. If the shares are sold at public auction at a price
greater than the amount paid to the dissenting shareholders, the
excess in such sale price shall be paid to such dissenting
shareholders. The appraisal of such shares of stock in any State
bank shall be determined in the manner prescribed by the law of
the State in such cases, rather than as provided in this
section, if such provision is made in the State law; and no such
merger shall be in contravention of the law of the State under
which such bank is incorporated. The provisions of this
subsection shall apply only to the shareholders of (and stock
owned by them in) a bank or association being merged into the
receiving association.
D-2<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article XVIII of the Holding Company's Articles of
Incorporation provides for indemnification of the Holding
Company's directors and officers. In the case of a threatened,
pending or completed action or suit by or in the name of the
Holding Company, the Holding Company shall indemnify a director
or officer for amounts actually and reasonably incurred by him
in connection with the defense or settlement of the action or
suit if the director or officer: (i) is successful on the
merits or otherwise; (ii) acted in good faith in the transaction
which is the subject of the suit or action, and in a manner he
reasonably believed to be in, the best interest of the Holding
Company or (iii) in a criminal proceeding he either had (a)
reasonable cause to believe that his conduct was lawful, or (b)
no reasonable cause to believe his conduct was unlawful.
Under Indiana law, a corporation may indemnify a director or
officer made a party to a proceeding because such person was a
director or officer of the corporation if: (i) the individual's
conduct was in good faith; and (ii) the individual reasonably
believed (A) in the case of conduct in the individual's official
capacity with the corporation, that the individual's conduct was
in the corporation's best interests, and (B) in all other cases,
that the individual's conduct was at least not opposed to the
corporation's best interests. An Indiana corporation may also
indemnify an officer or director in a criminal proceeding if the
individual: (i) had reasonable cause to believe that his
conduct was lawful; or (ii) had no reasonable cause to believe
that his conduct was unlawful.
An Indiana corporation must, unless limited by its articles
of incorporation, indemnify any director or officer who was
wholly successful, on the merits or otherwise, in the defense of
a proceeding to which the individual was a party because the
individual was a director or officer of the corporation, against
reasonable expenses incurred by the director or officer in
connection with the proceeding. Unless limited by the
corporation's articles of incorporation, an officer or director
may apply to the court conducting the proceeding or another
court of competent jurisdiction for indemnification. The court
may order indemnification if it determines: (i) the director or
officer is entitled to mandatory indemnification under Indiana
law; or (ii) the officer or director is fairly and reasonably
entitled to indemnification in view of all the relevant
circumstances, whether or not such director or officer met the
standard of conduct set forth for mandatory indemnification
under Indiana law. The Holding Company's Articles of
Incorporation do not contain any limitations on the ability of
the Holding Company to indemnify its directors and officers
under Indiana law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The exhibits and financial statement schedules filed as part
of this Registration Statement are as follows:
(a) Exhibits
The following is a list and index of the exhibits filed
with this Registration Statement.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
2 Agreement and Plan of Reorganization (attached as
Exhibit A to the Proxy Statement/Prospectus filed as
part of this registration statement).
3.1 Articles of Incorporation of Kentucky National
Bancorp, Inc. (attached as Exhibit B to the Proxy
Statement/Prospectus filed as part of this
registration statement).
3.2 Bylaws of Kentucky National Bancorp, Inc. (attached
as Exhibit C to the Proxy Statement/ Prospectus filed
as part of this registration statement).
5 Form of opinion of Housley Kantarian & Bronstein, P.C.
regarding legality of securities.
II-1<PAGE>
<PAGE>
8 Tax Opinion of Housley Kantarian & Bronstein, P.C.*
10.1 Kentucky National Bank Organizational Stock Option
and Incentive Plan.
10.2 Restrictive Stock Transfer Agreement
10.3 Lease Between Kentucky National Properties L.L.P. and
Kentucky National Bank
23 Consents of Housley Kantarian & Bronstein, P.C.
(contained in its opinions filed as Exhibits 5.1 and
8).
24 Power of Attorney (contained in the signature page to
this registration statement as originally filed).
99 Form of proxy to be mailed to shareholders of
Kentucky National Bank
________
* To be filed by amendment.
(b) Financial Statement Schedules
Not applicable.
(c) Report or Appraisal
Not applicable.
ITEM 22. UNDERTAKINGS
(a) Rule 415 Offering. The undersigned registrant hereby
-----------------
undertakes:
(1) to file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement;
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or most recent post effective
amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement;
(iii) to include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration statement.
(2) That, for purposes of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be a bona fide
offering thereof.
(b) Registration on Form S-4 of Securities Offered for
--------------------------------------------------
Resale.
- ------
(1) The undersigned registrant hereby undertakes as
follows: that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part
of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable
registration form with respect to reofferings by persons who may
be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus
II-2
<PAGE>
(i) that is filed pursuant to paragraph (1)
immediately preceding, or
(ii) that purports to meet the requirements of
section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is
effective, and that, for the purposes of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to
supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired
involved therein, that was not the subject of, and included in
the registration statement when it became effective.
II-3<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in Elizabethtown, Kentucky on February 12, 1999.
KENTUCKY NATIONAL BANCORP, INC.
Date: February 12, 1999 By: /s/ Ronald J. Pence
----------------------------
Ronald J. Pence
President
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors and officers of Kentucky
National Bancorp, Inc., do hereby severally constitute and
appoint Ronald J. Pence our true and lawful attorney and agent,
to do any and all things and acts in our names in the capacities
indicated below and to execute any and all instruments for us
and in our names in the capacities indicated below which said
Ronald J. Pence may deem necessary or advisable to enable
Kentucky National Bancorp, Inc. to comply with the Securities
Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in
connection with the registration statement on Form S-4 relating
to the offering of Common Stock of Kentucky National Bancorp,
Inc., including specifically, but not limited to, power and
authority to sign for us in our names in the capacities
indicated below the registration statement and any and all
amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that said Ronald J. Pence shall do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this registration statement has been signed below by
the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ------ ----
<S> <C> <C>
/s/ Lawrence P. Calvert Chief Executive Officer and February 12, 1999
- ----------------------- Director
Lawrence P. Calvert (Principal Executive Officer)
/s/ Ronald J. Pence President and Director February 12, 1999
- ---------------------- (Principal Financial and
Ronald J. Pence Accounting Officer)
/s/ Robert E. Robbins Chairman of the Board and February 12, 1999
- ---------------------- Director
Robert E. Robbins
/s/ Kevin D. Addington Director February 12, 1999
- ----------------------
Kevin D. Addington
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ------ ----
<S> <C> <C>
/s/ Henry Lee Chitwood Director February 12, 1999
- ----------------------
Henry Lee Chitwood
/s/ Lois Watkins Gray Director February 12, 1999
- ----------------------
Lois Watkins Gray
/s/ William R. Hawkins Director February 12, 1999
- ----------------------
William R. Hawkins
/s/ Christopher G. Knight Director February 12, 1999
- ----------------------
Christopher G. Knight
/s/ Leonard Allen McNutt Director February 12, 1999
- ----------------------
Leonard Allen McNutt
</TABLE>
Kentucky National Bancorp, Inc.
1000 North Dixie Avenue
Elizabethtown, Kentucky 42701
Re: Kentucky National Bancorp, Inc.
Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have served as special counsel for Kentucky National
Bancorp, Inc., a ______________ corporation, in connection with
the registration under the Securities Act of 1933, as amended,
of 256,000 shares of common stock, $0.01 par value (the"Common
Stock") under a registration statement on Form S-4 (the
"Registration Statement").
Based upon the foregoing and having regard for such legal
considerations as we have deemed relevant, it is our opinion
that:
(1) the shares of Common Stock have been duly authorized;
and
(2) upon issuance, sale and delivery of the Common Stock
as contemplated in the Registration Statement, the
shares will be legally issued, fully paid and non-
assessable.
We hereby consent to the reference to our firm under the
heading "Proposal II -- Proposed Formation of Holding Company --
Legal Opinion" in the Prospectus and Proxy Statement contained
in the Registration Statement and to the filing of this opinion
as Exhibit 5.1 to the Registration Statement.
Very truly yours,
HOUSLEY KANTARIAN & BRONSTEIN, P.C.
By:
--------------------
James C. Stewart
Washington, DC
February __, 1999
<PAGE>
Exhibit "A"
KENTUCKY NATIONAL BANK
ORGANIZATIONAL STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to advance the interests of the
Bank through providing select key Employees of the Bank with the
opportunity to acquire Shares. By encouraging such stock
ownership, the Bank seeks to attract, retain and motivate the
best available personnel for positions of substantial respon-
sibility and to provide additional incentives to key Employees
of the Bank to promote the success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "AFFILIATE" shall mean any "parent corporation" or
"subsidiary corporation" of the Bank, as such terms are defined
in Section 424(e) and (f), respectively, of the Code.
