<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section 240.14a-12
THE BANK OF KENTUCKY FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule O-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
<PAGE> 2
THE BANK OF KENTUCKY FINANCIAL CORPORATION
1065 BURLINGTON PIKE
FLORENCE, KENTUCKY 41042
(606) 371-2340
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of The
Bank of Kentucky Financial Corporation ("BKFC") will be held at the Triple Crown
Country Club, One Triple Crown Boulevard, Union, Kentucky 41091, on April 16,
1999, at 5:00 p.m. Eastern Daylight Saving Time (the "Annual Meeting"), for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(i) To reelect four directors of BKFC for terms expiring in 2002;
(ii) To approve an amendment to the Articles of Incorporation to
increase the number of authorized shares and eliminate par value;
(iii) To ratify the selection of Crowe, Chizek and Company LLP as the
auditors of BKFC for the current fiscal year; and
(iv) To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only stockholders of BKFC of record at the close of business on March
8, 1999, will be entitled to receive notice of and to vote at the Annual Meeting
and at any adjournments thereof. Whether or not you expect to attend the Annual
Meeting, we urge you to consider the accompanying Proxy Statement carefully and
to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM MAY BE
assured. The giving of a Proxy does not affect your right to vote in person in
the event you attend the Annual Meeting.
By Order of the Board of Directors
Florence, Kentucky Rodney S. Cain, Secretary
April 1, 1999
<PAGE> 3
THE BANK OF KENTUCKY FINANCIAL CORPORATION
1065 BURLINGTON PIKE
FLORENCE, KENTUCKY 41042
(606) 371-2340
PROXY STATEMENT
PROXIES
The enclosed Proxy is being solicited by the Board of Directors of The
Bank of Kentucky Financial Corporation, a Kentucky corporation ("BKFC"), for use
at the 1999 Annual Meeting of Stockholders of BKFC to be held at the Triple
Crown Country Club, One Triple Crown Boulevard, Union, Kentucky 41091, on April
16, 1999, at 5:00 p.m., Eastern Daylight Saving Time, and at any adjournments
thereof (the "Annual Meeting"). Without affecting any vote previously taken, the
Proxy may be revoked by a stockholder before exercise by executing a later-dated
Proxy or by giving notice of revocation to BKFC in writing or in open meeting.
Attendance at the Annual Meeting will not, of itself, revoke a Proxy.
Each properly executed Proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the reelection of David E. Meyer, John E. Miracle, Mary Sue
Rudicill and William E. Snyder as directors of BKFC for terms expiring
in 2002;
FOR the adoption of an amendment to the Articles of Incorporation of
BKFC (the "Articles") to increase the number of authorized shares to
15,000,000 and to provide that all shares of BKFC shall have no par
value; and
FOR the ratification of the selection of Crowe, Chizek and Company LLP
("Crowe Chizek") as the auditors of BKFC for the current fiscal year.
Proxies may be solicited by the directors, officers and other employees
of BKFC in person or by telephone, telecopy, telegraph or mail. The cost of
soliciting proxies will be borne by BKFC.
Only stockholders of record as of the close of business on March 8,
1999 (the "Voting Record Date"), are eligible to vote at the Annual Meeting and
will be entitled to cast one vote for each common share of BKFC ("Share") owned.
BKFC's records disclose that, as of the Voting Record Date, there were 3,518,224
votes entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to stockholders of BKFC on
or about April 1, 1999.
VOTE REQUIRED
ELECTION OF DIRECTORS
The presence, in person or by proxy, of a majority of the issued and
outstanding Shares entitled to vote at the Annual Meeting is necessary to
establish a quorum at the Annual Meeting. At the Annual Meeting, four directors
are to be elected for terms expiring in 2002. Stockholders may cumulate votes in
the election of directors. Cumulative voting enables a stockholder to cast the
number of votes such stockholder is entitled to cast times the number of
directors to be elected; and each stockholder may cast all votes for any one
nominee, or distribute such votes among two or more nominees.
The four nominees receiving the greatest number of votes will be
elected as directors. Shares as to which the authority to vote is withheld and
shares held by a nominee for a beneficial owner which are present in person or
by proxy but are not voted with respect to the election of directors
("Non-votes") are not counted toward the election of directors or toward the
election of the individual nominees specified on the Proxy. If a stockholder has
signed and dated a proxy in the form of the enclosed Proxy, but has not voted
for the election of directors by
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<PAGE> 4
marking the appropriate box on the Proxy, such person's Shares will be voted FOR
the reelection of Messrs. Meyer, Miracle and Snyder and Ms. Rudicill as
directors of BKFC for terms expiring in 2002 and will not be treated as
Non-votes.
