Exhibit 10.3
Stock Purchase Agreement Dated June 1, 2006 by and among Farmers Capital Bank
Corporation, Kentucky Banking Centers, Inc. and Citizens First Corporation.

 
STOCK PURCHASE AGREEMENT
 

 
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of
the 1st day of June, 2006, by and among (i) FARMERS CAPITAL BANK CORPORATION, a
Kentucky corporation with its principal executive offices located at 202 West
Main Street, Frankfort, Kentucky 40601 (“Farmers”); (ii) KENTUCKY BANKING
CENTERS, INC., a Kentucky banking corporation with its principal executive
offices located at 1530 South Green Street, Glasgow, Kentucky 42141 (“Bank”);
and (iii) CITIZENS FIRST CORPORATION, a Kentucky corporation with its principal
executive offices located at 1065 Ashley Street, Bowling Green, Kentucky 42101
(“Citizens”).
 
PREAMBLE
 
Farmers is the owner of all of the issued and outstanding shares of capital
stock (the “Shares”) of Bank.  Farmers desires to sell the Shares to Citizens,
and Citizens desires to purchase the Shares from Farmers, for the consideration
and on the terms and conditions set forth herein.
 
NOW THEREFORE, in consideration of the premises and the mutual and dependent
covenants and undertakings contained in this Agreement, and for other good and
valuable consideration, the mutuality, receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound, the parties hereby agree
as follows:
 
ARTICLE 1
 
DEFINITIONS
 
1.1.           Certain Defined Terms. The words listed in this Article 1 when
used and capitalized in this Agreement shall have the meanings set forth for
each by this Article 1. Certain other capitalized terms when used in this
Agreement shall have the meanings ascribed to them when first encountered
elsewhere in this Agreement:
 
(a)           “Acquisition Proposal” shall mean with respect to Bank any bona
fide written proposal or offer from any Person relating to any (i) direct or
indirect acquisition or purchase of a business that constitutes 50% or more of
the net revenues, net income or the Assets of Bank, (ii) direct or indirect
acquisition or purchase of equity securities of Bank representing 50% or more of
the combined voting power of Bank, (iii) any tender offer or exchange offer that
if consummated would result in any Person beneficially owning equity securities
of such Party representing 50% or more of the combined voting power of Bank, or
(iv) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Bank, other than the
transactions contemplated by this Agreement.
 
(b)           “Adverse Consequences” shall mean all Proceedings, charges,
claims, demands, injunctions, Orders, damages, dues, assessments, expenditures,
outlays, awards, penalties, fines, costs, interest, amounts paid in settlement,
liabilities, obligations, payments, premiums, taxes, liens, losses, reduction in
value, loss of use, injuries, expenses and fees of whatever nature, including
without limitation response, restoration, investigative, removal,
 

 
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remedial, monitoring or inspection costs and court costs and reasonable
attorneys’ fees and expenses.
 
(c)           “Affiliate” means, as applied to any Person, (i) any director,
executive officer, or general partner of such Person, (ii) any other Person
directly or indirectly controlling, controlled by or under common control with
or by such Person or (iii) any other Person that directly or indirectly owns or
controls, whether beneficially or as a trustee, guardian or other fiduciary, ten
percent (10%) or more of the equity capital of such Person.  For purposes of
this definition, “control” (including the terms “controlling,”  “controlled by”
and “under common control with”) shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or by
Contract or otherwise.
 
(d)           “Agreement” shall mean this Agreement and the Schedules, Exhibits
and other certificates or documents delivered pursuant hereto.
 
(e)           “Assets” of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise, wherever located.
 
(f)           “Bankruptcy Event” shall mean, with respect to a Person, if such
Person shall (i) discontinue business, or cease doing business for more than ten
(10) days; (ii) make a general assignment for the benefit of creditors; (iii)
apply for or consent to the appointment of a custodian, receiver, trustee or
liquidator of all or a substantial part of its assets; (iv) be adjudicated
bankrupt or insolvent; (v) file a voluntary petition in bankruptcy or file a
petition or an answer seeking a composition, reorganization or an arrangement
with creditors or seek to take advantage of any other Law (whether federal or
state) relating to relief for debtors, or admit (by answer, default or
otherwise) the material allegations of any petition filed against it in any
bankruptcy, reorganization, composition, insolvency or other Proceeding (whether
federal or state) relating to relief for debtors; (vi) suffer the filing of any
involuntary petition in any bankruptcy, reorganization, insolvency or other
Proceeding (whether federal or state), if the same is not dismissed within sixty
(60) days after the date of such filing; (vii) suffer or permit to continue any
judgment, decree or order entered by a court which assumes control of its
business or financial affairs or approves a petition seeking a reorganization,
composition or arrangement of its business or financial affairs or any other
judicial modification of the rights of any of its creditors, or appoints a
receiver, trustee or liquidator for it, or for all or a substantial part of any
of its businesses or assets or financial affairs; (viii) be enjoined or
restrained from conducting all or a material part of any of its businesses as
then conducted or as hereafter conducted and the same is not dismissed and
dissolved within thirty (30) days after the entry thereof; (ix) not be paying
its debts generally as they become due; or (x) admit in writing its inability,
or is unable, to pay its debts generally as they become due.
 
(g)           “Benefit Plans” shall have the meaning assigned such term in
Section 3.18(a) hereof.
 

 
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(h)           “BHC Act” shall mean the federal Bank Holding Company Act of 1956,
as amended.
 
(i)           “Bank Common Stock” shall mean the common stock, $20,000 par value
per share, of Bank.
 
(j)           “Bank Financial Statements” shall have the meaning assigned such
term in Section 3.5 hereof.
 
(k)           “Change in Control” shall mean (i) any merger, consolidation,
share exchange or other reorganization or recapitalization to which a Party or
any of its Subsidiaries is a party or subject, (ii) the sale, lease or exchange
following the date of this Agreement (either in one (1) transaction or a series
of transactions) of five percent (5%) or more of the Assets of a Party or any of
its Subsidiaries within a one (1) year period, (iii) the issuance of equity
interests in a Party or any of its Subsidiaries following the date of this
Agreement (either in one (1) transaction or a series of transactions) which
increases by five percent (5%) or more the equity of a Party or any of its
Subsidiaries or (iv) the issuance of voting interests in a Party or any of its
Subsidiaries following the date of this Agreement (either in one (1) transaction
or a series of transactions) equal to five percent (5%) or more of the voting
interests of a Party or any of its Subsidiaries prior to such issuance.
 
(l)           “Citizens Indemnified Persons” shall have the meaning assigned
such term in Section 9.2 hereof.
 
(m)           “Claim Notice” shall have the meaning assigned such term in
Section 9.5 hereof.
 
(n)           “Closing” shall mean the consummation of the Contemplated
Transactions and the satisfaction of all other conditions precedent thereto as
set forth hereinafter.
 
(o)           “Closing Date” shall have the meaning assigned such term in
Section 2.3 hereof.
 
(p)           “Code” shall mean the Internal Revenue Code of 1986, as amended,
or any successor thereto and all rulings and regulations issued pursuant thereto
or any successor thereto.
 
(q)           “Consent” shall mean any consent, approval, authorization,
clearance, exemption, waiver or similar affirmation by any Person pursuant to
any Contract, Law, Order or Governmental Authorization.
 
(r)           “Contemplated Transactions” shall mean all of the transactions
contemplated by this Agreement, apart from the Bank Merger, including the sale
of the Shares by Farmers to Citizens.
 
(s)           “Contract” shall mean any legally binding written or oral
agreement, arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan,
 

 
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practice, restriction, order, permit, understanding or undertaking of any kind
or character, or other document to which any Person is a party or that is
binding on any Person or its equity capital, assets or business.
 
(t)           “Covered Claim” shall have the meaning assigned such term in
Section 9.5 hereof.
 
(u)           “Default” shall mean (i) any breach or violation of or default
under any Contract, (ii) any occurrence or event that with the passage of time
or the giving of notice or both would constitute a breach or violation of or
default under any Contract or (iii) any occurrence or event that with or without
the passage of time or the giving of notice would give rise to a right to
terminate, revoke, modify, cancel, amend, change the current terms of,
renegotiate, or to accelerate, increase or impose any liability under, any
Contract.
 
(v)           “Disclosure Memorandum” shall mean the written Memorandum entitled
“Disclosure Memorandum” delivered to Citizens by Farmers describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, Farmers shall make reasonable efforts to specifically
reference each Section of this Agreement under which such disclosure is being
made.
 
(w)           “Encumbrance” shall mean any claim, lien, security interest (or
other security arrangement), charge, equity, mortgage, pledge, community
property interest, condition, equitable interest, option, right of first
refusal, conditional sale agreement, default of title, hypothecation,
reservation, title retention or encumbrance of any nature whatsoever, other than
liens for Taxes accrued but not yet payable, and, as to real property, such
imperfections of title and encumbrances, if any, as do not materially detract
from the value or interfere with the present use or sale of any of the real
property of Bank.
 
(x)           “Environment” means soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life and any
other environmental medium or natural resource.
 
(y)           “Environmental Laws” means any Laws that require or relate to: (a)
advising appropriate authorities, employees and the public of intended or actual
releases of pollutants or Hazardous Materials, violations of discharge limits or
other prohibitions and of the commencements of activities, such as resource
extraction or construction, that could have significant impact on the
Environment; (b) preventing or reducing to acceptable levels the release of
pollutants or Hazardous Materials into the Environment; (c) reducing the
quantities, preventing the release or minimizing the hazardous characteristics
of wastes that are generated; (d) assuring that products are designed,
formulated, packaged and used so that they do not present unreasonable risks to
human health or the Environment when used or disposed of; (e) protecting
resources, species or ecological amenities; (f) reducing to acceptable levels
the risks inherent in the transportation of Hazardous Materials or other
potentially harmful substances; (g) cleaning up pollutants that have been
released preventing the threat of release or paying the costs of such clean up
or prevention; or (h) making responsible parties pay private parties, or groups
of
 

 
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them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets. “Environmental Laws” shall include, without limitation,
the Comprehensive Environmental Response Compensation and Liability Act, as
amended, §§42 U.S.C. 9601 et seq. (“CERCLA”) or any successor law, and
regulations and rules issued pursuant thereto or any successor, and the Resource
Conservation and Recovery Act, as amended §§ 42 U.S.C. 6901 et seq. (“RCRA”) or
any successor law, and regulations and rules issued pursuant thereto or any
successor.
 
(z)           “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor thereto, and regulations and rules issued
pursuant thereto or any successor thereto.
 
(aa)           “ERISA Affiliate” shall mean any trade or business, whether or
not incorporated, that together with the Person under consideration would be
deemed a “single employer” within the meaning of Section 4001(b) of ERISA.
 
(bb)           “ERISA Plan” shall mean any Benefit Plan which is an “employee
pension benefit plan” as defined in Section 3(2) of ERISA.
 
(cc)           “Exhibits” shall mean the exhibits so marked and attached to this
Agreement, which Exhibits are hereby incorporated herein by reference and made a
part hereof.
 
(dd)           “Farmers” shall mean Farmers Capital Bank Corporation, a Kentucky
corporation.
 
(ee)           “Farmers Indemnified Persons” shall have the meaning assigned
such term in Section 9.3 hereof.
 
(ff)           “FDIC” shall mean the Federal Deposit Insurance Corporation.
 
(gg)           ”FRB” shall mean the Board of Governors of the Federal Reserve
System.
 
(hh)           “Funded Debt” shall mean, at any date, all indebtedness for
borrowed money issued, incurred, assumed or guaranteed of or by a Person which
would, in accordance with GAAP, be classified as funded indebtedness, but in any
event “Funded Debt” shall include all indebtedness for borrowed money, whether
secured or unsecured. However, notwithstanding the foregoing, “Funded Debt”
shall not include, with respect to the subject Person, any liability or
obligation of the subject Person incurred in the Ordinary Course of the subject
Person’s banking or trust business with respect to (i) any deposits held by the
subject Person or funds collected by the subject Person; (ii) any banker’s
acceptance or letter of credit issued by the subject Person; (iii) any check,
note, certificate of deposit, money order, traveler’s check, draft or bill of
exchange accepted or endorsed by the subject Person; (iv) any lease of real or
personal property, purchase money security agreement or similar instrument not
involving an obligation of the subject Person for borrowed money other than
purchase money indebtedness; (v) any guarantee or similar obligation incurred by
the subject Person in such circumstances as are incidental or usual in carrying
on the banking or trust business; (vi) any transaction in the nature of an
extension of credit, whether in the form of a commitment or otherwise,
undertaken by the
 

 
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subject Person for the account of a third party after the application by the
subject Person of the same banking considerations and legal lending limits that
would otherwise be applicable if the transaction were a loan to such party;
(vii) any transaction in which the subject Person acts solely in a fiduciary or
agency capacity; and (viii) FHLB borrowings and Federal Funds transactions in
the Ordinary Course of Business.
 
(ii)           “GAAP” shall mean generally accepted accounting principles
applicable to banks and bank holding companies as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants, in statements and pronouncements of the Financial
Accounting Standards Board, or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, in each
case which are applicable to the circumstances as of the date of determination.
 
(jj)           “Governmental Authorization” shall mean any approval, Consent,
license, permit, waiver, or other authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Law.
 
(kk)           “Governmental Body” shall mean any: (a) nation, state, county,
city, town, village, district or other jurisdiction of any nature; (b) federal,
state, local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any self-regulatory
organization, governmental agency, branch, department, official or entity and
any court or other tribunal); (d) multi-national organization or body; or (e)
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory or taxing authority or power of any
nature.
 