(b) "AGREEMENT" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "BANK" shall mean Kentucky National Bank.
(d) "BOARD" shall mean the Board of Directors of the
Bank.
(e) "CODE" shall mean the Internal Revenue Code of 1986,
as amended.
(f) "COMMITTEE" shall mean both the Stock Option
Committee appointed by the Board in accordance with Paragraph
5(a) hereof, and the Board.
(g) "COMMON STOCK" shall mean the common stock of the
Bank.
(h) "CONTINUOUS SERVICE" shall mean the absence of any
interruption or termination of service as an Employee of the
Bank or an Affiliate. Continuous Service shall not be
considered interrupted in the case of sick leave, military leave
or any other leave of absence approved by the Bank, in the case
of transfers between payroll locations of the Bank or between
the Bank, an Affiliate or a successor.
(i) "DIRECTOR" shall mean any member of the Board, and
any member of the board of directors of any Affiliate that the
Board has by resolution designated as being eligible for
participation in this Plan.
(j) "DISABILITY" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Bank or an Affiliate.
(k) "EFFECTIVE DATE" shall mean the date specified in
Paragraph 12 hereof.
(l) "EMPLOYEE" shall mean any person employed by the Bank
or an Affiliate.
(m) "EXERCISE PRICE" shall mean the price per Optioned
Share at which an Option may be exercised.
1<PAGE>
<PAGE>
(n) "ISO" shall mean an option to purchase Common Stock
which meets the requirements set forth in the Plan, and which is
intended to be and is identified as an "incentive stock option"
within the meaning of Section 422 of the Code.
(o) "MARKET VALUE" shall mean the fair market value of
the Common Stock, as determined by the Committee in its
discretion.
(p) "OCC" shall mean the Office of the Comptroller of the
Currency.
(q) "OPTION" shall mean a stock option issued pursuant to
the Plan.
(r) "OPTIONED SHARES" shall mean Shares subject to an
Option granted pursuant to this Plan.
(s) "PARTICIPANT" shall mean any person who receives an
Option pursuant to the Plan.
(t) "PLAN" shall mean this Kentucky National Bank
Organizational Stock Option and Incentive Plan.
(u) "SHARE" shall mean one share of Common Stock.
(v) "YEAR OF SERVICE" shall mean a full twelve-month
period, measured from the date of an Option and each annual
anniversary of that date, during which a Participant has not
terminated Continuous Service for any reason.
3. TERM OF THE PLAN AND OPTIONS.
(a) TERM OF THE PLAN. The Plan shall continue in effect
for a term of ten years from the Effective Date, unless sooner
terminated pursuant to Paragraph 14 hereof. No Option shall be
granted under the Plan after ten years from the Effective Date.
(b) TERM OF OPTIONS. The term of each Option granted
under the Plan shall be ten years from the Effective Date.
4. SHARES SUBJECT TO THE PLAN.
(a) GENERAL RULE. Except as otherwise required under
Paragraph 11, the aggregate number of Shares deliverable
pursuant to Options shall not exceed the number of Shares
required to satisfy the automatic grants provided in Paragraph
6(a) hereof, and in no event shall exceed 16,000 shares. Such
Shares may be authorized but unissued Shares. If any Options
should expire, become unexercisable, or be forfeited for any
reason without having been exercised, the Optioned Shares shall
not be available for the grant of additional Options under the
Plan.
5. ADMINISTRATION OF THE PLAN.
(a) COMPOSITION OF THE COMMITTEE. The Plan shall be
administered by the Committee, which shall consist of not less
than two (2) members of the Board who are non-employee
Directors. Members of the Committee shall serve at the pleasure
of the Board. In the absence at any time of a duly appointed
Committee, the Plan shall be administered by the Board.
(b) POWERS OF THE COMMITTEE. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to determine the form and content of Options to
be issued in the form of Agreements under the Plan, (ii) to
interpret the Plan, (iii) to prescribe, amend and rescind rules
and regulations relating to the Plan, and (iv) to make other
determinations necessary or advisable for the administration of
the Plan. The Committee shall have and may exercise such other
2
<PAGE>
<PAGE>
power and authority as may be delegated to it by the Board from
time to time. A majority of the entire Committee shall
constitute a quorum and the action of a majority of the members
present at any meeting at which a quorum is present, or acts
approved in writing by a majority of the Committee without a
meeting, shall be deemed the action of the Committee.
(c) AGREEMENT. Each Option shall be evidenced by a
written agreement containing such provisions as may be approved
by the Committee. Each such Agreement shall constitute a
binding contract between the Bank and the Participant, and every
Participant, upon acceptance of such Agreement, shall be bound
by the terms and restrictions of the Plan and of such Agreement.
The terms of each such Agreement shall be in accordance with
the Plan, but each Agreement may include such additional
provisions and restrictions determined by the Committee, in its
discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the Plan.
In particular, the Committee shall set forth in each Agreement
(i) the Exercise Price of an Option, (ii) the number of Shares
subject to the Option, and its expiration date, (iii) the
manner, time, and rate (cumulative or otherwise) of exercise or
vesting of such Option, and (iv) the restrictions, if any, to be
placed upon such Option, or upon Shares which may be issued upon
exercise of such Option. The Chairman of the Committee and such
other Directors and officers as shall be designated by the
Committee are hereby authorized to execute Agreements on behalf
of the Bank and to cause them to be delivered to the recipients
of Options.
(d) EFFECT OF THE COMMITTEE'S DECISIONS. All decisions,
determinations and interpretations of the Committee shall be
final and conclusive on all persons affected thereby.
(e) INDEMNIFICATION. In addition to such other rights of
indemnification as they may have, the members of the Committee
shall be indemnified by the Bank in connection with any claim,
action, suit or proceeding relating to any action taken or
failure to act under or in connection with the Plan or any
Option, granted hereunder to the full extent provided for under
the Bank's governing instruments with respect to the
indemnification of Directors.
6. GRANT OF OPTIONS.
(a) AUTOMATIC GRANTS. On the Effective Date, each of the
following Participants shall receive an Option (in the form of
an ISO, to the extent permissible under the Code) to purchase a
number of Shares up to but not exceeding the lesser of (i) the
number of Shares purchased by the Employee upon the formation of
the Bank, and (ii) the number of Shares listed below:
NUMBER OF SHARES
PARTICIPANT RESERVED UNDER PARAGRAPH 4(a)
----------- -----------------------------
Lawrence P. Calvert 6,000
Ronald J. Pence 6,000
Larry F. Witten 4,000
With respect to each of the above-named Participants, the Option
granted to the Participant hereunder (i) shall vest in accor-
dance with the general rule set forth in Paragraph 8(a) of the
Plan, (ii) shall have a term of ten years from the Effective
Date, and (iii) shall be subject to the general rule set forth
in Paragraph 8(c) with respect to the effect of a Participant's
termination of Continuous Service on the Participant's right to
exercise his Options.
(b) SPECIAL RULES FOR ISOs. The aggregate Market Value,
as of the date the Option is granted, of the Shares with respect
to which ISOs are exercisable for the first time by an Employee
during any calendar year (under all incentive stock option
plans, as defined in Section 422 of the Code, of the Bank or any
present or future Affiliate of the Bank) shall not exceed
$100,000.
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7. EXERCISE PRICE FOR OPTIONS.
The Exercise Price per Share shall be equal to the greater
of (i) $25.00, and (ii) per Share Market Value of the Common
Stock on the date of grant.
8. EXERCISE OF OPTIONS.
(a) GENERALLY. The Options granted to Messrs. Calvert
and Pence shall become exercisable with respect to thirty-three
and one-third percent (33 1/3%) of the Optioned Shares per Year
of Service after the grant date, up to 100%, provided actual
revenues of the Bank meet or exceed projected revenues of the
Bank (as contained in the Bank's Business Plan) for such Year of
Service. The Option granted to Mr. Witten shall become
exercisable with respect to thirty three and one-third percent
(33 1/3%) of the Optioned Shares per year of service, up to
100%, provided Mr. Witten attains certain performance goals
established by the Board. An Option shall become fully (100%)
exercisable immediately upon termination of the Participant's
Continuous Service due to the Participant's Disability, death,
normal retirement at or after age 62, early retirement after
attaining age 55 with 10 years of service, or upon a Change in
Control. An Option may not be exercised for a fractional Share.
(b) PROCEDURE FOR EXERCISE. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Bank (contemporaneously with
delivery of such notice) in cash, of the amount of the Exercise
Price for the number of Shares with respect to which the Option
is then being exercised. Each such notice (and payment where
required) shall be delivered, or mailed by prepaid registered or
certified mail, addressed to the Treasurer of the Bank at its
executive offices.