ADOPTION OF AMENDMENT TO THE ARTICLES
The affirmative vote of the holders of a majority of the outstanding
Shares entitled to be voted at the Annual Meeting is necessary to adopt the
amendment to the Articles. The effect of a Non-vote or an abstention is the same
as a vote against adoption. If a stockholder has signed and dated a proxy in the
form of the enclosed Proxy, but has not voted on the adoption of the amendment
to the Articles by marking the appropriate box on the Proxy, such person's
Shares will be voted FOR the adoption of the amendment to the Articles and will
not be treated as Non-votes.
RATIFICATION OF SELECTION OF AUDITORS
The affirmative vote of the holders of a majority of the votes cast in
person or by proxy at the Annual Meeting is necessary to ratify the selection of
Crowe Chizek as the auditors of BKFC for the current fiscal year. The effect of
a Non-vote or an abstention is the same as a vote against ratification. If a
stockholder has signed and dated a proxy in the form of the enclosed Proxy, but
has not voted on the ratification of the selection of Crowe Chizek as the
auditors by marking the appropriate box on the Proxy, such person's Shares will
be voted FOR the ratification of the selection of Crowe Chizek as the auditors
of BKFC for the current fiscal year.
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only persons known to BKFC to own beneficially more than five percent of the
outstanding Shares as of March 1, 1999:
<TABLE>
<CAPTION>
Amount and Nature Percentage of
Name and Address(1) of Beneficial Ownership(2) Shares Outstanding
- ------------------- -------------------------- ------------------
<S> <C> <C>
Rodney S. Cain and
Jacqueline M. Cain 620,583 (3) 17.64%
R. C. Durr and
R. C. Durr Company, Inc. 626,266 (4) 17.79
</TABLE>
- -----------------------------
(1) Mr. and Mrs. Cain, Mr. Durr and R. C. Durr Company, Inc., through Mr.
Durr, its sole stockholder, may be contacted in care of BKFC at 1065
Burlington Pike, Florence, Kentucky 41042.
(2) A person is the beneficial owner of Shares if such person, directly or
indirectly, has sole or shared voting or investment power over such
Shares or has the right to acquire such voting or investment power
within 60 days. All Shares are owned with sole voting and investment
power by each person listed, unless otherwise indicated by footnote.
(3) Includes 617,239 Shares owned jointly by Mr. and Mrs. Cain and 500
Shares that may be acquired upon the exercise of options.
(4) Includes 419,116 Shares owned by R. C. Durr Company, Inc., and 3,000
Shares that may be acquired upon the exercise of options. Mr. Durr is
the sole stockholder of R. C. Durr Company, Inc.
The following table sets forth certain information with respect to the
number of Shares beneficially owned by each director of BKFC and by all
directors and executive officers of BKFC as a group as of March 1, 1999:
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<PAGE> 5
<TABLE>
<CAPTION>
Amount and Nature of Percent of Common
Name and Address(1) Beneficial Ownership(2) Shares Outstanding
- ------------------- ----------------------- ------------------
<S> <C> <C>
Rodney S. Cain 620,583 (3) 17.64%
Ruth Seligman-Doering 70,440 (4) 2.00
R. C. Durr 626,266 (5) 17.79
Robert D. Fulkerson 20,741 (6) .59
Harry J. Humpert 25,326 (7) .72
David E. Meyer 58,622 (8) 1.67
Dr. John E. Miracle 54,964 (9) 1.56
Mary Sue Rudicill 45,827 (10) 1.30
Robert B. Sathe 70,440 (11) 2.00
William E. Snyder 26,418 (12) .75
Herbert H. Works 15,724 (13) .45
Robert W. Zapp 114,067 (14) 3.24
All directors and executive officers of
BKFC as a group (12 persons) 1,749,418 49.47%
</TABLE>
(1) Each of the persons listed in this table may be contacted at the
address of BKFC, 1065 Burlington Pike, Florence, Kentucky 41042.
(2) A person is the beneficial owner of Shares if such person, directly or
indirectly, has sole or shared voting or investment power over such
Shares or has the right to acquire such voting or investment power
within 60 days. All Shares are owned with sole voting or investment
power by each person listed, unless otherwise indicated by footnote.
(3) Includes 617,239 Shares owned jointly by Mr. Cain and his wife, and 500
Shares that may be acquired upon the exercise of options.
(4) Includes 3,000 Shares that may be acquired upon the exercise of
options.
(5) Includes 419,116 Shares owned by R. C. Durr Company, Inc., of which Mr.
Durr is the sole stockholder, and 3,000 Shares that may be acquired
upon the exercise of options.
(6) Includes 300 Shares held by Mr. Fulkerson's wife, 7,776 Shares held by
Mr. Fulkerson's children, 472 Shares allocated to the Burnett Federal
Savings Bank Employee Stock Ownership Plan (the "ESOP") account of Mr.
Fulkerson, with respect to which Mr. Fulkerson has sole voting but no
investment power and 430 Shares that may be acquired upon the exercise
of options.
(7) Includes 9,192 Shares owned by Mr. Humpert's wife and 2,000 Shares that
may be acquired upon the exercise of options.