(ll)           “Hazardous Materials” shall mean any waste or other substance
that is listed, defined, designated or classified as, or otherwise determined to
be, hazardous, radioactive or toxic or a pollutant or a contaminant or otherwise
regulated under or pursuant to any Environmental Law, including any admixture or
solution thereof, and specifically including (without limitation) petroleum and
all derivatives thereof or synthetic substitutes therefor, asbestos or
asbestos-containing materials and polychlorinated biphenyls, substances
containing polychlorinated biphenyls, nitrate, perchloroethylene,
1,1,1-trichloroethane, trichloroethylene, tetrachloroethylene,
1,1-dichloroethane, 1, 1-dichloroethene, cis-1, 2-dichloroethene, trans-1,
2-dichloroethene, copper, chromium, zinc, cadmium, lead, mercury, nickel, iron,
magnesium, nitrite and aluminum.
 
(mm)                      “Indemnified Person” shall have the meaning assigned
such term in Section 9.5 hereof.
 
(nn)           “Intellectual Property” shall mean any copyrights (in both
published and unpublished works), patents, trademarks (registered and
unregistered), service marks, service names, fictional business names and trade
names, technology rights and licenses, computer software (including any source
or object codes therefore or documentation relating thereto), trade secrets,
confidential information, customer lists, technical information, research and
development information and records, data processing technology, plans,
drawings, blueprints,
 

 
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franchises, know-how, inventions and discoveries (whether or not patentable),
any applications for any of the foregoing and any other intellectual property
rights of whatever nature.
 
(oo)            “Knowledge:” a Person who is an individual will be deemed to
have “Knowledge” of a particular fact or other matter if: (a) such individual is
actually aware of such fact or other matter; or (b) a prudent individual would
be expected to discover or otherwise become aware of such fact or other matter
in the course of conducting reasonably comprehensive investigation concerning
the existence of such fact or other matter. A Person (other than an individual)
will be deemed to have “Knowledge” of a particular fact or other matter if any
individual who is serving as a director or executive officer of such Person (or
in any similar capacity) as of the date of this Agreement or as of the Closing
Date has, or at any time had, Knowledge of such fact or other matter.
 
(pp)           “Law” shall mean any code, law, constitution, ordinance,
regulation, principle of common law, reporting or licensing requirement, rule,
treaty or statute applicable to a Person or its Assets, Liabilities or business,
including, without limitation, those promulgated, interpreted or enforced by any
Governmental Body wherever located.
 
(qq)           “Liability” shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or expense
(including costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
 
(rr)           “Material Adverse Effect” shall mean that the Adverse
Consequences from an event, change, or occurrence, individually or together with
any other event, change or occurrence, have had or can reasonably be expected to
have a material adverse impact (financial or otherwise) on (i) the financial
condition, business, results of operations or properties of the subject Person
or (ii) the ability of the subject Person to perform its obligations under this
Agreement or to consummate other transactions contemplated by this Agreement in
accordance with applicable Law; provided that “Material Adverse Effect” shall
not be deemed to include the impact of (a) changes in banking and similar Laws
of general applicability or interpretations thereof by Governmental Bodies, (b)
changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, (c) actions or omissions of a Party (or any
of its Subsidiaries) taken with the prior written consent of the other Parties
pursuant to Section 10.4 hereof, (d) changes in economic conditions or interest
rates generally affecting financial institutions, or (e) the direct effects of
compliance with this Agreement on the operating performance of the Parties,
including expenses incurred by the Parties in consummating the transactions
contemplated by the Agreement.
 
(ss)            “1933 Act” shall mean the Securities Act of 1933, as amended.
 
(tt)           “1934 Act” shall mean the Securities Exchange Act of 1934, as
amended.
 

 
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(uu)           “Office” shall mean the Kentucky Office of Financial
Institutions.
 
(vv)           “Operating Property” shall mean any property owned (or previously
owned) by the Party in question or any of its Subsidiaries or in which the Party
in question or any of its Subsidiaries holds (or previously held) a security
interest and, where required by Contract, include the owner or operator of the
said property, but only with respect to such property.
 
(ww)                      “Order” shall mean any administrative decision or
award, directive, decree, judgment, order, quasi-judicial decision or award,
ruling, subpoena, injunction, decision, verdict or writ of any court,
arbitrator, mediator, tribunal or Governmental Body.
 
(xx)           “Ordinary Course” or “Ordinary Course of Business” - an action
taken by a Person will be deemed to have been taken in the “Ordinary Course” or
the “Ordinary Course of Business” only if: (a) such action is consistent with
the past practices of such Person and is taken in the ordinary course of the
normal day-to-day operations of such Person; (b) such action is not required to
be authorized by the board of directors or the shareholders of such Person (or
by any Person or group of Persons exercising similar authority); and (c) such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors or the shareholders (or by any
Person or group of Persons exercising similar authority), in the ordinary course
of the normal day-to-day operations of other Persons that are in the same line
of business as such Person.
 
(yy)           ”Participation Facility” shall mean any facility or property in
which the Party in question or any of its Subsidiaries participates (or
previously participated) in the management of such facility or property and,
where required by the Contract, such term means the owner or operator of said
facility or property, but only with respect to said facility or property.
 
(zz)           “Party” shall mean Citizens, Farmers or Bank and “Parties” shall
mean, collectively, Citizens, Farmers and Bank.
 
(aaa)                      “Permit” shall mean any federal, state, local or
foreign Governmental Authorization, certificate, easement, filing, franchise,
license, notice, permit or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
assets or business.
 
(bbb)                      “Person” shall mean any individual, association,
corporation (including without limitation any non-profit corporation) estate,
general partnership, limited liability partnership, limited partnership, limited
liability company, joint stock association, joint venture, firm, trust, business
trust, cooperative, executor, administrator, nominee or entity in a
representative capacity, group acting in concert, Governmental Body,
unincorporated association or other legal entity or organization.
 
(ccc)                      “Proceeding” shall mean any action, arbitration,
adjudication, case, cause of action, audit claim, litigation, suit, complaint,
citation, criminal prosecution, demand letter, governmental or other examination
or investigation, hearing, inquiry, notice of violation,
 

 
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administrative or other proceeding of whatever nature, or notice (written or
oral) by any Person alleging potential Liability or requesting information
relating to or affecting any Person, its business, Assets or the transactions
contemplated by this Agreement, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by Regulatory
Authorities.
 
(ddd)                      “Purchase Price” shall have the meaning set forth in
Section 2.2.
 
(eee)                      “Real Property” shall have the meaning assigned such
term in Section 3.11(b) hereof.
 
(fff)           “Regulatory Authorities” shall mean, collectively, the FRB, the
Office, all state regulatory agencies having jurisdiction over any of the
Parties or their respective Subsidiaries, the NASD, and the SEC.
 
(ggg)                      “Representative” shall mean any investment banker,
financial advisor, attorney, accountant, consultant, or other representative of
a Person.
 
(hhh)                      “Rights” shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip, options,
purchase rights, warrants or other binding obligations of any character
whatsoever by which a Person is or may be bound to issue additional shares of
its capital stock or other equity interests of whatever nature or other rights,
or securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or other equity interests of whatever nature, or by
which a Person is or may be bound to repurchase, redeem or otherwise acquire any
of its outstanding shares of capital stock.
 
(iii)           “Schedules” shall mean any schedules so marked and attached to
this Agreement, which Schedules are hereby incorporated herein by reference and
made a part hereof.
 
(jjj)           “SEC” shall mean the Securities and Exchange Commission.
 
(kkk)                      “Securities Laws” shall mean the 1933 Act, the 1934
Act, the Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of any Regulatory Authority promulgated thereunder.
 
(lll)            “Subsidiaries” shall mean all those Persons of which the entity
in question owns or controls 5% or more of the outstanding equity securities
either directly or through an unbroken chain of entities as to each of which 5%
or more of the outstanding equity securities is owned directly or indirectly by
its parent; provided, there shall not be included any such entity acquired
through foreclosure or any such entity the equity securities of which are owned
or controlled in a fiduciary capacity.
 
(mmm)                      “Taxes” shall mean all taxes, charges, fees, levies,
imposts or other assessments, including, without limitation, all net income,
gross income, gross receipts, sales, use, goods and services, ad valorem,
transfer, alternative, net worth, value added, franchise,
 

 
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profits, license, withholding, payroll, employment, employer health, excise,
estimated, severance, stamp, occupation, real property and personal property
taxes, and any other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest, fines and penalties, additions to
tax or additional amounts imposed by any Governmental Body and whether disputed
or not.
 
(nnn)                      “Tax Returns” shall mean all returns and reports of
or with respect to any Tax, which are required to be filed by or with respect to
the applicable Person.
 
(ooo)                      “Termination Date” shall mean the date eighteen (18)
months after the Closing Date.
 
ARTICLE 2
 
SALE AND TRANSFER OF SHARES; CLOSING
 
2.1.           Purchase and Sale of Shares.  Subject to the terms and conditions
of this Agreement, at the Closing, Farmers will sell and transfer the Shares to
Citizens, and Citizens will purchase the Shares from Farmers.
 
2.2.           Purchase Price.  In consideration for the sale of the Shares,
Citizens shall pay to Farmers Twenty Million Dollars ($20,000,000) (the
“Purchase Price”).  The parties intend for the transactions contemplated by this
Agreement to be treated as an asset acquisition under Section 338(h)(10) of the
Code (and any similar state law) for Federal Tax (and any similar state Tax)
purposes and agree to assist and cooperate with each other in doing or causing
to be done all things necessary, proper or advisable to consummate and make
effective such tax treatment to the mutual satisfaction of the Parties,
including without limitation making and filing the election described in Section
338(h)(10) of the Code and any similar provision of state Law.
 
2.3.           Closing.  Unless otherwise mutually agreed to by the chief
executive officers of Farmers and Citizens, the purchase and sale of the Shares
(the “Closing”) provided for in this Agreement will take place at the offices of
Citizens counsel at 500 West Jefferson Street, Suite 2800, Louisville, Kentucky,
40202, at 10:00 a.m. (local time) as soon as is reasonably practicable on the
date (the “Closing Date”) five (5) days following the last to occur of (i) the
effective date of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Contemplated Transactions (taking
into account any requisite waiting period in respect thereto), and (ii) the date
on which all other conditions precedent (other than those conditions which
relate to actions to be taken at the Closing) to each Party’s obligations
hereunder shall have been satisfied or waived (to the extent waivable by such
Party).  Subject to the provisions of Section 9, failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at the
place determined pursuant to this Section 2.3 will not result in the termination
of this Agreement and will not relieve any party of any obligation under this
Agreement.
 
2.4.           Closing Obligations.  At the Closing:
 
(a)           Farmers will deliver to Citizens:
 

 
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(i)           certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange, for transfer
to Citizens;
 
(ii)           the minutes books, stock records, bylaws and other corporate
records of Bank;
 
(iii)           the resignations of each of the existing directors and officers
of Bank;
 
(iv)           the certificates contemplated in Section 7.2(c) hereof; and
 
(v)           such other instruments and documents as are reasonably necessary
to effect the transactions contemplated hereby; and
 
(b)           Citizens will deliver to Farmers:
 
(i)           the Purchase Price by wire transfer in immediately available funds
to an account specified by Farmers at least two (2) business days prior to the
Closing;
 
(ii)           the certificate contemplated in Section 7.3(c) hereof; and
 
(iii)           such other instruments and documents as are reasonably necessary
to effect the transactions contemplated hereby.
 
2.5.           Bank Merger. If and as requested by Citizens, each of Farmers and
Bank agrees to cooperate with Citizens and take all action necessary and
appropriate, including causing the entering into of an appropriate merger
agreement (the “Bank Merger Agreement”), to cause the Bank to merge with and
into Citizens First Bank, Inc. (the “Bank Merger”), at or promptly after the
Closing and in accordance with applicable Laws and regulations and the terms of
the Bank Merger Agreement.
 
ARTICLE 3
 
REPRESENTATIONS AND WARRANTIES
 
OF FARMERS
 
Farmers hereby represents and warrants to Citizens, except as set forth in the
Disclosure Memorandum, as follows (which representations and warranties are made
as of the date hereof and as of all times throughout the term of this
Agreement):
 
3.1.           Organization, Standing and Power.
 
(a)           Farmers is a corporation duly organized, validly existing and in
good standing under the Laws of the Commonwealth of Kentucky and has the
corporate power and authority to carry on its business as now conducted and to
perform all of its obligations under this Agreement. Farmers is duly qualified
or licensed to transact business as a foreign
 

 
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corporation in good standing in each of the States of the United States and in
each foreign jurisdiction where the character of its assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Farmers.
 
(b)           Bank is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Kentucky and has the corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its Assets. Bank is duly qualified or licensed to transact business
as a foreign corporation in good standing in each of the States of the United
States and in each foreign jurisdiction where the character of its assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Bank.  Bank is an “insured depository institution” as
defined in Section 3(c)(2) of the Federal Deposit Insurance Act, as amended, and
applicable regulations thereunder, the deposits in which are insured by the FDIC
to the maximum extent permitted by the Federal Deposit Insurance Act, as
amended, and applicable regulations thereunder and Bank is a member in good
standing with the FDIC. Bank is a member of the Bank Insurance Fund.
 
3.2.           Authority; No Conflict.
 
(a)           Each of Farmers and Bank has the corporate power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and all other agreements, documents or instruments contemplated hereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement, and the consummation of the
Contemplated Transactions, have been duly and validly authorized by all
necessary corporate action (including valid authorization and adoption of this
Agreement by Farmers’ and Bank’s duly constituted Boards of Directors and by
Farmers, as the sole shareholder of Bank) in respect thereof on the part of
Farmers and Bank and this Agreement constitutes the legal, valid and binding
obligation of Farmers and Bank, enforceable against Farmers and Bank in
accordance with its terms. Subject to the required approvals of Regulatory
Authorities, each of Farmers and Bank has the absolute and unrestricted right,
power, authority and capacity to execute and deliver this Agreement, and to
perform its obligations under this Agreement.
 
