SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to <section>240.14a-11(c)
or <section>240.14a-12
MID-AMERICA BANCORP
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
_________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was determined):
_________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________
5) Total fee paid:
_________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________
3) Filing Party:
___________________________________________________________
4) Date Filed:
___________________________________________________________
<PAGE>
MIDAMERICA BANCORP
500 WEST BROADWAY
LOUISVILLE, KENTUCKY 40202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of MidAmerica
Bancorp, a Kentucky corporation (the "Company"), will be held in the William
Ray Gallery of the Kentucky Derby Museum at Churchill Downs, 704 Central
Avenue, Louisville, Kentucky 40208, on April 16, 1998, at 10:00 a.m., Eastern
Daylight time, for the following purposes:
(1) ELECTION OF DIRECTORS. To elect six directors in Class 1 for terms
expiring at the 2001 Annual Meeting of Shareholders.
(2) AMENDMENT TO ARTICLES OF INCORPORATION. To require certain transactions
involving fundamental changes in corporate structure or the transfer of
substantial assets to be approved by a 75% super-majority vote of
shareholders.
(3) AMENDMENT TO ARTICLES OF INCORPORATION. To elect to be governed by the
board approval and super-majority voting provisions of the Kentucky
Business Combination Act.
(4) AMENDMENT TO ARTICLES OF INCORPORATION. To require a super-majority
vote of shareholders to amend or repeal the foregoing and certain other
provisions of the Articles of Incorporation.
(5) OTHER MATTERS. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Information regarding the matters to be acted upon at the meeting is
contained in the Proxy Statement accompanying this Notice. Only shareholders
of record at the close of business on February 20, 1998, will be entitled to
notice of and to vote at the Annual Meeting.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE. IF YOU ARE ABLE TO ATTEND THE MEETING AND
WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO BY REVOKING THE PROXY AT ANY
TIME BEFORE IT IS EXERCISED.
By Order of the Board of Directors
Louisville, Kentucky Orson Oliver
March 16, 1998 PRESIDENT
<PAGE>
MIDAMERICA BANCORP
500 WEST BROADWAY
LOUISVILLE, KENTUCKY 40202
PROXY STATEMENT
GENERAL INFORMATION
The proxy accompanying this Proxy Statement is being solicited by the
Board of Directors of MidAmerica Bancorp, a Kentucky corporation (the
"Company"), for use in connection with the Annual Meeting of Shareholders (the
"Annual Meeting") to be held in the William Ray Gallery of the Kentucky Derby
Museum at Churchill Downs, 704 Central Avenue, Louisville, Kentucky 40208, at
10:00 a.m., Eastern Daylight time, on Thursday, April 16, 1998, and at any
adjournments thereof. This Proxy Statement and accompanying proxy are first
being mailed to shareholders on or about March 16, 1998. The Company's Annual
Report to Shareholders for the year ended December 31, 1997, including
consolidated financial statements, has been mailed separately to shareholders.
Shares represented by proxies in the accompanying form received by the
Company properly signed and dated will be voted at the Annual Meeting or any
adjournments thereof in accordance with the instructions specified. If no
instructions are given, the shares represented by the proxy will be voted FOR
the nominees for director named below in this Proxy Statement, for the
amendments to the Articles of Incorporation set forth below in this Proxy
Statement and, in the discretion of the person(s) named in the accompanying
proxy or their substitutes, for any other matter that may be brought before the
Annual Meeting. As of the date of this Proxy Statement, the Board of Directors
of the Company does not know of any other matter that may be presented at the
Annual Meeting. Pursuant to the By-Laws of the Company, the proxy may be
revoked at any time, insofar as the authority granted thereby has not been
exercised, by filing with the Secretary of the Company written notice of such
revocation or by executing and delivering to the Secretary a proxy bearing a
later date.
The cost of solicitation of proxies by the Board of Directors will be
borne by the Company. The initial solicitation of proxies by mail may be
supplemented by directors, officers and employees of the Company or its major
banking subsidiary, Bank of Louisville (the "Bank"), by telephone or other
means of communication. None of the directors, officers or employees
1
<PAGE>
of the Company or the Bank will receive any additional compensation for any
such supplemental solicitation of proxies. Proxy materials may also be
distributed through brokers, custodians and other like parties to the
beneficial owners of the Company's common stock, without par value
("Common Stock"), and the Company will reimburse such parties for their
reasonable out-of-pocket and clerical expenses incurred in connection
therewith.
Only shareholders of record at the close of business on February 20, 1998
(the "Record Date"), are entitled to vote at the Annual Meeting or any
adjournments thereof. As of the Record Date, there were 9,890,490 outstanding
shares of Common Stock. Other than for the election of directors, each share
entitles its holder to one vote on all matters to be acted upon at the Annual
Meeting. Shareholders have cumulative voting rights in the election of
directors. In electing directors, each shareholder has the number of votes
equal to the number of shares held by him or her on the Record Date multiplied
by the number of directors to be elected. Each shareholder may cumulate his or
her votes and cast all such votes for one nominee or may distribute such votes
among as many nominees as he or she chooses. Shares represented by proxies in
the accompanying form may be voted cumulatively, as discussed below under
"Election of Directors". The six nominees receiving the most votes at the
Annual Meeting will be elected directors.
A majority of the outstanding shares present in person or by proxy is
required to constitute a quorum to transact business at the Annual Meeting.
Abstentions and broker non-votes will be treated as present for purposes of
determining a quorum, but as unvoted shares for purposes of determining the
approval of any matter submitted to the shareholders for a vote. Abstentions
and broker non-votes will have no effect on matters decided by a plurality
vote, such as the election of directors.
2
<PAGE>
PRINCIPAL SHAREHOLDERS
Except as set forth below, the Company knows of no shareholder who
beneficially owned more than 5% of the Company's outstanding Common Stock on
the Record Date, February 20, 1998.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF PERCENTAGE
BENEFICIAL OWNER SHARES<F1> OF CLASS<F1>
<S> <C> <C>
Bertram W. Klein 2,046,028<F2> 20.69%
6403 Shrader Lane
LaGrange, Kentucky 40031
</TABLE>
______________________________
[FN]
<F1> Based upon information furnished to the Company by Mr. Klein and
information contained in shareholder records of the Company. Under the
rules of the Securities and Exchange Commission, a person is deemed to
beneficially own shares over which the person has or shares voting or
investment power or of which the person has the right to acquire
beneficial ownership within 60 days. Unless otherwise indicated, the
person has sole voting and investment power with respect to the shares
shown for him. The numbers shown include shares which are not currently
outstanding but of which the named person has the right to acquire
beneficial ownership within 60 days of the Record Date. Such shares are
deemed to be outstanding for the purpose of computing the percentage of
outstanding shares owned by the named person, but are not deemed
outstanding for the purpose of computing the percentage ownership of any
other person.
<F2> Includes the following shares beneficially owned by Mr. Klein: 1,114,575
shares held in trusts over which Mr. Klein has sole or shared voting and
investment power as trustee or co-trustee; 226,394 shares held by
entities over which Mr. Klein has sole voting and investment power;
340,306 shares in which Mr. Klein shares voting power pursuant to powers-
of-attorney; 103,000 shares held in a family limited partnership in which
Mr. Klein shares voting power; 38,247 shares held by Mr. Klein under the
Company's 401(K) and Employee Stock Ownership Plan ("ESOP") at December
31, 1996, the most current plan information available; and 22,182 shares
which Mr. Klein has the right to acquire pursuant to the exercise of
options exercisable currently or within 60 days after the Record Date
under the stock option plans of the Company. Also includes 72,348 shares
held by Mr. Klein's spouse, with respect to which Mr. Klein shares voting
and investment power.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation is divided into three classes --
for convenience denominated Class 1, Class 2, and Class 3 -- whose terms of
office are staggered so that only one
3
<PAGE>
class of directors is elected at an annual meeting of shareholders. The term of
the Directors in Class 1 expires this year, and their successors are to be
elected at this Annual Meeting. The terms of the Directors in the other two
classes do not expire until 1999 and 2000, and consequently their successors
are not to be elected at this Annual Meeting. Pursuant to the Articles of
Incorporation, the Board of Directors has set the number of Directors for 1998
at 19.
The nominees for Directors in Classes 1 and the Directors belonging to
Classes 2 and 3 whose terms of office will extend beyond the Annual Meeting,
are set forth on the following pages, together with information regarding the
number of shares of the Company's Common Stock owned by each, his or her
principal occupation during the past five years and certain other information.
Information relating to the ownership of shares by the Named Officers in the
Summary Compensation Table, and all the directors and executive officers as a
group, is also included.
Each of the nominees for election as Director is currently a Director of
the Company. With the exception of Mr. Jones, each of the nominees was elected
a director at the 1996 Annual Meeting of Shareholders. Mr. Jones was elected a
director at the June, 1997, meeting of the Board of Directors. Although it is
not anticipated that any of the nominees will decline or be unable to serve, if
that should occur, the persons named in the accompanying proxy, or their
substitutes, may, in their discretion, vote for substitute nominees. In
addition, if any shareholder(s) shall vote shares cumulatively or otherwise for
the election of a director or directors other than the nominees named below, or
substitute nominees, the persons named in the accompanying proxy, or their
substitutes, will have the discretionary authority to vote cumulatively for
some number less than all of the nominees named below or any substitute
nominees, and for such persons nominated as they may choose. All information is
presented as of the Record Date unless otherwise noted.
<TABLE>
<CAPTION>
TOTAL SHARES
& PERCENT
OF CLASS<F1>
<S> <C>
NOMINEES FOR CLASS 1
ROBERT P. ADELBERG, 60, DIRECTOR SINCE 1975 6,237
Mr. Adelberg is the president of Robert Adelberg Companies, an insurance
and real estate services organization in Louisville, Kentucky.
HON. MARTHA LAYNE COLLINS, 61, DIRECTOR SINCE 1988 198
Ms. Collins is the President of Martha L. Collins & Associates, an
economic Development consulting firm in Lexington, Kentucky. She is
also the Director of International Business & Management Center at the
University of Kentucky. She was previously the President of St.
Catherine College. Ms. Collins is the former Governor of the Common-
wealth of Kentucky.
4
<PAGE>
R. K. GUILLAUME, 54, DIRECTOR SINCE 1995 30,522<F2>
Mr. Guillaume is Chief Executive Officer and Vice Chairman of the
Company. He is the former president of Bank One, Kentucky, in Lou-
isville, Kentucky.
DAVID JONES, JR., 40, DIRECTOR SINCE 1997 103
Mr. Jones is the Managing Director of Chrysalis Ventures, Inc., a
private equity management company in Louisville, Kentucky since 1994.
Prior to that he was associated with the law firm of Hirn, Reed &
Harper.
BERTRAM W. KLEIN (3), 67, Director since 1967 2,046,028-20.69%<F3>
Mr. Klein is the Chairman of the Board of Directors, and until
October, 1995, Chief Executive Officer of the Company.
BRUCE J. ROTH, 53, DIRECTOR SINCE 1994 62,305<F4>
Mr. Roth is a certified public accountant and a partner in the firm of
Louis T. Roth, CPA., in Louisville, Kentucky.
CONTINUING DIRECTORS
DIRECTORS IN CLASS 2:
JAMES E. CAIN, 59, DIRECTOR SINCE 1996 158
Mr. Cain serves as Chairman of the Board of Trustees and
Business Manager of Plumbers Local Union 107, Louisville,
Kentucky. He also serves as Secretary/Treasurer of the Kentucky
Pipe Trades Association.
DONALD G. MCCLINTON, 64, DIRECTOR SINCE 1980 11,510<F5>
Mr. McClinton is an investor and the owner of Skylight Thoroughbred
Training Centers, Inc. He is the former Chairman of Interlock Indus-
tries, Inc., a manufacturing and transportation services company.