(c) PERIOD OF EXERCISABILITY. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee and
has maintained Continuous Service from the date of the grant of
the Option, or within three months after termination of such
Continuous Service (but not later than the date on which the
Option would otherwise expire), except if the Employee's
Continuous Service terminates by reason of --
(1) "Just Cause" which for purposes hereof shall
have the meaning set forth in any unexpired employment or
severance agreement between the Participant and the Bank
(and, in the absence of any such agreement, shall mean
termination because of the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar
offenses) or final cease-and-desist order), then the
Participant's rights to exercise such Option shall expire
on the date of such termination;
(2) death, then to the extent that the Participant
would have been entitled to exercise the Option
immediately prior to his death, such Option of the
deceased Participant may be exercised within three years
from the date of his death (but not later than the date on
which the Option would otherwise expire) by the personal
representatives of his estate or person or persons to whom
his rights under such Option shall have passed by will or
by laws of descent and distribution;
(3) Disability, then to the extent that the
Participant would have been entitled to exercise the
Option immediately prior to his Disability, such Option
may be exercised within one year from the date of
termination of employment due to Disability, but not later
than the date on which the Option would otherwise expire.
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(d) EFFECT OF THE COMMITTEE'S DECISIONS. The Committee's
determination whether a Participant's Continuous Service has
ceased, and the effective date thereof, shall be final and
conclusive on all persons affected thereby.
(e) EXERCISE OR FORFEITURE REQUIREMENT. Options shall be
required to be exercised immediately or be forfeited in the
event the Bank's regulatory capital falls below the minimum
requirements established by the OCC.
9. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.
(a) RECAPITALIZATIONS; STOCK SPLITS, ETC. The number and
kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Options, and
the Exercise Price thereof, shall be proportionately adjusted
for any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the
Bank which results from a merger, consolidation, recapitaliza-
tion, reorganization, reclassification, stock dividend, split-
up, combination of shares, or similar event in which the number
or kind of shares is changed without the receipt or payment of
consideration by the Bank.
(b) TRANSACTIONS IN WHICH THE BANK IS NOT THE SURVIVING
ENTITY. In the event of (i) the liquidation or dissolution of
the Bank, (ii) a merger or consolidation in which the Bank is
not the surviving entity, or (iii) the sale or disposition of
all or substantially all of the Bank's assets (any of the
foregoing to be referred to herein as a "Transaction"), all
outstanding Options, together with the Exercise Prices thereof,
shall be equitably adjusted for any change or exchange of Shares
for a different number or kind of shares or other securities
which results from the Transaction.
(c) SPECIAL RULE FOR ISOs. Any adjustment made pursuant
to subparagraphs (a) or (b)(1) hereof shall be made in such a
manner as not to constitute a modification, within the meaning
of Section 424(h) of the Code, of outstanding ISOs.
(d) CONDITIONS AND RESTRICTIONS ON NEW, ADDITIONAL, OR
DIFFERENT SHARES OR SECURITIES. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Option before the adjustment was made.
(e) OTHER ISSUANCES. Except as expressly provided in
this Paragraph, the issuance by the Bank or an Affiliate of
shares of stock of any class, or of securities convertible into
Shares or stock of another class, for cash or property or for
labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect,
and no adjustment shall be made with respect to, the number,
class, or Exercise Price of Shares then subject to Options or
reserved for issuance under the Plan.
10. NON-TRANSFERABILITY OF OPTIONS.
Options may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution.
11. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be
the later of the date on which the Committee makes the deter-
mination of granting such Option, and the Effective Date.
Notice of the determination shall be given to each Participant
to whom an Option is so granted within a reasonable time after
the date of such grant.
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12. EFFECTIVE DATE.
The Plan shall become effective on the date on which the
Bank commences business operations.
13. MODIFICATION OF OPTIONS.
At any time, and from time to time, the Board may autho-
rize the Committee to direct execution of an instrument pro-
viding for the modification of any outstanding Option, provided
no such modification shall confer on the holder of said Option
any right or benefit which could not be conferred on him by the
grant of a new Option at such time, or impair the Option without
the consent of the holder of the Option.
14. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the
Plan, or suspend or terminate the Plan. No amendment, sus-
ension or termination of the Plan shall, without the consent of
any affected holders of an Option, alter or impair any rights
or obligations under any Option theretofore granted.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) COMPLIANCE WITH SECURITIES LAWS. Shares of Common
Stock shall not be issued with respect to any Option unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed.
(b) SPECIAL CIRCUMSTANCES. The inability of the Bank to
obtain approval from any regulatory body or authority deemed by
the Bank's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder shall relieve the Bank of any
liability in respect of the non-issuance or sale of such Shares.
As a condition to the exercise of an Option, the Bank may re-
quire the person exercising the Option to make such represen-
tations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements
of federal or state securities law.
(c) COMMITTEE DISCRETION. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal or to establish repurchase rights or both of these
restrictions.
16. RESERVATION OF SHARES.
The Bank, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
17. WITHHOLDING TAX.
The Bank's obligation to deliver Shares upon exercise of
Options shall be subject to the Participant's satisfaction of
all applicable federal, state and local income and employment
tax withholding obligations. The Committee, in its discretion,
may permit the Participant to satisfy the obligation, in whole
or in part, by irrevocably electing to have the Bank withhold
Shares, or to deliver to the Bank Shares that he already owns,
having a value equal to the amount required to be withheld. The
value of the Shares to be withheld, or delivered to the Bank,
shall be based on the Market Value of the Shares on the date the
amount of tax to be withheld is to be determined. As an alter-
native, the Bank may retain, or sell without notice, a number of
such Shares sufficient to cover the amount required to be
withheld.
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18. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's eligibility to participate
or participation in the Plan create or be deemed to create any
legal or equitable right of the Employee, or any other party to
continue service the Bank, or any Affiliate of such corpora-
tions. Except to the extent provided in Paragraphs 6(a), no
Employee shall have a right to be granted an Option or, having
received an Option, the right to again be granted an Option.
19. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the Commonwealth of Kentucky, except to the
extent that federal law shall be deemed to apply.
7
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KENTUCKY NATIONAL BANK
(IN ORGANIZATION)
STOCK TRANSFER AGREEMENT
THIS AGREEMENT is made and entered into by and among
Kentucky National Bank (the "Bank"), Robert E. Robbins, M.D.,
Lawrence P. Calvert, Ronald J. Pence, Kevin D. Addington, Henry
L. Chitwood, Lois W. Gray, William R. Hawkins, Christopher G.
Knight, M.D. and Leonard A. McNutt (collectively, the
"Organizers") and all persons ("Subscribers") subscribing to
shares ("Shares") of the Common Stock of the Bank pursuant to
the terms of the Subscription Agreement for such Shares executed
by each such Subscriber.
WHEREAS the parties hereto consider it to be in their best
interests and in the best interests of the Bank to maintain and
preserve the community ownership of the Shares of the Bank and
to provide for the orderly disposition of the Shares held at any
time by the individual parties;
NOW, THEREFORE, in consideration of the mutual promises,
covenants, provisions, terms and conditions hereinafter stated,
the parties hereto agree as follows:
1. RESTRICTIONS ON TRANSFERS OF SHARES.
(a) Except as otherwise expressly provided in this
Agreement, no Shares held by a Subscriber shall be assigned,
transferred, sold, pledged, encumbered or otherwise disposed of
during the term of the restrictions on transfer (the "Transfer
Restrictions") contained in this Agreement except in accordance
with the applicable provisions hereof.
(b) The Transfer Restrictions shall not apply to the
following transactions:
(ii) Any pledge of Shares as collateral
security for a loan or other extension of credit
(except any transfer of Shares upon foreclosure on
such pledge shall be subject to the Transfer
Restrictions);
(ii) Any transfer of Shares by a Subscriber (a)
by gift or otherwise, to or for the benefit of the
Subscriber, the Subscriber's spouse or the
Subscriber's descendants and (b) by gift to any other
person (each of the foregoing being a "Permitted
Transferee"); and a Permitted Transferee may transfer
the Shares back to the transferor Subscriber.
A Permitted Transferee shall receive and hold the Shares subject
to the terms of this Agreement, with all of the rights and
subject to all of the obligations hereunder of the transferor
Subscriber, the personal representative of the transferor
Subscriber or the transferee of the transferor Subscriber, and
there shall be no further transfer of such Shares except in
accordance with the terms of this Agreement.
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(c) Any purported transfer or acquisition of Shares
in violation of Paragraph 1(a) of this Agreement shall be null
and void. Each Subscriber agrees that any such transfer or
acquisition may and should be enjoined. A purported transfer in
violation of Paragraph 1(a) of this Agreement will not affect
the beneficial ownership of the Shares.