(b)           Neither the execution and delivery of this Agreement by Farmers or
Bank nor the consummation of the transactions contemplated hereby, nor
compliance by Farmers or Bank with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or Bylaws of Farmers or Bank, (ii) constitute or result in a
Default under, or require any Consent apart from necessary consents from
Regulatory Authorities pursuant to, or result in the creation of any Encumbrance
on any Asset of Farmers or Bank under, any Contract or Governmental
Authorization of or applicable to Farmers or Bank, or (iii) subject to receipt
of the requisite Consents referred to in Section 7.1(a) hereof, violate any Law
or Order applicable to Farmers or Bank or any of their Assets.
 

 
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(c)           Other than notice to and filings with, and Consent of, the
Regulatory Authorities, no notice to, filing with, or Consent of, any
Governmental Body is necessary for the consummation by Farmers or Bank of the
transactions contemplated in this Agreement.
 
3.3.           Capital Stock.  The authorized capital stock of Bank consists
solely of fifteen (15) shares of Bank Common Stock, of which fifteen (15) shares
are issued and outstanding and constitute the Shares. All of the issued and
outstanding shares of Bank Common Stock are duly authorized and validly issued
and outstanding, and are fully paid and non-assessable under applicable Law and
the Articles of Incorporation and Bylaws of Bank. None of the shares of Bank
Common Stock has been issued in violation of any preemptive rights of any
current or past shareholder of Bank. There are no outstanding Rights with
respect to Bank Common Stock.  Farmers is, and on the Closing Date will be, the
sole record and beneficial owner and holder of the Shares, free and clear of all
Encumbrances.
 
3.4.           Subsidiaries.  Bank has no Subsidiaries and has had no
Subsidiaries since January 1, 2001.
 
3.5.           Financial Statements.  Farmers has delivered to Citizens (or will
deliver, when available, with respect to periods ended after the date of this
Agreement) complete copies of (i) the unaudited balance sheets (including
related notes and schedules, if any) of Bank as of December 31, 2005 and 2004,
and the related statements of operations, stockholders’ equity, and cash flows
(including related notes and schedules, if any) for the fiscal years ended
December 31, 2005, 2004 and 2003, (ii) the unaudited balance sheets of Bank
(including related notes and schedules, if any) as of and for March 31, 2006,
and related statements of operations, stockholders’ equity, and cash flows
(including related notes and schedules, if any) for the three-months ended March
31, 2006 and 2005, (iii) the unaudited statements of financial position of Bank
(including related notes and schedules, if any) and related statements of
operations, stockholders’ equity, and cash flows (including related notes and
schedules, if any) with respect to any period ending subsequent to March 31,
2006, and prior to the Closing Date, and (iv) all Consolidated Reports of
Condition and Income (or similar reports, regardless of name), including any
amendments thereto, filed with any Regulatory Authorities by Bank for the years
ended December 31, 2005, 2004, and 2003, and for the period ended March 31,
2006, and with respect to any period ending subsequent to March 31, 2006,
together with any correspondence with any Regulatory Authorities concerning any
of the aforesaid financial statements and reports (collectively, the “Bank
Financial Statements”). Such Financial Statements (i) were (or will be) prepared
from the records of Bank; (ii) were (or will be) prepared in all material
respects in accordance with GAAP (or, where applicable, regulatory accounting
principles) consistently applied; (iii) accurately present (or, when prepared,
will present), in all material respects, Bank’s financial condition and the
results of its operations, changes in stockholders’ equity and cash flows at the
relevant dates thereof and for the periods covered thereby, except that the
unaudited interim Financial Statements were or are subject to normal and
recurring year-end adjustments which were not expected to be material in amount
or effect; (iv) do contain or reflect (or, when prepared, will contain and
reflect) all necessary adjustments and accruals for an accurate presentation of
Bank’s financial condition and the results of Bank’s operations and cash flows
for the periods covered by such financial statements; (v) do contain and reflect
(or, when prepared, will contain and reflect) adequate provisions or allowance,
as reasonably determined
 

 
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by Bank management, for loan losses, for OREO reserves, and for all reasonably
anticipatable liabilities and Taxes, with respect to the periods then ended;
(vi) do contain and reflect (or, when prepared, will contain and reflect)
adequate provisions for all reasonably anticipated Liabilities for Post
Retirement Benefits Other Than Pensions pursuant to SFAS Nos. 106 and 112, (vii)
except as set forth therein, do not (or will not) contain any of items of
special or nonrecurring income or any other income not earned in the Ordinary
Course of Business and (viii) do not (or, when prepared, will not) contain any
untrue statement of a material fact or omit to state a fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
 
3.6.           Absence of Undisclosed Liabilities.  Apart from Liabilities
described in the last sentence of this Section 3.6, Bank does not have any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Bank, except Liabilities which are
required under GAAP to be accrued or reserved against and which are accrued or
reserved against in the balance sheet of Bank as of March 31, 2006 included in
the Bank Financial Statements made available prior to the date of this Agreement
or reflected in the notes thereto. Bank has not incurred or paid any Liability
since March 31, 2006, except for such Liabilities (i) incurred or paid in the
Ordinary Course of Business consistent with past business practice or (ii) which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Bank.
 
3.7.           Regulatory Reports; Corporate Records.  Farmers has delivered to
Citizens (except when such delivery is prohibited by law) true and complete
copies of (i) any and all material reports which Bank has filed with any
Governmental Body since January 1, 2001, (ii) the Articles of Incorporation and
Bylaws of Bank and (iii) corporate minutes for the past five (5) years of Bank.
All of the foregoing are current, complete and correct in all material respects.
 
3.8.           Loans; Allowance for Loan and Lease Losses.
 
(a)           Each of the allowances for loan and lease losses shown on the Bank
Financial Statements is adequate to provide for all known and probable incurred
credit losses of Bank as of the respective dates of the Bank Financial
Statements, in accordance with the requirements of GAAP and standard banking
practice to provide for losses, net of recoveries relating to loans and leases
previously charged off, on loans outstanding or lease receivables (including,
without limitation, accrued interest receivable).
 
(b)           All outstanding Bank loans, discounts and lease financings (as
well as those reflected on the Bank Financial Statements) have been (a) made for
good, valuable and adequate consideration in the Ordinary Course of Business and
(b) evidenced by notes or other evidences of indebtedness which are true,
genuine, what they purport to be and enforceable in all material respects in
accordance with their terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Law affecting the enforcement of creditors’ rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
Proceeding may be brought). No Bank loan, discount or lease financing is subject
to any defense with respect to the enforceability of same (except in all cases
as such enforceability may
 

 
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be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Law affecting the enforcement of creditors’ rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
Proceeding may be brought). The signature of any party appearing on any note or
instrument evidencing any Bank loan, discount or lease financing, or on any
instrument evidencing any security therefor, is valid and the balances for Bank
loans, discounts or lease financings, as reflected on the books and records of
the Bank, are accurate.
 
(c)           Bank is not a party to any written or oral loan agreement, note or
borrowing arrangement, including any loan guaranty, that was, as of the dates
identified by the subject reports in the Disclosure Memorandum (i) delinquent by
more than 30 days in the payment of principal or interest, (ii) known by Bank to
be otherwise in Default for more than 30 days, (iii) classified as
“substandard,”  “doubtful,”  “loss,”  “other assets especially mentioned” or any
comparable classification by Bank, the FDIC or the Office, or (iv) an obligation
of any director, executive officer of Bank who is subject to Regulation O of the
Federal Reserve Board (12 C.F.R. Part 215), or any Person controlling,
controlled by or under common control with any of the foregoing. Any Bank loan
made under, or in conjunction with, any Governmental Body program (including,
without limitation, the Farm Services Administration) was made, and has been
serviced and administered, in compliance with any applicable requirements of
Law.
 
(d)           Except for such noncompliances which could not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
Bank, any Bank loan which has been assigned by Bank (including, without
limitation, Bank loans assigned to the secondary market) was made in accordance
with applicable Law and in accordance with the requirements (including, without
limitation, underwriting standards and documentation requirements) of the
subject assignee and no such assignment is subject to any defense with respect
to the enforceability of same (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Law affecting the enforcement of creditors’ rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
Proceeding may be brought) or subject to revocation by the assignee whereby the
assignee could require Bank to repurchase any subject loan.
 
(e)           Except for such secured loans the default of which would not have,
individually or in the aggregate, a Material Adverse Effect on Bank, (i) each of
Bank’s secured loans is secured with the collateral and priority indicated on
the books and records of Bank and (ii) each such Encumbrance is evidenced by a
security agreement or mortgage that is true, genuine and enforceable in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Law affecting the enforcement of creditors’ rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
Proceeding may be brought). There are no material uncured violations or
violations with respect to which material refunds or restitution may be required
with respect to Bank loans that have been cited in any compliance report to Bank
as a result of examination by any Governmental Body and the loan documentation
with respect to all Bank loans, discounts or lease financings, complies in all
material respects with applicable Law.
 

 
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(f)           No borrower or obligor under any Bank loan has requested, and Bank
has not allowed, any relief pursuant to the Soldiers and Sailors Civil Relief
Act of 1940.
 
3.9.           Repurchase Agreements.  With respect to all repurchase agreements
to which Bank is a party, (i) where Bank has the obligation to sell securities,
it has a valid, perfected first Encumbrance in the government securities or
other collateral securing the repurchase agreement, and the value of the
collateral securing each such repurchase agreement equals or exceeds the amount
of the debt secured by such collateral under such agreement, and (ii) where Bank
has the obligation to buy securities, the value of the collateral securing such
obligation does not materially exceed the amount of the obligation.
 
3.10.                      Absence of Changes.  Since December 31, 2005, the
business of Bank has been conducted in the Ordinary Course and Bank has not
otherwise:
 
(a)           experienced or suffered any change constituting a Material Adverse
Effect or events or transactions reasonably likely to result in a Material
Adverse Effect;
 
(b)           incurred any Funded Debt or (apart from such actions as are
described in the second sentence of Section 1.1(hh) hereof) incurred, or become
subject to, any other absolute or contingent obligation or liability, or
guaranteed any liabilities or obligations of any other Person;
 
(c)           created or suffered any Encumbrance with respect to its
properties, business or assets;
 
(d)           sold, pledged, transferred or otherwise disposed of, or agreed to
sell, transfer or otherwise dispose of any portion of its assets, properties or
rights, except in the Ordinary Course of Business and not exceeding in the
aggregate $25,000;
 
(e)           conveyed or agreed to convey any property to any Affiliate or
entered into any non-arm’s length transaction with any Affiliate;
 
(f)           experienced any general work stoppage, labor dispute or other
employee disturbance;
 
(g)           incurred or become subject to any claim or liability for any
damages which could have a Material Adverse Effect on it, for negligence or any
other tort, or for breach of Contract;
 
(h)           entered into any Contract, or otherwise operated its business,
other than in the Ordinary Course of Business;
 
(i)           committed any act or omitted to do any act which would cause a
Default under any Contract to which it is a party or by which it is bound on the
date hereof, which Default is reasonably likely to result in a Material Adverse
Effect on Bank;
 

 
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(j)           issued, sold, purchased or redeemed any stock, bonds, debentures,
notes, or other securities of Bank, or issued, sold or granted any Right in
respect thereof;
 
(k)           waived, released or canceled any debts owed to it, claims, rights
of value or suffered any extraordinary loss, or paid any of its non-current
obligations or liabilities, or written down the value of any assets or written
down or off any receivable except for loan charge-offs and writedowns in other
real estate owned in the Ordinary Course of Business;
 
(l)           declared, set aside or paid any dividend or distributions on any
shares of Bank Common Stock;
 
(m)           made any capital expenditures or capital additions or betterments
(or commitment therefor) in excess of $10,000 for any single item or in excess
of $25,000 in the aggregate;
 
(n)           suffered any casualty, damage, destruction or loss to any of its
assets not covered by insurance in excess of $10,000 in the aggregate;
 
(o)           terminated, placed on probation, disciplined, warned, or
experienced any resignation of (other than resignations for retirement) any
employee;
 
(p)           paid or obligated itself to pay any bonuses, extra compensation or
extraordinary compensation to, pensions or severance pay, or made any increase
(except increases in the Ordinary Course of Business) in the compensation
payable (or to become payable by it) to, any present or former officer, director
or employee, or entered into any contract of employment;
 
(q)           terminated or amended or suffered the termination or amendment of
(i) any lease, bids, Contracts, commitments or other agreements, or (ii) any
Permits, licenses, concessions, Governmental Authorizations, franchises and
similar rights granted to or held by it, which are necessary or related to its
operations;
 
(r)           failed to use reasonable efforts to preserve its business or
preserve the goodwill of its customers and others with which it has business
relations;
 
(s)           taken (or failed to take) any action which action or failure if
taken after the date of this Agreement, would represent or result in a breach or
violation of Sections 5.1 or 5.2 hereof;
 
(t)           experienced any change that would have a Material Adverse Effect
with respect to Asset concentrations as to customers or industries or in the
nature and source of its Liabilities or in the mix of interest-bearing versus
noninterest-bearing deposits; or
 
(u)           entered into any Contract to do any of the foregoing.
 

 
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3.11.                      Assets.
 
(a)           Except as disclosed or reserved against in the Bank Financial
Statements made available prior to the date of this Agreement, Bank has good,
marketable and indefeasible title, free and clear of all Encumbrances, to all of
its Assets. All tangible properties used in the businesses of Bank are in good
condition, reasonable wear and tear excepted, and are usable in the Ordinary
Course of Business of Bank. All Assets which are material to Bank’s business
held under leases or subleases by Bank, are held under valid Contracts
enforceable in accordance with their respective terms, assuming the
enforceability with respect to third parties to such Contracts, of which Bank
has no reason to believe that any such Contracts are not enforceable against any
such third party thereto (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws (including
provisions of the U.S. and Kentucky Constitutions) affecting the enforcement of
creditors’ rights generally and except that the availability of equitable
remedies is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect.
 