(8) Includes 3,184 Shares held in trust, with respect to which Mr. Meyer
shares investment power only as co-trustee, and 500 Shares that may be
acquired upon the exercise of options.
(9) Includes 22,000 Shares owned jointly by Dr. Miracle and his wife,
11,400 Shares held in a trust of which Dr. Miracle is the trustee and
with respect to which Dr. Miracle has sole voting and investment power
and 500 Shares that may be acquired upon the exercise of options.
(10) Includes 9,000 Shares owned by Belleview Sand and Gravel, Inc., of
which Ms. Rudicill is Chairman and which is owned by Ms. Rudicill and
her husband, and 3,000 Shares that may be acquired upon the exercise of
options.
(11) Includes 1,000 Shares that may be acquired upon the exercise of
options.
(12) Includes 2,000 Shares that may be acquired upon the exercise of
options.
(13) Includes 1,000 Shares that may be acquired upon the exercise of
options.
(14) Includes 20,060 Shares owned jointly by Mr. Zapp and his wife, 5,496
Shares held by Mr. Zapp's wife as custodian for Mr. Zapp's three
children, 29,056 Shares owned by his wife, 1,011 Shares allocated to
Mr. Zapp's ESOP account, with respect to which Mr. Zapp has sole voting
but no investment power, and 800 Shares that may be acquired upon the
exercise of options.
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<PAGE> 6
BOARD OF DIRECTORS
ELECTION OF DIRECTORS
The Amended Articles of Incorporation and By-Laws of BKFC provide for a
Board of Directors consisting of not less than nine directors and not more than
fifteen directors, divided into three classes. The Board of Directors of BKFC
currently consists of eleven directors. The four directors whose terms expire in
1999 have been nominated for reelection as directors of BKFC. Each of such four
directors will be elected for a three-year term. In accordance with BKFC's
By-Laws, any vacancy on the Board of Directors may be filled by the Board of
Directors for the remainder of the full term of the directorship. Each of the
directors of BKFC is also a director of The Bank of Kentucky, Inc. (the "Bank"),
BKFC's only subsidiary.
The entire Board of Directors of BKFC acts as a Nominating Committee
for selecting nominees for election as directors. In accordance with Section 3.3
of the By-Laws of BKFC, nominees for election as directors may be proposed only
by the directors or by a stockholder entitled to vote for directors if such
stockholder has submitted a written nomination to the Secretary of BKFC by the
later of the November 30th immediately preceding the annual meeting of
stockholders or the sixtieth day before the first anniversary of the most recent
annual meeting of stockholders held for the election of directors (unless the
annual meeting is not held on or before the thirty-first day following such
anniversary, in which case such written notice must be submitted no later than
the close of business on the seventh day following the day on which the notice
of the annual meeting is mailed to stockholders). Each such written nomination
must state the name, age, business or residence address of the nominee, the
principal occupation or employment of the nominee, the number of Shares owned
either beneficially or of record by each such nominee and the length of time
such Shares have been so owned.
If any nominee is unable to stand for election, the Proxies will be
voted for such substitute as the Board of Directors recommends. As of the date
of mailing this Proxy Statement, the Board of Directors knows of no reason why
any nominee would be unable to serve if elected. Stockholders may cumulate votes
in the election of directors.
The Board of Directors proposes the reelection of the following
directors for terms expiring in 2002:
<TABLE>
<CAPTION>
Director of Director of the
Name Age Position(s) Held BKFC Since Bank Since (1)
---- --- ---------------- ---------- ----------
<S> <C> <C> <C> <C>
David E. Meyer 64 Director 1994 1991
John E. Miracle 56 Director 1994 1991
Mary Sue Rudicill 55 Director 1994 1991
William E. Snyder 52 Director 1995 1995
</TABLE>
- -----------------------------
(1) BKFC acquired the Bank in 1995.
The following directors will continue to serve after the Annual Meeting
for the terms indicated:
<TABLE>
<CAPTION>
Term Director of Director of the Became Director
Name Age Position(s) Held Expires BKFC Since Bank Since (1) of Burnett (2)
---- --- ---------------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Harry J. Humpert 73 Director 2000 1995 1995 1946
Robert B. Sathe 52 Director 2000 1994 1990 -
Herbert H. Works 70 Director 2000 1994 1992 -
Robert W. Zapp 47 President, CEO and 2000 1994 1990 1995
Director
Rodney S. Cain 60 Secretary and Director 2001 1994 1990 -
Ruth Seligman-Doering 58 Director 2001 1994 1990 -
R. C. Durr 79 Chairman and Director 2001 1994 1990 -
</TABLE>
- -----------------------------
(1) BKFC acquired the Bank in 1995.
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<PAGE> 7
(2) BKFC acquired Burnett Federal Savings Bank ("Burnett") and caused it to
be merged into the Bank in 1995.
David E. Meyer is the President of Wolfpen Associates, a commercial
real estate firm; the managing partner of two commercial real estate investment
firms, Meyer Realty and Florence Commercial; the President of Fuller Square
Corporation, which owns the property on which Florence Commercial's building is
located; and the retired President of H. Meyer Dairy Company. Mr. Meyer served
as a director of Fifth Third Bank, Northern Kentucky, from 1981 through January
1991.
John E. Miracle, D.M.D., is a dentist and has been associated with
General Family Dentistry in Northern Kentucky for 22 years.
Mary Sue Rudicill has been the Chairman of Belleview Sand and Gravel,
Inc., and Gravelview Trucking Company for fifteen years. Ms. Rudicill is a
director of Farmer's Mutual Life Insurance Company and was formerly a director
of Fifth Third Bank of Boone County.
William E. Snyder has been the Vice President and General Manager of
Freightliner Trucks of Cincinnati Incorporated since July 1997. From December
1996 to July 1997, Mr. Snyder was the Manager of Wholesale Operations of Bob
Sumerel Tire Co. Prior to such time, Mr. Snyder was the Vice President of
Freightliner of Cincinnati, Inc., a company which operates a truck dealership
located in Northern Kentucky, for five years. Mr. Snyder also served as the
Treasurer of Burnett from 1990 to 1995.
Harry J. Humpert is the President of Humpert Enterprises, Inc., a
company which operates Klingenberg's Hardware and Paint in Covington, Kentucky.
Mr. Humpert became Chairman of the Board of Directors of Burnett in 1990.
Robert B. Sathe has been a Regional Vice-President of CIGNA Financial
Advisors, Inc., for the last seventeen years.
Herbert H. Works has been the President of Boone-Kenton Lumber for 23
years. Mr. Works served on the Board of Directors of Fifth Third Bank of Boone
County from 1980 until 1991, when he resigned in order to serve as a director of
the Bank.
Robert W. Zapp was the Executive Vice President and the Senior Loan
Officer of Fifth Third Bank of Boone County from January 1982 until June 1988.
From June 1988 until January 1990, Mr. Zapp was the President of Fifth Third
Bank of Kenton County, formerly Security Bank. Mr. Zapp resigned as President of
such institution in order to participate in the organization of the Bank.
Currently, Mr. Zapp is the President and the Chief Executive Officer of the Bank
and BKFC. He is also a member of the Board of Directors of Woodspoint Nursing
Home.
Rodney S. Cain was a director of Fifth Third Bank of Boone County,
formerly Boone State Bank, from 1977 until January 1990. Mr. Cain has served as
the Secretary of the Bank since 1990 and of BKFC since 1994. Mr. Cain is also
the Chairman and CEO of Wiseway Supply and has served in that capacity since
1972.
Ruth M. Seligman-Doering is currently a director of Charles Seligman
Distributing Company, Inc., and has also been its President and CEO for the past
seven years.
R. C. Durr was one of the founders of Boone State Bank. From the time
Boone State Bank was organized in 1971 until Boone State Bank was acquired by
Fifth Third Bank in 1985, Mr. Durr was active in the day-to-day management of
the activities of the institution. After such acquisition, Mr. Durr served as
the Chairman of the Board of Fifth Third Bank of Boone County, the successor to
Boone State Bank, until he resigned in order to participate in the organization
of the Bank. Mr. Durr has served as the Chairman of the Board of Directors of
the Bank since 1990 and of BKFC since 1994.
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<PAGE> 8
MEETINGS OF DIRECTORS
The Board of Directors of BKFC met 9 times for regularly scheduled and
special meetings during the fiscal year ended December 31, 1998. Each director
attended at least 75% of the aggregate of such meetings held during his or her
service as a director, except Mr. Sathe.
The Board of Directors of the Bank met 12 times for regularly scheduled
and special meetings during the fiscal year ended December 31, 1998.
COMMITTEES OF DIRECTORS
The Board of Directors of BKFC has no standing committees. Nominations
for election to the Board of Directors are determined by the entire Board of
Directors. See "Election of Directors."
The Board of Directors of the Bank has several committees, including an
Audit Committee and a Compensation Committee.
The Audit Committee's functions are to develop and ensure compliance
with an audit policy and to ensure that an independent audit is performed
annually. The members of the Audit Committee are Messrs. Humpert, Cain, Works,
Meyer and Fulkerson and Ms. Rudicill, and the Audit Committee met four times in
1998.
The Compensation Committee's functions are to make recommendations to
the Board of Directors regarding the President's compensation. The members of
the Compensation Committee are Messrs. Meyer and Miracle and Ms. Rudicill, and
the Compensation Committee met one time in 1998.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of BKFC:
<TABLE>
<CAPTION>
Name Age Position(s) Held
- ---- --- ----------------
<S> <C> <C>
R. C. Durr 79 Chairman of the Board
Robert W. Zapp 47 President and Chief Executive Officer
Rodney S. Cain 60 Secretary
Robert D. Fulkerson 47 Assistant Secretary and Treasurer
</TABLE>
For biographical information regarding each of these executive
officers, except Mr. Fulkerson, see "BOARD OF DIRECTORS - Election of
Directors."
Robert D. Fulkerson was Vice President of Fifth Third Bank of Boone
County from 1985 until 1990. He served as Vice President of the Bank from 1990
until 1995 and has served as Senior Vice President of the Bank since 1995. He
has also been the Assistant Secretary of BKFC since 1996 and its Treasurer since
1998.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
BKFC does not pay any compensation to its executive officers. Executive
officers of the Bank are compensated by the Bank for services rendered to the
Bank. Except for the President of the Bank, no director or executive officer of
BKFC received more than $100,000 in salary and bonus payments from the Bank
during the year ended December 31, 1998. The following table sets forth certain
information with respect to compensation paid to the President of the Bank.
Summary Compensation Table
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<PAGE> 9
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation (1) Awards All Other
----------------------
Securities underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options/SARs (#) ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert W. Zapp, President 1998 $139,711 $87,500 4,000/-0- $31,005(2)
and CEO 1997 $132,211 $70,000 0/-0- $31,590(3)
1996 $125,000 $50,000 0/-0- $29,559(4)
</TABLE>
- -----------------------------
(1) Does not include amounts attributable to other miscellaneous benefits.
The cost to BKFC of providing such benefits to Mr. Zapp was less than
10% of his cash compensation.
(2) Consists of contributions of $14,400 to the Bank's Profit Sharing Plan
for Mr. Zapp's account, a matching contribution to Mr. Zapp's 401(k)
plan account of $3,360 and premium payments of $13,245 for a
split-dollar life insurance policy. Allocations to Mr. Zapp's ESOP
account for fiscal year 1998 have not yet been determined.
(3) Consists of contributions of $14,461 to the Bank's Profit Sharing Plan
for Mr. Zapp's account, a matching contribution to Mr. Zapp's 401(k)
plan account of $1,988, premium payments of $9,095 for a split-dollar
life insurance policy and the $6,046 value at December 31, 1997, of
allocations to Mr. Zapp's ESOP account.
(4) Consists of contributions of $17,711 to the Bank's Profit Sharing Plan
for Mr. Zapp's account, premium payments of $6,596 for a split-dollar
life insurance policy and the $5,252 value at December 31, 1996, of
allocations to Mr. Zapp's ESOP account.
DIRECTOR COMPENSATION
Although BKFC and the Bank do not pay regularly established director's
fees, each director of the Bank, except Mr. Zapp, received a $500 bonus in
December 1998.
STOCK OPTION PLAN
At the 1997 Annual Meeting of Stockholders of BKFC, the stockholders
approved The Bank of Kentucky Financial Corporation 1997 Stock Option and
Incentive Plan (the "Stock Option Plan"). The Board of Directors of BKFC
reserved 360,000 Shares for issuance by BKFC upon the exercise of options
granted to certain directors, officers and employees of BKFC and the Bank from
time to time under the Stock Option Plan. Due to a stock dividend in the nature
of a 2-for-1 stock split which occurred in April 1998 (the "Stock Split"), the
number of Shares reserved for issuance was increased to 720,000. Options to
purchase 1,000 Shares and 1,500 Shares were awarded in 1997 and 1998,
respectively, pursuant to the Stock Option Plan to each of the non-employee
directors, after adjustments for the Stock Split. Pursuant to the Stock Option
Plan, options to purchase a total of 27,000 Shares have been granted to
employees of BKFC and the Bank.
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<PAGE> 10
The following table sets forth information regarding all grants of
options to purchase Shares of BKFC made to Mr. Zapp during the fiscal year ended
December 31, 1998:
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
--------------------------------------------------------------------------------------------
% of Total Options/
Number of Securities SARs Granted to
Underlying Options/ Employees in Fiscal Exercise or Base
Name SARs Granted (#)(1) Year Ended 12/31/98 Price ($/Share) Expiration Date
- ---- ------------------- ------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert W. Zapp 4,000 14.81% $12.25 1/16/08
</TABLE>
- ----------------------------
(1) Options granted were ISOs, of which one-fifth are exercisable each year
for five years beginning on January 16, 1999.
The following table sets forth information regarding the number and
value of unexercised options held by Mr. Zapp at December 31, 1998:
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Values
-------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options/SARs at In-the-Money Options/SARs at
Acquired on Value 12/31/98 12/31/98 ($)(1)
Name Exercise (#) Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Robert W. Zapp -0- N/A -0-/4,000 $-0-/$81,000
</TABLE>
- ----------------------------
(1) For purposes of this table, the value of the option was determined by
multiplying the number of Shares subject to unexercised options by the
difference between the $12.25 exercise price and the fair market value
of BKFC's Shares, which was $32.50 on December 31, 1998, based on a
purchase of BKFC Shares on December 30, 1998. No established trading
market for BKFC's Shares existed at December 31, 1998, BKFC's Shares
are not traded on any securities exchange and the prices at which its
Shares are traded are not quoted by a national quotation service.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has extended loans to certain of its and BKFC's directors and
executive officers, their affiliates and members of their families. All such
loans were made in the ordinary course of business on substantially the same
terms, including interest rates and collateral requirements, as those prevailing
at the time for comparable transactions with other persons and did not present
more than the normal risk of collectibility or other unfavorable features.