(d) If any Subscriber ("Selling Subscriber") desires
to sell, and has received a Bona Fide Offer (as defined below)
to purchase, all or some number of the Shares owned by such
Selling Subscriber, the Selling Subscriber shall deliver to the
Bank a copy of the Bona Fide Offer together with an offer in
writing ("Offer to the Organizers") to sell all the Shares
desired to be sold (the "Offered Shares") pursuant to this
Agreement for the purchase price specified in the Bona Fide
Offer. Within two business days of the date the Bona Fide Offer
and the Offer to the Organizers are received by the Bank, the
Bank shall transmit the Bona Fide Offer and the Offer to the
Organizers to each of Robert E. Robbins, M.D., Lawrence P.
Calvert, Ronald J. Pence, Kevin D. Addington, Henry L. Chitwood,
Lois W. Gray, William R. Hawkins, Christopher G. Knight, M.D.
and Leonard A. McNutt by personal delivery or by registered
mail, return receipt requested, at the last known place of
residence of each such Organizer. Within thirty (30) days
following the delivery to the Bank of the Offer to the
Organizers ("Offering Period"), each Organizer shall deliver to
the Selling Subscriber notice that the Organizer either accepts
the Offer to the Organizers or rejects the Offer to the
Organizers. Any Organizer that fails to deliver such notice to
the Selling Subscriber within the Offering Period shall be
deemed to have rejected the Offer to the Organizers.
(e) If within the Offering Period any Organizer
delivers notice to the Selling Subscriber that the Organizer
accepts the Offer to the Organizers, then each Accepting
Organizer shall purchase, and the Selling Subscriber shall sell
to the Accepting Organizer, that number of the shares of Offered
Shares which bears the same ratio to the total number of the
shares of Offered Shares as the number of shares of Common Stock
of the Bank owned by the Organizer bears to the total number of
shares of Common Stock of the Bank owned by all the Accepting
Organizers. Each sale to an Accepting Organizer shall be made
upon the same payment terms and conditions as in the Bona Fide
Offer. Each sale and purchase shall be closed at the principal
office of the Bank within ninety (90) days after the end of the
Offering Period. For purposes of this Paragraph 1(e), the
shares of Common Stock of the Bank owned by an Accepting
Organizer shall include all shares of the Bank's Common Stock
directly owned or controlled by or for the benefit of the
Organizer and the Organizer's spouse.
(f) If all of the Offered Shares fail to be sold
under Paragraphs 1(d) and 1(e) above, and if such failure is not
the result of default by the Selling Subscriber, then the
Selling Subscriber may sell any remaining Offered Shares to the
person who made the Bona Fide Offer, provided that (i) the sale
is closed within sixty (60) days after the expiration of the
Offering Period, (ii) the sale is made strictly upon the terms
and conditions stated in the Bona Fide Offer, and (iii) the
person who made the Bona Fide Offer executes an agreement, in a
form approved by the Organizers, containing substantially the
same terms as are contained in this Paragraph 1. If the sale is
not so closed, sale of the Offered Shares shall again become
subject to all the restrictions and requirements in this
Agreement to the same extent as if the Offered Shares had not
been previously offered for sale to the Organizers.
2
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(g) Any amendment to the Bona Fide Offer, or any
counter offer to the Bona Fide Offer, shall be deemed to be a
new Bona Fide Offer subject to all the restrictions and
requirements in this Agreement.
(h) Any other disposition, pledge or assignment of
Shares not subject to this Agreement (including, but not limited
to, a gift, transfer by operation of law or testamentary
disposition) shall be valid only if the transferee executes an
agreement, in a form approved by the Organizers, containing
substantially the same terms as are contained in this Paragraph
1. Prompt notice of such transfer, including the identity of
the transferee and a description of the transfer together with
the executed agreement described above shall be promptly given
to the Bank by the transferee. Failure to give such notice
shall mean that the Bank need not register the transfer on its
books or recognize the rights of the transferee as a holder of
Shares.
(i) The term "Bona Fide Offer," as used in this
Agreement, means a written offer to purchase all or some number
of the shares of Common Stock of the Bank owned by the Selling
Subscriber for a specified purchase price, which offer is made
in good faith and which the Selling Subscriber intends to
accept.
(j) The Transfer Restrictions contained in this
Agreement shall terminate upon the occurrence of any of the
following events:
(i) Cessation of the Bank's business;
(ii) Upon the effectiveness of any merger or
consolidation of the Bank with or into another bank,
or any sale, lease, exchange, transfer or other or any
disposition, including, without limitation, a mortgage
security device, of all or any substantial part of the
assets of the Bank to another bank or corporation;
provided, however, that any merger or consolidation
with another bank or financial institution or transfer
or sale of assets proposed solely to facilitate the
formation of a bank holding company to own the Bank or
the conversion of the Bank to another type of financial
institution and as a result of which the Organizers
shall own shares in such holding company or other
financial institution shall not cause a termination of
this Agreement;
(iii) The mutual written agreement of the
holders of at least seventy-five percent (75%) of the
Shares subject to this Agreement to terminate this
Agreement;
(iv) The unanimous agreement of the Organizers;
or
(v) The tenth anniversary of the day upon
which the first Shares are issued to any person (the
"Effective Date").
(k) All the terms, restrictions, and requirements in
this Agreement shall apply not only to the Shares presently
subscribed to by the Subscriber but also to any additional Shares
that are required by such Subscriber.
3
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(l) The following legends shall be placed on each
certificate evidencing ownership of any Shares of the Bank:
(i) On the front of the certificate:
"NOTICE"
"THIS CERTIFICATE IS SUBJECT TO THE RESTRICTIONS NOTED
ON THE REVERSE SIDE HEREOF."
(ii) On the back of the certificate:
"NOTICE"
"THE TRANSFER OF THE SHARES OF STOCK REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED UNDER THE TERMS OF A
RESTRICTIVE STOCK TRANSFER AGREEMENT DATED SEPTEMBER,
1997, A COPY OF WHICH IS ON FILE WITH THE BANK AT ITS
PRINCIPAL OFFICE IN ELIZABETHTOWN, KENTUCKY AND
AVAILABLE FOR INSPECTION DURING NORMAL BUSINESS HOURS
AT THE PRINCIPAL OFFICE OF THE BANK. NO TRANSFER OF
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY BE MADE
EXCEPT IN ACCORDANCE WITH AND, SUBJECT TO THE TERMS,
RESTRICTIONS, AND REQUIREMENTS IN THAT AGREEMENT."
(m) Upon termination of this Agreement, a Subscriber
may surrender his or her certificate or certificates representing
the Shares, and the Bank shall issue in lieu thereof a new
certificate or certificates for an equal number of shares without
the endorsement set forth in Paragraph 1(l).
(n) In the event any Shares are attempted to be sold,
pledged or transferred contrary to, or in violation of, the
provisions of this Agreement, the purported purchaser or
transferee thereof shall not be entitled to have such Shares
transferred on the books of the Bank, or be vested with any
voting rights or other rights of the Subscriber, such Shares
shall remain subject to all the provisions in this Agreement, and
such purported sales, transfer or pledge shall be null and void
and of no force or effect.
2. GENERAL PROVISIONS
(a) Notices. Any notice, offer, consent, or other
communication required or permitted by this Agreement to be given
to any person shall be deemed to have been given when either
personally delivered, sent by overnight courier, or two days
after being deposited in the United States mail, certified,
postage prepaid, addressed to the person to whom it is intended
to be given, which address, in the case of the Bank, shall be the
address of its principal place of business, and in the case of a
Subscriber or a Organizer, shall be the last known address of
such person as shown on the records of the Bank.
(b) Separability. In any provision of this Agreement
or the application thereof to any person or circumstances shall
be invalid or unenforceable to any extent, the remainder of this
4
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Agreement and the application of such provisions to other persons
or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
(c) Injunctive Relief and Specific Performance. The
parties hereto recognize that irreparable injury will result to
the Bank, its business and its property as well as to the
remaining Subscribers in the event of a breach of this Agreement
by any Subscriber. It is therefore agreed that, in the event any
Subscriber breaches or threatens to breach this Agreement, the
Bank and the Organizers shall be entitled, in addition to any
other remedies and damages available, to an injunction (i) to
restrain the violation hereof by such party, such party's
partners, agents, servants, employers and employees, and all
persons acting for or with such party, and (ii) to compel
specific performance of the terms and conditions of this
Agreement. Nothing herein shall be construed as prohibiting the
Organizers or the Bank from pursuing any other remedies available
to the Organizers or the Bank for such breach including the
recovery of damages from the breaching Subscriber.
(d) Entire Agreement. This Agreement constitutes the
entire agreement among the parties hereto with respect to the
subject matter hereof and may be amended only by a writing
executed by all parties.
(e) Modifications and Amendments. The terms and
provisions of this Agreement may not be modified or amended or
the breach of any of the terms or provisions hereof, waived,
except pursuant to the written consent of the parties hereto.