(b)           Schedule 3.11(b) of the Disclosure Memorandum contains a complete
list of all real property, leaseholds or other interests in real property (other
than mortgage interests held by Bank with respect to its borrowers) owned by
Bank (collectively, the “Real Property”). With respect to each lease of any real
property or personal property to which Bank is a party (whether as lessee or
lessor), except for financing leases in which Bank is lessor, (i) such lease is
in full force and effect in accordance with its terms against Bank; (ii) all
rents and other monetary amounts that have become due and payable thereunder
have been paid by Bank; (iii) there exists no Default under such lease by Bank;
and (iv) upon receipt of the consents described in Section 3.11(b) of the
Disclosure Memorandum, the consummation of the transactions contemplated by this
Agreement will not constitute a Default or a cause for termination or
modification of such lease.
 
(c)           Apart from any noncompliances which in the aggregate are not
reasonably likely to have a Material Adverse Effect on Bank, the improvements on
the Real Property fully comply with all (and Bank has not received an uncured
notice from any Governmental Body respecting any violation of any) Laws
including, without limitation, all applicable zoning, building, fire, health,
safety, handicapped persons, environmental, pollution, and use laws, codes and
ordinances and any and all requirements imposed in connection with the zoning or
rezoning of the Real Property (including, without limitation, requirements with
respect to on-site storm water detention or retention). Certificates of
Occupancy and all other required Governmental Authorizations have been issued
for each building or structure constituting a portion of the Real Property
improvements and for all leased or leasable areas of such improvements and all
fees and other expenses required to be paid in connection with any zoning or
rezoning of the Real Property and all obligations to be performed by or on
behalf of Bank with respect to any such zoning or rezoning have been paid and
performed in full. The Real Property is zoned in a manner which permits Bank to
use the Real Property for the purpose and in the manner as the Real Property is
currently being used. There are no Contracts with Governmental Bodies with
respect to the Real Property which would bind the Real Property following the
Closing, except for
 

 
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Contracts of record in the appropriate county clerk’s office, which do not
materially interfere with the current use of the Real Property.
 
(d)           There are no Proceedings pending or, to the Knowledge of Farmers,
threatened against or relating to the Real Property (including, without
limitation, any Proceeding for the taking or condemnation of all or any portion
of the Real Property) which, if successful, would affect Bank or the Real
Property or restrict or prevent the continued operation of the Real Property in
the same manner as that in which it is being operated and maintained as of the
date hereof.
 
(e)           There are no outstanding construction accounts payable or
mechanics’ liens or rights to claim a mechanics’ lien in favor of any
contractor, materialman or laborer or any other Person in connection with
construction on any portion of the Real Property.
 
(f)           The Real Property is not located within an area which has been
designated by any Governmental Body as having, or being subject to, special
flood hazards or wetlands restrictions.
 
(g)           There are no encroachments from or upon property adjoining the
Real Property or upon any easements located on the Real Property that would have
a material impact on the continued operation of the Real Property in the same
manner as that in which it is being operated and maintained as of the date
hereof.
 
(h)           The structures on the Real Property and the improvements thereon
(including, without limitation, (i) the walls, ceilings and other structural
elements of any improvements erected thereon and (ii) the building systems, such
as heating, plumbing, ventilation, air conditioning and electrical systems,
related thereto) constitute all of the real property currently used in relation
to the business of Bank and the aforesaid building systems located on such
properties are in good working order, repair and operating condition, ordinary
wear and tear expected.
 
(i)           There are no items of maintenance scheduled by Bank for completion
during the past six months that have been deferred with respect to any building
system located on the Real Property or with respect to the structural soundness
of the improvements comprising part of such premises in excess of $20,000 in the
aggregate.
 
(j)           Bank has not received any notice from any insurance company or
insurance broker or underwriter of any material defects or inadequacies in
respect of the Real Property that could reasonably be expected to affect the
insurability of such property.
 
3.12.                      Intellectual Property.  All of the Intellectual
Property rights of Bank are in full force and effect and, if applicable,
constitute legal, valid, and binding obligations of the respective parties
thereto, and there have not been, and, there currently are not, any material
Defaults thereunder by Bank. Bank owns, is the valid licensee of, or otherwise
has the unrestricted right to use in the manner in which it is or has been used,
all such Intellectual Property rights free and clear of all Encumbrances or
claims of infringement. Bank has not infringed the Intellectual Property rights
of others (except to the extent any such infringement
 

 
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will not have a Material Adverse Effect on Bank) and, to the Knowledge of
Farmers and Bank, none of the Intellectual Property rights as used in the
business conducted by Bank infringes upon or otherwise violates the rights of
any Person, nor has any Person asserted a claim of such infringement. Bank is
not obligated to pay any royalties to any Person with respect to any such
Intellectual Property. Bank owns or has the valid right to use all of the
Intellectual Property rights which it is presently using. No officer, director,
or employee of Bank is party to any Contract which requires such officer,
director, or employee to assign any interest in any Intellectual Property or
keep confidential any trade secrets, proprietary data, customer information, or
other business information or which restricts or prohibits such officer,
director, or employee from engaging in activities competitive with any Person,
including Bank.
 
3.13.                      Insurance.  Bank currently maintains insurance
pursuant to the policies disclosed on Schedule 3.13 of the Disclosure Memorandum
in amounts, scope, and coverage which are adequate for the operations of Bank
and consistent with the insurance carried by prudent Persons similarly situated.
All amounts due and payable under any of such insurance policies have been paid.
Bank is not liable for any material, retroactive premium adjustments respecting
any of its insurance policies. None of such insurance policies is subject to any
special or unusual terms or restrictions or provides for a premium in excess of
the stipulated normal rate. Bank has not received notice from any insurance
carrier that (i) any of such insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be materially increased. There are presently no
claims pending under any such policies of insurance and no notices have been
given by Bank under such policies. Bank has not failed to make a timely claim or
file a timely notice with respect to any matter giving rise to a material (or
potentially material) claim under its insurance policies and bonds. Bank has
not, during the past five (5) years, been denied or had revoked or rescinded any
policy of insurance.
 
3.14.                      Tax Matters.  All Tax Returns required to be filed by
or on behalf of Bank (as well as by any affiliated consolidated or combined
group that includes or included Bank) have been timely filed for periods ended
on or before the date hereof and, at the time filed, such Tax Returns were (and,
as to Tax Returns not filed as of the date hereof, will be) true, complete and
accurate in all respects and Bank (or any affiliated consolidated or combined
group in which Bank is or was included) has timely paid all Taxes due and
payable for periods covered by such Tax Returns.  There is no audit examination,
deficiency or refund Proceeding respecting Bank pending (or, threatened) with
respect to any Taxes. No presently pending assessments of deficiencies in
respect of Taxes have been made against Bank or with respect to the income,
receipts or net worth of Bank, and no extensions of time are in effect for the
assessment of deficiencies against Bank. Bank has not executed any extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect. Deferred Taxes of Bank have been provided for in accordance
with GAAP. Bank is in material compliance with, and the records of Bank contain
all information and documents (including properly completed Internal Revenue
Service Forms W-9) necessary to comply in all material respects with, all
applicable information reporting and Tax withholding requirements under federal,
state, and local Tax Laws, and such records identify with specificity all
accounts subject to backup withholding under Section 3406 of the Code.
 

 
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Bank has not made any payments, is not obligated to make any payments, and is
not a party to any Contract that could obligate it to make any payments that
would be disallowed as a deduction under Section 280G or 162(m) of the Code.
There has not been an ownership change, as defined in Code Section 382(g), of
Bank that occurred during or after any taxable period in which Bank incurred a
net operating loss that carries over to any taxable period ending after December
31, 2001, except in connection with the transactions contemplated pursuant to
this Agreement. Bank is not a party to any tax allocation or sharing agreement
nor does Bank have any material liability for taxes of any Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
Law) as a transferee or successor or by Contract or otherwise. None of Farmers
or Bank has received notice of any claim by any Governmental Body that Bank or
the income, receipts or net worth of Bank may be subject to Taxes. All Taxes and
other liabilities due with respect to completed and settled examinations or
concluded Proceedings related to Tax Return and/or Taxes of Bank have been paid.
There are no Encumbrances with respect to Taxes upon any of the assets of Bank.
 
3.15.                      Environmental Matters.
 
(a)           Bank and its Participation Facilities and Operating Properties
are, and have been (or, in the case of Operating Properties in which Bank holds
or has held a security interest, to Bank’s Knowledge, are and have been), in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Bank.
 
(b)           There is (or, in the case of Operating Properties, there is to
Farmers’ and Bank’s Knowledge) no Proceeding pending or threatened before any
Governmental Body or other forum in which Bank or any of its Operating
Properties or Participation Facilities has been or, with respect to threatened
Proceedings, may be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, adjacent to, or affecting (or potentially affecting) a
site owned, leased, or operated by Bank or any Operating Properties or
Participation Facilities.
 
(c)           During the period of (i) Bank’s ownership or operation of any of
its current properties, (ii) Bank’s participation in the management of any
Participation Facility, or (iii) Bank’s holding of a security interest in an
Operating Property, there have been (or, in the case of an Operating Property in
which Bank holds or has held a security interest, there have to the Knowledge of
Bank been) no releases of Hazardous Material in, on, under, adjacent to, or
affecting (or potentially affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Bank. Prior to the period of (i) Bank’s ownership or operation of any
of its current properties, or (ii) Bank’s participation in the management of any
Participation Facility, there were no releases of Hazardous Material in, on,
under, or affecting any such property, or Participation Facility, except such as
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Bank.  To the Knowledge of Farmers and Bank, prior to the
period of Bank’s holding of a security interest in an Operating Property, there
were no releases of Hazardous Material in, on, under, or
 

 
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affecting any such Operating Property, except such as are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Bank.
 
3.16.                      Compliance With Laws.  Bank has in effect all Permits
necessary for it to own, lease or operate its Assets and to carry on its
business as now conducted. Bank is  not (nor has it been) in violation of any
Laws, Orders or Permits applicable to its business or employees conducting its
business, except for such violations, which are not reasonably likely to have,
individually, or in the aggregate, a Material Adverse Effect on Bank. Bank has
not received notification or communication from any Governmental Body or the
staff thereof (i) asserting that Bank is in violation of any of the Laws or
Orders which such Governmental Body enforces (excluding violations which would
not be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Bank), (ii) threatening to revoke any Permits or (iii)
requiring Bank to enter into or consent to the issuance of a cease and desist
order, formal agreement, directive, commitment or memorandum of understanding,
or to adopt any Board of Directors resolution or similar undertaking, which
restricts the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management or the payment of
dividends. No event has occurred or circumstance exists that (with or without
notice or lapse of time) may constitute or result in a violation by Bank of, or
a failure on the part of Bank to comply with, any Laws, Orders or Governmental
Authorizations, the failure with which to comply could give rise to any
obligation on the part of Bank to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.
 
3.17.                      Labor Relations.  Bank is not the subject of any
Proceeding asserting that Bank has committed an unfair labor practice (within
the meaning of the National Labor Relations Act or comparable state Law) or
seeking to compel Bank to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving Bank pending or, to the Knowledge of Farmers, threatened, nor to the
Knowledge of Farmers, is there any activity involving the employees of Bank
seeking to certify a collective bargaining unit or engaging in any other
collective bargaining organizational activity.
 
3.18.                      Employee Benefit Plans.
 
(a)           Farmers has disclosed in Schedule 3.18 of the Disclosure
Memorandum and has delivered or made available to the Citizens prior to the
execution of this Agreement true and complete copies of all pension, retirement,
profit sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other material incentive plans, all other
written employee programs, arrangements or agreements, all medical, vision,
dental or other health plans, all life insurance plans, and all other material
employee benefit or fringe benefit plans, including “employee benefit plans” as
that term is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by Farmers or any of the
Bank or any ERISA Affiliate thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
of Bank and under which employees, retirees, dependents, spouses, directors,
independent contractors or other beneficiaries of Bank are eligible to
participate (collectively, the “Benefit Plans”). No ERISA Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.  Bank has no
Liability under or relating to any Benefit Plan ever maintained or contributed
to by any
 

 
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Person in Bank’s controlled group within the meaning of Code Sections 414(b) or
414(c), or which is part of an affiliated service group with Bank within the
meaning of Code Section 414(m), or otherwise would be aggregated with Bank under
Code Section 414(o), including liability under the Consolidated Omnibus Budget
Reconciliation Act of 1986, as amended.
 
(b)           All Benefit Plans are in compliance with (and have been managed
and administrated in accordance with) the applicable terms of ERISA, the Code
and any other applicable Laws, apart from noncompliances not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Bank.
Each Bank ERISA Plan that is intended to be qualified under Section 401(a) of
the Code has either received a favorable determination letter from the Internal
Revenue Service (and Farmers is not aware of any circumstances likely to result
in revocation of any such favorable determination letter) or timely application
has been made therefor. Bank is not subject to a Tax imposed by Section 4975 of
the Code or a civil penalty imposed by Section 502(i) of ERISA. Farmers has no
knowledge of any fact which would adversely affect the qualification of any of
the Benefit Plans, or of any threatened or pending claim against any of the
Benefit Plans or their fiduciaries by any participant, beneficiary or
Governmental Body.
 
(c)           No “defined benefit plan” (as defined in Section 414(j) of the
Code) or any “single-employer plan,” within the meaning of Section 4001(a)(15)
of ERISA, maintained at any time by Farmers or Bank, or the single-employer plan
of any entity which is considered one employer with Bank under Section 4001 of
ERISA or Section 414 of the Code or Section 302 of ERISA (whether or not waived)
(an “ERISA Affiliate”), has an “accumulated funding deficiency” within the
meaning of Section 412 of the Code or Section 302 of ERISA. Bank has not
provided, nor is required to provide, security to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
 
(d)           Within the six year period preceding the Closing Date, no
liability under Subtitle C or D of Title IV of ERISA has been incurred by Bank
with respect to any current, frozen, or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate. Bank has not incurred any
withdrawal liability with respect to a multiemployer plan under Subtitle E of
Title IV of ERISA (regardless of whether based on contributions of an ERISA
Affiliate). No notice of a “reportable event,” within the meaning of Section
4043 of ERISA for which the 30 day reporting requirement has not been waived,
has been required to be filed for any Benefit Plan or by any ERISA Affiliate
within the 12 month period ending on the date hereof.
 
