<PAGE> 1
As filed with the Securities and Exchange Commission on October 15, 1996
REGISTRATION NO. 333-__________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
CARDINAL BANCSHARES, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
KENTUCKY 61-1128205
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
</TABLE>
400 EAST VINE STREET, SUITE 300
LEXINGTON, KENTUCKY 40507
(606) 255-8300
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
JACK H. BROWN
CARDINAL BANCSHARES, INC.
400 EAST VINE STREET, SUITE 300
LEXINGTON, KENTUCKY 40507
(606) 255-8300
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
COPIES TO:
STUART G. STEIN
LAWRENCE D. KAPLAN
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
(202) 637-5600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as possible after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
<TABLE>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE (1) PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value per share 85,246 $40.275 $3,433,282.65 $1,040.39
====================================================================================================================================
</TABLE>
(1) Pursuant to Rule 457(c) the registration fee has been calculated on the
average of the high and low price as of October 14, 1996.
--------------------
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
SUBJECT TO COMPLETION
October 15, 1996
PROSPECTUS
85,246 SHARES
CARDINAL BANCSHARES, INC.
COMMON STOCK
______________________________
This Prospectus relates to the offer and sale from time to time by certain
holders (the "Selling Stockholders") of up to 85,246 shares (the "Offered
Shares") of common stock, no par value per share (the "Common Stock"), of
Cardinal Bancshares, Inc., Lexington, Kentucky ("Company," "Cardinal" or
"Registrant"). The Company is registering the Offered Shares as required under
the terms of certain agreements between the Company and the Selling
Stockholders. The registration of the Offered Shares does not necessarily mean
that any of the Offered Shares will be offered or sold by the Selling
Stockholders. The Company will receive no part of the proceeds of any sales of
the Offered Shares, but will incur certain expenses in connection with the
offering. See "Selling Stockholders" and "Plan of Distribution."
The Common Stock is quoted on the Nasdaq Stock Market's National Market
System under the symbol "CARD." On October 14, 1996, the last reported sale
price of the Common Stock on the Nasdaq Stock Market's National Market System
was $40.50.
_____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
_____________________
The Selling Stockholders may from time to time offer and sell all or a
portion of the Offered Shares in transactions on the Nasdaq Stock Market's
National Market System, in the over-the-counter market, on any other national
securities exchange on which the Common Stock is listed or traded, in
negotiated transactions or otherwise, at prices then prevailing or related to
the then-current market price or at negotiated prices. The Offered Shares may
be sold directly or through agents or broker-dealers acting as principal or
agent, or in block trades or pursuant to a distribution by one or more
underwriters on a firm commitment or best-efforts basis. To the extent
required, the names of any agents or broker-dealers and applicable commissions
or discounts and any other required information with respect to any particular
offer will be set forth in this Prospectus under the caption "Plan of
Distribution" or any accompanying Prospectus Supplement. Each of the Selling
Stockholders reserves the right to accept or reject, in whole or in part, any
proposed purchase of the Offered Shares to be made directly or through agents.
The Selling Stockholders and any agents or broker-dealers participating in the
distribution of the Offered Shares may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"),
and any profit on the sale of Offered Shares by the Selling Stockholders and
any commissions received by any such agents or broker-dealers may be deemed to
be underwriting commissions or discounts under the Securities Act.
_____________________
THE DATE OF THIS PROSPECTUS IS OCTOBER ___, 1996.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SHARES IN
ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission in
accordance with the Exchange Act can be inspected and copied at the Public
Reference Section maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following regional offices of the
Commission: Seven World Trade Center, Suite 1300, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a site on the World Wide Web ("Web") of
the Internet that contains reports, proxy and information statements and other
information regarding registrants that file reports electronically with the
Commission. The Commission's web site is located at <http://www.sec.gov>. In
addition, the Common Stock is listed on the Nasdaq Stock Market's National
Market System under the symbol "CARD" and such reports, proxy statements and
other information concerning the Company can be inspected and copied at the
offices of the National Association of Securities Dealers, Inc. (the "NASD").
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement"), of which this Prospectus is a part, under
the Securities Act, with respect to the Offered Shares. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. Statements contained in this Prospectus as to
the contents of any contract or other documents are not necessarily complete,
and in each instance, reference is made to the copy of such contract or other
documents filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference and the exhibits
and schedules thereto. For further information regarding the Company and the
Offered Shares, reference is hereby made to the Registration Statement and such
exhibits and schedules which may be obtained from the Commission at its
principal office in Washington, D.C. upon payment of the fees prescribed by the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates the following documents into this
Registration Statement:
A. The Company's Annual Report on Form 10-K for the year ended December
31, 1995, filed pursuant to Section 13(a) or 15(d) of the Exchange Act.
B. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the fiscal year covered by the
Annual Report referred to above, including the Company's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996; and the
Company's Current Reports on Form 8-K dated March 15, 1996, March 19, 1996,
April 8, 1996, April 19, 1996, April 25, 1996, May 29, 1996 and June 7, 1996.
C. The description of the Common Stock contained in the Form 8-A filed by
the Company on August 4, 1992, as updated by any amendment or report filed for
the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c) 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the
- 2 -
<PAGE> 5
termination of the offering of all Offered Shares shall be deemed to be
incorporated by reference in this Prospectus and shall be part hereof from the
date of filing such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in the
Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), in any
applicable Prospectus Supplement (as defined below) relating to a specific
offering of Offered Shares or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus or any accompanying Prospectus Supplement. Subject to the foregoing,
all information appearing in this Prospectus and each accompanying Prospectus
Supplement is qualified in its entirety by the information appearing in the
documents incorporated by reference.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated herein by reference (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference in
such information). Written requests for such copies should be directed to
Cardinal Bancshares, Inc., 400 East Vine Street, Suite 300, Lexington, Kentucky
40507, Attention: Jack H. Brown, telephone number: (606) 255-8300.
THE COMPANY
The Company is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended. As of June 30, 1996, the Company had total
consolidated assets of approximately $622.9 million and its total consolidated
stockholders' equity was approximately $49.6 million. The Company's business is
conducted primarily through its four bank subsidiaries: The Vine Street Trust
Company ("Vine Street"); HNB Bank ("HNB"); First & Peoples Bank ("First &
Peoples") and the Jefferson Banking Company ("Jefferson"), and through its
thrift subsidiary Alliance Bank, FSB ("Alliance"). Vine Street, HNB, First &
Peoples and Jefferson conduct a commercial banking business throughout Fayette,
Harlan, Estill, Washington and Jefferson counties in Kentucky, which includes
accepting demand and time deposits, providing checking and money market
accounts, making commercial, consumer and mortgage loans and providing safe
deposit facilities. Vine Street also offers personal and corporate trust
services. As part of Vine Street's activities, it originates Small Business
Administration and Farmer's Home Administration loans through loan production
offices of its subsidiary, VST Financial Services, Inc., which is located in
Atlanta, Georgia, Wilmington, North Carolina and Tampa, Florida well as its
Lexington, Kentucky office. Mutual Insurance Agency, Inc., a subsidiary of HNB,
offers general insurance products, including property and casualty insurance
policies and annuity insurance products. Alliance is principally engaged in
the business of attracting retail deposits from the general public and
investing those funds in mortgage loans (secured primarily by one-to-four
family real estate), construction loans, consumer loans and investment
securities. Alliance has a subsidiary, Mutual Service Corporation, which
offers a broad range of securities products through an agreement with Compulife
Investor Services.