(f) Governing Law. This Agreement shall be enforced,
governed, and construed in all respects in accordance with the
laws of the Commonwealth of Kentucky.
(g) Counterparts. This Agreement may be executed by
the parties on any number of separate counterparts, and all such
counterparts so executed constitute one agreement binding on all
the parties notwithstanding that all the parties are not
signatories to the same counterpart.
(h) Signatory Warranty. Each person executing this
Agreement warrants that he or she is authorized to do so on
behalf of the party for whom he or she signs this Agreement.
(i) Effective Date. This Agreement shall become
binding and effective on the Effective Date as defined in
Paragraph 1(j)(v) hereof.
5
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the Effective Date.
KENTUCKY NATIONAL BANK
By:/s/Robert E. Robbins, M.D.
--------------------------
Robert E. Robbins, M.D.
Chairman
Organizers:
/s/Robert E. Robbins, M.D.
--------------------------
Robert E. Robbins, M.D.
/s/Lawrence P. Calvert
--------------------------
Lawrence P. Calvert
/s/Ronald J. Pence
-----------------------------
Ronald J. Pence
/s/Kevin D. Addington
-----------------------------
Kevin D. Addington
/s/Henry L. Chitwood
-----------------------------
Henry L. Chitwood
/s/Lois W. Gray
-----------------------------
Lois W. Gray
/s/William R. Hawkins
-----------------------------
William R. Hawkins
/s/Christopher G. Knight, M.D.
-----------------------------
Christopher G. Knight, M.D.
/s/Leonard A. McNutt
-----------------------------
Leonard A. McNutt
6
<PAGE>
LEASE
THIS LEASE is made and entered into this 1st day of
March, 1998, by and between KENTUCKY NATIONAL PROPERTIES,
L.L.C., of P.O. Box 2504, Elizabethtown, Kentucky 42702,
hereinafter referred to as the Lessor, and KENTUCKY NATIONAL
BANK of 1000 North Dixie Avenue, Elizabethtown, Kentucky 42701,
hereinafter referred to as the Lessee, WITNESSETH:
That for the consideration hereinafter set out, the
Lessor agrees to lease to the Lessee, and the Lessee agrees to
lease from the Lessor the following described real estate
located in Elizabethtown, Hardin County, Kentucky upon the
following terms and conditions:
1. PROPERTY BEING LEASED: The property which is the
subject of this Lease is two tracts of land with a
building to be erected thereon, with the tracts of
land being as follows:
(a.) Being Lot 1 A of Taco Bell Subdivision No. 1
per plat recorded on plat sheet 2011 in the Office
of the Hardin County Court Clerk, Elizabethtown,
Kentucky.
Being the same property which has been leased to
the Lessor by a Lease Agreement dated April 4,
1997 and which is hereby being subleased to the
Lessee.
Included in the property being leased is the
building constructed on the above-described
premises.
2. TERM: The term of this lease shall commence as of
the 1st day of March, 1998 and extend thereafter
for an initial period of ten (10) years. The
Lessee shall then have an option to renew the
lease for four (4) successive terms of ten (10)
years each, by giving to the Lessor written notice
of its intent to exercise this option of renewal
at least ninety (90) days prior to the termination
of any term then in effect.
3. RENT: Lessee agrees to pay monthly rental for the
premises in the amount of
1<PAGE>
<PAGE>
$12,000.00 per month, payable in advance on the
first day of each month during the first year of
this lease. After the first year, the rental
shall be increased annually based on the
percentage increase in the Consumer Price Index
calculated from the date of the commencement of
each yearly anniversary date until the end of that
particular year. (For example, for the first year,
the percentage increase would be based on the
increase in the Consumer Price Index from the
commencement of this lease term (March 1,
1998) until February 28, 1999.
4. USE OF PREMISES: Lessee agrees that during the
term of this lease and any extensions thereof, it
shall use the premises only for a bank and a
banking institution, and any other use of the
premises shall only be done with the Lessors prior
written permission.
5. LESSOR'S WARRANTIES AND COVENANTS: Lessor hereby
covenants and warrants to Lessee that:
(a.) Lessor owns and/or leases the premises and
has full right, power and authority to
execute and deliver this Lease, to consummate
the transaction contemplated hereby, to
comply with and fulfill the terms and
conditions hereof, and to demise and let the
premises unto Lessee; there are no legal,
contractual or other restrictions upon
Lessor's right, power or authority to demise
the premises unto Lessee except as otherwise
set forth herein.
(b.) That the premises hereby demised is free of
any tenancies whether written or oral.
(c.) This Lease has been fully executed and
delivered by Lessor and constitutes a legal,
valid and binding obligation of Lessor in
accordance with its terms and conditions.
(d.) Lessor has not made any other agreement to
sell or lease all or any part of the premises
to any person other than Lessee, nor has
Lessor given to any person an option to
purchase all or any part of the premises.
(e.) The leased premises are not located in any
area of special flood hazard as designated by
any federal, state or local authority, there
are no hazardous or toxic wastes or
substances, or underground storage tanks, in
or upon the premises or building to be
located upon the premises, and no hazardous
or toxic wastes or substances have been
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produced, used, stored, handled or disposed
of upon the premises.
(f.) There are no existing, contemplated or
proposed federal, state or local laws,
ordinances, rules, regulations, codes or
other orders, and no pending or threatened
proceedings or actions against Lessor or the
premises before any court or governmental
agency or authority, which would interfere
with, or make infeasible or undesirable from
an economic or other point of view the
operation, use and/or occupancy of the
premises.
(g.) There are no pending or threatened claims,
demands, liabilities or actions against
Lessor or the premises (including without
limitation, any pending or threatened
condemnation proceedings by any public or
governmental agency or authority) which
constitute or might ripen into a lien or
claim against the premises superior to
Lessee.
(h.) Lessor shall indemnify and hold Lessee
harmless from and against any and all costs,
expenses, losses, claims, liabilities,
damages, injuries or actions of any kind,
including reasonable attorneys' fees, (i)
arising from Lessor's use or possession of
the premises prior to the term of this Lease,
or the negligence of or use of the realty on
which the premises are located by, Lessor or
its agents or employees at any time, or (ii)
resulting from the presence on or under, or
the escape, seepage, leaking, spillage,
discharge, emission or release from the
premises of any hazardous or toxic waste,
substance or material placed or located on
the premises prior to the commencement date
hereof or from and after the termination or
expiration hereof, or during the term of this
Lease at Lessor's fault, or at any time
placed or located on other portions of real
property on which the premises are located.
Such indemnification shall include any
damages, injuries, costs, including
reasonable attorneys' fees, or claims
asserted or arising under any federal, state
or local statute, ordinance or regulation
imposing liability or standards of conduct
concerning hazardous materials.
(i.) If Lessor receives any notice of (i) the use,
spill discharge or removal of any hazardous
substance or material, or (ii) any complaint,
order or notice regarding air emissions,
water discharges or any other environmental,
health, or safety matter affecting Lessor or
the premises from any person or entity,
including, without limitation, the United
States Environmental Protection Agency, then
Lessor will give written notice of such an
occurrence to Lessee within seven (7) days.
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6. LESSEE'S COVENANTS: Lessee covenants and agrees
that during the term of this Lease and for such
further times as Lessee, or any person claiming
under it, shall hold the premises or any part
thereof;
(a.) To pay the rent on the days and in the manner
aforesaid.
(b.) Not to suffer the estate of Lessor in the
premises at any time during the said term to
become subject to any lien, charge, or
encumbrance whatsoever and to indemnify and
keep indemnified Lessor against all such
liens, charges and encumbrances; it being
expressly agreed that Lessee shall have no
authority, express or implied, to create any
lien, charge, or encumbrance upon the estate
of Lessor in the demises premises.
(c.) To maintain the exterior and interior of the
premises, including all HVAC systems. Lessee
shall keep the interior painted and decorated
and in a clean and sanitary condition,
complying in all respects with the applicable
laws, ordinances and regulations of competent
authorities. Lessee shall also maintain the
exterior of the premises, including the roof,
and be responsible for any repairs needed to
the driveways and parking lots.
(d.) Not to make or suffer any use or occupancy of
the premises contrary to any law or
ordinances now or hereafter in force.
(e.) To indemnify Lessor against all costs and
expenses, including reasonable attorney's
fees, lawfully and reasonably incurred in
discharging the premises from any charge,
lien, or encumbrance resulting from Lessee's
actions (other than charges, liens or
encumbrances resulting from Lessor's
actions), or in obtaining possession after
default of Lessee or the termination of this
Lease by reason of Lessee's default.
(f.) Upon the termination of this Lease, either by
lapse of time or otherwise, to surrender,
yield and deliver up the premises in such
condition as it shall be in as of the
effective date hereof.