JEROME J. PAKENHAM, 62, DIRECTOR SINCE 1995 2,818<F6>
Mr. Pakenham is the Chief Financial Officer for the Archdiocese
of Louisville.
JOHN S. PALMORE, 80, DIRECTOR SINCE 1983 402
Judge Palmore is a retired Chief Justice of the Supreme Court of
Kentucky. After his retirement and until 1995, he practiced law
with the firm of Jackson & Kelly in Lexington, Kentucky.
5
<PAGE>
WOODFORD R. PORTER, SR., 79, DIRECTOR SINCE 1981 2,383
Mr. Porter is the President and Chief Executive Officer of A.D.
Porter & Sons, a funeral services company in Louisville, Kentucky.
RAYMOND L. SALES, 75, DIRECTOR SINCE 1986 4,683<F7>
Mr. Sales is an attorney, serving of counsel to the firm of Segal,
Isenberg, Sales, Stewart, Cutler & Tillman in Louisville, Kentucky.
Prior to July 31, 1997, he was a partner at that firm.
DIRECTORS IN CLASS 3:
LESLIE D. ABERSON, 61, DIRECTOR SINCE 1983 20,678<F8>
Mr. Aberson is a partner in the law firm of Rothschild, Aberson,
Miller & Goodin in Louisville, Kentucky.
WILLIAM C. BALLARD, JR., 57, DIRECTOR SINCE 1991 13,897<F9>
Mr. Ballard is of counsel to the law firm of Greenebaum Doll & Mc-
Donald, PLLC, in Louisville, Kentucky. He served previously as Execu-
tive Vice President and Chief Financial Officer of Humana, Inc., an
integrated health care services company.
PEGGY ANN MARKSTEIN, 47, DIRECTOR SINCE 1992 8,879<F10>
Ms. Markstein is the Assistant Prosecuting Attorney for the Butler
County Prosecutor's Office in Hamilton, Ohio.
ORSON OLIVER, 54, DIRECTOR SINCE 1979 94,280<F11>
Mr. Oliver is the President of the Company.
BENJAMIN K. RICHMOND, 54, DIRECTOR SINCE 1993 115
Mr. Richmond is the President of the Louisville Urban League in
Louisville, Kentucky.
HENRY C. WAGNER, 55, DIRECTOR SINCE 1989 786
Mr. Wagner is the President and Chief Executive Officer of Jewish
Hospital Healthcare Services, Inc., a medical services corporation in
Louisville, Kentucky.
NON-DIRECTOR NAMED OFFICERS:
Gail W. Pohn 36,740<F12>
Robert H. Sachs 40,208<F12>
Steven A. Small 23,700<F12>
6
<PAGE>
All Directors and Executive Officers as a group (29 in number, including the above) 2,874,682-29.07%<F13>
above)
</TABLE>
______________________________
[FN]
<F1> Total Shares are based on the beneficial ownership rules of the
Securities and Exchange Commission as described in footnote 1 to
PRINCIPAL SHAREHOLDERS. Unless otherwise indicated, the named persons
have sole voting and investment power with respect to the shares shown
for them. Percentage ownership is based on 9,890,490 shares outstanding
as of February 20, 1998, the Record Date for the Annual Meeting. Shares
of Common Stock subject to options exercisable within 60 days of the
Record Date are deemed outstanding for computing the percentage of class
of the person holding such options but are not deemed outstanding for
computing the percentage of class for any other person. Unless otherwise
indicated, ownership is less that one percent. Holdings do not include
shares that may be acquired in the future pursuant to the provisions of
the Non-employee Directors Deferred Compensation Plan. As of December 31,
1997, the following directors have chosen to participate in this Plan:
Leslie D. Aberson, Donald G. McClinton, Jerome J. Pakenham, Bruce J.
Roth, Raymond L. Sales, and Henry C. Wagner.
<F2> Includes 26,522 shares which Mr. Guillaume may purchase under options
granted under the Company's stock option plans which are exercisable
currently or within 60 days after the Record Date. Also includes 788
shares held by Mr. Guillaume under the Company's ESOP at December 31,
1996, the most current plan information available.
<F3> See footnote 2 to PRINCIPAL SHAREHOLDERS for a description of the shares
beneficially owned by Mr. Klein. Mr. Klein's sons, David N. Klein and
Richard B. Klein, are executive officers of the Company.
<F4> Includes 1,928 shares held by Mr. Roth's spouse as to which Mr. Roth
shares voting and investment power and 1,706 shares held by a minor child
as to which Mr. Roth has voting and investment power. Also includes
32,696 shares held in trust as to which Mr. Roth shares voting and
investment power, and 19,418 shares held in partnerships as to which Mr.
Roth has voting and investment power. Also includes 4,094 shares held by
adult children for which Mr. Roth disclaims beneficial ownership.
<F5> Includes 6,257 shares held by Mr. McClinton's spouse, as to which Mr.
McClinton shares voting and investment power.
<F6> Includes 1,421 shares held by Mr. Pakenham and his spouse as joint
tenants, as to which Mr. Pakenham shares voting and investment power.
<F7> Includes 1,437 shares held by Mr. Sales' spouse as to which Mr. Sales
shares voting and investment power.
<F8> Includes 5,406 shares held in trust over which Mr. Aberson has voting and
investment power. Also includes 9,071 shares held by Mr. Aberson's
spouse, as to which shares Mr. Aberson shares voting and investment
power.
7
<PAGE>
<F9> Includes 12,523 shares held in trusts with respect to which Mr. Ballard
serves as trustee with the power to vote and invest such shares.
<F10> Includes 1,870 shares held by Ms. Markstein as custodian for her children
and 51 shares held by the spouse of Ms. Markstein.
<F11> Includes 24,329 shares held by Mr. Oliver under the Company's ESOP at
December 31, 1996, the most current plan information available. Also
includes 64,471 shares which Mr. Oliver may purchase under options
granted under the Company's stock option plans and exercisable currently
or within 60 days after the Record Date.
<F12> Represents shares which Messrs. Pohn, Sachs and Small may purchase
pursuant to options granted under their employment agreements with the
Company and under the Company's stock option plans and exercisable
currently or within 60 days after the Record Date. This also includes
2,968 shares held by Mr. Pohn, 2,876 shares held by Mr. Sachs, and 2,462
shares held by Mr. Small under the Company's ESOP at December 31, 1996,
the most current information available. (These numbers include shares
represented by Company contributions not yet vested.)
<F13> Includes 641,012 shares which may be purchased by all Executive Officers
as a group under options granted pursuant to employment contracts and/or
the Company's stock option plans which are exercisable currently or
within 60 days after the Record Date. Also included are 322,240 shares
attributable to Stanley L. Atlas. Mr. Atlas was a director as of the
Record Date. His term expires at the Annual Meeting and he has notified
the Company that he chooses not to stand for reelection. Included in the
shares attributable to him are 9,634 shares held by Mr. Atlas and his
spouse as joint tenants, as to which Mr. Atlas shares voting and
investment power, 145,707 shares held in a family limited partnership,
and 120,105 shares held by the spouse of Mr. Atlas either directly or as
trustee. Mr. Atlas' spouse is a first cousin of Bertram W. Klein. Mr.
Atlas and his spouse have granted a proxy to Bank management pursuant to
an Agreement to vote their shares and have granted a right of first
refusal to the Bank and its Chairman prior to disposing of such shares to
any third party.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
DIRECTORS' COMPENSATION. Directors who are not officers of the Company
are paid a fee of $1,000 for attendance at each meeting and $100 for non-
attendance. Directors who are also officers are not paid any fee for serving
as a director or attending any meetings. Under the Company's Non-employee
Directors Deferred Compensation Plan, non-employee Directors may elect to defer
director's fees into a participant account that includes a deferred stock
account (consisting of shares of Common Stock of the Company) and/or a deferred
cash account (which bears interest at the Bank's prime rate). Deferrals into
the deferred stock account are credited at the rate of 110% of the applicable
fee. Amounts deferred are payable, in stock or cash, as the case may be, upon
the earlier of the date selected by the participant, the date the participant
ceases to be a director or 60 days following a "Change in Control" of the
Company, as defined in the plan.
MEETINGS OF THE BOARD. During 1997, the Board of Directors of the Company
held 12 regularly scheduled meetings and one annual organizational meeting.
Each director of the Company attended at least 75% of the aggregate of: (1)
the total number of meetings of the Board of Directors held during the period
for which he or she has served as a director; and (2) the total
8
<PAGE>
number of meetings held by all committees of the Board of Directors on which the
director served in 1997.
BOARD COMMITTEES. The Board of Directors has an Audit Committee, Planning
and Management Committee and Nominating Committee, each of which is comprised
solely of non-employee directors.
The Audit Committee consists of William C. Ballard, Jr., Jerome Pakenham,
Donald G. McClinton, David Jones, Jr., and Henry C. Wagner. The Audit
Committee recommends to the Board of Directors the engagement of independent
auditors for the Company (and the Bank), reviews the reports of regulatory
examiners and independent auditors, reviews reports concerning the internal
control structure and other similar matters, and makes recommendations to the
Board of Directors as may be appropriate. The Audit Committee held 5 meetings
during 1997.
The Planning and Management Committee consists of Raymond L. Sales, Leslie
D. Aberson, William C. Ballard, Jr., James E. Cain, Martha Layne Collins, Bruce
J. Roth, and Henry C. Wagner. This Committee functions as the compensation
committee of the Board to review the compensation of executive officers of the
Company and to prepare recommendations and periodic reports to the Board
concerning such matters. This committee is also responsible for administering
the Company's Incentive Stock Option Plan. In addition, this Committee works
with Company management regarding strategic planning issues. The Planning and
Management Committee met 3 times during 1997.
The Nominating Committee consists of Robert P. Adelberg, Martha Layne
Collins, Judge John Palmore and Benjamin K. Richmond. The duties of the
Nominating Committee include seeking qualified and capable individuals to
serve on the Company's Board of Directors. The Committee will consider for
nomination as directors persons recommended by shareholders. Such
recommendations must be in writing and delivered to the Nominating Committee,
MidAmerica Bancorp, 500 West Broadway, Louisville, Kentucky 40202. The
Nominating Committee met once during 1997.
Directors of the Company hold directorships in other companies registered
under Section 12 or subject to the requirements of Section 15(d) of the
Securities Exchange Act of 1934, or registered as an investment company under
the Investment Company Act of 1940, as follows: William C. Ballard, Jr., is a
director of LG&E Energy Corp., United Healthcare Corp., Atria Corp., American
Safety Razor, Healthcare, REIT and Health Recoveries, Inc. Martha Layne Collins
is a director of the Eastman Kodak Company and R. R. Donnelly & Sons Company.
Donald G. McClinton is a director of Caretenders, Inc.
9
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation information
for Mr. Bertram W. Klein, Chairman, R. K. Guillaume, Chief Executive Officer,
and four other Executive Officers, as of year-end 1997, who were the most
highly compensated in 1997 (the Named Officers).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
<S> <C> <C> <C> <C> <C>
STOCK
OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS<F1> (IN SHARES) COMPENSATION<F2>
Bertram W. Klein 1997 $420,000 $133,896 12,360 $24,918
Chairman of the Board 1996 400,000 111,600 - 0 - 28,143
1995 400,000 - 0 - 10,300 17,614
R. K. Guillaume 1997 $400,000 $127,520 12,360 $7,776
Chief Executive Officer 1996 365,000 101,835 25,750 10,259
1995 *84,231 - 0 - - 0 - - 0 -
Orson Oliver 1997 $315,000 $100,422 6,180 $13,632
President 1996 315,000 87,885 - 0 - 13,969
1995 267,305 - 0 - 10,300 16,923
Gail W. Pohn 1997 $167,000 $53,240 6,025 $21,114
Executive Vice President 1996 160,603 44,808 - 0 - 18,796
1995 155,925 - 0 - 10,300 20,390
Robert H. Sachs 1997 $167,000 $53,240 6,025 $11,757
Executive Vice President 1996 162,982 45,472 - 0 - 16,774
1995 158,235 - 0 - 10,300 14,482
Steven A. Small 1997 $174,000 $55,471 6,165 $17,451
Executive Vice President & 1996 164,285 45,836 - 0 - 14,639
Chief Financial Officer 1995 159,500 - 0 - 10,300 14,180
</TABLE>
* Employed only part of 1995.