The Company's principal executive offices are located at 400 East Vine
Street, Suite 300, Lexington, Kentucky, and its telephone number is (606)
255-8300.
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<PAGE> 6
USE OF PROCEEDS
The Company will not receive any of the proceeds from sales of the Offered
Shares by the Selling Stockholders. All costs and expenses incurred in
connection with the registration under the Securities Act of the offering made
hereby will be paid by the Company, other than any brokerage fees and
commissions, fees and disbursements of legal counsel for the Selling
Stockholders and stock transfer and other taxes attributable to the sale of the
Offered Shares, which will be paid by the Selling Stockholders.
SELLING STOCKHOLDERS
The Selling Stockholders own 85,246 Offered Shares in the aggregate, which
were acquired in a private placement of the Offered Shares in April 1996 by the
Company. The following table provides the name of each Selling Stockholder, the
number of shares of Common Stock owned by each Selling Stockholder before the
offering to which this Prospectus relates, and the number of Offered Shares
offered by each Selling Stockholder. Because the Selling Stockholders may sell
all or some of their Offered Shares, no estimate can be made of the number of
Offered Shares that will be sold by the Selling Stockholders or that will be
owned by each of the Selling Stockholders upon completion of the offering.
There is no assurance that the Selling Stockholders will sell any of the Offered
Shares. The Offered Shares represent approximately 5.38% of the total shares of
Common Stock outstanding as of July 31, 1996.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED NUMBER OF
PRIOR TO SHARES BEING
NAME OF SELLING STOCKHOLDER OFFERING OFFERED
- --------------------------- ------------ ------------
<S> <C> <C>
Argonaut Partnership, L.P...................... 0 3,688
Dawson Development Company Limited Partnership. 0 16,393
DC Investment Partners......................... 3,600 8,197
J. Rex Fuqua................................... 1,000 16,394
Gerstenhaber Investments L.P. 0 410
Richard A. Horstmann........................... 0 24,590
The Alan W. Steinberg, L.P..................... 0 7,377
West Broadway Partners, L.P.................... 0 8,197
----- ------
TOTAL......................................... 4,600 85,246
===== ======
</TABLE>
PLAN OF DISTRIBUTION
Any of the Selling Stockholders may from time to time, in one or more
transactions, sell all or a portion of the Offered Shares on the Nasdaq Stock
Market's National Market System, on any other national securities exchange on
which the Common Stock is listed or traded, in negotiated transactions, in
underwritten transactions or otherwise, at prices then prevailing or related to
the then current market price or at negotiated prices. The offering price of
the Offered Shares from time to time will be determined by the Selling
Stockholders and, at the time of such determination, may be higher or lower
than the market price of the Common Stock on the Nasdaq Stock Market's National
Market System. In connection with an underwritten offering, underwriters or
agents may receive compensation in the form of discounts, concessions or
commissions from a Selling Stockholder or from purchasers of Offered Shares for
whom they may act as agents, and underwriters may sell Offered Shares to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents. Under agreements that may
be entered into by the Company, underwriters, dealers and agents who
participate in the distribution of Offered Shares
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<PAGE> 7
may be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which such underwriters, dealers or agents may be required to make
in respect thereof. The Offered Shares may be sold directly or through
broker-dealers acting as principal or agent, or pursuant to a distribution by
one or more underwriters on a firm commitment or best-efforts basis. The
methods by which the Offered Shares may be sold include: (a) a block trade in
which the broker-dealer so engaged will attempt to sell the Offered Shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker-dealer as principal and
resale by such broker-dealer for its account pursuant to this Prospectus; (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; (d) an exchange distribution in accordance with the rules of the
Nasdaq Stock Market's National Market System; (e) privately-negotiated
transactions; and (f) underwritten transactions. The Selling Stockholders and
any underwriters, dealers or agents participating in the distribution of the
Offered Shares may be deemed to be "underwriters" within the meaning of the
Securities Act, and any profit on the sale of the Offered Shares by the Selling
Stockholders and any commissions received by an such broker-dealers may be
deemed to be underwriting commissions under the Securities Act.
When a Selling Stockholder elects to make a particular offer of Offered
Shares, a prospectus supplement, if required, will be distributed which will
identify any underwriters, dealers or agents and any discounts, commissions
and other terms constituting compensation from such Selling Stockholder and any
other required information ("Prospectus Supplement").
In order to comply with the securities laws of certain states, if
applicable, the Offered Shares may be sold only through registered or licensed
brokers or dealers. In addition, in certain states, the Offered Shares may not
be sold unless they have been registered or qualified for sale in such state or
an exemption from such registration or qualification requirement is available
and is complied with.
The Company has agreed to pay all costs and expenses incurred in
connection with the registration under the Securities Act of the Offered
Shares. The Selling Stockholders will pay any brokerage fees and commissions,
fees and disbursements of legal counsel for the Selling Stockholders and stock
transfer and other taxes attributable to the sale of the Offered Shares. The
Company also has agreed to indemnify each of the Selling Stockholders and, if
appropriate the respective officers, directors and each person who controls a
Selling Stockholder within the meaning of the Securities Act and any
underwriters, including officers and directors and any other persons who are
participating in the distribution of the Offered Shares from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including without limitation, interest,
penalties and reasonable attorneys' fees and disbursements, asserted against,
resulting to, imputed upon or incurred, directly or indirectly (collectively
"Claims") against a Selling Stockholder , based upon, arising out of, or
resulting from any untrue material fact contained in the Registration Statement
or any omission to state in the Registration Statement a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, to the extent that
such Claim is based upon, arises out of or results from information furnished
to the Company by a Selling Stockholder in a written document provided by a
Selling Stockholder for use in the Registration Statement.
Each of the Selling Stockholders has agreed to indemnify the Company, its
officers and directors and each person, if any, who controls the Company,
within the meaning of the Securities Act, against any Claims based upon any
untrue statement of material fact contained in the Registration Statement or
any omission to state therein a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, to the extent such Claim is based upon, arises out of or
results from information furnished by the Company to the Selling Stockholder in
a written document provided by the Company for use in connection with a
Registration Statement.
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<PAGE> 8
EXPERTS
The consolidated financial statements of Cardinal Bancshares, Inc. and
Subsidiaries as of December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995, have been incorporated by reference
herein in reliance on the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and given on
the authority of said firm as experts in auditing and accounting.