(e)           Bank has complied in all material respects with the notice and
continuation requirements of Parts 6 and 7 of Subtitle B of Title I of ERISA and
Section 4980B of the Code, and the proposed regulations thereunder, whether
proposed or final. All reports, statements, returns and other information
required to be furnished or filed with respect to the Benefit Plans have been
timely furnished, filed or both in accordance with Sections 101 through 105 of
ERISA and Sections 6057 through 6059 of the Code, and they are true, correct and
complete in all material respects. Records with respect to the Benefit Plans
have been maintained in material compliance with Section 107 of ERISA. Neither
Bank nor any other fiduciary (as that
 

 
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term is defined in Section 3(21) of ERISA) with respect to any of the Benefit
Plans has any material liability for any breach of any fiduciary duties under
Sections 404, 405 or 409 of ERISA.
 
(f)           Bank has not, with respect to any of the Benefit Plans, nor has
any administrator of any of the Benefit Plans, the related trusts or any trustee
thereof, engaged in any prohibited transaction which would subject Bank, any of
the Benefit Plans, any administrator or trustee or any party dealing with any of
the Benefit Plans or any such trusts, to a Tax or penalty on prohibited
transactions imposed by ERISA, Section 4975 of the Code, or to any other
liability under ERISA.
 
(g)           Bank does not have any liability for health or welfare benefits
for any retired or former employee or for any active employee, following such
employee’s retirement or other termination of service.
 
(h)           Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation or golden parachute)
becoming due to any director or any employee of Bank under any Benefit Plan,
(ii) materially increase any benefits otherwise payable under any Benefit Plan
or (iii) result in any acceleration of the time of payment or vesting of any
such benefit.
 
(i)           The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of Bank and their respective beneficiaries, other than entitlements
accrued pursuant to funded retirement plans subject to the provisions of Section
412 of the Code or Section 302 of ERISA, have been fully reflected on the
Financial Statements to the extent required by and in accordance with GAAP.
 
3.19.                      Material Contracts.  Neither Bank nor or any of its
Assets, businesses or operations is a party to or is bound by, or has any
liability under, (i) any employment, severance, termination, consulting or
retirement Contract, (ii) any Contract relating to the borrowing of money by
Bank or the guarantee by Bank of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, Federal Home Loan Bank advances, trade payables and
Contracts relating to borrowings or guarantees made in the Ordinary Course of
Business), (iii) any Contracts which prohibit or restrict Bank from engaging in
any business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any exchange-traded or over-the-counter
swap, forward, future, option, cap, floor, or collar financial Contract, or any
other interest rate or foreign currency protection Contract which is a financial
derivative Contract (including various combinations thereof), (v) any Contract
not made in the Ordinary Course of Business, (vi) any Contract relating to
capital expenditures and involving future payments which (either alone or when
combined with other like Contracts) exceed $25,000, (vii) apart from this
Agreement, any Contract involving an Acquisition Proposal, (viii) any Contract
involving Intellectual Property, (ix) any Contract involving the provision of
data processing or other technical services, or (x) any Contract which (A) will
not be performed within sixty (60) days of the date of this
 

 
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Agreement, (B) involves future payments by Bank (whether during the term of any
such Contract or in connection with its termination or expiration) in excess of
$10,000 or (C) is not cancelable by Bank without penalty on no more than 30
days’ notice. With respect to each Bank Contract: (i) the Contract is valid and
in full force and effect in accordance with its terms; (ii) the Bank is not in
Default thereunder; (iii) the Bank has not repudiated or waived any material
provision of any such Contract; (iv) no other party to any such Contract is, to
the Knowledge of Farmers and Bank, in Default in any respect or has repudiated
or waived any material provision thereunder; (v) no event or condition has
occurred or exists (or is alleged to have occurred or existed) which constitutes
(or with the lapse of time might constitute) a Default; and (vi) the Contract
may be assigned by Bank (or a Change in Control with respect to Bank may occur)
without the consent of the other party or parties thereto.
 
3.20.                      Legal Proceedings.  There is no Proceeding instituted
or pending, or, to the Knowledge of Farmers, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Bank, or against any
asset, employee benefit plan, interest or right of Bank, nor are there any
Orders of any Governmental Body outstanding against Bank. There is no Proceeding
instituted or pending, or to the Knowledge of Farmers, threatened (or unasserted
but considered probable of assertion) against any officer, director or employee
of Bank arising in connection with actions taken (or omitted to be taken) by
such officer, director or employee in his capacity as an officer, director or
employee. Schedule 3.20 of the Disclosure Memorandum hereto includes a summary
report of all Proceedings as of the date of this Agreement to which Bank is a
party.
 
3.21.                      Reports.  Since January 1, 2003, Bank has timely
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with any Governmental
Body. As of its respective date (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing), each of such
reports and documents, including the financial statements, exhibits and
schedules thereto, complied with all applicable Laws, except for any
noncompliances not reasonably likely to have in the aggregate a Material Adverse
Effect on Bank. As of its respective date (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing),
none of such documents so filed contained any untrue statement of a material
fact, omitted to state a material fact required to be stated therein, or
intentionally omitted to state a material fact necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. To the extent permitted by Law, copies of all reports,
correspondence, notices and other documents relating to any inspection,
examination, audit, monitoring or other form of review or enforcement action by
a Regulatory Authority has been made available to Citizens.
 
3.22.                      Deposits.  The deposit records of Bank accurately
reflect Bank’s deposit accounts and are and shall be sufficient to enable
Citizens to conduct a banking business with respect to Bank. There are no
material uncured violations or violations with respect to which material refunds
or restitution may be required with respect to Bank deposit liabilities and the
terms and conditions and other documentation with respect to Bank deposit
liabilities comply in all material respects with all applicable Laws and have
been provided to Citizens. Bank deposit liabilities are insured by the FDIC to
the full extent provided by Law. Bank is in material
 

 
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compliance with all terms and conditions and other documentation applicable to
Bank deposit liabilities. There are not (and have not been within the past three
years) any “kiting” schemes associated with any of Bank’s deposit liabilities.
 
3.23.                      Books and Records.  The books of account, general
ledger and records of Bank fairly and accurately in all material respects
reflect the assets and liabilities of Bank in accordance with GAAP consistently
applied. The books of account, general ledger and records of Bank (i) are
maintained by Bank substantially in accordance with applicable legal and
accounting requirements and (ii) reflect only actual transactions. The records
and other information provided in accordance with this Agreement by Bank will
accurately reflect in all material respects the book value of the assets and
liabilities referred to therein as of their respective dates, recorded at their
historical cost and depreciated or otherwise adjusted in accordance with the
subject Person’s historical accounting policies, all in accordance with GAAP
consistently applied.
 
3.24.                      Safe Deposit Boxes.  Bank is in compliance in all
material respects with the terms and conditions of the applicable leases or
other agreements relating to the safe deposit boxes currently offered or
maintained in connection with the safe deposit business conducted by Bank.
 
3.25.                      Community Reinvestment Act.  Bank has complied in all
material respects with the provisions of the Community Reinvestment Act (“CRA”)
and the rules and regulations thereunder, has a CRA rating of not less than
“satisfactory,” has received no material criticism from regulators with respect
to discriminatory lending practices, and has no Knowledge of any conditions or
circumstances that are likely to result in a CRA rating of less than
“satisfactory” or material criticism from regulators with respect to
discriminatory lending practices.
 
3.26.                      Privacy of Customer Information.
 
(a)           Bank is the sole owner or, in the case of participated loans, a
co-owner with the other participant(s), of all individually identifiable
personal information (“IIPI”) relating to Bank customers, former customers and
prospective customers. For purposes of this Section 3.26, “IIPI” shall include
any information relating to an identified or identifiable natural person.
 
(b)           The collection and use of such IIPI by Bank complies in all
material respects with all applicable privacy policies, the Fair Credit
Reporting Act, the Gramm-Leach-Bliley Act and all other applicable state,
federal and foreign privacy Law, and any Contract or industry standard relating
to privacy.
 
3.27.                      Technology Systems.
 
(a)           No action will be necessary as a result of the transactions
contemplated by this Agreement to enable use of the electronic data processing,
information, record keeping, communications, telecommunications, hardware, third
party software, networks, peripherals, portfolio trading and computer systems,
including, without limitation, any outsourced systems and processes, and any
Intellectual Property that is used by Bank (collectively, the “Technology
Systems”), following the Closing Date.
 

 
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(b)           The Technology Systems (for a period of 18 months prior to the
Closing Date) have not suffered unplanned disruption causing a Material Adverse
Effect. Except for ongoing payments due under relevant third party agreements,
the Technology Systems are free from any Encumbrances. Access to business
critical parts of the Technology Systems is not shared with any third party.
 
(c)           Details of Bank’s disaster recovery and business continuity
arrangements have been provided to Citizens with the Disclosure Memorandum.
 
(d)           Bank has not received notice of or is aware of any material
circumstances including, without limitation, the execution of this Agreement,
that would enable any third party to terminate any agreements or arrangements
relating to the Technology Systems (including maintenance and support).
 
3.28.                      Bank Secrecy Act Compliance.  Bank is and has been in
compliance in all material respects with the provisions of the Bank Secrecy Act
of 1970, as amended (the “Bank Secrecy Act”), and all regulations promulgated
thereunder including, but not limited to, those provisions of the Bank Secrecy
Act that address suspicious activity reports and compliance programs. Bank has
implemented a Bank Secrecy Act compliance program that adequately covers all of
the required program elements as required by 12 C.F.R. § 21.21.
 
3.29.                      Statements True and Correct.
 
(a)           Neither this Agreement, nor any Exhibit, Schedule or document
delivered by Farmers and Bank to Citizens in connection with this Agreement or
any of the transactions contemplated hereby contains or shall contain an untrue
statement of a material fact or omits or shall omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
 
(b)           All of the information supplied or to be supplied by Farmers and
Bank expressly for inclusion in any filing with any Governmental Body in
connection with the transactions contemplated hereby will be true, correct and
complete and will comply as to form in all material respects with the provisions
of applicable Law.
 
3.30.                      Regulatory Matters.  Farmers and Bank have no
Knowledge of any fact or circumstance that is reasonably likely to materially
impede or delay receipt of any Consents of Governmental Bodies referred to in
Section 7.1 (a) of this Agreement.
 
3.31.                      Brokers’ or Finders’ Fees.  No agent, broker or other
Person acting on behalf of either of Farmers or Bank or under its authority is
or shall be entitled to any commission, broker’s or finder’s fee in connection
with any of the transactions contemplated by this Agreement.
 
ARTICLE 4
 
REPRESENTATIONS AND WARRANTIES
 
OF CITIZENS
 

 
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Citizens hereby represents and warrants to Farmers, as follows (which
representations and warranties are made as of the date hereof and as of all
times throughout the term of this Agreement):
 
4.1.           Organization, Standing and Power.  Citizens is a corporation duly
organized, validly existing, and in good standing under the Laws of the
Commonwealth of Kentucky, and has the corporate power and authority to carry on
its business as now conducted and to own, lease and operate its assets.
 
4.2.           Authority; No Breach by Agreement.
 
(a)           Citizens has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement by Citizens and the consummation of
the transactions contemplated herein and therein, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Citizens. Subject to the receipt of all Consents required from Governmental
Bodies and the expiration of all mandatory waiting periods, assuming the due
authorization, execution and delivery of this Agreement by Farmers, this
Agreement each represents a legal, valid and binding obligation of Citizens,
enforceable against it in accordance with its terms.
 
(b)           Neither the execution and delivery of this Agreement by Citizens,
nor the consummation by Citizens of the transactions contemplated hereby, nor
compliance by Citizens with any of the provisions hereof or thereof will (i)
conflict with or result in a breach of any provision of Citizens’ Articles of
Incorporation or Bylaws, (ii) constitute or result in a Default under, or
require any Consent (excluding Consents required by Law or Order) pursuant to,
or result in the creation of any Encumbrance on any material asset of Citizens
under, any Contract or Governmental Authorization of or applicable to Citizens
except for such Defaults and Encumbrances which will not, and for such Consents
which, if not obtained, will not have, individually or in the aggregate, a
Material Adverse Effect on Citizens, or (iii) subject to receipt of the
requisite Consents referred to in Section 7.1 hereof, violate any Law or Order
applicable to Citizens or any of its material Assets.
 
(c)           Other than (i) Consents required from Governmental Bodies, and
(ii) Consents, filings or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Citizens, no notice to, filing with, or Consent of, any Governmental
Body is necessary for the consummation by Citizens of the transactions
contemplated in this Agreement.
 
4.3.           Statements True and Correct.
 
(a)           Neither this Agreement, nor any Exhibit, Schedule or document
delivered by Citizens to Farmers in connection with this Agreement or any of the
transactions contemplated hereby contains or shall contain an untrue statement
of a material fact or omits or shall omit to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
 

 
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(b)           All of the information supplied or to be supplied by Citizens
expressly for inclusion in any filing with any Governmental Body in connection
with the transactions contemplated hereby will be true, correct and complete and
will comply as to form in all material respects with the provisions of
applicable Law.
 
4.4           Vote Required.  No vote of consent of the holders of any class or
series of capital stock of Citizens is necessary to approve this Agreement or
the Contemplated Transactions.
 
ARTICLE 5
 
CONDUCT OF BUSINESS PENDING CONSUMMATION
 
5.1.           Affirmative Covenants of Bank and Farmers.  From the date of this
Agreement until the earlier of the Closing Date or the termination of this
Agreement, Bank shall (i) operate its business only in the Ordinary Course, and
(ii) use reasonable efforts to preserve intact its business organization and
assets and maintain its rights and franchises and neither Farmers nor Bank shall
take any action which would (a) materially adversely affect the ability of any
Party to obtain any Consents required for the transactions contemplated hereby,
or (b) materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
 
5.2.           Negative Covenants of Bank.  Except as specifically permitted by
this Agreement, from the date of this Agreement until the earlier of the Closing
Date or the termination of this Agreement, Bank covenants and agrees that it
will not permit, do or agree or commit to do any of the following without the
prior written consent of the chief executive officer of Citizens, which consent
may be withheld for any reason or no reason:
 
(a)           amend its Articles of Incorporation, Bylaws or other governing
instruments;
 
(b)           (i) incur any Funded Debt, (ii) impose, or suffer the imposition
of, on any material Asset (or Assets) any Encumbrance or permit any such
Encumbrance to exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, FHLB borrowings in the Ordinary Course of
Business, “treasury tax and loan” accounts established in the Ordinary Course of
Business and the satisfaction of legal requirements in the exercise of trust
powers), or (iii) guarantee or become a surety or otherwise contingently liable
for any obligations of others;
 
(c)           repurchase, redeem or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares of Bank Common Stock or declare, set aside or pay any
dividend or make any other distribution in respect of Bank Common Stock, except
as set forth in Section 5.7;
 
(d)           set aside or pay any management fee to Farmers or to any Farmers’
Affiliate except in a manner consistent with past practice;
 
(e)           issue, sell, pledge, encumber, authorize the issuance of, enter
into any Contract to issue capital stock, sell, pledge, encumber, or authorize
the issuance of, or otherwise
 

 
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permit to become outstanding, any additional shares of capital stock, or any
other Right to acquire any such stock, or any security convertible into any such
stock;
 
(f)           adjust, split, combine or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of or in substitution
for shares of capital stock, or sell, lease or transfer in any fashion Assets
other than in the Ordinary Course of Business for reasonable and adequate
consideration;
 
(g)           except for purchases of investment securities acquired in the
Ordinary Course of Business consistent with past practices, purchase any
securities or make any investment, either by purchase of stock or securities,
contributions to capital, asset transfers, or purchase of any assets, in any
Person or otherwise acquire direct or indirect control over any Person, other
than in connection with (i) foreclosures in the Ordinary Course of Business, or
(ii) acquisitions of control in its fiduciary capacity;
 
(h)           grant any increase in compensation or benefits to its employees,
directors or officers or pay any severance or termination pay or any bonus other
than pursuant to written policies or written Contracts in effect on the date of
this Agreement; enter into or amend any severance agreements with officers;
grant any increase in fees or other increases in compensation or other benefits
to directors; or voluntarily accelerate the vesting of any employee benefits;
 
(i)           pay or agree to pay data processing fees to Farmers or any
Farmers’ Affiliate except at the same rate per item as now being paid by Bank or
pay or agree to pay any termination, deconversion or other fee in an amount in
excess of $10,000 to Farmers or any Farmers’ Affiliate in connection with the
termination of such data processing services subsequent to the Closing;
 
(j)           enter into any employment Contract with any Person;
 
(k)           apart from actions taken by Farmers which apply to all of its bank
Subsidiaries, adopt any new employee benefit plan of or terminate or withdraw
from, or make any material change in or to, any existing employee benefit plans,
other than any such change that is required by Law or that, in the opinion of
counsel, is necessary or advisable to maintain the tax qualified status of any
such plan, nor make any distributions from such employee benefit plans, except
as required by Law, by the terms of such plans, or in a manner consistent with
past practices with respect to the applicable plan;
 
(l)           make any change in any Tax or accounting methods or systems of
internal accounting controls, except as may be appropriate to conform to changes
in Tax Laws, regulatory accounting requirements or GAAP;
 
(m)           commence any Proceeding other than in the Ordinary Course of
Business or settle any Proceeding involving any Liability for material money
damages or restrictions upon its operations;
 
(n)           experience a Change in Control;
 

 
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(o)           without first consulting with the chief executive officer of
Citizens, make or commit to make any loan or other extension of credit, or enter
into any financing lease, in the Bowling Green/Warren County, Kentucky banking
market;
 
(p)           encourage or solicit any Bank customer or depositor to replace or
diminish his relationship with Bank including, without limitation, through
entering into (or enhancing) a relationship with an Affiliate of Bank; or
 
(q)           except in the ordinary course consistent with past practice, enter
into, modify, amend, or terminate any material Contract (excluding any loan
Contract) or waive, release, compromise, or assign any material rights or
claims.
 
5.3.           Covenants of Citizens.  From the date of this Agreement until the
earlier of the Closing Date or the termination of this Agreement, Citizens
covenants and agrees that it shall take no action which would materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 7.1(b) of
this Agreement.
 
5.4.           Adverse Changes in Condition.  Each Party agrees to give written
notice promptly to the other Parties upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it which (i) could
have, individually or in the aggregate, a Material Adverse Effect on it or (ii)
would cause or constitute a breach of any of its representations, warranties, or
covenants contained herein or which would prevent the satisfaction of the
conditions precedent set forth in Article 7 of this Agreement, and to use its
reasonable efforts to prevent or promptly to remedy the same.
 
5.5.           Reports.  Bank shall file all reports required to be filed by it
with Governmental Bodies between the date of this Agreement and the Closing Date
and, to the extent permitted by Law, shall deliver to the other Parties copies
of all such reports promptly after the same are filed. If financial statements
are contained in any such reports, such financial statements will fairly present
the consolidated financial position of the Person filing such statements as of
the dates indicated and the consolidated results of operations, changes in
shareholders’ equity, and cash flows of such Person for the periods then ended
in accordance with GAAP (subject in the case of interim financial statements to
normal recurring year end adjustments that are not material). As of their
respective dates, such reports will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Farmers shall deliver to Citizens
not less than every four weeks a list of all of Bank’s paid-off loans, loan
reductions, new loans or increases in existing loans to customers setting forth
the amounts of such loans, the collateral securing such loans, and any other
matters or information concerning such loans as Citizens shall reasonably
request.
 
5.6.           Financial Statements. Bank shall make available to Citizens true
and complete copies of any Bank Financial Statements as well as monthly
financial statements for any annual, monthly or quarterly period ended
subsequent to March 31, 2006 and prior to the Closing Date.
 

 
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5.7.           Dividends.  Prior to the Closing, Bank shall reverse the $629,000
dividend paid to Farmers in the second quarter of 2006 as provided in the
Disclosure Memorandum.  Bank may declare and pay monthly dividends on the first
day of each month in the amount of $100,000 beginning with December, 2006 in the
event that the Closing shall not have occurred prior to such date.
 
5.8.           Employee Benefits.  Prior to the Closing, Bank shall implement a
cash incentive plan, reasonably acceptable to Citizens, under which employees
shall be discouraged from using accrued but unused paid time off during the
period from the date of this Agreement and until the Closing in exchange for the
release of Bank’s obligation to pay such accrued paid time off.  In addition,
matching and discretionary contributions to Farmers’ and Bank’s Salary Savings
Plan shall continue to be accrued during the period from the date of this
Agreement and until the Closing in a manner consistent with the past practice of
Farmers and Bank and shall be contributed by Bank to the Plan for allocation to
the accounts of the eligible employees of Bank as of the Closing Date.
 
ARTICLE 6
 
ADDITIONAL AGREEMENTS
 
6.1.           Applications.  Citizens shall prepare and file, and Farmers and
Bank shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. At
least five (5) days prior to each filing, Citizens shall provide Farmers and its
counsel with copies of such applications. Each of the Parties shall deliver to
each of the other Parties copies of all filings, correspondence and orders sent
by such Party to and copies of all filings, correspondence and orders received
by such Party from all Regulatory Authorities in connection with the
transactions contemplated hereby as soon as practicable upon their becoming
available.
 
6.2.           Agreement as to Efforts to Consummate.  Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including, without being limited to, using its reasonable
efforts to lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause to be satisfied the
conditions referred to in Article 7 of this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
 
6.3.           Investigation and Confidentiality.
 
(a)           Prior to the Closing Date, Farmers and Bank shall keep Citizens
advised of all material developments relevant to Bank’s business and to
consummation of the Contemplated Transactions and shall permit Citizens to make
or cause to be made such investigation of the business and properties of Bank
and of its financial and legal conditions as
 

 
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Citizens reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations.
 
(b)           Each Party will hold, and will cause its respective Affiliates and
their respective officers, directors, employees, agents and Representatives to
hold, in strict confidence, unless compelled to disclose by judicial or
administrative process (including without limitation in connection with
obtaining the necessary Consents of Regulatory Authorities) or by other
requirements of Law, all confidential documents and confidential or proprietary
information concerning the other Parties gathered from the other Parties, or
their respective officers, directors, employees, agents or Representatives,
pursuant to this Agreement, except to the extent that such documents or
information can be shown to have been (a) previously lawfully known by the Party
receiving such documents or information, (b) in the public domain through no
fault of such receiving Party, or (c) later acquired by the receiving Party from
other sources not themselves bound by, and in breach of, a confidentiality
agreement. Except as otherwise required by Law, no Party will disclose or
otherwise provide any such confidential or proprietary documents or information
to any other Person, except to the Party’s auditors, Representatives and other
consultants and advisors who need such documents or information in connection
with this Agreement and the transactions contemplated hereby, and the Parties
agree to cause each of the foregoing to be subject to and bound by the
confidentiality provisions hereof.
 
(c)           For a period of one (1) year following the Closing, Farmers agrees
that it will not, directly or indirectly:
 
(i)  except for disclosures required by Law, disclose or use or otherwise
exploit (for its own benefit or the benefit of any other Person) at any time,
any Confidential Information of which Farmers has heretofore become aware. For
purposes of this Section 6.3(c)(i), "Confidential Information" shall mean all
non-public, proprietary technical, commercial and business information of Bank,
including, but not limited to, manner of operations, financial information,
employee lists and records (including lists of employees of Bank's customers and
clients), the identity of Bank customers and clients, loan or deposit
information, contractual agreements between Bank and any Persons, contents of
any and all applications to Governmental Bodies, and comments of such
Governmental Bodies and the Bank's response thereto and any and all examination
reports of Governmental Bodies, but shall not include information that (1)
became generally known or available by publication, commercial use or otherwise
through no fault of Farmers or (2) information known to Farmers or any of its
Affiliates through relationships, operations or Contracts of Farmers and its
Affiliates other than Bank; or

(ii)  except with respect to any Person who is or has been a customer of a
Farmers’ Affiliate other than Bank, (A) solicit, divert or appropriate to itself
or any other Person, or attempt to solicit or divert or appropriate to itself or
any other Person, any business or services (similar in nature to any portion of
the Business) of any Person who [i] maintained a deposit, demand, sweep or loan
account with Bank, [ii] was a party to a repurchase agreement with Bank, [iii]
borrowed money from Bank pursuant to a loan which was subsequently sold by the
Bank on the secondary market or [iv] was an employee or an agent of Bank, at any
time during the six (6) months prior to the date of this Agreement or (B) open
or maintain an office in Barren County or

 
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Hart County, Kentucky, or target customer solicitation in Barren County or Hart
County, Kentucky (provided that this Section 6.3(c)(ii) shall not be deemed to
prohibit any marketing, media or customer solicitation campaign not targeted
solely or principally at customers of the Bank or citizens of Barren County or
Hart County and which campaign makes use of broadcast media such as radio or
television or mass mailings; provided, however, that the use of a mass mailing
directed to only citizens of Barren County or Hart County, Kentucky or to Bank
customers, as well as the distribution of handbills, use of a billboard or
advertisement in a newspaper of local circulation in Barren County or Hart
County, Kentucky shall be prohibited hereunder.

Farmers acknowledges that its breach of any covenant  contained in this Section
6.3(c) will result in irreparable injury to Citizens and its Affiliates and that
the remedy of Citizens and its Affiliates at Law for such a breach will be
inadequate. Accordingly, Farmers agrees and consents that Citizens or any of its
Affiliates, in addition to all other remedies available to any of them at Law
and in equity, shall be entitled to seek both preliminary and permanent
injunctions to prevent and/or halt a breach or threatened breach of any covenant
contained in this Section 6.3(c).
 
6.4.           Press Releases.  Prior to the Closing Date, Citizens and Farmers
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 6.4
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party’s disclosure
obligations imposed by Law.
 
6.5.           Acquisition Proposals.  From and after the date of this
Agreement, Farmers shall, and shall cause Bank to, and it shall use its
reasonable best efforts to cause any of its and their Representatives to,
immediately cease and cause to be terminated immediately all existing
activities, discussions and negotiations with any Persons conducted heretofore
with respect to any Acquisition Proposal. From and after the date of this
Agreement until the termination hereof, Farmers shall not, and it shall cause
the Bank and each of its and their respective Representatives not to, directly
or indirectly, (i) solicit, initiate or knowingly encourage the making of an
Acquisition Proposal, (ii) enter into any Contract or letter of intent with
respect to any Acquisition Proposal or (iii) participate in any discussions or
negotiations regarding, or furnish or disclose to any Person (other than a party
to this Agreement) any non-public information with respect to Bank in connection
with any inquiries or the making of any proposal that constitutes, or is
reasonably likely to lead to, any Acquisition Proposal. Neither the Board of
Directors of Farmers or Bank nor any committee thereof shall approve or
recommend, or allow Farmers or Bank to execute or enter into, any Contract,
letter of intent, memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement, option agreement, joint venture agreement,
partnership agreement or other similar agreement constituting or related to any
Acquisition Proposal.  From and after the date of this Agreement, Farmers and
Bank shall promptly (but in any event within twenty-four hours) advise Citizens
of the receipt of any inquiries, requests, proposals or offers relating to an
Acquisition Proposal, or any request for nonpublic information relating to Bank
by any Person that informs Bank that such Person is considering making, or has
made, an Acquisition Proposal. Any such notice shall be made in
 

 
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writing, shall indicate the material terms and conditions thereof and the
identity of the other party or parties involved, and shall include a copy of any
such written inquiry, request, proposal or offer. Farmers agrees that it shall
keep Citizens informed on a current basis of the status and terms of any
Acquisition Proposal.
 
6.6.           Termination of Affiliate Agreements.  Effective as of the Closing
Date, Farmers shall cause Bank to terminate its management services agreement
and tax sharing agreement with Farmers and, effective as of the Closing Date or
such later date as the Parties shall reasonably agree, to terminate any other
agreement between Bank and Farmers or between Bank and any Farmers’ Affiliate,
without cost to Bank except as expressly provided in this Agreement.
 
6.7.           Employee Plans.  The Parties shall cooperate with each other to
provide an orderly transition with respect to the withdrawal of Bank from
Farmers’ group benefit plans and the enrollment of Bank’s employees in Citizens’
benefit plans.  To the extent necessary, as reasonably determined by Farmers’
and Citizens’ counsel, Farmers shall amend its Salary Savings Plan to permit the
withdrawal of Bank as of the Closing Date and to allow Bank employee
participants in such Plan to transfer and/or rollover their accounts in such
Plan to an individual retirement account or other qualified rollover
investment.  From and after the Closing, Farmers shall assume (and shall
indemnify and hold Citizens and Bank harmless from) any and all Liability to
Bank’s current and former officers and employees for post-retirement medical and
dental benefits under the Farmers Capital Bank Corporation Post-Retirement
Medical and Dental Benefits plan or shall terminate such plan with respect to
Bank’s current and former officers and employees without Liability to Citizens
or Bank.
 
6.8.           Payment for Tax Obligation.  Notwithstanding anything to the
contrary in this Agreement, Bank will pay to Farmers (i) on a quarterly basis
consistent with past practice, and (ii) immediately prior to or at the Closing,
the amounts necessary to compensate Farmers for the income Tax obligations
related to Bank for the period from January 1, 2006 through the Closing, such
Tax obligations calculated in accordance with the terms of that certain Amended
Agreement to Join in the filing of Consolidated Federal Income Tax Returns,
dated October 28, 1993, by and between Farmers and Bank (f/k/a Horse Cave State
Bank).
 
6.9.           Name of Kentucky Banking Centers.  Citizens and Bank agree that
within a reasonable time following consummation of the Bank Merger, Citizens and
Bank will assign and transfer to Farmers all of their right, title and interest
to the name “Kentucky Banking Centers” and the use thereof.  Such assignment
shall provide that (i) Bank’s continued use of such name on outstanding loan,
deposit and other customer documents, including, without limitation, financing
statements and the like, until the expiration of the term of such documents,
shall be permitted, and (ii) neither Farmer nor any of its Subsidiaries shall
use the name “Kentucky Banking Centers” in any banking market in which Citizens
or Bank conducts a banking business as of the date of such assignment.
 
ARTICLE 7
 
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
 

 
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7.1.           Conditions to Obligations of Each Party.  The respective
obligations of each Party to perform this Agreement and consummate the
Contemplated Transactions and the other transactions contemplated hereby are
subject to the satisfaction of the following conditions, unless waived by
Farmers and Citizens pursuant to Section 10.4 of this Agreement:
 
(a)           Regulatory Approvals.  All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for consummation
of the Contemplated Transactions shall have been obtained or made and shall be
in full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in any manner deemed to be unreasonable by Citizens.
 
(b)           Consents and Approvals.  Each Party shall have obtained any and
all Consents required for consummation of the transactions contemplated hereby
or for the preventing of any Default under any Contract or Permit of such Party
which, if not obtained or made, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on any such Party. No Consent so
obtained which is necessary to consummate the transactions contemplated hereby
shall be conditioned or restricted in a manner which in the reasonable judgment
of the Board of Directors of either Farmers or Citizens would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement that, had such condition or requirement been
known, such Party would not, in its reasonable judgment, have entered into this
Agreement.
 
(c)           Legal Proceedings.  No Governmental Body of competent jurisdiction
shall have enacted, issued, promulgated, enforced, or entered by Law or Order
(whether temporary, preliminary, or permanent) or taken any other action which
prohibits, restricts, or makes illegal consummation of the transactions
contemplated by this Agreement.
 
7.2.           Conditions to Obligations of Citizens.  The obligations of
Citizens to perform this Agreement and consummate the Contemplated Transactions
are subject to the satisfaction of the following conditions, unless waived by
Citizens pursuant to Section 10.4(a) of this Agreement:
 
(a)           Representations and Warranties.  For purposes of this Section
7.2(a), the accuracy of the representations and warranties of Farmers set forth
in this Agreement shall be assessed as of the date of this Agreement and as of
the Closing Date with the same effect as though all such representations and
warranties had been made immediately prior to the Closing Date (provided that
representations and warranties which are confined to a specific date shall speak
only as of such date). The representations and warranties of Farmers set forth
herein shall each be true and correct in all material respects. There shall not
exist inaccuracies in the representations and warranties of Farmers set forth in
this Agreement such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Bank, provided that, for
purposes of this sentence only, those representations and warranties which are
qualified by references to “material” or “Material Adverse Effect” or
“Knowledge” shall be deemed not to include such qualifications.
 

 
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(b)           Performance of Agreements and Covenants.  Each and all of the
agreements and covenants of Farmers and Bank to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Closing Date shall have been duly performed and complied with in all
material respects.
 
(c)           Certificates.  Each of Farmers and Bank shall have delivered to
Citizens (i) a certificate, dated as of the Closing Date and signed on its
behalf by its chief executive officer and its chief financial officer or
treasurer, to the effect that the conditions of its obligations set forth in
Sections 7.2(a) and 7.2(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by Farmers’ Board of Directors and
Bank’s Board of Directors and sole shareholder evidencing the taking of all
corporate action necessary to authorize the execution, delivery, and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as Citizens shall request.
 
(d)           Consents and Approvals.  Farmers and Bank shall have obtained any
and all Consents required for consummation of the transactions contemplated
hereby or for the preventing of any Default under any Contract or Permit of such
Party which, if not obtained or made, is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Bank.
 
(e)           Legal Opinion.  Farmers and Bank shall have delivered to Citizens
an opinion of Stoll Keenon Ogden PLLC, counsel to Farmers and Bank, dated as of
the Closing Date, covering those matters set forth in Exhibit A hereto.
 
(f)           No Material Adverse Effect.  Without intending to limit in any
manner the provisions of Section 7.2(a) hereof, there shall have been no events,
changes or occurrences after the date of this Agreement which have had,
individually or in the aggregate, a Material Adverse Effect on Bank.
 
(g)           Financing.  Citizens will have obtained prior to the Closing on
terms reasonably satisfactory to it sufficient cash funds to pay the Purchase
Price.
 
7.3.           Conditions to Obligations of Farmers.  The obligations of Farmers
to perform this Agreement and consummate the Contemplated Transactions hereby
are subject to the satisfaction of the following conditions, unless waived by
Farmers pursuant to Section 10.4(b) of this Agreement:
 
(a)           Representations and Warranties.  For purposes of this Section
7.3(a), the accuracy of the representations and warranties of Citizens set forth
in this Agreement shall be assessed as of the date of this Agreement and as of
the Closing Date with the same effect as though all such representations and
warranties had been made immediately prior to the Closing Date (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of Citizens
shall be true and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of Citizens set forth in this
Agreement such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Citizens; provided
 

 
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that, for purposes of this sentence only, those representations and warranties
which are qualified by references to “material” or “Material Adverse Effect” or
“Knowledge” shall be deemed not to include such qualifications.
 
(b)           Performance of Agreements and Covenants.  Each and all of the
agreements and covenants of Citizens to be performed and complied with by
Citizens pursuant to this Agreement and the other agreements contemplated hereby
prior to the Closing Date shall have been duly performed and complied with in
all material respects.
 
(c)           Certificates.  Citizens shall have delivered to Farmers (i) a
certificate, dated as of the Closing Date and signed on its behalf by its chief
executive officer and its chief financial officer or treasurer, to the effect
that the conditions of its obligations set forth in Sections 7.3(a) and 7.3(b)
of this Agreement have been satisfied, and (ii) certified copies of resolutions
duly adopted by Citizens’ Board of Directors evidencing the taking of all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as Farmers shall request.
 
ARTICLE 8
 
TERMINATION
 
8.1.           Termination.  Notwithstanding any other provision of this
Agreement, this Agreement may be terminated and the Contemplated Transactions
abandoned at any time prior to the Closing Date:
 
(a)           By mutual consent of the Board of Directors of Citizens and the
Board of Directors of Farmers;
 
(b)           By the Board of Directors of Citizens or the Board of Directors of
Farmers (provided that the terminating Party is not then in breach of any
representation or warranty contained in this Agreement under the applicable
standard set forth in Section 7.2(a) of this Agreement in the case of Farmers
and Section 7.3(a) in the case of Citizens in material breach of any covenant or
other agreement contained in this Agreement) in the event of an inaccuracy of
any representation or warranty of the other Party contained in this Agreement
which cannot be or has not been cured within thirty (30) days after the giving
of written notice to the breaching Party of such inaccuracy and which inaccuracy
would provide the terminating Party the ability to refuse to consummate the
Contemplated Transactions under the applicable standard set forth in Section
7.2(a) of this Agreement in the case of Citizens and Section 7.3(a) of this
Agreement in the case of Farmers;
 
(c)           By the Board of Directors of Farmers or the Board of Directors of
Citizens (provided that the terminating Party is not then in breach of any
representation or warranty contained in this Agreement under the applicable
standard set forth in Section 7.2(a) of this Agreement in the case of Farmers
and Section 7.3(a) in the case of Citizens or in material breach of any covenant
or other agreement contained in this Agreement) in the event of a material
breach by the other Party of any covenant or agreement contained in this
Agreement which
 

 
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cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach;
 
(d)           By the Board of Directors of Farmers or the Board of Directors of
Citizens in the event any Consent of any Regulatory Authority required for
consummation of the Contemplated Transactions and the other transactions
contemplated hereby shall have been denied by final non-appealable action of
such authority or if any action taken by such authority is not appealed within
the time limit for appeal; or
 
(e)           By the Board of Directors of Farmers or the Board of Directors of
Citizens in the event that the Contemplated Transactions shall not have been
consummated by March 31, 2007, if the failure to consummate the transactions
contemplated hereby on or before such date is not caused by any willful breach
of this Agreement by the Party electing to terminate pursuant to this Section
8.1(e).
 
8.2.           Effect of Termination.  Subject to the provisions of Section 8.3
hereof, in the event of the termination and abandonment of this Agreement
pursuant to Section 8.1 of this Agreement, this Agreement shall become void and
have no effect, and none of Farmers, Bank or Citizens or any of the officers or
directors of any of them shall have any liability of any nature whatsoever under
this Agreement, except that (i) the provisions of this Section 8.2, Section 8.3
(as applicable), Section 6.3(b), and Article 9 of this Agreement shall survive
any such termination and abandonment, and (ii) a termination pursuant to the
terms of this Agreement shall not relieve the breaching Party from Liability for
any willful breach of a representation, warranty, covenant, or agreement.
 
8.3.           Termination Expenses.  If this Agreement is terminated because
the condition set forth in Section 7.2(g) shall not have been satisfied on or
before March 31, 2007, then Citizens shall pay to Farmers in immediately
available funds the sum of Two Hundred Fifty Thousand Dollars ($250,000).
 
ARTICLE 9
 
INDEMNIFICATION; REMEDIES
 
9.1.           Survival; Right to Indemnification Not Affected by
Investigation.  All representations and warranties and all covenants and
obligations to be performed or complied with prior to or on the Closing Date in
this Agreement, the Disclosure Memorandum, any certificates delivered pursuant
to Sections 7.2 or 7.3 and any other certificate or document delivered pursuant
to this Agreement will survive the Closing and continue in effect until the
Termination Date (except that the representations in Section 3.3 and 3.14 shall
survive indefinitely and the representation set forth in Section 3.18 shall
survive for a period of three (3) years). The right to indemnification, payment
of Damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation.
 

 
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9.2.           Indemnification and Payment of Damages by Farmers.  Farmers will
indemnify and hold harmless Citizens and its Representatives, stockholders,
controlling persons, and Affiliates (collectively, the “Citizens Indemnified
Persons”) for, and will pay to the Citizens Indemnified Persons, the amount of,
any loss, liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys’ fees) or diminution of value, whether or not involving a third-party
claim (collectively, “Damages”), arising, directly or indirectly, from or in
connection with:
 
(a)           any breach by Farmers of any representation or warranty made by
Farmers in this Agreement, the Disclosure Memorandum, or any other certificate
or document delivered by Farmers pursuant to this Agreement;
 
(b)           any breach by Farmers or Bank of any covenant or obligation of
Farmers or Bank in this Agreement; or
 
(c)           any claim by any Person for brokerage or finder’s fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either Farmers or Bank (or any
Person acting on their behalf) in connection with any of the Contemplated
Transactions.
 
9.3.           Indemnification and Payment of Damages by Citizens.  Citizens
will indemnify and hold harmless Farmers, and will pay to Farmers and its
Representatives, stockholders, controlling persons, and Affiliates
(collectively, the “Farmers Indemnified Persons”) the amount of any Damages
arising, directly or indirectly, from or in connection with:
 
(a)           any breach of any representation or warranty made by Citizens in
this Agreement or in any certificate delivered by Citizens pursuant to this
Agreement;
 
(b)           any breach by Citizens of any covenant or obligation of Citizens
in this Agreement; or
 
(c)           any claim by any Person for brokerage or finder’s fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Citizens (or any Person acting on
its behalf) in connection with any of the Contemplated Transactions.
 
9.4.           Time Limitations; Sole Remedy.  If the Closing occurs, Farmers
will have no liability (for indemnification or otherwise) with respect to any
representation or warranty or covenant or obligation to be performed and
complied with prior to the Closing Date, other than those in Sections 3.3
[Capital Stock], 3.14 [Taxes], and Sections 3.18 [Employee Benefits] unless on
or before the Termination Date Citizens notifies Farmers of a claim specifying
the factual basis of that claim in reasonable detail to the extent then known by
Citizens.  A claim with respect to Sections 3.3 and 3.14 may be made at any
time.  A claim with respect to Section 3.18 may be made at any time on or before
three (3) years from the date of this Agreement.  If the Closing occurs,
Citizens will have no liability (for indemnification or otherwise) with respect
to any representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before the Termination
Date, Farmers notifies Citizens of
 

 
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a claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Farmers.  Except as otherwise provided in this Article 9,
(i) all remedies available to Citizens and Farmers with respect to this
Agreement shall cease to be available as of the Termination Date, and (ii) if
the Closing occurs, the sole remedy of the Parties hereunder for breaches of or
inaccuracies in any representation or warranty, or breach of any covenant or
obligation hereunder shall be the indemnification remedy provided under this
Article 9.
 
9.5.           Indemnification Procedures.
 
(a)           Whenever a Farmers Indemnified Person or Citizens Indemnified
Person (an “Indemnified Person”) becomes aware that it has a claim for indemnity
under Section 9.2 or 9.3 hereof or that any claim is threatened or asserted
against it that would occasion the indemnification described in Section 9.2 or
9.3 (a “Covered Claim”), such Indemnified Person shall promptly provide the
indemnifying Party with a notice (a “Claim Notice”) of such Covered Claim
pursuant to the provisions of Section 10.6 hereof. Each Claim Notice shall
describe in reasonable detail the Indemnified Person’s understanding of (and
basis for) the Covered Claim, the Person threatening or asserting it, the relief
sought and the basis for indemnification hereunder with respect thereto.
 
(b)           In connection with any Covered Claim the indemnifying Party,
provided that it shall have acknowledged in writing its obligation to provide
indemnification in respect of such Covered Claim, shall have the right (without
prejudice to the right of any Indemnified Person to participate at its expense
through counsel of its own choosing) to defend or prosecute such Covered Claim
at its expense and through counsel of its own choosing if it gives written
notice of its intention to do so not later than twenty days following receipt by
it of a Claim Notice or such shorter time period as required so that the
interests of the Indemnified Person would not be materially prejudiced as a
result of its failure to have received such notice; provided, however, that if
the defendants in any action shall include both the indemnifying Party and an
Indemnified Person and the Indemnified Person shall have reasonably concluded
that counsel selected by the indemnifying Party has a conflict of interest
because of the availability of different or additional defenses to the
Indemnified Person, the Indemnified Person shall have the right to select
separate counsel to participate in the defense of such action on its behalf, at
the expense of the indemnifying Party. If the indemnifying Party does not choose
to defend or prosecute any such claim asserted by a Person for which any
Indemnified Person would be entitled to indemnification hereunder, then the
Indemnified Person shall be entitled to recover from the indemnifying Party, on
a monthly basis, all of its attorneys’ fees and other costs and expenses of
litigation of any nature whatsoever incurred in the defense of such claim. If
the indemnifying Party assumes the defense of any such claim, the indemnifying
Party will (subject to the provisions of Section 9.6 hereof) hold the
Indemnified Person harmless from and against any and all Adverse Consequences
arising out of any settlement approved by indemnifying Party or any Order in
connection with such Covered Claim or Proceeding. Notwithstanding the assumption
of the defense of any Covered Claim by the Indemnified Person pursuant to this
Section 9.5(b) the indemnifying Party shall have the right to approve the terms
of any settlement of a claim (which approval shall not be unreasonably
withheld). The indemnifying party shall be subrogated to the rights that the
Indemnified Person has against third parties with respect to any subject Covered
Claim.
 

 
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(c)           The indemnifying Party and the Indemnified Person shall cooperate
in furnishing evidence and testimony and in any other manner which the other may
reasonably request, and shall in all other respects have an obligation of good
faith dealing, one to the other, so as not to unreasonably expose the other to
an undue risk of loss. The Indemnified Person shall be entitled to reimbursement
for out-of-pocket expenses reasonably incurred by it in connection with such
cooperation. Except as provided in the preceding sentence, each party shall bear
its own fees and expenses incurred pursuant to this Section 9.5(c).
 
(d)           It is not a condition precedent to recovery under this Article 9
for an Indemnified Person to first seek a contractual, statutory or common law
remedy against any indemnifying Party in order to provide a Claim Notice. No
Indemnified Person is under any obligation to pursue any claims against an
indemnifying Party.
 
9.6           Restrictions on Scope and Duration of Indemnification.
 
(a)           The amount of indemnity payable hereunder shall be calculated
after giving effect to (i) the actual Tax impact when realized (including any
and all Tax benefits) on the Indemnified Person with respect to the subject
Covered Claims and (ii) any proceeds received under insurance policies covering
the subject Covered Claims.
 
(b)           With respect to any Covered Claim involving Damages arising from
Bank loans, the amount of indemnity payable hereunder by Farmers shall be offset
by such portion of the Bank’s loan loss reserve attributable to such loan.
 
(c)           No Farmers Indemnified Person or Citizens Indemnified Person shall
be entitled to be indemnified hereunder for any Damages respecting a Covered
Claim until the total of all Damages respecting Covered Claims for Farmers
Indemnified Persons or Citizens Indemnified Persons, as applicable, exceeds
$100,000, subject to the limitations set forth in Section 9.6(d).
 
(d)           Subject to Section 9.6(e) below and except for claims with respect
to Sections 3.3 and 3.14 hereof, the aggregate and total liability of Farmers
pursuant to Section 9.2 hereof or Citizens pursuant to Section 9.3 hereof shall
in no event exceed (i) $5,000,000 with respect to Covered Claims for which Claim
Notices are provided on or before the date one year following the Closing Date,
and (ii) $3,000,000 (less the Damages respecting Covered Claims for which Claim
Notices have previously been delivered hereunder)) with respect to Covered
Claims for which Claim Notices are provided after the date one year after the
Closing Date.  Subject to Section 9.6(e) below and except for claims with
respect to Sections 3.3 and 3.14 hereof, the Parties agree that in no event
shall the aggregate and total liability of Farmers pursuant to Section 9.2
hereof or Citizens pursuant to Section 9.3 hereof exceed $5,000,000.
 
(e)           Notwithstanding anything contained in this Agreement to the
contrary, the rights of an Indemnified Person to be indemnified, defended and
held harmless in connection with any intentional misrepresentation or omission
hereunder or any intentional failure to perform or comply with any covenant or
agreement hereunder shall not be subject to the restrictions on scope and
duration set forth in Sections 9.4 and 9.6 above, and shall survive the Closing
indefinitely.
 

 
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ARTICLE 10
 
MISCELLANEOUS
 
10.1.                      Expenses.
 
(a)           Each of the Parties shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and application fees,
printing fees and fees and expenses of its own financial or other consultants,
investment bankers, accountants and counsel.
 
(b)           Nothing contained in this Section 10.1 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a Party of
the terms of this Agreement or otherwise limit the rights of the non-breaching
Party.
 
10.2.                      Entire Agreement; Benefits of Agreement.  This
Agreement constitutes the complete and exclusive agreement between the Parties
with respect to the transactions contemplated hereunder and concedes and
supersedes all prior arrangements or understandings with respect thereto,
written or oral, between the Parties. Nothing in this Agreement expressed or
implied is intended or shall be construed to confer upon any Person, other than
the Parties or their respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
 
10.3.                      Amendments.  To the extent permitted by Law, this
Agreement may be amended, only by a subsequent writing signed by each of the
Parties, upon the approval of the Board of Directors of each of the Parties,
whether before or after shareholder approval (if applicable) of this Agreement
has been obtained.
 
10.4.                      Waivers.
 
(a)           Prior to or at the Closing Date, Citizens, acting through its
Board of Directors or Chief Executive Officer, shall have the right to waive any
Default in the performance of any term of this Agreement by Farmers or Bank, to
waive or extend the time for the compliance or fulfillment by Farmers or Bank of
any and all of its obligations under this Agreement, and to waive any or all of
the conditions precedent to the obligations of Citizens under this Agreement,
except any condition which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in writing signed by the chief
executive officer of Citizens.
 
(b)           Prior to or at the Closing Date, Farmers, acting through its Board
of Directors or Chief Executive Officer, shall have the right to waive any
Default in the performance of any term of this Agreement by Citizens, to waive
or extend the time for the compliance or fulfillment by Citizens of any and all
of its obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of Citizens under this Agreement, except
any condition which, if not satisfied, would result in the violation of any Law.
No such waiver shall be effective unless in writing signed by the chief
executive officer of Farmers.
 

 
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(c)           The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
 
10.5.                      Assignment.  Neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by any Party
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other Parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
 
10.6.                      Notices.  Any deliveries, notices or other
communications required or permitted hereunder shall be deemed to have been duly
made or given (i) if delivered in person, (ii) if sent by registered mail,
return receipt requested, postage prepaid, (iii) if sent by a nationally
recognized overnight courier or (iv) if sent by facsimile transmission, to the
following addresses and numbers:
 

 
Farmers:                                   Farmers Capital Bank Corporation
 
G. Anthony Busseni, President
 
202 West Main Street
 
Frankfort, Kentucky 40601
 
Facsimile Number: (502) 227-1692
 

 
Copy to Farmers Counsel          Stoll Keenon Ogden PLLC
 
Attn: J. David Smith, Jr.
 
300 West Vine Street, Suite 2100
 
Lexington, Kentucky 40507
 
Facsimile Number: (859) 246-3662
 

 
Citizens:                                   Citizens First Corporation
 
Mary D. Cohron, President
 
1065 Ashley Street
 
Bowling Green, Kentucky 42101
 
Facsimile Number: (270) 393-0716
 

 
Copy to Citizens Counsel:          Wyatt, Tarrant & Combs, LLP
 
Attn: Caryn F. Price
 
500 W. Jefferson Street, Suite 2800
 
Louisville, Kentucky  40202
 
Facsimile Number: (502) 589-0309
 

 
or, as to each party, at such other address or number as may hereafter be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section
 

 
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10.6. All such notices, requests, demands and other communications shall be
deemed to have been given (i) on the date received if personally delivered, (ii)
two days following the date deposited in the mail if delivered by mail, (iii) on
the date following the date sent by overnight courier if delivered by overnight
courier or (iv) the date sent by facsimile if delivered by facsimile
transmission on or before 2:30 p.m., local Bowling Green, Kentucky time (if
received by facsimile after 2:30 p.m., local Bowling Green, Kentucky time, then
the following day).
 
10.7.                      Governing Law.  This Agreement shall be governed by,
construed and enforced in accordance with the Laws of the Commonwealth of
Kentucky, without regard to its principles of conflicts of law or choice of law.
 
10.8.                      Counterparts.  This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument. Any such
counterpart may be delivered through facsimile transmission provided the
original thereof is promptly delivered to the Parties hereto.
 
10.9.                      Captions.  The captions contained in this Agreement
are for reference purposes only and are not part of this Agreement.
 
10.10.                      Interpretations.  Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
Party, whether under any rule of construction or otherwise. No Party to this
Agreement shall be considered the draftsman. The Parties acknowledge and agree
that this Agreement has been reviewed, negotiated and accepted by all Parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of all Parties hereto.
 
10.11.                      Enforcement of Agreement.  The Parties agree that
time is of the essence in the performance of their respective obligations under
this Agreement. The Parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at Law or in equity.
 
10.12.                      Severability.  Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
 
10.13.                      Rights and Remedies Cumulative.  Subject to the
restrictions set forth in Sections 9.4 and 9.6 hereof, (i) the rights and
remedies provided by this Agreement are cumulative and
 

 
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the use of any one right or remedy by any Party shall not preclude or waive the
right to use any or all other remedies, and (ii) are given in addition to any
other rights the parties may have by Law, Order, or otherwise.
 

 
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly
executed on its behalf as of the day and year first above written.
 
FARMERS CAPITAL BANK CORPORATION
 

 

 
By:           _/s/ G. Anthony Busseni_______________
 
G. Anthony Busseni
 
President
 

 

 
KENTUCKY BANKING CENTERS, INC.
 

 

 
By:           __/s/ David Shadburne________________
 
David Shadburne
 
President
 

 

 
CITIZENS FIRST CORPORATION
 

 

 
By:           ___/s/ Mary D. Cohron________________
 
Mary D. Cohron
 
President
 

 

 

 
15173919.5

 
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EXHIBIT A

Form of Legal Opinion

Capitalized terms used in this Exhibit shall have the respective meanings set
forth in the Agreement.

1.             Farmers is a bank holding company existing and in good standing
under the Laws of the Commonwealth of Kentucky with corporate power and
authority to conduct its business and to own and use its Assets.  The Bank is a
Kentucky banking corporation existing and good standing with the FDIC and under
the Laws of the Commonwealth of Kentucky with corporate power and authority to
conduct its business and to own and use its Assets.

2.  Bank’s authorized capital stock consists of ___________ shares of Bank
common stock, of which 15 shares were outstanding as of the Closing Date and
owned of record in their entirety by Farmers. The outstanding shares of Bank
common stock have been duly authorized and validly issued, were not issued in
violation of any statutory preemptive rights of shareholders, and are fully paid
and nonassessable. To our Knowledge, there are no Rights obligating the Bank to
issue or acquire any of its equity securities.

3.  The execution, delivery and performance by Farmers and Bank of the Agreement
do not and will not violate or contravene any provision of the Articles of
Incorporation or Bylaws of Farmers or Bank or, to our Knowledge, result in any
material breach of, or default or acceleration under, any Contract or Order to
which Farmers or the Bank is a party or by which any of such Persons is bound.

4.  The Agreement has been duly and validly executed and delivered by Farmers
and Bank and assuming valid authorization, execution and delivery of the
Agreement by Citizens, constitutes a valid and binding agreement of Farmers and
Bank, enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally; provided, however, that we express no opinion as to
the availability of the equitable remedy of specific performance.

 
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