__________________________________
[FN]
<F1> The amounts shown in this column represent amounts earned under the
Company's Management Incentive Compensation Plan, pursuant to which
Senior Vice Presidents, Executive Vice Presidents and other executive
officers of the Company and the Bank are eligible to receive a cash award
based upon performance criteria established by the Plan. (See
Compensation Committee Report on
10
<PAGE>
Executive Compensation). The bonuses reflected in this chart were paid in
1998 based upon 1997 performance.
<F2> Amounts in this column include:
(a) Contributions by the Company to the Company's 401(K) and Employee
Stock Ownership Plan, a defined contribution plan (ESOP), on behalf of
the Named Officers. All employees of the Company who have attained age
20-1/2 and who have been credited with 500 hours of service in a six-
month period with the Company or the Bank are generally eligible to
participate in the ESOP. Participants may elect to have 2% to 5% of
their pre-tax compensation contributed to the ESOP with the Company
contributing an amount of up to 4-1/2% of the participant's compensation.
Also includes Company contributions under the Company's Benefit
Restoration Plan, a defined benefit plan intended to restore benefits
unavailable to participants as a result of certain Internal Revenue Code
limits on qualified plan benefits.
(b) Amounts paid to the following Named Officers under the Bank's Key-
Per Plan during 1997, as follows: Mr. Klein, $5,632, and Mr. Oliver,
$5,856. The Key-Per Plan is an unfunded employee welfare benefit plan
available to certain employees in the position of Senior Vice President
or more senior office. After participants have held the office of Senior
Vice President or higher with the Bank for 10 years, the participant
begins to receive equal monthly payments from the Key-Per Plan over the
next 10 years, provided the participant remains employed by the Bank
during such period. There have been no participants added to the Key-Per
Plan since 1986.
(c) For Mr. Pohn, $6,000 pursuant to an employment contract. For Mr.
Small $5,000 pursuant to an agreement to forego a contractual right.
OPTION GRANTS IN 1997
The following table sets forth information as to the stock options granted
to the Named Officers during 1997 pursuant to the Company's Incentive Stock
Option Plan.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENTAGE OF VALUE AT ASSUMED ANNUAL
TOTAL OPTIONS RATES OF STOCK PRICE
GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE EXPIRATION OPTION TERM <F2>
NAME GRANTED<F1> FISCAL 1997 ($/SHARE) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Bertram W. Klein 12,360 25% 21.87 3/17/2002 $ 43,291 $125,416
R. K. Guillaume 12,360 25% 19.88 3/17/2007 154,530 391,609
Orson Oliver 6,180 13% 19.88 3/17/2007 77,265 195,805
Gail W. Pohn 6,025 12% 19.88 3/17/2007 75,327 190,894
Robert H. Sachs 6,025 12% 19.88 3/17/2007 75,327 190,894
Steven A. Small 6,165 13% 19.88 3/17/2007 77,077 195,329
</TABLE>
______________________________________
11
<PAGE>
[FN]
<F1> The exercise price of each of the options is equal to the closing price
of the Company's Common Stock in the American Stock Exchange, Inc.
("AMEX") reported consolidated trading on the date of grant. The number
of options and the exercise price shown have been adjusted to reflect the
effect of a stock dividend in 1997 after the grant of the options.
<F2> Based on actual option term and annual compounding, without regard to the
taxes associated with gains upon option exercises. These amounts assume
the stated rates of appreciation will be realized. Actual gains, if any,
are dependent upon the future performance of the Company's Common Stock.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table provides information about options exercised during
1997, and the unexercised options held at December 31, 1997 by the Named
Officers. None of the Named Officers exercised stock appreciation rights
("SARs") during 1997 or held SARs at the fiscal year-end. The value of the
unexercised options is calculated based on the difference between the exercise
price and the closing price of Common Stock as of December 31, 1997, as
reported by the AMEX consolidated transaction reporting system ($33.625).
12
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR-END AT FISCAL YEAR-END($)
<S> <C> <C> <C> <C> <C> <C>
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($)* EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Bertram W. Klein .. 11,254 $178,606 22,182 12,360 $368,202 $145,045
R. K. Guillaume - 0 - - 0 - 26,522 12,360 435,889 169,641
Orson Oliver. 3,000 30,799 64,471 6,180 1,337,958 84,821
Gail W. Pohn - 0 - - 0 - 33,772 6,025 633,451 82,693
Robert H. Sachs - 0 - - 0 - 33,772 6,025 622,323 82,693
Steven A. Small 12,700 150,672 20,693 6,165 365,837 84,601
</TABLE>
__________________________________
* Represents the difference between the market value of the Common Stock
(or the sale price if shares were sold) on the day of exercise and the
option exercise price.
RETIREMENT PLAN
The Company's non-contributory defined benefit Retirement Plan (the
"Plan") originated on September 1, 1963 (as the Bank's Retirement Plan prior to
formation of the Company in 1983) and has been amended several times to comply
with governmental regulations and to reflect other changes made since the Plan
was adopted. All full time employees of the Company and the Bank who have
attained age 20-1/2 and who have been credited with 500 hours of service in a
six month period with the Company or the Bank, and part time employees who have
completed 1,000 hours of service in the previous 12 month period, are generally
eligible to participate in the Plan.
The table set forth below shows the estimated annual benefits payable
following retirement at age 65 to persons in specified remuneration and years
of participation classifications under the Plan. A portion of the benefits
shown below will be paid from the Company's Benefit Restoration Plan, a defined
benefit plan intended to restore benefits unavailable to participants as a
result of certain Internal Revenue Code limits on qualified plan benefits.
13
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
<S> <C> <C> <C> <C> <C>
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
$125,000 $27,765 $37,020 $46,275 $55,530 $64,785
150,000 33,390 44,520 55,650 66,780 77,910
175,000 39,015 52,020 65,025 78,030 91,035
200,000 44,640 59,520 74,400 89,280 104,160
225,000 50,265 67,020 83,775 100,530 117,285
250,000 55,890 74,520 93,150 111,780 130,410
300,000 67,140 89,520 111,900 134,280 156,660
400,000 89,640 119,520 149,400 179,280 209,160
450,000 100,890 134,520 168,150 201,780 235,410
500,000 112,140 149,520 186,900 224,280 261,660
</TABLE>
Covered compensation includes base salary. If an employee retires at the
later of age 65 or the employee's fifth anniversary of participation, the
employee will be entitled to a monthly pension payable for life with a minimum
of 120 guaranteed payments equal to the product of: (1) the sum of 1% of the
first $400 of the employee's average monthly compensation (highest 10
consecutive years) plus 1-1/2% of the employee's average monthly compensation
in excess of $400, multiplied by (2) the employee's years of credited service
(up to 35 years). Employees with more than 35 years of credited service are
entitled to additional monthly payments equal to 1-1/2% of the employee's
average monthly compensation multiplied by the employee's years of credited
service in excess of 35 years. The benefits as determined above and as listed
in the pension table are not subject to any deduction for Social Security or
other offset amounts.
As of December 31, 1997, the Named Officers in the Summary Compensation
Table who participate in the Retirement Plan had the following number of
complete years of accredited service: Bertram W. Klein, 44 years; R. K.
Guillaume, 2 years; Orson Oliver, 22 years; Steven A. Small, 4 years; Robert H.
Sachs, 5 years; and Gail W. Pohn, 5 years.
EMPLOYMENT CONTRACTS, TERMINATION AND
CHANGE IN CONTROL ARRANGEMENTS
The Company and the Bank have employment agreements with R. K. Guillaume,
Orson Oliver, Robert H. Sachs, Steven A. Small and Gail W. Pohn. These
agreements were entered into in 1995. Mr. Guillaume was employed as Vice
Chairman and Chief Executive Officer of the Company and the Bank. Pursuant to
his agreement, he receives a base annual salary of $365,000 and participates in
the benefit plans of the Company. If he is unable to work because of
disability, he will receive 50% of base salary, continued coverage in the
medical, dental, hospitalization and life insurance programs of the Company and
continued accrual of credited service under the Pension Plan of the Company to
age 65. Mr. Guillaume will receive his base pay and the continuation of
14
<PAGE>
certain benefits for 36 months if he is terminated without cause or is
constructively terminated without cause. If such termination follows a change
in control, he will receive such payments in a lump sum without discount.
The agreement with Mr. Oliver provides for a base annual salary of
$315,000 and terms otherwise similar to that of Mr. Guillaume, plus $125,000
upon the completion of 5 years service and $25,000 per year for each of the
following three years, provided he remains employed.
The agreement with Mr. Sachs incorporates the provisions of his old
agreement which expires on December 31, 1998, including the grant of 34,954
stock appreciation rights that upon a change in control prior to December 31,
1998 (and presuming continued employment), are converted into stock options.
The current agreement provides, in addition, for the payment of a sum equal to
two years' pay at the conclusion of its term, and, if there is a change in
control during its term, the grant of such years of credited service to bring
his total years of credited services for pension purposes to 15.
Mr. Pohn and Mr. Small have agreements expiring in 2003 and 2008,
respectively. If they are terminated (or constructively terminated) without
cause, they will receive salary payments and health insurance coverage for the
length of the extension period. If the termination is after a change in
control, they will receive, in addition, retirement benefits as if they had 15
years of credited service.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Planning and Management Committee of the Board of Directors is
comprised of the seven non-employee directors named below. The principal
duties of the committee are to review the compensation of executive officers of
the Company and to prepare recommendations and periodic reports to the Board
concerning such matters. The Planning and Management Committee has furnished
the following report relating to executive compensation during 1997.
The Company's Compensation Program for its executive officers consists of
base salary, the opportunity to earn an annual performance-based bonus and the
ability to receive discretionary stock option awards. Each of these elements
of compensation is discussed below.
BASE SALARY. Base salary levels are established by this Committee and the
other forms of compensation are fixed as described below. In general, base
salary levels are set at the minimum levels believed by this Committee to be
sufficient to attract and retain qualified executives when considered with the
components of the Company's compensation structure.
INCENTIVE COMPENSATION. The Committee believes that a portion of an
executive officer's cash compensation should be subject to specific performance
criteria. To accomplish this objective,
15
<PAGE>
the Company, in 1996, adopted a Management Incentive Compensation Plan
(the "Bonus Plan"). The Bonus Plan is intended to provide an immediate
recognition of managerial efforts through a cash bonus or award tied to the
financial performance of the Company. An annual award is based on the annual
increase in Earnings Per Share for the award period over the previous
period. A three-year award is based on (i) the three-year average increase
in Earnings Per Share, (ii) the three-year average Return on Average Assets,
and (iii) the three-year average Return on Equity. The Bonus Plan is open to
participation by Executive Vice Presidents and above, Senior Vice Presidents
and Vice Presidents of the Company and the Bank. The aggregate amount of
cash award for a fiscal year is calculated for each of the aforementioned
groups according to a schedule comparing the relevant increases or results for
the Award Period to a predetermined performance standard. When an increase or
result is above or below the target performance standard, the actual award fund
is adjusted upward or downward from the target award. The aggregate amount
of the annual award is apportioned between corporate performance and
individual performance for the groups below Executive Vice President. The
individual performance portion is discretionary with the Committee and is
25% of the annual award for Senior Vice Presidents and 50% of the annual award
for Vice Presidents.