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<PAGE> 9
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- --------------------------------------------------------------------------------
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained or incorporated by
reference in this Prospectus in connection with the offering covered by this
Prospectus. If given or made, such information or representations must not be
relied upon as having been authorized by the Company or the Acquirers. This
Prospectus does not constitute an offer to sell, or a solicitation of any offer
to buy, the Offered Shares, in any jurisdiction where, or to any person to whom,
it is unlawful to make any such offer or solicitation. Neither the delivery of
this Prospectus nor any offer or sale made hereunder shall, under any
circumstances, create an implication that there has not been any change in the
facts set forth in this Prospectus or in the affairs of the Company since the
date hereof.
-----------------
TABLE OF CONTENTS
PAGE
<TABLE>
<CAPTION>
<S> <C>
Available Information................................................... 2
Incorporation of Certain Documents
by Reference.......................................................... 2
The Company............................................................. 3
Use of Proceeds......................................................... 4
Selling Stockholders.................................................... 4
Plan of Distribution.................................................... 4
Experts................................................................. 6
</TABLE>
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85,246 SHARES
CARDINAL BANCSHARES, INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
OCTOBER ___, 1996
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<PAGE> 10
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses
payable by the Company in connection with the issuance and
distribution of the securities being registered:
<TABLE>
<S> <C>
Registration Fee ................... $ 1,040.39
Printing and Duplicating Expenses .. 500
Legal Fees and Expenses ............ 7,500
Accounting Fees and Expenses ....... 1,200
Blue Sky Fees and Expenses ......... 1,625
Miscellaneous ...................... 1,000
----------
Total $12,865.39
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) Article IX of the Registrant's Articles of Restatement of
the Articles of Incorporation, entitled "Indemnification," is set
forth as Exhibit 99.1 to this Registration Statement and
incorporated herein by reference.
(b) Section 271B.8-500 et. seq. of the Business Corporations
Law of the State of Kentucky, entitled "Indemnification," is set
forth as Exhibit 99.2 to this Registration Statement and is
incorporated herein by reference.
(c) The Registrant has in effect a policy of liability
insurance covering its directors and officers.
ITEM 16. EXHIBITS
4.1 - Articles of Restatement of The Articles of
Incorporation of the Registrant
4.2 - By-laws of the Registrant
5 - Opinion of Hogan & Hartson L.L.P.
23.1 - Consent of KPMG Peat Marwick LLP
23.2 - Consent of Hogan & Hartson L.L.P.
(included in Exhibit 5)
99.1 - Article IX of Registrant's Articles of
Restatement of the Articles of Incorporation
entitled "Indemnification"
99.2 - Section 271B.8-500 et seq. of the Business
Corporations Law of the State of Kentucky,
entitled "Indemnification"
<PAGE> 11
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in this
registration statement;
Provided, however, that subparagraphs (i) and (ii) above do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in the periodic reports
filed with or furnished to the Commission by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the Offered
Shares offered herein, and the offering of such Offered Shares at
that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned Registrant hereby further undertakes that, for
the purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the Offered
Shares offered herein, and the offering of such Offered Shares at
that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to existing
provisions or arrangements whereby the registrant may indemnify a
director, officer or controlling person of the registrant against
liabilities arising under the Securities Act of 1933, or otherwise,
the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of
any action,
- 2 -
<PAGE> 12
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
- 3 -
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Lexington, Kentucky, on
October 15, 1996.
CARDINAL BANCSHARES, INC.
BY: /s/ John S. Penn
---------------------------
John S. Penn, President
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below appoints John S. Penn and Jack H. Brown,
either of whom may act without the joinder of the others, as his
true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her, and in his or her
name, place and stead, in any and all capacities, to sign any and
all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with all exhibits
thereto and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed on October 15,
1996, by the following persons in the capacities indicated:
/s/ John S. Penn President and Director
-------------------------------- (Principal Executive Officer)
John S. Penn
/s/ Jack H. Brown Chief Financial Officer
-------------------------------- (Principal Financial and Accounting
Jack H. Brown Officer)
/s/ Samuel A.B. Boone Director
--------------------------------
Samuel A.B. Boone
/s/ Vernon J. Cole Director
--------------------------------
Vernon J. Cole
/s/ Loyd G. Jasper Director
--------------------------------
Loyd G. Jasper
- 4 -
<PAGE> 14
/s/ Ryan R. Mahan Director
--------------------------------
Ryan R. Mahan
Director
--------------------------------
Ronald C. Switzer
- 5 -
<PAGE> 15
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit
Sequentially
Number Description of Exhibit Numbered
------ ---------------------- --------
Page
----
<S> <C>
4.1 - Articles of Restatement of The Articles
of Incorporation of the Registrant
4.2 - By-laws of the Registrant
5 - Opinion of Hogan & Hartson L.L.P.
23.1 - Consent of KPMG Peat Marwick LLP
23.2 - Consent of Hogan & Hartson L.L.P.
(included in Exhibit 5)
99.1 - Article IX of Registrant's Articles of
Restatement of the Articles of Incorporation
entitled "Indemnification"
99.2 Section 271B.8-500 et seq. of the Business
Corporations Law of the State of Kentucky,
entitled "Indemnification"
</TABLE>
- 6 -
<PAGE> 1
Exhibit 4.1
Articles of Restatement of The Articles of Incorporation of the Registrant
ARTICLES OF RESTATEMENT OF
THE ARTICLES OF INCORPORATION
OF CARDINAL BANCSHARES, INC.
Pursuant to the provisions of KRS 271B.10-070, the undersigned corporation
executes these Articles of Restatement of its Articles of Incorporation.
First: The name of the Corporation is Cardinal Bancshares, Inc.
Second: The following Articles of Restatement contain amendments to the
Articles which amend and substitute in the entirety Articles IV and IX.
Third: The amendments included in these Articles of Restatement do not
provide for an exchange, reclassification or cancellation of issued shares.
Fourth: The amendments to the following Articles of Restatement required
shareholder approval and were approved by the shareholders of the Corporation
on April 16, 1992 in the manner prescribed by the Kentucky Business Corporation
Act.
Fifth: There were 869,708 shares of common stock entitled to be cast on
the amendments and 647,932 shares of common stock were indisputably represented
at the meeting.
Sixth: There were 626,682 votes cast in favor of the amendments and the
number of votes cast for the amendments was sufficient for approval by the
common stockholders, the only voting group entitled to a vote on the
amendments.
The Corporation's Articles of Incorporation are Restated as follows:
ARTICLE I
NAME
The name of the Corporation is Cardinal Bancshares, Inc.
- 7 -
<PAGE> 2
ARTICLE II
REGISTERED OFFICE AND RESIDENT AGENT
The registered office of the Corporation in the Commonwealth of Kentucky
is 400 East Vine Street, Suite 300, Lexington, Kentucky 40507.
The registered agent at the same address is James S. Mahan III.
ARTICLE III
PRINCIPAL OFFICE
The address of the principal office of the Corporation is 400 East Vine
Street, Suite 300, Lexington, Kentucky 40507.