(g.) To indemnify and hold Lessor harmless from
and against any and all costs, expenses,
losses, claims, liabilities, damages,
injuries or actions of any kind, including
reasonable attorney's fees, (i) arising from
Lessee's use or possession of the premises
throughout the term of this Lease, or the
negligence of Lessee or its agents,
employees, licensees
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or invitees, at any time, or (ii) resulting
from the presence on or under, or the escape,
seepage, leaking, spillage, or discharge,
emission or release from the premises of any
hazardous or toxic waste, substance or
material placed or located on the premises
(including other portions of the real
property on which the premises are located)
by Lessee, its agents, employees, licensees
or invitees throughout the term hereof. Such
indemnification shall include any damages,
injuries, costs, including reasonable
attorneys' fees, or claims asserted or
arising under any federal, state or local
statute, ordinance or regulation imposing
liability or standards of conduct concerning
hazardous materials.
(h.) If Lessee receives any notice of (i) the use,
spill, discharge or removal of any hazardous
substance or material, or (ii) any complaint,
order or notice regarding air emissions,
water discharges or any other environmental,
health, or safety matter affecting Lessor or
the premises from any person or entity,
including, without limitation, the United
States Environmental Protection Agency, then
Lessee will give written notice of such an
occurrence to Lessor within seven (7) days.
(i.) To save Lessor harmless from all loss, costs,
damages and expenses of any kind, whatsoever,
arising out of any accident, damage or
injury, or any claim, suit or action for
damages or injuries from any cause
whatsoever, either to persons or property
happening, occurring or resulting in or upon
the premises or improvements thereon during
the term herein demised, in connection with
or growing out of the use, occupation and
operation of the premises by Lessee, except
for loss, costs, damages and expenses
incurred as a result of the negligence or
acts of Lessor or its agents or employees.
Lessee shall carry such insurance policies
covering the Lessor and Lessee and in such
amounts and against such liability risk and
casualty as are set out in paragraph 22
hereof.
(j.) To replace any plate glass windows or any
other broken glass during the term of this
Lease or any renewal thereof.
(k.) Not to obstruct or permit the obstruction of
sidewalks and roadways adjacent to the
premises, except while loading or unloading
merchandise or other materials, and then not
to an unreasonable extent.
(l.) To promptly pay for all public utilities
rendered or furnished to the
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premises during the term hereof or any
renewal including heat, water, gas,
electricity, sewer charges, and sewer taxes.
Lessee shall provide for the prompt removal
of garbage, rubbish, and litter from the
demised premises and to provide adequate
facilities for containing the same prior to
such removal. Lessee shall keep the premises
clean and keep all sidewalks adjacent to the
premises clean and free from all rubbish,
litter, debris, ice and snow. If Lessee
fails to carry out the foregoing,
Lessor, at its option, may provide such
facilities and service and charge same to
Lessee as additional rent.
7. DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS:
(a.) If the building on said premises shall be
rendered untenantable by fire or other
casualty, and if the building cannot be made
tenantable and usable for Lessee's use within
ninety (90) days after such damages, Lessee
may, at Lessee's option to be evidenced by
notice in writing given to Lessor within
thirty (30) days after the occurrence of such
damage or destruction, elect to terminate
this Lease upon written notice to Lessor as
of the date of such fire or other casualty,
whereupon Lessor shall be entitled to all
proceeds of insurance and right of recovery
against insurer on policies covering such
damages or destruction; provided, however,
Lessee shall be entitled to such insurance
proceeds representing payments for losses to
moveable fixtures, trade fixtures, leasehold
improvements, machinery, equipment and other
property owned by Lessee.
(b.) In the event Lessee fails to validly exercise
its right to terminate this Lease under
Section 7.a., or if the premises can be
restored within ninety (90) days of the
damage, Lessor shall commence forthwith to
effect repairs and the rental then in effect
shall abate proportionately (based upon
square footage). Lessor shall restore the
premises to its condition immediately prior
to the casualty, regardless of the
sufficiency of insurance proceeds received by
Lessee.
8. IMPROVEMENTS: Lessee shall have the right to
remove, at its sole expense, any and all
improvements on the premises providing that in
doing so it shall comply with all statutes, laws,
rules and regulations in connection with the
demolition, including any laws or restrictions on
disposal of hazardous waste
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or materials that may be in and about the
premises. The term "hazardous waste materials"
shall mean any and all materials, substances, and
conditions which are designated or deemed
hazardous, dangerous, toxic, a contaminant,
or a pollutant under any valid and enforceable
federal, state, or local law, statute, ordinance,
policy, code, rule, regulation, order, or decree
relating to human health or safety or the
environment, as the same may be amended from time
to time, as are now or may hereafter be in effect.
9. ASSIGNMENT, SUBLETTING AND MORTGAGING: Lessee
shall not voluntarily, involuntarily or by
operation of law assign or transfer, mortgage or
otherwise encumber all or any part of its interest
in this Lease, or sublet the premises or any part
thereof without first obtaining in each and every
instance Lessor's prior written consent, and any
attempt to so assign, transfer or sublet, without
Lessor's written consent shall be null and void;
and if any such assignment or transfer is made
with the written consent of Lessor, Lessee shall
nevertheless remain liable to Lessor for payment
of rent according to the terms hereof and for due
performance of all terms, covenants and conditions
of this Lease. Any transfer of this Lease by
merger, consolidation or liquidation shall
constitute an assignment for the purposes of this
paragraph. If written consent is once given by
Lessor to any such assignment or subletting, such
consent shall not operate as a waiver of the
necessity for obtaining Lessor's written consent
to any subsequent assignment or subletting.
10. SUBORDINATION: This Lease shall at all times be
subject and subordinate to the lien of any
mortgage (which term shall include all security
instruments) that may be placed on the premises by
Lessor; and Lessee agrees, upon demand, without
cost, to execute any instrument as may be required
to effectuate such subordination. Provided,
however, that any such mortgagee agrees not to
disturb possession of the premises as long as
Lessee is not in default hereunder.
11. LESSOR'S RIGHT OF RE-ENTRY: If Lessee shall fail
to pay any installments of rent promptly on the
day when the same shall become due and payable
hereunder or within ten (10) days after written
notice thereof by Lessor, or if Lessee shall fail
to promptly keep and perform any other affirmative
covenants of this Lease strictly in accordance
with the terms of this Lease
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and shall fail to cure within thirty (30) days
after written notice thereof by Lessor of demand
of performance, then ended, and enter into said
premises, or any part thereof, either with or
without process of law, and expel Lessee or any
person occupying the same in or upon said
premises, using such force as may be necessary so
to do, and so to repossess and enjoy the premises
as in Lessor's former estate; or (b) re-let the
premises. Anything hereinbefore contained to the
contrary notwithstanding, if any default shall
occur, other than in the payment of rent, which
cannot with due diligence be cured within a period
of thirty(30) days, and Lessee prior to the
expiration of thirty(30) days from and after
the giving of notice as aforesaid, commences to
eliminate the cause of such default, then the
Lessor shall not have the right to declare the
said term ended by reason of such default.
12. RIGHTS ON TERMINATION OF LEASE: Upon termination
of this Lease or any renewal thereof, by lapse of
time causes specified in the preceding paragraph,
Lessee belonging to Lessee which Lessee is
entitled under the terms hereof to remove from
said premises, to repair any and all damage caused
by such removal and to vacate and surrender
possession of the premises to Lessor in the same
conditions as when received, except for ordinary
wear and tear.
Lessee further agrees that if such possession is
not immediately surrendered to Lessor as
hereinabove provided Lessor may forthwith
re-enter the premises and repossess thereof as its
former estate and remove any persons or effects
therefrom using such force as may be reasonably
necessary for that purpose, without being deemed
guilty in any manner of trespass or forcible entry
or detainer.
Lessor shall not be responsible for the storage
and safekeeping of any property or effects of
Lessee so removed from premises, or for
the loss thereof, but may, at his option, store
same for the account of Lessee, and Lessee agrees
to pay Lessor for any and all expenses incurred in
removing and storing said effects and repairing
damage caused by their removal, and, in the event
Lessee fails to do so within ten (10) days after
written demand for such payment has been mailed to
Lessee by Lessor at Lessee's address as given <PAGE>
<PAGE>
in paragraph 19 herein, Lessor may, without
further notice to Lessee, sell any or all of said
property or effects at public or private sale, for
such price as Lessor may be able to obtain, and
apply the proceeds of such sale to the payment of
any amounts due Lessor from Lessee under this
Lease, including the cost of removing, storing or
selling said property and effects and the cost of
repairing the damage caused by its removal.