STOCK OPTION PROGRAM. The Company has adopted the 1995 Incentive Stock
Option Plan. The Committee believes that by providing those officers who have
substantial responsibility for the management and growth of the Company and the
Bank an opportunity to increase their ownership of the Company's Common Stock,
the interests of shareholders and executives will be closely aligned. The
Committee also believes that stock options whether under this plan or otherwise
are an important component in attracting and keeping quality personnel and in
contributing to the long term objectives of the Company. Therefore, persons
holding the positions of Vice President or more senior offices in the Company
and the Bank are eligible to receive stock options from time to time, giving
them the right to purchase shares of the Company's Common Stock at a specified
price in the future. Options are granted at an exercise price not less than the
closing price of the Company's Common Stock in the AMEX reporting consolidated
trading on the date of grant. In addition, in the case of Mr. Klein (and any
other participants who may own more than 10% of the outstanding voting stock of
the Company in the future), the option price of the shares is not less than
110% of such closing price on the date of grant.
The Committee has discretion in determining whether options will be
awarded in any given year, which eligible officers will receive options and the
number of options to be received by such officer. Decisions concerning options
for a particular year are made in the FOLLOWING year. In 1997, the Committee
decided that an award of options would be granted based upon the performance of
the Company during 1996.
OBRA DEDUCTIBILITY LIMITATION. The Omnibus Budget Reconciliation Act of
1993 prohibits the deduction by public companies of compensation of certain
executive officers in excess of $1 million, unless certain criteria are met.
The Company has determined not to take any action at this time with respect to
its compensation plans to seek to meet these criteria.
16
<PAGE>
PLANNING AND MANAGEMENT COMMITTEE
<TABLE>
<CAPTION>
<S> <C> <C>
Raymond L. Sales, Chairman Leslie D. Aberson
William C. Ballard, Jr. James E. Cain
Martha Layne Collins Bruce J. Roth
Henry C. Wagner
</TABLE>
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Planning and Management Committee of the Board of Directors is
responsible for executive compensation decisions as described above. During
1997, the committee consisted of Raymond L. Sales, Leslie D. Aberson, William
C. Ballard, Jr., James E. Cain, Martha Layne Collins, Bruce J. Roth and Henry
C. Wagner. Mr. Sales was, until July 31, 1997, a partner in the law firm of
Segal, Isenberg, Sales, Stewart, Cutler & Tillman, which the Company retained
to perform various legal services during 1997. Mr. Sales remains of counsel to
that firm.
OTHER TRANSACTIONS
In the ordinary course of its business, the Company, through the Bank, has
in the past and expects to have in the future, banking transactions including
lending, with its directors, officers, principal shareholders and their
associates. Loans made to such persons are made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, involving no more than normal risk of collection and presenting
no unfavorable features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's stock, to file with the Securities Exchange Commission
initial reports of stock ownership and reports of changes in stock ownership.
Reporting persons are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file. Based solely on its review of
the copies of such reports received during the last fiscal year or written
representations, the Company believes that all reports required by Section
16(a) during the most recent fiscal year or prior fiscal years were filed on a
timely basis.
COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURN
The following graph shows the cumulative return experienced by the
Company's shareholders during the last five years compared to the S&P 500
Composite Stock Index and the
17
<PAGE>
NASDAQ CRSP Bank Index. The graph assumes the investment of $100 on
December 31, 1992 in the Company's Common Stock and each index and the
reinvestment of all dividends paid during the five-year period.
Mid-America Bancorp
Total Return Performance
<TABLE>
<CAPTION>
PERIOD ENDING
<S> <C> <C> <C> <C> <C> <C>
INDEX 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
Mid-America Bancorp 100.00 117.51 120.02 135.83 153.77 289.67
S&P 500 100.00 110.08 111.53 153.44 188.52 251.44
NASDAQ Bank Index 100.00 114.04 113.63 169.22 223.41 377.44
</TABLE>
18
<PAGE>
PROPOSED AMENDMENTS TO THE ARTICLES OF INCORPORATION
OVERVIEW OF THE PROPOSED AMENDMENTS
The following summary discusses three proposed additions to the Articles
of Incorporation of the Company (the "Amendments") that are being presented to
shareholders as three separate proposals. Each of the Amendments has been
approved unanimously by the Board of Directors. This summary is not intended to
be comprehensive and is qualified by reference to the text of the Amendments,
which are attached as Appendix A to this Proxy Statement. The Amendments would
add the following provisions to the Articles of Incorporation of the Company:
(i) Proposed Article IX would require certain transactions involving
fundamental changes to the corporate structure of the Company or the transfer
of substantial amounts of its assets be approved by the vote of holders of 75%
of the Company's outstanding shares of the Company. The supermajority vote
would not apply to transactions approved by a majority of all the directors
then in office.
(ii) Proposed Article X provides that the Company would elect to be
governed by the board approval and supermajority voting provisions of the
Kentucky Business Combination Act (the "Act"). The Act imposes a five-year
standstill period and minimum share vote approval requirements on certain
business combinations involving a Kentucky corporation that is subject to or
elects to be governed by the provisions of the Act, unless specific conditions
are satisfied.
(iii) Proposed Article XI would require a supermajority vote of
shareholders to amend or repeal the foregoing provisions and certain other
provisions of the articles of incorporation.
REASONS FOR THE AMENDMENTS
The purpose of the proposed Amendments is to provide for the stability of
the operations and personnel of the Company, by increasing the leverage of the
Board of Directors in takeover situations generally. The Amendments are
intended to encourage third parties to initiate any attempt to acquire control
of the Company by negotiating with the management and Board of Directors of the
Company. The Amendments will help ensure that the Board of Directors will have
sufficient time to evaluate any acquisition proposal and appropriate
alternatives on an informed basis and greater ability to negotiate a fair price
for all of the shareholders if a sale of the Company is determined by the Board
of Directors to be in the best interest of the Corporation.
At the same time, the Amendments would discourage certain tactics that the
Board of Directors believes can be highly disruptive to a company and can
result in dissimilar and unfair treatment of its shareholders. Such tactics
include the accumulation of a substantial common stock position as a prelude to
an attempted takeover or significant corporate restructuring, and the use of
"two-tiered pricing," in which an acquirer could offer to pay a premium price
in cash for the
19
<PAGE>
number of shares sufficient to gain control of the target corporation. After
obtaining control, the acquirer could then pay a different price or a less
desirable form of consideration for the remaining shares in a "squeeze-out"
merger or similar transaction in which the remaining minority position would be
eliminated. The proposed Amendments will be a significant deterrent to
two-tiered pricing.
The Amendments, if they are adopted, could also have the effect of
discouraging a third party from making a tender offer or otherwise attempting
to obtain control of the Company without negotiating with the Board of
Directors, even though such a takeover attempt might be desirable to certain
shareholders. In addition, since the Amendments are designated to discourage
accumulations of large blocks of the stock of the Company by purchasers whose
objective is to have such stock repurchased by the Company at a premium,
adoption of the Amendments could tend to reduce the temporary fluctuations in
the price of the stock of the Company that could result from accumulations of
large blocks of the stock of the Company. Accordingly, shareholders could be
deprived of certain opportunities to sell their stock at a temporarily higher
price. The Amendments will not prevent a takeover that is approved by the
directors of the Company unaffiliated with the shareholder seeking to acquire
control of the Company.
The Board of Directors feels that now is an appropriate time for the
adoption of these amendments. All of the larger banks in the area served by the
Company have been acquired by regional bank holding companies headquartered in
other states. As the area's largest locally managed bank, the Company believes
that it has an unusual opportunity for growth if it remains independent. The
Board has adopted as part of the mission statement of the Company, the goal to
maintain that independence. The proposed Amendments are not the result of any
specific effort to accumulate shares of the Company or to acquire control of
the Company.
Each of the proposed Amendments will be approved if the number of votes
cast for the Amendment exceeds the number of votes cast against the Amendment
at the Annual Meeting. Abstentions will be counted as shares represented at
the Annual Meeting but not as votes either for or against an Amendment. Broker
non-votes will not be counted as shares represented at the Annual Meeting or as
votes either for or against an Amendment.
The Board of Directors believes that adoption of the Amendments is in the
best interests of all of the shareholders and unanimously adopted these
recommendations that shareholders vote "FOR" each of the three proposed
Amendments.
PROPOSED ARTICLE IX
Proposed Article IX would require the affirmative vote of the holders of a
least 75% of the outstanding shares of the voting stock of the Company to
approve the following transactions: (i) the sale of all or substantially all
the assets of the Company or any subsidiary in which the Company owns 50% or
more of the voting stock; (ii) the sale of shares of a subsidiary owned by
20
<PAGE>
the Company; (iii) the distribution of any shares or assets of any subsidiary;
(iv) any merger or share exchange to which the Company or a subsidiary is a
party; (v) any split-off or split-up of the Company; or (vi) the dissolution
of the Company.
The supermajority requirements would not apply if either (a) the proposal
was approved by a majority of the directors then in office (and not merely a
majority of a quorum), or (b) higher voting requirements apply. If the Company
were to adopt proposed Article X and elect thereby to be governed by the
Kentucky Business Combination Act, higher voting requirements would apply to
transactions between the Company and any "interested shareholder," within the
meaning of that Act.
The text of proposed Article IX is set forth in full in Appendix A.
The primary purpose of Article IX is to encourage any potential acquirer
to negotiate with the Board to obtain its concurrence with the proposed
transaction and thus secure the decreased voting threshold. The Board of
Directors could use this opportunity for negotiation to attempt to obtain the
most favorable terms for the Company and its shareholders or pursue alternative
measures. Proposed Article IX could have the effect of rendering more
difficult or discouraging one of the transactions it covers, and accordingly,
would have an adverse impact on shareholders who favor such transactions.
As a group, the Company's directors and officers as a group beneficially
own 29.07% of the Common Stock currently outstanding. Bertram W. Klein, the
Company's Chairman, beneficially owns 20.69% of the Common Stock currently
outstanding. Although these percentages could increase or decrease in the
future, the shares currently owned by the Company's directors and officers, if
voted together, would represent more than the 25% of the Common Stock required
to defeat a proposed business combination that was favored by holders of a
majority of the outstanding shares of Common Stock.
PROPOSED ARTICLE X
Proposed Article X provides that the shareholder vote and board approval
requirements of the Kentucky Business Combination Act (KRS 271B.12-200 to 12-
230) would apply to specific transactions defined as "business combinations"
between the Company and a person who, after the effective date of this proposed
Article X, acquires shares representing 10% of the Company's voting power, and
thus becomes an "Interested Shareholder" of the Company, at any time after
Article X becomes effective. The Act applies to Kentucky corporations that
have at least 500 shareholders, have their principal offices in Kentucky, and
meet other criteria relating to the amount of shareholders, stock or employees
located in Kentucky. Unlike similar business combination statutes of other
states, the Kentucky Act does not apply to bank holding companies and certain
other financial institutions unless the institution's articles of incorporation
contain a provision providing that the institution will be governed by the Act.
Thus, Article X would provide the Company with
21
<PAGE>
the same statutory protections against the self-dealing transactions described
elow that many other public companies of similar size currently have.
The text of the proposed Article X is set forth in full in Appendix A. The
Act is set forth in full in Appendix B.
KRS 271B.12-210 prohibits a "business combination" between a corporation
and a person who has accumulated a significant position in the stock of the
Corporation for five years from the date such person became an "interested
shareholder" within the meaning of the Act unless, before the date the
interested shareholder became such, the business combination is approved by a
majority of the corporation's "independent directors." The Act defines
"independent directors" as the directors who are not officers or employees of
the corporation nor are affiliated or associated with an interested shareholder
or any of its affiliates. In addition to the five-year standstill, a business
combination not approved by a majority of the independent directors must either
(a) be approved by 80% of the outstanding voting shares of the corporation and
by two-thirds of the voting shares held by shareholders other than the
interested shareholder who (or whose affiliate) is a party to the business
combination, voting together as a single voting group; or (b) meet certain
minimum price and procedural requirements designed to ensure equal treatment of
all shareholders.