ARTICLE IV
CAPITAL STOCK
The total number of shares which may be issued by the Corporation is
5,000,000 shares of common stock having no par value. Every shareholder is
entitled to one vote per share and may vote same as provided by law.
ARTICLE V
INCORPORATOR
The name and address of the Incorporator is Joseph H. Terry, Lexington
Financial Center, 250 West Main Street, Lexington, Kentucky 40507.
ARTICLE VI
DIRECTORS
The business and affairs of the Corporation are to be conducted by a Board
of Directors of not less than one nor more than twenty members, the number to
be set in the manner provided in the bylaws.
ARTICLE VII
BYLAWS
The bylaws for the Corporation shall be adopted and may be amended or
repealed by the Board of Directors, subject to repeal or change by action of
the shareholders.
- 8 -
<PAGE> 3
ARTICLE VIII
ELIMINATION OF DIRECTOR LIABILITY
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for a breach of his or her
duties as a director except for liability:
(a) for any transaction in which director's personal financial interest is
in conflict with the financial interest of the Corporation or its stockholders;
(b) for acts or omissions not in good faith or which involve intentional
misconduct or are known to the director to be a violation of law;
(c) for distributions made in violation of the Kentucky Business
Corporation Act; or
(d) for any transaction from which the director derives an improper
personal benefit.
If the Kentucky Business Corporation Act is amended, modified or
supplemented or any other statutory provision is adopted, in either case, after
approval by the stockholders of this Article to eliminate or limit further the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Kentucky Business Corporation Act, as so amended, or the statutory
provision as adopted. Any repeal or modification of this Article by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE IX
INDEMNIFICATION
A. Right to Indemnification. Each person who was or is made a party or is
threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
- 9 -
<PAGE> 4
(hereinafter a "proceeding"), by reason of the fact that he or she or a person
for whom he or she is the legal representative is or was a director or executive
officer of the Corporation or is or was serving at the request of the
Corporation as a director of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director or
executive officer of the Corporation shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Kentucky Business
Corporation Act, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee who has
ceased to be a director or executive officer and shall inure to the benefit of
the indemnitee's heirs, executors and administrators; provided, however, such
indemnitee shall be entitled to indemnification only if he or she has discharged
his or her duties in good faith, on an informed basis, and in a manner the
indemnitee honestly believes to be in the best interests of the Corporation; and
provided, however, that, except as provided in paragraph C hereof with respect
to proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the board of directors of the Corporation.
B. Right to Advancement of Expenses. The right to indemnification
conferred in paragraph A of this Section shall include the right to be paid by
the Corporation the expenses incurred in defending any proceeding for
- 10 -
<PAGE> 5
which such right to indemnification is applicable in advance of its final
disposition (hereinafter an "advancement of expenses"); provided, however, an
advancement of expenses incurred by an indemnitee in his or her capacity as a
director or executive officer (and not in any other capacity in which service
was or is rendered by such indemnitee, including, without limitation, service to
an employee benefit plan) shall be made only upon delivery to the Corporation of
an undertaking (hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined that such indemnitee is not entitled to be indemnified for such
expenses under this Section or otherwise and a written affirmation of the
indemnitee's good faith belief that the indemnitee has discharged his or her
duties in good faith, on an informed basis, and in a manner the indemnitee
honestly believes to be in the best interests of the Corporation.
C. Right of Indemnitee to Bring Suit. The right to indemnification and to
the advancement of expenses conferred in paragraphs A and B of this Article
shall be contract rights. If a claim under paragraph A or B of this Article is
not paid in full by the Corporation within sixty days after a written claim has
been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
days, the indemnitee may at any time thereafter bring suit against the
Corporation to answer the unpaid amount of the claim. It shall be a defense to
any such action that the indemnitee has not discharged his duties in good faith
on an informed basis and in a manner he honestly believes to be in the best
interests of the Corporation. If successful in whole or in part in any such
suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit.
Neither the failure of the Corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such suit that indemnification of the indemnitee
is proper
- 11 -
<PAGE> 6
in the circumstances because the indemnitee has discharged his duties in good
faith, on an informed basis and in a manner he or she honestly believes to be in
the best interests of the Corporation, nor an actual determination by the
Corporation (including its board of directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such aforementioned applicable
standard of conduct, shall create a presumption that indemnitee has not met the
aforementioned applicable standard of conduct or in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by
the indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article or otherwise shall be on the Corporation. If the
standard of care provided in paragraphs A, B, C, or F of this Article is found
not to be permissible under Kentucky law, the indemnitee shall be held to the
applicable standard of conduct under the Kentucky Business Corporation Act.
D. Non-Exclusivity of Rights. The rights of indemnification and to the
advancement of expense conferred in this Article shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
these articles of incorporation, by-law, agreement, vote of stockholders of
disinterested directors or otherwise both as to action in his official capacity
and as to action in another capacity while holding office.
E. Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Kentucky Business Corporation Act.
- 12 -
<PAGE> 7
F. Officer's Employee's and Agent's Rights to Indemnification. Each
person who was or is made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, ("proceeding"), by reason of the fact that he
or she, or a person for whom he or she is the legal representative, is or was an
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as an officer, employee or agent, of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as an officer,
employee or agent or in any other capacity while serving as an officer, employee
or agent, may, by action of the Board of Directors, be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Kentucky
Business Corporation Act, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment) against all
expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith;
provided, however, such indemnitee shall be entitled to indemnification only if
he or she has discharged his or her duties in good faith, on an informed basis
and in a manner the indemnitee honestly believes to be in the best interests of
the Corporation; and provided, however, that the Corporation may, by action of
the Board of Directors, indemnify any such person seeking indemnity in
connection with an action, suit or proceeding (or part thereof) initiated by
such person only if such action, suit or proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The Board of Directors
may, in its discretion, advance the payment of expenses.
- 13 -
<PAGE> 8
Dated this 23rd day of April, 1992.
CARDINAL BANCSHARES, INC.
/s/ John S. Penn
---------------------------------
John S. Penn, President
THIS INSTRUMENT PREPARED BY:
/s/ Lisa E. Underwood
- ----------------------------
Lisa E. Underwood
WYATT, TARRANT & COMBS
Lexington Financial Center
250 West Main Street
Lexington, Kentucky 40507
(606) 233-2012
- 14 -
<PAGE> 1
Exhibit 4.2
By-laws of the Registrant
AMENDED AND RESTATED
BYLAWS OF
CARDINAL BANCSHARES, INC.
ARTICLE I
OFFICES
The principal office of the corporation in the State of Kentucky shall be
located at 400 East Vine Street, Suite 300, Lexington, Kentucky. The
corporation may have such other offices, either within or without the State of
Kentucky, as the business of the corporation may require from time to time.
