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,




3


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




5


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,




6


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.




7


(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,




8


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,




9


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




11


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.




12


(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




13


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




14


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.




15


(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;




16


(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.




17







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




18


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




19


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.




20


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




21


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




22


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




23


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




24


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




25


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.




26


(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




27


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.




28


(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




29


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;




30


(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.




31


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




32


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


33


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




34


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




35


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.




36


(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




37


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




38


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.




39


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




40


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.




41


(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.




42


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




44


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




45


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.




46


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


47


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.











48