Transactions defined as "business combinations" include mergers, certain
dispositions of assets, certain issuances and transfers of securities, certain
recapitalizations and reorganizations, as well as other specified transactions
involving a corporation and an interested shareholder. In addition, an
interested shareholder's receipt of the benefit of loans, pledges, guarantees,
tax benefits or other financial assistance from the corporation other than
proportionally as a shareholder would be a business combination for purposes of
the Act.
The Act defines an "interested shareholder" as any person, other than the
corporation or any of its subsidiaries, who is the beneficial owner, directly
or indirectly, of 10% or more of the voting shares of the corporation,
including for this purpose any shares beneficially owned by any entity or
person affiliated or associated with the interested shareholder. Article X
excludes from the definition of interested shareholder a person who
beneficially owns 10% or more of the voting power of outstanding voting stock
of the Company at the time Article X takes effect unless and until such person
acquires additional shares of voting stock of the Company and becomes the
beneficial owner of 24% or more of the voting power of outstanding voting stock
of the Company. However, shares acquired pursuant to the employee benefit plans
of the Company, stock dividends, stock splits or similar distributions of or
changes to the outstanding voting stock of the Company would not be counted for
this purpose.
Currently, the Company knows of one shareholder who beneficially owns 10%
or more of its voting shares. That shareholder is Mr. Klein, the Chairman of
the Company, who currently owns 20.69% of the Common Stock. For purposes of
Article X, Mr. Klein would become an interested
22
<PAGE>
shareholder only if he acquired additional shares (other than as specifically
excepted by Article X) to increase his beneficial ownership to 24% of the
voting shares of the Company.
The directors and officers of the Company have the power to vote up to
29.07% of the currently outstanding shares as a group. Although this
percentage could increase or decrease in the future, the shares currently owned
by the directors and officers of the Company collectively, and by Mr. Klein
individually, would represent more than the 20% required to defeat a proposed
business combination that was favored by holders of a majority of the
outstanding shares of Common Stock, unless the terms of the proposal satisfied
minimum price and procedural requirements that would obviate the need for
supermajority approval of the transaction.
PROPOSED ARTICLE XI
Proposed Article XI would require a supermajority vote to alter, amend, or
repeal specific provisions of the Articles of Incorporation, or to adopt any
provision inconsistent with them, unless the proposed amendment is approved by
a majority of directors who are not affiliated with the Interested Shareholder.
The Articles that could be altered, amended, or repealed only by a
supermajority vote are: Article V [classified board of directors]; Article VI
[indemnification]; Article VII [board's authority to consider certain factors
in evaluating takeover proposals]; Article VIII [limitation of director
liability]; Article IX [supermajority voting requirements]; Article X [business
combinations]; and Article XI [supermajority vote to amend or repeal certain
Articles].
The vote required to amend or repeal the listed Articles (the "Required
Proportion") would be a percentage of the voting stock of all classes of shares
entitled to vote in election of directors. The Required Proportion is defined
as the SUM of (i) the number of shares owned by an "interested shareholder"
PLUS (ii) 70% of the remaining shares DIVIDED BY the total number of voting
shares. For example, if the Company had one interested shareholder owning 15%
of the voting shares, the Required Proportion would be .15 + (.85 x .7) = .745
or 74.5%.
Article XI defines "interested shareholder" as any person who acquires 15%
or more of the voting shares after the Article takes effect. Any person who
beneficially owns 15% or more of the voting shares at the time Article X takes
effect would become an interested shareholder for purposes of Article XI only
if, and at such time as, that person acquires additional shares of voting stock
of the Company and becomes the beneficial owner of 24% or more of the voting
power of outstanding voting stock of the Company. However, shares acquired
pursuant to the Company's employee benefit plans, stock dividends, stock splits
or similar distributions of or changes to the Company's outstanding voting
stock would not be counted for this purpose. Thus, Mr. Klein would become an
interested shareholder for purposes of Article XI only if he acquired
additional shares (other than as specifically excepted by Article XI) to
increase his beneficial ownership to 24% of the Company's voting shares.
The text of proposed Article XI is set forth in full in Appendix A.
23
<PAGE>
The requirement of an increased shareholder vote is designed to prevent a
shareholder controlling a majority of the voting stock of the Company from
avoiding the requirements of the Articles subject to Article XI by simply
repealing them. A proposal to alter, amend or repeal any of these Articles may
present a conflict of interest for an interested shareholder. Article XI would
allow those of the directors or shareholders of the Company without such a
conflict of interest to determine whether to change the provisions of these
Articles. Article XI would work in conjunction with the Articles IX and X and
certain other Articles by making their provisions more difficult to change.
The Company's directors and officers to have the power to vote up to
29.07% of the currently outstanding shares as a group. Although this
percentage could increase or decrease in the future, the shares currently owned
by the directors of the Company and officers of the Company, if voted together
at a time when the Company had an interested shareholder, would be sufficient
to defeat a proposal to amend or repeal Articles subject to the supermajority
voting requirements of Article XI.
CURRENT ARTICLES PROVISIONS AFFECTING TAKEOVERS
The Articles of Incorporation of the Company currently include provisions,
and the Company has taken other measures, that could have the effect of
discouraging a third party from making a tender offer or otherwise attempting
to obtain control of the Company other than through negotiations with the Board
of Directors.
PREFERRED STOCK.
Article IV authorizes the Company to issue 750,000 shares of preferred
stock ("Preferred Stock") in one or more series with such preferences,
limitations, and relative rights as may be determined by the Board of Directors
of the Company without further action by shareholders. No shares of Preferred
Stock are currently issued or outstanding. The Board of Directors has reserved
one series of 120,000 shares of the Preferred Stock for issuance in connection
with the Company's Shareholder Rights Agreement. See "Shareholder Rights
Agreement" below.
The Board of Directors believes that the ability to issue a second class
of stock in one or more series with a range of potential economic and voting
rights provides the Company with valuable flexibility in connection with a wide
range of possible transactions, including acquisitions, combinations, equity
financings, stock distributions, stock splits, stock dividends, employee
benefit plans and other corporate purposes. The power to issue new Preferred
Stock could allow the Board of Directors to make it more difficult to replace
incumbent directors or accomplish certain business combinations opposed by the
incumbent Board of Directors by issuing shares with sufficient voting power or
economic rights to ensure that such a proposal could not obtain the requisite
approval of the shareholders of the Company.
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CLASSIFIED BOARD.
Article V provides that the number of directors may not be less than ten
nor more than twenty-one and authorizes the Board of Directors to establish the
number of directors within that range. Article V also provides that the
directors are divided into three classes, each class to be as nearly equal in
number as possible, and one class of directors to be elected annually. A
classified board thus reduces the number of directors otherwise elected by
shareholders each year, and increases the number of shares that must be voted
together to elect any particular director. A classified board may have the
effect of discouraging a takeover attempt because it would take a majority
shareholder at least two years to elect its nominees to a majority of the
positions on the Board of Directors.
EVALUATION OF TAKEOVER PROPOSALS.
Article VII authorizes the Board of Directors to base its response to an
acquisition proposal upon its evaluation of what is in the best interests of
the Company and its shareholders. For this purpose, the Board of Directors may
consider not only the consideration offered in the takeover bid in relation to
the then current market price but also the Board of Directors' estimate of the
current or future value of the Company in a freely negotiated transaction as
well as the Board of Directors' estimate of the Company's future value as an
independent entity.
In addition, the Board of Directors may also consider such other factors
as it determines to be relevant, including the social, legal and economic
effects on employees, customers, suppliers, and other constituents of the
Company and on the communities in which the Company operates. Finally, the
Board of Directors may consider the background and personnel of the acquiring
party.
SHAREHOLDER RIGHTS AGREEMENT.
On February 23, 1998, the Board of Directors declared a dividend
distribution of one right (a "Right") for each outstanding share of Common
Stock to shareholders of record at the close of business on March 13, 1998 (the
"Record Date"). Each Right entitles the registered holder to purchase from the
Company a unit consisting of one-hundredth of a share (a "Unit") of 1998A
Junior Participating Preferred Stock (the "Participating Preferred") at a
purchase price of $75.00 per Unit (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of February 23, 1998 (the "Rights Agreement") between the
Company and Bank of Louisville, as Rights Agent.
Initially, the Rights attach to all the Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates are
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) 10 business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the
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outstanding shares of the Common Stock (the "Stock Acquisition Date") or (ii)
10 business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 15% or more of
such outstanding shares of the Common Stock. In addition to the Rights
dividend on shares outstanding on the Record Date, the Rights Agreement
provides for the automatic issuance of a Right with respect to each share
of the Common Stock issued after the Record Date but before the earlier of the
Distribution Date or the date on which the Rights expire.
The definition of "Acquiring Person" excludes any shareholder who
beneficially owns 15% or more of the shares of Common Stock outstanding on the
date the Rights Agreement was adopted (an "Excluded Shareholder"). An Excluded
Shareholder may become an Acquiring Person only at such times as the Excluded
Shareholder becomes the beneficial owner of 24% or more of the shares of the
Common Stock outstanding as a result of the Excluded Shareholder acquiring
additional shares of Common Stock (other than acquisitions as a result of the
death of a parent or spouse or pursuant to an employee benefit plan, a stock
split, or a stock dividend). The Excluded Shareholders include Mr. Klein and
certain members of his immediate family.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on March 13, 2008, unless earlier redeemed by the
Company as described below. Until a Right becomes exercisable and is actually
exercised (as described in succeeding paragraphs), the holder thereof, as such,
will have no voting, dividend or other rights as a shareholder of Company.
Following any Stock Acquisition Date, (i) each holder of a Right other
than an Acquiring Person (or certain related parties) will have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the exercise price of the Right, and (ii) all rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person will be null and void.
For example, at an exercise price of $75 per Right, each Right not owned
by an Acquiring Person (or by certain related parties) following a Stock
Acquisition Date would entitle its holder to purchase $150 worth of Common
Stock based on the current market price (as defined in the Agreement) of the
Common Stock for $75. Assuming that the current market price of Common Stock
is $30 per share, the holder of each valid Right would be entitled to purchase
5 shares of Common Stock for $75.
If, at any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation (other than a merger which follows an
offer described in the second preceding paragraph), or (ii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights that previously have been voided as set forth above) shall
thereafter have the
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right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the Right.
The Company may redeem all (but no fewer than all) of the Rights at a
price of $.01 per Right (payable in cash, Common Stock or other consideration
deemed appropriate by the Board of Directors). The decision to redeem requires
the concurrence of a majority of the Continuing Directors. The term "Continuing
Directors" means any member of the Board of Directors who was also a member of
the Board before the date an Acquiring Person became such, and any person who
is subsequently elected to the Board if such person is recommended or approved
by a majority of the Continuing Directors, but does not include an Acquiring
Person or an affiliate or associate of an Acquiring Person or any
representative of the foregoing entities.
Rights agreements generally provide a significant deterrent to attempts to
acquire control of a corporation without the approval of the board of
directors. The Rights would cause substantial dilution to a person or group
that attempts to acquire control without Board approval unless the offer is
conditioned upon the redemption of the Rights. The Rights, however, should not
affect any prospective offeror willing to make an offer for all outstanding
shares of the Common Stock at a fair price and otherwise in the best interest
of the Company and its shareholders as determined by the Board of Directors or
affect any prospective offeror willing to negotiate with the Board of
Directors. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors since the Board of Directors
may, at its option, redeem all but not less than all of the then outstanding
Rights or amend the Rights Agreement so as not to apply to a negotiated
transaction.
The Rights Agreement, which sets forth the terms and conditions of the
Rights, is incorporated herein by reference. See "Incorporation of Certain
Documents by Reference." The foregoing description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE
THREE AMENDMENTS.