The registered office of the corporation may be, but need not be,
identical with the principal office in the State of Kentucky and the address of
the registered office may be changed from time to time by the Board of
Directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held on the third Thursday of April beginning with the year 1989 at the hour
of 9:00 a.m. for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a Sunday or a legal holiday, such meeting shall be
held on the next secular day. If the election of directors shall not be held on
the day designated for any annual meeting, or at any adjournment thereof, the
Board of Directors shall cause the election to be held at a special meeting of
the shareholders to be held as soon thereafter as may be convenient.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by the chief executive officer, the president, by a majority of the
members of the Board of Directors or by the holders of not less than one-fifth
of all the shares entitled to vote at the meeting.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place within or without the State of Kentucky as the place of meeting for any
annual meeting or for any special meeting called by the Board of Directors.
A waiver of notice signed by all shareholders may designate any place,
either within or without the State of Kentucky, as the place for the holding of
such meeting. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the office of the corporation in the
State of Kentucky, except as otherwise provided in Section 5 of this article.
SECTION 4. NOTICE OF MEETINGS. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the president, or the
secretary, or the officer or persons calling the meeting, to each shareholder
of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail in a sealed
envelope addressed to the shareholder at his address as it appears on the
records of the corporation, with postage thereon prepaid.
SECTION 5. MEETING OF ALL SHAREHOLDERS. If all of the shareholders shall
meet at any time and place, either within or without the State of Kentucky, and
consent to the holding of a meeting, such meeting shall be valid without call
or notice, and at such meeting any corporate action may be taken.
SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board
of Directors of the corporation may close its stock transfer books for the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders
for any other proper purpose for a period not to exceed fifty days. If the
stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, the
transfer books shall be closed for at least ten days immediately preceding such
meeting. In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty days and, in case
of a meeting of shareholders, not less
- 15 -
<PAGE> 2
than ten days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the first date on which a resolution
of the Board of Directors declaring such dividend or fixing the date for such
meeting of shareholders is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided
herein, such determination shall apply to any adjournment thereof.
SECTION 7. VOTING LISTS. The officer or agent having charge of the
transfer book for shares of the corporation shall make a complete list of the
shareholders entitled to vote at such meeting, or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each shareholder, which list, for a period of ten days prior to such
meeting, shall be kept on file at the office of the corporation and shall be
subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during
the whole time of the meeting. The original share ledger or stock transfer
book, or a duplicate thereof kept in this State, shall be prima facie evidence
as to who are the shareholders entitled to examine such list or share ledger or
stock transfer book or to vote at any meeting of shareholders.
SECTION 8. QUORUM. A majority of the outstanding shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders. The shareholders present at a duly organized meeting
can continue to do business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney-in- fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided
in the proxy, but in no event shall a proxy, unless coupled with an interest,
be voted on three years from the date of its execution.
SECTION 10. VOTING OF SHARES. Subject to the provisions of the Articles
of Incorporation, each outstanding share of common stock shall be entitled to
one vote upon each matter submitted to a vote at a meeting of shareholders.
The rights of classes of shares other than common shall be as set forth in the
stock certificate.
SECTION 11. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders may be taken without a
- 16 -
<PAGE> 3
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by its Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The exact number of
Directors to be elected by the Shareholders shall be determined by the Board of
Directors from to time to time; provided, however, that no decrease in the
number of Directors shall operate to shorten the term of any incumbent
Director. In the event the number of Directors is increased, that number of
Directors shall be within the limit specified in the Articles of Incorporation.
The Board of Directors may elect a Director to serve in the vacancy created by
an increase in the number of Directors, which Director shall serve until the
next meeting of Shareholders at which Directors are elected. Each Director
shall hold office for the term for which he is elected or until his successor
shall have been elected and qualifies for the office, whichever period is
longer. Directors need not be residents of Kentucky, nor need they be holders
of any shares of the capital stock of the Corporation.
SECTION 3. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this bylaw, immediately after, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide, by resolution, the time and place, within or without the State of
Kentucky, for the holding of additional regular meetings without other notice
than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the chief executive officer, the
president or any two directors. The person or persons authorized to call
special meetings of the Board of Directors may fix any place, either within or
without the State of Kentucky, as the place for holding any special meeting of
the Board of Directors called by them.
SECTION 5. NOTICE. Notice of any special meeting shall be given at least
two days previously thereto by written notices delivered personally or mailed
to each director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
in a sealed envelope so addressed, with postage thereon prepaid. If notice be
given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director may waive notice
of any meeting. The attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully
- 17 -
<PAGE> 4
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the Board of Directors shall constitute
a quorum for the transaction of business at any meeting of the Board of
Directors, provided that if less than a majority of the directors are present
at said meeting, a majority of the directors present may adjourn the meeting
from time to time without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors; provided, however, that the Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members an executive committee and one or more other committees, each of
which, to the extent provided in such resolution, shall have and may exercise
all the authority of the Board of Directors, but no such committee shall have
the authority of the Board of Directors in reference to amending the articles
of incorporation, adopting a plan of merger or consolidation, recommending to
the shareholders the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the corporation otherwise than in
the usual and regular course of business, recommending to the shareholders a
voluntary dissolution of the corporation or a revocation thereof, or amending
these Bylaws.
SECTION 8. VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to
fill a vacancy shall be elected for the unexpired term of his predecessor in
office. Any directorship to be filled by reason of an increase in the number
of directors may be filled by the Board of Directors for a term of office
continuing only until the next election of directors by the shareholders.
SECTION 9. COMPENSATION. The Board of Directors shall have authority to
fix the compensation of directors.
SECTION 10. INFORMAL ACTION. Any action required by law to be taken at a
meeting of the Board of Directors, or any action which may be taken at a
meeting of the Board of Directors or of a committee, may be taken without a
meeting if a consent, in writing, setting forth the action so taken shall be
signed by all of the directors, or all of the members of the committee, as the
case may be. Such consent shall have the same effect as a unanimous vote.
ARTICLE IV
OFFICERS
SECTION 1. CLASSES. The officers of the corporation shall be a chairman
of the board, a chief executive officer, a president, one or more vice
- 18 -
<PAGE> 5
presidents, a treasurer, a secretary, and such other officers, including a
general manager, whose duties may be fixed from time to time by the Board of
Directors, as may be provided by the Board of Directors and elected in
accordance with the provisions of this article. The Board of Directors may
also create the offices of one or more assistant treasurers and assistant
secretaries, all of whom shall be elected by the Board of Directors. Any two
or more offices may be held by the same person, except if the corporation has
more than one shareholder the office of president and secretary may not be held
by the same person.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the Board of Directors. Each
officer shall hold office until his successor shall have been duly elected and
shall have qualified or until his death or until he shall resign or shall have
been removed in the manner hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interest of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. CHAIRMAN OF THE BOARD. The chairman of the board shall
preside at all meetings of the shareholders and of the Board of Directors. He
shall have the authority to vote all shares of stock in other corporations
owned by the corporation, unless the Board of Directors designates and appoints
another person as proxy for the corporation; and in general shall perform all
duties incident to the office of the chairman of the board and such other
duties as may be prescribed by the Board of Directors from time to time.