The receipt of money by Lessor from Lessee, after
Lessor has notified Lessee of his intention to
terminate this Lease, or after the termination
thereof, shall not in any way reinstate, continue
or extend the term of this Lease, or affect or
invalidate any notice given prior thereto, it
being commencement of a suit or entry of final
judgment for possession of the premises, Lessor
may recover and collect any rent due, and that the
payment waiver of any notice, suit or judgment
theretofore given, filed or rendered.
13. RIGHTS OF LESSOR CUMULATIVE: The rights and
remedies of Lessor under this Lease shall be
cumulative and shall not exclude any other rights
and remedies authorized by law, and that the
failure of Lessor to insist upon a strict
performance of, or compliance with, any of the
covenants or conditions of this Lease by Lessee,
or to declare a forfeiture for any violation
thereof, or to exercise any option conferred on
Lessor, shall not be construed as a waiver, or
relinquishment for the future, of Lessor's right
to insist upon strict compliance by Lessee with
all the covenants, agreements and conditions
herein contained or of its right to exercise such
options, or of its right to declare a forfeiture
for the violation of such condition, if the
violation be continued or repeated.
14. REIMBURSEMENT OF LESSOR FOR PAYMENTS MADE ON
ACCOUNT OF ACTIONS OF LESSEE: Lessee agrees that
in the event Lessor shall, by reason of the
failure of Lessee to keep and perform any of the
covenants, agreements or conditions herein
contained, be compelled to pay or shall pay any
sum of money, or do any act requiring the payment
of money, then the sum or sums of money so paid or
required to be paid shall be added to the
installment of rent next becoming due, and shall
be collectible as additional rent in the same
manner and with the same remedies as if said sum
or sums had been originally reserved as rent.
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15. LESSOR'S LIABILITY: Neither Lessor nor its agents
shall be liable for any injury or damage to person
or property of Lessee, or for loss or interruption
of business resulting from fire, explosion,
falling plaster, steam, gas, electricity, water,
rain or snow, or from leaks from any part of said
building or from pipes, appliances or plumbing
works or from the roof, street, or subsurfaces or
from any other place, or by dampness or by any
other cause unless caused by or due to the
negligence of Lessor, nor shall Lessor or its
agents be liable for any damage caused by other
tenants or persons in said building or caused by
the construction of any private or public or
quasi-public work; nor shall Lessor be liable for
any latent defects in the premises or the building
of which it forms a part.
16. LESSEE'S LIABILITY AND INDEMNITY: Lessee shall be
liable to Lessor for any damage to the premises
caused by Lessee's acts or negligence, or caused
by the acts or negligence of its agents,
employees, customers, licensees, or invitees;
Lessor may repair such damage, though not
obligated so to do, and Lessee shall thereupon
reimburse and compensate Lessor as additional rent
within five (5) days after the rendition of a
statement by Lessor for the actual cost of such
repair or damage.
17. SIGNS: Lessee shall have the right at its sole
cost and expense during the term hereof or any
extension thereof to erect, replace, maintain and
operate any signs, electrical or otherwise, in and
on the premises and on or about any improvements
thereof, so long as such signs comply with
applicable laws and regulations. Lessee agrees
not to permit the exterior of the premises to be
used for the purpose of advertising except in
connection with Lessee's business.
18. HOLDING OVER: In the event Lessee continues to
occupy the premises after the last day of
the term hereby created, or after the last day of
any extension of said term, and Lessor elect to
accept rent thereafter, a tenancy from month to
month only shall be created and not for any
longer period.
19. SERVICE- OF NOTICE: If at any time after the
execution of this Lease, it shall become
necessary or convenient for one of the parties
hereto to serve any notice, demand or
communication upon the other party such notice,
demand
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or communications shall be in writing signed by
the party serving the same, personally delivered
or deposited in the registered or Certified United
States mail, return receipt requested, postage
prepaid or deposited with an overnight carrier
that guarantees next-day delivery and (a) if
intended for Lessor shall be addressed to KENTUCKY
NATIONAL PROPERTIES, LLC, P.O. BOX 2504,
ELIZBETHTOWN, KY. 42702-2504, ATTENTION: DR.
ROBERT ROBBINS, and (b) if intended for Lessee,
shall be addressed to: KENTUCKY NATIONAL BANK,
ATTN: LAWRENCE CALVERT, 1000 NORTH DIXIE AVENUE,
ELIZABETHTOWN, KENTUCKY 42701, or to such other
address as either party may have furnished to the
other in writing as a place for service of notice.
Any notice so mailed shall be deemed to have been
given on the earlier of when received or three (3)
days after the same is deposited in the United
States mail.
20. CONDEMNATION:
A. If at any time during the term of this Lease
fifty percent (50%) or more of the premises shall
be taken for any public or quasi-public purpose by
any lawful power or authority by the exercise of
the right of condemnation or eminent domain,
Lessor shall be entitled to and shall receive any
and all awards that may be in any such proceeding
for the taking of real property; and Lessee hereby
assigns and transfers to Lessor any and all such
awards that may be made to Lessee, subject to
paragraph (c) below.
Lessee shall be entitled to any payment based
inter alia upon the value of the unexpired term of
this Lease, consequential damage to the premises
not so taken, fixtures, or alterations to the
premises or their use otherwise.
B.(1) If such proceedings shall result in the
taking of fifty (50%) percent or more of the
premises, or if such taking render the premises
unusable for Lessee's purposes, this Lease and the
term hereof shall terminate and expire on the date
of such taking, and the rent and other sums or
charges provided in this Lease to be paid by the
Lessee shall be apportioned and paid to the date
of such taking.
B.(2) If less than fifty percent (50%) of the
premises shall be taken in such proceedings and if
such taking does not render the premises unusable
for Lessee's purposes, Lessor shall, with
reasonable dispatch, repair the remaining portion
of the premises so as to restore the premises;
provided,
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however, that if the expense of such restoration
would be greater than the sum allowed to Lessor,
less such expenses in such condemnation on
proceeding, then Lessor shall have an option, for
a period of thirty (30) days after such partial
taking, within which to decide whether to make
such restoration or to terminate this Lease. If,
within such 30-day period, Lessor shall give
written notice to the Lessee of the termination
of this Lease and the term hereof shall terminate
and expire on the last day of the calendar month
following the month in which such notice shall be
given and the rent and other sums or charges in
this Lease provided to be paid by Lessee shall be
apportioned and paid to the date of such
termination; provided, however, that if Lessee
shall agree in writing, within sixty (60) days
after receiving any such notice of termination and
the net from Lessor, to pay the difference
between the cost of restoration and the net
proceeds of such condemnation proceeding, then
Lessor's notice of termination and right to
terminate hereunder shall cease and Lessor shall
make such restoration as hereinbefore required.
The annual base rental shall be reduced in
proportion to the amount of the premises taken.
C. Lessee shall be entitled to receive out of any
award the sum, if any, specifically allowed to
Lessee for the value of Lessee's leasehold estate
taken, moving expenses and Lessee's trade fixtures
and for improvements made to the premises by
Lessee.
21. LESSOR'S COVENANT OF TITLE AND QUIET ENJOYMENT:
Lessor covenants and warrants that Lessor has full
right and lawful authority to enter into this
Lease for the full term hereof, and that Lessor is
lawfully seized of the entire premises hereby
demised and has good title thereto, free and clear
of all tenancies and encumbrances, and that all
times when Lessee is not in default under the
terms and during the term of this Lease or any
extensions of said term, Lessee's quiet peaceable
enjoyment of the premises shall not be disturbed
or interfered with by anyone.
22. INSURANCE:
A. Lessee shall procure and maintain in full force
and effect continuously during the term of this
Lease together with any extensions at its sole
expense general public liability and property
damage insurance against claims for personal
injury, death or property damage occurring in, or
about the premises or sidewalks or areas adjacent
to the premises to afford protection to the limit
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of not less than One Million Dollars
($1,000,000.00) in respect to injury or death of a
single person and to the limit of not less than
Three Million Dollars $3,000,000.00), in respect
to any one accident and to the limit of Five
Hundred Thousand Dollars ($500,000.00) in respect
to property damage. Such insurance shall be
written by companies of recognized standing which
are qualified to engage in the insurance business
in the Commonwealth of Kentucky, such insurance to
include as the insured parties thereunder Lessor
and Lessee as their interest may appear.
B. Lessee may maintain such insurance under a blanket
policy covering the premises. Lessee shall
deliver to Lessor a certificate of all insurance
coverage and of renewals thereof from time to time
during the term of this Lease including renewals
thereof. Any such insurance policy shall contain
to the extent obtainable in an agreement by the
insurer that it will not cancel any such policy
except upon ten (10) days prior written notice to
Lessor. If Lessee fails to procure any such
insurance or keep the same in force or effect
Lessor may procure the necessary insurance and pay
the premiums thereof and Lessee shall repay Lessor
on demand the amount so paid as premium, together
with interest at the rate of ten percent (10%) per
annum.