INDEPENDENT AUDITORS
The selection of independent auditors to audit the Company's consolidated
financial statements for the year ended December 31, 1998, has not yet been
made. The timing of this selection allows the Audit Committee of the Board of
Directors additional time to review the performance of the independent auditors
during the past year, the complete results of the audit process and to make its
recommendation to the Board of Directors. The Board of Directors intends to
select an independent auditor following its receipt of the recommendation of
the Audit Committee by the end of the second quarter of 1998. KPMG Peat
Marwick LLP has acted as the
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Company's independent auditors since 1990. Representatives of KPMG Peat Marwick
LLP will be present at the Annual Meeting and will be given the opportunity to
make a statement if they so desire, and will answer appropriate questions
directed to them relating to their audit of the Company's consolidated
financial statements.
INCORPORATION BY REFERENCE
The Current Report of the Company on Form 8-K dated February 23, 1998,
which relates to the adoption of the Rights Agreement dated as of February 23,
1998, between the Company and Bank of Louisville, as Rights Agent, is
incorporated herein by reference.
OTHER MATTERS
The only matters to be considered at the Annual Meeting or any adjournment
thereof, so far as known to the Board of Directors, are those set forth in the
Notice of Meeting and routine matters incident to the conduct of the meeting.
However, if any other matters should properly come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy, or their substitutes, to vote such proxy in
accordance with their judgments in such matters.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholders who desire to present proposals at the 1998 annual meeting of
shareholders must forward them in writing to the President of the Company so
that they are received no later than November 17, 1998, in order to be
considered for inclusion in the Company's proxy statement for such meeting.
By order of the Board of Directors
Orson Oliver
President
Louisville, Kentucky
March 16, 1998
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APPENDIX A
TEXT OF PROPOSED NEW ARTICLES IX, X AND XI TO THE ARTICLES OF INCORPORATION
OF MIDAMERICA BANCORP
ARTICLE IX
Certain Voting Requirements
(a) In addition to any other requirements required by law or these
Articles of Incorporation, except as specified in (b) below, a vote of the
holders of at least seventy-five percent (75%) of the number of outstanding
shares of each class of the capital stock of the Corporation shall be
required to approve:
(i) The sale of all or substantially all of the assets of the
Corporation;
(ii) The sale of all or substantially all of the assets of any
Subsidiary;
(iii)The sale of all or part of the shares of any Subsidiary
owned by the Corporation;
(iv) The distribution, by way of spinoff, dividend or other
similar transaction of any shares of any Subsidiary or any
assets thereof;
(v) Any merger or share exchange to which the Corporation or any
Subsidiary is a party;
(vi) Any split-off or split-up of the Corporation; or
(vii)A plan of dissolution of the Corporation.
(b) The voting requirements of this Article shall not apply to a
transaction specified in (a)(i) through (a)(vii) where:
(i) Any other provision of law or these Articles specifies a
higher voting requirement, including, without limitation,
Article X ["Business Combinations"] and KRS 271B.12-210; or
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(ii) The proposed action has received the approval of a majority
of the directors of the Corporation then holding office.
(c) For purposes of this Article, "Subsidiary" shall mean any
corporation more than 50% of whose outstanding stock having voting power in
the election of directors is owned, directly or indirectly, by the
Corporation or by a Subsidiary or by the Corporation and one or more
Subsidiaries.
ARTICLE X
Business Combinations
The requirements of a shareholder vote and board approval in Section
271B.12-210 of the Kentucky Revised Statutes (the "Business Combinations
Statute") shall apply only to any Business Combination of the Corporation
with a person who becomes an Interested Shareholder of the Corporation at
any time after the effective time of this Article X pursuant to KRS 271B.1-
230. For purposes of this Article X, "Business Combination" and
"Interested Shareholder" shall have the meanings set forth in the Business
Combinations Statute; provided, however that a person who beneficially owns
10% or more of the voting power of outstanding voting stock of the
Corporation at the effective time of this Article X shall not become an
Interested Shareholder unless and until such time as such person shall
become the beneficial owner of 24% or more of the voting power of
outstanding voting stock of the Corporation solely as a result of such
person's acquiring beneficial ownership of additional shares of voting
stock of the Corporation (other than shares acquired as a result of the
death of a parent or spouse or acquired pursuant to a profit-sharing,
stock-based incentive compensation or other employee benefit plan
maintained by the Corporation, to a dividend or distribution paid or made
by the Corporation on the outstanding voting stock in shares of the same
class of stock, or to a split or subdivision of the outstanding voting
stock).
ARTICLE XI
Amendment or Repeal of Certain Articles
(a) CERTAIN DEFINITIONS. For the purposes of this Article:
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(i) A "Person" shall mean any individual, firm, trust,
estate, corporation or business organization.
(ii) "Interested Shareholder" shall mean any Person (other
than the Corporation or any Subsidiary) who or which:
(1) becomes the beneficial owner, directly or
indirectly, of more than 15% of the combined
voting power of the then outstanding shares of
Voting Stock after the date this Article takes
effect; or
(2) beneficially owns, directly or indirectly, more
than 15% of the combined voting power of the then
outstanding shares of Voting Stock at the date
this Article takes effect, but only if, and at
such time as, the Person becomes the beneficial
owner of 24% or more of the outstanding shares of
Voting Stock solely as a result of such Person's
acquiring beneficial ownership of additional
shares of Voting Stock (other than shares acquired
as a result of the death of a parent or spouse or
acquired pursuant to a profit-sharing, stock-based
incentive compensation or other employee benefit
plan maintained by the Corporation, to a dividend
or distribution paid or made by the Corporation on
the outstanding Voting Stock in shares of the same
class of stock, or to a split or subdivision of
the outstanding Voting Stock); or
(3) is an Affiliate of the Corporation, became the
beneficial owner (directly or indirectly) of more
than 15% of the combined voting power of the then
outstanding shares of Voting Stock after the date
this Article takes effect, and at any time within
the two-year period immediately prior to the date
in question was the beneficial owner (directly or
indirectly) of 15% or more of the combined voting
power of the then outstanding shares of Voting
Stock; or
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(4) is an assignee of or has otherwise succeeded to
the beneficial ownership of any shares of Voting
Stock that were at any time within the two-year
period immediately prior to the date in question
beneficially owned by any Interested Shareholder,
if such assignment or succession shall have
occurred in the course of a transaction or series
of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(iii) A Person shall be a "beneficial owner" of any
Voting Stock:
(1) which such Person or any of its Affiliates or
Associates beneficially owns, directly or
indirectly; or
(2) which such Person or any of its Affiliates or
Associates has (A) the right to acquire (whether
such right is exercisable immediately or only
after the passage of time), pursuant to any
agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (B)
the right to vote or direct the vote pursuant to
any agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or
indirectly, by any other Person with which such
Person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
(iv) For the purposes of determining whether a person is an
Interested Shareholder pursuant to (a) (ii) of this Article, the number of
shares of Voting Stock deemed to be outstanding shall include shares deemed
owned through application of (a)(iii) of this Article but shall not include
any other shares of Voting Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
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(v) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
January 1, 1998.
(vi) "Subsidiary" shall mean any corporation more than 50%
of whose outstanding stock having ordinary voting power in the election of
directors is owned, directly or indirectly, by the Corporation or by a
Subsidiary or by the Corporation and one or more Subsidiaries; PROVIDED,
HOWEVER, that for the purposes of the definition of Interested Shareholder
set forth in (a)(ii) of this Article, the term "Subsidiary" shall mean only
a corporation of which a majority of each class of equity security is
owned, directly or indirectly, by the Corporation.
(vii) "Disinterested Director" shall mean (1) any member of
the Board of Directors of the Corporation who is unaffiliated with, and not
a nominee of, the Interested Shareholder and was a member of the Board
prior to the time that the Interested Shareholder became an Interested
Shareholder, or (2) any successor of a Disinterested Director who is
unaffiliated with, and not a nominee of, the Interested Shareholder and who
is recommended to succeed a Disinterested Director by a majority of
Disinterested Directors then on the Board of Directors.
(viii) "Voting Stock" shall mean the voting power of the
then outstanding shares of all classes and series of the Corporation
entitled to vote generally in the election of directors.
(b) Notwithstanding anything in these Articles of Incorporation
to the contrary and in addition to any affirmative vote required by law,
the affirmative vote of the Required Proportion (as defined below) of
Voting Stock shall be required to alter, amend, or repeal Articles V
[Number and Authority of Directors], VI [Indemnification], VII
[Consideration of Certain Factors], VIII [Limitation of Director
Liability], IX [Certain Voting Requirements], X [Business Combinations], or
XI [Amendment or Repeal of Certain Articles] of these Articles of
Incorporation or to adopt any provision inconsistent therewith.
(c) For purposes of paragraph (b) of this Article, the Required
Proportion shall be calculated by DIVIDING (i) the sum of (1) the number of
shares of Voting Stock beneficially owned by any Interested Shareholder,
directly or indirectly plus (2) seventy percent of all the remaining shares
of Voting Stock not beneficially owned by any Interested Shareholder,
directly or indirectly BY (ii) the total number of shares of Voting Stock.
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(d) A majority of the Disinterested Directors of the Corporation
shall have the power and duty to determine, on the basis of information
known to them after reasonable inquiry, all facts necessary to determine
compliance with this Article, including, without limitation, (i) whether a
Person is an Interested Shareholder, (ii) the number of shares of Voting
Stock beneficially owned by any Person, (iii) whether a Person is an
Affiliate or Associate of another Person and whether a director is
unaffiliated with an Interested Shareholder, and (iv) whether the
requirements of paragraph (b) of this Article have been met with respect to
any shareholder vote specified therein. The good faith determination of a
majority of the Disinterested Directors on such matters shall be conclusive
and binding for all purposes of this Article.
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APPENDIX B
KENTUCKY BUSINESS COMBINATIONS ACT
271B.12-200 DEFINITIONS FOR KRS 271B.12-210 TO 271B.12-230
As used in KRS 271B.12-210 to 271B.12-230:
(1) "Affiliate," including the term "affiliated person," means a person
who directly, or indirectly through one (1) or more intermediaries,
controls, or is controlled by, or is under common control with, a
specified person.
(2) "Associate," when used to indicate a relationship with any person,
means:
(a) Any corporation or organization (other than the corporation
or a subsidiary of the corporation) of which such person is
an officer, director or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more
of any class of equity securities;
(b) Any trust or other estate in which such person has a
substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity; and
(c) Any relative or spouse of such person, or any relative of
such spouse, any one (1) of whom has the same home as such
person or is a director or officer of the corporation or any
of its affiliates.
(3) "Beneficial owner," when used with respect to any voting stock,
means a person:
(a) Who, individually or with any of its affiliates or
associates, beneficially owns voting stock, directly or
indirectly; or
(b) Who, individually or with any of its affiliates or
associates, has:
1. The right to acquire voting stock, whether such right
is exercisable immediately or only after the passage of
time and whether or not such right is exercisable only
after specified conditions are met, pursuant to any
agreement, arrangement, or understanding or upon the
exercise of conversion rights, exchange rights,
warrants or options, or otherwise;
2. The right to vote voting stock pursuant to any
agreement, arrangement, or understanding; or
3. Any agreement, arrangement, or understanding for the
purpose of acquiring, holding, voting or disposing of
voting stock with any other person who beneficially
owns, or whose affiliates or associates beneficially
own, directly or indirectly, such shares of voting
stock; however, for the purposes of this section and
KRS 271B.12-230 the beneficial owner of any voting
stock held by, or owned through participation in, any
purchase, savings, option, bonus, appreciation, profit
sharing, thrift, incentive, pension, stock ownership or
similar plan for employees or officers of the
corporation or any of its subsidiaries shall be deemed
to be the shareholder
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of record of such voting stock as shown on the stock
transfer books of the corporation.