SECTION 6. CHIEF EXECUTIVE OFFICER. The chief executive officer shall be
the principal executive officer of the corporation and shall in general
supervise and control all of the business and affairs of the corporation; and
shall perform all duties incident to the office of chief executive officer and
such other duties as may be prescribed by the Board of Directors from time to
time.
SECTION 7. PRESIDENT. The president shall be the chief operating officer
and in general supervise and control the day to day business and affairs of the
corporation. He may sign, with the secretary, or any other proper officer of
the corporation thereunto authorized by the Board of Directors, certificates
for shares of
- 19 -
<PAGE> 6
the corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed except
in cases where the signing and execution thereof shall be expressly delegated
by the Board of Directors or by these bylaws to some other officer or agent of
the corporation, or shall be required by law to be otherwise signed or
executed; and in general shall perform all duties incident to the office of
president and such other duties as may be prescribed by the Board of Directors
from time to time.
SECTION 8. VICE PRESIDENT. In the absence of the president or in the
event of his inability or refusal to act, the vice president shall perform the
duties of the president and, when so acting, shall have all the powers of and
be subject to all the restrictions upon the president. The vice president may
sign, with the secretary or an assistant secretary, certificates for shares of
the corporation and shall perform such other duties as from time to time may be
assigned to him by the president or by the Board of Directors.
SECTION 9. TREASURER. If required by the Board of Directors, the
treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors shall determine.
He shall: [a] have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit all such
moneys in the name of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of Article
V of these bylaws; [b] in general, perform all the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or the Board of Directors.
SECTION 10. SECRETARY. The secretary shall: [a] keep the minutes of the
shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; [b] see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; [c] be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all certificates for shares
prior to the issue thereof and to all documents, the execution of which on
behalf of the corporation under its seal is duly authorized in accordance with
the provisions of these bylaws; [d] keep a register of the post office address
of each shareholder which shall be furnished to the secretary by such
shareholder; [e] sign with the president, or vice president, certificates for
shares of the corporation, the issue of which shall have been authorized by
resolution of the Board of Directors; [f] have general charge of the stock
transfer books of the corporation; [g] in general, perform all duties incident
to the office of secretary and such other duties as from time to time may be
assigned to him by the president or by the Board of Directors.
SECTION 11. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums
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<PAGE> 7
and with such sureties as the Board of Directors shall determine. The
assistant secretaries, as and if authorized by the Board of Directors, may sign
with the president or vice president certificates for shares of the
corporation, the issue of which shall have been authorized by a resolution of
the Board of Directors. The assistant treasurers and assistant secretaries in
general shall perform such duties as shall be assigned to them by the treasurer
or the secretary, respectively, or by the president or the Board of Directors.
SECTION 12. SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V
CONTRACTS LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instruments in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation, and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ORDERS, ETC. All checks, drafts, or other
orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers, agent or agents, of the corporation and in such manner as shall from
time to time be determined by resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the Board of Directors may
select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the president or vice
president and by the secretary or an assistant secretary and may be sealed with
the seal of the corporation or a facsimile thereof. All certificates for
shares shall be consecutively numbered. The name of the person owning the
shares represented
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<PAGE> 8
thereby with the number of shares and date of issue shall be entered on the
books of the corporation. All certificates surrendered to the corporation for
transfer shall be canceled, and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate, a
new one may be issued therefor upon such terms and indemnity to the corporation
as the Board of Directors may prescribe. No certificate shall be issued for
any share until such share is fully paid.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made only on the books of the corporation by the registered holder
thereof or by his attorney thereunto authorized by power of attorney duly
executed and filed with the secretary of the corporation, and on surrender for
cancellation of the certificate for such shares. The person in whose name
shares stand on the books of the corporation shall be deemed the owner thereof
for all purposes as regards the corporation.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be the calendar year.
ARTICLE VIII
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the provisions
of these bylaws, or under the provisions of the Articles of Incorporation, or
under the provisions of the corporation laws of the State of Kentucky, waiver
thereof in writing, signed by the person, or persons, entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE IX
AMENDMENT OF BYLAWS
The Board of Directors may alter, amend or rescind the bylaws, subject to
the right of the shareholders to repeal or modify such actions.
CERTIFICATE
It is hereby certified that on this date we are, respectively, the duly
elected and qualified president and secretary of Cardinal Bancshares, Inc., and
that as of the 16th day of July, 1992, the foregoing Bylaws were amended by
unanimous action of the board.
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<PAGE> 9
/s/ John S. Penn
-----------------------------
John S. Penn, President
/s/ Carolyn Gabriel
- -------------------------------
Carolyn Gabriel, Secretary
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<PAGE> 10
RESOLUTION OF THE BOARD OF DIRECTORS
OF CARDINAL BANCSHARES, INC.
FOR ADOPTION OF AN AMENDMENT TO THE BYLAWS
WHEREAS, the Board of Directors deems it advisable to amend the
Corporation's bylaws as set forth below;
BE IT RESOLVED, that the Board of Directors hereby approves the
following Amendment to Article II, Section 1 of the Corporation's bylaws, which
shall be amended in its entirety to read as follows:
Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held on the first Thursday of May beginning with the year 1994 at the
hour of 9:00 a.m. for the purpose of electing directors and for the
transaction of such other business as may come before the meeting. If the
day fixed for the annual meeting shall be a Sunday or legal holiday such
meeting shall be held on the next secular day. If the election of
Directors shall not be held on the day designated for any annual meeting,
or at any adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders to be held as
soon thereafter as may be convenient.
RESOLVED FURTHER, that the bylaws be amended and restated to include the
Amendment to Article II, Section 1.
It is hereby certified that on this date, January 29, 1994, the foregoing
Amendment to Article II, section I of the Corporation's Bylaws was unanimously
adopted by action of the board.
/s/ Carolyn L. Gabriel
---------------------------
Carolyn L. Gabriel
Corporate Secretary
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<PAGE> 1
Exhibit 5
Opinion of Hogan & Hartson L.L.P.
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
October 11, 1996
Board of Directors
Cardinal Bancshares, Inc.
400 East Vine Street, Suite 300
Lexington, Kentucky 40507
Ladies and Gentlemen:
We are acting as special counsel to Cardinal Bancshares,
Inc., a Kentucky corporation (the "Company"), in connection with
its registration statement on Form S-3 (the "Registration
Statement") filed with the Securities and Exchange Commission
relating to the proposed public offering of up to 85,246 shares of
the Company's common stock, no par value, all of which shares (the
"Shares") may be sold by certain shareholders of the Company.
This opinion letter is furnished to you at your request to enable
you to fulfill the requirements of Item 601(b)(5) of Regulation
S-K, 17 C.F.R. Section 229.601(b)(5), in connection with the
Registration Statement.
For purposes of this opinion letter, we have examined copies
of the following documents:
1. An executed copy of the Registration Statement.
2. The Articles of Restatement of the Articles of Incorporation of the
Company, as certified by the Secretary of the Company on the date
hereof as being complete, accurate and in effect.
3. The Amended By-laws of the Company, as certified by the Secretary of
the Company on the date hereof as being complete, accurate and in
effect.
4. Purchase Agreements between the Company and each of Argonaut
Partnership L.P., Dawson Development Company Limited Partnership,
DC Investment Partners, J. Rex Fuqua, Gerstenhaber Investments L.P.,
Richard A. Horstmann, Thomas Mark Yuele/The Alan W. Steinberg, L.P.
and West Broadway Partners (jointly, the "Purchase Agreements").
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<PAGE> 2
5. Resolutions of the Board of Directors of the Company adopted on
April 12, 1996, as certified by the Secretary of the Company on the
date hereof as then being complete, accurate and in effect, relating
to the Purchase Agreements and the issuance and sale of the Shares
and arrangements in connection therewith.
6. Certificate of officers of the Company, dated the date hereof, as to
certain facts relating to the original Issuance of the Shares and to
the Company.
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy, and completeness of all documents submitted to us as
certified, telecopied, photostatic or reproduced copies. This opinion letter
is given, and all statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on the
applicable provisions of Section 271B.6-210 of the Kentucky Business
Corporation Act. We express no opinion as to any other laws, statutes,
regulations or ordinances.
Based upon, subject to and limited by the foregoing, we are of the
opinion that the Shares are validly issued, fully paid and non-assessable under
the applicable provisions of Section 271B.6-210 of the Kentucky Business
Corporation Act.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has
been prepared solely for your use in connection with the filing of the
Registration Statement on the date hereof, and should not be quoted in whole or
in part or otherwise be referred to, nor otherwise be filed with or furnished
to any governmental agency or other person or entity, without the prior written
consent of this firm.
We hereby consent to the filing of this opinion letter as Exhibit 5 to
the Registration Statement. In giving this consent, we do not thereby admit
that we are an "expert" within the meaning of the Securities Act of 1933, as
amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
---------------------------
HOGAN & HARTSON L.L.P.
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<PAGE> 1
Exhibit 23.1
Consent of KPMG Peat Marwick LLP
The Board of Directors
Cardinal Bancshares, Inc.:
We consent to the use of our report incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the Prospectus.
/s/ KPMG Peat Marwick LLP
Lexington, Kentucky
October 10, 1996
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<PAGE> 1
Exhibit 99.1
Article IX of the Registrant's
Articles of Restatement of the Articles of Incorporation
entitled "Indemnification"
ARTICLE IX
INDEMNIFICATION
A. Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she or a person
for whom he or she is the legal representative is or was a director or
executive officer of the Corporation or is or was serving at the request of the
Corporation as a director of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director or
executive officer of the Corporation shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Kentucky Business
Corporation Act, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification shall continue as to an
indemnitee who has ceased to be a director or executive officer and shall inure
to the benefit of the indemnitee's heirs, executors and administrators;
provided, however, such indemnitee shall be entitled to indemnification only if
he or she has discharged his or her duties in good faith, on an informed basis,
and in a manner the indemnitee honestly believes to be in the best interests of
the Corporation; and provided, however, that, except as provided in paragraph C
hereof with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the board of directors of the Corporation.
B. Right to Advancement of Expenses. The right to indemnification
conferred in paragraph A of this Section shall include the right to be paid by
the Corporation the expenses incurred in defending any proceeding for which
such right to indemnification is applicable in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, an advancement
of expenses incurred by an indemnitee in his or her capacity as a director or
executive officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of
an undertaking (hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined that such indemnitee is not entitled to be indemnified for such
expenses under this Section or otherwise and a written affirmation of the
indemnitee's good faith belief that the indemnitee has discharged his or her
duties in good faith, on an informed basis, and in a manner the indemnitee
honestly believes to be in the best interests of the Corporation.
C. Right of Indemnitee to Bring Suit. The right to
indemnification and to the advancement of expenses conferred in paragraphs A
and B of this Article shall be contract rights. If a claim under paragraph A
or B of this Article is not paid in full by the Corporation within sixty days
after a written claim has been received by the Corporation,
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<PAGE> 2
except in the case of a claim for an advancement of expenses, in which case the
applicable period shall be twenty days, the indemnitee may at any time
thereafter bring suit against the Corporation to answer the unpaid amount of
the claim. It shall be a defense to any such action that the indemnitee has
not discharged his duties in good faith on an informed basis and in a manner he
honestly believes to be in the best interests of the Corporation. If
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. Neither the failure of the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has discharged his duties in good faith, on an informed
basis and in a manner he or she honestly believes to be in the best interests
of the Corporation, nor an actual determination by the Corporation (including
its board of directors, independent legal counsel, or its stockholders) that
the indemnitee has not met such aforementioned applicable standard of conduct,
shall create a presumption that indemnitee has not met the aforementioned
applicable standard of conduct or in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee
to enforce a right to indemnification or to an advancement of expenses
hereunder, or by the Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the burden of proving that the indemnitee is
not entitled to be indemnified, or to such advancement of expenses, under this
Article or otherwise shall be on the Corporation. If the standard of care
provided in paragraphs A, B, C, or F of this Article is found not to be
permissible under Kentucky law, the indemnitee shall be held to the applicable
standard of conduct under the Kentucky Business Corporation Act.
D. Non-Exclusivity of Rights. The rights of indemnification and
to the advancement of expense conferred in this Article shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, these articles of incorporation, by-law, agreement, vote of
stockholders of disinterested directors or otherwise both as to action in his
official capacity and as to action in another capacity while holding office.
E. Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Kentucky Business Corporation Act.
F. Officer's Employee's and Agent's Rights to Indemnification. Each
person who was or is made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, ("proceeding"), by reason of the fact that he
or she, or a person for whom he or she is the legal representative, is or was
an officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as an officer, employee or agent, of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as an officer,
employee or agent or in any other capacity while serving as an officer,
employee or agent, may, by action of the Board of Directors, be indemnified and
held harmless by the Corporation to the fullest extent authorized by the
Kentucky Business Corporation Act, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the
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<PAGE> 3
Corporation to provide prior to such amendment) against all expenses, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith; provided, however, such
indemnitee shall be entitled to indemnification only if he or she has
discharged his or her duties in good faith, on an informed basis and in a
manner the indemnitee honestly believes to be in the best interests of the
Corporation; and provided, however, that the Corporation may, by action of the
Board of Directors, indemnify any such person seeking indemnity in connection
with an action, suit or proceeding (or part thereof) initiated by such person
only if such action, suit or proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The Board of Directors may, in its
discretion, advance the payment of expenses.
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<PAGE> 1
Exhibit 99.2
Section 271B.8-500 et seq. of the Business
Corporations Law of the State of Kentucky,
entitled "Indemnification"
INDEMNIFICATION
271B.8-500 DEFINITIONS FOR KRS 271B.8-510 TO 271B.8-580.--As used
in KRS 271B.8-510 to 271B.8-580:
(1) "Corporation" includes any domestic or foreign predecessor
entity of a corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual, while a director of a corporation, is or
was serving at the corporation's request as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise. A director shall be considered to be serving an
employee benefit plan at the corporation's request if his duties to the
corporation also impose duties on, or otherwise involve services by,
him to the plan or to the participants in or beneficiaries of the plan.
"Director" includes, unless the context requires otherwise, the estate
or personal representative of a director.
(3) "Expenses" include counsel fees.
(4) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan), or reasonable expenses incurred
with respect to a proceeding.
(5) "Official capacity" means:
(a) When used with respect to a director, the office of director
in a corporation; and
(b) When used with respect to an individual other than a director,
as contemplated in KRS 271B.8-560, the office in a corporation held by the
officer or the employment or agency relationship undertaken by the employee or
agent on behalf of the corporation. "Official capacity" shall not include
service for any other foreign or domestic corporation or any partnership, joint
venture, trust, employee benefit plan, or other enterprise.
(6) "Party" includes an individual who was, is, or is threatened
to be made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal.
271B.8-510 AUTHORITY TO INDEMNIFY.--(1) Except as provided in
subsection (4) of this section, a corporation may indemnify an
individual made a party to a proceeding because he is or was a director
against liability incurred in the proceeding if:
(a) He conducted himself in good faith; and
(b) He reasonably believed:
1. In the case of conduct in his official capacity with the
corporation, that his conduct was in its best interests; and
2. In all other cases, that his conduct was at least not opposed
to its best interests; and
(c) In the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan
for a purpose he reasonably believed to be in the interests of the
participants in and beneficiaries of the plan shall be conduct that
satisfies the requirement of subsection (1)(b)2. of this section.
(3) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent shall not be, of itself, determinative that the director did
not meet the standard of conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging improper
personal benefit to him, whether or not involving action in his
official capacity, in which he was adjudged liable on the basis that
personal benefit was improperly received by him.
(5) Indemnification permitted under this section in connection
with a proceeding by or in the right of the corporation shall be
limited to reasonable expenses incurred in connection with the
proceeding.
271B.8-520 MANDATORY INDEMNIFICATION.-- Unless limited by its
articles of incorporation, a corporation shall indemnify a director who
was wholly successful, on the merits or otherwise, in the defense of
any proceeding to which he was a party because he is or was a director
of the corporation against reasonable expenses incurred by him in
connection with the proceeding.
271B.8-530 ADVANCE FOR EXPENSES.--(1) A corporation may pay for
or reimburse the reasonable expenses incurred by a director who is a
party to a proceeding in advance of final disposition of the proceeding
if:
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<PAGE> 2
(a) The director furnishes the corporation a written affirmation
of his good faith belief that he has met the standard of conduct
described in KRS 271B.8-510;
(b) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay the advance if it is
ultimately determined that he did not meet the standard of conduct; and
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification under KRS
271B.8-500 to 271B.8-580.
(2) The undertaking required by subsection (1)(b) of this section
shall be an unlimited general obligation of the director but shall not
be required to be secured and may be accepted without reference to
financial ability to make repayment.
(3) Determinations and authorizations of payments under this
section shall be made in the manner specified in RS 271B.8-550.
271B.8-540 COURT-ORDERED INDEMNIFICATION.--Unless a corporation's
articles of incorporation provide otherwise, a director of the
corporation who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. On receipt of an application, the
court after giving any notice the court considers necessary may order
indemnification if it determines:
(1) The director is entitled to mandatory indemnification under
KRS 271B.8-520, in which case the court shall also order the
corporation to pay the director's reasonable expenses incurred to
obtain court-ordered indemnifications; or
(2) The director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or
not he met the standard of conduct set forth in KRS 271B.8-510 or was
adjudged liable as described in subsection (4) of KRS 271B.8-510, but
if he was adjudged so liable his indemnification shall be limited to
reasonable expenses incurred.
271B.8-550 DETERMINATION AND AUTHORIZATION OF
INDEMNIFICATION.--(1) A corporation shall not indemnify a director
under KRS 271B.8-510 unless authorized in the specific case after a
determination has been made that indemnification of the director is
permissible in the circumstances because he has met the standard of
conduct set forth in KRS 271B.8-510.
(2) The determination shall be made:
(a) By the board of directors by majority vote of a quorum
consisting of directors not at the time parties to the proceeding;
(b) If a quorum cannot be obtained under subsection (2)(a) of this
section, by majority vote of a committee duly designated by the board
of directors (in which designation directors who are parties may
participate) consisting solely of two (2) or more directors not at the
time parties to the proceeding;
(c) By special legal counsel:
1. Selected by the board of directors or its committee in the
manner prescribed in subsection (2)(a) and (b) of this section; or
2. If a quorum of the board of directors cannot be obtained under
subsection (2)(a) of this section and a committee cannot be designated
under subsection (2)(b) of this section, selected by a majority vote of
the full board of directors (in which selection directors who are
parties may participate); or
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<PAGE> 3
(d) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding
shall not be voted on the determination.
(3) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses shall
be made by those entitled under subsection (2)(c) of this section to
select counsel.
271B.8-560 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND
AGENTS.--Unless a corporation's articles of incorporation provide
otherwise:
(1) An officer of the corporation who is not a director shall be
entitled to mandatory indemnification under KRS 271B.8-520, and is
entitled to apply for court-ordered indemnification under KRS
271B.8-540, in each case to the same extent as a director;
(2) The corporation may indemnify and advance expenses under KRS
271B.8-500 to 271B.8-580 to an officer, employee, or agent of the
corporation who is not a director to the same extent as to a director;
and
(3) A corporation may also indemnify and advance expenses to an
officer, employee, or agent who is not a director to the extent,
consistent with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of
directors or contract.
271B.8-570 INSURANCE.--A corporation may purchase and maintain
insurance on behalf of an individual who is or was a director, officer,
employee, or agent of the corporation, or who, while a director, officer,
employee or agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise, against liability asserted against
or incurred by him in that capacity or arising from his status as a director,
officer, employee, or agent, whether or not the corporation would have power to
indemnify him against the same liability under KRS 271B.8-510 or 271B.8-520.
271B.8-580 APPLICATION OF KRS 271B.8-500 TO 271B.8-580.--The
indemnification and advancement of expenses provided by, or granted
pursuant to, KRS 271B.8-500 to KRS 271B.8-580 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise, both as
to action in his official capacity and as to action in another capacity
while holding such office.
(2) KRS 271B.8-500 to 271B.8-580 shall not limit a corporation's
power to pay or reimburse expenses incurred by a director in connection
with his appearance as a witness at a proceeding at a time when he has
not been made a named defendant or responded to the proceeding.
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