C. Lessee shall, during the course of the
improvements which it may place on the property
and thereafter and at all times, insure at its
sole cost the property against damage by fire,
vandalism, malicious mischief sprinkler leakage
and other extended coverage to the extent of the
full replacement value thereof with the Lessor and
the Hagans to be named as additional insureds.
Such insurance shall contain a clause that the
Lessor and the Hagans will receive thirty (30)
days notice of either non-renewal or cancellation
of the policy. Such insurance shall insure the
property against fire and casualty and shall be
written by a company acceptable to the Lessor and
the Hagans and qualified to do business in the
State of Kentucky. The "Hagans" are the persons
referred to in paragraph 33 herein.
23. BROKERS AND COMMISSIONS: Lessor and Lessee
represent and warrant to each other that they have
not dealt with any real estate agent or broker in
connection with this Lease or its negotiation.
Lessor and Lessee shall indemnify and hold the
other party harmless from any cost, expense or
liability (including costs of suit and reasonable
attorneys' fees) for any compensation, commission
or fees claimed by any real estate broker or agent
in connection with this Lease or its negotiation
by reason of any act of such
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indemnifying party.
24. RECORDING: Either party, at their option, may
record a Memorandum of Lease and the cost of all
documentary stamps or conveyancing, transfer tax
and recording fees shall be paid equally by the
parties thereto.
25. CAPTIONS: The captions appearing in this Lease are
inserted only as a matter of convenience and in no
way define, limit, construe or describe the scope
or intent of such paragraphs of this Lease or in
any way affect this Lease. Any gender used herein
shall be deemed to refer to any other gender more
grammatically applicable to the party to whom such
use of gender relates. The use of singular herein
shall be deemed to include the plural and,
conversely, the plural shall be deemed to include
the singular.
26. SUCCESSOR OR ASSIGN: It is further expressly
agreed and understood that all the covenants and
agreements herein made, shall extend to and be
binding upon the successors in interest, and
assigns of Lessor, and of Lessee as permitted
above. The terms, conditions and covenants of
this Lease shall be binding upon and shall inure
to the benefit of each of the parties hereto,
successors or assigns, aud shall run with the
land, and where more than one party shall be
Lessor under this Lease, the word LESSOR whenever
used in this lease shall be deemed to include all
parties hereto jointly and severally.
27. INVALID PROVISIONS: If any terms or provision of
this Lease or the application thereof to any
person or circumstance shall, to any extent be
invalid or unenforceable, the remainder of this
Lease, or the application of such term or
provision to persons whose circumstances other
than those as to which it is held invalid or
unenforceable, shall not be affected thereby.
28. ENTIRE AGREEMENT: No waivers, alterations or
modifications of this Lease or any agreements in
connection therewith shall be valid unless in
writing duly executed by both Lessor and Lessee
herein.
29. TRADE FIXTURES, MACHINERY AND EQUIPMENT: All trade
fixtures, machinery, equipment, furniture or other
personal property of whatever kind and nature kept
or installed on the premises by Lessee shall not
become the property of Lessor or a part of the
realty no matter how affixed to the premises and
may
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be removed by Lessee.
30. MECHANIC'S LIENS: Lessee shall not suffer or
permit any mechanics' liens to be filed against
the fee of the premises, nor against Lessee's
leasehold interest in the premises, by reason of
work, labor, services or materials supplied, or
claimed to have been supplied, to Lessee, or
anyone holding the premises or any part thereof,
through or under Lessee; and nothing in this Lease
contained shall be deemed or construed in any way
as constituting the consent or request of Lessor,
expressed or implied, by inference or otherwise,
to any contractor, subcontractor, laborer or
material man for the performance of any labor or
the furnishing of any materials for any specified
improvement, alteration or repair of, or to the
premises, or any part thereof, nor as giving
Lessee any right, power or authority to contract
for, or permit the rendering of, any services, or
the furnishings of any materials that would give
rise to the filing of any mechanics' liens against
the fee of the premises. Lessor shall have the
right at all reasonable times to post, and keep
posted, on the premises any notices that may be
provided by law which Lessor may deem to be
necessary for the protection of Lessor, and the
premises from mechanics' liens. If any such
mechanics' lien shall at any time be filed against
the premises, Lessee covenants that it will
promptly take and diligently prosecute appropriate
action to have the same discharged; and, upon its
failure to do, Lessor, in addition to any other
right or remedy that it may have, may take such
action as may be reasonably necessary to protect
its interest, and any reasonable amount paid by
Lessor in connection with such action, and all
reasonable legal and other expenses of Lessor in
connection therewith, including reasonable counsel
fees, court costs and other necessary
disbursements, with interest thereon at the rate
of ten (10%) percent per annum from the date of
payment, shall be repaid by Lessee to Lessor on
demand.
31. Notwithstanding any other provisions contained in
this lease, in the event (a) Lessee or its
successors or assignees shall become insolvent or
bankrupt, or if it or their interests under this
Lease shall be levied upon or sold under execution
or other legal process, or (b) the depository
institution then operating on the Premises is
closed, or is taken over by any depository
institution supervisory authority ("Authority"),
Lessor may, in either such event, terminate this
Lease only with the concurrence of any Receiver or
15
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Liquidator appointed by such Authority; provided,
that in the event this lease is terminated by the
Receiver or Liquidator, the maximum claim of
Lessor for rent, damages, or indemnity for injury
resulting from the termination, rejection, or
abandonment of the unexpired Lease shall by law in
no event be in an amount equal to all accrued and
unpaid rent to the date of termination.
32. PROPERTY TAXES: All real estate property taxes
shall be the responsibility of the Lessee during
the term of this Lease, except for that portion
being paid by Joe Guy Hagan under the terms of
this Lease with the Lessor dated April 4, 1997.
33. Lessor and Lessee both acknowledge that a portion
of the property herein leased is being leased by
the Lessor from Joe Guy Hagan and Merwyn R. Hagan,
and both Lessor and Lessee must abide by the terms
of that Lease dated April 4, 1997 and the First
Amendment to that Lease dated July 1, 1997.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seals the day and year first above written.
LESSOR:
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KENTUCKY NATIONAL PROPERTIES,
L.L.C.
BY: /s/ Kevin Addington
------------------------
KEVIN ADDINGTON
LESSEE:
-------
KENTUCKY NATIONAL BANK
BY: /s/ Lawrence Calvert, CEO
------------------------
LAWRENCE CALVERT, CEO
16
REVOCABLE PROXY
KENTUCKY NATIONAL BANK
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ANNUAL MEETING OF SHAREHOLDERS
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The undersigned hereby appoints _____________, _____________
and ________________ and each of them, with full power of
substitution, as attorneys and proxies for the undersigned, to
vote all shares of common stock of Kentucky National Bank (the
"Bank"), the undersigned is entitled to vote at the Annual
Meeting of Shareholders to be held in the Commons Area of the
Central Hardin High School, 3040 Leitchfield Road,
Elizabethtown, Kentucky on__________, April __, 1999 at __:__
_.m. local time, and any adjournments thereof (the "Annual
Meeting"), upon the following matters and such other business as
may properly come before the Annual Meeting.
FOR WITHHELD
1. Election of directors of
the nominees listed below [ ] [ ]
Robert E. Robbins, M.D.
Lawrence P. Calvert
Ronald J. Pence
Kevin D. Addington
Henry Lee Chitwood
Lois Watkins Gray
William R. Hawkins
Christopher G. Knight, M.D.
Leonard Allen McNutt
INSTRUCTION: TO WITHHOLD YOUR VOTE
FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME ON THE LINE BELOW
__________________________________
FOR AGAINST ABSTAIN
2. The proposal to reorganize
the Bank into the holding
company form of ownership,
including the approval of the
Agreement and Plan of Reorgani-
zation (the "Reorganization"). [ ] [ ] [ ]
The Board of Directors recommends a vote "FOR" each of the
listed propositions.
PROXY IS CONTINUED ON OTHER SIDE
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS
STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING,
THIS PROXY WILL BE VOTED BY THE PERSON NAMED IN THIS PROXY AT
THE DIRECTION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
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<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after
notification to the Bank at the Annual Meeting of the
shareholder's decision to terminate this proxy, then the power
of said attorney and proxy shall be deemed terminated and of no
further force and effect. This proxy may also be revoked by
executing a later dated proxy or by sending a written notice of
revocation to the Bank before the proxy has been exercised.
The undersigned acknowledges receipt from the Bank prior to
the execution of this proxy of Notice of the Annual Meeting and
a Proxy Statement for the Annual Meeting.
Dated:______________________, 1999
__________________________ _________________________
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
__________________________ _________________________
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on the envelope in
which this card was mailed. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title.
If shares are held jointly, each holder should sign.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
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