(4) "Business combination" means:
(a) Unless the merger or consolidation does not alter the
contract rights of the stock as expressly set forth in the
articles of incorporation or change or convert in whole or in
part the outstanding shares of stock of the corporation, any
merger or consolidation of the corporation or any subsidiary
with any interested shareholder or any other corporation,
whether or not itself an interested shareholder, which is, or
after the merger or consolidation would be, an affiliate or
associate of an interested shareholder who was an interested
shareholder prior to the transaction;
(b) Any sale, lease, transfer, or other disposition, other than
in the ordinary course of business, in one (1) transaction or
a series of transactions in any twelve-month period, to any
interested shareholder or any affiliate or associate of any
interested shareholder, other than the corporation or any
subsidiaries, of any assets of the corporation or any
subsidiary having, measured at the time the transaction or
transactions are approved by the board of directors of the
corporation, an aggregate book value as of the end of the
corporation's most recently ended fiscal quarter of five
percent (5%) or more of the total market value of the
outstanding stock of the corporation or of its net worth as
of the end of its most recently ended fiscal quarter;
(c) The issuance or transfer by the corporation, or any
subsidiary, in one transaction or a series of transactions in
any twelve-month period, of any equity securities of the
corporation or any subsidiary which have an aggregate market
value of five percent (5%) or more of the total market value
of the outstanding stock of the corporation, determined as of
the end of the corporation's most recently ended fiscal
quarter prior to the first such issuance or transfer, to any
interested shareholder or any affiliate or associate of any
interested shareholder, other than the corporation or any of
its subsidiaries, except pursuant to the exercise of warrants
or rights to purchase securities offered pro rata to all
holders of the corporation's voting stock or any other method
affording substantially proportionate treatment to the
holders of voting stock;
(d) The adoption of any plan or proposal for the liquidation or
dissolution of the corporation in which anything other than
cash will be received by an interested shareholder or any
affiliate or associate of any interested shareholder; or
(e) Any reclassification of securities, including any reverse
stock split; or recapitalization of the corporation; or any
merger or consolidation of the corporation with any of its
subsidiaries; or any other transaction which has the effect,
directly or indirectly, in one transaction or a series of
transactions, of increasing by five percent (5%) or more the
proportionate amount of the outstanding shares of any class
of equity securities of the corporation or any subsidiary
which is directly or indirectly beneficially owned by any
interested shareholder or any affiliate or associate of any
interested shareholder; or
(f) Any receipt by an interested shareholder or any affiliate or
associate of such interested shareholder of the benefit
directly or indirectly, except proportionately as a
shareholder of such corporation, of any loans, advances,
guaranties, pledges
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or other financial assistance, or any tax credits or other
tax advantages provided by or through such corporation.
(5) "Common stock" means any stock other than preferred or preference
stock.
(6) "Continuing director" means any member of the board of directors
who is not an affiliate or associate of an interested shareholder
or any of its affiliates, other than the corporation or any of its
subsidiaries, and who was a director of the corporation prior to
the time the interested shareholder became an interested
shareholder, and any successor to such continuing director who is
not an affiliate or associate of an interested shareholder or any
of its affiliates, other than the corporation or any of its
subsidiaries, and was recommended or elected by a majority of the
continuing directors at a meeting at which a quorum consisting of a
majority of the continuing directors is present.
(7) "Control," including the terms "controlling," "controlled by" and
"under common control with," means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership
of voting securities, by contract, or otherwise, and the beneficial
ownership of ten percent (10%) or more of the votes entitled to be
cast by a corporation's voting stock creates a presumption of
control.
(8) "Equity security" means:
(a) Any stock or similar security, certificate of interest, or
participation in any profit-sharing agreement, voting trust
certificate, or certificate of deposit for the foregoing;
(b) Any security convertible, with or without consideration, into
an equity security, or any warrant or other security carrying
any right to subscribe to or purchase an equity security; or
(c) Any put, call, straddle, or other option, right or privilege
of acquiring an equity security from or selling an equity
security to another without being bound to do so.
(9) "Independent member" of the board of directors means any director
who is not an officer or full-time employee of the corporation or
an affiliate or associate of an interested shareholder or any of
its affiliates.
(10) "Interested shareholder" means any person, other than the
corporation or any of its subsidiaries, who:
(a) Is the beneficial owner, directly or indirectly, of ten
percent (10%) or more of the voting power of the outstanding
voting stock of the corporation; or is an affiliate of the
corporation and at any time within the five-year period
immediately prior to the date in question was the beneficial
owner, directly or indirectly, of ten percent (10%) or more
of the voting power of the then outstanding voting stock of
the corporation. The term interested shareholder shall not
mean any entity or person holding or owning voting stock for,
or through participation in, any purchase, savings, option,
bonus, appreciation, profit sharing, thrift, incentive,
pension, stock ownership or similar plan for employees or
officers of the corporation or any of its subsidiaries.
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(b) For the purpose of determining whether a person is an
interested shareholder, the number of shares of voting stock
deemed to be outstanding shall include shares deemed owned by
the person through application of subsection (3) of this
section, but shall not include any other shares of voting
stock which may be issuable pursuant to any agreement,
arrangement, or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
(11) "Market value" means:
(a) In the case of stock, the highest closing sale price during
the thirty-day period immediately preceding the date in
question of a share of such stock on the composite tape for
New York stock exchange listed stocks, or, if such stock is
not quoted on the composite tape on the New York stock
exchange, or if such stock is not listed on such exchange, on
the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock
is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a
share of such stock during the thirty-day period preceding
the date in question on the National Association of
Securities Dealers, Inc., Automated Quotations System or any
system then in use, or if no such quotations are available,
the fair market value on the date in question of a share of
such stock as determined by a majority of the continuing
directors at a meeting of the board of directors at which a
quorum consisting of at least a majority of the continuing
directors is present; and
(b) In the case of property other than cash or stock, the fair
market value of such property on the date in question as
determined by a majority of the continuing directors at a
meeting of the board of directors at which a quorum
consisting of at least a majority of the continuing directors
is present.
(12) "Subsidiary" means any corporation of which voting stock having a
majority of the votes entitled to be cast is owned, directly or
indirectly, by the corporation.
(13) "Voting stock" means shares of capital stock of a corporation
entitled to vote generally in the election of directors.
271B.12-210 MINIMUM SHARE VOTE REQUIREMENTS FOR APPROVAL OF BUSINESS
COMBINATIONS; LIMITATIONS ON BUSINESS CORPORATION
(1) In addition to any vote otherwise required by law or the articles
of incorporation of the corporation, a business combination shall
either be approved by a majority of the independent members of the
board of directors who are also continuing directors, provided that
the independent members of the board of directors shall not, for
the purposes of this subsection, be required to either approve or
disapprove of any proposed business combination, or approved by the
affirmative vote of at least:
(a) Eighty percent (80%) of the votes entitled to be cast by
outstanding shares of voting stock of the corporation, voting
together as a single voting group; and
(b) Two-thirds of the votes entitled to be cast by holders of
voting stock other than voting stock beneficially owned by
the interested shareholder who is, or whose affiliate is, a
party to the business combination or by an affiliate or
associate of such interested shareholder, voting together as
a single voting group.
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<PAGE>
(2) Unless a business combination is exempted from the operation of KRS
271B.12-200 to 271B.12-230 in accordance with the terms hereof, the
failure to comply with the voting requirements of subsection (1) of
this section shall render such business combination void.
(3) Notwithstanding anything to the contrary contained in this chapter
(except the provisions of KRS 271B.12-220(5)(a)), no corporation
shall engage in any business combination with any entity or person
who is at the time of such business combination an interested
shareholder of such corporation, unless such person became an
interested shareholder before March 28, 1986, for a period of five
(5) years following the date on which such interested shareholder
became an interested shareholder unless such business combination
is approved by a majority of the independent members of the board
of directors of such corporation prior to such date on which the
interested shareholder became an interested shareholder. If a good
faith proposal is made in writing to the board of directors of such
corporation regarding a business combination, the board of
directors shall respond, in writing, within thirty (30) days or
such shorter period, if any, as may be required by the Securities
Exchange Act of 1934, setting forth its reasons for its decision
regarding such proposal. If the board of directors does not respond
affirmatively in writing within thirty (30) days or such shorter
period, if any, as may be required by the Securities Exchange Act
of 1934, the independent members of the board of directors shall be
deemed to have disapproved the business combination.
(4) In discharging its duties under this section, or otherwise, the
board of directors, in considering the best interests of the
corporation, may consider in addition to the interests of the
corporation's shareholders, any of the following:
(a) The interests of the corporation's employees, suppliers,
creditors and customers;
(b) The economy of the state and nation;
(c) Community and societal considerations; and
(d) The long-term as well as short-term interests of the
corporation and its shareholders, including the possibility
that these interests may be best served by the continued
independence of the corporation.
(5) Notwithstanding KRS 271B.6-020 and any other provision of this
chapter, and unless otherwise provided in the articles of
incorporation before the creation or issuance of any rights or
options as set forth herein, in considering the interests of the
corporation's shareholders, the board of directors of a corporation
may, before, on or after July 15, 1988, create and issue rights or
options pursuant to KRS 271B.6-240 which may contain provisions
which adjust the option price or number of shares issuable under
such rights or options in the event of an acquisition of shares or
a reorganization, merger, consolidation, sale of assets or other
occurrence involving such corporation. Such rights or options may
also include conditions that prevent the holder or holders of at
least a specified number or percentage of the outstanding shares of
the corporation, including subsequent transferees of the holder,
from exercising those rights or options.
271B.12-220 EXEMPTIONS FROM MINIMUM SHARE VOTE REQUIREMENTS
(1) For purposes of subsection (2) of this section:
(a) "Announcement date" means the first general public
announcement of the proposal or intention to make a proposal
of the business combination or its first communication
generally to shareholders of the corporation, whichever is
earlier;
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<PAGE>
(b) "Determination date" means the date on which an interested
shareholder first became an interested shareholder; and
(c) "Valuation date" means:
1. For a business combination voted upon by shareholders,
the latter of the day prior to the date of the
shareholders vote or the date twenty (20) days prior to
the consummation of the business combination; and
2. For a business combination not voted upon by
shareholders, the date of the consummation of the
business combination.
(2) The vote required by KRS 271B.12-210 does not apply to a business
combination if each of the following conditions is met:
(a) The aggregate amount of the cash and the market value as of
the valuation date of consideration, other than cash to be
received per share by holders of common stock in such
business combination, is at least equal to the highest of the
following:
1. The highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers'
fees) paid by the interested shareholder for any shares
of common stock of the same class or series acquired by
it:
a. Within the five (5) year period immediately prior
to the announcement date of the proposal of the
business combination;
b. In the transaction in which it became an
interested shareholder, whichever is higher; or
2. The market value per share of common stock of the same
class or series on the announcement date or on the
determination date, whichever is higher; or
3. The price per share equal to the market value per share
of common stock of the same class or series determined
pursuant to subparagraph 2. of this paragraph,
multiplied by the fraction of:
a. The highest per share price, including any
brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the interested
shareholder for any shares of common stock of the
same class or series acquired by it within the
five (5) year period immediately prior to the
announcement date, over
b. The market value per share of common stock of the
same class or series on the first day in such
five (5) year period on which the interested
shareholder acquired any shares of common stock;
(b) The aggregate amount of the cash and the market value as of
the valuation date of consideration other than cash to be
received per share by holders of shares of any class or
series of outstanding stock other than common stock is at
least equal to the highest of the following, whether or not
the interested shareholder has previously acquired any shares
of a particular class or series of stock:
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<PAGE>
1. The highest per share price, including any brokerage
commissions, transfer taxes and soliciting dealers'
fees, paid by the interested shareholder for any shares
of such class of stock acquired by it:
a. Within the five (5) year period immediately prior
to the announcement date of the proposal of the
business combination;
b. In the transaction in which it became an
interested shareholder, whichever is higher; or
2. The highest preferential amount per share to which the
holders of shares of such class of stock are entitled
in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the
corporation;
3. The market value per share of such class of stock on
the announcement date or on the determination date,
whichever is higher; or
4. The price per share equal to the market value per share
of such class of stock determined pursuant to
subparagraph 3. of this paragraph, multiplied by the
fraction of:
a. The highest per share price, including any
brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the interested
shareholder for any shares of any class of voting
stock acquired by it within the five (5) year
period immediately prior to the announcement
date, over
b. The market value per share of the same class of
voting stock on the first day in such five (5)
year period on which the interested shareholder
acquired any shares of the same class of voting
stock.