The Bank has a lease agreement for office premises located at 1065
Burlington Pike with Mr. Durr, R. C. Durr Company, Inc., Mr. Cain, and Mr.
Cain's sons, John S. Cain, Rodney C. Cain and David Alfred Cain, each of whom is
a lessor under the lease agreement. The annual rental expense under this lease
was $178,170, $178,170 and $176,820 for the years ended December 31, 1998, 1997
and 1996, respectively. The lease has an initial term of 15 years expiring in
2006 and may, at the option of the Bank, be renewed for three successive
five-year periods.
The Bank has a lease agreement for office premises located on Weaver
Road in Boone County, Kentucky, with Ms. Seligman-Doering and Mr. Sathe as
lessors under the lease agreement. Total rental expense under this lease was
$64,885 , $64,885 and $58,987 for the years ended December 31, 1998, 1997 and
1996, respectively. The lease has an initial term of 15 years expiring in 2007
and may, at the option of the Bank, be renewed for three successive five-year
periods.
The Bank has a lease agreement for office premises located on Kentucky
Highway 18 in Boone County, Kentucky, with William R. Rudicill, the husband of
Ms. Rudicill. Total rental expense under this lease was $10,051 for each of the
years ended December 31, 1998, 1997 and 1996. The lease has an initial term of
15 years expiring in 2008 and may, at the option of the Bank, be renewed for
three successive five-year periods.
The Bank has a lease agreement for office premises located on Houston
Road in Boone County, Kentucky, with Dr. Miracle, Geraldine G. Miracle, Jennifer
A. Meyer, Maria A. Meyer, Leila L. Meyer, Herbert E. Works, Mark T. Wilson,
Nicolette Wilson, Bryan E. Wilson and Josephina Wilson, each of whom is a lessor
under the lease agreement. Geraldine Miracle is Dr. Miracle's spouse. Jennifer
Meyer, Maria Meyer and Leila Meyer are daughters-in-law of Mr. Meyer. Herbert E.
Works is the son of Mr. Works. Mark Wilson, Nicolette Wilson,
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<PAGE> 11
Bryson Wilson and Josephina Wilson are Mr. Works' wife's sons and their wives.
The annual rental expense under this lease was $73,467 for each of the years
ended December 31, 1998, 1997 and 1996, respectively. The lease has an initial
term of 15 years expiring in 2009 and may, at the option of the Bank, be renewed
for three successive five-year periods.
The Bank has a ground lease agreement for office premises located at
12020 Madison Pike in Nicholson, Kentucky, with Nicholson Properties LLC. R. C.
Durr owns 50% of Nicholson Properties LLC. The annual rental expense under this
agreement is $24,000. The lease has an initial term of five years expiring in
2001 and may, at the option of the Bank, be renewed for an additional term of
five years at an annual expense of $26,400.
The Bank has a lease agreement for office premises located on U.S. 42
in Boone County, Kentucky, with Burnett Mortgage Company, LLC, of which Mr.
Humpert and Mr. Snyder are members. Total rental expense under this lease was
$59,663 for 1998. The lease was effective in May 1998 with an initial term of 15
years and may, at the option of the Bank, be renewed for three successive
five-year periods.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, BKFC's directors and executive
officers and persons holding more than ten percent of the outstanding Shares are
required to report their ownership of Shares and changes in such ownership to
the Securities and Exchange Commission (the "SEC") and BKFC. The SEC has
established specific due dates for such reports. Based upon a review of such
reports, BKFC must disclose any failures to file such reports timely in proxy
statements used in connection with annual meetings of stockholders. Each of
Messrs. Meyer, Miracle, Snyder, Humpert, Sathe, Works, Cain and Durr and Mses.
Radicill and Seligman-Doering filed late a Form 5 reporting stock options
received in 1998.
AMENDMENT OF ARTICLES
The Board of Directors recommends that the stockholders adopt a
proposed amendment to Section 2 of the Articles to increase the number of
authorized Shares from 5,000,000 to 15,000,000 and to provide that all Shares
shall have no par value.
The Board of Directors recommends the increase in authorized Shares in
order to permit specific corporate purposes planned by the Board of Directors,
as well as to ensure flexibility of action with respect to future opportunities
not yet contemplated. If the proposed amendment is adopted, additional Shares
will be available, free from any preemptive rights, for issuance from time to
time to such persons and for such consideration as the Board of Directors may
determine, without necessarily requiring further action by BKFC's stockholders,
other than as may be required in certain instances by Kentucky law. For
instance, Kentucky law requires stockholder approval for the issuance of shares
in connection with certain mergers and acquisitions. The additional Shares could
be used for various corporate purposes, including stock dividends, acquisitions
of other companies, public offerings and stock options and other employee
benefit plans. The Board of Directors currently expects to declare a stock
dividend in the nature of a 3-for-2 stock split if the proposed amendment is
adopted. The purpose of the stock split is to reduce the per share price of the
Shares, therefore making it more affordable for the small investor and enhancing
the liquidity of the Shares. At March 1, 1999, 779,066 Shares are authorized and
neither already issued nor reserved for issuance pursuant to stock benefit
plans.
Opportunities often arise that require prompt action, and the delay
necessary for shareholder approval could be detrimental to BKFC and its
stockholders. Although the directors do not intend to seek stockholder approval
for future issuances of Shares unless required by law, the directors will not
issue any Shares except on terms the Board of Directors deems to be in the best
interests of BKFC and its stockholders.
The increase in the authorized number of Shares has not been proposed
for the purpose of having an anti-takeover effect, and the Board of Directors
has no knowledge of any current efforts to obtain control of BKFC. Nevertheless,
the proposed increase in the number of authorized Shares might be viewed as
having the effect of discouraging an attempt by another person or entity,
through the acquisition of a substantial number of BKFC's Shares, to acquire
control of BKFC with a view to imposing a merger, sale of all or any part of its
assets or a similar
-11-
<PAGE> 12
transaction, because the issuance of new Shares or the granting of rights to
purchase Shares, perhaps on very favorable terms, could be used to dilute the
stock ownership of a person or entity seeking to obtain control of BKFC. In
addition, although the Board of Directors at present has no intention of doing
so, authorized but unissued Shares could be issued to a holder that would
thereby have sufficient voting power to assure that the transactions described
in Section 8 of the Articles, such as mergers or sales of substantial amounts of
the assets of BKFC, and any proposal to change the number of directors, would
not receive the 75 percent stockholder vote required by Section 8.
BKFC's Articles currently state that the par value of the Shares is
$5.00 per Share. The par value was arbitrarily set based upon the par value of
the Bank's shares and has no relevance to the market value of the Shares or the
rights of the stockholders. The elimination of par value will allow the BKFC
financial statements to be analyzed more readily in comparison with other
banking institutions that utilize no par or "penny par" stock and will eliminate
any confusion the $5.00 designation may create. Financial information of BKFC,
included in the Annual Report to Stockholders accompanying this Proxy Statement,
has not been included in this Proxy Statement because it is not material to the
adoption of the Amendment.
At the Annual Meeting, the stockholders will be asked to approve the
following resolution:
RESOLVED, that the Articles of Incorporation of The Bank of Kentucky
Financial Corporation be, and they hereby are, amended by deleting
Section 2 in its entirety and substituting therefor the following
Section 2:
2. The aggregate number of shares of stock which the
Corporation shall have authority to issue is 15,000,000 shares
having no par value. Each share of stock shall have one (1)
vote. Each share of stock of the Corporation with a par value
of $5.00 each issued and outstanding as of April 16, 1999,
shall, without further action, be a share of stock of the
Corporation with no par value.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
AMENDMENT TO THE ARTICLES.
SELECTION OF AUDITORS
The Board of Directors has selected Crowe Chizek as the auditors of
BKFC and its subsidiaries for the current fiscal year and recommends that the
stockholders ratify the selection. Crowe Chizek has been the auditor of BKFC
since 1995. Management expects that a representative of Crowe Chizek will be
present at the Annual Meeting, will have the opportunity to make a statement if
he or she so desires and will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the votes cast is
necessary to ratify the selection of Crowe Chizek as the auditors of BKFC for
the current fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF CROWE CHIZEK AS THE AUDITORS FOR THE CURRENT FISCAL YEAR.
PROPOSALS OF SECURITY HOLDERS AND OTHER MATTERS
Any proposals of stockholders intended to be included in BKFC's proxy
statement and proxy card for the 2000 Annual Meeting of Stockholders (other than
nominations for directors, as explained herein at "BOARD OF DIRECTORS - Election
of Directors") should be sent to BKFC by certified mail and must be received by
BKFC not later than November 30, 1999. In addition, if a stockholder intends to
present a proposal at the 2000 Annual Meeting without including the proposal in
the proxy materials related to that meeting, and if the proposal is not received
by February 11, 2000, then the proxies designated by the Board of Directors of
BKFC for the 2000 Annual Meeting of Stockholders of BKFC may vote in their
discretion on any such proposal any shares for which they have been appointed
proxies without mention of such matter in the proxy statement or on the proxy
card for such meeting.
Management knows of no other business that may be brought before the
Annual Meeting, including matters incident to the conduct of the Annual Meeting.
It is the intention of the persons named in the enclosed
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<PAGE> 13
Proxy to vote such Proxy in accordance with their best judgment on any other
matters that may be brought before the Annual Meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN
AND RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
Florence, Kentucky Rodney S. Cain, Secretary
March 29, 1999
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<PAGE> 14
REVOCABLE PROXY
THE BANK OF KENTUCKY FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
APRIL 16, 1999
The undersigned hereby appoints R. C. Durr and Rodney S. Cain, or
either of them, with full powers of substitution and resubstitution, to act as
proxy or proxies for the undersigned to vote all shares of common stock of The
Bank of Kentucky Financial Corporation (the "Company") that the undersigned is
entitled to vote at the Annual Meeting of Stockholders (the "Meeting") to be
held on April 16, 1999, at Triple Crown Country Club, One Triple Crown
Boulevard, Union, Kentucky 41091, and at any and all adjournments thereof, as
follows:
I. The election of the following directors:
___ FOR the nominees ___ WITHHOLD authority to
listed below (except vote for the nominees
as otherwise indicated) listed below
For a term expiring in 2002:
David E. Meyer
John E. Miracle
Mary Sue Rudicill
William E. Snyder
Instructions:
1. To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
2. If you wish to vote cumulatively, indicate below how you want
your votes allocated among the nominees.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
II. The approval of an amendment to the Articles of Incorporation of The
Bank of Kentucky Financial Corporation to increase the number of
authorized shares from 5,000,000 to 15,000,000 and to eliminate
par value of all shares. _____ _________ _________
FOR AGAINST ABSTAIN
III. The ratification of the
appointment of Crowe, Chizek
and Company LLP as independent
auditors for the Company
for the year ended December 31, 1999. _____ _________ _________
</TABLE>
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment thereof.
<PAGE> 15
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE DIRECTORS
NOMINATED AND "FOR" PROPOSALS II AND III.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS NOMINATED AND FOR
PROPOSALS II AND III. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS
PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy shall be deemed terminated and of no further force and effect if the
undersigned attends and votes in person at the Annual Meeting or gives written
notice of revocation or submits a later-dated proxy received by the Company
before the Meeting.
The undersigned acknowledges receipt from the Company, prior to the execution of
this Proxy, of a Notice of the Meeting, a Proxy Statement dated March 29, 1999,
and a copy of the 1998 Annual Report to Stockholders.
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Dated: ___________________, 1999 Dated: _____________________, 1999
Please sign exactly as your name appears above on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, only one holder's signature is required.
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
<PAGE> 16
REVOCABLE PROXY
THE BANK OF KENTUCKY FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
APRIL 16, 1999
The undersigned hereby appoints R. C. Durr and Rodney S. Cain, or
either of them, with full powers of substitution and resubstitution, to act as
proxy or proxies for the undersigned to vote all shares of common stock of The
Bank of Kentucky Financial Corporation (the "Company") that the undersigned is
entitled to vote at the Annual Meeting of Stockholders (the "Meeting") to be
held on April 16, 1999, at Triple Crown Country Club, One Triple Crown
Boulevard, Union, Kentucky 41091, and at any and all adjournments thereof, as
follows:
I. The election of the following directors:
---- FOR the nominees ---- WITHHOLD authority to
listed below (except vote for the nominees
as otherwise indicated) listed below
For a term expiring in 2002:
David E. Meyer
John E. Miracle
Mary Sue Rudicill
William E. Snyder
Instructions:
1. To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
------------------------------------------------------------------
2. If you wish to vote cumulatively, indicate below how you want
your votes allocated among the nominees.
------------------------------------------------------------------
------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
II. The approval of an amendment
to the Articles of
Incorporation of The Bank of
Kentucky Financial
Corporation to increase the
number of authorized shares
from 5,000,000 to 15,000,000
and to eliminate par value
of all shares. --- ------- -------
FOR AGAINST ABSTAIN
III. The ratification of the
appointment of Crowe, Chizek
and Company LLP as independent
auditors for the Company for the
year ended December 31, 1999. --- ------- -------
<PAGE> 17
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE DIRECTORS
NOMINATED AND "FOR" PROPOSALS II AND III.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS NOMINATED AND FOR
PROPOSALS II AND III. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS
PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy shall be deemed terminated and of no further force and effect if the
undersigned attends and votes in person at the Annual Meeting or gives written
notice of revocation or submits a later-dated proxy received by the Company
before the Meeting.
The undersigned acknowledges receipt from the Company, prior to the execution of
this Proxy, of a Notice of the Meeting, a Proxy Statement dated March 29, 1999,
and a copy of the 1998 Annual Report to Stockholders.
- --------------------------- ---------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- --------------------------- ---------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Dated: , 1999 Dated: , 1999
----------------------- ------------------------
Please sign exactly as your name appears above on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, only one holder's signature is required.
- --------------------------------------------------------------------------------
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
- --------------------------------------------------------------------------------