(c) In making any price calculation under this section,
appropriate adjustments shall be made to reflect any
reclassification, including any reverse stock split;
recapitalization; reorganization; or any similar transaction
which has the effect of reducing the number of outstanding
shares of the stock. The consideration to be received by
holders of any class or series of outstanding stock is to be
in cash or in the same form as the interested shareholder has
previously paid for shares of the same class or series of
stock. If the interested shareholder has paid for shares of
any class of stock with varying forms of consideration, the
form of consideration for such class of stock shall be either
cash or the form used to acquire the largest number of shares
of such class or series of stock previously acquired by it;
(d) 1. After the interested shareholder has become an
interested shareholder and prior to the consummation
of such business combination:
a. There shall have been no failure to declare and
pay, at the regular date therefor, any full
periodic dividends, whether or not cumulative, on
any outstanding preferred stock of the
corporation;
b. There shall have been no reduction in the annual
rate of dividends paid on any class or series of
stock of the corporation that is not preferred
stock, except as necessary to reflect any
subdivision of the stock; and an increase in such
annual rate of dividends as
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<PAGE>
necessary to reflect any reclassification,
including any reverse stock split;
recapitalization; reorganization; or any
similar transaction which has the effect of
reducing the number of outstanding shares of the
stock; and
c. The interested shareholder did not become the
beneficial owner of any additional shares of
stock of the corporation, except as part of the
transaction which resulted in such interested
shareholder becoming an interested shareholder or
by virtue of proportionate stock splits or stock
dividends.
2. The provisions of sub-subparagraphs a. and b. of
subparagraph 1. of this paragraph do not apply if no
interested shareholder or an affiliate or associate of
the interested shareholder voted as a director of the
corporation in a manner inconsistent with such sub-
subparagraphs and the interested shareholder, within
ten (10) days after any act or failure to act
inconsistent with such sub-subparagraphs, notifies the
board of directors of the corporation in writing that
the interested shareholder disapproves thereof and
requests in good faith that the board of directors
rectify such act or failure to act.
(3) (a) Whether or not such business combinations are authorized
or consummated in whole or in part after July 13, 1984, or
after the interested shareholder became an interested
shareholder, the requirements of KRS 271B.12-210 do not apply
to business combinations that specifically, generally, or
generally by types, as to specifically identified or
unidentified existing or future interested shareholders or
their affiliates or associates, have been approved or
exempted therefrom by resolution of the board of directors
of the corporation prior to two (2) months after July 13,
1984, or such earlier date as may be irrevocably established
by resolution of the board of directors; and
(b) Unless by its terms a resolution adopted under this
subsection is made irrevocable, it may be altered or repealed
by the board of directors, but this shall not affect any
business combinations that have been consummated, or are the
subject of an existing agreement entered into, prior to the
alteration or repeal.
(4) (a) Unless the articles of incorporation or bylaws of the
corporation specifically provide otherwise, the requirements
of KRS 271B.12-210 do not apply to business combinations of
a corporation that, on July 13, 1984, had an existing
interested shareholder, whether a business combination is
with the existing shareholder or with any other person who
becomes an interested shareholder, after July 13, 1984, or
their present or future affiliates, unless, at any time after
July 13, 1984, the board of directors of the corporation
elects by resolution, adopted by a majority of the continuing
directors at a meeting of the board of directors at which a
quorum consisting of at least a majority of the continuing
directors is present, to be subject, in whole or in part,
specifically, generally, or generally by types, as to
specifically identified or unidentified interested
shareholders, to the requirements of KRS 271B.12-210.
(b) The articles of incorporation or bylaws of the corporation
may provide that if the board of directors adopts a
resolution under paragraph (a) of this subsection, the
resolution shall be subject to approval of the shareholders
in the manner and by the vote specified in the articles of
incorporation or the bylaws;
B-8
<PAGE>
(c) An election under this subsection may be added to but may not
be altered or repealed except by an amendment to the articles
of incorporation adopted by a vote of shareholders meeting
the requirements of subsection (5)(a)2. of this section; and
(d) If a corporation elects under this subsection to be included
within the provisions of KRS 271B.12-210 generally, without
qualification or limitation, it shall file with the secretary
of state articles of amendment, including a copy of the
resolution making the election and a statement describing the
manner in which the resolution was adopted. The articles of
amendment, shall be executed in the manner required by KRS
271B.10-060.
(5) (a) Unless the articles of incorporation of the corporation
provide otherwise, the requirements of a shareholder vote and
board approval in KRS 271B.12-210 do not apply to any business
combination of:
1. A corporation which does not have on the date any
interested shareholder became an interested
shareholder:
a. Five hundred (500) or more beneficial owners of
its stock;
b. Its principal executive office located in this
state; and
c. One (1) or more of the following:
(i) More than two hundred (200) beneficial
owners of its stock residing in this state;
(ii) More than ten percent (10%) of the
beneficial owners of its stock residing in
this state;
(iii) More than ten percent (10%) of its
outstanding stock owned by residents of
this state;
(iv) More than one hundred (100) employees of
the corporation and its subsidiaries
working within this state; or
(v) Assets located in this state and owned by,
or owned by a person or entity controlled
by, the corporation with a value of at
least one million dollars ($1,000,000);
2. A corporation whose original articles of incorporation
have a provision, or whose shareholders adopt an
amendment to the articles of incorporation after July
13, 1984, by a vote of at least eighty percent (80%) of
the votes entitled to be cast by outstanding shares of
voting stock of the corporation, voting together as a
single voting group and two-thirds (2/3) of the votes
entitled to be cast by persons, if any, who are not
interested shareholders of the corporation, voting
together as a single voting group, expressly electing
not to be governed by KRS 271B.12-210; or
3. An investment company registered under the federal
Investment Company Act of 1940, as amended; a bank or a
bank holding company as defined in the federal Bank
Holding Company Act of 1956, as amended; a savings and
loan holding company as defined in the federal Savings
and Loan Holding
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<PAGE>
Company Amendments of 1967, as amended; and a domestic
insurer as defined under KRS 304.1-070; and
(b) For purposes of subparagraph 1. of paragraph (a) of this
subsection, all shareholders of a corporation who have
executed an agreement to which the corporation is an
executing party governing the purchase and sale of stock
of the corporation or a voting trust agreement governing
stock of the corporation shall be considered a single
beneficial owner of the stock covered by the agreement.
271B.12-230 KRS 271B.12-200 TO 271B.12-220 PREVAIL OVER OTHER
PROVISIONS OF KRS CHAPTER 271B; SEVERABILITY OF PROVISIONS
(1) The provisions of KRS 271B.12-200 to 271B.12-220 are in addition
to and do not repeal any other provisions of KRS Chapter 271B that
govern any corporate actions described in KRS 271B.12-200 to
271B.12-220; provided, that in the event of a direct conflict
between any provision of KRS 271B.12-200 to 271B.12-220 and any
other provision of KRS Chapter 271B, the provision of
KRS 271B.12-200 to 271B.12-220 shall prevail.
(2) It shall be considered that, for the purposes of KRS 446.090, it
is the intent of the general assembly in enacting KRS 271B.12-200
to 271B.12-220 that any clause, sentence, subparagraph,
paragraph, subsection, section, or other part of the above-stated
sections or the application thereof to any person or circumstances
held to be invalid shall not affect, impair or invalidate the
remainder of the stated sections or the application of that part
held invalid to any other person or circumstances, but shall be
confined in its operation to the clause, sentence, subparagraph,
paragraph, subsection, section, or other part thereof directly
involved in that holding or to the person or circumstances
therein involved.
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<PAGE>
APPENDIX TO PROXY STATEMENT
FORM OF PROXY
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MIDAMERICA BANCORP
500 WEST BROADWAY
LOUISVILLE, KY 40202
PROXY-ANNUAL MEETING OF STOCKHOLDERS
The undersigned, a shareholder of MIDAMERICA BANCORP, a Kentucky
corporation (the "Company"), hereby appoints BERTRAM W. KLEIN, ORSON OLIVER and
ROBERT SACHS, and each of them, the true and lawful attorneys and proxies with
full power of substitution, for and in the name, place and stead of the
undersigned, to vote all of the shares of Common Stock of the Company which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders to be held in the William Ray Gallery of the Kentucky
Derby Museum at Churchill Downs, 704 Central Avenue, Louisville, Kentucky
40208, on April 16, 1998, at 10:00 a.m., Eastern daylight time, and at any
adjournment thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. ELECTION OF DIRECTORS
Nominees: Robert P. Adelberg, Hon. Martha Layne Collins, R. K.
Gulliaume, David Jones, Jr., Bertram W. Klein, and Bruce
Roth
<TABLE>
<CAPTION>
<S> <C> <C>
[ ] Vote FOR all nominees listed above [ ] WITHHOLD AUTHORITY to vote
(except those written in below) for all nominees listed above
INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name in the space below.
____________________________________________________________________________________________________________
</TABLE>
2. AMENDMENTS TO ARTICLES OF INCORPORATION. Check the appropriate box here to
vote with respect to all three of the proposed Amendments as a group. See
below to vote individually on each of the three proposed Amendments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[ ] Vote FOR [ ] Vote AGAINST [ ] ABSTAIN
____________________________________________________________________________________________________________
</TABLE>
3. AMENDMENT TO ARTICLE IX OF THE ARTICLES OF INCORPORATION. To require
certain transactions involving fundamental changes in corporate structure to be
approved by a supermajority vote of shareholders.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[ ] Vote FOR [ ] Vote AGAINST [ ] ABSTAIN
</TABLE>
4. AMENDMENT TO ARTICLE X OF THE ARTICLES OF INCORPORATION. To elect to be
governed under the provisions of the Kentucky Business Combination Act.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[ ] Vote FOR [ ] Vote AGAINST [ ] ABSTAIN
</TABLE>
5. AMENDMENT TO ARTICLE XI OF THE ARTICLES OF INCORPORATION. To require a
supermajority vote of shareholders to change certain provisions of the Articles
of Incorporation.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[ ] Vote FOR [ ] Vote AGAINST [ ] ABSTAIN
</TABLE>
6. DISCRETIONARY AUTHORITY. To vote with discretionary authority with respect
to all other matters which may properly come before the meeting.
This proxy, when properly executed, will be voted in accordance with any
directions hereinbefore given. Unless otherwise specified, this proxy will be
voted FOR the nominees named above, FOR each of the amendments to the Articles
of Incorporation, and with the discretionary authority described in the
accompanying proxy statement. MANAGEMENT RECOMMENDS A VOTE FOR ALL OF THE
ABOVE.
The undersigned hereby revokes all proxies heretofore given and ratifies and
confirms all that the proxies appointed hereby, or any of them, or their
substitutes, may lawfully do or cause to be done by virtue thereof. The
undersigned hereby acknowledges receipt of a copy of the Notice of Annual
Meeting and Proxy Statement, both dated March 16, 1998 and a copy of the
Company's Annual Report for the period ended December 31, 1997.
*Please sign exactly as shares are
registered. If shares are held by joint
tenants, all parties in the joint
tenancy must sign. When signing as
attorney, executor, administrator,
trustee or guardian please indicate
the capacity in which signing. If
a corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
_____________________________________
Signature Date
_____________________________________
Signature, if held jointly Date
Shares:
